Investors are reportedly becoming concerned at the rapid expansion of Vietnam's largest private conglomerate, Vingroup, parent of new automaker Vinfast, which last month opened a vehicle assembly plant in the northern port city of Haiphong after production of the first home grown Vietnamese vehicle, the Fadil, had started earlier in the month, just two years after production plans were first announced.

The Nikkei said Vingroup had continued its rapid expansion by launching an aviation wing called Vinpearl Air with hopes of becoming the country's sixth carrier after its moves into car and smartphone production.

The group's aggressive expansion has drawn investor concern as the new businesses will require hefty amounts of initial capital, the Japanese daily said.

The launch of the aviation unit came after Fitch Ratings said on 1 July it had withdrawn ratings on Vingroup because of insufficient information from the company.

Before this move, Fitch's rating for Vingroup was B+ with a negative outlook.

According to Nikkei, Vingroup vice president Nguyen Viet Quang told local media after the withdrawal Vingroup's investment in the automotive sector, VinFast, was "highly risky, so it would certainly face a ratings downgrade."

He added if Vingroup wanted to remain rated by Fitch, it would have to abandon car manufacturing.

"We have to sacrifice the benefits [of being rated] in order to focus and mobilise all resources on the VinFast project," Quang said.

VinFast and smartphone unit VinSmart factories went into operation within the past year in a bid to diversify the group beyond its core property business.

Capital expenditures for VinFast alone were estimated at US$3.5bn, Nikkei said, citing Hanoi-based analyst SSI Research.

The group posted revenue of 21.8 trillion dong (US$941.7m) for the first quarter of 2019, down 23% on year. Profit after taxes fell 2% to one trillion dong.

The group is preparing other big projects, including organising the country's first Formula One Grand Prix next year in Hanoi.

Investors are becoming wary of the risks associated with the group's rapid expansion, Standard & Poor's said in a December report, the Nikkei added.

Vingroup's entry into the auto industry, "where it lacks expertise and experience, has increased operational pressure over the short term," the rating agency said.

While acknowledging Vingroup's strong sales forecasts, SSI Research said in a 11 June report there was concern over "the hyper-aggressive expansion of various new sectors that requires substantial initial establishment and a significant length of time to reach optimal levels".

"Hence, we do not exclude the possibility that the group may need to raise more funds, either via equity or debt," SSI added, the Nikkei reported.

Ha Vinh, an individual investor, told Nikkei many international conglomerates were eventually forced to narrow down their businesses to some core verticals as diversification faced difficulties.

"I don't have enough information to figure out if Vingroup is moving forward, but many new projects, such as retail and car production, are expected to face losses in the coming years," Ha told the daily.

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