Freight rate and charter rates skyrocket
Investment thesis
- Vietnam international trade benefit from the recovery of target market such as China, The US, Europe. Export and import and container throughput have been strongly raising regardless of new wave of Covid-19 outbreak in May;
- Sea container transportation industry is being in uptrend cycle, freight rate has surged due to high demand. Freigh rate is climbing undisputedly to new high, more than 50% compared to May 2021 Container vessel price skyrockets second quarter, increase 3 times. Shortage of capacity not yet be solved in near future, which is expected to keep freight rate staying high level until 2022, according to the company;
- 2 new investments in Hai An West and Hai An East at attractive price, which help to improve capacity during shortage of supply; 2900 teus of container received in May buying at cheap cost in first quarter is boosting the income since empty container is heavily in shortage over the world;
- Stable income from port operation, thanks to HAH container fleet;
- In Q2 2021, HAH recorded consolidated revenue of 449 billion VND (+72% y-o-y), gross profit of 141 billion VND (+135% y-o-y), NPAT of 82.3 billion VND (+130% y-o-y)
Risk
- Increasing oil price is the most important risk, which impact negatively on the earning .
- We believe that risk of disrupting domestic business activity if will ever be impacted by Covid-19 Pandemic outbreak would be eliminated, since HAH is able to lease their vessels internationally at very high charter rate, when other liners are hunger for additional tonnage.
Recommendation
After Q2/2021 result was announced, we raise target price to 55,100 VND per share to reflect the fact mentioned above.
