
Written by Francesco Guarascio and Phuong Nguyen
HANOI (Reuters) – Vietnam’s Vingroup faces renewed scrutiny over its strategy to support loss-making electric car maker VinFast, with its shares near multi-year lows as foreign investors sell off and borrowing costs rise.
Pressure on the company, a household name in Vietnam with businesses including automobiles, real estate, retail and resorts, intensified this month as Moody’s and Fitch gave “junk” ratings to the debt of Vingroup’s most profitable unit, property firm Vinhomes, as well. In connection with the planned sale of international bonds worth $500 million.
The speculative-grade ratings were due to Vinhomes’ links to Vingroup, the two agencies said.
This year “may become an indicator of Vingroup’s broader financial health,” said Leif Schneider, head of international law firm Luther in Vietnam.
“Vingroup may face further financial erosion” if VinFast’s performance does not improve, he said, adding that reducing Vingroup’s support for subsidiaries could ease financial pressures.
The group and its founder, Pham Nhat Phung, had pumped $13.5 billion into the electric car maker as of October in loans and grants, and promised nearly $3.5 billion more in November, despite concerns about the bet raised by investors at the last two annual shareholder meetings. In the company. .
Vingroup’s market capitalization has shrunk by nearly half to about $6 billion since VinFast listed in August 2023. Over the past year, its shares have fallen 6.6%, the largest among Vietnam’s 10 largest listed companies, and have underperformed a 7.5% rise. In Vietnam. Market, according to LSEG data.
Its shares traded in December at their lowest level since 2017. They have recovered slightly since then but are still near their multi-year low this week.
“The biggest challenge facing Vingroup remains VinFast,” said Nguyen Thi Minh, head of research at Yuanta Securities Vietnam.
However, Vingroup is not backing down.
“Vingroup has been and will continue to support the development of the subsidiary,” she told Reuters on Wednesday, underscoring its long-term commitment to Nasdaq-listed VinFast.
Vingroup said the expected strong growth of its units this year will attract investment in the company.
Borrowing costs
So far, investors, especially from abroad, are not convinced. Since VinFast’s listing, the value of foreigners’ combined holdings in Vingroup has fallen nearly 60% to 15.7 trillion dong ($620.5 million), faster than domestic investors, according to stock market data updated up to last week.
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