Company Quarterly Earnings Update – VSC VN – 2020 Q1

Summary of the 2020 Q1 results of Vietnam Container Ship. (VSC VN)

Q1/2020 results highlights:
  • VSC’s net revenue declined slightly by 3.5% y/y to VND408bn in Q1/2020 as a result of lower port volume. Port operation accounted for about 70% of VSC’s total sales and its volume reached to 261K TEUs in Q1/2020, down 7.8% y/y. Other business of VSC, which made up the remaining 30% of total sales, reported a slight growth with a single-digit number in Q1/2020.
  • Net profit surged by 41.8% y/y to VND57.2bn in Q1/2020 thanks to (i) improvement in the gross margin; (ii) less financial expense; (iii) and no one-off expense as it was in the same period last year.
  • VSC had a total of VND308bn in cash and cash equivalent, equivalent to 12.9% of total assets. The company’s financial leverage was minimal with D/E of 0.01x.
  • VSC reported some positive growth in the volume via its ports in early April 2020 thanks to the recovery of trade between Vietnam and China. However, the momentum has become weaker towards the end of April. VSC’s port volume should see a further decline in Q2/2020 due to the weakening the import/export activities between Vietnam and the US, Europe markets.
  • We expect VSC’s port volume to drop by 16% y/y in Q2/2020 and to decline by 3% y/y in Q3/2020 before back to a normal level with 0% growth in Q4/2020. As a result, VSC’s total throughput volume should decrease by 6.8% y/y to 1,094K TEUs in 2020. However, as the same reasons stated in Q1/2020’s results, net profit is projected to grow by 12.8% y/y to VND264bn in 2020.
  • As for 2021, VSC’s port volume should rebound by 5.2% y/y to 1,150K TEUs, thus net profit is projected to increase by 8.8% y/y to VND 287bn.

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