Gemadept Corporation (Gemadept) announced on Wednesday its complete divestment from the Hoa Sen - Gemadept Logistics and International Port Corporation.

It finalised the sale of its 51 per cent stake in the company to an undisclosed South Korean buyer a day earlier, on Tuesday. The transaction’s value, also not disclosed, has been estimated at VND100 billion (US$4.4 million).

In 2008, Gemadapt and the Hoa Sen Group signed a deal to establish the company, aimed to develop a logistics and port project in Ba Ria - Vung Tau Province. Gemadept held 51 per cent of shares while the Hoa Sen Group held 45 per cent.

Gemadept is a Vietnamese company with interests in ports, logistics, forestry and real estate. The port it is divesting from is one of six ports that it operates.

The stated reason for Gemadept’s divestment is that the project is of small value offering little return on investment. The 55ha Hoa Sen - Gemadept International Port is located on a 300m long coast line, and has neither high productivity nor high revenues.

After divesting from the project, Gemadept plans to channel investment into the Gemalink deep water port in the Cai Mep – Thi Vai area. Work on this port, which has a total area of 72ha, a 1,150m main berth and 370m feeder berth, has been suspended for many years, citing the global economic downturn.

The capital from divesting in the project will be used on logistics and transportation, the company said.

Answering shareholders’ questions at the annual 2017 General Meeting of the Board back in May on revenues from the divestment, Gemadept had said that they had already signed an agreement with the undisclosed Korean partner to sell its shares.

It said the Korean buyer plans to turn it into a port for carriers transporting liquefied petroleum gas (cooking gas).

In May this year, the Taekwang Group, a large South Korean chaebol producing clothing, apparel, chemical, industry, and financial services products, had expressed interest in purchasing Gemadept’s shares in the project.

Gemadept also said the divestment is part of their business restructuring plans. It said they would divest from other projects and pick other strategic shareholders to continue growing out in the logistics industry.

The value of 45 per cent shares in the project owned by the Hoa Sen Group, the other project investor, has dropped from VND25 billion ($1.1 million) last year to about VND18.3 billion ($815,144) as of July 2017.

Gemadept listed on the Ho Chi Minh City Stock Exchange (HOSE) in 2002 with stock code GMD, which has a total of 675,390 shares currently trading at VND41,300 ($1.83) per share with a preferential price of VND40,950 ($1.82 ).

For the second quarter of 2017, Gemadept recorded around VND1 trillion in net income ($44.5 million), up 9 per cent year on year, though its post-tax income was down 9 per cent to VND123 billion ($5.4 million).

The Hoa Sen Group’s port project was set up in 2006 with an initial charter capital of VND39 billion ($1.7 million). The port stands next to the Tan Cang-Cai Mep International Terminal in Ba Ria – Vung Tau Province. — VNS