VinFast Auto Ltd. Q2 FY2024 earnings call

Key Points

• Q2 deliveries: 13,172 EVs, up 44% Q/Q, 43% Y/Y. H1 total deliveries 22,348, 101% Y/Y growth.
• Product mix: VF 5 was 62% of Q2 deliveries, VF 3 had 28,000 non-refundable pre-orders in 66 hours.
• Vietnam: Strong B2C growth, VF 5 leading A-segment, VF 3 pre-orders, majority EV market share.
• North America: Pushed out NC plant, adjusted lease offerings, dealer network established, plan to launch VF 9, VF 6, VF 7.
• Southeast Asia/India: Expedited entry, Indonesia showrooms, India assembly plant on track.
• Cost: Bill of material cost down 16%, production cost down 43%, SG&A as % of revenue improved with dealer sales.

In Q2 2024, VinFast's revenue was US$357 million, a 9% year-over-year increase and 33% quarter-over-quarter increase. The product mix saw the VF 5 as the main volume driver, accounting for 62% of total deliveries in Q2. The VF 8, VF e34, and VF 6 made up 30% of deliveries. E-scooters had 13,076 units delivered in Q2, up 67% quarter-over-quarter and 28% year-over-year. In Vietnam, B2C delivery grew 108% year-over-year in H1 2024 and 146% quarter-over-quarter in Q2. North America had strategic adjustments, Southeast Asia and India saw new market entries with dealerships and plant progress.

Guidance

• 2024 delivery target is 80,000 EVs. VF 3 pre-orders support this.
• Gross margin trend is positive; aiming for positive gross margin by next year and EBITDA margin by 2026.

Risks

• Macroeconomic uncertainties affecting EV outlook.
• Typhoon Yagi impact on Haiphong factory, though operations resumed.
• Dependence on specific markets and product mix performance.

Q: Have you seen any changes in the competitive landscape in Vietnam given that new players are entering into the market?

A: The Vietnam EV market has headroom to grow. VinFast is confident in maintaining leading position due to Vingroup ecosystem, brand loyalty, and ecosystem benefits.

Q: CFO mentioned bill of material and production cost went down by 16% and 43% per unit. Can you provide more color on that?

A: Initiatives included lower battery costs, design optimization, customer fit upgrades, supply chain optimization; cost savings will be visible in P&L when vehicles with new materials are delivered.

Q: About gross margins. Looks like this quarter margins were slightly below expectations. With VF 3 ramping up, what's the gross margins trajectory?

A: Gross margin improved compared to last quarter when excluding one-off NRV charges; margin expected to trend better in coming quarters.

Q: Path towards breakeven gross margins?

A: Aim for positive gross margin by next year and EBITDA margin by 2026.

Q: Total liquidity including e-log facilities and grants?

A: Around US$98 million cash on hand, plus e-log facilities and grants, total around US$2 billion.

Q: Revenue product mix going forward, especially with new vehicles?

A: VF 3 and VF 5 will be main revenue drivers, with more affordable models.

Q: Marketing efforts to boost brand awareness?

A: Focus on markets with more volumes; Vietnam relies on Vingroup brand awareness, US spends on brand awareness with dealers; quality and service drive marketing.

Q: Impact of Typhoon Yagi to Haiphong factory?

A: Some infrastructure damage, but operations resumed within a few days.

Q: Funding progress for CapEx in India and Indonesia?

A: Capital from delaying NC plant reallocated to India and Indonesia plants.

Q: PV power plants and charging infrastructure impact?

A: V-Green investing in charging stations, helps EV adoption, benefits VinFast's competitive advantage.

Q: Capital expenditure outlook and international expansion?

A: Delayed NC plant, focused on selected markets, targeting 15 selected markets.

Q: Entry into new Asian markets, customer reception, charging/financing?

A: ASEAN focus on affordability, battery leasing, asset sales; V-Green developing charging network in ASEAN.

Q: Still target 80,000 deliveries this year?

A: Yes, committed to 80,000, with VF 3 and VF 5 contributing.

Q: Asia market contribution long term?

A: Asia expected to account for 30-50% of global volume in longer term.