Company Quarterly Earnings Update – VSC VN – 2018 Q4

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

2018 results: highlights
  • The company’s net revenue increased by 30.1% yoy to VND 1,694bn, thanks to the strong performance of its port operations and its container yard service business (C/Y). Both segments were supported by the solid growth of container throughput via the Green Port and via the VIP Green Port.
  • VSC’s gross margin declined to 29.3% from 31.3% of the previous year, mostly due to the change of its revenue structure: The C/Y business achieved the highest growth, but had the lowest gross margin. Net financial expenses fell significantly as a result of the lower outstanding loan amount. All in all, net profit grew by 26.6% yoy to VND 300bn. The 2018 financial results were in line with our expectations.
  • By the end 2018, cash and cash equivalent amounted to VND 283bn, accounting for 11% of total assets. The financial leverage was reduced significantly during the year and fell to a low level with a D/E ratio of 0.15x by the end 2018. Total debts declined sharply to VND 287bn by the end 2018 from VND 520bn at the end of the previous year.
Outlook
  • Total cargo volume via ports in Hai Phong continued to grow strongly by 18.4% yoy in 2018. Such strong growth is likely to continue thanks to expected strong FDI inflows as Vietnam is one of the most attractive destinations to replace China as the global workbench.
  • Port utilization rates in Hai Phong are highly dependable on locations. The VIP Green Port is likely to continue to achieve high utilization in the future, while the Green Port might become less attractive. Therefore, VSC will gradually replace the port operation business at the Green Port in favor of an expansion of the CFS business.
  • The new approved regulation on port tariffs should support port operators’ profitability in 2019. Accordingly, we raise our forecast for VSC’s bottom line of 2019 and 2020 by 17.0% compared to our previous projections. As a result, the company’s net profit should grow by17.9% yoy in 2019 and by 0.2% yoy in 2020.
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Featured image credit: viconship.com