Singaporean-backed logistics major Sotrans targets 77% profit hike, northern foray

Leading logistics service provider South Logistics JSC, also known as Sotrans, aims for VND267 billion ($10.5 million) in net profit this year, a 77% surge year-on-year, according to its 2024 AGM resolution.

The firm, 30% held by Singapore-backed PSA Cargo Solutions Vietnam Investments Pte.Ldt, targets VND2.75 trillion ($108.2 million) in revenue in 2024, up 53% year-on-year.

Listed on the Ho Chi Minh Stock Exchange as STG, Sotrans has decided not to pay dividends for 2023 and 2024. Instead, it will balance cash flow and capital sources to finance its operations from 2025 onwards, the firm said.

This decision was made in consideration of various factors affecting the company’s performance, including economic headwinds post-pandemic, the Russia-Ukraine conflict, and stubborn inflation, stated the Sotrans board of directors.

In addition, the firm will focus on directing cash flow and capital towards its system and the operations of its member units, aiming to consolidate its footprint in the southern region and expand into the northern region.

Sotrans used to pay dividends of 20-25% before 2016. It paid a stock dividend of 15% in 2017 and 10% in 2018. The company has paused dividend payouts since 2019, helping it accumulate VND1.15 trillion ($45.44 million) in profit as of end-2023. Meanwhile, its charter capital is VND982 billion ($38.63 million).

Besides PSA Cargo Solutions, Sotran, founded in 1975, currently has another major shareholder, ITL Corp, which holds a 69.32% stake.

As of end-March, Sotrans had total assets of VND2.9 trillion ($114.1 million). It has eight subsidiaries and six affiliates, including Sotrans Infrastructure Investment Co.,Ltd (SII), Southern Waterborne Transport Corporation (Sowatco), and Vietranstimex MultiModal Transport Holding Company (Vietranstimex).

Sotrans also holds a 37% stake in First Logistics Development JV Company and a 20.25% stake in Dong Nai Port JSC (HoSE: PDN), earning dozens of billions of Vietnam dong (VND1 billion = $39,340) in dividends each year.

Last year, the company posted a net profit of VND150 billion ($5.9 million) on revenue of VND1.8 trillion ($70.82 million), down 40% and 32% year-on-year, respectively.

Consequently, Sotrans only achieved 43% and 60% of its revenue and net profit targets, respectively. Its board attributed the underperformance to unfavorable economic conditions and its on-the-shelf M&A plan.

In Q1/2024, Sotrans earned VND476 billion ($18.73 million) in revenue and VND43 billion ($1.7 million) in net profit, up 23.5% and 7.8% year-on-year, respectively.