VCSC: Vingroup’s core businesses continue to recover, which will make up for VinFast’s loss

According to a recent analysis report, Viet Capital Securities (VCSC) has made new assessments about Vingroup Corporation (VIC).

The company believes that Vingroup will strongly benefit from the growing middle-income class in Vietnam through real estate companies such as Vinhomes (VHM), Vincom Retail (VRE) and Vinpearl.

VCSC forecasts VIC’s operating profit (EBIT) in 2023 will reach VND 10,200 billion compared to an EBIT loss of VND 11,500 billion in 2022 due to the expectation of strong real estate sales and the recovery of the company. The Retail Lease segment will make up for the EBIT loss for the Industrial and Hotel-resort segments.

VCSC expects high unrecorded real estate sales from The Empire and The Crown projects (accounting for 71% of total unrealized revenue at the end of 2022 at VND 107,600 billion) will support VIC’s real estate segment in in 2023. Meanwhile, it is expected that the gross profit margin of the Retail Lease segment will continue to improve thanks to higher rents and higher occupancy rates.

For Vinpearl, VCSC believes that the recovery of international tourism will help improve room occupancy and room rates. However, a slower-than-expected return of Chinese tourists and weaker domestic consumer spending will lead to a longer-than-expected recovery.

Many plans to raise capital from VIC to support VinFast’s market expansion in the US.

Regarding VinFast’s capital raising plan, VIC is looking for different funding opportunities from the potential IPO of VinFast and the international capital market. In addition, VCSC expects VIC and the Chairman of the Board of Directors to continue to support the development of VinFast.

According to management, VinFast has been awarded the “Air Permit” license – this is the last license required – and is preparing to build VinFast’s North Carolina factory. VinFast continues to keep the plan to put the factory in the US into trial production by the end of 2024.

VCSC forecasts total capital investment for the period 2023-2025 at VND 100,700 billion (USD 4.3 billion), financed by the expected increase in net mobilized debt under VCSC of VND 108.9 trillion ( $4.6 billion) during this period.