Release Date: November 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VinFast Auto Ltd (VFS, Financial) achieved its highest monthly delivery ever in its home market, becoming the market leader in Vietnam.
- The company recorded a 66% quarter-over-quarter and 115% year-over-year increase in EV deliveries, showcasing strong growth.
- VinFast's international strategy is paying off, with North America experiencing its best month in history and a growing dealer network.
- The company is on track to meet its 80,000-vehicle delivery target for 2024, with 55% of the target already achieved by the end of Q3.
- VinFast has secured a $3.5 billion capital injection from Vingroup and its founder, providing financial stability and resources for growth.
Negative Points
- Despite improvements, VinFast Auto Ltd (VFS) still reported a gross loss of $123 million in Q3 2024, indicating ongoing financial challenges.
- The company's ASP (Average Selling Price) declined by over 10% due to the introduction of lower-priced models, impacting revenue per unit.
- VinFast's cash balance at the end of Q3 2024 was only $79 million, raising concerns about liquidity despite additional funding commitments.
- The company faces challenges in ramping up production to meet its ambitious delivery targets, especially in international markets.
- VinFast's reliance on related party transactions, such as sales to GSM, remains significant, though it has decreased compared to previous years.
Q & A Highlights
Q: Can you share any color on confidence in hitting the full-year 2024 target? Given that you have only met 55% of the 80,000 of Q3, also ramping up to 40,000 in the last three months can be daunting, do you see any challenges to production?
A: Thuy Le, Chairwoman of the Board: We're very confident about hitting the 80,000 targets, especially having seen October and November numbers as well. We had a very robust Q3 number where we hit a number of milestones. We became a number one OEM in Vietnam and have exceeded our internal forecast for deliveries in the US. In Canada as well, we saw three consecutive bestselling months. We expect that this momentum will continue through Q4.
Q: You have talked about BOM optimization for the last two quarters, can you share more specifics on what areas are you focused on with regards to BOM optimization and how does this impact your EV architecture?
A: Lan Anh Nguyen, Chief Financial Officer: We have a number of planned initiatives for BOM optimization that's undergoing, and the testing, and validation phase. Optimizing and upgrading an electric vehicle, electronics architecture is complex, given that safety is the overarching priority. We are also optimizing some features like ADAS for various models and better sourcing for other components.
Q: Can you walk us through the liquidity one more time, given the recent $3.5 billion capital injection?
A: Lan Anh Nguyen, Chief Financial Officer: The injection of USD3.5 billion is over the year period to 2026. Our liquidity provision at the end of Q3 2024 stood at USD1 billion, which includes USD79 million in cash and USD968 million in e-Lock facilities. The use of this capital injection will go into our CapEx and debt repayments.
Q: There was a very good improvement in gross margins this quarter. Are you still on track to achieve positive gross margins next year?
A: Thuy Le, Chairwoman of the Board: For now, we still maintain our forecast for 2025 and 2026. We are in the middle of the budget season right now and making changes to the five-year plan. We expect to provide more guidance at the end of this quarter.
Q: Can you elaborate more on the finance fleet for the new factory?
A: Thuy Le, Chairwoman of the Board: The new facility is on a long-term lease structure, similar to the sales lease structure where we don't have to invest initial capital, and we pay the lease on an annual basis. We have the option to buy the facility from the lessor in the future. This structure allows VinFast to manage capital prudently while balancing growth and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
