August 22, 2023

[Vietnam] Logistics

Gemadept Corporation Hold

(GMD VN) (Maintain)

Divestment boosts profits TP: VND53,000

Upside: -2.2%

Mirae Asset Securities (Vietnam) JSC.

Chau Bui chau.bn@miraeasset.com.vn

Business update Jump in profits from Nam Hai Dinh Vu port (NHDV) divestment: In 2Q23, pressured by weak
export-import activities, Gemadept Corporation (GMD) recorded a 6.73% YoY drop in revenue,
reaching VND912.2bn. However, gross margin increased slightly, with gross profits nearly unchanged,
at VND430.7bn. The divestment of NHDV brought a financial profit of VND1,844bn. Profits from
financial activities soared to VND1,863.5bn in 2Q23 (vs. VND3.9bn in 2Q22). As a result, 2Q23 operating
profits and NPAT jumped dramatically, reaching respectively VND2,166.5bn (2Q22: VND364.1bn) and
VND1,711.5bn (2Q23: VND334.2bn). In 1H23, GMD recorded revenue of VND1,814.1bn (-2.3% YoY)
and NPAT of VND1,966.3bn (+200.7% YoY). Notably, gross margin from both seaport (45.3%) and
logistics businesses (52.8%) improved (1H22: 41.7% and 45.6%, respectively).
Associates saw mixed results: In 1H23, two of GMD’s main associates saw profits decline. 1H23
profits from SCSC Cargo Service Corporation (SCS VN) reached VND80.3bn (-26.5% YoY). GMD
recorded a loss of VND49.4bn from the Gemalink port (1H22: profit of VND69.3bn). By contrast,
logistics associates like CJ Gemadept Logistics Holdings (VND25.5bn; flat YoY) and “K” Line-Gemadept
(VND6.8bn; +33.3% YoY) maintained solid results.
Clearance volume fell: With weakened export-import activities, total volume passing through GMD’s
systems in 1H23 fell significantly to 1.33mn TEU (-16.8% YoY), of which Northern area volume
accounted for 515,000 TEU (-7.9% YoY) and Southern volume 815,000 TEU (-22.6% YoY).
Nam Dinh Vu Phase 2 (NDV2): In May 2023, NDV2 has been officially operated, which adds nearly
700,000 TEU into GMD container capacity. GMD aims to start NDV Phase 3 which is expected to be
completed in 2025.

2023 forecast Maintain 2023F revenue; increase 2023F NPAT: We expect export-import activities should improve
in 2H23, amid continued growth in key Vietnam export markets and signs of recovery in consumer
confidence. Thus, we maintain our 2023 revenue forecast of VND3,784.9bn (-3.3% YoY). Despite
significant profits from NHDV, as well as improvements in gross margin, profits from associates may
drop to VND279.5bn (-26.8% YoY; previous forecast VND611.7bn). We increased our 2023 NPAT
forecast to VND2,719.9bn (+135.1%; from previous VND2,389.4bn).

Recommendation Maintain VND53,000 TP and Hold rating: We used the discounted free cashflow for the firm (FCFF)
method to value GMD stock, with the following key assumptions: 1) A required rate of return of 14%;
2) a long-term growth rate of 5% from 2033; and 3) on-time completion of GMD’s key projects. Thus,
we maintain our VND53,000 target price and Hold rating for GMD.

Key data
(%) VN-Index GMD VN Share price (08/21/23, VND) 54,200 Market cap (VNDbn) 16,305
130
OP (23F, VNDbn) 3,113 Shares outstanding (mn) 301
110
Consensus OP (23F, VNDbn) 1,477 Free float (%) 96.0
90
EPS growth (23F, %) 155.6 Foreign ownership (%) 47.2
70
P/E (23F, x) 6.7 Beta (12M) 0.8
50
Market P/E (x) 16.2 52-week low (VND) 36,400
30
Aug 22 ct 22 Dec 22 Feb 23 Apr 23 Jun 23 Aug 23 VN-Index 1,178 52-week high (VND) 60,400

Share performance Earnings and valuation metrics

(%) 1M 6M 12M FY () FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Absolute -5.9 3.6 5.3 Revenue (VNDbn) 2,606 3,206 3,916 3,785 4,130 4,235
Relative -5.2 -8.1 11.9 OP (VNDbn) 496.3 861.5 1,357 3,113 1,719 1,910
OP margin (%) 19.0 26.9 34.6 82.2 41.6 45.1
NPATMI (VNDbn) 371 621 994 2,339 1,338 1,495
EPS (VND) 1,166 1,930 3,037 7,761 4,438 4,960
ROE (%) 6.7 10.2 14.6 26.7 13.7 13.8
P/E (x) 42.0 26.6 14.9 6.7 11.8 10.5
P/B (x) 2.2 2.2 1.9 1.8 1.6 1.5
Source: Company data, Mirae Asset Securities (Vietnam) JSC Research estimates
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
August 22, 2023 Gemadept Corporation

Table 1. Business results & forecast (VNDbn)

1H22 1H23 % YoY New 2023F Old 2023F Consensus Guidelines
Revenue 1,857.8 1,814.1 -2.3 3,784.9 3,784.9 3,831.7 3,920
Pre-tax profits 720.3 2,486.5 +245.2 3,052.7 2,703.1 2,801.6 1,136
Source: Company data, Bloomberg, Mirae Asset Vietnam Research

Table 2. Company guidelines vs. actual results (VNDbn)

Revenue Pre-tax profits
FY
Guidelines Actual % Difference Guidelines Actual % Difference
2019 2,800 2,643 -5.6 695 705 1.4
2020 2,150 2,606 21.2 500 513 2.5
2021 2,700 3,206 18.8 630 806 28.0
2022 3,800 3,916 3.0 1,000 1,308 30.8
Source: Company data, Mirae Asset Vietnam Research

Table 3. Valuation sensitivity (VND)

Required return on equity (%)

Long-term growth rate (%)
11.00 12.00 13.00 14.00 15.00 16.00 17.00
2.00 61,325 56,495 52,577 49,340 46,624 44,318 42,337
3.00 64,047 58,486 54,067 50,477 47,506 45,011 42,889
4.00 67,548 60,976 55,889 51,842 48,549 45,820 43,525
5.00 72,215 64,176 58,167 53,110 49,800 46,776 44,267
6.00 78,750 68,443 61,095 55,596 51,328 47,923 45,145
7.00 88,552 74,417 64,999 58,277 53,239 49,325 46,197
Source: Company data, Mirae Asset Vietnam Research

Mirae Asset Vietnam Research 2

August 22, 2023 Gemadept Corporation

Investment thesis, valuation, and risks

Gemadept Corporation (GMD VN/Hold/TP: VND53,000)

Investment thesis

Gemadept Corporation (GMD VN) is a leading logistics corporation in Vietnam with a system
of seaports, warehouses, and depots throughout the country. In which, GMD currently runs
the GML deep-water port in the Cai Mep – Thi Vai cluster, which is one of the few seaports
able to receive vessels of nearly 200,000 DTW. In addition, GMD also has a portfolio of
associates that cooperate in providing complete logistics solutions. In 2022, total container
volume through GMD’s system accounted for 12.5% of Vietnam’s total container clearance
volume.

Due to GMD’s dominant role in Vietnam’s seaport segment, it is well positioned to benefit
from the country’s trade growth.

Valuation

We used the discounted free cashflow for the firm (FCFF) method to value GMD stock, with
the following assumptions: 1) A required rate of return at 14%, as the Fed has hinted at a
further rise in the policy rate, despite a slowing pace of increase; 2) a long-term growth rate
of 5% from 2033; and 3) on-time completion of GMD’s key projects. Thus, we calculate the fair
value of GMD stock at VND53,000, and recommend a Hold rating.

Risks to rating and valuation

We believe the key risks to our Hold rating and valuation include:

- Changes in GMD new investment plans, divestment of rubber projects, and CAPEX
demand.

- Expansion in the Nam Dinh Vu and Lach Huyen areas and increased local competition.

- Weak demand in Vietnam’s key export markets, leading to lower clearance volume.

- Changes in unit service price, which is strictly controlled by the government.

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 August 22, 2023 Gemadept Corporation

Gemadept Corporation (GMD VN)

Income statement (summarized) Balance sheet (summarized)

(VNDbn) 2022 2023 2024 2025 (VNDbn) 2022 2023 2024 2025
Revenue 3,915.6 3,784.9 4,130.1 4,235.2 Current assets 2,724.5 3,136.8 2,961.8 3,573.1
COGS -2,270.7 -2,235.3 -2,420.5 -2,491.0 Cash & Equivalents 1,428.3 1,985.3 1,706.9 2,286.7
Gross profits 1,644.9 1,549.6 1,709.6 1,744.2 Trading securities 17.9 17.9 17.9 17.9
Interest from financial activities 24.2 1,983.0 102.4 137.2 Receivables 975.6 946.2 1,032.5 1,058.8
Financial costs -177.7 -131.7 -119.4 -103.9 Inventories 82.2 72.7 79.3 81.3
Profits from associates 406.5 279.5 646.2 768.3 Other current assets 220.6 114.7 125.2 128.3
SG&A -541.3 -567.7 -619.5 -635.3 Non-current assets 10,465.9 11,393.7 11,851.6 12,406.4
Operating profits 1,356.6 3,112.7 1,719.3 1,910.5 PP&E 6,100.9 6,875.9 6,828.3 6,771.2
Other income -48.3 -60.0 -40.0 -40.0 Investment in associates 3,032.4 3,185.2 3,690.7 4,302.6
Pre-tax profits 1,308.3 3,052.7 1,679.3 1,870.5 Other long-term investments 37.5 37.5 37.5 37.5
Income tax -151.3 -332.8 -124.0 -132.3 Other non-current assets 1,295.1 1,295.1 1,295.1 1,295.1
After-tax profits 1,157.0 2,719.9 1,555.3 1,738.2 Total assets 13,190.4 14,530.5 14,813.4 15,979.5
Profits of controlling shareholders 995.0 2,339.1 1,337.6 1,494.9 Short-term Payables 2,767.7 2,018.6 1,321.6 1,355.3
Short-term debts 543.4 493.7 486.0 413.8
Long-term debts 1,486.2 1,337.5 1,188.9 1,040.3
Other long-term payables 386.5 386.5 386.5 386.5
Welfare fund 62.8 118.9 108.2 144.1
Total liabilities 5,246.6 4,355.3 3,491.3 3,340.0
Charter capital & funds 5,699.2 5,699.2 5,699.2 5,699.2
Retained earnings 1,228.2 3,078.8 4,008.0 5,081.9
Non-controlling interests 1,016.4 1,397.2 1,615.0 1,858.3
Equity 7,943.8 10,175.2 11,322.2 12,639.4
Total resources 13,190.4 14,530.5 14,813.5 15,979.5

Cash flow statement (summarized) Key valuation metrics/ratios

(VNDbn) 2022 2023 2024 2025 2022 2023 2024 2025
CFO 2,332.8 140.6 326.7 1,209.3 P/E (x) 14.9 6.7 11.8 10.5
After-tax income 1,157.0 2,719.9 1,555.3 1,738.2 P/B (x) 1.9 1.8 1.6 1.5
Depreciation & Amortization 375.6 418.6 438.1 458.1 EPS (VND) 3,037 7,761 4,438 4,960
Profits from investment activities -419.7 -2,262.5 -748.7 -905.5 BPS (VND) 22,986 29,126 32,209 35,773
Others -31.4 -131.0 -117.7 -83.7 DPS (VND) 1,200 1,000 1,000 1,000
Chg. in receivables -162.6 29.3 -86.3 -26.3 Revenue growth (%) 22.1 -3.3 9.1 2.5
Chg. in inventory -13.4 9.5 -6.6 -2.0 Operating profit growth (%) 57.5 129.4 -44.8 11.1
Chg. in other current assets 9.9 105.9 -10.5 -3.2 EPS growth (%) 62.5 155.6 -42.8 11.8
Chg. in payables 1,304.0 -749.1 -697.0 33.6 Dividend yield (%) 2.4 1.9 1.9 1.9
CFI -1,269.5 916.2 -147.3 -107.3 Accounts receivable turnover (x) 4.3 4.0 4.0 4.0
CAPEX -1,395.2 -1,193.5 -390.5 -401.0 Inventory turnover (x) 25.1 25.0 25.0 25.0
Inflow from liquidation 4.4 0.0 0.0 0.0 Accounts payable turnover (x) 0.9 0.9 1.5 1.5
Dividends received 173.7 2,109.7 243.1 293.6 ROA (%) 8.8 18.7 10.5 10.9
CFF -337.6 -499.7 -457.7 -522.1 ROE (%) 14.6 26.7 13.7 13.8
Inflow from share issuance 0.0 0.0 0.0 0.0 Accounts payable to equity (%) 34.8 19.8 11.7 10.7
Share buyback 0.0 0.0 0.0 0.0 Total debt to equity (%) 25.5 18.0 14.8 11.5
Net borrowing 90.6 -198.4 -156.3 -220.7 Interest coverage ratio (x) 8.6 24.6 15.4 19.4
Dividends -428.1 -301.4 -301.4 -301.4
Net CF 725.8 557.0 -278.4 579.8
Begin cash 659.3 1,428.3 1,985.3 1,706.9
End cash 1,428.3 1,985.3 1,706.9 2,286.7

Source: Company data, Mirae Asset Vietnam Research

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August 22, 2023 Gemadept Corporation

Appendix 1

Important disclosures and disclaimers

Two-year rating and TP history
Company Date Rating TP (VND)
(VND) GMD VN 12M target price
Gemadept Corporation 03/27/2023 HOLD 53,000
70,000
Gemadept Corporation 11/29/2022 BUY 57,000
60,000
Gemadept Corporation 07/04/2022 BUY 64,000
50,000
TRADING
Gemadept Corporation 05/30/2022 64,000
BUY 40,000

Gemadept Corporation 12/15/2021 HOLD 50,500 30,000

20,000

10,000

0
Aug 22 ct 22 Dec 22 Feb 23 Apr 23 Jun 23 Aug 23

Stock ratings Sector ratings

Buy Expected 12-month performance: +20% or greater Overweight Expected to outperform the market over 12 months
Trading Buy Expected 12-month performance: +10% to +20% Neutral Expected to perform in line with the market over 12 months
Hold Expected 12-month performance: -10% to +10% Underweight Expected to underperform the market over 12 months
Sell Expected 12-month performance: -10% or worse

Rating and TP history: Share price (─), TP (▬), Not Rated (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆)
* Our investment rating is a guide to the expected return of the stock over the next 12 months.
* Outside of the official ratings of Mirae Asset Daewoo Co., Ltd., analysts may call trading opportunities should technical or short-term material developments arise.
* The TP was determined by the research analyst through valuation methods discussed in this report, in part based on estimates of future earnings.
* TP achievement may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Analyst certification
The research analysts who prepared this report (the “Analysts”) are subject to Vietnamese securities regulations. They are neither registered as research
analysts in any other jurisdiction nor subject to the laws and regulations thereof. Opinions expressed in this publication about the subject securities and
companies accurately reflect the personal views of the Analysts primarily responsible for this report. MAS policy prohibits its Analysts and members of their
households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board
member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the
subject companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts
was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of MAS, the Analysts
receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities,
investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know
of any actual, material conflict of interest of the Analyst or MAS except as otherwise stated herein.
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Mirae Asset Vietnam Research 5

August 22, 2023 Gemadept Corporation

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Mirae Asset Vietnam Research 6