Vinalines' designs to maintain controlling stake in three strategic seaports

Having controlling rights over Vietnam's major seaports would help balance Vinalines' business operations

Recently, Vinalines has proposed the Ministry of Transport (MoT) to authorise it to spend VND247.5 billion ($10.9 million) on buying 2.475 million of the 33 million additional shares Danang Port JSC put on sale to increase its chartered capital.

This is the second time within one month that Vinalines has submitted the proposal to MoT, aiming to maintain its holding of 75 per cent stake in Danang Port after this company increased the chartered capital to VND990 billion ($43.79 million) from VND660 billion ($29.19 million).

The two remaining ports where Vinalines wants to hold at least 65 per cent of the chartered capital in the period from now to 2020 are Haiphong Port with the chartered capital of VND3.27 trillion ($144.6 million) and Saigon Port with the chartered capital of VND2.16 trillion ($95.5 million).

According to Le Anh Son, chairman of Vinalines, holding at least 65 per cent of the chartered capital in Vietnam’s key ports will ensure that Vinalines holds the controlling rights in these ports and contribute to balancing Vinalines’ business operations.

Earlier, in late 2015, Vinalines equitised its 11 member companies. As of early 2017, Vinalines also divested the entire state ownership in Quy Nhon Port JSC and Quang Ninh Port JSC.

In Nha Trang Port JSC alone, after completing the equitisation in 2014, Vinalines sold a 34.7 per cent state-owned stake to investors and transferred the remaining state-ownership to the Khanh Hoa People’s Committee.

According to an industry insider, these ports are rare cases where Vinalines gives up the controlling rights.

Vinalines currently keeps large holdings in numerous port companies, including Khuyen Luong Port JSC (49 per cent), Nghe Tinh Port JSC (51 per cent), and Can Tho Port JSC (51 per cent).

In the past 3-4 years profit from port business has helped Vinalines to balance its finances after suffering losses from its ocean shipping operations.

Notably, in the first six months of this year, although Vinalines' seaports saw a decrease of 10.6 per cent in revenue and 23.7 per cent in profit, they earned VND307 billion ($13.58 million) in profit, partially offsetting its massive loss of VND904 billion ($39.98 million) from ocean shipping operations. Vinalines has decreased its holdings in its ocean shipping companies due to the massive losses.

According to Vinalines’ acting CEO Nguyen Canh Tinh, although the corporation’s ocean shipping companies cut expenses, they are still running massive losses. Notably, in the first six months, the total revenue of Vinalines' ocean shipping companies increased by 10 per cent on-year, but they are still operating in massive losses due to a plunge in fares.

Accordingly, in the upcoming time, Vinalines will decrease its holdings in Vietnam Ocean Shipping JSC (Vosco) to 49 per cent and to 36 per cent in Vinaship JSC. Both Vosco and Vinaship are large-scale ocean shipping companies.

Besides, Vinalines will decrease its holdings in Vitranschart and Dong Do Marine to less than 36 per cent while simultaneously divest its entire holding in Northern Shipping JSC and Seagull Shipping Company.

Along with decreasing its holdings in ocean shipping companies, Vinalines will maintain ownership in marine logistics companies with the target of becoming Vietnam’s leading marine logistics enterprise and joining the global supply chain.

Notably, Vinalines asked MoT to permit it to keep its holdings in key marine logistics companies that play an important role in the development of the company’s logistics services chain in the 2016-2020 period, with the vision to 2030. These companies include Vinalines Logistics JSC (56.72 per cent owned by Vinalines), Vosa Corporation (51.05 per cent), and Vietnam Maritime Development JSC (51 per cent).

In first half of this year, Vinalines’ maritime logistics companies earned VND838 billion ($37.06 million) in profit.

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