VinFast Auto (VFS) Misses 2023 Delivery Targets: Analysts’ Perspectives and Stock Sentiment

VinFast Auto Ltd. (NASDAQ: VFS), the Vietnamese electric vehicle maker, has reported its full-year delivery numbers for 2023, falling short of its projected target. The company delivered just under 35,000 vehicles, missing the lower end of its guidance of 40,000 units. This outcome prompts a closer examination of analysts’ views and market sentiment surrounding VinFast’s stock.

Delivery Performance and Market Context

Initially, VinFast had set an ambitious target, aiming to deliver between 40,000 to 50,000 vehicles in 2023. This goal represented a significant increase from the 7,400 EVs sold in the previous year, all within Vietnam. The company’s aggressive strategy included an expansion outside its home country, striving to compete globally with established automakers. Despite these efforts, the company only managed to reach 87.5% of the lower end of its delivery guidance.

The shortfall has been attributed to a variety of factors, including slow EV adoption in certain regions and economic pressures on car prices. However, VinFast did see a “significant ramp-up in vehicle deliveries” in the fourth quarter, with 13,513 cars delivered, marking a 35% increase quarter-over-quarter.

Analysts’ Views and Sentiment

Despite the delivery miss, VinFast maintains a “Buy” rating among analysts. Top-rated analysts have suggested that the stock may still be a worthwhile investment. Brian Dobson of Chardan Research initiated coverage of VinFast with a Buy rating and a price target of $11, indicating a belief in the company’s potential despite the “rollercoaster ride in the shares” caused by “irrational forces”.

Analysts have also noted the company’s expansion efforts and its transition to a capital-light distribution model. VinFast’s CEO, Lê Thị Thu Thủy, expressed confidence in capturing potential markets globally, which could be indicative of the company’s long-term strategic vision.

However, concerns have been raised by equity analyst Shifara Samsudeen of LightStream, who pointed out the low delivery numbers in the second quarter as “raising serious concerns over demand for VinFast’s EVs”. This sentiment suggests that while there is optimism, there are also cautionary views regarding the company’s demand and growth trajectory.

Financial Health and Future Capital Raising

VinFast, which is yet to make a profit, is positioned in a challenging market environment. The company’s sales and marketing executive, Tran Mai Hoa, acknowledged the need for raising considerable capital in the future to support its growth and expansion plans. This statement suggests that while the company is ambitious, it also faces the reality of needing additional financial resources to sustain its operations and growth.

The company’s capital expenditure (Capex) spending for 2023-24 is expected to be maintained at the first-half of 2023 incurred levels, indicating a level of financial discipline and planning.

Conclusion

In light of the information presented and considering the analysts’ views, it appears that while VinFast has faced a setback in its delivery targets for 2023, the market sentiment remains cautiously optimistic. The company’s expansion efforts and strategic moves to establish a global presence in the EV market are seen as potential drivers for future growth. However, the need for additional capital and the concerns over demand for VinFast’s EVs highlight the risks and challenges that lie ahead.

VinFast’s stock could be a speculative but potentially rewarding investment, particularly for those with a high-risk tolerance and a long-term investment horizon. The company’s ability to execute its strategic plans and adapt to market conditions will be critical in determining its future success.

VinFast’s next earnings report and management webcast, scheduled for February 22, 2024, will provide further insights into the company’s financial health and strategic direction, which investors should closely monitor.

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