Vietnam Stock market Quick Note 2015 B u s i n e s s r e s u l t s GMD GEMADEPT Port operation GROWING Target price 42,000 CURRENT PRICE 34,500 40.0 35.0 30.0 25.0 20.0 03/15 04/15 05/15 06/15 07/15 08/15 09/15 S t o c k i n d i c a t o r s Code GMD Current outstanding shares (m) 116.1 Market cap (VNDbn) 3,972 High Low 52 weeks 26.6 35.5 Average trading vol (3M) 206,316 Beta 0.18 Foreign ownership (%) 32.5 M a j o r s h a r e h o l d e r s ReCollection Pte. Ltd 12.3% Deutsche Bank Aktiengesellsch 6.6% Deutsche Bank AG 4.9% Market Vectors Vietnam ETF 4.1% Deutsche Bank AG London 1.9% Growing in core businesses GMD has 4 main business segments: port operations, logistics, forestry and real estate. This year GMD focused on its core segments are port operations and logistics after expanding port operations to the South and pushing the cooperations with other companies. According to business results of GMD in the first half 2015, port operations and logistics contributed 99% to GMD s revenue and port operations also accounted for most of GMD s gross profit. Some key points in GMD business this year. Port operationss segment: GMD has 6 ports to exploit are Phuoc Long Port, Gemalink, GMD-Hoa Sen, Dung Quat, Nam Hai and Nam Hai Dinh Vu. Especially, Phuoc Long, Nam Hai and Nam Hai Dinh Vu are running excitingly and bringing the biggest income to GMD. Nam Hai Dinh Vu Port is a joint venture company between GMD and Vietnam Petroleum Transport Joint Stock Company (VIP) in Haiphong from 2012 with designed capacity 500,000 TEUs/year, total investment VND1,000bn, with 450m of berth and 150,000m of CY, triple of Nam Hai port. Nam Hai Dinh Vu Port was launched since late 2013 and in the first 6 months this year this port reached 220,000 teu in output and almost double of its capacity in 2014. The current capacity of Nam Hai Dinh Vu port reached nearly 90% and this port has higher profit margin than other ports due to tax incentives over 40%. This is one of the reasons why large capacity ships from 20,000 DWT has moved from Nam Hai port to Nam Hai Dinh Vu port and Nam Hai port is only for smaller capacity ships. GMD is holding approximately 73% authorized capital of Dung Quat port. This is P r i c e m o v e m e n t 1M 3M 6M %change 5% 10% 27% Changes in value 1.60 3.0 7.40 a strategic port of the most dynamic economic zone in the Middle of Vietnam with big projects in oil gas sector and industrial sector belongs to Exxon Mobil, Sembcorp Thermal Power. Therefore, Dung Quat port aims to become the terminal of the largest ships in the Middle of Vietnam. GMD completed its investment to upgrade the quay from 30,000 DWT up to 70,000 DWT and build other auxiliary construction. The plan of 2015 for Dung Quat port is reaching the output 1.54m tons of cargo and Dung Quat port has completed more than 50% of this goal in the half this year. 1 Please read Disclaimer on the last page
1H2015 Business results Net revenue 1,722.6 +27.3% (y-o-y) Gross profit 463.7 86.3% Operations profit 237.3-61% Profit before tax 256.8-58.7% Profit after tax 233.6-54.6% Unit VNDbn Selling expenses 19.3 54.4% Financial expenses 112.6-19.2% Financial income 17.7-97.2% Gross profit margin 26.9% Net profit margin 11.8% Business results 6M2015 Gemalink and Gemandept-Lotus are 2 ports in Ba Ria Vung Tau and the operations from these 2 ports are slowing down due to some problems relates to infrastructure so expansion in port operations will be implemented after one or two years. These are two important strategic ports of the most dynamic economic zone in the South of Vietnam includes HCMC, Mekong Delta and Ba Ria Vung Tau with large traffic of international ships. Logistics segment: this is the second important segment after port operations although gross profit margins of this segment is significantly less than port operations due to big costs for transportation and fuel. The logistic segment of GMD segment includes depot services and distribution centers, Tan Son Nhat air cargo terminal services SCSC, ocean shipping and inland transport... This year GMD has expanded its investment in the North by investing a Depot at Nam Hai Dinh Vu port an a logistics center in Hai Duong, area of 16,000m2 and is expected to operate in the end of 2015. In the second quarter 2015, GMD extended its logistic operations to the South by signing a cooperations agreement with Minh Phu Seafood Corporation (MPC) to invest a logistics centers in Hau Giang, total investment capital approximately VND670bn (GMD hold 51% project value), includes cold storage with capacity of 50,000 ballets and warehouse area of 15,000m². GMD revenue structure(vndbn) 3500 3000 Port operations Logistics and transport Office for lease 2500 2000 1500 1000 500 0 2010 2011 2012 2013 2014 6T2015 GMD ongoing goal is to become a leading company in port operator and logistic in VN so the expansion projects as well as M&A projects are boosting. This goal has been shown clearly by 2 Please read Disclaimer on the last page
the restructuring in GMD s operations structure: revenues of port operations in the first 6 months this year reached VND830bn, equivalent to 76% revenues of port operators in the whole year 2014. Although logistics segment revenue exceeded port operations revenue VND891bn, logistic segment revenue this year is almost unchanged from the same period last year. Although revenue of port operators and logistics, transport are almost the same, gross profit margin of these 2 segments are quite different: port operations 43.8% while logistic and transport only 11.1%. Gross profit margin in the first 6 months 2015 rose significantly due to the drop of maintenance and gasoline costs recently. Accordingly, both ports operations segment and logistics segment contributed 50% to total revenue in the first half 2015 but port operator contributed 79% while logistics contributed only 21% to total profit of GMD in the same period. Perhaps this is long-term strategy of GMD: save its resources to develop port operations segment. On the contrary, logistics segment is also a core business of GDM at the moment but this segment could be sold to foreign partners in the future and hold approximately 51%. Gross profit margin (%) Port operations 50.0% Logistics and transport 45.0% 43.8% 40.0% 35.0% 36.5% 30.0% 32.7% 32.8% 27.6% 25.0% 24.2% 20.0% 15.0% 12.5% 10.0% 9.1% 8.0% 8.7% 10.7% 11.1% 5.0% 0.0% 2010 2011 2012 2013 2014 6T2015 Forestry segment: GMD has just grown 2,000 ha of rubber on total area 30,000 ha in Cambodia. GMD is one among the few foreign companies which were approves to do business in Cambodia within 50 years and granted such a big land. However this segment did not bring high profit because the world rubber price continually dropped down and the competition in this sector became tough after GMD started investing in this sector. Therefore GMD will divest from this sector soon. Real estate segment: this is another non-core investment sector of GMD and contributes about 5% to its annual sales but has the highest gross profit margin up to 70%. In 2014 GMD sold 75% Gemandept Tower building and received VND570bn. If this year GMD can sell the rest 15% of this building, it can add about VND100bn to profit before tax in 2015. Gemandept Tower building brings about VND80-90bn per year to GMD revenue via offices for rent. However, GMD will not receive this income anymore but the last income VND100bn from selling Gemandept Tower buildings. At the moment GMD is investing an office building at No. 6 Le Thanh Ton Street and a lot of land in Saigon Gem Complex Building Project. This is an extremely high value land at the 3 Please read Disclaimer on the last page
corner Le Loi - Nam Ky Khoi Nghia which cooperates with Saigontourist by the land 4,000m2 as joint venture asset. This building will become hotel and offices for lease in the future but we have not known when this project will be built and exploited. GMD is trying to divest from projects in forestry and real estate sector so it may sell this land if any buyer can offer a reasonable price. As target for 2015, GMD expects to get VND3,200bn in revenue and VND330bn in profit before tax (excluding extraordinary profit from selling the rest 15% of Gemandept Tower). After the first 6 months 2015 GMD has completed about 70% target this year and as we predicted GMD earn VND420bn profit after tax. If we add the income from selling Gemadept Tower, GMD s profit could reach nearly VND500bn. EPS 2015 could reach about VND3,600/share, PE 2015 is around 9.5. For long-term prospects, GMD is gradually divesting from the rubber planting projects and real estate projects. The divestment from non-core businesses usually suffers losses. However the divestment can bring a big amount of money to GMD, particularly real estate projects at advantage location because their value will rose up many times after revaluation. Furthermore, GMD tends to withdraw their funds from logistics to concentrate on port operators segment due to its limited resources. Port operations industry will become a key sector in the future because Vietnam has better advantage in this sector than other countries in the same region thanks to our favorable location but this advantage is forgotten during many years. If Vietnam can join international trade agreement, this will will bring more advantages to develop port operations and the government hope this sector can bring huge income in the future as same as oil gas sector because oil gas industry is suffering risk from fluctuation of price and the increasing disputes can affect on new rig exploitation. GMD is one of the biggest companies with many years experience in port operators segment so GMD will take this advantage broaden its affect to key economic zones in the North, Middle and South. Investors are waiting for bonus shares ratio 2: 1 and cash dividend 20%. This will be the best dividends of this company because its annual dividend in previous years was only about 12%/year. GMD will need a fund more than VND200bn to pay dividends. After bonus shares and cash dividend, GMD market price will be around VND21,000/share if we suppose GMD s reference price is VND34,500/share (GMD s close price at Oct 2nd 2015). According to ratio Div/yield about 6% and bonus shares; GMD is a good stock for long term investment.. Annex: GMD financial indicators 2011 2012 2013 2014 6M/2015 Revenue (VNDbn) 2,382.0 2,580.5 2,525.1 3,012.6 1,722.6 Net profit (VND) 14.7 114.5 204.0 564.9 203.5 PE 599.87 36.08 20.36 7.48 16.49 P/BV 0.88 0.85 0.87 0.81 0.83 Outstanding shares (m shares) 109.45 109.45 114.42 116.14 116.14 Market cap (VNDbn) 3,743 3,743 3,913 3,972 3,972 EPS (VND) 57 948 1,680 4,572 2,074 4 Please read Disclaimer on the last page
Book Value (VND) 38,975 40,143 39,191 42,002 41,396 Cash /Current liabilities 1.01 1.08 0.99 1.41 1.04 Long-term borrowings / Total asset 0.1 0.11 0.17 0.18 0.17 ROE 0.15% 2.40% 4.33% 11.34% 4.95% ROA 0.09% 1.52% 2.66% 6.72% 2.92% Other companies in the same sector: Indicators GMD VSC DVP TMS CLL PDN DXP Market price 34,500 61,000 51,000 62,000 23,500 36,700 45,000 Current outstanding 116.14 41.42 40 23.77 34 12.35 7.87 shares (m shares) Market Cap(VNDbn) 4,007 2,526 2,040 1,473 799 453 354 Foreign Ownership 32.48 49 15.05 41 6.65 1.73 33.37 Diluted EPS (VND) 2,074 7,615 6,355 5,605 2,707 3,885 5,433 Book Value (VND) 41,396 31,612 21,734 34,305 15,114 25,239 28,973 EV (VNDbn) 4,887 2,207 2,129 1,522 790 594 310 EBITDA(VNDbn) 659.0 386.7 376.5 219.9 140.3 77.2 72.1 Diluted P/E 16.6 8.0 8.0 11.1 8.7 9.5 8.3 P/B 0.83 1.93 2.35 1.81 1.55 1.45 1.55 Cash / Current liabilities 1.04 1.18 0.2 1.34 2.39 0.39 1.4 Current asset/current 1.99 1.87 5.79 1.97 3.86 1.14 5.31 liabilities Long term 0.17 0.01 0.07 0.14 0.14 0.27 0 borrowing/total asset Borrowings/Total asset 0.21 0.01 0.1 0.2 0.18 0.32 0 Borrowings /Owner 0.38 0.01 0.13 0.28 0.24 0.56 0 equity Liabilities /Total asset 0.39 0.18 0.17 0.27 0.24 0.44 0.12 Công nợ/vốn CSH 0.69 0.22 0.21 0.37 0.31 0.77 0.14 Liabilities /Total asset 25.72% 38.08% 44.73% 23.94% 43.30% 34.89% 33.89% Net profit/ Revenue 8.64% 29.84% 41.70% 35.96% 28.96% 15.79% 25.43% ROE 4.95% 24.14% 30.40% 21.03% 17.36% 15.60% 18.04% ROA 2.92% 18.31% 25.28% 15.67% 13.06% 9.69% 16.28% Average trading vol (3M) 242,488 88,902 2,289 1,575 4,796 1,652 2,370 5 Please read Disclaimer on the last page
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