Loan 2 billion USD
According to Vingroup 's (VIC) separate financial report for the second quarter of 2024, by the end of June, the group had outstanding loans to electric car company VinFast (VFS) of more than VND 52,200 billion (equivalent to more than USD 2 billion), including nearly VND 44,826 billion in short-term loans and nearly VND 7,429 billion in long-term loans.
Loans to VinFast account for more than 77% of Vingroup's total loans to its subsidiaries. The interest rate Vingroup lends to VinFast is 11-12% per year, equivalent to the interest rate it lends to other subsidiaries.
Regarding investment, by the end of the second quarter, Vingroup had poured more than VND65,700 billion (equivalent to nearly USD2.6 billion) into VinFast, out of a total of more than VND175,900 billion (nearly USD6.7 billion) invested in subsidiaries.
The loans to VinFast are part of a strategy to help the Vietnamese electric car company expand its production and sales globally, in Vietnam, Southeast Asia, and even in the US and Europe.
Like many other electric car companies in the world , VinFast went through a very difficult start-up phase, having to convince consumers about green transportation, improve battery quality technology, control technology, improve safety, reduce costs and aim for profits through selling in large quantities, hundreds of thousands of cars/year.
VinFast has started construction of factories in North Carolina (USA), India and Indonesia. In the first 6 months of the year, VinFast has been present in the markets of Indonesia, Thailand and most recently in early July, opened the first 3 dealerships in the Philippines market.
With the orientation of becoming a technology - industrial - service group by 2028, the manufacturing sector is increasingly important. In the first half of the year, Vingroup's manufacturing and related services (mainly electric vehicles) continued to be the second pillar, with revenue of nearly VND 14,200 billion.
Revenue from real estate transfer business in 6 months still ranked first with more than 27,100 billion VND. Real estate leasing reached more than 2,400 billion VND, tourism and entertainment more than 3,900 billion VND, healthcare more than 2,000 billion VND, education more than 2,800 billion VND...
In total, in 6 months, Vingroup recorded total revenue of more than 65,000 billion VND.
In terms of profit, due to the production segment (electric vehicles) still suffering large losses, although revenue from financial activities more than doubled (from more than VND 14,200 billion in the first half of 2023 to more than VND 30,100 billion in the first half of 2024), Vingroup's consolidated net profit only reached more than VND 2,000 billion.
Real estate "shoulders" production, electric car race enters fierce phase
In the manufacturing sector (electric vehicles), Vingroup reported a pre-tax loss of nearly VND18,900 billion. Meanwhile, the real estate transfer business sector made a profit of nearly VND9,700 billion. Real estate leasing made a profit of more than VND1,500 billion. Tourism, entertainment and healthcare lost a total of more than VND1,800 billion...
In 2023, VinFast will have a net loss of nearly VND18.3 trillion (compared to a loss of nearly VND18.9 trillion in the first half of 2024). In 2022, VinFast will have a loss of VND33.5 trillion.
Recently, electric vehicle manufacturers have been expanding production and sales in many countries around the world to capture the market in the early stages of development, as well as to avoid taxes that countries have and may impose on this product.
In early July, Chinese electric car giant BYD opened its first factory in Southeast Asia, in Rayong, south of Bangkok, with a capacity of 150,000 vehicles/year. Within Southeast Asia, import tax on cars is 0%.
The European Commission (EC) and the US have recently increased taxes on Chinese electric vehicles (more than 2 and more than 4 times), but BYD has also built/is building factories in Türkiye, Uzbekistan, Brazil and Hungary to penetrate many markets around the world.
Chinese electric car makers and US-based Tesla are also pushing to export low-cost electric cars.
Vietnam’s market of 100 million people still seems quite small. Confidence in electric vehicles is still in its early stages. Expanding production and sales to other international markets may be a must. In mid-July, VinFast officially broke ground on an electric vehicle factory in Indonesia, the most populous country in Southeast Asia, with an investment of 200 million USD, and an expected capacity of 50,000 vehicles/year.
Previously, at the 2024 annual general meeting of shareholders, Chairman Pham Nhat Vuong affirmed that VinFast is Vingroup's mission and future and "will never let go". In an interview with Bloomberg TV in mid-June, the billionaire said he would financially support VinFast "until the money runs out".
Mr. Vuong is also confident that he can steer VinFast through difficulties, despite the fact that Toyota and Volkswagen are facing difficulties globally.
According to Bloomberg experts, VinFast needs to build its brand and compete with big rivals, which requires a lot of time and investment. By the end of the first quarter of 2024, Vingroup, its member companies and financial institutions have provided VinFast with about 12.9 billion USD.
At the 2024 Shareholders' Meeting, Mr. Vuong said that he personally will continue to arrange assets to sponsor VinFast with another 1 billion USD and wants to focus all his efforts on building this brand.
The VinFast boss admitted that making electric cars was very difficult, but the most difficult time has passed and the market has recovered. He believes that electric cars are a sustainable and irreversible trend.
Regarding charging stations, Mr. Vuong said he will spend 10,000 billion VND in the next 3 years to build charging stations even though most consumers travel less than 100km/day and can completely charge at home. Vietnam's richest billionaire believes that VinFast is expected to have positive earnings before interest, taxes, depreciation and amortization (EBITDA) by 2026.
Bloomberg calculated that by mid-June, Mr. Pham Nhat Vuong owned assets of about 5.3 billion USD. According to Forbes, as of July 20, Mr. Vuong had assets of 4.1 billion USD.
Source: https://vietnamnet.vn/ty-phu-pham-nhat-vuong-ho-tro-vinfast-den-khi-het-tien-vingroup-bom-von-manh-2304174.html
Comment (0)