Investment viewpoint: Container ports look positive

Cai Mep - Thi Vai Port would maintain the highest growth rate nationwide thanks to the accelerated infrastructure projects in the coming time.

The number of containers going through Vietnam seaports reached 16.8 million TEUs (18.8% YoY) after the eight first months of 2021, higher than the average of 10% during 2015-2020. KB Securities expected container traffic to continue to grow at 10% per year in the next five years, supported by: (1) Post-pandemic recovery of international trade; (2) Prospects of attracting foreign investment into Vietnam thanks to its proximity to China with a long coastline, low labor cost, increasing productivity, stable economic growth, and political stability; (3) Great economic benefits that Vietnam might gain thanks to new effective trade agreements like the Comprehensive and Progress Agreement for Trans-Pacific Partnership (CPTPP), European Union-Vietnam Free Trade Agreements (EVFTA) and the Rice Competitiveness Enhancement Fund (RCEF).

Ocean freight costs remain high in 2021 due to supply chain bottlenecks, but the situation will improve from 2022. As of September, Drewry's World Container (Composite) freight rate index reached USD10,084/40ft container, 309% higher than the same period a year ago. Furthermore, the growing domestic demand in European countries exceeded the capacity of export countries, including Vietnam and China. They even had to temporarily close their seaports due to the pandemic outbreak, leading to higher container and vessel rental prices.

Therefore, KB Securities said container owners and container shipping companies like Hai An Transport & Stevedoring JSC (HAH) would gain short-term benefit from this because this trend will probably cool down from 2022 when China will be able to handle the increasing container capacity. Besides, steelmakers like Hoa Phat Group (HPG) can help deal with the supply side by joining in manufacturing containers.

This stock company forecasted Cai Mep-Thi Vai Port would maintain the highest growth rate nationwide thanks to the accelerated infrastructure projects in the coming time. Cai Mep - Thi Vai's 8M21 TEU grew by 28% to more than 6 million TEU. This figure will be even more impressive thanks to the promotion of regional connectivity via typical projects, namely 991B Road, Phuoc Hoa - Cai Mep, Bien Hoa - Vung Tau Expressway, Phuoc An Bridge, and Bien Hoa - Vung Tau Railway. Currently, the old ports in the Cai Mep area have almost reached their full capacity and Gemalink Port's designed capacity should reach 70% by the end of 2021 and 100% or 1.5 million TEUs by 2022.