Vietnamese agricultural machinery major VEAM to spend $236 mln on dividend payout

Vietnam Engine and Agricultural Machinery Corporation (VEAM), a state-controlled automaker and machinery producer (HoSE: VEA), will spend about VND6.19 trillion ($235.7 million) to pay cash dividends for 2024, according to a company announcement.

The company set November 19 as the record date and December 19 as the payment date. The payout ratio will be 46.58%, meaning shareholders will receive VND4,658 ($0.18) per share.

With nearly 1.33 billion outstanding shares, the Ministry of Industry and Trade - VEAM’s majority shareholder with an 88% stake - is expected to collect VND5.45 trillion ($207 million).

VEAM has a long tradition of paying high annual cash dividends, typically once a year in November or December. The company paid dividends of 44.9% in 2022, 41.87% in 2023, and 50.35% in 2024.

Strong cash position

VEAM manufactures mechanical products, engines, auto parts, vehicles, and agricultural machinery. It is best known for its stakes in profitable joint ventures such as Honda Vietnam, Toyota Vietnam, and Ford Vietnam - often dubbed its “golden geese.”

In the first nine months of this year, revenue rose 7% to VND3.18 trillion ($120.78 million), and gross profit increased 4.2% to VND470 billion ($17.87 million). However, most of its profit still came from joint ventures and associates, which contributed VND4.66 trillion ($177.15 million), up 6.7% year-on-year.

VEAM reported a post-tax profit of VND5.23 trillion ($198.84 million), up 6.2%, of which VND5.17 trillion belonged to the parent company shareholder.

The company’s massive cash reserves remain a highlight. Deposits totaled VND19.04 trillion ($723.7 million) at the end of Q3, up nearly VND6 trillion and accounting for 58% of total assets. Interest income reached VND665 billion ($25.28 million) in the nine-month period, up 4.6% from a year earlier.

BIDV remained VEAM’s largest depository bank with VND8.13 trillion, or 42.6% of total deposits. Meanwhile, VietinBank deposits surged from VND2.06 trillion to VND7.14 trillion, and Vietcombank holdings climbed sharply from VND85.6 billion to VND2.58 trillion. Agribank, however, saw VEAM reduce its deposits from VND1.55 trillion to VND842 billion.

Long-term challenges

To align with Vietnam’s national industrial and energy strategies through 2030 and 2045, VEAM plans to focus on high-tech agricultural machinery, railway industry equipment, wind power mechanics, electric engines, auto components, and dual-use products serving both defense and civilian needs.

The company also aims to expand into rail transport and renewable energy projects while strengthening internal cooperation and supply chain linkages within its ecosystem.

On the unlisted public companies market UPCoM, VEA shares closed last Friday at VND41,500 or $1.58 (last Friday) from being almost flat around VND39,000 following the dividend announcement.

Brokerage Vietcap forecast VEAM’s profit to continue growing in 2025 but decline gradually thereafter. The firm cited stricter green transition policies and rising competition from electric vehicles, particularly VinFast, as key headwinds.

The traditional car market will continue to shrink by 2026 as incentives for EVs increase, allowing VinFast to expand its market share while traditional carmakers wait for a complete transformation roadmap and need time to launch competitive electrified product lines.

Honda, VEAM’s most profitable joint venture, is likely to lose market share in passenger cars after peaking in 2024. Its motorcycle segment also faces pressure from potential bans on internal combustion motorbikes within Hanoi’s Ring Road 1 and emission-zone regulations in major cities, according to the broker.

Vietcap also noted Honda’s two-wheeler sales growth slowed to 7% in the first nine months, down from 16% in the first half, reflecting consumer caution amid upcoming environmental rules.

Honda’s electric motorcycle transition remains slow, with few models and a cautious stance amid regulatory uncertainty.