- VEA announced H1 2021 results with revenue of VND2tn (USD88mn; +15% YoY) and NPAT-MI of VND3.1tn (USD135mn; +38% YoY).  In Q2 2021 alone, revenue and NPAT-MI surged 37% YoY and 79% YoY off their respective low bases. 

- We attribute the profit increases to stronger auto sales and capacity utilization at VEA's JVs, including Honda Vietnam, Toyota Vietnam and Ford Vietnam. Based on our estimate, Vietnam’s passenger car sales soared 31% YoY in H1 2021 and 140% YoY in Q2 2021. 

- Per our estimate, Honda Vietnam's net profit surged 39% YoY in H1 2021 (Q2 2021: 88% YoY) as a 7% YoY rise in motorbike (2W) sales volume and improved productivity more than offset a 3% YoY slide in auto (4W) sales. We note that profit margins of VEA’s automobile JVs were hurt the most by COVID-19 in Q2 2020 due to temporary factory closures. 

- Similarly, Toyota Vietnam’s net profit advanced 49% YoY (Q2 2021: +111% YoY) in H1 2021 against a 15% YoY  (Q2 2021: +37% YoY) rebound in 4W sales while Ford Vietnam recorded a net profit in H1 2021 vs a loss in H1 2020.

- Although VEA’s H1 2021 results are broadly in line with our expectations, we see potential downside risk to our current full-year forecasts — pending a fuller review — given the worse-than-expected COVID-19 outbreaks in Vietnam that could undermine consumer spending as well as disrupt vehicle sales acivities.