Can Vinfast make the cut?
VinFast hit the news with a 700% stock value surge.
VinFast became the world's 3rd most valuable automated after listing and what do we know about VinFast?
(The financial information is taken from their SEC submissions.)
From Income statement, I have a few observations (in USD$) for 3 months ending 31 March 2023:
Thus, the company has yet to achieve break even.
Coming to the balance sheet, here are the observations:
This is an item to look out for. It could turn into red flag if it is due to aged inventories that could not be sold.
Coming to cash flow, here are some observations:
Conclusion
It is too early to call this a success or failure. The business may not have reached critical mass and thus, there are many funds required for funding and expansion. I have concerns about the falling revenue and the failure to achieve profitability.
This is just one aspect of looking at the financials. Let us also need to look into other qualitative and quantitative elements, to establish any competitive advantages. For now, it seems that VinFast is unlikely to achieve profitability soon but there is definitely potential, especially for EV.
I prefer to monitor the business as a spectator and not be involved as (a customer or investor) for now.
VFS
VinFast became the world's 3rd most valuable automated after listing and what do we know about VinFast?
(The financial information is taken from their SEC submissions.)
From Income statement, I have a few observations (in USD$) for 3 months ending 31 March 2023:
- Total revenue is 65.11M.
- Note that there is a drop in revenue of almost 50% from the same quarter 1 year ago.
- Total Cost of Sales is 222M
- Gross loss is 161M
- The total loss for the period is 598M
Thus, the company has yet to achieve break even.
Coming to the balance sheet, here are the observations:
- Current liabilities (3.5M) are much more than Current assets (1.8M) - thus, raising some short-term liquidity concerns.
- The accumulated losses stand at 5.9M
- Total assets are valued at 5.08B but total liabilities stand at about 7.2B
- There is also an increase in the inventories on hand compared Q1 between 2022 and 2023.
This is an item to look out for. It could turn into red flag if it is due to aged inventories that could not be sold.
Coming to cash flow, here are some observations:
- There is a notable increase in cash flow used in operations amounting to 811M.
- CAPEX investment has increased and stands at 322M
- From financing, about 966M was borrowed to fund the business. This is a significant amount that we need to monitor - with huge amounts of interest being paid out.
Conclusion
It is too early to call this a success or failure. The business may not have reached critical mass and thus, there are many funds required for funding and expansion. I have concerns about the falling revenue and the failure to achieve profitability.
This is just one aspect of looking at the financials. Let us also need to look into other qualitative and quantitative elements, to establish any competitive advantages. For now, it seems that VinFast is unlikely to achieve profitability soon but there is definitely potential, especially for EV.
I prefer to monitor the business as a spectator and not be involved as (a customer or investor) for now.
VFS 
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