Gemadept Corporation: A Look into Its Recent Share Sale and Future Plans
Author: My Ha, Minh Hue
Date: Thu, December 12, 2024 | 8:15 am GMT+7
Gemadept Corporation, a prominent player in Vietnam’s port and logistics sector, recently made headlines by successfully selling 102.7 million shares to existing shareholders at a price of VND29,000 (approximately $1.14) each. This strategic move raised an impressive VND2,978 billion (around $117.3 million), showcasing the company’s strong market position and investor confidence.
Share Distribution and Financial Boost
In addition to the substantial share sale, Gemadept also distributed 797,286 unsold shares to two investors: Agribank Securities and Phan Van Tuan, at a higher price of VND45,000 ($1.77) each. The overall amount raised from these transactions amounts to VND3,000 billion (approximately $118.2 million). This financial influx is earmarked for several key projects:
- Acquisitions: VND2,213 billion will be utilized to acquire three 1,800 TEU ships, two STS cranes with 85-ton lifting capacities, and seven barges, each with a 248 TEU capacity.
- Debt Repayment: About VND231 billion is allocated for repaying bank loans.
- Expanding Holdings: VND558 billion is set aside to increase its stake in Nam Dinh Vu Port JSC, where Gemadept currently holds a 60% stake.
Gemadept’s Unique Market Position
What sets Gemadept apart is its unique standing as the only listed company in Vietnam that possesses and operates a comprehensive port system stretching from the north to the south of the country. The company offers an extensive array of services, which include not just seaports but also river ports and dry ports.
A standout in its portfolio is Gemalink, recognized as one of the largest deep-water ports in Vietnam and ranked among the top 19 global ports capable of accommodating megaships. This positions Gemadept not only as a national leader but also as a significant player in the global logistics landscape.
Logistics Services and Expansion Plans
In the logistics realm, Gemadept operates a robust network of distribution centers that provide a variety of services, ranging from air cargo handling and warehousing to heavy-lift transportation and cold chain logistics. As of the end of Q3 2024, the company reported total assets amounting to VND14,366 billion ($565.8 million), highlighting its substantial fixed assets and investments in subsidiaries.
The capital generated from the recent share sale will also support ongoing port projects, particularly the second phase of Gemalink in Ba Ria-Vung Tau and the third phase of Nam Dinh Vu Port in Hai Phong. Gemadept is in the process of finalizing required procedures and arranging funds to commence construction on Gemalink-Phase 2, with phase 2A anticipated to be operational by 2026.
Financial Performance Overview
In terms of financial performance, Gemadept reported a 21.4% year-on-year increase in revenue, reaching VND3,420 billion ($134.7 million) for the first nine months of 2024, which means it has accomplished 86% of its revenue target for the year. Nevertheless, its after-tax profit saw a drop of 33%, totaling VND1,549 billion ($61 million). This decline was largely attributed to a one-off financial gain from the previous year’s divestment of Nam Hai Dinh Vu Port.
The port sector remains Gemadept’s primary revenue generator, contributing 85% to total revenue with VND2,924 billion ($115.2 million), marking a 38% increase year-on-year. Conversely, revenue from logistics and office leasing fell by 28%, coming in at VND497 billion ($19.6 million).
Challenges and Market Dynamics
Despite the promising figures from the port segment, the logistics sector has faced challenges. Global containerized freight and transportation services experienced a slowdown, exacerbated by geopolitical tensions in the Middle East, the Red Sea dispute, and strikes at U.S. ports. The maritime transport market has shown volatility, with shipping rates adjusting downward after significant surges earlier in the year.
The landscape is evolving, particularly as major shipping companies like Maersk and MSC prepare to end their 2M alliance in January 2025, which could result in further market shifts.
Share Price Movements
In the context of share prices, Gemadept has experienced a notable increase, with its stock price soaring from VND14,400 in May 2020 to VND71,600 ($2.82) in March 2024. Recently, the price has stabilized around VND66,000, reflecting investor confidence despite market fluctuations. The closing price on Wednesday stood at VND65,900 ($2.6) per share, which remains significantly higher than the prices offered to shareholders and investors in the recent share sale.
Through these developments, Gemadept Corporation is not just reinforcing its market leadership but also strategically positioning itself for future growth in Vietnam’s rapidly evolving logistics landscape.