Superdong – Kien Giang High-Speed JSC (HoSE: SKG) held its annual General Meeting of Shareholders on June 26. The BOD submitted to shareholders to consider the revenue plan of 633.3 billion VND, equivalent to the level implemented in 2019 and the profit after tax of 30.8 billion VND, down nearly 70%.
Sharing in the discussion, the representative of the business said that the shipping business enterprises had to temporarily suspend operations for 2 weeks of April. By April 22, the companies had resumed operation but the frequency of and capacity is limited. In May, the new activity returned to normal, however, the number of visitors was still reduced due to disease concerns. May’s profit was still unable to cover the losses in March and April. In the first 6 months, the company escaped a loss with modest profit.
Regarding dividends in 2019, businesses are expected to pay in the form of 10% cash. The dividend rate in 2020 is planned to be 10%.
The contents of the discussion are as follows.
– Are the competing companies narrowing their operations?
– From the perspective of the overall perspective, the competitors paused on some routes and some trips. However, business representatives could not confirm whether the cause was from the disease or not.
– Which establishment sets a profit plan of VND 30.8 billion in 2020? Can the company use 10% more of the profits left in 2019 to pay dividends in 2020?
– Business plan in 2020 submitted to shareholders has been adjusted down compared to the plan in the annual report due to the ships having to stop operating in April.
A part of the profits from dividends is also used for the prevention and control of Covid-19. Basic earnings per share (EPS) in 2019 is just over 400 VND / share. The company has another option of paying stock dividends but the market situation is not favorable, so choosing cash is also a support for shareholders.
– Gasoline prices have been on a downward trend recently, have you purchased any futures contracts or bought low-price oil for reserves? How many years of CIT incentive?
– Lower petrol price is an advantage for businesses, helping to offset the costs during the epidemic. Currently, the company is signing contracts with 4 fuel suppliers with 2 forms of deposit to keep the price (advance) and pay later. In the short term, the company is using more form of advances. However, the amount of fuel consumption per day is very large, so the company can only reserve within a certain amplitude to reduce the overload in petrol depots and ensure fuel quality. In addition, the cost of the type of advance contract is very large.
From ship No. 1 to ship No. 4 has expired, the remaining ships are still in the tax incentive period. The company also arranged the ships with more tax incentives to maximize benefits.
Superdong Kien Giang is enjoying a tax incentive thanks to investments in disadvantaged areas (islands). According to the investment certificate, Superdong Kien Giang has a period of 50 years from the date of registration with a tax rate of 10%.
– In 2019, the ratio of after-tax profit to net revenue (ROS) is 22.36%. In 2020, the price of DO oil is reduced by nearly 40%, why is the ROS plan only 8.73%?
– Oil price fell 40% in April but that was the time when businesses limited their activities due to epidemics. The average price from January to May only decreased by about 14% compared to the same period in 2019.
In addition, the company faces many burden of staff costs, berths, fuel consumption due to relocation of wharves and insufficient vessel capacity.
– Market share of routes that the company is exploiting, the competition with competitors in each route, especially Ha Tien – Phu Quoc – Rach Gia? What are the company’s plans to increase competition?
– Ha Tien – Phu Quoc route in 2019 accounts for 24.69% of the revenue. Rach Gia – Phu Quoc route is 31.31%, Rach Gia – Nam Du is 19.51%, Phan Thiet – Phu Quy is 14.55%, Phu Quoc – Nam Du is 9.9%.
In order to increase competitiveness, the company focuses on improving the quality of services and facilities, stabilizing prices, ensuring safety and stability for customers. The company owns many ships to help arrange flexibility to meet customer needs. The company also focuses on information technology, electronic ticketing system and e-invoices that have been completed and put into use. In the coming time, Superdong Kien Giang will operate the Mobile App system.
– If high-speed ferry business does not improve in the next 1-5 years, does the company have any solutions or new directions?
– The company currently has 2 high speed ferries operating Ha Tien route to Phu Quoc. High-speed ferry has been completed in Malaysia, due to the situation of wharves, the company has not brought to Vietnam.
The ferries have operated losses continuously in recent years but the company wants to diversify its services, creating more choices for customers. In the process of exploitation, many other ferry companies also offer similar services, leading to reduced demand, fierce competition on prices. In addition, the emergence of a new type of ferry transporting trucks and freight vehicles with very small operating costs, the regulations are not strict, causing great pressure on the company.
In order to help the ferries operate effectively, the company is studying solutions such as keeping one ferry on the Ha Tien – Phu Quoc route, and one ferry to exploit more potential routes.
– What is the depreciation time for ships? Has any fleet depreciated yet?
– Decision No. 45 of the Ministry of Finance guiding the depreciation of fixed assets which allows the depreciation period for ship vehicles to be from 7 to 15 years. The 15-year calculation will be in line with the actual operation and tax incentive framework, including the first 4 years of CIT exemption, 9 years for 50% CIT reduction and 15 years for 10% preferential tax.
Currently, the company with the Superdong I ship has fully depreciated but still operates.
– The construction of 2 new high-speed ferries to deploy bidding or to select partners as agreed by the Board of Directors? The construction of the new ferry took so long, why didn’t the company build the port at the same time?
– The strength of the business is a stable fleet, reasonable fuel consumption. The fleet of two ships operating in Ha Tien is built in Vietnam, 16 high-speed boats and two new ferries are built in Malaysia with the partner Kaibuok Shipyard – the company related to General Manager Puan Kwong Siing, specializing in expert on shipbuilding technology. The company selects a shipbuilding partner in accordance with the law, including those with related interests, who are not allowed to vote. Shipbuilding prices are also competitive.
By the time the company conducted research and ship building, the Rach Gia – Phu Quoc route did not have the means of high-speed ferry to anchor. In addition, it is reported that the State management agencies are developing and developing Rach Gia pier with a replication model for operating ferries, so the leadership has the idea of ferry service business. Demand for Rach Gia – Phu Quoc is large.
Due to cumbersome procedures, the yard is still starting to work, affecting the overall progress. The Board of Directors is also aware that investing in ferries in front of yards is risky but accepting risks to catch the trend.
– How many% of foreign visitors in recent years? How is the revenue from foreign visitors affected?
– Foreigners account for a relatively limited proportion, about 10-15% and depend on the season. The impact of foreign visitors on business activities is not too large.
– Share more about the plan to pay dividends in 2019?
– The Company chose the 10% cash option due to the current unfavorable stock market assessment, the stock dividend payment may cause dilution.
– Could you please explain the enterprise income tax (CIT) overpaid 8.8 billion?
– In 2018, Chief Accountant Bui Thi Hong Dao contacted Phu Quoc Tax Department and Kien Giang Tax Department to work on preferential policies on CIT. Ms. Dao then asked the authorities to inspect tax from 2016 to 2018 and adjust the CIT returns during that time. This caused an excess of VND 8.8 billion in taxes.
– The result of auction of land use right in To Chau Ward, Ha Tien City is canceled, when will the company receive nearly VND 22 billion?
– This is a project the company held a tender to own a piece of land to build a port logistics. However, due to a number of procedures at the State management agencies when the company participates in auctions, the company cannot register land use rights because of foreign factors. Company leaders worked with the People’s Committee of Ha Tien Town and Kien Giang Province and requested to return the land and receive appropriate and reasonable compensation. However, Ha Tien Town People’s Committee has no official response. In case of necessity, management will use the provisions of the law to ensure the best interests of the company.
Therefore, business leaders have not been able to answer in detail about the time of receiving the 22 billion dong.