Phân tích báo cáo tài chính công ty pomina pominas financial statement analysis

Lecturer Class MACROECONOMIC OVERVIEW04 GDP Growth Interest rate Rate of exchange Anti dumping policy steel industry09 INDUSTRY ANALYSIS History of steel Influence factor Trends in steel industry Prospects for steel industry The steel industry ANALYZE THE PROFIT STRUCTURE 13 Profit Structure Horizontal Common – Size Statement Vertical Common – Size Statement Assets structure and capital structure analysis 24FINANCIAL RATIOSANALYSIS Coefficient of capital structure Coeflcient of solvency The profit.

Class

FINANCIAL RATIOSANALYSIS

MACROECONOMIC OVERVIEW

GDP Growth Interest rate Rate of

exchange Anti-dumping policy steel industry

INDUSTRY ANALYSIS

History of steel Influence factor Trends in steel industry Prospects for steel industry The steel industry

ANALYZE THE PROFIT STRUCTURE

13

Profit Structure Horizontal Common – Size Statement Vertical Common – Size Statement Assets structure and capital structure analysis

24

Coefficient of capital structure

04

09

Coeflcient of solvency The profitability

indicators of capital

Figrure 1: Income statement

9 Curren

t ratio coeflci ent

However, the company's profit for three years (from-6,801 VND million in 2014 to -8,850VND million in2016) and financial investment is profitable (-13,167VND million dong in 2014 to -1,148VND million in2016) This demonstrates that the expansion of othertypical company activities is that financial investment isnot effective The ability to manage and use Pomina isnot guaranteed at the best level

The current liquidity of the company fluctuates, from

2014 to 2015 decreased 2.47%, but by 2016 it rose to3.17% compared with 2015 but still smaller than theindustry In general, Pomina's solvency has increasedbut less and less than 1 Therefore, it is impossible toguarantee the repayment of due debts

The company's solvency ratio increased gradually overthe years, namely in 2014 is 32.2%, in 2015 is 42.51%,

in 2016 is 60.25%, but it is smaller than 1 should Theability to pay short- term liabilities from short-termassets with high liquidity is low

0.6 0.32 0.43

0.98 0.96 0.9

GDP Growth:

evelopment of Vietnam's

economy in the period from 2011-2017 in

terms of the world economy has the variable

complexity, while plummeting growth but still

ensure the objectives This period is also the

time to affirm Vietnam's position on the world

market and mark the truth in the process of

international economic integration

Participation in the free trade agreement

help for our country there are good

conditions for development, hence the

motivation to raise per capita income

learly the growth of GDP from 2013 to

2016 five year relatively stable, sees theeconomic growth was quite strong andadapt with the volatility of the worldeconomy But the year 2016 GDPplummeting down 6.2% due to the impact

of the recession spread of export anddemand in the country but remains highcompared with other countries in theregion According to the Institute ofCertified Accountants of England andWales (ICAEW) predicted the GDP ofVietnam will reach over 6.5% in the year

2017, confirms the growth of the Vietnammarket in the long term and the marketposition of our country as a source oflow-cost for textiles and other industrialproducts in the area

1

Đông Á Bank

Interest rate:

he majority ofenterprises are using loans

to finance operations, a

dress is to expand on the

other hand is to save the

cost of enterprise income

tax Therefore, the volatility

of interest rates has great

influence to the business

operations of the Greco At

present, the general

interest are stable and are

lower than the

previous year According tothe statistics of the Center for economic forecasting

and information-NationalSocialists, the current loan interest rate

of approximately 7-9% per year for the short term and 9-10.5% annually for the medium and long term Especially in July, theState Bank has decided toreduce the interest rate in effect from the date of 10/7/2017, according to 1424/QĐ-NHNN decision

and decided

to NHNN has created

1425/QĐ-favorable conditions forbusiness development.Results from theimplementation of theabove mentioned solutionssync which is the TCTDactively advocates thedeployment of Governmentand SME, rising 0.5% peryear interest rate for short-term loans for the priorityfield

(Interest rates updated on 14/9/2017) - Source: Bac A bank.

OCB(Ph ươ ng Đông)

EXECUTIVE MACROECONOMIC INDUSTRY ANALYZE THE FINANCIAL

esides, the credit institutions also actively make steadyinterest rates for the manufacturing sector of business (BUSINESS)with lower interest rates of about 0.5-1% per year, reduce interestrates a number of medium and long-term lending programs forpriority sectors to about 8% per year (from level popular 9-10.5% ayear earlier), the deployment of short-term credit packages anddiverse with medium and long-term interest rates incentives foressential sector in economic development and social welfare, applyshort-term lending interest rates for good customers for about 4-5%/

RATIO

Anti-dumping policy steel industry 4

Rate of exchange:

To cater to the production and business,

companies need to import machinery and

modern equipment to improve the efficiency,

performance and cost reduction The company

has imported from Europe whole line

technology, modern equipment, advanced to

equip the factory sheet metal, while 1 line Rust,

2 cold rolling mill, two galvanizing lines, 1 color

coating line Besides imports, the company also

offers its products to the friends in the world by

exporting to countries such as Laos, Cambodia,

Dubai, United Arab Emirates and North America

(Canada) According GSO, the imports of iron

and steel in the month 6/2017 to nearly 1.1

million tonnes, valued at USD 649 million; fell

10.9% in volume and 15.6% in value compared

to the previous month Thereby, put steel import

volume in 6 months / 2017 reached 7.91

million tons, worth

4.61 billion US dollars, down 17.3% in volume,

however, rose 21.8% in value compared with

the same period last year The market supply

steel and iron to Vietnam 6 months / 2017

mainly include: China market with 3.95 million

tons, Japan provided 1.07 million tons So, the

volatility of hungry exchange rates affect

business operations of the business.

Dated 21.08.2017, the Ministry of Industry

and Trade issued Decision No 3283 / BCT on the application of anti-dumping measures against certain official product H- shaped steel imported into Vietnam exported origin export from the people's Republic of China, HS codes 7216.33.00; 7228.70.10 and 7228.70.90 September

QD-2014, the Ministry of Industry and Trade issued Decision No 7896/ QD-BCT on the application of measures against dumping for some products of stainless steel cold rolled imports into Vietnam from other countries These actions by the Government to create favorable conditions for domestic manufacturing enterprises, including joint-stock companies and protection Pomina steel manufacturing industry is still young.

3

=> non-differentiated steel products.

Capital requirements : requiring large amounts of capital to invest in production technology, labor force, and inventory

Access to distribution channels: With the bargaining of many economic sectors, retail chains are widely distributed throughout the country => Barriers to accessing distribution channels are relatively high

Government policies :Tax policy change constantly => create unstable, bring more concern for businesses.Issue a document banning the export of iron ore (Official Letter

5828 / BTC-CST 2015 on iron ore export tax) to create advantages for enterprises to invest in blast furnace technology, increase international competitiveness

Major customers and the degree of dispersion :Customers have demand for steel today is the contractor, business enterprises operating in the steel industry low concentration of customers

Highly standardized steel products: High conversion fees because steel is the main material of the works, so the conversion is very time consuming and costly

Risk customers do not like to use steel products: Due to the low prices of imported steel, especially China, the domination of the domestic market is a big threat to the domestic steel industry.arcity

The importance of the product to the quality of the product / service to the customer: The importance of the product to the quality of steel products is high because when customers decide to choose steel products they are in the direction of long-term investment and they will certainly pay more attention to aspects of quality.

Many providers and low level of focus: Vietnam imports many different raw materials, selling finished products to finished products

Does not cause major conversion costs : Because the product is uniform, no different characteristics, and more than the source of scrap, this iron ore is sold only to the steel industry => low conversion costs

Manufacturers are capable of vertical integration: Companies in the industry can choose to produce a number of different products or products that make up the vertical link in the industry

Number and size of enterprises in the sector : According to the Vietnam Steel Association, the current number of members joining the Association is 103 members

=> low numbers Steel industry is mostly small-scale manufacturing enterprises with medium production technology Speed and growth potential of the industry: 2-digit growth rate => high growth rate

High inventory or inventory costs : capacity increase rapidly through large investment

Products of the steel industry: Construction steel, steel pipes, hot rolled steel, cold rolled steel, galvanized metal paint coatings

Hreats from substitute products: Products from plastic, wood, bamboo….Compared to hardness, elasticity, to bending, durability, steel is more dominant => ability Low resale plastic

RATIO

are unlikely to handle the erratic increase in input prices, nor can they mmediately

adjust their selling prices when input costs increase as a result of maintaining their credibility with customers as well as domestic market share

History

of steel

Deploying Three Major Economic Program (1986-1960)

 Production output: 40000-85000 tons / year, mainly steel imported from the Soviet Union

 Foreign Investment Law (1987) and Corporate Law (1990)

Steel industry growing rapily (2000-2006)

 New business law (1999) created the premise for domestic enterprises

and joint ventures (Hoa Sen, Việt Ý, VinaKyoei )

 Continuous capacity has been improved but still small

2016

 Is considered the golden year of the steel industry

 Production and consumption at record highs

 Many profitable business records

Born- decade 60s

 Iron and steel complex Thai Nguyen (1959)

 Luu Xa steel building was built and inaugurated (1978)

Innovation policy(1990-1999)

 Vietnam Steel Corporation (1990) and Restructuring (1995) - Many

enterprises were established (Viet Steel, Huu Lien A Chau, Hoa Phat )

 The first time the output of rolled steel of foreign enterprises

exceeded state- owned enterprises (1998)

Open policy and economic intergration (from 2007)

 Vietnam joined the WTO (2007)

 Large-scale FDI projects approved: Dung Quat Economic Zone (Quang

Ngai), Ca Na Steel Complex (Ninh Thuan), etc

Rates, Interest Rates

The specialty of the steel industry in Vietnam is to import up to 50-60%

of input materials for the production process to create products.If theexchange rate increases, the input cost of the company will increaseaccordingly, while the selling price of the product can not be adjustedaccordingly Domestic companies

The next economic factor affecting the steel industry is interest rates.The steel industry is capital intensive so the demand for debt in theindustry is very high, about 55% of the asset structure is financed bydebt When the economy is suffering from high inflation, the State isforced to implement tightening monetary policy by increasing thelending interest rate, enterprises are more difficult to access bankcapital and expenses Interest rates will also increase

Urbanization Factor

The urbanization process has increased the demand for housing andinfrastructure HCMC, Hanoi and other developing cities of Vietnam arefacing a global trend of urbanization The average urbanization growthrate of Vietnam for the period 2010 - 2016 is about + 3.4% yoy.According to estimates by the World Bank, by 2050, about 60% ofVietnam's population will live in urban areas compared to the currentlevel of about 35% This is a very positive long-term positive signal forthe steel industry in the country

Technological factors

Technological factors have a great impact on the development of thesteel industry, especially at this stage Vietnam steel companies havepaid attention to investing and technology innovation, using Europeantechnology instead of China, Taiwan as before

However, the renewal of technology, machinery and equipment for thesteel industry is still a major obstacle as all the equipment forproduction activities of the industry have to import

Legal elements - policy

Decision No 55/2007 / QD-TTg approves the list of 10 priority industries,spearheaded 2007-2010, with a vision to 2020, the steel industry is also

in the list of priority industries develop In Decision No 694 / QD-BCTdated January 31, 2013 on development planning for steel productionand distribution system in the period up to 2020, with a view to 2025,the government plans to invest To prioritize the development of steelindustry into a strong economic branch

Influenc

e factor

Improve the growth rate

Vietnam is a developing country in the process of industrialization, sodomestic demand will continue to increase strongly in the future Withthe growth rate of Vietnam's steel industry expected at 15% in the nextfive years, the growth opportunities of enterprises are still very good ifthey find the right direction

Improve return on investment

The coming trend is to build large BOF furnace businesses with the scale

of 4-5 million tons per year At the same time, the cost per product will

be lower, increasing margins and domestic steel firms will be able towithstand low cost imported steel products

Demand for steel industry is huge

Steel industry is a core industry of many countries Vietnam is adeveloping country, so in the short and medium term the huge demandfor infrastructure development and urbanization will help Vietnam'ssteel industry grow strongly Not to mention, the rural area in Vietnam isvery large, so in the long term the demand for construction steel will still

be able to remain stable

Steel sector is still being expanded very strongly

steel companies are striving to invest in and expand the value chain inorder to increase efficiency in cost management, cost managementand production management To be competitive with foreign firms interms of price, quality and brand New steel plants are being built eachyear, as well as modernized old factories to increase capacity andefficiency

Protection from the government of Vietnam

In the face of massive steel imports from China, the Ministry of Industryand Trade (MOIT) has decided to impose official safeguard duties onbillet billets (21.3%), long steel (13.9%) by 2016 and flat steel (3.17 -38.34%) at the end of March 2017 This move helps domestic firms toovercome temporary difficulties to continue production Protectiontariffs will last for at least 5 years, creating time for businesses toconsolidate production capacity

Risk of raw materials

Raw materials of steel companies such as scrap steel, coke, iron ore,billet and some steel products are imported from abroad As the price

of raw materials in the international market fluctuates, the price ofsteel products fluctuate, resulting in profits of steel companies are notstable In the period from mid-2016 until now, raw material prices haveincreased steadily, causing steel companies to increase productioncosts

Risk of environmental pollution

Environmental pollution (air and water) is an inevitable problem for thesteel industry According to statistics, for every ton of crude steelproduced by blast furnace technology, more than 500 kg of solidwaste, 3m3 of toxic waste water,

2.3 tons of CO2 and other toxic gases such as CO, SO2 and metal dust

Pomina is a company active in the field of iron and steel production; recycle metalscrap; Trading in steel products.

Business Strategy: Recognizing the potential and challenges of Vietnam's steelindustry, Pomina has outlined a better investment strategy with large scalecapital, high technology, high capacity, quality products good, sustainable brandand cost competitive price According to the assessment of the company, onlywith the above orientation, new businesses have the ability to advance and deep

in the steel industry in Vietnam and in the world

Vision: constantly striving, is the pride of Vietnam heavy industry

Information of major shareholder structure of the company:

• State Owned 0%

• Foreign Ownership 6.83%

• Other Ownership 93.17%

ANALYZE THE PROFIT STRUCTURE

Value Proportion Value Proportion

Profit from financial activities (excluding loan interest) (24,124) -7.35% 36,143 18.44%

Figrure 3: Earnings

beforeinteret andtaxes

150,000

100,000

50,000

-Pomina's EBIT in 2014 was 115,377 million VND, EBIT

in 2015 was 198,706 million VND In 2015 EBIT increased

by 83,329 million VND compared to 2014 In 2016, EBITwas 350,428 million and to be continued to increase151,722 million VND Thus, the growth rate of EBITincreased rapidly from 2014 to 2015, but after 2015 thegrowth rate began to slow down

(50,000) Other profit/(loss)

Profit from financial activities

(excluding loan interest)

Net operating profit/(loss)

General 2014- 1016, Net operating profit or lossaccounted for the largest proportion In 2015 Netoperating profit or loss increased by111,286 million VNDcompared to 2014, and increased 6.81% Profit structure.And in 2016, Net operating profit or loss continued toincrease 113,795 million VND, however decreased21.27% Profit structure

Besides, in 2015 Profit from financial activities (excluding intersest expense)decreased by 24,124 million VND compared to 2014,and decreased 7.35% Profitstructure However in 2016, Profit from financial activities (excluding intersestexpense) continued to increase 36,143 million VND, and decreased 18,44% Profitstructure

In 2015 Other profit or loss decreased by 3,833 million VND compared to 2014,butincreased 0,54% Profit structure In 2016, Other profit or loss increase 1,784 millionVND, and increased 2.83% Profit structure

EXECUTIVE MACROECONOMIC INDUSTRY ANALYZE THE FINANCIAL RATIOS

Table 3: The analysis of the change in business resul

Table3: Comparative table of profit structure of Pomina Figures in: million

VND

Value Proportion Value Proportion Value Proportion

Net operating profit/(loss) 135,345 117.31% 246,631 124.12% 360,426 102.85% Profit from financial activities

(13,167) -11.41% (37,291) -18.77% (1,148) -0.33% (excluding loan interest)

Other profit/(loss) (6,801) -5.89% (10,634) -5.35% (8,850) -2.53%

Figures in: million VND

ITEMS Year 2014 Year 2015 Year 2016 Milions VND CHANGE % CHANGE

6 Profits from production and bussiness activities 135,345 246,631 360,426 111,286 113,795 82.22% 46.14%

7 Revenue from financial activities 38,806 73,541 1,739 34,735 -71,802 89.51% -97.64%

8 Expenses from financial activities (not include Interest) 51,973 110,832 2,887 58,859 -107,945 113.25% -97.40%

9 Profit from financial activities (not include Interest) (13,167) (37,291) (1,148) -24,124 36,143 -183.22% 96.92%

15 Earnings After Taxs ( EAT) (69,016) 21,413 199,363 90,429 177,950 131.03% 831.04%

NET SALES Pomina's net sales in 2014 was 6,339,809 million

VND, net sales in 2015 was 6,066,498 millionVND.Thus, in 2015 net sales decreased by 273,311million VND compared to 2014, respectivelydecreased by 4.31 % And in 2016, Net salescontinued to decrease 738,945million VND,respectively decreased by 12.18%

SUMMARY OVERVIEW ANALYSIS PROFIT STRUCTURE ANALYSIS

Figure 4 :Total earnings

800,000 before taxes (EBT)

Profits from production and bussiness activities

Profit from financial activities (not

include Interest)

20152016

consumption in the

country tends to increase

again, the amount of steel

Raw material pricesdecreased dramaticallyfrom 2013 and continued

to drop in specifically, scrap pricesfell to 33.3%, ore pricesfell to 32.1% and billetsfell to 45.6%

2015-Steel

consumption nationwidehas a tendency toincrease dramatically,there was a growth inthe amount of steelconsumed in the country

in 2016 was 107.77% incomparision with 2015(accounting for 15%market share in thecountry) Pomina exports

in 2015 will continue toincrease sharply by 104%compared to 2015

Pomina's EBIT in 2014 was 115,377 million VND, EBIT

in 2015 was 198,706 million VND Thus, in 2015 EBITincreased by 83,329 million VND compared to 2014,respectively increased by 72.22 % And in 2016, EBITcontinued to increase 151,722 million VND, respectivelyiecreased by 76.36% Thus, the growth rate of EBITincreased rapidly from 2014 to 2015, but after 2015 thegrowth rate began to slow down

The fluctuation of EBIT in the period from 2014 to 2016 increased by the impact of the following factors:

 In 2015, EBIT increased by 83,329 million VND due to:

 Net operating profit increased by 111,286 million VND,also resulting in an increased in EBIT of 111,286million VND

 Profit from fianancial activitives (excluding intersestexpense) decreased 24,124 million VND, also resulting

in an decreased in EBIT of 24,124 million VND

 Other profit or loss decreased 3,833 million VND, alsoresulting in an decreased in EBIT of 3,833 million VND

 In 2016, EBIT increased by 151,722 million VND due to:

 Net operating profit increased by 113,795 million VND, also resulting in

an increased in EBIT of 113,795 million VND

 Profit from fianancial activitives (excluding intersest expense) increased 36,143 million VND, also resulting in an decreased in EBIT of 36,143 million VND

 Other profit or loss increased 1,784 million VND, also resulting in an increased in EBIT of 1,784 million VND