summation
- It is becoming an issue with moves that raise expectations for the post-Tesla era, such as converting to a pure electric vehicle company, listing on Nasdaq, and boldly building production facilities in the United States.
- Due to the small number of floating stocks compared to the interest of many people, the stock soared up to 700% of the listed price, but then showed extreme liquidity, plummeting to about 1/3. Nevertheless, it is currently ranked 3rd (based on U.S. listing) after Tesla and Toyota.
- Vietnam is in a geopolitically favorable environment for manufacturing, and is fostering the electric vehicle industry nationally. At the center, in a virtually exclusive location, is Vinfast.
Vin Group
Before introducing Vin Fast, let’s first learn about Vin Group, which may be somewhat unfamiliar to us.
Vin Group started as a dry food company called Technocom in Ukraine in 1993 and has been expanding its business in Vietnam since 2000. Currently, it is a company that does literally everything, including real estate, large supermarkets, schools, hospitals, and even big data, and is the largest company in Vietnam by market capitalization. For reference, it is listed on the Ho Chi Minh Stock Exchange and its ticker is VIC.
Automobile business in Vin
Today's topic, VinFast (VFS, VinFast), started with electric scooters in 2018, diversified into electric buses and cars, and is a company that is making unusual moves by entering the high-end internal combustion engine lineup less than a year after the electric scooter was launched.
Starting with the first model with an internal combustion engine, it was a luxury lineup designed based on BMW's old model, and the fourth model after two version upgrades was a repainted version of opel carl (a sibling model of the Chevrolet Spark) conducted under GM's license.
I know it's an interesting company, but why is a Vietnamese car company becoming an issue? Now, let’s take a closer look at the issue of Bean Fast.
Issue 1. Conversion to a pure electric vehicle manufacturer and entry into the US
This company, which had a lineup of internal combustion engines, has been Transformed into a pure electric vehicle company starting this year. Most of the models introduced so far are in the form of SUVs, giving the impression that they are aimed at the US and Europe rather than the domestic market in Vietnam, which is just now attempting to transition from motorcycles to electric vehicles.
VinFast car lineup (Source: VinFast Presentation)
That's right, the price of the entry-level model VF 5, released exclusively for the domestic market, is around 30 million won in Korean won, which is ridiculously expensive compared to Vietnam's average monthly salary is around 430,000 won.. (There was also The story of patriotic marketing.) Rather than focusing on domestic demand and building a cheap image, it gives the impression that it will compete head-on with top brands from the beginning.
As if to prove this, Vingroup is spending $5.2 trillion to build a 150,000-vehicle production facility in the United States, with the goal of operating it in 2025. Just listed on Nasdaq, Targeting the US automobile market, Still at a loss, Pure electric vehicle company. The keywords that describe bean fast remind me of some hot stocks aiming to become post-Tesla. (Nicola, Rivian, Faraday Future, Lucid...) Of course, can this company, which has the strong backing of Vingroup, realize the blueprint it is currently presenting?
For reference, parent company Vingroup invested about $8 billion in Vinfast ( https://insideevs.com/news/667917/vinfast-expects-sales-surge-opportunity-to-break-even/ ), but EV sales in 2022 were only about 7,400 units. As of the first half of this year, EV sales in the U.S. reached 137 units.. There is still a long way to go in terms of investment and sales.
Issue 2. Vietnam, Asia’s production base
The high interest in Vin Fast also reflects expectations for Vietnam. Bill Russo, CEO of Auto Mobility, a China-based consulting company, recently mentioned on the BBC that the future of electric vehicles will be East Asian countries capable of low-cost production that will emerge as competitors to the United States, and that Vietnam is geopolitically more powerful than China.
In fact, it is not new for Vietnam to receive attention as a production base in Asia. Vietnam has a young population and low labor costs. In addition, it is easy to export using the port and is adjacent to China, so it has a geographical advantage that allows it to expand into China. Not only is it a relatively free country from conflicts between the United States and China, but it is also considered a relatively stable country with fewer political conflicts and protests compared to other Southeast Asian countries. For the same reason, many Korean companies have also built production bases in Vietnam. Due to the high evaluation of foreign capital, it has recently been said that We are even experiencing a manpower shortage..
The country of Vietnam itself is actively fostering the electric vehicle industry. Vietnam aimed to improve air pollution and traffic congestion with Anticipating a ban on motorcycles, which was a symbol of the streets of Vietnam. As an alternative to the motorcycle gap, the expansion of public transportation and the spread of electric vehicles are being encouraged. Vinfest is engaged not only in electric vehicles but also in the electric vehicle business, so it is no exaggeration to say that it is responsible for most of the development of electric vehicles in Vietnam. Vietnam's electric vehicle sales this year are expected to more than double compared to the previous year, and credit rating agency Fitch Solutions predicts an average annual growth rate of 25.8% until 2032.]( https://www.kiep.go.kr/aif/issueDetail.es?brdctsNo=352461&mid=a30200000000&systemcode=03 ).
Issue 3. Spectacular rise and fall immediately after listing (feat. number of floating stocks)
No matter what, Vin Fast became a hot topic stock without mentioning the spectacular rise and fall of its stock price immediately after its listing on Nasdaq.
There is actually a reason for the spectacular rise and fall. Of course, there are people who invest in the belief that it is post-Tesla, but the more key reason is that the number of floating stocks is only about 1%. The movements of individual investors who wanted to start a legend or ride on the speculative bandwagon, and some institutions who wanted to own the subsidiary of Vietnam's No. 1 group listed on Nasdaq for the first time, were enough to cause only 1% of tradable stocks to plummet.
This company, which still has little recognition and sales, soared by 700% after listing, and at one point received a higher price than GM, Ford, and Honda combined. Even now, having plummeted by about 1/3 from its high point (as of 9/5 closing price), it ranks 3rd after Tesla and Toyota. The PS ratio is over 100 times.
There are also issues raised about the fact that the company banned derivatives trading, inducing an abnormal bubble. This is because, if derivatives trading is banned, institutions with large funds will be reluctant to put money in already insufficient liquidity due to the difficulty of hedging. Considering these measures, it is difficult to say that the company did not anticipate the rapid rise and fall of its stock. I don't know what the reason is, but I don't think it's an advantageous reason for individual investors.
conclusion
It is one thing to say that Vietnam is in an advantageous geopolitical position and that future development is expected, but investing in Vietnam is another matter. Index investment is like that, and even more so when it comes to empty fast, which has 1% floating stock. With Vietnam's atmosphere of transition to electric vehicles and the support of Vingroup, the company is expected to grow somehow. However, as of now, it is evaluated so highly that it is difficult for us to explain, and it is showing extreme volatility. Unless you are someone who can't sleep at night, we recommend that you use this as an opportunity to study about Vietnam, Vin Group, and Vin Fast.