Logistics firm Gemadept Corporation (Gemadept) estimates its full-year pre-tax profit will jump 227 per cent to VND2.13 trillion (US$94.7 million) in 2018.— Photo cafef.vn

Logistics firm Gemadept Corporation (Gemadept) estimates its full-year pre-tax profit will jump 227 per cent to VND2.13 trillion (US$94.7 million) in 2018.

The expected soar in profit growth is attributed to the firm selling its stakes in three subsidiaries, and an affiliate, which is forecast to produce returns of up to VND1.56 trillion.

Excluding asset sales, Gemadept predicts its pre-tax profit may increase by a more modest 6 per cent year on year to VND570 billion.

According to general director Do Van Minh, the company’s full-year revenue is estimated at VND2.4 trillion, down 40 per cent from 2017.

Of the total figure, revenue from seaport operations accounted for 91 per cent, a rise of 19 per cent year on year, while income from the logistics side of the business fell 90 per cent year on year.

In the first quarter of 2018, Gemadept posted a one-fifth decrease in its revenue from core business activities, which reached VND689 billion, but its pre-tax profit rose to VND1.5 trillion thanks to the successful sale of its stakes in two subsidiaries.

During the first quarter, the company sold a 51 per cent of its ownership in CJ-Gemadept Logistics Holdings Co Ltd, which was formerly known as Gemadept Logistics Co Ltd before the deal; and a 49 per cent stake in CJ-Gemadept Shipping Holdings Co Ltd, which was previously named Gemadept Shipping Co Ltd, for VND1.35 trillion.

The stake sales also helped the company accomplish 71 per cent of its full-year pre-tax target and 29 per cent of the full-year revenue target. Without the sales, it has fulfilled just 23 per cent of the full-year pre-tax estimate.

Despite higher-than-expected full-year earnings, Gemadept shares (HoSE: GMD) have been on a downtrend since early March. They finished Friday at VND27,900 per share, having lost 22 per cent in value since March 2.

According to Viet Dragon Securities Co (VDSC), the establishment of Nam Dinh Vu Seaport’s first component in the northern city of Hai Phong is expected to make a big contribution to the firm’s logistics and shipping revenues this year.

However, as the company is still operating at Lach Huyen Seaport, which is built in another site of Hai Phong City, the competition between the two seaports may result in a struggle for the firm’s business structure this year, VDSC said in a note this week.

Nam Dinh Vu’s first compartment began operations in February 2018 and was officially launched on May 7, 2018. It has an annual capacity of 600,000 twenty-foot equivalent units (teu). The Nam Dinh Vu Seaport has total area of 65 hectares and is able to receive ships of up to 40,000 deadweight tonnage (DWT).

Gemadept is strengthening its port operation by constructing the second component of the Nam Dinh Vu Seaport in the third quarter of the year. This plan is seen as a suitable strategy to ensure the company can receive more ships from upstream seaports, especially Lach Huyen, given that shipping firms in said ports have yet to clarify their short-term business plans.

Hai Phong plans to keep the city’s import-export growth at an annual rate of 15 per cent in the next few years thanks to increasing demand from the foreign direct investment (FDI) sector. It may benefit shipping companies to transport containers to downstream ports more often, VDSC said.

Gemadept will benefit from the flow of containers to downstream ports, as the Nam Dinh Vu Seaport is more capable of handling a large amount of containers, the brokerage firm reported. — VNS