Following its SPAC merger in August, shares of VinFast Auto (NASDAQ:VFS) went on one almighty tear, going from its $11.10 debut price to $93 over the space of two weeks, with the Vietnamese electric vehicle (EV) maker’s market cap soaring to $190 billion at some point, making it briefly the world’s third most valuable carmaker, only behind EV colossus Tesla and auto giant Toyota. The comedown, however, as you might expect following such an unlikely surge, has been fast and brutal, with the shares now trading 46% below the debut price.
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While the improbable former valuation has now come down to a far more reasonable level, Cantor analyst Andres Sheppard thinks the company has several things going for it.
“We believe VinFast benefits from more affordably priced EVs, vertical integration and manufacturing in Vietnam (which results in fewer supply chain disruptions), and the financial and brand backing of Vingroup,” Sheppard said in a recent initiation report.
So, what is VinFast all about? The company designs and makes EVs, e-scooters, and e-buses, selling them directly to customers in Asia, Europe, and North America. There are currently four models in the portfolio, including compact electric SUV, the VF 5, that has an ASP of $22,800, and the VF e34 that goes for ~$34,860 and is sold exclusively in Vietnam. Additionally, the company manufactures the VF8, a compact SUV aimed at customers in the U.S., Canada, Europe, and Vietnam (going for $46,000), and the most-expensive model, the VF 9, which is a seven-person, three-row, more upmarket SUV, selling for ~$83,000. Moreover, there are 3 other models in the pipeline with prices anticipated in the range between $13,500 to $37,500, so that next year, the company expects to have seven different models on the market in Asia, Europe, and North America.
“More importantly,” Sheppard says, “we believe that at these price points, VinFast’s vehicles are more affordable (relative to competitors), which should help the company to increase its market share both globally and in the U.S., in our view.”
All of VinFast’s vehicles are currently manufactured in Vietnam, where the total maximum annual manufacturing capacity reaches 300,000 vehicles. There are many advantages to having production based there. “Through its vertically integrated manufacturing approach,” notes Sheppard, “VinFast benefits from large scale of operations, highly-automated manufacturing facilities, lower cost of production, favorable tax Incentives, cheaper labor and operating costs, and established trade agreements.”
Nevertheless, the company is eyeing international expansion, and according to management, a new manufacturing facility in North Carolina should open by mid-2025. That should lead to annual production capacity rising by 150,000 to a total capacity of 450,000.
All told, based on all the above, Sheppard rates VinFast stock an Overweight (i.e., Buy), while his $7 price target suggests the shares climb 18% from current levels. (To watch Ellis’s track record, click here)
In contrast to its noisy debut, it’s all rather quiet on the VFS front on Wall Street. Right now, Sheppard is the only analyst following VinFast’s progress. (See VinFast stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
