VinFast executives: Confident about ‘financial health’ ahead of IPO

VinFast executives: Confident about ‘financial health’ ahead of IPO

The VinFast prospectus sent to the US Securities Exchange Commission (SEC) receives a lot of attention from investors. Ms. Le Thi Thu Thuy, President of VinFast and Vice President of Vingroup, shared more clearly the financial situation and opportunities of the Vietnamese automaker in the context of the IPO in the United States.

behind the numbers

In VinFast’s prospectus filed with the SEC, investors are interested in the cumulative loss of nearly $4.7 billion. What exactly are these losses, ma’am?

– The total figure of $4.7 billion does not accurately reflect VinFast’s actual loss. Differences in accounting principles between the United States and Vietnam lead to different results.

For example, the alleged loss of $1.879 billion – actually corresponds to the research and development (R&D) costs of the VinFast models. According to Vietnamese accounting standards, most of these costs are considered long-term investments of the company and will be amortized over the life of the product. However, in accordance with US accounting standards (US GAAP), these amounts are expensed as soon as they are incurred, resulting in an increase in accumulated losses.

In addition, of the remaining total loss, approximately $690 million is amortization expense. For companies, this is not considered a loss, but rather part of the initial investment.

VinFast executives: Confident in their financial health ahead of IPO - 1
Ms. Le Thi Thu Thuy – President of VinFast and Vice President of Vingroup (Photo: VinFast).

In addition to the loss, VinFast’s debt portfolio also shows a figure of up to $8.8 billion. Why this number?

– Essentially, this $8.8 billion is not all debt, in particular, some liabilities are not debt. For example, there is $2.092 billion in debt resulting from internal ownership restructuring transactions so that VinFast Singapore can be listed in the United States. After the success of the IPO, this debt will be settled between the group companies and VinFast will no longer have to bear this obligation. In other words, this $2.092 billion is not debt but just an internal structure for restructuring purposes for the IPO.

Another example, in this total “debt” there is also 603 million USD which is the obligation to pay for the transaction of transferring the factory part (excluding machinery and equipment) to Vinhomes Industrial Real Estate Investment Company (VHIZ) . This transfer aims to restructure the business activities to be consistent with the general plan on the structure of the industry between the member companies of Vingroup. Thus, VHIZ is the only company of Vingroup operating in the field of development and operation of industrial real estate. With this amount, VinFast has effectively received the payment for the transfer of the factory from VHIZ and pays periodic rents to VHIZ under a long-term lease. Accordingly, the amount received from VHIZ as a result of the transfer of the factory is recognized as a future liability in the form of a long-term lease over many years.

So, if we remove the two debts above without the debt element, the total remaining payable from VinFast is $6.1 billion; whose debt to credit institutions is 3.077 billion USD, the internal loan is 1.313 billion USD, the rest is made up of debts born during operation and is balanced with other receivables.

In other words, we are completely confident in our “financial health” to go out into the world. It will be a great opportunity for VinFast to increase its scale and level to become a global electric car company, helping to promote the future of mobility.

Wear VinFast globally

Back to the IPO story, is the current time right for VinFast to implement this plan?

– The global market is expected to recover in 2023. Therefore, the IPO at this time is appropriate to catch the wave of recovery and breakthrough. From VinFast’s side, the sooner the IPO, the sooner it creates the impetus to expand globally as the intended goal.

VinFast executives: Confident in their financial health ahead of IPO - 2
Campus of the VinFast factory (Photo: VinFast).

Foreign investors are often interested in the potential of companies to decide to invest. Compared to other companies in the sector, what strengths can VinFast show investors?

– VinFast is a company with a very fast growth rate. Although we have only entered the market for 5 years, we have successfully built a modern automotive business, mastered product development, supply chain and production processes, bringing major vehicle lines to market. of the participating segment. VinFast’s partners are all big names in the global automotive industry such as ZF, Durr, Bosch, ABB, Pininfarina…

More recently, VinFast exported the first batch of electric vehicles to the United States, less than a year after announcing the “pure electric” strategy, affirming the company’s strong rollout capability.

Can you tell us about the biggest expectation of VinFast in the current critical period?

– VinFast’s goal is to successfully register in the United States to move towards greater opportunities, thus creating momentum for VinFast to expand globally.

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