Major port operator ordered to pay back over 3.5 billion VND in taxes.

VietNamNet•24/09/2023

Recently, Gemadept Joint Stock Company (Stock code: GMD) received a decision from the Ho Chi Minh City Tax Department regarding administrative penalties for tax violations during the inspection period from 2017 to 2022.

The tax authorities will collect over 1.5 billion VND in corporate income tax, 674.4 million VND in late payment penalties, and over 1.3 billion VND in administrative fines from Gemadept. The total amount Gemadept must pay is over 3.5 billion VND.

Gemadept, formerly a state-owned enterprise established in 1990, was privatized in 1993. To date, the majority of the company's shares have been dispersed and transferred to private hands, including small domestic and foreign shareholders.

Shareholder data at the end of 2022 shows that the State shareholder had divested all its capital. The largest shareholder is SSJ Consulting Vietnam Co., Ltd. (a subsidiary of Sumitomo - Japan), owning approximately 9.85%. Domestic minority shareholders hold up to 52.65% of the shares, and the remaining 37.5% is owned by other foreign shareholders.

The company's leadership team (including members of the Board of Directors, the General Management Board, and the Supervisory Board) held only about 5.5 million shares at that time, or about 1.83% of the company's shares. Of these, Chairman of the Board Do Van Nhan held the most, over 1.5 million shares (0.5%).

The total number of shareholders recorded at the end of last year was 12,179 entities; this includes 225 organizations and 11,954 individuals.

Since its privatization, Gemadept has rapidly risen in Vietnam's maritime sector, with a strong presence in seaports stretching from North to South, along with numerous distribution centers both domestically and internationally.

This private company operates a system of 7 major port clusters, including: 3 ports in the North (Nam Dinh Vu Port, Nam Hai ICD, and Nam Hai Port), one in the Central region (Dung Quat Port), and 3 ports in the South (Phuoc Long ICD, Gemalink Port, and Binh Duong Port).

Most notably, Gemalink Port, in partnership with CMA Terminals (France), is currently the largest deep-water port in Vietnam. The company is also seeking to establish a joint venture with SSA Marine (USA) to collaborate on strategic port projects in Southern Vietnam, including a shared interest in developing the $6.7 billion Cai Mep Ha Logistics Center.

This conglomerate has also built a dense logistics network with 22 distribution centers nationwide. Its real estate business includes the Saigon Gem Complex project and a complex project in Vientiane, Laos. Its forestry segment is developing a rubber tree planting and processing project in Cambodia.

Gemadept's business operations have also made significant strides recently thanks to capacity expansion and favorable macroeconomic conditions. Last year, the company recorded revenue reaching VND 3,900 billion for the first time and a record pre-tax profit of VND 1,161 billion, representing increases of 22% and 62% respectively compared to the previous year.

According to its report for the first six months of this year, this logistics giant saw a slight 3% decrease in revenue to VND 1,814 billion due to the sluggish shipping market. However, net profit surged by 245%, reaching VND 2,493 billion. This was mainly due to extraordinary profits from the sale of stake in Nam Hai Dinh Vu port.

According to market share reports for the first half of the year, Gemadept accounted for 18% of output in the North, 32% in the Central region, and 19% of the market share at Southern seaports.

With the recent sale of Nam Hai Dinh Vu port, Gemadept is maintaining significant financial resources for investment plans in other mega-ports. The total value of cash, cash equivalents, and short-term deposits on the balance sheet has now exceeded VND 2,300 billion (an increase of nearly VND 900 billion compared to the beginning of the year).

Therefore, the company's leadership is planning to invest in phase 3 of the Nam Dinh Vu Port Cluster to bring it into operation in 2025. When completed, this will be the largest river port cluster in the North, capable of accommodating the largest feeder vessels and Intra-Asia ships in the river port region.

Gemalink Port is also finalizing the necessary procedures and securing funding for construction, ready to bring phase 2 into operation from 2024-2025, thereby increasing capacity to 3 million TEU/year, with an investment of 300 million USD.

GMD shares on the stock market are currently the biggest bright spot, continuously rising sharply, even reaching a historical peak of 65,000 VND/share on September 21st, nearly 1.5 times higher than at the beginning of the year. The company's market capitalization is now approximately 20,000 billion VND.

How powerful is the US partner behind the $6.7 billion mega-port project that domestic businesses want to build? Gemadept currently owns 7 major port clusters nationwide and still intends to expand further with the Nam Dinh Vu and Gemalink port clusters, as well as invest in the Cai Mep Ha mega-port project with a US partner.

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