By Francesco Guarascio and Phuong Nguyen
HANOI (Reuters) – Vietnamese conglomerate Vingroup is facing fresh scrutiny over its strategy to support loss-making electric vehicle maker VinFast, with its shares near multi-year lows as foreign investors sell and its borrowing costs increase.
Pressure on the company, a household name in Vietnam with businesses spanning automobiles, real estate, retail and resorts, has intensified this month as Moody’s and Fitch also assigned a “junk” rating to the debt of Vingroup’s most profitable unit, real estate company Vinhomes. regarding its planned $500 million sale of international bonds.
Both agencies said the speculative ratings were due to Vinhomes’ ties to Vingroup.
This year “could become an indicator of Vingroup’s overall financial health,” said Leif Schneider, director of international law firm Luther in Vietnam.
“Vingroup could face further financial erosion” if VinFast’s performance does not improve, he said, adding that Vingroup’s reduction in support for subsidiaries could ease financial stress.
The conglomerate and its founder, Pham Nhat Vuong, invested $13.5 billion in the electric automaker in October in loans and grants, and pledged nearly $3.5 billion more in November, despite concerns raised by investors at the company’s last two annual shareholder meetings. .
Vingroup’s market capitalization has nearly halved to around $6 billion since VinFast listed in August 2023. Over the past year, its shares have fallen 6.6%, the steepest among 10 largest listed companies in Vietnam, and underperforming Vietnam’s 7.5% rise. market, according to LSEG data.
Its shares traded in December at their lowest level since 2017. They have recovered slightly since then but were still close to that multi-year low this week.
“The biggest challenge for Vingroup remains VinFast,” said Nguyen The Minh, head of research at Yuanta Securities Vietnam.
However, Vingroup is not backing down.
“Vingroup has supported and will continue to support the development of the subsidiary,” he told Reuters on Wednesday, reiterating his long-standing commitment to Nasdaq-listed VinFast.
The expected strong growth of its units this year would attract investment into the company, Vingroup said.
BORROWING COSTS
So far, investors, particularly foreign ones, have not been convinced. Since VinFast’s listing, the value of foreigners’ combined stakes in Vingroup has fallen nearly 60 percent to 15.7 trillion dong ($620.5 million), faster than that of local investors, stock market data shows updated last week.
