VSC – Q4/2022 results are not prosperous and story from the M&A deal in the seaport industry

• Q4/2022 results was net revenue and NPATMI of VND 520 billion (+3% YoY, +2% QoQ) and VND 53.4 billion (-42% YoY, -34% QoQ), respectively. In 2022, net revenue and NPATMI recorded VND 2,007 billion (+6% YoY) and VND 314 billion (-10% YoY), EPS was 2,451 VND (-45% YoY).
• VSC is in the execution process of an M&A deal. We believe that VSC's target company is Nam Hai Dinh Vu Port Joint Stock Company, which owns Nam Hai Dinh Vu Port (NHDV) in Hai Phong as GMD has announced the decision to transfer all shares in NHDV and recorded a deposit of VND1,000 billion in Q4/2022. In Q4/2022, VSC together with Doan Huy Investment and Trading Co., Ltd. made a deposit of VND 1,000 billion to buy back the target port, of which VSC contributed VND 300 billion. According to the draft of the plan to use capital from the issuance, the value of this deal is expected to be about VND 2,250 billion. In which, the remaining VND 1,200 billion is expected to be mobilized by VSC through the share issuance to existing shareholders at the ratio of 1:1 and the offering price is VND10,000/share.
• The seaport industry's outlook for 2023 is quite challenging as GDP growth rate of main trade partners such as the US and EU is forecasted to slow down and inflation will remain high. In fact, the PMI of Vietnam has not shown any positive signal in recent months.
• We are conducting a more thorough assessment of the potential from the NHDV port M&A deal and projection for 2023. Currently, VSC stock is trading at a P/B valuation of 1.4x, equivalent to a 5-year average of 1.4x, and a P/E TTM of 12.2x, and is 33% above the 5-year average of 9.2x.