FUNDAMENTALS OF CORPORATE FINANCE TOPIC FINANCIAL REPORT OF GEMADEPT ANALYSIS

CHAPTER 1: GEMADEPT COPORATION’S GENERALINTRODUCTION1.1 Introduce the company overview  Name of company: GERMADEPT COORPORATION  History and Development:  1990, established under

HANOI UNIVERSITY OF SCIENCE AND TECHNOLOGY

School of International Education

FUNDAMENTALS OF CORPORATE FINANCE

TOPIC: FINANCIAL REPORT OF GEMADEPT ANALYSIS

LECTURE: PhD Nguyen Dang Tue

CHAPTER 1: GEMADEPT COPORATION’S GENERAL INTRODUCTION 3

1.1 Introduce the company overview 3

1.2 Products and Service 6

1.3 Size of the company 7

CHAP 2: FINANCIAL REPORT ANALYSIS 8

2.1 Balance sheet, income statement, cash flow analysis 8

2.1.1 Balance sheet 8

2.1.2 Income statement 10

2.1.3 Cash flow statement 12

2.2 Financial ratios analysis 14

2.2.1 Profitability Margin 14

2.2.2 Liquidity ratios 15

2.2.3 Interest Coverage ratios 15

2.2.4 Leverage ratios 16

2.2.5 Operating return 18

CHAP 3: OPINIONS INVESMENT 21

3.1 EVALUATING PROSPECTS FROM BUSINESS ACTIVITIES 21

3.1.1 Prospects for medium and long-term development 21

3.1.2 Position and resources of the company: 22

3.1.3 Competitive position 23

3.2 ANALYSIS OF FINANCIAL SITUATION 24

CHAPTER 1: GEMADEPT COPORATION’S GENERAL

INTRODUCTION1.1 Introduce the company overview

 Name of company: GERMADEPT COORPORATION

 History and Development:

 1990, established under Viet Nam Maritime Bureau

 1993, one of the first 3 companies being selected by the government forequitization

 1995,Establishment of Phuoc Long ICD, the port inland of Viet Nam

 1997, Implementation of Midstream operation, river way transport

 2000, NO.2 nationwide ranking in container handling volume

 2001, Increasing charter capital to VND 200 billion

 2002, officially listed on Viet Nam Stock Exchange

 2003, Deployment of container liner transport service

 2004, established 2 overseas

 2006, Successful share issuance to raise charter capital up tp VND 475 billion

 2007, Purchase of 3 seagoing vessels, launch of 4 service lanes,

establishment of 3 joint ventures with reliable international partners

 2008, Putting Germadept Tower, Schenker- Germadept Logistics Centerand 2 ports in Dung Quat and Hai Phong into operation

 2009, Accomplishment of a new level profit , Initiation of Tan Son NhatAir Cargo Terminal construction

 2010, Increasing charter capital to VND 1000 billion , Putting Tan Son Nhat Air Cargo Terminal into operation, owning 99,98% of proportion

of Nam Hai Port Join Stock company

 2011, Starting rubber plantation project in Cambodia , Putting

Distribution Center 1 in Song Than IZ ( Binh Duong province ) into operation

 2012, Putting distribution Center 2 Song Than IZ ( Binh Duong

province ) into operation, Starting Construction of Nam Hai Dinh Vu Container port ,

 2013, Completing the construction of Nam Hai Dinh vu Container port and putting into operation , restructuring capital construction

 2014, Increasing the charter capital to over 1,161 billion

 2015, Increasing the charter capital to over 1,196 billion, starting Construction of a Cold Warehouse project in Hau Giang

 2016, Increasing the charter capital to over 1,794 billion , starting construction of Nam Dinh Vu Port in Hai Phong

 2017, Increasing the charter capital to over 2,882 billion , having

strategic partnership with CJ Logistics( Korea)

 Award

- Germadept has been ranked among Vietnam’sTop 500 largest

enterprises

- Top 20 Logistics Enterprises in Viet Nam

- Top 50 Vietnamese Best Performing Companies,

- Top 50 Best Vietnamese Listed Companies by Forbes

- Top 1000 enterprises having the largest contribution of corporate income tax to national budget

 Vision: Striving to become a Viet Nam and regional leading corporation

in Port Operation and Logistics

 Mission:

- Possessing and operating most effectively the port system along the coastline

- Completing the supply chain to provide customer with most efficient logistics solutions and highest competitive service quality in the market

- Properly taking investment opportunities to create added values

 Target:

- Leading port operator with best service quality

- Among leading logistics companies in Indochina and ASEAN

- No.1 in project cargo transport

- Leading carrier in domestic and Vietnam-Cambodia services

- Top 3 employee income and welfare in the industry

- Among VN30

1.2 Products and Service

Core business:

- Port operation : one of the core businesses of Germadept Corporation

After 20 years of establishment and development, Germadept is now owning and operating a large port system from North to South , in big cities and key economic zones

- Logistics : with good and proper infrastructure as large distribution

center, port system along national coastline , large and powerful vessel and truck fleet, Germadept Logistics has gradually combined its strength

to offer customers the supply chain management service Targeting to make Gemadept the top brand \name in Viet Nam until 2015

- Forestry: since the 1 rubber bamboo plantation on July 04, 2011, the st

project has been in progress for almost 4 years with fruitful results

- Real estate: In line with the business diversification strategy, Gemadept

has achieved remarkable successes in real estate sector, starting with the market segment of office buildings at the CBD of some big cites

1.3 Size of the company

Stockholder’s Equity VND 7,094,537,082,089

CHAP 2: FINANCIAL REPORT ANALYSIS2.1 Balance sheet, income statement, cash flow analysis

Other non-current assets 594.620.398.968 996.776.717.662 964.141.596.774

Total Liabilities 3.384.815.508.267 4.251.302.978.148 4.196.680.125.183

Current liabilities 1.605.680.951.595 2.961.152.475.919 2.676.231.766.155

Non-current liabilities 1.779.134.556.672 1.290.150.502.229 1.520.448.359.028

Stockholder equity 5.614.485.412.019 5.866.616.018.032 7.094.537.082.089

Base on balance sheet:

- Total Assets increased from 8,999,300,920,286 VND (2015) to

10,117,918,996,180 VND in 2016 and then increased to

11,291,217,207,272 VND in 2017 That means the company has expanded

its investment in assets Specifically, the company has reduced Current

assets from 2,678,066,855,242 VND in 2015 to 2,223,117,121,083 VND

in 2017, the total non-current assets soared from 6,321,234,065,044 VND

in 2015 to 9,068,100,086,189 VND by 2015; This shows that the company

is pushing for non-current asset investment, especially fixed assets and

long-term assets in the process In addition, short-term and long-term

receivables decreased, showing that the company has recovered part of capital from customers.

- Total liabilities of the company also increase from 3,384,815,508,267 VND (2015) to 4,196,680,125,183 VND in 2017, of which current

liabilities increase sharply from 1,605,680,951,595 VND in 2015 to

2,961,152,475,919 VND in 2016 and then decrease to 2,676,231,766,155 VND in 2017 Meanwhile, non-current liabilities fell from

1,656,433,254,922 VND; while total current liabilities increased by

1,355,471,524,324 VND That means the company did not use short-term loans to invest in current assets, but to invest in non-current assets; this is against the principle of investment

- In the period 2016-2017, total current assets increased 82,865,444,869 VND, total non-current assets increased by 1,090,432,766,223 VND; while the total liabilities of the company decreased 54,622,852,965 VND That means the company uses stockholder’s equity to invest in assets

- In term of liquidity, the total current liabilities in 2017 are larger than the total current assets, which mean that the company will have difficulty repaying short-term debt In the worst case, the company may have to sell some of its fixed assets to pay off its short-term debt

2.1.2 Income statement

Sales 3.593.780.842.602 3.743.839.681.801 3.990.532.084.494

Sales from port operation 1.699.715.096.053 1.626.266.580.999 1.835.237.955.108

Sales from logistic

services 1.892.524.904.470 2.116.383.863.392 2.152.902.070.265Sale from leasing office 1.540.842.079 1.189.237.410 2.392.059.121

Cost of sale 2.639.663.623.277 2.723.430.511.250 2.954.816.507.075

Cost cost of port

operation 986.743.561.404 935.754.045.343 1.125.780.192.171Cost of logistic services 1.652.920.061.873 1.787.676.465.907 1.829.036.314.904

company is stepping up investment in logistic services; however, the

growth rate of the company is quite low compared with expectations of growth logistic (about 20% per year)

- Gross profit increased 7.56%; Meanwhile, net profit increased strongly at21.68% This suggests that, during this period, the company's expenses

may decrease or increase but not significantly

- However, due to the impact of the decrease in revenue from other profit (down 867.62%), the earnings before interest and tax (EBIT) of the company has decreased from 624,305,639,431 VND to 601,921,924,846 (equivalent to 3.59) As a result, net profit fell by 3.68%.

 In period 2016-2017:

- In this period, total sales of the company continued to increase 6.59%; specifically, revenue from port operations increased by 12.85%, logistic revenue increased by 1.73% and office leasing revenue increased by 101.14% In addition, total cost increased 8.5%; Specifically: port

operating costs increased 20.31%, cost of logistics service increased 2.31% This shows that, at this stage, the company has shifted focus to invest in port operations However, the cost of port operation increased 20.31% while revenue from this industry increased only 12.85 This indicates that the company is investing unreasonably

- Gross profit increased by only 1.07%; however, net profit increased strongly at 22.82% This shows that, during this period, the company has cut unnecessary expenses or the expense increased but not significantly Therefore, the EBIT increase sharply by 31.96% and the net profit also increase by 31.03%

Evaluation: Through that, in the period 2015-2017, the company has twice

changed the direction of investment focus, specifically: 2015-2016 period, concentrated investment in logistics services; in the period 2016-2017, the focus is on port operations However, both times the change of the company results is not as expected Although the company's profit in 2017 increased sharply compare to 2016; However, profits do not come mainly from sales (services) but from financial income (such as: loans ) and in joint

ventures

2.1.3 Cash flow statement

Cash flow statement is a type of report showing the cash flow in or out of the company for a certain period Based on the cash flow statement, we can know where the company took the money, where the company spent money This is a tool for managers to control the cash flow of the company

Statement of cash flow of GEMADEPT

Net cash flow during the year -47.601.977.069 -180.623.794.234 56.421.075.220

Beginning cash and cash

equivalents 952.132.979.299 904.519.085.757 724.469.956.298

Effects of fluctuations in

foreign exchanfe rate -11.916.473 574.664.775 -1.088.830.921

Ending cash and cash

equivalents 904.519.085.757 724.469.956.298 779.802.200.597

- In this statement, we focus on 3 main sections which are: net cash flow fromoperating activities, net cash flow from investing activities and net cash flowfrom financial activities

- In 2015, cash flow from operating activities is 757,216,866,332VND, cash flow from investing activities is -470,602,502,579VND and cash flow from financial activities is -334,216,340,822 VND That means in 2015, revenues from operating activities are greater than operating expenses In addition, theinvestment and financial expenses are larger than the revenues from these two activities Also, the net cash flow during the year was

-47,601,977,069VND, showing that in 2015, the company spent more than its revenues, leading to the company's ending cash down to 904,519,085,757VND

- In 2016, cash flow from operating activities of the company increased very low (only about 0.57%), the cash flow for investment of the company

increased sharply about 162.75% Besides, in 2016, cash flow from financialactivities increased from -334,216,340,822 to 294,401,666,526 That means

in 2016, the company has earned money from 2 activities which are

operating activities and financial activities However, due to the sharp

increase in spending on investment, the cash flow during year continues to

be negative, meaning that in 2016 the company continues to spend more

than its revenue

- In 2017, cash flow from operating activities decreased 16.9%, cash flow

from financial activities decreased by 10.2% However, cash flow from

investing activities decreased sharply from -1,236,543,872,891 to

-840,854,280,104 This shows that in 2017, the company continues to earn

money from operating activities and financial activities, however, thanks to the sharp decrease in investment costs leading to the cash flow during year

of the company has been positive, showing that in 2017, the company earnedmore than spending

2.2 Financial ratios analysis

Gross margin 0,26 0,27 0,26

Based on the above analysis, we see that the indicators of the Gross margin in

2016 are 27%, slightly better than 2015 and 2017 which are 26% It’s mean in

2016 the company controls the cost of its inventory and the manufacturing of its products and subsequently pass on the costs to its customers better than in

2015 and 2017.On the other hand, the EBIT margin in 2016 fall off compare

to 2015 and 2017, it fell from 17% in 2015 to 16% in 2016 It’s mean the

overall operating efficiency, incorporating all the costs of ordinary, daily

business activity is decrease in 2016 But it’s increase in 2017.We also can seethe Net profit margin drop from 13% in 2015 to 12% in 2016 This means that

in 2015 13 cents of every dollar are profit but in 2016 only 12 cents of every dollar are profit In contrast in 2017, the Net profit margin increase to 15% It means 15 cent of every dollar are profit

2.2.2 Liquidity ratios

Current ratios

Looking at the table, we see Current Ratios in 2015> 1( 1,667869855)

indicates that the company is operating well, able to pay off all debts But

in 2016 and 2017, Current Ratios <1 ( 0,7227 in 2016 and 0,8306 in 2017)indicate that the company is in a negative financial position, likely to

default on its debt However, this does not mean that the company goes

bankrupt because there are many ways to raise capital

Quick ratio

In general, the Quick Ratio of 2016 and 2017 is less than 1 ( 0,6555 and 0,7549 respectively), indicating that the company will not be able to repayshort-term debt and must be carefully considered In addition, the Quick

Ratio is less than the Current Ratio, which means that the short-term

assets of an enterprise depend too much on inventory

Cash ratio

The Cash Ratio tells how fast the company can pay off its debts, because

cash and equivalents are liquid assets Cash ratio falls in 2016 and 2017

( 0,2446 and 0,2913 respectively) as compared to 2015 ( 0,2913), which

shows that businesses have cash and cash equivalents to meet short-term

liabilities, which require more cash

2.2.3 Interest Coverage ratios

Cash and cash equivalent 904.519.085.757 724.469.956.298 779.802.200.597

Book value of equity 5.614.485.412.019 5.866.616.018.032 7.094.609.077.089

Real market value 5.071.972.545.600 4.844.671.587.000 11.588.733.671.400

Debt-equity ratios (book) 0,334657187 0,427201907 0,272759722Debt-equity ratios (mark) 0,370453089 0,517316706 0,16698318Debt-to-capital ratios 0,250743929 0,29932829 0,214305746Debt-to-enterpise value