Company Quarterly Earnings Update – VSC VN – 2018 Q3

Summary of the 9M 2018 results of Vietnam Container Ship. (VSC VN) 

9M/2018 results: highlights
  • Net revenue grew by 29.8% yoy to VND 1,244bn in 9M/2018 thanks to the strong performance of VSC’s port operations (+31% yoy) and its container yard services (C/Y) (+51% yoy). Total volume via the company’s two ports was 792,000 TEUs, up by 35% yoy. Both ports reported solid growth.
  • VSC’s gross margin declined to 30.6% in 9M/2018 from 31.6% during the same period of last year, mainly due to changes in the revenue mix. Net financial expenses dropped significantly. All in all, net profit rose by 29.4% yoy to VND 223bn in 9M/2018.
  • The 9M/2018’s results were a bit better than our expectations, mostly thanks to stronger throughput volume via both ports, especially via the Green Port (the old port).
  • During the first nine months of 2018, total cargo volume via ports in Hai Phong continued to grow strongly by 19.1% yoy, reaching 78.9 million tons. Such strong growth is likely to continue thanks to the expectation of strong FDI inflows as Vietnam is one of the most attractive destinations to replace China as the global workbench. Instead, China is moving up the value chain, not least due to the current trade tensions with the US.
  • The Vietnamese authority is considering to lift the floor tariff for the port’s container stevedore services by 10% from next year, supporting the profitability of port operators.
  • VSC’s net profit should grow by 23.6% yoy in 2018, and is expected to increase by another 3.5% yoy in 2019. The bottom line may be lifted by another 11% next year if the new regulation on the floor tariffs will be approved.

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