Vinpearl's Stock Surge: Boosting Vingroup's Financial Strategy amid VinFast Challenges

Vinpearl's shares rose 20% following a successful equity issue to enhance the company's financial reserves. This move aims to support VinFast, the automotive division, which has seen mounting losses. Despite initial low trading, experts predict foreign investments will boost the stock's liquidity.

Shares of Vinpearl surged by 20% on Tuesday after the Vietnamese hospitality arm of Vingroup launched a successful equity issue. The move is intended to bolster capital reserves and stabilize the company's finances amid substantial investments in VinFast, Vingroup's automotive unit.

Nguyen The Minh, head of research at Yuanta Securities Vietnam, emphasized that the listing provides Vingroup with an opportunity to diversify its asset base and support VinFast, leveraging Vinpearl's strong cash flow. However, VinFast has reported increasing losses, with $3.2 billion in losses in 2024, rising from $2.4 billion the previous year.

The equity issue attracted demand for 1.45 million shares, although initial trading saw only 4,800 shares changing hands. Vingroup, maintaining a predominant 85.5% shareholding, leaves a 14.5% free float, expected to rise with strategic investor sales. Despite challenges, the move marks a significant shift in Vietnam's market, potentially attracting foreign investments.

(With inputs from agencies.)