Seaport companies less affected amid pandemic

Dinh Vu Port in the northern province of Hai Phong. Dinh Vu Investment and Development JSC (DVP) reported net revenue of more than VND237 billion (US$10.2 million) in the first half of this year, down nearly 18 per cent, but post-tax profit reached more than VND139.4 billion, similar to the previous year (Photo dinhvuport.com.vn)

According to Sacombank Securities Joint Stock Company (SBS), due to the pandemic, port throughput has decreased in growth momentum compared to previous years as exports to Europe and the US fell sharply. Key products such as apparel and leather shoes witnessed orders fall more than 50 per cent.

However, in general, seaports were still among the least affected industries amid COVID-19, SBS said.

According to the Vietnam Maritime Administration, in the first eight months of this year, the total output of goods through Vietnam's seaports was estimated at nearly 485.3 million tonnes, the volume of container cargo reached more than 13.9 million Teus, up 6 per cent and 8 per cent respectively over the same period in 2019.

SBS said that the EU-Vietnam Free Trade Agreement (EVFTA) taking effect would boost the development of the seaport and logistics industries in the long term.

The EVFTA would help Vietnam's exports increase by an average of 4-6 per cent per year within 10 years from the date of the entry into force of the agreement.

Dinh Vu Port Investment and Development JSC (DVP) reported net revenue of more than VND237 billion (US$10.2 million) in the first half of this year, down nearly 18 per cent, but post-tax profit reached more than VND139.4 billion, similar to the previous year.

Meanwhile, Tan Cang Logistic JSC (TCL) recorded revenue of over VND512.1 billion, post-tax profit reached more than VND42.1 billion, up 14 per cent and 5.5 per cent respectively compared to the first six months of 2019.

Danang Port Joint Stock Company (CDN) recorded revenue of over VND439.6 billion and after-tax profit of more than VND113 billion, up 17.5 per cent and 26.6 per cent respectively compared to 2019.

Other seaport enterprises such as Hai Phong Port JSC (PHP), Saigon Port JSC (SGP), Hai An Transport and Handling JSC (HAH), Southern Logistics JSC (STG) and Transimex Transportation JSC (TMS) also recorded positive business results in the first half of the year, SBS said.

SBS forecasts that the performance of this group of businesses will decline slightly in the second half of this year, especially for those businesses in the northern region due to increased competitive pressure.

The seaport industry had not been directly affected but would surely be impacted indirectly when the global economy enters a major recession, SBS said.

The appearance of a series of new ports on a large scale led to an oversupply, which would make competition stiffer, especially in key areas such as Hai Phong port cluster and Cai Mep-Thi Vai port cluster.

In Hai Phong, two new ports have come into operation including MIPEC port and Vinalines Dinh Vu port.

This means the revenue and profitability of businesses operating in these areas will continue to decline.

However, in general, seaport operators, cargo transportation and warehousing companies were less dependent on loans compared to other industries so they did not have to suffer as much pressure, said SBS.

This was a huge advantage compared to other industries in the current pandemic which is forecasted to last for a long time, SBS said.

In seaport industries, the listed enterprise with the largest debt to asset ratio is Transimex JSC (TMS) with only 25.2 per cent.

That ratio of Hai Phong Port JSC (PHP), Tan Cang Logistics JSC (TCL), Saigon Port JSC (SGP) are all lower than 15 per cent. Dinh Vu Port Investment and Development JSC (DVP) even reported no debt.

The large amount of cash can help these businesses quickly restore operations when the pandemic is controlled.

According to SBS, with less negative impact from disease, seaport stock prices remain more stable than the general market.

The plunge of the local stock market after the Tet holiday also affected this group but still much less than the decline of the VN-Index, SBS said.

Some stocks even recorded growth such as Vietnam Container Shipping Joint Stock Corporation (VSC), up nearly 26 per cent since the beginning of this year. Tan Cang Logistics JSC (TCL) rose by more than 37.2 per cent, Port of Hai Phong JSC (PHP) increased by over 13.8 per cent, Danang Port Joint Stock Company (CDN) grew by more than 18.1 per cent and Hanoi Construction Corporation – JSC (HAN) climbed by more than 8.4 per cent.

SBS said the current difficulties that the seaport industry was confronting were only temporary. Along with the forecast that countries will soon produce a COVID-19 vaccine next year, the industry's recovery is likely to begin in the second half of 2021, SBS said.