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SCS – Fairly positive results despite revenue and NPAT growth deceleration in Q2-FY25

• SCS is trading at a TTM P/E and TTM EV/EBITDA of 9.0x and 6.9x, respectively, which are 34%/38% lower than the 5-year historical average and 80%/50% lower than the industry median. We recommend BUY based on the expectation that SCS could participate in Cargo Terminal No. 1 at Long Thanh Airport and that its shares will be re-rated.
• NPAT reached VND 189 billion (+11% QoQ and flat YoY). SCS maintained double-digit revenue growth while NPAT remained flat due to the expiration of its corporate income tax (CIT) incentives (a 20% tax rate applied from 2025 after a 50% reduction for nine years). We assess that the core business operations still delivered relatively positive results.
• Most of the profitability indicators remained stable at high levels in Q2-FY25. The gross margin showed little fluctuation, reaching 80% (-1.1 pps QoQ and -0.6 pps YoY). SG&A expenses/revenue remained low at 5.2% (-0.4 pps QoQ and +0.1 pps YoY). The net margin was 64.8% (+1 pps QoQ and -7 pps YoY). The narrowing of the net margin was due to the expiration of CIT incentives as mentioned above.