Summary of the 2020 H1 results of Vietnam Container Ship. (VSC VN)
H1/2020 results highlights:
- VSC’s net revenue declined by 10.7% y/y to VND801bn in H1/2020 due to lower volume via its ports caused by weak import/export activities and global ocean freight disruption in Q2. The volume throughput via VSC’s ports was dropped by 14.6% y/y to 508,300 TEUs in H1/2020. Though there was no major change in the number of ships visiting VSC’s ports, the decline in the average load of each ship affected the company’s volume in H1/2020.
- The operating profit decreased by 6.3% y/y to VND150bn, the decline rate was less than the drop in net revenue thanks to the improvement in gross margin. Net profit climbed by 35.6% y/y to VND113.2bn thanks to less financial expense supported by an increase in cash position. Also, there was not any one-off expenses and extraordinary income tax expense compared with the same period last year.
- Cash and cash equivalent amounted to VND447bn, which is equivalent to 18% of total assets or VND8,100/share. VSC’s financial leverage was minimal with D/E of 0.01x.
- The global sea logistics situation has been improving gradually as many countries have started to relax the restriction and businesses have been resumed. The utilization of ocean freight has improved significantly from Q3/2020 for routes linked to the U.S., Europe, China which are major trading partners of Vietnam. However, we expect a moderate recovery of port volume via Hai Phong city as the impacts of the COVID-19 on the global economy will still weaken import/export activities.
- As the COVID-19 outbreak last longer than our previous thought, we slightly reduce our forecasted volume for VSC in H2/2020. Still, we expect VSC’s bottom line to grow
7.4% y/y to VND251bn in 2020. In 2021, we expect net profit to grow by 13.9% y/y to VND286bn thanks to the recovery in port volume and the improvement in profitability.
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