Transport heavyweight Deo Ca estimates Q1 profit up 33%

Deo Ca Transport Infrastructure Investment JSC, a subsidiary of “tunnel king” Deo Ca Group, expects its revenues and profit in the first quarter of 2024 to reach VND674 billion ($26.8 million) and VND109 billion ($4.34 million), up 25% and 33% year-on-year, respectively.

The expectation comes as both core areas of toll collection on BOT (business-operate-transfer) expressways and construction are thriving, said Nguyen Quang Huy, board member and CEO of the company, which is listed on the Ho Chi Minh Stock Exchange (HoSE) as HHV, at an investor meeting on Wednesday.

In Q1/2024, BOT toll revenue increased 18% year-on-year to VND458 billion ($18.2 million) due to an 18% hike in fees at four toll stations and increased vehicle traffic during the Lunar New Year holiday (February 8-14). Construction revenue hit VND200 billion ($8 million), a rise of 46% compared to the first quarter of 2023.

HHV's board of directors has targeted revenue growth of 17% this year to VND3,146 billion ($125.14 million) and profit expansion of 11% to VND404 billion ($16.1 million). Of which, BOT toll collections will contribute VND1,720 billion, up 9%; while construction will chip in VND1,323 billion, up 26%.

The company expects construction revenue to come mainly from the Dong Dang - Tra Linh Expressway project (65%), Binh Dinh coastal road (17%), Quang Ngai - Hoai Nhon Expressway (6%), Binh Dinh Expressway (6%), Cam Lam – Vinh Hao Expressway (4%), and other projects (8%).

The CEO assessed that public investment will continue to be the main growth driver of the economy in 2024 in addition to consumption and exports, which are recovering slowly amid global economic fluctuations.

The country's public investment capital plan for 2024 is VND657 trillion ($26.13 billion), an increase of 12% compared to the 2023 figure. In the first two months, public investment disbursement was estimated at nearly VND60 trillion, a rise of 21% over the same period last year. This year, construction of key traffic projects will continue to be promoted with about VND422 trillion.

The new contracts the company signed in 2023 have a total value of nearly VND2 trillion ($80 million), with implementation times from 2023 to 2026. This year, in addition to existing projects, the company is pursuing three new projects including Dong Dang - Tra Linh Expressway (VND14,331 billion or $570 million), Huu Nghi - Chi Lang Expressway (VND11,179 billion or $445 million), and Tan Phu - Bao Loc Expressway (VND18,120 billion or $720.8 million).

Among them, construction on Dong Dang - Tra Linh Expressway started on January 1. The northern province of Lang Son has just opened a tender to select a PPP (public-private partnership) investor for Huu Nghi - Chi Lang Expressway, connecting to Dong Dang - Tra Linh Expressway. A consortium led by Deo Ca is the only one to meet the bidding criteria for the latter, and is awaiting results.

HHV engages in the above projects as a direct investor or business cooperation contract (BCC) partner. The estimated construction value of HHV alone is about VND5.7 trillion ($226.7 million).

A consortium of Deo Ca, Ho Chi Minh City Infrastructure Investment JSC (CII), and Tasco, led by Deo Ca Group, beat the CHEC (China) - Coteccons consortium to be selected by the Ministry of Transport as the investor for a VND35 trillion ($1.39 billion) project to expand Ho Chi Minh City - Trung Luong - My Thuan Expressway, a gateway to the Mekong Delta region.

The firm has studied a list of expressway projects with a total value of VND79,250 billion ($3.15 billion) and metro projects of VND59,708 billion ($2.38 billion), according to vice chairman Nguyen Huu Hung.

To raise investment capital for the Huu Nghi - Chi Lang and Dong Dang - Tra Linh expressway projects, the company has two plans to increase capital in the 2024-2025 period, Hung said. It will issue 73.5 million shares (17%) via private placements to increase its charter capital to VND5,057 billion ($201.15 million). Then the company will offer another 75.8 million shares to existing shareholders for VND5,816 billion.

HHV closed the Thursday session at VND15,450 ($6.1) per share.