Uber, Grab hit Vinasun revenues

Hanoi (VNS/VNA) – In the last three years, ride-hailing applications Uber and Grab have decimated the business of local taxi firms. Now, taxi companies’ foreign shareholders are feeling the pain.

One of the most affected companies is Vinasun, which mainly operates in the south and has 678.6 billion VND (30.16 million USD) in charter capital. According to the economic and financial news site cafef.vn, Vinasun has reported slower growth rates in both net revenue and profit since the two apps entered Vietnam in mid-2014.

From 2010-15, Vinasun’s net revenue increased from over 1.64 trillion VND to 4.25 trillion VND. The HCM City-based taxi company also recorded that its post-tax profit grew from 179.4 billion VND to 329.3 billion VND. In 2016, however, the company’s net revenue grew at a slower pace to reach 4.5 trillion VND, while its post-tax profit fell to roughly 312 billion VND.

In the first half of 2017, Vinasun performed even worse as its net revenue dropped 16 percent year on year to 1.9 trillion VND and its post-tax profit declined by a third to 100 billion VND.

In the past nine months, the company also had to cut its payroll by nearly 8,000 employees to about 9,200 from 17,170 in 2016. The 2016 figure represented an increase by a fifth from around 14,200 employees in 2013.

Much of the downward trend in Vinasun’s business is attributed to strong competition since Uber and Grab entered Vietnam in 2014, cafef.vn reported.

A large number of drivers that were removed from Vinasun’s payroll have turned to work for Uber and Grab.

Lower performance in recent years has sent shares of Vinasun on the HCM Stock Exchange down by 51 percent from the record high of 37,580 VND (1.67 USD) per share in early December 2014.

Vinasun’s shares, listed under code VNS, closed on October 10 at 18,450 VND per share.

Over time, the fall of Vinasun’s shares has caused big losses for shareholders, especially the two Singaporean investment funds TAEL Partners and Government of Singapore (GIC), as those two funds started investing in Vinasun in 2013-14 when the company was at its strongest.

In late 2013, TAEL Partners bought three million shares of Vinasun, equal to a 6.9 percent stake, via a private placement at 45,000 VND per share.

In 2014, TAEL Partners increased its ownership in Vinasun to 18.3 percent, equal to more than 12.4 million shares, becoming the biggest shareholder of the company.

Cafef.vn reported that the total value of purchases made by TAEL Partners was 383 billion VND. As shares of Vinasun have dropped 51 percent in value, TAEL Partners’ investment in the taxi firm has lost 40 percent, and is now worth 221 billion VND.

GIC bought 4.5 million shares of Vinasun in August 2014, equal to a 7.96 percent stake, for 203 billion VND, and its ownership in the taxi firm has remained steady since then.

At the moment, the value of VNS shares held by GIC is around 96 billion VND, down 53 percent from the initial figure.-VNA