Vingroup plans $421 mln bond issuance for auto production project

Vietnam’s biggest private conglomerate Vingroup plans to issue VND10 trillion ($421 million) worth of bonds in five lots this year.

The group will lend the funds to its automaker subsidiary, VinFast, to invest in the automobile manufacturing project in Hai Phong city’s Dinh Vu-Cat Hai Economic Zone.

The new bonds will be non-convertible, without warrants, without collateral and establish a direct debt obligation for Vingroup. The par value of each bond is VND100,000 ($4.2) and the issuing organization is SSI Securities.

Bonds worth VND6 trillion ($252.7 million) will have a term of 36 months; and the remaining, worth VND4 trillion ($168.5 million), will have a term of 24 months.

Specifically, the VICH2326001, VICH2326002 and VICH2326003 bond backpacks will have a term of 36 months. The interest rate for the first two interest periods will be fixed at 15%/year. From the third period onwards, the interest rate will be equal to the sum of 4.5% and the reference interest rate. Individual investors will have to register to buy at least 500 units, while institutional investors can do so for 5,000 units. Expected release date is September 14.

The other two bond lots VICH2326004 and VICH2326005 with a shorter term of 24 months will have an interest rate for the first two periods fixed at 14.5%/year. From the third period onwards, the interest rate will be equal to the sum of 4% and the reference rate. For this lot, too, individual and institutional investors will have to register to buy at least 500 and 5000 units, respectively. Expected release date is August 31.

Vingroup reported after-tax profits and net revenues of VND987 billion ($41.68 million) and VND86.12 trillion ($3.64 billion) in the first half of the year, down 7% and up 138% year-on-year, respectively.

The strong rise in revenue was driven by the real estate transfer segment that earned VND102.53 trillion ($4.33 billion), up 13 times year-on-year, thanks mainly to the handover of low-rise housing at the Vinhomes Ocean Park 2 project in Hung Yen province.

Other segments, including real estate investment, hotel services, tourism, entertainment and manufacturing also recorded robust growth.

As of June 2023, Vingroup's total assets stood at VND608 trillion ($25.67 billion), of which short-term receivables were VND150.59 trillion ($6.35 billion), fixed assets, VND140.54 trillion ($5.9 billion), and long-term unfinished assets, VND114.62 trillion ($4.84 billion).

At the end of Q2, the group's equity reached VND137.71 trillion ($5.8 billion), up 1.5% year-on-hear, with liabilities at VND470.28 trillion ($19.86 billion), up 6.45%.

Vingroup, listed on the Ho Chi Minh Stock Exchange (HoSE) as VIC, has set a record-high net revenue target of VND190 trillion ($8 billion) in 2023, up 86.6% year-on-year.

The group also eyes a post-tax profit of VND2 trillion ($85.25 million) this year, unchanged from 2022, according to documents released at its annual general meeting in May.