On March 17, Vingroup’s Board of Directors (stock code: VIC) signed an agreement to sell up to 100% of its capital contribution in SDI company – the entity currently owning over 99% of the charter capital of Sado Trading and Business Joint Stock Company, a major shareholder of Vincom Retail. After the completion of this transaction, SDI Company, Sado Company and Vincom Retail Company will no longer be subsidiaries of Vingroup.
Sado Trading and Business Joint Stock Company is currently the largest shareholder of VRE, owning 943.2 million VRE shares, equivalent to 40.5% of the charter capital and 41.51% of the voting rights of the company.
Sharing about the above transaction, Mr. Nguyen Viet Quang, CEO of Vingroup, said that this is the time to concentrate all resources to develop the group and key brands with high growth potential. In order to accomplish this mission, the company will devote all resources, especially financial resources, to create breakthrough development in the next turning point.
A Vincom Retail Shopping Mall.
This is not the first high-profile divestment deal of Vingroup in recent years. Especially in the context of VinFast still being a “money-burning” business segment that requires a lot of capital but has not yet generated profits, while real estate, the “cash cow” of Vingroup, is facing difficulties in the general market conditions.
In late 2018, Vingroup announced its ambition to become a world-class Technology-Industry-Service conglomerate, in which Technology accounts for the main proportion. Therefore, divesting from its subsidiaries that do not belong to this orientation or closing down inefficient business segments is almost a necessary step for the conglomerate of billionaire Pham Nhat Vuong to raise capital.
Notable divestment deals of Vingroup
The first high-profile divestment deal of Vingroup was when the group sold all shares of Vincom Securities (VincomSC). Specifically, from 2007 to 2008, when the Vietnamese stock market was at its peak, VN-Index continuously surpassed 1,000 points, Vingroup had the ambition to enter the market with Vincom Financial Group (VFG), starting with Vincom Securities Company (VincomSC) established in 2007.
However, the global economic crisis in 2008 caused Vingroup to cancel its plan to participate in the financial sector. As a result, billionaire Pham Nhat Vuong had to abandon the plan to establish a financial group. In 2011, Vingroup sold all of its capital in VincomSC.
Currently, this company is still operating in the Vietnamese stock market under the name VIX Securities.
From 2009 to now, Vingroup has launched and closed countless projects: VinDS (clothing and footwear stores in Vincom shopping centers), Vinlink, VinExpress (logistics), Emigo (VinFashion fashion company), Vinpearl Air (aviation)…
The next notable divestment deal that Vingroup carried out was the divestment from the retail – e-commerce sector. In late 2019, the market was “shaken” by the news that Vingroup was withdrawing from the retail sector after a period of investment and development.
Specifically, Vingroup announced the decision to transfer its shares in VinCommerce Company, the entity that owns the VinMart supermarket chain and the VinMart+ convenience stores, to Masan Group (stock code: MSN), officially parting ways with the retail sector. In addition, Vingroup also sold VinEco to Masan Group in this deal. At the time of divestment, VinCommerce had been incurring losses for many years and struggling to gain market share.
However, not every divestment deal of Vingroup has received widespread support. In particular, the decision to cease the production of Vsmart phones and TVs has caused mixed reactions among consumers.
At the time of its launch, Vsmart was favored by many consumers. From zero and until the end of 2020, Vsmart phones ranked third in the domestic market with a market share of 12.7%. By early 2021, three AT&T-branded smartphones produced by VinSmart were officially launched for sale in the US market.
However, in May 2021, Vingroup announced the cessation of production of Vsmart phones, smart televisions. Mr. Nguyen Viet Quang, CEO of Vingroup, shared: “Producing smartphones or smart TVs no longer brings breakthroughs, creates differentiated value for users”. In addition, the failure to acquire LG’s factory also contributed to Vingroup’s withdrawal from this sector.
However, VinSmart is still in operation. The company has shifted its focus to developing smart features on VinFast vehicles and houses. The goal of the group is to develop smart – entertainment – service features for VinFast cars.
The most recent “notable” divestment deal is Vingroup’s divestment from One Mount Group. In mid-2022, the company of billionaire Pham Nhat Vuong transferred all of its shares in One Mount Group Joint Stock Company – a company established by the largest corporations in Vietnam, including “Masan Group, Techcombank, and Vingroup.”
The main business line of this company is Agency, Brokerage, Auctioning of goods. In addition, One Mount Group is also engaged in transportation and related services, real estate business, management consulting, advertising… Famous brands under the umbrella of One Mount include Vin ID, VinShop, and One Housing.
In particular, Vin ID aims to become a super personal assistant application, integrating multiple functions such as payment, home management, and shopping. One Housing is a platform that serves the needs of buying, renting, and other real estate-related services.
VinShop is a platform that serves grocery stores at all stages, from shopping, transportation, store management, payment, to financial support, and suppliers, with the ability to become a distribution channel for financial products and other services.
The One Mount ecosystem.
Although divesting from many business lines, as of December 31, 2023, Vingroup still owns a huge number of subsidiaries with a total of 110 enterprises. Among them, the conglomerate still owns famous brands such as Vinhomes (real estate), VinPearl (resort tourism), VinFast (industry), Vinmec (hospital), Vinschool (education), VinBrain (artificial intelligence)…
Investing heavily in the industry has begun to pay off for Vingroup. Specifically, the group recorded a net revenue of VND 27,428 billion in the fourth quarter, a 34% decrease compared to the same period.
In the breakdown of net revenue, revenue from production activities accounted for the main share, generating VND 11,266 billion for Vingroup in the quarter, an increase of 2.8 times compared to the same period. Meanwhile, revenue from real estate transfer decreased significantly by 84% compared to the same period, reaching VND 4,808 billion. Revenue from real estate leasing brought the third largest revenue with VND 2,396 billion.
This is the first quarter since VinFast was commercially operational that Vingroup’s production activities have surpassed its revenue from real estate business operations, becoming the main source of revenue for Vingroup.
