Fitch charges Vietnam’s realty heavyweight Vinhomes as ‘BB-‘

Fitch Ratings has announced the long-term issuer default rating (IDR) of Vinhomes, a leading real estate developer in Vietnam and the housing development arm of conglomerate Vingroup, at “BB-“.

In a Monday release, Fitch Ratings also noted that Vinhomes’ outlook is “stable” and published a “BB-“ rating for the company’s proposed U.S. dollar senior unsecured note.

Vinhomes’ rating is constrained by the consolidated profile of its “weaker” parent Vingroup, Fitch added.

The “stable” outlook on Vinhomes’s rating reflects the expectations that Vingroup’s consolidated leverage and liquidity will remain adequate over the next few years.

Fitch anticipates that a sustained cashflow burn at Vingroup’s electric vehicle (EV) arm VinFast will be largely counterbalanced by Vinhomes’ solid cashflows.

Fitch also assesses Vinhomes’ standalone credit profile (SCP) at “bb,” reflecting its leading market position in Vietnam, in line with its large contracted sales scale and solid cash flows from residential property development and related activities. The SCP is also supported by Vinhomes’ low leverage, with net debt-to-net property assets ratio likely to be maintained at well below 30% in the medium term, according to Fitch.

Besides, Fitch highlighted some Vinhomes’ advantages for the rating result, including its strong project appeal and the expectation of contracted sales to increase 25% year-on-year to VND150 trillion ($5.91 billion) in 2025.

For the first nine months of 2024, Vinhomes recorded net revenue of VND69.9 trillion ($2.75 billion), down 26% year-on-year. The company’s pre-tax and after-tax profits reached VND24.6 trillion and VND20.6 trillion ($809 million), respectively, representing declines of 41.3% and 36.4% from the same period of 2023.

Vinhomes stated that its profit results were supported by the handover of projects such as Vinhomes Ocean Park 2–3 in the northern province of Hung Yen and the recognition of business results from the Vinhomes Royal Island project in the northern port city of Hai Phong during the period.