Vietnam seaport, shipping firms expected to enjoy good profits in 2024

By Thuy Yen, Minh Hue
Fri, February 23, 2024 | 6:52 am GMT+7

A potential recovery of Vietnam's export activities in 2024 and a sharp increase in shipping rates due to Red Sea tensions are expected to help domestic seaport and shipping firms enjoy good profits after a gloomy year.

Soaring trade, shipping rates

Following the recovery momentum from the end of last year, Vietnam continued to report positive information on external trade in the first two months of 2024.

According to Vietnam Customs, from January 1 to February 14, Vietnam’s import and export value reached $82.56 billion, an increase of 17.1% over the same period in 2023. Of this, exports increased 21.6% year-on-year to $43.83 billion and imports rose 12.4% to $38.73 billion, resulting in a trade surplus of more than $5.1 billion.

A seaport operated by the Vietnam Maritime Corporation. Photo courtesy of the company.

A seaport operated by the Vietnam Maritime Corporation. Photo courtesy of the company.

Since the Lunar New Year holiday, businesses have welcomed workers back and recruited more staff to meet abundant orders. Many companies such as Thanh Cong Textile-Garment Investment Trading JSC (TCM), PPJ Group, Taekwang Vina, and Changshin Vietnam said they have secured orders for the first quarter or even the first half.

The Ministry of Industry and Trade assessed that the world and domestic economic contexts have showed many more positive factors for trade activities. Import-export results have initially recorded positive signals since the last months of 2023.

The U.S. Federal Reserve (Fed) has hinted at stopping interest rate hikes and reducing them this year to bolster economic growth. Meanwhile, the U.S.'s destocking is nearing an end. At the same time, Vietnamese businesses can take advantage of trade agreements to boost exports.

The escalating Red Sea crisis from the last months of 2023 is also having a major impact on shipping prices. According to a report by Gemadept Corporation (GMD), the Red Sea tension has forced shipping companies to move through the Cape of Good Hope instead of the Suez Canal to ensure safety. Longer routes, longer shipping times, and more fuel consumption have caused shipping rates to rise significantly.

Drewry's World Container Index, after falling to $1,300 per 40ft, began to skyrocket after the Red Sea tension broke out. On February 15, this index reached $3,700 per 40ft, nearly three times higher in three months and double the figure in the same period last year.

The Baltic Dry Index (BDI) in December 2023 hit 1,629 points, much higher than about 1,000 points in the same period of 2022.

Major brokerage house Saigon Securities (SSI) is upbeat about the seaport industry in 2024 thanks to a recovery in output when import and export demand improves. While the shipping industry benefits from geopolitical tensions, longer sea routes and falling supply will help shipping rates recover.

Sudden earnings in Q4/2023

In 2023, the business activities of most shipping enterprises declined as shipping rates plunged 50-60% year-on-year. Seaport operators saw less negative results. However, a number of businesses recorded sudden earnings in the fourth quarter of 2023, helping to improve their profits for the whole year.

Vietnam Ocean Shipping Joint Stock Company, listed on the Ho Chi Minh Stock Exchange (HoSE) as VOS, reported 2023 revenue and net profit of VND3,187 billion ($129.5 million) and VND155 billion ($6.3 million), up 32% and down 68% respectively compared to 2022. Its Q4 profit hit VND104 billion, 5.8 times higher than the same period in 2022.

Vinaship, traded on the Unlisted Public Companies Market (UPCoM) as VNA, saw gloomy business in the first three quarters of 2023, with profit in the whole year plunging 86% from 2022 to VND36 billion ($1.46 million). Of the figure, VND32 billion was recorded in Q4. The sudden profit in the last quarter of the year came from bank loan restructuring.

Another unit reporting high Q4/2023 profit was Vietnam Maritime Corporation (UPCoM: MVN). While its main activity saw flat profitability, other activities brought a profit of VND271 billion ($11 million), seven times higher from a year earlier.

Thanks to that, the company’s after-tax profit in Q4 reached VND264 billion, 11.5 times higher year-on-year. The main reason was that the corporation had its debt written off and restructured in the quarter.

However, for the whole year, the corporation's net profit decreased by 37% to VND1,152 billion ($46.8 million).

VMN operates 15 seaports and owns the country's largest fleet of 61 ships. Port operations contributed 49% of its revenue while transportation activities accounted for 33%.

The owner of the country's largest container fleet - Hai An Transport & Stevedoring JSC (HoSE: HAH) - saw revenue falling down 19% to VND2,613 billion ($106.2 million) and net profit down 53% to VND385 billion ($15.65 million).

In addition to weakened ship operations, the company recorded business losses from its joint venture company Zim Hai An, which was commissioned in March 2023.

In the field of seaport operation and exploitation, Quy Nhon Port (HoSE: QNP) reported a profit 2.5 times higher in 2023 to VND112 billion ($4.55 million) as it did not have to make provisions for short-term payables. Dong Nai Port (PDN), Saigon Port (SGP), Da Nang Port (CDN), and Cam Ranh Port (CCR) reported flat or growing profits.

Seaport giant Gemadept (HoSE: GMD) achieved 2023 revenue equivalent to 2022 at VND3,846 billion ($156.3 million). But thanks to the sale of Nam Hai Dinh Vu Port, its net profit reached a historic peak of VND2,221 billion ($90.3 million), more than double that of 2022.

Vietnam Container Shipping Joint Stock Corporation (Viconship) (HoSE: VSC), after acquiring Nam Hai Dinh Vu Port from Gemadept, reported a 9% increase in revenue to VND2,181 billion ($88.93 million) last year. However, its profit plummeted 60% to VND126 billion ($5.14 million) due to the burden of interest costs.

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