Container shipping firm Viconship raises funds for port acquisition, hotel construction

The Vietnam Container Shipping Joint Stock Corporation (Viconship) is mobilizing capital from a share issuance to finance the acquisition of Nam Hai Dinh Vu Port and build the Hyatt Place Hai Phong Hotel in the northern city of Hai Phong.

Viconship, listed on the Ho Chi Minh Stock Exchange (HoSE) as VSC, plans to offer 133.4 million shares to existing shareholders with a ratio 1:1 (one existing share for a new one). If the share issuance is completed in 2024, the company’s charter capital is expected to double to VND2.67 trillion ($109.85 million).

If existing shareholders do not buy all the above shares, the board of directors will redistribute the remainder to investors at a price of VND10,000 ($0.41) per share. The redistributed shares will be restricted from transfer for one year.

Through the share issuance, Viconship wants to mobilize VND1.33 trillion ($54.88 million) to acquire a 44% stake in Nam Hai Dinh Vu Port Company Limited (VND1.32 trillion) and additional working capital (VND14 billion or $575,000).

Nam Hai Dinh Vu Port was built in 2012 as a joint venture between Gemadept Corporation (HoSE: GMD) and Vietnam Petroleum Transport JSC (Vipco). The port had a total investment of VND1 trillion ($41.15 million) with a capacity of 500,000 TEUs per year. At the end of 2013, Gemadept increased its stake in the port from 54.66% to 84.66%.

In the second quarter of 2023, Gemadept completed the sale of its entire 84.66% stake to Viconship and its partners. In the first half of the year, Gemadept recorded a profit of over VND1.87 trillion ($76.94 million) from its financial activities, mainly the transfer of Nam Hai Dinh Vu Port.

Viconship said it holds 35% of the port's charter capital. The company will receive the transfer of an additional 44% from Huy Hoang Import-Export Metal Trading Company Limited and Doan Huy Investment and Trading Company Limited for VND1.32 trillion ($54.3 million). The deal will leave Viconship with a stake of 79%.

Viconship already owns the Green and VIP Green ports in Hai Phong. According to DSC Securities, after the acquisition, Viconship will have the largest total capacity in the city with about 2.6 million TEUs, an increase of 36% over the same period last year.

In 2022, the corporation successfully acquired Quang Binh-Dinh Vu Inland Container Depot from Quang Binh Import and Export JSC (HoSE: QBS). The 26-hectare port, which was built at a cost of $432 billion, was the first of its kind in Hai Phong and one of the largest dry ports in northern Vietnam.

Viconship also revealed that it has borrowed VND700 billion ($28.8 million) from its subsidiaries to implement the Hyatt Place Hai Phong Hotel project, together with T&D Group, a firm based in the port city.

The four-star Hyatt Place Hai Phong Hotel is located in the heart of Hai Phong city, featuring two towers with 17 and 25 floors.

Falling profits, increasing debt burden

In the first half of 2023, Viconship recorded revenue of VND998 billion ($41 million), similar to 2022. Its gross profit margin decreased from 35% to 28.6% as some ships had to anchor at other companies’ ports due to scheduling conflicts.

With increasing interest, management and sales costs, the after-tax profit of the parent company as a shareholder sharply fell to VND49 billion ($2 million), equal to 27% of the figure in the same period last year.

At the end of 2022, the business reported VND208 billion ($8.56 million) in short-term loans and VND700 billion ($28.8 million) in long-term loans. In the first half of this year, its short-term and long-term loans increased to VND239 billion ($9.83 million) and VND1.45 trillion ($59.5 million), respectively, with a debt-to-equity ratio of 53%.

On the stock market, VSC closed the Friday session at VND28,700 ($1.18) per share.