GMD — Company Visit — June 2024

We attended GMD’s AGM on June 25. Management announced a cash dividend of VND 2,200 per share on 2023 earnings, equivalent to a 2.7% dividend yield. Based on its estimates for 1H24 results, GMD has achieved 53% of its full-year core profit target. Other topics of discussion included the company’s planned rights issuance to fund its planned projects for growth in the years ahead. We don’t cover GMD and have no investment view, but the trailing PE multiple of 9.9x is less than half of the regional peer median, which could draw interest from some investors — and the stock now offers 1.4% FOL room.

Key Highlights — 

2024 Guidance: GMD targets 2024E net revenue of VND4.0tn (+4% YoY) but guides for PBT to decrease by -46% YoY to VND1.7tn. Specifically, the PBT target from core operations is set at VND1.4tn (+15% YoY) with an additional expected divestment gain of VND336bn (-81.7% YoY).

GMD plans to increase its charter capital by +35% from 1Q24 through a rights issuance of 103.5mn shares VND29k per share in 2024. Of the implied VND3.0tn issuance, GMD plans to allocate VND 2.2tn to purchase fixed assets, VND 231bn to repay bank loans, and VND 558bn to increase its capital contribution to Nam Dinh Vu Port JSC (in which GMD holds a 60% stake). In addition, GMD is expanding Gemalink and Ha Nam Canal (see page 2 for details).

53% of core profit achieved in 1H24, based on GMD’s preliminary estimate of c. VND896bn (-64% YoY), which excludes proceeds from the divestment of Nam Hai Port in 1Q24.

1Q24 review. 1Q24 net revenue of VND 1tn (+11% YoY) fulfilled 25% of 2024 guidance; and PBT of VND708bn (+130% YoY) fulfilled 42% of the company’s full-year PBT target. The latter figure was boosted by VND336bn in gains from the divestment of Nam Hai Port.

1Q24 Gross margin was 43.9% (+2.7% QoQ / -3.4% YoY). Freight costs surged sharply in 1H24, including in June (+34% MoM / +300% YoY). Management expects that persistent challenges, including the Red Sea issues and other conflicts as well as equipment shortages, will drive continued cost increases through end-2024.

Logistics accounts for c.24% of GMD’s revenue as of 2023 (see Fig.1), so increased freight cost is a growth catalyst. GMD has no plans to divest from Nam Hai ICD and aims to optimize its capacity through partnerships with shipping lines. Additionally, GMD has proposed a new Mekong Delta-to-Cai Mep route to the MOT, which it expects to reduce time, boost load capacity, and slash logistics costs by up to 30%.

GMD’s 2024 CAPEX guidance is approximately VND10tn.

TTM PER of 9.9x: Cheap enough? We don’t cover GMD and have no recommendation but this valuation is less than half the regional peer median of 21.7x. This is interesting given that GMD’s TTM ROE of 29% is far higher than the regional peer median of 6.8%

Please access the link for our complete report: 20240626 GMD AGM 2024 EN final

Analyst:

An Nguyen, An.nguyen@yuanta.com.vn

Binh Truong, Binh.truong@yuanta.com.vn