seaport logistics industry outlook 2021 return …

SEAPORT – LOGISTICS INDUSTRY

OUTLOOK 2021

RETURN TO DOUBLE DIGIT GROWTH

© RESEARCH DEPARTMENT ǀ 11.03.2021

2

SEAPORT – LOGISTICS INDUSTRY UPDATES

INDUSTRY OUTLOOK 2021

RECOMMENDATIONS

© RESEARCH DEPARTMENT

3

THE CARGO VOLUME MAINTAINED GWOTH STATUS

© VCBS Research Department

The volume of goods through seaports maintained growth status in 2020 (+ 3,68% yoy) despite

certain impacts from the Covid-19 pandemic thanks to the following factors:

Source: Vinamarine, Finpro, VCBS

‐ The demand to relocate production facilities of multinational corporations to improve profit

margins is increasingly due to: (1) The increase in labor costs in China; (2) The pressure from

trade war and rising tension in US-China relation; (3) The process of shifting to a higher level of

production in the value chain of Chinese manufacturing.

‐ The Covid-19 pandemic and a disruption in the global supply chain in 2020 presented risks

when the production chain is concentrated in a single location.

‐ Vietnam has many advantages in receiving investment capital flows thanks to: (1) Close to

China with a long coast, connecting with major trade routes; (2) Economic and political

environment are stable and have great potential for development; (3) Abundant workforce with

rapidly improving productivity.

Import-export turnover and marine transportation were relatively less disrupted by social

distancing and disease control measures.

The effective trade agreements (CPTPP, EVFTA, RCEP) provided a driving force for import-

export turnover, especially in the second half of the year.

Benefit from the trend of production relocation from China, in particular:

427,8459,8

536,4 530,1

664,6 689,1

0

200

400

600

800

2015 2016 2017 2018 2019 2020

The volume of goods through seaports in Vietnam (unit: million tons)

6,6%

10,5% 10,0%

5,1%5,9%

-8,4%

6,7%

15,8%

-10%

-5%

0%

5%

10%

15%

20%

Q1.2019 Q2.2019 Q3.2019 Q4.2019 Q1.2020 Q2.2020 Q3.2020 Q4.2020

Growth rate of import-export turnover

4

HIGHLIGHTS IN GROWTH OF DEEP WATER SEAPORTS

© VCBS Research Department Source: VPA, Vinamarine, CEIC, VCBS

The cargo volume at the deep-water port seaports recorded outstanding growth coupled

with the increase in the volume of ultra-tonnage container ships (> 100.000 DWT) that was

driven by :

‐ Positive growth in exports and imports to US and EU as: (1) Many free trade agreements came

into effect; (2) Vietnam's increasing role as a new manufacturing hub besides China.

‐ Trend of increasing fleet tonnage of large container shipping lines to save costs.

In the Cai Mep - Thi Vai area, SSIT port leaded the growth trend since the seaports in the

region have basically reached their capacity limit and Gemalink port (of GMD) had not come

into operation in 2020. After 3 years of serving container goods, SSIT port is currently

operating at nearly 70% of designed capacity with container throughput in 2020 estimated at

1.000.000 TEU (+ 236% yoy).

By the end of 2020, the People's Council of Ho Chi Minh City has approved of collecting

infrastructure fees at seaports within the city. Along with that, the process of relocating

seaports in Ho Chi Minh City is strongly promoted to resolve congestion and in accordance

with city planning. This provides a positive motivation for the cargo allocation to deep-water

ports in the South in the coming period.

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

2015 2016 2017 2018 2019 2020

TCIT - TCCT CMIT TCTT SSIT

The container volume through seaports in Cai Mep

(unit: TEU)

Import-Export turnover between Vietnam and US & EU

(unit: million USD)

0

20.000

40.000

60.000

80.000

100.000

2015 2016 2017 2018 2019 2020

US

EU

In Lach Huyen (Hai Phong), HICT port also recorded strong growth in 2020 with an

estimated output of 14 million tons (+ 123% yoy). However, the operating efficiency is

relatively lower than the Cai Mep area due to the low traffic of ultra-tonnage container ships in

the area and the port has to expand to accommodate smaller ships.

5

COMPETITION PRESSURE VARIES IN HAI PHONG AREA

© VCBS Research Department Source: VCBS

The group of seaports located in the midstream of the Cam River such as Dinh Vu, Tan

Vu, VIP Green ports, ... benefited in 2020 as the competitive pressure in the region

decreased, in particular :

Along with the reduction of depreciation and interest cost, the business performance of many

seaport enterprises located in the midstream have been improved positively in 2020.

‐ Since 2018, these seaports group had been under pressure from the trend of cargo allocation to

deep downstream, close to the sea seaports (Nam Dinh Vu, Mipec) and Lach Huyen area.

However, from mid-2020, the transition of shipping lines using large container ships has

basically been completed.

‐ With the feature that most of the import-export goods in the region are located on transport

routes to East Asian countries such as China, Japan, and South Korea (often using medium-

sized container ships), output through midstream ports possesses strong momentum from the

cargo increasing trend in the area.

Meanwhile, the group of ports located deep downstream faces a relatively fierce

competition due to:

‐ Cargo attracting pressure from Lach Huyen port.

‐ Rapid increase in supply in the downstream area and Lach Huyen as many new ports came

into operation in a short time.

0

100

200

300

400

500

2018 2019 2020

PHP DVP VGR

Net profit of some seaport enterprises in midstream Cam River

(unit: billion VND)

SeaportYear come into

operationCapacity

Nam Đinh Vu 2018 500.000 TEU/ year

HICT (Lach Huyen) 2018 1.100.000 TEU/ year

Vinalines Đinh Vu 2019 520.000 TEU/ year

Mipec 2019 600.000 TEU/ year

Construction progress of downstream Cam River and Lach Huyen ports

6

THE LACK OF CONTAINERS INHIBITS GROWTH TREND

© VCBS Research Department Source: Bloomberg, SFI, HAH, VCBS

From the end of 2020, import and export activities in Vietnam have faced a severe

shortage of containers due to the impact of many factors:

‐ The disparity in disease control and production recovery between the two Pacific sides leads to

a trade balance gap (China and Vietnam both recorded a large trade surplus) and affected the

two-way container rotation.

‐ Complicated pandemic situation in the US, EU and social distancing measures reduced the

speed of inland handling and rotating containers of these countries.

‐ Shipping lines prioritize container for China market to benefit from higher scale and freight

rates.

Sudden increase in container rental, marine freight and great pressure on import and

export activities as well as cargo throughput seaports in the last months of the year.

‐ Group of enterprises that own containers and domestic / regional container fleet (eg: HAH).

‐ Group of shipping agency businesses, since their revenue are adjusted to increase according to

the freight rates of international container carriers (eg: SFI).

However, some businesses in the maritime logistics service chain in Vietnam benefit from

the increase in freight rates and the rental of empty containers, typically :

200,2%

57,0%

-100%

0%

100%

200%

300%

Q1.2019 Q2.2019 Q3.2019 Q4.2019 Q1.2020 Q2.2020 Q3.2020 Q4.2020

SFI HAH

Growth in net profit of HAH and SFI

6.579

2.000

3.000

4.000

5.000

6.000

7.000

Transportation freight of container 40ft from Shanghai to New York

(unit: USD)

7



RECOMMENDATIONS


8

OUTPUT IS FORECASTED TO RECORD A TWO-NUMBER GROWTH

© VCBS Research Department Source: Vinamarine, VCBS

Total volume of goods through seaports in Vietnam in 2021 is forecast to reach

771 million tons (+ 11,9% yoy) with motivation from:

‐ Demand recovery in major export markets as economic activity is restored and

disease control measures are loosened.

‐ Motivation from EVFTA and RCEP agreements reflects from the beginning of the

year.

‐ FDI inflows maintains a positive state, especially when the exchange rate

environment is relatively favorable and the investment projects of important

transport infrastructure are being promoted.

Container scarcity and high container freight rates are forecast to continue to put pressure on import-export volume growth in the first half of 2021. In the long term, we do

not believe this phenomenon will persist, considering the factors:

‐ The Covid-19 pandemic is under control and economic activities are recovering rapidly in the US, EU, which is expected to help decrease the trade imbalance state.

‐ Regulations on declaration, transparency of freight rates and container rotation for shipping lines have been strongly enforced by the government.

‐ Container supply has improved positively thanks to: (1) Increasing new container capacity in China; (2) Domestic steel company (HPG) begins to participate in the market for

supplying containers.

Cargo output through seaports in Vietnam (unit: million tons)

771,24

-5%

0%

5%

10%

15%

20%

25%

30%

0

200

400

600

800

1.000

2016 2017 2018 2019 2020 2021F

Output Growth

9

COMPETITION PRESSURE IN CAI MEP AREA REMAINS LOW


In 2021, Cai Mep - Thi Vai area will receive new supply when Gemalink port phase 1 (capacity

1,5 million TEU/ year) comes into operation. However, the competition level in the region is

expected to remain low:

‐ There has been a major change in the planning orientation for a deep-water port system in Cai

Mep. Instead of rampant licensing as in the 2010-2014 period, ports are developed in

succession and growth in demand is concentrated in the nearest 1-2 ports.

‐ Up to now, most of the Cai Mep downstream ports are at their maximum designed capacity.

Given the growth of the region, we believe that SSIT port will basically operate at capacity in

2021.

‐ The EVFTA Agreement provides a particularly important driving force for the Southern seaport

system in 2021 because agricultural products, aquatic products, wood products, ... (mainly in

the South) are the firsts that benefit from tariffs from the agreement.

‐ The trend of restricting imports from border trades in China promotes the export of agricultural

products and raw materials directly from the Southern seaports.

‐ Benefit from the relocation of seaports in Ho Chi Minh City.

The promotion of many transport infrastructure projects connected to Cai Mep is

expected to improve FDI flows in the region and increase the attraction of this seaport group

for import and export activities in the coming period.

Seaport InvestorYear into

operation

Capacity

(TEU/ year)

Output 2020

(TEU)

TCCT - TCIT Tan Cang 2011 1.700.000 2.100.000

CMIT Vinalines 2011 1.100.000 970.890

TCTT Tan Cang 2014 1.100.000 1.047.000

SSIT Vinalines 2014 1.500.000 1.000.000

Gemalink Gemadept 2021 1.500.000

Cai Mep Ha N/A N/A N/A

Deep-water seaports in downstream Cai Mep

Project Commencement Finish

Road 991B 2018 2021

Road Phuoc Hoa – Cai Mep 2018 2021

Bien Hoa – Vung Tau highway 2021 2025

Phuoc An bridge 2021 2025

Bien Hoa – Vung Tau railway 2023 2025

Important infrastructures connecting Cai Mep

Sorce: SNP, Vinalines, VCBS

10

HAI PHONG AREA: MIDSTREAM PORTS CONTINUE TO BE BRIGHT SPOT


Competitive pressure in the downstream of Cam River and Lach Huyen seaports is

forecast to remain high in 2021 :

‐ Large investment and low demand of the super-tonnage vessels in Hai Phong area put pressure

on HICT port to promote the attraction of smaller vessel sizes (about over 40,000 DWT).

‐ The deployment of container terminals 3&4 Lach Huyen (by PHP) increases the motivation for

HICT to quickly attract customers and reach break-even output before welcoming competitors.

‐ Sedimentation in the downstream and Lach Huyen areas reduces the advantage of the channel

depths compared to the ports at a higher position in Cam River.

The bright spot for growth is forecasted to remain in the group of container ports in the

midstream of Cam River :

‐ The overall growth of regional cargo service demand is strongly reflected in the output at ports

as the allocation of goods has basically ended.

‐ The trend of shifting to serving bulk cargoes of upstream ports (located in front of Bach Dang

bridge) brings the driving force for container cargo growth in the region.

Volume of goods through seaports in Hai Phong

(unit: million tons)

163,76

0

40

80

120

160

200

2016 2017 2018 2019 2020 2021F

64.912

0

38.355

65.992

38.237 45.470

103.235

0

20.000

40.000

60.000

80.000

100.000

120.000

Average container vessel size at HICT seaport (unit: DWT)

Source: Hai Phong Marintime Administration , GSO Hai Phong, VCBS

11

RESHAPE THE MARINE LOGISTICS CHAIN


Despite the scarcity of containers, increase in freight rates and congestion of the logistics chain are not expected to persist in the long term, these phenomenon have

shown the realities :

‐ The power of foreign container shipping lines is too large since: (1) These firms have formed large alliances that possess concentrated market share and ability to control the

market; (2) Almost all container shipping activities in Vietnam are held by foreign shipping lines; (3) The fact that many shipping lines are strategic shareholders in large-scale

seaports increase their ability to regulate service prices level.

‐ The activities of Vietnamese enterprises in the maritime logistics chain are fragmented and lack of linkage, most of them focus on developing a number of links in the chain, so

they lack the ability to negotiate with foreign partners.

‐ Logistics infrastructure, especially cargo and container consolidation and distribution hubs, is currently underdeveloped in line with the growth of export-oriented

manufacturing.

We believe that a number of trends of operation and development of the maritime logistics industry will be accelerated in the coming period :

Limit the loss of economic benefits to foreign shipping lines

‐ The draft amendments and supplements to Circular 54/2018, accordingly, the container

handling services fees at seaport will be adjusted to increase by 10% in 2021 and continue

to increase according to the roadmap in the coming years. This is based on the fact that: (1)

Port service charges in Vietnam are still low compared to the region; (2) International shipping

lines are paying the ports only 30-40% of the port handling surcharge from customers.

‐ Strict regulations on transparent listing and regulating freight rates for shipping lines.

‐ Policies to support the development of Vietnamese shipping lines, especially container ships,

through preferential credit for investment in ships, income tax reduction, tax exemption, and

fee reduction when building new ships,…

➢ The Southern and midstream Cam River (Hai Phong) ports

can make good use of the roadmap to increase the price bracket

thanks to low competitive pressure.

➢ A favorable environment for businesses that operate

container fleets with: (1) Healthy financial status; (2) Owning

market share and proven capabilities in Southeast and East Asia

markets.

12

RESHAPE THE MARINE LOGISTICS CHAIN


‐ Firms with large scale, strong financial capacity and full logistics service chain are forecasted to be major beneficiaries in the next growth period and act as counterweights to

large foreign shipping lines.

‐ Large state-owned corporations (Saigon New Port and Vinalines) own outstanding advantages thanks to holding the majority of the market share of seaports, stretching

logistics infrastructure with full services (transportation, ICD, cargo, port services and marine shipping), advantages in land resources and project development ability.

‐ In the private sector, we appreciate GMD with extensive seaport system, logistics infrastructure and a diversified service portfolio. Meanwhile, Viconship (VSC) is also

increasing its position rapidly in operating a full logistics chain thanks to high efficiency container yard - transport – seaport infrastructures, orientation to focus on developing

logistics service and increasing cooperation with strategic partners such as SAFI (transport agency) and Sao A (depot operation).

Develop large-scale logistics chains

Promote investment in logistics centers

‐ The development of the logistics centers is being strongly promoted by the Government to meet the demand from export-orientated production, increase the efficiency of goods

and container rotation and the orientation to minimize the proportion of logistics costs (currently is at a high level compared to the world).

‐ National and economic regional logistics centers are especially interested in with many economic benefits: (1) Integration of many services (warehouse services, gathering,

serving and clearance of goods, container distribution,...) to bring efficient logistics chain; (2) Become hubs for transshipment, distribution of goods and connecting transportation

routes, minimizing the situation of empty vehicles in the return journey. In the listed companies, we appreciate ICD Tan Cang Long Binh (ILB) with many advantages to

develop into a economic regional logistics center.

‐ Smaller logistics center systems are developed in the fan shape from the original centers, in charge of goods circulation in regions and economic corridors. These logistics

centers will also aim to integrate many logistics services, become transit centers and can specialize in a flow of import and export goods or certain consumer or E-commerce

goods.

13



RECOMMENDATIONS


14

GEMADEPT CORPORATION (HOSE: GMD)


OVERVIEW

Business activities

GMD is a leading company in seaport and logistics operations sector with a system of 6 seaports

across the country, including: Nam Hai port, Nam Hai Dinh Vu port, Nam Dinh Vu port, Dung Quat

port, Binh Duong port and Gemalink port.

Business results 2020

GMD recorded a slight decline in revenue (-1,5% yoy) due to competitive pressure at Nam Dinh Vu

port. NPAT decreased by 28,7% yoy due to increasing administration costs and in 2020 GMD no

longer recognized financial income from investment transfer.

Business results of GMD (unit: VND billion)

11,9%14,6%

70,2%

23,2%

16,8%

0%

20%

40%

60%

80%

2016 2017 2018 2019 2020

NPAT margin of GMDShareholder structure of GMD

Source: GMD, VCBS

6,18%4,59%

4,77%

2,00%

1,96%

80,49%

KIM Vietnam Growth Equity Fund

ReCollection Private Limited

PYN Elite Fund (Non-UCITS)

Wareham Group Limited

Deutsche Bank Aktiengesellchaft

Other

2.643 2.604

1.013 950

614 438

0

500

1.000

1.500

2.000

2.500

3.000

2019 2020

Revenue Gross profit NPAT

15



INVESTMENT THESIS

Benefit from industry growth

‐ As one of the leading companies in the industry with a nationwide seaport system, GMD is in

a great position to benefit from the boom in cargo volume through seaports in 2021.

‐ Nam Hai and Nam Hai Dinh Vu ports are forecast to increase operational efficiency thanks to

the trend of cargo movement to downstream ports has basically finished.

‐ Binh Duong port benefits strongly in 2021 thanks to the relocation of Truong Tho ICD cluster

and the development orientation to the east of Ho Chi Minh City.

Advantage from the logistics service chain

‐ With the advantage of owning a relatively complete logistics service chain with seaport

infrastructure, ICD and control of fleet and container through associate company, GMD

limits the impact of market shocks such as the scarcity of containers and hold a good position

in negotiation with shipping lines.

‐ In the future, GMD will increase investment in the ICD system in the South, which is

expected to improve the efficiency of the logistics chain.

Source: GSO Hai Phong, Vinamarine, VCBS

Cargo output through seaports in Vietnam (unit: million tons)

771,24

-5%

0%

5%

10%

15%

20%

25%

30%

0

200

400

600

800

1.000

2016 2017 2018 2019 2020 2021F

Output Growth



163,76

0

40

80

120

160

200

2016 2017 2018 2019 2020 2021F

16



Gemalink is expected to basically reach break-even output in 2021

‐ Cargo service demand in the Cai Mep area is forecast to maintain a high growth rate in 2021

along with growth in import-export volume, motivation from EVFTA and the process of

relocating ports in Ho Chi Minh City.

‐ Most downstream Cai Mep ports are already at their design capacity limits.

‐ Cargo source from CMA-CGM shipping line (joint venture partner at Gemalink), which

currently using services of other ports in Cai Mep area.

Cargo volume through downstream Cai Mep seaports (unit: TEU)

Capacity utilization rate of downstream Cai Mep seaports

Source: VPA, SNP, Vinalines, VCBS

We forecast Gemalink's output in to be 736.247 TEU, basically help the port reach

breakeven point.

Growth momentum from Gemalink will be strongly reflected from 2022, when:

‐ SSIT port is forecasted to operate at full designed capacity, while Cai Mep Ha port will take a

few more years to complete.

‐ With Cai Mep's growing position as a regional transshipment hub, Gemalink has many

advantages to attract cargo sources of Ocean Alliance shipping lines from Singapore.

123,5%

88,3%

95,2%

66,7%

0%

20%

40%

60%

80%

100%

120%

140%

2016 2017 2018 2019 2020

TCCT - TCIT CMIT TCTT SSIT

0

2.000.000

4.000.000

6.000.000

8.000.000

2016 2017 2018 2019 2020 2021F

Cargo volume Total capacity

17



P/B Method 30.025

FCFF Method 43.708

FORECAST

40.972 VND

TARGET PRICE

+27,2%UPSIDE

VALUATION

Unit: VND billion 2020 2021F 2022F

Revenue 2.604 2.871 6.107

+/- yoy (%) -1,48% 10,25% 112,76%

Profit for common shareholders 366 408 509

+/- % -29,28% 11,59% 24,82%

EPS (VND) 1.133 1.219 1.521

STOCK PRICE FLUCTUATION

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

GMD Relative VN Index

18

DINH VU PORT INVESTMENT & DEVELOPMENT JSC (HOSE: DVP)


Business activities

DVP is a subsidiary of Hai Phong Port (PHP) - a member of Vinalines. Currently, the company is

operating Dinh Vu port in the midstream of Cam River (Hai Phong) with the ability to

accommodate ships of up to 40.000 DWT and capacity of 500.000 TEU / year.


DVP recorded a slight decrease in revenue and profit due to still being affected by the movement of

major customers in the first half of the year. Specifically, in 2020, DVP's revenue was VND 518

billion (-7,5% yoy), NPAT was VND 238 billion (-4,0% yoy).

OVERVIEW Business results of DVP (unit: VND billion)

45,87%

45,05%

44,23%

45,87%

43%

44%

45%

46%

47%

2017 2018 2019 2020

NPAT margin of DVPShareholder structure of DVP

Source: DVP, VCBS

51,00%

18,70%

5,15%

5,16%

4,52%

4,90%

10,57%

PHP

Apromaco

Halley Asian Prosperity

Samarang UCITS

Erikoissijoitusrahasto Elite

PYN Elite Fund (Non-UCITS)

Other

560 518

285 249 248 238

0

100

200

300

400

500

600

2019 2020


19



The trend of cargo allocation has basically ended

INVESTMENT THESIS

‐ After shipping line O.N.E (a major customer of DVP) completed the movement to Lach

Huyen, DVP began to witness a rebound in cargo volume since Q3.2020.

‐ With the cargo movement trend basically completed, the positive growth trend of output in

the region is forecasted to be reflected in DVP's business results from 2021.

Expectation for price adjustment of container handling service in 2021

DVP holds a good position in the adjustment of service prices when the new circular

adjusting the price bracket for container handling services at seaports is implemented thanks

to factors:

‐ Competitive pressure in the area around Dinh Vu port (midstream of Cam river) has decrease

dramatically.

‐ High container freight rates are a positive basis for DVP to increase prices for handling

services at ports.



163,76

0

40

80

120

160

200

2016 2017 2018 2019 2020 2021F

-6,0%

-18,5%-17,8%

-17,6%-13,2%

-8,0%

16,7%

7,3%

-30%

-20%

-10%

0%

10%

20%

Q1.2019 Q2.2019 Q3.2019 Q4.2019 Q1.2020 Q2.2020 Q3.2020 Q4.2020

Growth of cargo volume through Dinh Vu port

Source: GSO Hai Phong, DVP, VCBS

20



Benefiting from the relocation of Hoang Dieu port

‐ According to the restructuring orientation of the parent company - PHP, Hoang Dieu port is

gradually being relocated and shifting bulk cargo operations to Chua Ve port.

‐ Dinh Vu and Tan Vu ports will then receive container cargo from Chua Ve port and position to

be the main members in charge of the group's container handling operations in the next few

years.

‐ People's Committee of Hai Phong city has decided to push up the construction progress of

Nguyen Trai bridge. Accordingly, PHP will start relocating Hoang Dieu to hand over the site to

the project right in Q1.2021 and accelerate the cargo movement between member ports.

Seaports in PHP’s system

Source: PHP, DVP, Hai Phong Maritime Administration, VCBS

SeaportBerth leng

(m)Depth (m)

Number of

berth

Cargo

categoriesCapacity

Hoang Dieu 1.717 -8,4 11 Bulk 10 million tons/ year

Chua Ve 848 -8,5 5 Bulk, container 550.000 TEU/ year

Tan Vu 1.002 -8,7 5 Bulk, container 1.000.000 TEU/ year

Dinh Vu

(DVP)425 -8,7 2 Container 500.000 TEU/ year

Bulk cargo

Container cargo

Cargo allocation between member ports of PHP

Hoang Dieu Port

Chua Ve Port

Tan Vu Port Dinh Vu Port

21



P/B Method 53.014

FCFF Method 63.474

FORECAST

55.106 VND

TARGET PRICE

+17,2%UPSIDE

VALUATION


Revenue 518 604 650

+/- yoy (%) -7,5% 16,5% 7,74%


+/- % -4,0% 17,0% 9,1%

EPS (VND) 5.942 6.238 6.800


0

10.000

20.000

30.000

40.000

50.000

60.000

DVP Relative VN Index

22

ICD TAN CANG – LONG BINH JSC (HOSE: ILB)



OVERVIEW Compare a number of ICDs in Dong Nai, Binh Duong and HCMC

Business result of ILB (unit: VND billion)

Nguồn: ILB, VCBS tổng hợp

Business activities

‐ ILB is a member unit of Saigon Newport Corporation (SNP), responsible for providing

logistics services and inland clearance points (ICD) within the logistics service chain of Tan

Cang in the Southeast Vietnam.

‐ With a land reserve of 230 ha for logistics infrastructure development in Bien Hoa city, Dong

Nai, ILB is the logistics enterprise and ICD that has the largest land area in the country.

‐ ILB witnessed a net revenue of VND 456 billion (+8,9% yoy), mainly coming from the

growth of warehouse rental segment thanks to the following factors: (1) Some new

warehouse clusters went into operation, (2) Import and export activities in the region

maintained growth despite the influence of Covid-19.

‐ NPAT in 2020 was VND 69.3 billion (+6,0% yoy). Profit margin decreased slightly due to:

(1) The depreciation expense recorded from the new warehouse cluster that came into

operation in Q4.2020; (2) Financial expenses increased sharply over the same period.

ICDLand area

(ha)

Warehouse

(m2)Position

ICD Phuoc Long 15 1.200 D.9 & D.Thu Đuc, HCMC

ICD Transimex 10 27.000 D.Thu Đuc, HCMC

ICD Sotrans 10 N/A D.Thu Đuc, HCMC

ICD TBS – Tan Vạn 23 86.000 Di An, Binh Duong

ICD Tanamexco 18 8.000 Di An, Binh Duong

ICD Tan Cang

Long Binh230 436.175 Bien Hoa, Đong Nai

418 456

152 158

65 69

0

100

200

300

400

500

2019 2020


23



Growth motivation from new warehouse system

INVESTMENT THESIS

‐ Some warehouse clusters in Long Binh Service Area 2 (130 ha) have gradually come into

operation. The company plans to complete an additional 100.000 m2 of warehouse in 2021.

‐ Warehouse rents in the region have increased positively and are forecast to remain high in the

coming period due to limited supply.

‐ With the abundant land reserve, ILB has plenty of room to continue building warehouse

systems in the coming years. In the long term, the demand for warehouse space in the region

will continue to expand thanks to:

FDI inflow into Dong Nai (unit: USD million)

E-Commerce B2B market value of Vietnam (unit: USD billion)

Source: DPI Dong Nai, IDEA, ECOM, VCBS

1) FDI inflows into Dong Nai maintain positive outlook.

2) The trend of using outsourced warehouses of companies in the region due to scarcity of

industrial land and taking advantage of warehouse service businesses.

3) The strong growth of the e-commerce market poses a great demand for warehouse

infrastructure due to the fact that the use of warehouse and logistics space is much

greater than the traditional trade channel.

1.9181.839 1.916

2.302

919

0

500

1.000

1.500

2.000

2.500

2016 2017 2018 2019 9M.2020

5,0

6,2

8,1

10,1

12,0

0

2

4

6

8

10

12

14

2016 2017 2018 2019 2020

(estimated)

24



The ICD segment is expected to make a positive contribution to revenue in the event

that ILB is included in the ICD category in 2021:

‐ Benefit from FDI inflows and growth in import - export volume in the region.

‐ The trend of returning to using ICD services in Dong Nai of enterprises in the province

as Truong Tho port cluster is being relocated.

‐ The over-capacity state of SNP's deep-water ports in Cai Mep boosts demand for

services at ICD Tan Cang Long Binh to save time for cargo handling.

Source: VPA, SNP, MOIT, VCBS

Cargo volume through SNP’s seaports in Cai Mep (unit: TEU)

The potential for development into an important logistics center in the region thanks to

advantages :

‐ Outstanding land reserve with full infrastructure for logistics service chain.

‐ Favorable geographical location to become a hub for import-export goods in the

Southeast region with infrastructure connecting industrial parks, Cai Mep port cluster

and Long Thanh airport.

‐ Owning a convenient location to integrate logistics service provision for e-commerce

and consumer goods.

‐ As an important link in the logistics chain of SNP- the unit holding the majority of

market share in seaports and logistics market in the South.

1.112.2791.324.348

1.632.290

1.957.0832.100.000

224.609 389.419 470.704648.835

1.047.000

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

2016 2017 2018 2019 2020

TCCT - TCIT TCTT

Project Size (ha)Invested capital

(VND billion)Position

ICD Vinh Phuc 83 3.800 Binh Xuyen, Vinh Phuc

Hateco Logistcs

center12 N/A Long Bien, Ha Noi

Logistics center for

Dong Nam

Economic Zone

72 2.000 Hai Lang, Quang Tri

ICD Tan Cang

Long Binh230 N/A Bien Hoa, Đong Nai

Compare a number of infrastructure project that orientated to be

logistics center

25



P/E Method 29.880

FCFF Method 33.437

FORECAST

31.658 VND

TARGET PRICE

+17,3%UPSIDE

VALUATION


Revenue 456 560 628

+/- yoy (%) 8,95% 22,90% 12,17%


+/- % 5,91% 44,34% 20,26%

EPS (VND) 2.600 3.258 3.918


0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

ILB Relative VN Index

26

DISCLAMER


This report is designed to provide updated information on the fixed-income, including bonds, interest rates, some other related. The VCBS analysts exert their best efforts to obtain

the most accurate and timely information available from various sources, including information pertaining to market prices, yields and rates. All information stated in the report has

been collected and assessed as carefully as possible.

It must be stressed that all opinions, judgments, estimations and projections in this report represent independent views of the analyst at the date of publication. Therefore, this report

should be best considered a reference and indicative only. It is not an offer or advice to buy or sell or any actions related to any assets. VCBS and/or Departments of VCBS as well as

any affiliate of VCBS or affiliate that VCBS belongs to or is related to (thereafter, VCBS), provide no warranty or undertaking of any kind in respect to the information and materials

found on, or linked to the report and no obligation to update the information after the report was released. VCBS does not bear any responsibility for the accuracy of the material

posted or the information contained therein, or for any consequences arising from its use, and does not invite or accept reliance being placed on any materials or information so

provided.

This report may not be copied, reproduced, published or redistributed for any purpose without the written permission of an authorized representative of VCBS. Please cite sources

when quoting. Copyright 2012 Vietcombank Securities Company. All rights reserved

CONTACT INFORMATION:

Tran Minh Hoang Mac Dinh Tuan Pham Hong Quan

Head of Research

[email protected]

Head of Equity team

[email protected]

Equity Analyst

[email protected]

seaport logistics industry outlook 2021 return …

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