VSC_VIETNAM CONTAINER SHIPPING CORPORATION_BSC_Company Update_EN

Valuation
In 2018, we forecast VSC's EPS will come to VND 4,628 per share. As of 7/3/2018, VSC is traded at VND 42,700 per share, equivalent to a PE of 9.2x. In 2017, VSC was valued at an average PE of 9.8x. So in 1-year period, we recommend to Hold VSC with a target price of VND 45,354 / share
We expect that the participation of GMD's Nam Dinh Vu Port will not have much impact on Vip Green's resources as VSC is a highly reputable port operator in the region. In the history, there are no fleet that moving to other ports

Forecast business results
In 2018, we forecast VSC will record net sales of VND 1,447 billion (+10% yoy) and EAT of VND 313 billion (+23.7% yoy), corresponding to EPS of VND 4,628

Catalyst
(1) Expected average service prices will not fall sharply as in 2017. (2) Vip-green port increases capacity and container throughput

Investment highlights
(1) Vip-Green port expects to increase the number of customers from 8 per week to 10 weekly, so that throughput can reach about 600,000 teus. Meanwhile, Green port will continue to have difficulties and throughput may reach only 250,000 teus.
(2) Depot of about 8 hectares (GIC) will be in use by the end of 2017, which will increase the capacity of Vip-Green Port to 800,000 TEUs per year.
(3) The CPTPP signed on 8/3/2018 is a momentum to increase the demand for import and export of goods through ports.
(3) Investment risk: Competition continues to increase sharply from new ports, so service price trends are unlikely to increase in the medium term.

Investment risk.
We believe that the biggest risk to VSC's business is when Lach Huyen comes into operation. According to some port enterprises in Hai Phong, Sai Gon New Port will be able to put some cranes at Cat Lai Port to be exploited in Lach Huyen in 2018, but the plan has not been agreed by the Japanese partners. . With VSC, it is possible that in 2019, two flights a week of Evergreen can be put into operation in Lach Huyen.