WEAK IMPORT AND EXPORT: WHAT WILL GMD, VSC AND HAH LOOK LIKE IN 2023?

In the 4 months of 2023, import and export value recorded a decrease of 13.6%, estimated at 210.7 billion USD. In which, export and import values reached 108.5 billion USD (down 11.8%) and 102.2 billion USD (down 15.4%).

WEAK IMPORT AND EXPORT: WHAT WILL GMD, VSC AND HAH LOOK LIKE IN 2023?

Import-export turnover and customs clearance volume decreased

In the 4 months of 2023, import and export value recorded a decrease of 13.6%, estimated at 210.7 billion USD. In which, export and import values reached 108.5 billion USD (down 11.8%) and 102.2 billion USD (down 15.4%).

Along with that, the throughput of seaports also recorded a significant decrease. In the first quarter of 2023, the total volume of customs clearance at Vietnam's seaports was estimated at 165.2 million tons (down 8%). In which, the export volume is estimated at 42.5 million tons (down 7.5%), imported goods 48.8 million tons (down 4.8%), domestic goods 73.5 million tons (down 10%). .3%), transit goods 375 thousand tons (down 6.9%).

In terms of container volume, the total volume is estimated at 5.2 million TEUs (down 17.6%). In which, export container volume is estimated at 1.8 million TEU (down 12.7%), import 1.7 million TEU (down 21.4%), domestic 1.7 million TEU (down 18.2%). %).

Manufacturing activity weakens, FDI decelerates

Manufacturing activity showed signs of weakness in the 4 months of 2023 when the PMI continuously stayed below 50 along with the IIP barely recording growth in April.

The industrial employment index (LEI) 4M 2023 decreased by 3.5%. Besides, the growth in the number of industrial FDI projects and investment capital slowed down. In the first four months of 2023, the total number of accumulated projects, although increased by 3.2%, reaching 16,149 projects, but the total capital only reached 265.5 billion USD, up 5.6%, the lowest increase since 2019. Scale of capital/project slightly increased to 16.4 million USD/DA.

Consumer confidence indexes in key markets were mostly flat and remained at 4-month lows in 2023, although markets still recorded real GDP growth. Consumers are concerned that the economic recession and restrained spending will likely affect import and export demand and dismal clearance volume in 2023.

First quarter business results: Profit margin declines

The weakening of export and import activities is clearly reflected in the business results of the first quarter of 2023 of the key listed seaport companies.

Specifically, companies whose main activities are port operations such as Gemadept JSC (GMD), Vietnam Container Joint Stock Company (VSC), Dinh Vu Port Joint Stock Company (DVP) recorded negligible changes in revenue and profit margin. activities decreased, leading to a sharp decline in profit after tax over the same period (except for DVP due to abnormal income). The overall decline in output increases price competition in seaport clusters, negatively impacting profit margins.

For companies operating mainly in the shipping segment such as Hai An Transport and Unloading Joint Stock Company (HAH), the pressure from declining output along with shipping prices returning to low levels in the period 2011-2019 will affect profit margins in subsequent quarters of 2023.

Revenue increased slightly, profit from associates decreased sharply: In Q1 2023, GMD recorded revenue and gross profit increased by 2.5% and 21.1%, respectively, to VND 901.9 billion and VND 426, respectively. 6 billion. Gross profit margin increased significantly to 47.2% (from 40% in Q1 2022). However, profits from associates dropped sharply by 83%, causing operating profit margin to decline to 33.5% (from 38.5% in Q1 2022). GMD respectively recorded operating profit and net profit at 302.5 billion (down 10.8%) and 254.8 billion (down 20.4%).

Divestment from Nam Hai Dinh Vu port (capacity of 500,000 TEU/year): The buyer has been confirmed as Vietnam Container Joint Stock Company (VSC) and the deal has a potential value of 2,250 billion. Mirae Asset believes that GMD may record an extraordinary profit of around VND 1,000 billion from the divestment of Nam Hai Dinh Vu in 2023.

Port volume flat, logistics revenue expected to decrease: In 2023, Mirae Asset forecasts GMD's port volume and revenue to remain unchanged, but logistics revenue may decline. Mirae Asset forecasts total revenue and NPAT in 2023 to be 3,784.9 billion dong (-3.3% decrease) and 2,389.4 billion dong (up 106.5%). Profit of controlling shareholders reached 2,055 billion (up 106.5%), equivalent to EPS of 5,114 dong.

It should also be noted that the recent expansion in Dinh Vu and Lach Huyen clusters puts competitive pressure on GMD's operations in the Hai Phong area.

Vietnam Container Joint Stock Company (HOSE: VSC): Scaling up

Sales flat, profit margin decline: In Q1/2023, VSC recorded revenue of 467 billion (flat). However, reduced logistics and customs clearance demand led to increased costs and put pressure on gross margin, which fell to 29.4% (compared to 34.5% in Q1 2022).

VSC recorded a gross profit of 136.6 billion (down 15.8%). In addition, VSC's loan balance skyrocketed at the end of 2022, financial expenses in Q1/2023 increased to VND 28.3 billion. Along with the increase in selling & administrative expenses (up 37.6%), VSC's operating profit dropped sharply by 53.5% to 60 billion dong. In turn, VSC recorded a profit after tax of 42.8 billion (down 60.9%).

Trade deal of Nam Hai Dinh Vu port (NHDV): On April 19, VSC announced the signing of a contract with Gemadept JSC (GMD VN) on the transfer of Nam Hai Dinh Vu port. This port has a container capacity of about 500,000 TEU/year (about 50% of the current VSC port clearance volume) and the acquisition will increase VSC's total logistics output.

In 2023, due to increased capacity, Mirae Asset forecasts that VSC's revenue will continue to grow to 2,230 billion (up 11%). However, increased operating and financial expenses put pressure on profit margin to drop sharply in 2023. Accordingly, Mirae Asset forecasts NPAT of VND 187 billion (down 52.4%) and NPAT of controlling shareholders. is 147.8 billion dong (down 53%).

Hai An Transport and Unloading Joint Stock Company (HOSE: HAH): Pressure from weakening demand

Profit margin dropped sharply: In Q1 2023, HAH recorded revenue at 655.1 billion (flat). However, low shipping prices as well as weak transportation demand caused Q1's gross profit margin to drop sharply from 52.1% of the same period to 29.4% and record gross profit at 192.4. billion (down 43.2%). EBT and EAT of the company respectively reached 150.7 billion (down 52.9%) and 126.4 billion (down 51.9%).

Transport and logistics capacity: Currently, HAH is operating 11 container ships with a total capacity of nearly 16,000 TEUs. HAH operates 7 ships by itself and leases 4 ships. HAH's transportation activities cover 16 domestic routes and 6 international routes (mostly between Vietnam and China). The company plans to purchase five new-built ships in the period 2021–2024, along with purchasing second-hand vessels if the opportunity arises. HAH owns a seaport in the North of Vietnam, Hai An port with an average output of more than 300,000 TEU/year. Besides, HAH has also invested in container yards, CFS warehouses, depots (both self-exploited and associated with Pantos Holdings) with increasing output over the years.

After soaring in 2022, Mirae Asset thinks 2023 results will return to 2021 levels as shipping prices have cooled. Mirae Asset forecasts that controlling shareholder's revenue and NPAT in 2023 will be VND 2,823.7 billion (down 12%) and VND 414.4 billion (down 49.5%), respectively. Forecast EPS in 2023 is at nearly 5,900 VND/share (down 48%).