By Francesco Guarascio and Phuong Nguyen
HANOI (Reuters) – Vietnamese conglomerate Vingroup is dealing with renewed scrutiny on its technique of backing loss-making electrical automobile maker VinFast, with its shares close to multi-year lows as overseas traders promote and its borrowing prices rise.
Stress 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’ rankings 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 businesses stated the speculative-grade rankings had been as a consequence of Vinhomes’ hyperlinks to Vingroup.
This 12 months “could change into indicative of Vingroup’s broader monetary well being,” stated Leif Schneider, head of worldwide regulation agency Luther in Vietnam.
“Vingroup could face additional monetary erosion” if VinFast’s efficiency doesn’t enhance, he stated, 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 practically $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 practically 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 corporations in Vietnam, and underperforming the 7.5% rise for the Vietnam market, in response to LSEG knowledge.
Its shares traded in December at their lowest stage since 2017. They’ve recovered barely since however had been nonetheless near that multi-year low stage this week.
“The most important problem for Vingroup stays VinFast,” stated Nguyen The Minh, head of analysis at Yuanta Securities Vietnam.
Vingroup, nevertheless, will not be backing off.
“Vingroup has been and can proceed to assist the subsidiary’s growth,” it informed Reuters on Wednesday, reiterating its long-standing dedication to Nasdaq-listed VinFast.
Sturdy anticipated progress for its models this 12 months would appeal to funding within the firm, Vingroup stated.
BORROWING COSTS
Thus far, traders, particularly from abroad, have been unconvinced. Since VinFast’s itemizing, the worth of foreigners’ mixed holdings in Vingroup has dropped by practically 60% to fifteen.7 trillion dong ($620.5 million), sooner than native traders’, in response to inventory market knowledge up to date to final week.