The median P/E (Price-to-Earnings) ratio of listed logistics companies in Vietnam is 7.4 times, compared to
15.1 times in the Philippines, 19.8 times in India, and 23.1 times in Thailand.
Ban Viet Securities Joint Stock Company (VCSC) recently released an update on the logistics industry in which
they assessed that Vietnam's logistics industry, with a total value of 50-60 billion USD, is currently experiencing
rapid growth. However, the level of development is still relatively nascent.
"The logistics industry is currently growing at a rate of approximately 20% per year and is projected to
maintain this double-digit growth for at least 5 to 10 years," VCSC provided an impressive growth figure for
Vietnam's logistics industry.
Most logistics enterprises in Vietnam are second-party logistics providers (2PL), unlike more developed markets,
primarily dominated by third-party logistics providers (3PL) and integrated supply chain management service providers.
According to VCSC, the development of logistics activities creates conditions for Vietnam to quickly emerge as a new
manufacturing hub in the region.
In fact, after slowing down in 2011 and continuing to decline in 2012, the total value of FDI disbursement in Vietnam
has now achieved a growth rate of over 9%, reaching 12 billion USD in 2014, with approximately 70% flowing into the
Furthermore, upcoming major free trade agreements are expected to accelerate this trend, maintaining demand for
various types of logistics services in the coming years.
"At the same time, it allows leveraging the strong growth momentum of domestic consumers, notably in the retail
and online sectors. Vietnam has become one of the fastest-growing retail markets in the world."
According to statistics, the total retail sales from 2009 to 2014 increased by 17.5% to 1.751 trillion VND (80 billion
USD), and it is projected to reach 2.202 trillion VND by 2019. The penetration rate of modern retail channels is less than
15% in urban areas and from 0% to 1% in rural areas (nationally 4%-5%), but it is rapidly increasing with many domestic
and foreign enterprises participating in this market.
This has stimulated the demand for warehousing services and created a demand for professional services, such as cold
supply chain management (for retailing fruits and vegetables).
Retailing via the Internet is also a rapidly growing sector, with a growth rate of 43% in 2014, equivalent to a value of 11
trillion VND. Home delivery to buyers as well as the complex payment process for online purchases are currently driving
demand for professional logistics services.
VCSC believes that low efficiency is a major obstacle in the industry, reducing the valuation of companies. Customs procedures
and complex legal processes in Vietnam have increased logistics costs, resulting in delays in cross-border transportation.
The underdeveloped infrastructure in Vietnam exacerbates the issue. The discount due to low efficiency is reflected in the
median P/E ratio of logistics companies listed in Vietnam, reaching only 7.4 times, compared to 15.1 times in the Philippines,
19.8 times in India, and 23.1 times in Thailand.
However, FDI continues to flow into Vietnam, and continuous improvement of infrastructure will boost efficiency and narrow the
valuation gap with logistics companies in the region.
"Vietnam continues to attract FDI into high-tech manufacturing sectors such as electronics, requiring complex supply chains, leading
to the import of sophisticated components and the export of high-value, fragile products," emphasized VCSC.
This will create pressure for current warehousing companies to upgrade their operations. Strong investments in road, rail, port, and airport
infrastructure will allow domestic enterprises to improve efficiency, thereby enhancing profitability."