- 2024-07-19T00:00:00
- Company Research
- VIC’s H1 2024 NPAT-MI was VND4.5tn (USD178mn; +57% YoY), mainly supported by (1) a total of 70% stake sales in SDI Trading Development and Investment Company Limited (SDI) with a H1 2024 pre-tax gain of VND18.9tn (USD741mn; of which VND3.2tn/USD125mn was in Q2 2024), (2) the Chairman’s grants to VinFast (Nasdaq: VFS) amounting to VND3.3tn (USD129mn), and (3) the recognition of VHM’s bulk sales in the Royal Island project with a pre-tax gain of VND6.4tn (USD251mn) in Q2 2024.
- As VIC’s H1 2024 EBIT loss and FX loss were higher than our expectations, we foresee downside risk to our 2024F NPAT-MI forecast of VND2.7tn (USD106mn; +25% YoY), pending a fuller review.
- Property segment: See more details in our July 18 VHM Earnings Flash.
- Hospitality segment: The segment’s Q2 2024 EBIT loss increased 35% QoQ to VND761bn (USD30mn), mainly due to a higher depreciation cost from three assets – Vinwonders Nha Trang, Vinpearl Landmark 81, and Thanh Hoa – which were repurchased in February 2024. Management stated that Vinpearl’s EBITDA turned positive in H1 2024.
- Industrial segment: VFS delivered 12,058 EV units in Q2 2024 (+24% QoQ and +26% YoY) and 21,747 EV units in H1 2024 (+92% YoY) – completing 38% of our 2024F forecast (56,700 EV units; +63% YoY). Management stated that the number of cars sold to related parties (mainly GSM) in Q2 2024 was meaningfully lower QoQ (In Q1 2024, VFS delivered 9,689 EV units, of which ~56% were sold to related parties).
- Transaction of SDI stake sales: As of end-Q2 2024, VIC has divested a total of 70% of its stake in SDI (comprised of a first tranche of a 55% stake in Q1 and a second tranche of a 15% stake in Q2) and received cash proceeds of VND27.7tn (USD1.1bn) in H1 2024. VIC will divest the remaining stake in SDI and receive the expected proceeds of VND11.4tn (USD446mn) within this year (see details of the divestment plan here).
- Grants from Chairman and VIC to VinFast: As of end-Q2 2024, the Chairman and VIC fulfilled the grant disbursements to VFS for the capital funding agreement made in April 2023 (this agreement included the Chairman's USD1bn grant and VIC's USD500mn grant to be disbursed to VFS over the next 12 months). In VIC’s April 2024 AGM, the Chairman stated that he will grant at least another USD1bn to VFS from his personal assets; further details of the timing have not been disclosed.
- Debt balance: As of end-Q2 2024, VIC’s total debt was VND222.4tn (USD8.7bn; +4% YTD and -2% QoQ), with USD-denominated debts accounting for 29.1% of the total debt. Debts maturing within 12 months include (1) revolving bank loans of VND43.7tn (USD1.7bn), (2) long-term debts due in H2 2024 amounting to VND44.5tn (USD1.7bn; in which 100% of this amount has been secured or is in discussion for refinancing plans, per management), and (3) other debts due in H1 2025 amounting to VND22.1tn (USD868mn).
- In Q2 2024, VIC redeemed USD562.5mn of EBs including the (1) outstanding USD250mn of the USD500mn 3% EBs due in 2026 and (2) USD312.5mn of the USD625mn private EBs – which is consistent with the management update provided in April 2024 (see more details of VIC’s current EBs in Figure 3).
- Management provided updates on the refinancing plan for the following EBs:
- Outstanding USD425mn from the USD425mn EBs issued by Vinpearl: VIC has lined up an international syndicated loan to address a large portion of the principal.
- Outstanding USD312.5mn from the USD625mn private placement bonds issued by VIC: In April 2024, VIC repurchased 50% of the USD625mn principal by cash, and reached an agreement with bondholders to extend the early redemption of the remainder by 18 months. In July 2024, VIC redeemed a total of USD60mn EBs.
For the remainder EBs, VIC is looking to various refinancing options including discussion with the bondholders or using cash on hands.
Figure 1: VIC’s H1 2024 results
VND bn | H1 2023 | H1 2024 | YoY% Growth | 2024F | H1 as % of 2024F | Vietcap’s comments on H1 2024 results |
Net revenue | 86,259 | 65,043 | -25% | 191,049 | 34% |
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| 59,230 | 27,114 | -54% | 112,578 | 24% | * Key handovers: Ocean Park 1, 2, 3, and Golden Avenue. |
| 4,546 | 2,407 | -47% | 3,714 | 65% | * VRE was not consolidated into VIC’s financial statement at end-Q1 2024. |
| 4,220 | 3,930 | -7% | 11,615 | 34% | * The segment’s revenue declined YoY in H1 2024 mainly due to the non-consolidation of the performance of beach villas and condotels, following Vinpearl's agreement with local partners to transfer this portfolio in Q1 2024. * If excluding the performance of beach villas and condotels in H1 2023, H1 2024 segment revenue would increase 57% YoY, per management. |
| 9,779 | 14,192 | 45% | 43,221 | 33% | * VinFast delivered 21,747 EV units (+92% YoY) – completing 38% of our 2024F forecast. |
| 8,484 | 17,400 | 105% | 19,921 | 87% |
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EBIT | 3,119 | -9,789 | N.M. | 7,810 | N.M. |
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| 17,938 | 9,655 | -46% | 36,966 | 26% |
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| 2,714 | 1,511 | -44% | 1,339 | 113% |
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| -2,550 | -1,326 | N.M. | -1,706 | 78% |
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| -14,709 | -18,878 | N.M. | -29,116 | 65% |
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| -274 | -752 | N.M. | 326 | N.M. |
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Financial income | 14,256 | 30,118 | 111% | 26,118 | 115% | * Including i) an H1 2024 pre-tax gain of VND18.9tn (USD741mn) from selling its 70% stake in SDI Trading Development and Investment Company Limited (SDI), and ii) a Q2 2024 pre-tax gain of VND6.4tn (USD251mn) from bulk sales in the Royal Island project. |
Financial expenses | -8,267 | -16,335 | 98% | -23,937 | 68% | * H1 2024 FX loss was VND4.1tn (USD160mn) vs VND307bn (USD12mn) in H1 2023. |
Profit from associates | -119 | 397 | N.M. | 573 | 69% |
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Other gain (loss) | -1,089 | 2,165 | N.M. | 3,400 | 64% | * Chairman’s grants to VinFast amounted to VND3.3tn (USD129mn) in Q2 2024. |
PBT | 7,900 | 6,556 | -17% | 13,964 | 47% |
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Tax expenses | -6,911 | -4,537 | -34% | -11,963 | 38% |
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PAT | 989 | 2,019 | 104% | 2,001 | 101% |
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Minority interest | -1,901 | -2,511 | 32% | -699 | 359% |
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NPAT-MI | 2,890 | 4,531 | 57% | 2,700 | 168% | * H1 2024 NPAT-MI was mainly supported by a total of 70% stake sales in SDI with a pre-tax gain of VND18.9tn (USD741mn) in H1 2024 and VHM’s bulk sales in Q2 2024. |
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EBIT margin | 3.6% | -15.1% |
| 4.1% |
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| 30% | 36% |
| 33% |
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| 60% | 63% |
| 36% |
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| -60% | -34% |
| -15% |
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| -150% | -133% |
| -67% |
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PBT margin | 9.2% | 10.1% |
| 7.3% |
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PAT margin | 1.1% | 3.1% |
| 1.0% |
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Effective tax rate | 87.5% | 69.2% |
| 85.7% |
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NPAT-MI margin | 3.4% | 7.0% |
| 1.4% |
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Source: VIC’s consolidated financial statements, Vietcap forecast (updated May 31, 2024)
Figure 2: VIC’s total debt breakdown by maturity (VND tn) as of end-Q2 2024
Source: VIC, Vietcap compilation
Figure 3: VIC’s current outstanding international exchangeable bonds (EB) at end-Q2 2024
EB name | Principal amount (USDmn) | Outstanding amount (USDmn) | Issue date | Maturity date | Put option exercise date for bondholders | Interest rate | Exchangeable shares (secondary shares owned by VIC/affiliates) |
Vingroup USD500mn 3% EBs due 2026 (listed) | 500 | 0(1) | 2021 | 2026 | April 2024 | 3% | VHM shares |
Vingroup USD250mn 10% EBs due 2028 (listed) | 250 | 250(2) | 2023 | 2028 | November 2026 | 10% | VHM shares |
Vingroup/ | 625 | 312.5(3) | 2022 | 2027 | April 2024 | 5% | VinFast shares |
Vinpearl USD425mn 3.25% EBs due 2026 (listed) | 425 | 425(4) | 2021 | 2026 | September 2024 | 3.25% | VIC shares |
Source: Vietcap compilation. Note: (1) As of end-April 2024, VIC used cash on hand to redeem 50% of the USD500mn principal; (2) The proceeds were used to buy back 50% of the USD500mn principal of the Vingroup USD500mn 3% EBs due in 2026; (3) VIC repurchased USD312.5mn in April 2024 and USD60mn EBs in July 2024; (4) VIC has lined up an international syndicated loan to address a large portion of the principal, per management.
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