VinFast Auto Ltd. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a quarterly filing; it does not provide clear standalone Q4 2023 financial results. Financial statements are prepared under U.S. GAAP and audited by Ernst & Young Vietnam Limited, which issued an unqualified opinion on the financial statements.
Business context
VinFast is a Singapore-incorporated, Vietnam-based vehicle manufacturer that completed its transition to an EV-focused business after ending ICE vehicle production in November 2022. FY2023 results still include final ICE vehicle deliveries and reflect a ramp-up in EV sales, so historical periods may not be directly comparable. The company completed its business combination and began Nasdaq trading in August 2023.
Key financial metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | VND28.7tn ($1.203bn) | VND15.0tn |
| Gross loss / gross margin | VND13.2tn / -46.1% | VND12.3tn / -82.0% |
| Operating loss | VND40.5tn ($1.695bn) | VND42.3tn |
| Net loss | VND57.5tn ($2.408bn) | VND49.8tn |
| Cash used in operating activities | VND53.6tn ($2.248bn) | VND35.6tn |
| Cash used in investing activities | VND23.0tn ($964m) | VND16.0tn |
| Cash from financing activities | VND77.4tn ($3.244bn) | VND52.9tn |
| Cash and cash equivalents at year-end | VND4.0tn ($167.7m) | VND4.3tn |
Revenue was primarily vehicle sales: VND26.2tn, up 111.6%. EV sales growth and a richer model mix contributed to higher revenue and average selling price. Cost of sales rose 54.0%, slower than revenue growth, narrowing the gross-margin deficit. R&D expense declined 27.2% to VND14.5tn as several models moved from development to production. Finance costs increased 52.4% to VND12.1tn. Losses on financial instruments were VND4.9tn, versus a VND1.2tn gain in 2022.
At year-end, total assets were VND131.3tn ($5.503bn), total current liabilities VND138.5tn ($5.802bn), and accumulated losses VND184.6tn ($7.734bn). The company reported negative working capital; the financial statements quantify net current liabilities at VND89.8tn ($3.761bn). Total debt, as defined by the company and excluding related-party borrowings, was VND71.3tn ($2.986bn). About 83.2% of that debt had floating interest rates. Cash, cash equivalents and restricted cash totaled VND4.8tn ($199.4m).
Material changes versus the prior year
- Revenue nearly doubled, while gross loss widened modestly in absolute terms but improved substantially as a percentage of revenue.
- Operating loss narrowed 4.3%, but net loss increased 15.3%, primarily amid higher finance costs and a swing to losses on fair-value financial instruments.
- Operating cash outflow increased to VND53.6tn, including a VND22.3tn working-capital outflow; inventory increased VND12.5tn, partly reflecting materials reserved for 2024 production.
- EV deliveries and sales expanded, but related-party dependence rose: approximately 72% of EV deliveries were to related parties, and about 74% of vehicle revenue was from related parties. GSM was a major buyer.
- VinFast acquired affiliate VinES in January 2024 for no consideration other than assuming its loans; this is a post-year-end event, not included as a 2023 operating-period acquisition.
Outlook, risks and unusual items
- Management expects operating and net losses and negative operating cash flow to continue in the near term. No specific profitability or revenue guidance is provided in the filing.
- 2024 capital expenditures are estimated at $1.0bn–$1.5bn, including product development, after-sales infrastructure and manufacturing projects in Vietnam, North Carolina, India and Indonesia. Estimated 2024 debt service is about $3.305bn.
- Liquidity depends on further debt and equity financing and support from Vingroup and its affiliates. Vingroup provided a going-concern support letter valid for 12 months from issuance of the audited FY2023 statements, subject to procedures to facilitate support. The filing warns that funding may not be available on acceptable terms.
- Material funding and dilution exposures include Yorkville’s up-to-$1.0bn equity subscription facility, a $50m convertible debenture due July 2024 unless converted or redeemed, and Vingroup’s $625m exchangeable bonds. The filing describes amendments to those bonds in April 2024, including partial and scheduled redemptions and a higher coupon, subject to conditions.
- Collateral coverage ratios on certain loans fell below required levels on multiple test dates, including dates through March 2024; the company says it restored the required ratios. Covenant breaches, cross-defaults and Vingroup’s ability to support the group remain liquidity risks.
- Unusual FY2023 charges included VND5.5tn of inventory write-downs, VND1.1tn of compensation expenses for discontinued models, and VND272bn of goodwill impairment. The company also recognized VND4.9tn of losses on fair-value financial instruments.
- Management identified material weaknesses in financial reporting controls: insufficient comprehensive U.S. GAAP accounting policies and procedures, and insufficient experienced accounting and reporting personnel. Disclosure controls were deemed ineffective at year-end; remediation is in progress and not yet complete.
- Commercial and execution risks include heavy related-party sales, competition and pricing pressure, low factory utilization (about 16% at Hai Phong), supplier and battery dependencies, manufacturing expansion costs, recalls, warranty exposure, and evolving incentives and regulations. The filing also describes a shareholder class action filed in April 2024 and IP complaints filed in the U.S. that seek, among other relief, restrictions on certain models; outcomes are uncertain.
Important facts for investors to verify
- Whether operating cash burn, gross losses and inventory levels improve as deliveries scale, and how much demand is from unaffiliated customers.
- Availability, timing and terms of external financing and promised affiliate support, alongside the company’s 2024 debt-service needs and capital spending plans.
- Debt maturities, floating-rate exposure, covenant compliance and collateral coverage, including the status of Vingroup exchangeable-bond redemptions and the Yorkville debenture.
- Progress on internal-control remediation and whether controls operate effectively for a sufficient period.
- Actual production, utilization, costs and completion timing for North Carolina, India and Indonesia projects, compared with announced plans.
- Developments in recalls, warranty claims, litigation and IP proceedings, and any resulting financial or operational impact.