- GMD released Q2 2021 results, in which revenue was up 24% YoY to VND752bn (USD32mn) and NPAT-MI increased 38% YoY to VND142bn (USD6.1mn).
- GMD’s Q2 2021 revenue growth was mainly attributed to the port segment, which advanced 29% YoY from a relatively low base in Q2 2020. Meanwhile, GMD’s bottom-line growth was further driven by net income from affiliates, which was partially offset by a surge in other losses.
- We believe the upbeat results of GMD’s port segment were mainly driven by its ports in Hai Phong, while the main contributor to GMD’s income from affiliates — Saigon Cargo Service (HOSE: SCS) — posted a strong recovery in Q2 2021 from a low base in Q1 2020. In addition, the Gemalink deep sea port posted a marginal loss in the quarter as it was ramping up its utilization.
- In H1 2021, GMD’s revenue was up 19% YoY to VND1.4tn (USD62mn) while its NPAT-MI climbed 33% YoY to VND289bn (USD12mn), which were mainly driven by port revenue growth and further supported by lower net financial expenses and increased net income from affiliates.
- GMD’s H1 2021 revenue and NPAT-MI completed 50% and 59% of our 2021F full-year forecasts, respectively. Additionally, Gemalink’s results have improved significantly thanks to its upbeat vessel call schedule that is beyond our current expectation. We therefore see potential upside risk to our full-year 2021F forecasts for GMD, pending a fuller review.

We believe port revenue was mainly driven by GMD’s ports in Hai Phong — although the company has not provided a revenue breakdown for its ports. At GMD’s recent AGM, management stated that the effective centralized management for the company’s ports in Hai Phong — in addition to the Lach Huyen deep sea port (HICT) facing difficulties in maintaining berth draft — has improved the business performance of GMD’s ports in Hai Phong. 

Gemalink incurred marginal losses in Q2 2021. We estimate that Gemalink incurred marginal losses of VND3.6bn (USD155,000) in Q2 2021 vs VND54bn (USD2.3mn) in Q1 2021. At the AGM, management stated that it expects the port to achieve a volume of 950,000-1.1 million TEUs in 2021F. Per management, if Gemalink’s volume is ~900,000 TEUs in 2021, then the port is expected to achieve revenue of USD40mn and profit of USD1.7mn-1.8mn in its first year of operation vs our current forecasts that it will incur a loss of VND5bn (USD215,000) for full-year 2021F. 

Declining interest expenses partially drove GMD’s bottom line. In H1 2021, GMD posted a 24% YoY decrease in interest expenses to VND59bn (USD2.5mn; 81% of its financial expenses in the period) as its end-Q2 2021 gross debt balance declined 11% vs the end-Q2 2020 balance. We believe GMD paid its debt that financed the developments of its ports while not raising a material amount of debt over 2020-H1 2021 as there was no significant capex.

Net other losses surged in Q2 2021, which we mainly attribute to the natural rubber segment. In Q2 2021, GMD incurred net other losses of VND44bn (USD1.9mn) vs net other gains of VND1bn (USD43,000) in Q2 2020. Per GMD, these losses were mainly uncapitalized expenses, which we believe were mainly from GMD’s natural rubber plantations in Cambodia. In H1 2021, net other losses were VND30bn (USD1.3mn) vs net other gains of VND4bn (USD172,000). We note that GMD also recorded other losses from inefficient investment expenses in H1 2020; however, the other losses were offset by other gains of VND60bn (USD2.6mn) that were derived from a reversal of a payable provision. According to GMD, the provision was made a decade ago for compensation for cargo transportation losses. As GMD was not required to make any payments related to the compensation, the company therefore reversed the provision in H1 2020.