Stocks of aviation industry have gone through the boom?

In addition to banking, securities and real estate stocks, the aviation industry group was also assessed to “sublimate” in the second quarter thanks to the controlled epidemic, Vietnam also began to study the feasibility of “vaccine passports”. However, there are still less optimistic opinions regarding the recovery of this industry.

Since the beginning of the year until now, along with the growth of the stock market, aviation stocks such as HVN of Vietnam Airlines, VJC of Vietjet Air, SAS of Sasco, NCS of Noi Bai Aviation Meals … also recorded receive an average increase of about 14%.

In fact, at the end of 2020, the prices of some typical aviation stocks such as VJC and HVN recorded a recovery of about 80% compared to the first outbreak of the epidemic. Currently, valuations of domestic airlines are at a very attractive level compared to international airlines.

The spirit is burning

Over the past 1 year, Vietnam’s aviation industry has suffered greatly from 3 outbreaks, it is estimated that domestic airlines have suffered losses of more than VND 18,000 billion from air transport activities and revenue decreased by about VND 10,000 billion compared to 2019.

Updating the latest data, in the first 2 months of 2021, international passenger transportation only reached 66,600 passengers, a decrease of 98.8% compared to the same period in 2019. The domestic aviation market has also decreased significantly due to the epidemic. 3 takes place right on the occasion of the Lunar New Year (January 27 – February 26, 2021), when transportation demand peaks of the year, so the number of visitors is huge. Difficult years for airlines in the airline industry.

Stocks of aviation industry have gone through the boom?

The number of passengers decreased, the number of flights also decreased, but the cost increased due to the need to ensure anti-epidemic measures. In order to stimulate demand and attract operating cash flow, firms were forced to deeply cut fares, leading to unprecedented consequences that businesses suffered losses during the peak season. The firms’ Tet sales also decreased by 70 to 80% on average over the same period last year.

In the context of narrowing flight operations, commercial services, technical services, and catering services … are adversely affected, reducing both revenue and output since March /. 2020.

However, recently, after more than a year of “freezing” international routes, domestic airlines are expecting a “passport vaccine” solution to be able to restore these routes in the second half of the year. 2021.

In a recent statement, Mr. To Viet Thang – Deputy General Director of Vietjet Air said that the travel and aviation businesses all said that the vaccination will bring international tourists back to Vietnam in the conditions of selection. Choose passengers from the markets that are fighting against epidemics well and Vietnam is one of them.

Currently, domestic airlines have started implementing step by step plans to restore regular international routes, initially serving the needs of Vietnamese people studying, working, visiting relatives in the country. Foreigners and foreigners returning from Vietnam to their home country will meet the entry requirements.

Specifically, from April 1, Vietnam Airlines started operating 4 international routes, while Vietjet and Bamboo Airways also said they are willing to fly internationally back to markets such as Southeast Asia and Northeast Asia if licensed.

The future “if.. then”

It is normal for the airline businesses to expect the “vaccine passport” to help “salvage” revenue as well as overcome the losses that are being incurred. It is normal after the difficulties of more than a year. However, industry expectations will only come true if the vaccine passport is passed.

Commenting on the outlook for the aviation industry in 2021, Mirae Asset Vietnam securities company said this will still be a difficult year because the industry is in a state where there is no more space to recover when international flights reopen.

“The second difficulty facing the aviation industry in 2021 is that the market is narrowed, making the competition more fierce,” said expert of Mirae Asset.

Even when the “vaccine passport” is approved, Bao Viet Securities Company (BVSC) still believes that the contribution from the international market to the aviation industry in 2021 is still not much due to the reopening of the period. This section will be limited to a few countries with a low frequency for easy control. Therefore, the contribution to total revenue of businesses in the industry is negligible.

BVSC did not even give a recommendation for HVN shares because of the difficult recovery process of Vietnam Airlines, while the recommendation for VJC is neutral.

Notably, on April 8, HoSE decided to put HVN shares under warning from April 15, 2021 due to a loss of 10,927 billion dong in profit after tax of shareholders of Vietnam Airlines in 2020.

According to SSI Securities Company, although the group of aviation stocks is having an attractive valuation, it will not bring much benefits to new investors because the current valuation is unlikely to reach the pre-service level. Most likely to dilute, the financial pressure of the current restructuring process as well as the risk of an outbreak of Covid-19 may increase in some places.

In that context, the Government also has many practical support policies for the “big brother” of Vietnam Airlines in particular and the aviation industry in general in order to pave the way for potential growth opportunities. However, to evaluate “overcame the storm” now for the aviation industry is probably too early.

Source: stockbiz.vn – Translated by fintel.vn

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