By Francesco Guarascio and Phuong Nguyen
HANOI (Reuters) – Vietnamese conglomerate Vingroup is going through renewed scrutiny on its technique of backing loss-making electrical car maker VinFast, with its shares close to multi-year lows as overseas traders promote and its borrowing prices rise.
Strain on the corporate, a family identify in Vietnam with companies spanning autos, actual property, retail and resorts, intensified this month as Moody’s and Fitch gave ‘junk’ scores to the debt of Vingroup’s most worthwhile unit, actual property agency Vinhomes, in addition to to its deliberate $500 million worldwide bond sale.
The 2 companies mentioned the speculative-grade scores have been because of Vinhomes’ hyperlinks to Vingroup.
This 12 months “could grow to be indicative of Vingroup’s broader monetary well being,” mentioned Leif Schneider, head of worldwide regulation agency Luther in Vietnam.
“Vingroup could face additional monetary erosion” if VinFast’s efficiency doesn’t enhance, he mentioned, including that scaling again Vingroup’s assist to subsidiaries may mitigate monetary pressure.
The conglomerate and its founder, Pham Nhat Vuong, poured $13.5 billion into the electrical automaker as of October in loans and grants, and promised one other almost $3.5 billion in November, regardless of issues concerning the wager traders raised on the firm’s final two annual shareholders’ conferences.
Vingroup’s market capitalisation has shrunk by almost half to about $6 billion since VinFast’s itemizing in August 2023. Over the previous 12 months, its shares fell 6.6%, probably the most among the many 10 largest listed firms in Vietnam, and underperforming the 7.5% rise for the Vietnam market, in accordance with LSEG information.
Its shares traded in December at their lowest stage since 2017. They’ve recovered barely since however have been nonetheless near that multi-year low stage this week.
“The most important problem for Vingroup stays VinFast,” mentioned Nguyen The Minh, head of analysis at Yuanta Securities Vietnam.
Vingroup, nevertheless, is just not backing off.
“Vingroup has been and can proceed to assist the subsidiary’s improvement,” it informed Reuters on Wednesday, reiterating its long-standing dedication to Nasdaq-listed VinFast.
Sturdy anticipated development for its items this 12 months would entice funding within the firm, Vingroup mentioned.
BORROWING COSTS
Up to now, traders, particularly from abroad, have been unconvinced. Since VinFast’s itemizing, the worth of foreigners’ mixed holdings in Vingroup has dropped by almost 60% to fifteen.7 trillion dong ($620.5 million), quicker than native traders’, in accordance with inventory market information up to date to final week.
