Vingroup supported VinFast and global expansion strategy

DNHN - The Vingroup conglomerate, chaired by Mr. Pham Nhat Vuong, has extended significant loans to electric vehicle manufacturer VinFast, alongside considerable investments in the company.

According to Vingroup's Q2/2024 financial report, by the end of June, the group had loaned VinFast (VFS) over 52.2 trillion VND (more than 2 billion USD), including nearly 44.826 trillion VND in short-term loans and approximately 7.429 trillion VND in long-term loans.

These loans account for more than 77% of Vingroup's total loans to its subsidiaries. The interest rate Vingroup charges VinFast is 11-12% per annum, which is comparable to the rates for other subsidiaries.

Regarding investments, as of the end of Q2, Vingroup had invested over 65.7 trillion VND (nearly 2.6 billion USD) in VinFast, out of a total of over 175.9 trillion VND (nearly 6.7 billion USD) invested in its subsidiaries.

These loans are part of the strategy to help VinFast expand its production and sales operations globally, including in Vietnam, Southeast Asia, the U.S., and Europe. VinFast is investing in battery technology, control technology, improving safety, reducing costs, and aiming for profitability through large-scale sales, targeting hundreds of thousands of vehicles per year. VinFast has started constructing plants in North Carolina (U.S.), India, and Indonesia, and has opened stores in Indonesia, Thailand, and the Philippines.

Aligned with its goal to become a technology-industrial-service conglomerate by 2028, Vingroup's manufacturing segment is becoming increasingly important. In the first half of 2024, the manufacturing and related services segment (mainly electric vehicles) continued to be a key pillar, generating nearly 14.2 trillion VND in revenue.

Revenue from real estate transfers in the first six months still led with over 27.1 trillion VND. Real estate leasing earned over 2.4 trillion VND, tourism and entertainment over 3.9 trillion VND, healthcare over 2 trillion VND, and education over 2.8 trillion VND. In total, Vingroup recorded more than 65 trillion VND in total revenue in the first half of the year.

In terms of profit, despite a significant increase in financial revenue (from over 14.2 trillion VND in the first half of 2023 to over 30.1 trillion VND in the first half of 2024), Vingroup's consolidated net profit was only over 2 trillion VND due to substantial losses in the manufacturing segment (electric vehicles). Vingroup reported a pre-tax loss of nearly 18.9 trillion VND in the manufacturing segment. In contrast, the real estate transfer business earned nearly 9.7 trillion VND in profit. Real estate leasing earned over 1.5 trillion VND in profit. Tourism, entertainment, and healthcare combined for a total loss of over 1.8 trillion VND. In 2023, VinFast reported a net loss of nearly 18.3 trillion VND, compared to a loss of nearly 18.9 trillion VND in the first half of 2024. In 2022, VinFast lost 33.5 trillion VND.

Recently, electric vehicle manufacturers have been aggressively expanding production and sales in various countries worldwide to capture the market early and avoid new taxes.

Mr. Pham Nhat Vuong affirmed at the 2024 annual shareholders meeting that VinFast is the mission and future of Vingroup and "will never be abandoned." He is confident in his ability to steer VinFast through its challenges. He stated that he would continue to arrange assets to finance VinFast with an additional 1 billion USD and devote all efforts to building the brand.

Mr. Vuong plans to spend 10 trillion VND over the next three years to build charging stations, despite most consumers being able to charge at home. He believes VinFast will have a positive EBITDA by 2026.

According to Bloomberg, as of mid-June, Mr. Pham Nhat Vuong's net worth was approximately 5.3 billion USD. According to Forbes, as of July 20, his net worth was 4.1 billion USD.

Minh Anh