Saigon Ground Services JSC (Sags – stock code: SGN) has unveiled a conservative business plan for 2025, forecasting a significant drop in profits after losing a major client, Vietjet Aviation JSC (stock code: VJC).
In preparation for the annual general meeting in 2025, SGN targets consolidated revenue of VND 1,392 billion (down 11% from the previous year) and expects net profit to reach only VND 159 billion (down 41% year-on-year).
This conservative plan follows SGN’s termination of ground handling services for Vietjet at Tan Son Nhat Airport from April 2025. According to the financial report of Saigon Ground Services JSC, Vietjet contributed 38% of SGN’s total revenue.
Saigon Ground Services JSC forecasts a net profit of only VND 159 billion this year. Image: CAAV.
Additionally, Saigon Ground Services JSC assesses that the aviation and tourism markets still face unpredictable risks. Volatile oil and jet fuel prices are driving up operating costs, which directly affect ticket prices and reduce passenger demand. Moreover, the robust development of the road transport system is reducing the dependence on domestic air services, a trend that disadvantages airport service companies like SGN.
According to calculations, by self-handling ground services at Tan Son Nhat Airport, Vietjet can save hundreds of billions of VND annually.
Despite short-term challenges, SGN remains optimistic about the future with the upcoming operation of the Long Thanh Airport. The airport is expected to accommodate 80% of international flights currently operating at Tan Son Nhat Airport, offering significant growth opportunities for SGN.
In March, Saigon Ground Services JSC announced a resolution by its Board of Directors to contribute capital to establish Saigon – Long Thanh Ground Services JSC. SGN will contribute nearly VND 250 billion in cash, equivalent to 75% of the charter capital of Long Thanh Ground Services JSC (VND 333 billion).
SGN will appoint two representatives to manage this investment and participate in the Member Council of Saigon – Long Thanh Ground Services JSC. Mr. Nguyen Cao Cuong, Chairman of SGN’s Board of Directors, will be authorized to represent VND 166.5 billion, equivalent to 50% of the charter capital of Saigon – Long Thanh, and will serve as the Chairman of the Member Council. Meanwhile, Mr. Hua Kien Trung, Vice President of SGN, will be authorized to represent VND 83.25 billion, equivalent to 25% of the capital.
Additionally, SGN has nominated Mr. Nguyen Thai Hoa as the legal representative and General Director of Saigon – Long Thanh, Mr. Phung Danh Nguyen – Chief Accountant of SGN, and Ms. Nguyen Thi Thuy Diem – Head of Consolidated Accounting Team of SGN as members of the Inspection Team.
Saigon – Long Thanh Ground Services JSC has recently commenced a project to invest in the construction of an aircraft and equipment maintenance service at Long Thanh Airport.
In the first quarter of this year, Saigon Ground Services JSC recorded net revenue of nearly VND 418 billion, up 13% over the same period last year. The main business of ground handling services contributed more than VND 400 billion, an increase of 12%.
Revenue from related parties played a significant role, bringing in more than VND 157 billion for SGN in this quarter. Vietjet contributed over VND 156 billion, while Vietnam Airports Corporation (code: ACV) contributed more than VND 1 billion.
As a result, SGN achieved a net profit increase of 16% compared to the previous year, reaching over VND 78 billion. Saigon Ground Services JSC explained that this performance was due to the growth in both domestic and international service volumes and the signing of new service contracts with several international customers.
As of March 31, SGN recorded short-term receivables of nearly VND 242 billion. Of this, over VND 55 billion was receivable from Vietjet and over VND 66 billion from Bamboo Airways. For the receivables from Bamboo Airways, SGN has made a provision for doubtful debts of nearly VND 70 billion.
Saigon Ground Services JSC and Hanoi Ground Services JSC have capital contributions from Vietnam Airports Corporation (code: ACV) with ownership ratios of 48.03% and 20%, respectively. In addition, Vietjet Aviation JSC also holds 9.11% of SGN’s capital.
