Logistics heavyweight Gemadept revives capital raising plan as stock price soars

Gemadept Corporation, a leading port and logistics firm in Vietnam, plans to issue 103.5 million shares to existing shareholders at VND29,000 ($1.14) apiece, raising VND3 trillion ($118 million).

Proceeds from the 3:1 (three existing shares for one) share issuance will be used to buy fixed assets, repay bank debts and contribute capital to Nam Dinh Vu Port in the northern port city of Hai Phong. The plan to raise fresh capital is contained in documents to be submitted at the corporation’s June 25 AGM.

In 2022, the seaport giant, listed on the Ho Chi Minh Stock Exchange as GMD, revealed a plan to issue more than 100 million shares, at a 3:1 ration to existing shareholders at a price of VND20,000 ($0.79) each.

However, the company did not implement the plan after considering the market situation, the company’s 2023 business plan and its capital needs.

The plan’s revival has been prompted by the GMD stock soaring to its earlier peak of VND85,000 ($3.34) per share. Compared to the beginning of 2020, the stock value has gone up 5.5 times.

The price of VND29,000 offered by the board of directors to existing shareholders is just one-third of the current market price and a little bit higher than the company's book value as of December 31, 2023 (VND28,050).

Regarding 2024 business activities, Gemadept, which owns the nation’s largest deep-water port Gemalink, targets revenues of VND4 trillion ($157.37 million), up 4% year-on-year; and pre-tax profits of VND1.69 trillion ($66.49 million), down 46% year-on-year.

The lower pre-tax profit target is based on the forecast that transfers of subsidiaries’ stake will plunge from VND1.84 trillion ($72.38 million) to VND336 billion ($13.22 million).

In 2023, the corporation successfully divested from the Nam Hai Dinh Vu Port, earning a profit of more than VND1.8 trillion ($70.82 million). In the first quarter of this year, it sold its entire stake in Nam Hai Port in Hai Phong city to Nhat Viet JSC, aka Vietsun Lines.

In Q1/2024, Gemadept recorded year-on-year increases of 11% and 3.5% in revenue and gross profit, respectively. Since financial revenues surged suddenly from VND21 billion to VND354 billion ($13.93 million) thanks to divestment from the Nam Hai Port, its net profit expanded 2.8 times to VND559 billion ($22 million).

The board of directors plans to pay cash dividends of 22%, equivalent to VND2,200 ($0.9) per share. With huge profits from the sale of Nam Hai Dinh Vu Port, Gemadept shareholders had expressed expectations of special dividends. However, the corporation’s leaders responded that the business must prepare capital for its large investment plans.

Gemadept is speeding up investment in two large projects, Gemalink Port - phase 2 and Nam Dinh Vu Port - phase 3. It is completing related procedures and arranging capital to construct Gemalink 2 so that it can be put into operation in 2025-2026.

With a total investment of about $300 million, once completed, the port will handle 3 million TEUs – outdoing several major competitors in Southeast Asia.

The Nam Dinh Vu Port project is being implemented in three phases, with the first expected two becoming operational in 2018 and mid-2023, respectively. Construction on the third phase will start in the beginning of Q3 this year with a total investment of VND2.5 trillion ($98.36 million).

The company's ambition is to develop Nam Dinh Vu into the largest river port in northern Vietnam. When the third phase is completed, its total capacity will reach 2 million TEUs, an increase of 67% from current levels.

GMD closed Wednesday at VND84,000 ($3.3) per share.