VinFast Stock Soars Post-SPAC Merger and Eyes Further Expansion

Post its SPAC merger this past August, VinFast Auto VFS experienced a remarkable surge in its share price, with an initial launch at $11.10 escalating to a peak of $93 within a fortnight. This extraordinary leap catapulted the Vietnamese electric vehicle (EV) manufacturer's market capitalization to a dizzying $190 billion at one point, positioning it temporarily as the third most valuable carmaker globally, trailing only behind the EV titan Tesla and the automotive behemoth Toyota. Nonetheless, the stock's trajectory swiftly reversed, seeing a decline of 46% below its debut price.

The Promise of VinFast

The valuation spike for VFS may have normalized, but analysts like Cantor's Andres Sheppard spot bright prospects for VinFast. Citing the company's competitively priced EV array, vertical integration, the logistical benefits of manufacturing in Vietnam, and the support of parent conglomerate Vingroup, Sheppard recently initiated coverage with a positive outlook.

VinFast is not just an EV manufacturer; the company also produces e-scooters and e-buses, targeting the Asian, European, and North American markets. Currently, it boasts a diverse lineup ranging from the compact VF 5 SUV at an Average Selling Price (ASP) of $22,800 to the premium VF 9, a seven-seater commanding a price tag of approximately $83,000. With three additional models anticipated to price between $13,500 and $37,500, VinFast is set to expand its offerings to seven models in various markets next year.

"It's crucial," Sheppard adds, "that VinFast's vehicles, due to their affordability compared to competitors', could grab a larger market share, both globally and in the U.S. market."

Strategic Manufacturing and Expansion

Currently, VinFast's production operations are based in Vietnam, boasting a total annual manufacturing capacity of 300,000 vehicles. Sheppard emphasizes the advantages of its location, mentioning large-scale operations, advanced automation, reduced production costs, favorable tax incentives, lower labor fees, and existing trade agreements.

Looking beyond its borders, VFS is planning to grow internationally, with a new manufacturing facility in North Carolina expected to be operational by mid-2025. This expansion is projected to increase annual production capacity by 150,000, bringing the company's total output to 450,000 vehicles per year.

Analyst Ratings and Future Outlook

Sheppard gives VinFast stock an Overweight rating, equivalent to a Buy recommendation, with a $7 price target that implies an 18% rise from its current levels. For the moment, Sheppard stands alone in covering VFS on Wall Street, leaving future analyst consensus yet to develop.

Moving forward, VinFast's global ambitions, its range of affordable EVs, and strategic positioning seem to set a robust course for the company. While the world of EV manufacturing remains competitive, this newcomer appears to have a strategy that could capture consumers' attention and secure a substantial share of the market.

VinFast, VFS, EV