From the perspective of investors, we suggest a BUY recommendation on TMT The following factors warrant the BUY recommendation 1 Hoa Sen Group has very strong comparative advantages and posses a valuable opportunity for prosperous development because some of reason 2 5 2 1 5 1 0 5 0 Billions USD According to Macro Analysis we can se that In the report World Trade 2015 and Prospects 2016, WTO stated that Vietnam was the only country achieving impressive import–export growth in 2015 In 2014 – 20.
Trang 22014 2015 2016
HOA SEN GROUPSTEEL INDUSTRY
From the perspective of investors, we suggest a BUY recommendation on TMT The following factors warrant the BUY recommendation:
1.Hoa Sen Group has very strong comparative advantages and posses a valuable opportunity for prosperous development because some of reason:
According to Macro Analysis we can se that:
In the report "World Trade 2015 and Prospects 2016", WTO stated that Vietnam was the only country achieving impressive import–export growth in 2015
In 2014 – 2016, disbursed FDI over the years tends to increase, reached 2.15 billion in 9/2015 The average FDI release in 2016 increased by 9% compared to 2015, reaching the highest disbursed FDI The increase in registered and disbursed foreign investments
Source: Vietstock Data
Figure: Vietnam's FDI disbursement 2014
-2016
7,000
5,000 4,260
3,000
1,000
-Source: Company Data, Cophieu68.vn
Figure: EPS of Hoa Sen Group & Steel Industry
Source: Company Data, Cophieu68.vn
Figure: The profitability ratios of
Hoa Sen Group & Steel Industry
4.Profitability has improved and was
above the industry average for
almost ratios (ROI, ROA, ROE, EPS)
The above ratios show high
profitability when investing in HSG
Therefore, the decision to invest in
HSG is the right thing to do By
analyzing with specific data we see
that HSG is a group with many potential years to develop and sustain in the long time
2.5 2 1.5 1 0.5 0
ROE
ROA
ROI
STEEL INDUSTRYHOA SEN GROUP
Trang 3demonstrated the improvement of Vietnam's
investment and business environment
In addition, Hoa Sen Group has an advantage
of industry:
- Hoa Sen Group is now known as the
leading steel sheet enterprise in Viet
Nam with 40% market share, 20% of
Steel pipe market share and become the
leading exporter of steel sheets in
Southeast Asia Hoa Sen Group has 7
subsidiaries and over 200 branches
across the country
- Speaking about the prospects of
Vietnam steel industry, Vietnam Steel
Association (VSA) predicted that in the
next five years, the steel industry will
continue to grow at approximately
12-15% In 2017, iron output is expected to
increase by 80% to 4.5 million tons; billet
production increased by 47.2% to 11.5
million tons; Production of finished steel
products increased by 12% to nearly 20
million tons, construction steel output
increased by 11%, CR coil steel increased
13%, welded steel 15% and coated steel
increased 12%
2. The firm has steadily improved the cost efficient management, it shown through fluctuations of business result and effectivesave cost of Hoa Sen Group.
- Net Sales, expense, profit including EBIT, EBT, EAT of Hoa Sen Group tends to fluctuate gradually in the period of 2014 - 2015 and especially increase in the period 2015 - 2016 signaling the business results of the company has fluctuated in a positive direction.EAT in
2014 – 2015 increased with quivalent to 74.26% increase, in 2016, EAT continue increased corresponding to the increase rate of 135.30% compared to 2015
- In addition, the company has achieved optimum efficiency in the cost savings of its business and the contribution of the profit department to the company's return on its revenues
- During the period from 2014 to 2016, Hoa Sen Group's EAT has increased sharply in the years shown specifically at the EBT growth rate in 2015 of 74.26% and by 2016 the EAT growth rate continues increased strongly at 135.30%
3. Financial risk and liquidity risk are moderate
Financial risk and liquidity risk of the lotus corporation is moderate compared to the average of the steel industry By analyzing the capital structure coefficients, we find that the capital structure of HSG is reasonable compared to the average of the steel industry Although the short-term solvency ratio is still low relative to the industry, it is relatively stable and is gradually improving over the years In addition, the ability to convert into money of customer receivables and inventory
of Hoa Sen Group is quite good
By 2015, 2016 the inventory time of HSG will decrease from 35.57 days
to 34.93 days, and only 0.42 times the average inventory time of the steel industry The collection time of HSG is 13 days faster than the industry average, helping the company save capital, flowing quickly Moreover, in terms of loan repayment capacity, HSG has a high interest rate, which is two times higher than the average of the steel industry
Source: Vietstock Data
Figure 1: GDP growth rate 2014 - 2016
Source: Vietstock Data
Figure 2: Vietnam's exports & imports
2014 - 2016
Source: Vietstock Data
Figure 3: Vietnam's balance of trade 2014 - 2016
Source: Vietstock Data
Figure 4: Vietnam's inflation 2014 - 2016
162,439 150,042 165,609
176,630 174,110 148,058
ExportsImports
2016
4,000
2,000
0
% 6.8
6.6
6.4
6.2
6
6.68
6.21 5.98
5.8 5.6
201420152016
6
% 4 2 0
4.74 1.84 0.63
201420152016
Consumer Price Index
Trang 42.5 2 1.5 1 0.5 0
2 0 1 4 – 2 0 1 6 w a s t h e p e ri o d m a r ki n g d e v e l o p m e n t s t e p s o f V i e t n a m E c o n
omy Completing negotiations several Free Trade Agreements was a great turning point in Vietnam's international economic integration in 2015 This year Vietnam economic growth rate was 6.68% In 2016, because of the complex global context, Vietnam showed signs of vulnerability to shocks Nevertheless, Vietnam economy in 2016 still had bright spots in policy reform, inflation control, and macroeconomic stability
1.1 ECONOMIC GROWTH
In 2015, GDP growth rate reached 6.68%, increased by 0.7% compared to 2014 and was the highest rate for five years before Economic growth in 2015 was mainly contributed by the growth of industry and construction In 2016, GDP growth has slowed down to 6.21% due to the fluctuation of the world economy, so Vietnam economy was affected In addition, the erratic climate also impacted on agricultural, industrial production, imports, exports and GDP growth in Vietnam
1.2 BALANCE OF TRADE
The total import and export turnover of Vietnam from 2014 to 2016 increased gradually over the years Exports increased 17.72% (26.588 million), imports increased 17.60% (26.052 million) In the report "World Trade 2015 and Prospects 2016", WTO stated that Vietnam was the only country achieving impressive import–export growth in 2015
Vietnam's trade balance officially moved from deficit in 2015 to surplus of 2.520 million USD
in 2016 According to the professional economist, the current account deficit of Vietnam was due to the government budget deficit The high government budget deficit and soaring public debt were testimonies to Vietnam's current account deficit
1.3 INFLATION
After recording a low CPI in 2015, the CPI started to increase in 2016 Consumer prices increased to 4.74% The cause of inflation touched bottom and upward was that domestic demand recovered Besides, crude oil prices in the world raised causing domestic petroleum prices to be continuously adjusted The main motivation for the rise of CPI in 2016 was prices
of transportation and medical services The high inflation rate will affect the capital used for construction and the consumption of HSG's products, thus affecting the performance of the company
1.4 FOREIGN DIRECT INVESTMENT
The attraction of foreign investment was also a great success of the economy in 2014 - 2016 Disbursed FDI over the years tends to increase, reached 2.15 billion in 9/2015 The average FDI release in 2016 increased by 9% compared to 2015, reaching the highest disbursed FDI The increase in registered and disbursed foreign investments demonstrated the improvement
of Vietnam's investment and business environment
1.5 RATE
In the period 2014 - 2016, because of the direction of the State Bank, interest rate has gradually decreased compared to the previous time Besides, the macroeconomic indicators such
as GDP and inflation have improved that impulse banks to continue reducing interest rates to support businesses’s development, promoting growth economy as well Interest rates in this
Source: Vietstock Data
Figure 5: Vietnam's FDI disbursement
2014 - 2016
Source: LienVietPostBank Data
Figure 6: Loan Interest Rate 2014 - 2016
period are relatively stable (6.8% - 9%) This is a good sign for businesses which have large capital such as Hoa Sen Group
2,000
0
-2,000
-4,000-3,170
2015
% 10 15
5 0
Short - termMedium/Long - term
Trang 5Source: Vietstock
Figure 7: Exchange Rate 2014 - 2016
1.6 EXCHANGE RATE
Although the USD / VND exchange rate has been increasing year by year, 2014 is considered
as a successful year of Vietnam State Bank when the rate fluctuated only 1% However, in
2015, the value of money in Vietnam decreased 5.34% In 2016, exchange rate fluctuations mainly took place in the fourth quarter, after two major events in the US leading to turbulence in the exchange rate market of Vietnam Exchange rate fluctuations affected a lot
to listed companies such as HSG, especially in import-export activities Because most of HSG's materials are imported
In terms of the current life cycle, the steel industry is in a
development phase, with an average annual growth rate of
17.5%
/ year for 2012-2016 The demand for steel is about 180-190 kg,
which is still lower than the world average of 217 kg / person and
the average in Asia is estimated at 267 kg / person In 2016, total
domestic steel output was 17.2 million tonnes (+ 14.7% yoy),
steel consumption was 20.5 million tonnes (+12.6 yoy)
The size of the whole steel industry in 2016 accounts for about
5% of Vietnam's GDP Total revenue of listed steel companies is
about US $ 4.7 billion in 2016 (listed companies account for
about 54% of Vietnam steel output) The steel industry is also the
reason that the trade balance of VN weakened Specifically, in
the year 2016 the country has a trade surplus of 2.68 billion USD
but import turnover of iron and steel of all kinds is over 8 billion
USD
The value chain of the domestic steel industry has been closed in
the long steel segment, but the long steel segment has just
started to process HRC steel Ability of raw material input of the
steel industry is low Major materials such as iron ore, coke and
scrap steel are all imported The production process in Vietnam
is dominated by the EAF technology, which is estimated at 60%
and the rest is using BOF Output of steel structure in Vietnam in
2016 includes 48% of long steel construction, plated steel
products 41% and the remaining 11% of steel pipes
Speaking about the prospects of Vietnam steel industry, Vietnam Steel Association (VSA) predicted that in the next five years, the steel industry will continue to grow at approximately 12-15% In 2017, iron output is expected to increase by 80% to
4.5 million tons; billet production increased by 47.2% to 11.5 million tons; Production of finished steel products increased
by 12% to nearly 20 million tons, construction steel output increased by 11%, CR coil steel increased 13%, welded steel 15% and coated steel increased 12%
In addition, free trade in steel will also increase competitive pressures in the industry As of 2016, Vietnam has signed 12 bilateral and multilateral FTAs, is negotiating four FTAs and is considering an FTA, Vietnam steel industry will increasingly integrate into the global steel industry Under the tariff commitments of the signed FTAs, the average import tax rate for steel and steel products in Vietnam will only fluctuate between 0.69% - 7.55% 2018 and will continue to decline in the next phase Therefore, the competitive pressure on steel enterprises in Vietnam will become more and more important In order to survive and develop, it is necessary to constantly improve the competitiveness
23,000 22,540
21,115 21,405
21,075
20,000
1/1/20141/1/20151/1/2016
Bid rate Ask rate
Trang 6Porter’s Five Force Model will
make us understand clearly
about Vietnam steel industry
The possibility of rising raw material prices
and demand is not affected low
As there are many sources of imported raw materials in the steel industry, this factor does not affect much
The ability to reduce quality despite the
constant price low
In the steel industry, quality is very important If the quality is reduced, the ratio of raw materials to other types of steel will be used
The ability of vendors to collaborate and
adjust prices low
The major suppliers of steel inputs are large nations, so collaborating to adjust prices is difficult because many dependents of political factors
There is no substitute product for the input high Alternatively replace the input of the BOF with the input of the EAF and vice versa
Supplier's product plays an important part
in the cost structure of the industry high
There are two types of steel production technology and input materials of different types, so in terms of overall industry, there are four main types of inputs Therefore, the proportion of input materials accounts for only about 20% of each kind in the steel industry
The provider imposes or imposes penalties
when the business moves to another provider low
Generally, domestic steel producers import raw materials from diverse sources such as China, Australia,
Vendors have the capacity to expand their
This is very rare due to the huge investment required in the steel industry In addition to the current difficult situation of the world steel industry, not many mining enterprises want to invest to expand the value chain to steel production.
The focus of the customer low The output of the steel industry is diverse, accounting for about half of the construction sector, with very low customer focus
Opportunity to switch to other products low As there is no substitute for steel, this factor is negligible
Customers know the details of the product medium Due to the low number of steel products and industries using steel products are automobile, petroleum, construction These industries themselves need a lot of capital to relocate so serious research on the product before use
There are many sellers for customers
high Customers have many choices from domestic and imported companies from many other countries such as China, Japan, Korea,
The product has little difference medium Steel is a basic material and there are not so many types of products to distinguish between products
Ability to self-manufacture steel of customers low This factor is very rare because the steel industry requires a large amount of initial capital that not everyone can afford
At present there is no material that can replace the perfect steel Therefore, there is no threat from the substitute for steel
Difference in product Low Compared to other industries, the steel industry does not have many types of products
Number of businesses Low Compared to other countries in the region, the number of steel enterprises in Vietnam is not much
High growth High Vietnam's steel industry is the fastest growing in the ASEAN region and is emerging as a majorconsumer and importer of steel in the world.
Switching between businesses Low
Many steel mills are the same type of product so customers can easily switch to low cost
Average inventory cost Medium Mostly the opportunity cost and the cost of material price fluctuations occur, which causes producers to sell the product as soon as possible.
Barriers leave the industry High
In addition, large fixed assets and machines that can not be utilized in other business options are high barriers to exit These factors increase the competitiveness and level of fragmentation of the steel industry
High fixed costs High
The economies of scale have led to high fixed costs, which increases the competitiveness of the sector
In the steel industry most of the total cost of production is fixed costs, the firm must produce near capacity to achieve the lowest cost per product As a company has to sell a large number of such products, production at such a high level will lead to a battle for market share and as a result increases competitiveness.
Barriers created by the government high With the specific sector development plan for each period, new steel companies wishing to set up must get approval from the
Ministry of Industry and Trade and must pass the minimum capacity criteria.
Brand and copyright low Due to the nature of the industry, joining the industry does not require trademark and copyright
Capital barriers high
Characteristics of production in the steel industry is the need for large capital investment It is estimated that VND 8-10 trillion will
be used to build a hydroelectric plant with capacity of 1 million tons per year
Advantages of scale
high
Economies of scale are the business cost advantages of having to scale Economies of scale lead to lower fixed costs and lighter bargaining power The average cost of production will decrease as production increases
Profit advantage high
Comprehensive steelmakers have their own input material that protects them from the challenges of entering new entrants
Higher-margin businesses may be more profitable to invest, thus resulting in increased competitive advantage, increased barriers
to entry into the industry
Trang 7With the flexible and creative management of Mr Le Phuoc Vu and his associates, from a small company with an initial chartered capital of VND 30 billion and 22 employees, Hoa Sen Group has become a leading manufacturing business in Vietnam with the chartered capital
of 3500 billion dong, revenue of 20,000 billion dong and profit after tax of more than 1,500 billion dong It creates jobs for about 10,000 employees At present, Hoa Sen Group is leading steel production and trading enterprises in Vietnam with 33.1% of market share and 20.3%
of steel pipe market share (According to Vietnam Steel Association 2016)
Nowadays, Hoa Sen Group owns 11 large factories, nearly 300 branches distributing and retailing all over the country In addition, Hoa Sen Group also attaches special importance to export promotion activities, Hoa Sen’s products are present in more than 70 countries and territories in the world In addition to traditional export partners, the Group is also expanding its exports to potential markets such as the Americas, Europe and so on
Mr Le Phuoc Vu
Chairman of the Board of Directors of
Hoa Sen Group
Lately, on June 9th, Hoa Sen Group was honored in Vietnam's 50 best performing companies in 2017 This is the fourth consecutive year Hoa
Sen Group gained the title of "Vietnam's 50 best performing
companies".
Some informations about shareholders of Hoa Sen Group
Hoa Sen Investment & Travel Co Ltd 87,843,749 25.10%
BI Asset Management Fondsmæglerselskab A/S 3,262,650 0.93%
Trang 84.1 HORIZONTAL ANALYSIS 4.1.1 NET SALES
Hoa Sen Group's Net sale in 2014 was VND 21,965,738,124,852 and net Sale in 2015 was VND
3,147,527,213,471 compared to 2014, corresponding to
an increase of 11.26%
However, in 2016, Net sales decreased by VND 944,407,734,115 compared to net sales in 2015, reaching VND 30,153,251,241,606, equivalent to a decrease of 3.04%
In general throughout the period from 2014 to 2016, the Net sales of Hoa Sen Group increased in 2015 and then decreased in 2016, particularly in
2015 Net sales increased by 11.26% but in 2016, Net sales growth was - 3.04% Thus, the Net sale growth in 2016 was significantly reduced compared to 2015
The reason of the sharp decline in net sales growth during this period was that the steel market in 2015 experienced a very difficult period:
Domestic and international steel price is continuously decreasing in 2015, especially for Hot Rolled Steel (HRC)
The export of domestic steel products to the overseas market continuously encounters major obstacles from trade barriers, which typically include the application of trade defense measures and anti-dumping cases at some export markets
Domestic supply in 2015 increased significantly as manufacturers in the same industry boosted their production capacity and China exported Steel products rush into Vietnam
The fraud, the production, the purchase and sale of counterfeit goods, imitation goods are complicated and increasingly sophisticated
4.1.2 EBIT: EARNINGS BEFORE INTEREST AND TAXES
EBIT in 2014 reached VND654,638,548,398; by 2015, EBIT increased by VND 351,684,625,477 to VND 1,006,323,173,875, corresponding to an increase of 53.72% In 2016, EBIT reached VND 2,031,901,830,882, an increase of VND 1,025,578,657,007 compared to 2015, corresponding
to an increase of 101.91%
During the period from 2014 to 2016, Hoa Sen Group's steel EBIT has increased sharply over the years, reflecting the specific growth rate of 53.72% in FY2015 and by 2016 the growth rate of EBIT was continued increased sharply to 101.91%
The fluctuation of EBIT in the period from 2014 to 2016 increased by the impact of the following factors:
+ In 2015, EBIT increased by 351,684,625,477 VND due to:
• Net operating profit increased by VND 404,937,560,710,
also resulting in an increased in EBIT of VND 404,937,560,710
• However, Profit from fianancial activitives (excluding loan
interest) decreased (loss) of VND12,122,796,164 and also
resulting in decreased EBIT of VND 12,122,796,164
• Besides, other loss of VND41,130,139,069 was negatively
recorded into other profit, which reduced EBIT VND
41,130,139,069
+ In 2016, EBIT increased by 1,025,578,657,007 VND due to:
• Net operating profit increased by VND 621,967,472,903 also resulting in an increased in EBIT of VND 621,967,472,903
• Profit from fianancial activitives (excluding loan interest) increased by VND 437,932,404,364 and EBIT increased by VND 437,932,404,364
• However, the other loss of VND34,321,220,260 was recognized as a negative profit, reducing EBIT VND 34,321,220,260
EBT in 2014 reached VND 475,906,358,795, EBT increased by
VND 349,855,567,570 to VND 825,761,926,365 by 2015,
corresponding to an increase of 73.51% EBT has reached VND1,868,135,081,277 by 2016, an increase of VND1,042,373,154,912 compared with 2015, corresponding to an increase of 126.23%
2015/2014 2016/2015 2015/2014 2016/2015
Revenue 27,965,738,124,8
5231,133,878,040,82530,259,054,800,256 3,168,139,915,973 -874,823,240,569 11.33% -2.81%
The deduction from revenue 15,606,362,602 36,219,065,104 105,803,558,650 20,612,702,502 69,584,493,546 132.08% 192.12%
Net Sales 27,950,131,762,250 31,097,658,975,72
130,153,251,241,606 3,147,527,213,471 -944,407,734,115 11.26% -3.04%
Cost of goods sold 26,543,957,391,8
4529,074,021,762,75426,953,271,230,658 2,530,064,370,909 -2,120,750,532,096 9.53% -7.29%
Gross Profit 1,406,174,370,40
52,023,637,212,967 3,199,980,010,948 617,462,842,562 1,176,342,797,981 43.91% 58.13%
Selling expenses 602,674,781,415 727,052,217,691 974,622,573,218 124,377,436,276 247,570,355,527 20.64% 34.05%
Administrative overheads 329,681,909,965 417,829,755,541 724,634,725,092 88,147,845,576 306,804,969,551 26.74% 73.43%
Main Operating Profit 473,817,679,025 878,755,239,735 1,500,722,712,638 404,937,560,710 621,967,472,903 85.46% 70.78%
Financial Income 189,955,101,097 304,851,891,320 589,479,991,294 114,896,790,223 284,628,099,974 60.49% 93.37%
Financial expenses 72,302,717,704 199,322,304,091 46,017,999,701 127,019,586,387 -153,304,304,390 175.68% -76.91%
Financial Profit ( None Interest
expenses 117,652,383,393 105,529,587,229 543,461,991,593 -12,122,796,164 437,932,404,364 -10.30% 414.99%
Other Income 140,129,321,530 109,991,563,846 11,210,529,464 -30,137,757,684 -98,781,034,382 -21.51% -89.81%
Other expenses 76,960,835,550 87,953,216,935 23,493,402,813 10,992,381,385 -64,459,814,122 14.28% -73.29%
Other Profit ( Other Loss) 63,168,485,980 22,038,346,911 -12,282,873,349 -41,130,139,069 -34,321,220,260 -65.11% -155.73%
Earnings before interest and taxes
( EBIT) 654,638,548,398 1,006,323,173,875 2,031,901,830,882 351,684,625,477 1,025,578,657,007 53.72% 101.91%
Interest 178,732,189,603 180,561,247,510 163,766,749,605 1,829,057,907 -16,794,497,905 1.02% -9.30%
Trang 9During the period from 2014 to 2016, the EBT of Hoa Sen
group has increased sharply in the years shown in the EBT
growth rate of 73.51% in 2015 By 2016 EBT growth rate
continues Continued strong increase with the rate of
126.23%
The fluctuation of EBIT in the period from 2014 to 2016
increased by the impact of the following factors
+ In 2015, EBT increased by VND 349,855,567,570 due to:
• Net operating profit increased by VND 404,937,560,710,
also resulting in an increased in EBT of VND
404,937,560,710
• However, profit from financial activities (excluding loan
interest) decreased by VND 12,122,796,164 and EBT
decreased by VND 12,122,796,164
• Other loss of VND41,130,139,069 was negatively
recorded into other profit, which reduced EBT VND
41,130,139,069
• Besides, loan interest expense increased by VND
1,829,057,907 which reduced EBT VND 1,829,057,907
+ In 2016, EBT increased by 1,042,373,154,912 VND
compared to 2015 due to:
• Net operating profit increased by VND 621,967,472,903,
also resulting in an increase in EBT of VND
621,967,472,903
• Profit from financial activities (excluding loan interest)
increased by VND 437,932,404,364 and EBT increased by
VND 437,932,404,364
• Other loss of VND34,321,220,260 was negatively
recorded into other profit, which reduced EBT VND
34,321,220,260
• In addition, loan interest expense decreased by
VND16,794,497,905
4.1.4 EAT: EARNINGS AFTER TAXES
EAT in 2014 reached VND 372,385,124,263; EAT increased by VND 276,528,155,234 by the year 2015 to reach VND 648,913,279,497, equivalent to 74.26% increase In 2016, EAT has reached 1,526,875,812,677 VND, an increase of 877,962,533,180 VND compared
to 2015, corresponding to the increase rate of 135.30%
During the period from 2014 to 2016, Hoa Sen Group's EAT has increased sharply in the years shown specifically at the EBT growth rate in 2015 of 74.26% and by 2016 the EAT growth rate continues increased strongly at 135.30%
The fluctuation of EBIT in the period from 2014 to 2016 increased by the impact of the following factors
+ In 2015, compared to 2014 EAT increased 276,528,155,234 VND due to:
• Net operating profit increased by VND 404,937,560,710, causing an increase in EAT by VND 404,937,560,710
• However, profit from financial activities (excluding loan interest) decreased (loss) of VND12,122,796,164 and reduced the EAT equivalent to VND12,122,796,164
• There was another loss of VND41,130,139,069 which was negatively recorded into other profit, which reduced EAT VND 41,130,139,069
• Besides, loan interest expense increased by VND 1,829,057,907 which reduced EAT VND 1,829,057,907
• The current corporate income tax increased by VND65,617,758,262
VND7,709,654,074 to VND73,327,412,336
+ In 2016, compared to 2015, EAT increased 877,962,533,180 VND due to:
• Net operating profit increased by VND 621,967,472,903, resulting in
an increase in EAT of VND 621,967,472,903
• Profit from financial activities (excluding loan interest) increased by VND 437,932,404,364 and increased EAT VND 437,932,404,364
• Other loss of VND34,321,220,260 was recorded in other profit, which reduced the EAT VND 34,321,220,260
• Besides, loan interest expense decreased by VND16,794,497,905 resulting in an increase in EAT of VND16,794,497,905
• The current corporate income tax increased by VND 159,454,153,380 and the deferred corporate income tax increased by VND 4,956,468,352 to VND 164,410,621,732
Trang 104.2 VERTICAL ANALYSIS
4.2.1 EARNINGS BEFORE INTERESTS AND TAXES
Hoa Sen Group’s The percentage of EBIT over Net Sales (EBIT/ Net Sales) in 2014 was 2,34% The percentage of EBIT over Net Sales in 2015 was 3,24% As compared to the the previous years, the EBIT/Net Sales increased by 0,89% The EBIT /Net Sales in 2015 rose 3.5% and grew to 6.74% in 2016
In 2014, The EBIT/ Net
following:
Profit and Financial Profit
distributed 1,7% and 0,42%
while Other Profit was 0,42%
In 2015, Main Operating Profit
increased by 1,13%, Financial
decreased by 0,08% and
0,16% as the result, the EBIT/
Net Sales increased by 0,89%
compared to 2014 was 3,24%
On the other hands, The EBIT/
Net Sales in 2016 increased by
previous year was 6,74%
went up from 2,83% to 4,98%
and Financial Profit increased
by 1,46% while Other Profit
dropped by 0,07% to - 0,04%
0.89% as compared to 2014 because The Main Operating Profit increased by 1.13% which means that Hoa Sen Group increased The effeciency of Cost savings because 1.13%
increase means that on average 100 VND of Net Sales in 2015 the company generates 1.13 VND of Main Operating Profit over 2014 or the Main operating cost in 2015 decreased by 1.13 VND compared to 2014 over 100 VND Net Sales
Conclusionly, in 2015, the company increased The efficiency of Cost savings by 1.13%:
+ The Cost of goods sold in 2015 is 93.49% so compared to 2014, it is estimated to be less than 1,48 VND Cost of goods sold over the average
100 VND Net Sales So, the company has increased The effeciency of Cost savings’s Cost
of goods sold
+ For Selling expenses, the company can not increase the efficiency of Cost savings The ratio
of Selling expenses in 2015 increased by 0.18%
compared to that of 2014
+ For the Administrative overheads, the company can not increase the efficiency of cost savings The ratio of Administrative overheads
in 2015 is 0.16% higher than that of 2014 The
Administrative overheads compared to year 2014
3,5% as compared to 2015 because The Main Operating Profit increased by 2,15% which means that Hoa Sen Group increased The effeciency of Cost savings because 2,15% increase means that on average 100 VND of Net Sales in 2016 the company generates 2,15 VND
of Main Operating Profit over 2015 or the Main operating cost in 2016 decreased by 2,15 VND compared to 2015over 100 VND Net Sales Conclusionly, in 2016, the company increased The efficiency of Cost savings by 2,15%:
+ The Cost of goods sold in 2016 is 89,39% so compared to 2015, it is estimated to be less than 4,11 VND Cost of goods sold over the average
100 VND Net Sales So, the company has increased The effeciency of Cost savings’s Cost
of goods sold
+ For Selling expenses, the company can not increase the efficiency of Cost savings The ratio
of Selling expenses in 2016 increased by 0,89% compared to that of 2015
+ For the Administrative overheads, the company can not increase the efficiency of cost savings The ratio of Administrative overheads in
2016 is 1,06% higher than that of 2014 The
Administrative overheads compared to year 2015
4.2.2 EARNINGS BEFORE TAXES
The Interest expenses in 2015 decreased by 0,06% compared to 2014 As the result,
EBT/Net Sales increased by 0,06%
The Interest expenses in 2016 decreased by 0,04% compared to 2015 As the result, EBT/Net Sales increased by 0,04%