The financial report of VinFast automobile company of Vietnam’s giant company Vingroup submitted to the US Securities and Exchange Commission on December 6 shows that the company has total assets of more than $4.4 billion, but its debts hit approximately $8.8 billion and suffered a cumulative loss of nearly $4.7 billion.
According to the summary financial data listed on pages 21 and 22 in VinFast’s report, as of September 30, 2022, the total assets of the firm- a Singaporean firm on paper – are more than VND105.38 trillion, equivalent to $4.4 billion.
At that time, its short-term debt – debt payable to creditors within 12 months – was nearly VND127 trillion, equivalent to more than $5.3 billion. Besides, the firm’s long-term debt is more than VND83 trillion, equal to nearly $3.5 billion.
The car maker’s accumulated loss at the end of the third quarter of 2022 is nearly VND112 trillion, or nearly $4.7 billion. Year-on-year net loss is nearly VND19 trillion (nearly $800 million) in 2020; more than VND32 trillion (more than $1.3 billion) by 2021; and more than VND34.5 trillion (more than $1.4 billion) in the first 9 months of 2022.
Professor, Dr. Khuong Huu Loc, a CFO and economist in Texas, USA, commented to the press that when any company has the ratio of assets to liabilities and losses as mentioned above, the health of that company is “very bad” with the huge risk of liquidity.
According to this expert, the ideal ratio of assets to liabilities is 2:1, which means assets are twice as many as liabilities. When a company has assets of $4.4 billion but short-term debt of $5.3 billion plus a loss of $4.7 billion, it means the company is in “dangerous trouble.”
“That loss made the company unable to pay its short-term debt. An asset-to-short-term debt ratio of 1:1 is bad enough, and it’s even less than 1. Not to mention interest payable and long-term debt. In general, such financial indicators are very bad,” the analyst said.
Mr. Loc is currently teaching a Master of Business Administration program at a university in the US. He has more than 20 years of experience as chief auditor and chief financial officer (CFO) for several large firms in the US.
The SEC is currently reviewing VinFast’s submission for an initial public offering (IPO) in the US and will respond in 27-30 days. The company did not disclose when it will officially IPO, the number of shares it will offer and the amount of capital it hopes to raise.
In a statement released on December 7, Ms. Le Thi Thu Thuy, CEO of VinFast, said that the company will conduct an IPO after the SEC declares that the registration dossier is valid and the market conditions are satisfied.
Answering the question of whether such a company can be approved by the SEC for an IPO with the above financial ratios, Professor, Dr. Khuong Huu Loc said that “they can still sell shares.”
With his experience, Mr. Loc made the comment: “When a company sells shares, it’s up to investors whether they like it or not. If they like it, they buy it. For example, like before, Tesla, Apple, Google, Amazon… they have suffered losses for many years, but investors like and accept the market prospects of those firms, they still buy.”
However, Professor, Dr. Loc noted that investors should be very cautious for a company that has just started manufacturing cars, largely dependent on imported technology and components, as well as no great name in the world.
If someone asked him if he should buy stock in such a company, he would advise “no.” However, he also reached out to electric car company Tesla in the US to point out that what matters is whether a company’s product is popular.
Just a few days before VinFast submitted for an IPO in the US, an account named Tom Peng posted on YouTube on December 3 a video of more than 20 minutes showing that its VF8 car has many errors, mainly software errors, making the car uncontrollable and unable to go.
In the caption of the video recorded in Ho Chi Minh City, Vietnam, Tom Peng writes that he loves VinFast and the VF8. But recently, errors on Tom Peng’s VF8 appear more and more often, such as the car stopping on its own, turning signals and headlights off automatically, software errors, “virtual alarm” errors. , motion system failure, 12v battery charging failure, etc.
He said that many other people who bought VinFast cars had the same problem, had to call the company, even bring their cars back to the company to fix the error, but some problems in the software have not been completely resolved.
The video on YouTube has Tom Peng saying “everything is broken…hey, VinFast, you guys are torturing us.” Tom Peng said his aim that day was to test drive the VF8 and add that despite the faults listed above, at other times, when the car is running fine, “I have to say that the VF8 is a very good car, the car is very smooth and very comfortable … But unfortunately, I have this problem today.”
On December 5, still Tom Peng posted another video saying that the VF8 was faulty and not working.
So far, VinFast has not made any public statements about these two videos, which now have a total of nearly 37,000 views and nearly 800 comments. The press tried to contact VinFast, asking them to comment on the company’s “financial health” and the VF8’s fault, but have not received a response.
Thoibao.de (Translated)
