GMD [OUTPERFORM +13.0%] - Northern port to overtake southern ports as core profit driver

- We upgrade GMD to OUTPERFORM from MARKET PERFORM, despite a 3% cut in our target price (TP) to VND67,400/share, as the stock price has declined ~7% over the last 3 months.

- Our lower TP is mainly due to (1) a 3% reduction in our core business valuation and (2) our 16% lower rubber plantation valuation as GMD booked a ~VND250bn (USD9.8mn) in expenses for this business during Q4 2024. These factors outweigh a 5% increase in GML’s valuation.

- Our 3% lower valuation for the core business is due to a 27% lower net cash balance of ~VND1tn (USD39.3mn). We attribute this to (1) shorter-than-expected days payable outstanding (67 vs 120 expected), (2) a VND130bn (USD5.1mn) investment in Saigon Development Corporation made in Q4 2024 and a VND475bn (USD18.7mn) YoY increase in pre-paid land lease fees for GMD’s northern ports that were not factored into our last model, and (3) a ~VND400bn (USD15.7mn) higher-than-expected cash dividend payment during the year.