The construction sector attracts cash flow thanks to public investment expectations
Investors are currently looking for opportunities in construction stocks because they expect the industry to flourish as public investment is being boosted.
After the bond channel was tightened and showed no signs of recovery, along with the continued high interest rates on deposits and loans, many industries, especially businesses in the real estate sector, were affected.
Affected by the tightening of cash flow and slowing global economic growth, in the fourth quarter of 2022, a series of real estate, securities, and steel businesses plummeted, with many businesses even reporting record losses in many quarters.
For the transport infrastructure construction industry, BSC expects that, with the close direction of the Government recently, more favorable weather conditions and the cooling of some material prices will create conditions for construction contractors to speed up progress.
Statistics on the floor from December 26, 2022 to January 27, 2023, civil construction stocks such as Hoa Binh Construction Group (code HBC), Coteccons Construction (code CTD) increased by 14.1% and 21.4%, respectively.
Particularly for the infrastructure construction group, in the same period, Vinaconex shares (code VCG) increased by 36.7%, Cienco4 (code C4G) increased by 39.3%, Lizen (code LCG) increased by 46.8%, Fecon (code FCN) increased by 33.7% and Deo Ca Transport Infrastructure Investment (code HHV) increased by 59.1%.
However, if including all 7 construction stock groups, this group of stocks increased by an average of 35.9% compared to the same period, the VN-Index increased by 13.4% and the VN30 index increased by 14.5%.
In fact, the group of infrastructure construction stocks tends to increase more strongly, especially when joint ventures continuously announce the winning of large public investment projects such as Long Thanh International Airport Project, component projects of the North-South Expressway Construction Project, etc.
VNDirect Securities Company expects public investment to make a breakthrough from the beginning of 2023. According to VNDirect’s estimates, public investment disbursement in 2023 will grow by 20-25% over the same period. This unit highly appreciates the prospects for infrastructure development next year when the problems of shortage of stone and sand supply and high construction material prices have been almost resolved.
Recently, the first 12 bidding packages at the North-South Expressway Phase II with a total value of VND 52,280 billion have officially started construction since January 1, 2023. In addition, the remaining 13 packages in the North-South Expressway Phase II, Ring Road 3 (HCMC) and Ring Road 4 (Hanoi) are also expected to start construction in the first half of 2023.
On the business side, VNDirect believes that the opportunity to win large-scale packages will belong to leading units such as Vinaconex, Deo Ca Infrastructure, and Cienco 4. Of which, Vinaconex, Deo Ca Infrastructure, and Cienco 4 have been assigned to participate in the first 12/25 packages of the North-South Expressway Phase II.
Since the beginning of this year, 12 component projects of the North-South Expressway Phase II have simultaneously started construction in 9 provinces: Ha Tinh, Quang Binh, Quang Tri, Quang Ngai, Phu Yen, Binh Dinh, Khanh Hoa, Hau Giang, and Ca Mau. In addition, the Quang Ngai – Hoai Nhon Expressway was chosen by the Government and the Ministry of Transport as the main venue and online connection with the remaining localities.
It can be seen that investors in the market are expecting a brighter future for the infrastructure construction group in 2023 when the Government promotes key public investment projects to pull the whole economy to grow.
