Gelex gives up logistics core to widen foothold in industrial park development

Gelex will give up logistics, which is one of its four core business sectors, and divest from Dong Nai Port JSC to wade deeper into industrial park development.

Vietnam Electrical Equipment JSC (Gelex) has issued the decision to divest its 100 per cent holding in Gelex Logistics Co., Ltd. which has a charter capital of VND1.21 trillion ($52.6 million).

According to Gelex’s report, in 2019, the revenue from its logistics operations acquired VND1.83 trillion ($79.57), up 4 per cent on-year, however, after-tax profit decreased by 22 per cent to VND122 billion ($5.3 million). The company said that the logistics sector carries numerous risks. It requires players to establish an integrated chain in order to ensure the smooth transit of goods from manufacturers to retailers and then customers. However, in Vietnam, this requirement has yet to be met. In addition, the existing infrastructure system has yet to be completed. There are also high exchange rate risks.

Gelex has yet to disclose the identity of the buyer of its logistics arm, however, Indo Trans Logistics Corporation has recently issued a plan to buy 58.2 per cent stake in Sotrans, which is a member company of Gelex Logistics, to increase its holding to 100 per cent. Thus, Indo Trans Logistics is likely to be the purchaser in this deal, too.

In addition, the company will sell 20.25 per cent stake in Dong Nai Port JSC, despite only having bought the company in last April. With the value at VND64,000 ($2.78) per share at the latest transaction session, Gelex would acquire VND240 billion ($10.43 million) in proceeds from the divestment.

It is likely that Gelex will spend the proceeds of these two deals to increase its investment in the industrial park development because in its annual report, the company mentioned that it plans to increase its holding in Viglacera to over 50 per cent from the current 25 per cent, which it acquired in May 2019 for VND2.44 trillion ($106.1 million). In 2019, Viglacera acquired VND10.14 trillion ($440.87 million) in revenue, with the industrial park segment contributing a large portion.

The purchase is feasible because the Ministry of Construction plans to divest the remaining 38.85 per cent state-owned stake in Viglacera this year.