Vietnamese electric vehicle maker VinFast Auto (NASDAQ:VFS) is moving to bolster integration in its production value chain and secure its competitive advantage. The company plans to acquire a 99.8% stake in battery producer VinES from its founder, Pham Nhat Vuong, according to Reuters. Both companies are part of the VinGroup conglomerate in Vietnam.
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The strategic move is expected to help VFS secure a supply of batteries, control its supply chain, and optimize its operating expenses. While the deal does not involve any consideration, VFS will assume debt of about $462 million. Further, the company will receive grants from its Founder, Vuong, for all interest payments associated with VinES up to 2027.
Additionally, VFS plans to set up kit assembly facilities in Indonesia. These strategic facilities could provide VinES with an advantage in producing its batteries.
Driven by higher vehicle sales, VFS’ third-quarter revenue soared by 159% to $338 million. The company also plans to set up an assembly plant in India.
Is VFS a Good Investment?
VFS made its debut on the Nasdaq in August, and the company’s shares have been on a downward trajectory ever since. The stock has dropped by nearly 52% over the past month. While analyst coverage for VFS remains scant, Chardan Research’s Brian Dobson has assigned the stock a Buy rating. The analyst has a price target of $11 on VFS.
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