GMD – Q4 core profit disappoints; Gemalink makes profit for FY2023

GMD released Q4 2023 results with revenue of VND1.0tn (USD42.2mn; +4% QoQ & -3% YoY) and NPAT-MI of VND115bn (USD4.7mn; -55% QoQ & -39% YoY based on core performance).
Full-year 2023 profit before tax (PBT) was broadly in-line with our forecast at VND3.1tn (USD128.3mn); however, higher-than-expected tax expenses and minority interests resulted in full-year 2023 NPAT-MI of VND2.2tn (USD90.7mn), trailing our forecast.
We note that GMD recorded a financial gain of VND1.8tn (USD78.1mn) from the Nam Hai Dinh Vu (NHDV) port divestment in Q2 2023. Excluding the NHDV port divestment, we estimate GMD’s full-year 2023 core NPAT-MI of VND782bn (USD31.9mn; -21% YoY).
While GMD’s full-year 2023 operating profit was weaker than our expectation (fulfilling 82% of our full-year forecast), net income from affiliates delivered a positive surprise mainly due to Gemalink’s result beating expectation. This was further supported by lower-than-expected net other losses.
We anticipate a downside risk to our forecast for GMD’s consolidated port business (derived from GMD’s northern ports), which is partially offset by upside potential for Gemalink. Therefore, we anticipate downside risk to our forecast for GMD as stated in our latest Update Report, dated November 20, 2023, pending a more extensive review.
Segment performance:
1. Northern ports: GMD’s consolidated port revenue (derived from GMD’s northern ports) grew 6% QoQ and 5% YoY. Nevertheless, this improvement is weaker than our expectation, as full-year 2023 consolidated port revenue (-5% YoY) only fulfilled 92% of our full-year forecast. Moreover, this segment’s Q4 2023 gross margin contracted to the lowest level in 2023 of 40.0% from 46.6% last quarter.
2. Gemalink: Gemalink reported a Q4 2023 net profit of VND111bn (USD4.5mn) after four consecutive quarters of losses. This strong earning helps Gemalink to record a net profit for the full year 2023 of VND26bn (USD1.1mn; -78% YoY) which beat our full-year forecast of VND17bn (USD0.7mn) of net loss.
3. Logistics: The logistics segment Q4 2023 result came in-line with our forecast with gross profit falling 26% QoQ and 48% YoY, mainly due to gross margin normalization.

GMD’s 2023 results

VND bn	Q4 2022	Q3 2023	Q4 2023	QoQ	YoY	2022	2023	YoY	2023F	2023 as % of 2023F
Total revenue	1,066	998	1,034	4%	-3%	3,898	3,846	-1%	4,068	95%
Ports	788	780	825	6%	5%	3,086	2,942	-5%	3,183	92%
Logistics & others	278	218	209	-4%	-25%	812	903	11%	885	102%
Gross profit	454	465	426	-8%	-6%	1,718	1,776	3%	1,942	91%
Ports	270	363	330	-9%	22%	1,220	1,298	6%	1,464	89%
Logistics & others	185	131	96	-26%	-48%	425	478	13%	478	100%
SG&A expenses	-190	-102	-276	171%	45%	-667	-660	-1%	-589	112%
Operating profit	264	363	150	-59%	-43%	1,051	1,116	6%	1,354	82%
Financial income	8	33	24	-26%	193%	24	1,941	8006%	1,888	103%
Financial expenses	-27	-51	-25	-51%	-6%	-166	-169	2%	-163	104%
Net income from affiliates	70	52	139	167%	98%	399	272	-32%	245	111%
Net other (losses)/gain	-65	1	-35	N.M.	-46%	0	-16	N.M.	-41	39%
PBT	251	398	253	-36%	1%	1,308	3,144	140%	3,282	96%
NPAT	216	338	192	-43%	-11%	1,161	2,502	115%	2,797	89%
MI	27	84	77	-9%	186%	167	280	68%	202	139%
NPAT-MI	189	254	115	-55%	-39%	994	2,222	124%	2,595	86%
Core NPAT-MI*	189	254	115	-55%	-39%	994	782	-21%	1,120	70%
Gross margin	42.6%	46.6%	41.2%			44.1%	46.2%		47.7%
Ports	34.2%	46.5%	40.0%			39.5%	44.1%		46.0%
Logistics	66.5%	59.8%	45.9%			52.3%	52.9%		54.0%
Operating margin	24.8%	36.4%	14.5%			27.0%	29.0%		33.3%
NPAT-MI margin	17.7%	25.5%	11.1%			25.5%	57.8%		63.8%

Source: GMD, Vietcap forecast (last updated November 20, 2023; *excluding impact from divestments)