After entering the bourse in January 2017, HVN shares of Vietnam Airlines saw prices increasing sharply, hitting the VND50,200 per share ceiling on January 5. But later, the share price slid, now hovering around VND32,000-33,000 per share.
Meanwhile, since the day it made debut on February 28, VJC shares of Vietjet Air have seen prices escalating, now hovering around VND130,000-132,000 per share.
The market price of Vietjet is now four times higher than the market price of Vietnam Airlines, a big player in the market.
The market price of Vietjet is now four times higher than the market price of Vietnam Airlines, a big player in the market. Some securities investors said that the young Vietjet has defeated Vietnam Airlines to become the largest airline in Vietnam.
However, in fact, Vietjet has only outstripped Vietnam Airlines in capitalization value. Vietjet’s capitalization value is now at VND39.24 trillion, while Vietnam Airlines’ is VND38.912 trillion.
Meanwhile, Vietnam Airlines still had higher revenue and holds larger market share than Vietjet.
According to Vincente Nguyen, director of Asia Frontier Capital, making comparison in share market price does not have much significance.
The share price is determined by supply and demand. The short-term sharp increase in the demand and small supply may cause unreasonable increases in share prices. However, in long term, the share prices must truly reflect the value of enterprises.
Other shares which entered the bourse recently have also seen market prices increasing. And this could be explained by the modest amount of shares available in the market.
Regarding the P/E (price-earning ratio), Vietjet has a P/E of 17.3, while Vietnam Airlines is 17. This means that the two airlines have nearly the same P/E (Vietnam Airlines still has not made public the Q4/2016 finance report).
If only considering the P/B (price to book ratio), one would see that Vietjet is highly valued. However, Vietjet has very high turnover growth rate, 25-30 percent, while Vietnam Airlines’ growth rate is inconsiderable. This explains why investors put high hopes on Vietjet.
Vietjet is quite likely to exceed Vietnam Airlines in market share in the near future. It is very dynamic with an increasingly high number of air routes which helps revenue increase sharply.
Vietnam Airlines and Vietjet Air are the two leading enterprises in market which hold 42.5 percent and 41.5 percent, respectively, in domestic aviation market share.
Jetstar Pacific holds 14.2 percent. However, 70 percent of Jestar Pacific’s stakes is held by Vietnam Airlines.