Strong throughput growth in Q1 2024: GMD posted strong 56% YoY growth in total throughput to 908,000 TEUs, driven by the recovery in export activities from a low base in Q1 2023, of which total throughput recorded a 26% YoY decline. Breakdown by region shows northern ports handling 277,000 TEUs (+14% YoY) and southern ports 631,000 TEUs (+85% YoY). GMD’s management also shared Gemalink’s (GML) robust throughput of 350,000 TEUs (+112% YoY) in Q1 2024, outperforming its peers in the southern region thanks to both higher throughput from existing clients as well as contributions from new services acquired in Q4 2023.

2024 Outlook – Optimistic first half, cautious second half: Management expressed confidence in the Q2 2024 and overall H1 2024 results, riding on currently strong momentum. However, they showed caution towards H2 2024 and even into 2025 due to global geopolitical risks and cautious inventory restocking in key export markets.

Implementation of the new cargo handling fees: In the south, GMD faces no major issues in applying the higher fee floor rates in accordance with Circular 39 (effective from Feb 15, 2024), which we attribute to the port’s strong competitive advantage in the Cai Mep Thi Vai area. In the north, GMD manages to apply higher handling fees on specific services and clients. However, in some cases, they have to also have to lower fees for other non-handling services, which we attribute to higher competition in this region compared to the south.

Ha Nam canal dredging project: 

Currently, Nam Dinh Vu can accommodate large vessels which cannot navigate through the existing narrow Ha Nam canal. The Ha Nam canal dredging project is expected to address this issue and leverage Nam Dinh Vu's larger capacity advantage over other ports in the Hai Phong region. Total capex for the project is VND90-100bn (USD3.6mn-4.0mn), which will be depreciated over the next 3-5 years. Management expects the project to finish dredging and start operating in mid-June 2024. 

GMD will fund the entire capex, while the Government will cover subsequent annual maintenance costs. However, GMD shared that it is hard to charge other port operators fees for using this canal, as it is considered a public asset. Nevertheless, GMD chooses to be the pioneer in this initiative to fully realize the potential of Nam Dinh Vu port. 

Our thoughts: GMD’s strong Q1 2024 throughput growth sets a positive start for the company this year and reaffirms our view for a strong YoY recovery of core earnings. However, management’s view remains more cautious than ours regarding the speed and magnitude of restocking activities as well as impacts of geopolitical risks, especially in H2 2024. GMD will release Q1 2024 business results by the end of April and host its AGM in late May 2024.

Powered by Froala Editor