We attended GMD’s AGM in HCMC on June 25. Our key takeaways are as follows. 

Conservative 2024G guidance: 

• The AGM approved GMD’s 2024G guidance for revenue of VND4.0tn (USD156.9mn; +4% YoY; 94% of our 2024F revenue forecast) and PBT of VND1,686bn (USD66.1mn; -46% YoY; 83% of our 2024F PBT forecast) – in line with its AGM document released earlier this month. 

• We note that both GMD’s guidance and our forecasts include the abnormal gains from the Nam Hai Dinh Vu port divestment in Q2 2023 (VND1.8tn/USD72.2mn) and the Nam Hai port divestment in Q1 2024 (VND336bn/USD13.2mn). Excluding these gains, GMD’s guidance for 2024 core PBT is VND1.35tn (USD52.9mn; +4% YoY vs 2023 core PBT; 80% of our 2024F forecast). 

• We believe GMD’s 2024 guidance is conservative. During the Analyst Meeting in April 2024, management expressed confidence in the outlook for Q2 2024 and overall H1 2024 results, following strong throughput recovery in Q1 2024. However, management was cautious about the outlook for H2 2024 and going into 2025 due to global geopolitical risks and cautious inventory restocking in key export markets. This conservative outlook was reiterated at the AGM. 

GMD’s actual and guidance for consolidated core PBT 

Source: GMD, Vietcap. Note: * excluding divestments; ** average of two proposed scenarios. 

2024 rights issuance plan approved: 

• The AGM approved GMD’s proposal for a rights issuance plan of 103.5 million shares to existing shareholders (3:1 issuance ratio; exercise price of VND29,000/share vs June 25’s closing price of VND83,000/share). 

• The expected VND3.0tn (USD120mn) of proceeds will be used to buy fixed assets, repay bank debts, and contribute capital to the Nam Dinh Vu port (NDV) in Hai Phong.  

• In 2022, GMD announced a potential rights issuance plan (90:30 ratio; exercise price of VND20,000/share) but it was suspended at the 2023 AGM due to market conditions and the company’s business plan/capital needs. 

FY2023 cash dividend of VND2,200/share:  

• The AGM approved GMD’s proposal for FY2023 cash dividend of VND2,200/share equivalent to a 2.7% dividend yield, slightly higher than our assumption of VND2,000/share (2.4% dividend yield). 

Ha Nam dredging project: 

• In the AGM, management stated that the project would finish dredging and start operating in early July (in line with the initial plan of mid-June). 

• Once finished, the project will allow NDV to accommodate ships that are 15-20% larger in size, and it is expected to add 300,000 TEUs per year to the port’s capacity.  

• Further information can be found in our latest Analyst Meeting note. 

Implementation of the new cargo handling fees: 

• In the south, GMD manages to apply fees higher than the new higher floor rates set by Circular 39 (effective from Feb 15, 2024), attributed to Gemalink’s (GML) strong competitive advantage in the Cai Mep Thi Vai area. 

• In the north, due to stiff competition and a lower competitive advantage compared to the south, GMD has not benefitted much from higher handling fees. Specifically, the company manages to apply higher handling fees in accordance with Circular 39, but they have to offer more services to clients to offset the higher prices (i.e., higher prices are offset by higher expenses). 

Singaporean port congestion to benefit GMD: 

• In the south, some ad-hoc shipments (e.g., urgent shipments requiring on-time delivery) had to use GMD's port to avoid congestion in Singapore. Management stated that they received 10 ships due to this congestion, which made a significant throughput contribution (although they did not specify how much). 

• In the north, GMD has added a new service line, serving as a transshipment hub from Hai Phong to China, in addition to Hai Phong to Singapore. 

• Management expects that if the situation persists, shippers will consider moving from the Singaporean port to nearby ports, including Ba Ria – Vung Tau. This should benefit GMD in the medium to long term by attracting new clients. 

Development of major upcoming projects is on track and in line with our expectations. We provide a summary of GMD’s major upcoming projects below. 

Source: GMD, Vietcap. We apply a USD/VND rate of 25,500. 

* We currently have a MARKET PERFORM rating for GMD with a target price of VND81,000/share.