On March 30, Vietnam’s domestic press, citing a Reuters source, said that VinGroup was negotiating to sell $1.5 billion of VinHomes real estate to CapitaLand, while the group put billions of dollars into its car-maker VinFast. In addition, VinGroup is in discussions to sell shares in its subsidiary that operates Vincom shopping centers.
Vincom Retail Joint Stock Company is the largest shopping mall operator in Vietnam, with nearly 60% of shares held by VinGroup, including direct and indirect ownership, through SADO Trading Business Joint Stock Company. Sources said that Central Group – Thailand’s largest retail group – and other companies, are in talks to buy shares of Vincom Retail. In February, Central Group announced that it intends to invest an additional 50 billion baht ($1.45 billion) in the Vietnamese market over the next five years.
Currently, Vincom Retail has a market capitalization of about VND70 trillion ($2.9 billion). It is known that for the whole year of 2022, Vincom Retail recorded VND7.3 trillion in total revenue, up 24% over the same period last year. Profit after tax reached VND 2.74 trillion, up 108% over the same period last year and reaching 114% of the whole year plan. Impressive after-tax profit margin at 37% of revenue, affirming the leading position in business performance of the No. 1 retail real estate developer in Vietnam and the leading in the region.
Thus, Vincom Retail is the chicken that lays golden eggs, but Mr. Pham Nhat Vuong is thinking of selling it, to put money to invest in VinFast. In the previous newsletter Thoibao.de analyzed, in the first 9 months of 2022, VinFast burned $1.4 billion, and if selling Vinhomes’ assets $1.5 billion, it is only enough for VinFast to burn in 9 months. The question is, if Mr. Pham Nhat Vuong sells Vincom Retail, how long will it be enough for VinFast to burn?
The story that Mr. Vuong plans to sell Vincom Retail, proves that the sale of Vinhomes assets to Capitaland Group for $ 1.5 billion is not enough for him to manage, and the sale of other properties of VinGroup is a way to compensate. However, the question is, why did Mr. Vuong not kill VinFast but sell the “chickens that lay golden eggs” to raise money for VinFast.
In fact, VinFast is currently for sale and no one is buying. How much is VinFast worth to hold its $8.8 billion debt while the VinFast brand is still unknown. According to the financial report submitted to the US Securities and Exchange Commission, VinFast’s gross loss until September 2022 is $4.7 billion, making it unwanted for all investors.
VinFast is like a “poison pot.” If you spend money to buy it, the owner will also get infected. So no one buys. Thus, Mr. Vuong has no way to get rid of the debt of VinFast, he only has to sell what can be sold, to put it in the VinFast oven, so that it continues to burn money.
Pham Nhat Vuong’s sale of Vinhomes’ properties and his intention to sell Vincom Retail, is similar to the way of a person who gets confusion without clear thinking. But after careful analysis, Mr. Vuong has no other choice, so he has to regret selling his profitable units to cover the immense loss of VinFast.
Jumping over technology is a good direction, but Mr. Vuong did not anticipate the difficulties in getting involved. Seeing Tesla succeed, does not mean that every technology car company is successful. Currently, many electric car startups are suffocating right in the leading country of technology, the United States.
The dream of Vietnamese cars going the US and the global market can be said to be a failure. It is very difficult for Mr. Vuong to revive the disastrous decline of VinFast, and it is very difficult to provide additional investment for this car company to burn. Most likely, VinFast is the destiny of VinGroup. VinFast keeps sticking, and keeps burning money very aggressively, while the long-term money-making machine Vinhomes is no longer making money. Mr. Vuong is struggling in the swamp and is sinking because of VinFast.
Thoibao.de (Translated)
