HABECO’S FINANCIAL STATEMENTS ANALYSIS IN THE PERIOD OF 2018 2020

Short-term solvency, or liquidity ratios of HABECO, SABECO and HaiDuong Beer in 2020 .... Asset management, or turnover ratios of HABECO, SABECO and Hai Duong Beer in 2020 .... Long-term

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FOREIGN TRADE UNIVERSITYSCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS

-ÎÎ

ÓÓ -MID-TERM REPORT

TOPIC HABECO’S FINANCIAL STATEMENTS ANALYSIS

IN THE PERIOD OF 2018-2020

Group number: 6 Group members: Vũ Thanh Tùng – 1815530063

Vu Trong Cao Sang – 1815530050Trần Đoàn Lâm – 1815530029

Intake: 57 Major: Logistics & Supply Chain Management

Instructor: Dr Quyen Do Nguyen

Hanoi, December 2021

download by : skknchat@gmail.com

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TABLE OF CONTENTS

INTRODUCTION 1

CHAPTER 1: GENERAL INFORMATION ABOUT HABECO 2

1.1 About HABECO 2

1.2 Vision Statements, Mission Statements and Core Value Statements 2

1.2.1 Vision 2

1.2.2 Mission 2

1.2.3 Core values 3

1.3 Product ranges 3

CHAPTER 2: HABECO’S FINANCIAL STATEMENTS ANALYSIS FROM 2018-2020 4

2.1 Vertical analysis of HABECO’s financial statements from 2018-2020 4

2.1.1 Short-term solvency, or liquidity ratios 4

2.1.2 Asset management, or turnover ratios 5

2.1.3 Long-term solvency, or financial leverage ratios 6

2.1.4 Profitability Ratios 7

2.1.5 Market Value Ratios 8

2.2 Horizontal analysis of HABECO’s financial statements in comparision with SABECO and HAIDUONG BEER in 2020 9

2.2.1 Short-term solvency, or liquidity ratios 9

2.2.2 Asset management, or turnover ratios 10

2.2.3 Long-term solvency, or financial leverage ratios 11

2.2.4 Profitability Ratios 11

2.2.5 Market Value Ratios 12

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Table 2.6 Short-term solvency, or liquidity ratios of HABECO, SABECO and Hai

Duong Beer in 2020 9

Table 2.7 Asset management, or turnover ratios of HABECO, SABECO and Hai

Duong Beer in 2020 10

Table 2.8 Long-term solvency, or financial leverage ratios of HABECO, SABECO

and Hai Duong Beer in 2020 11 Table 2.9 Profitability Ratios of HABECO, SABECO and Hai Duong Beer in 2020 11 Table 2.10 Market Value Ratios of HABECO, SABECO and Hai Duong Beer in

2020 12

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Today, more and more people are choosing to step out of their comfort zone tomake money by investing in public companies This investment also follows the law ofthe market: High risk high return To maximize the return on investment, investorsneed to prepare a huge amount of knowledge, skills and experience before puttingmoney in the stocks of the above companies: general macro knowledge economy,knowledge of the specific industry, and most importantly, from a micro perspective,must grasp the analysis of the company's operations and financial health throughspecific indicators from financial statement analysis The analysis of financialstatements will be a key factor to help investors predict the company's growth, therebymaking a decision whether to invest in the company or not

Drinking alcohol has been a cultural beauty of Vietnamese people for a longtime It is said that “Betel is the beginning of the story, the cup of wine or beer isthe beginning of the fun” This cultural feature is also evidence for the potentialconsumption of the beer industry in Vietnam Among the beer and wine companies

in Vietnam, HABECO is a large company with great potential for growth

Realizing the potential of HABECO development in profitable investment, we chose the research topic: " HABECO’S FINANCIAL STATEMENTS ANALYSIS IN THE PERIOD

OF 2018-2020" By analyzing the data of specific items in HABECO's financial statements, and then comparing it with data from HABECO's main competitors, this report will draw conclusions for the question: Is it worth the investment in HABECO to maximize profit? In addition, the article also contains useful information for those who want to learn about the Vietnamese beer market as well as basic information about

HABECO

Our report will consist of three main parts:

• CHAPTER 2: HABECO'S FINANCIAL STATEMENTS ANALYSIS FROM 2018-2020

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CHAPTER 1: GENERAL INFORMATION ABOUT HABECO

1.1 About HABECO

• Company name: Hanoi Beer Alcohol and Beverage Joint Stock Corp

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1.2.3 Core values

“CUSTOMER TRUST IS THE FOUNDATION OF PRINCE QUALITY”determining the best satisfaction of customers' needs and requirements is the guidelinethroughout all activities, and is the foundation of HABECO's success and longevity

1.3 Product ranges

• Hanoi Premium canned beer • Hanoi Bold & Light bottled beer

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CHAPTER 2: HABECO’S FINANCIAL STATEMENTS

ANALYSIS FROM 2018-2020

2.1 Vertical analysis of HABECO’s financial statements from 2018-2020

2.1.1 Short-term solvency, or liquidity ratios

Table 2.1 HABECO’s short-term solvency, or liquidity ratios from 2018 to 2020

Overall, the company has been more and more likely to pay off current debt

obligations without raising external capital It seems that this is more because of

the company's ability to pay off its current liabilities with its accounts receivable,

not with cash and inventories

The company’s current ratio experienced a noticeable upward trend over the

3-year period The figure stood at 1.39 in 2018 before growing by 0.42 in the following

year and reached its peak at an incredible number of 2.58 in the year 2020 The

increase in the company’s current ratio indicates its enhanced ability to pay off its

current liabilities with its total current assets In general, a good current ratio is

anything over 1, with 1.5 to 2 being the ideal In this case, the company had been

having more than enough cash to meet its liabilities while using its capital effectively

Turning to the quick ratio, there was a similar upward trend over the given

years The company’s figures stood at respectively 1.18, 1.53 and 2.24 in 2018,

2019 and 2020 This means that the company was more likely to meet its

short-term obligations with its most liquid assets This is also a good ratio as it stayed

above the 1.0 level and almost doubled from 2018 to 2020

The company’s cash ratio was the only ratio to witness a downturn over the years.

This figure rose minimally to 0.56 in 2019, but then fell to 0,47 in 2020, at almost the

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same level as it was in 2018 This figure shows that the company was less likely torepay its short-term debt with cash or near-cash resources.

As for networking capital to total asset ratio, which is quite low, indicating

serious cash flow difficulties for the company, the 3-year period only introduced a

marginal increase from 0.16 to 0.36

2.1.2 Asset management, or turnover ratios

Table 2.2 HABECO’s asset management, or turnover ratios from 2018 to 2020

In the period of 3 years, total asset turnover was not stable In 2018 everyVND in assets of the company brought in 1.01 VND of revenue In 2019, one VND

in assets brought in 1.21 VND in revenue (increased by about 20% compared tothe number in 2018) The 2020’s total asset turnover dropped down to 0.98, which

is marginally lower than that of 2018 We can see that the company used its assetsexceptionally efficiently in 2019, but this was no longer the case in 2020

The company's inventory turnover in 2018 was 8.51, the number of daysinventory was 43 Inventory turnover in 2019 was 10.77, days in inventory was 34 In

2020, inventory turnover decreased from 10.77 to 9.16 with the inventory days rising to

40 days The higher the inventory turnover ratio, the faster the sales and the inventory

is not stagnant in the business This means that the business will be less risky if seen

in the financial report, the item of inventory value decreases over the years

In 2018, receivable turnover was 21.27; average collection period was 18 days However, in 2019, the company's receivable turnover increased sharply from 21.27 to

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company's receivable turnover plummeted to 19.15 in the final year Average collection was up to approximately 19 days The lower receivable turnover index shows that the more money the business is being occupied, the amount of cash will decrease, reducing the initiative of businesses in financing working capital in production and businesses may have to borrow from banks to finance this working capital.

2.1.3 Long-term solvency, or financial leverage ratios

Table 2.3 HABECO’s long-term solvency, or financial leverage ratios from 2018 to 2020

The company’s time interest earned ratio rose quickly from well below 15 to almost 35 between 2018 and 2020 Overall, the company’s time interest earned ratio in this period was quite high, which means it could afford to pay additional interest expenses In this respect, the business was less risky and the bank should not have had a problemaccepting its loan

There was an even sharper increase of roughly 30 in the company’s cashcoverage ratio This number started at about 24 in 2018, before rising to almost 38

in 2019 and surging to its peak at over 54 in the final year The business couldcover its interest expenses nearly 54 times over, leaving more than enough in cash

to cover other obligations It can be seen that the company’s debt-equity ratio ishigh, which is good for the company

In the period from 2018 to 2019, there was a downturn of 0.13 in the company’s total debt ratio, which was followed by a similar decrease to 0.25 in the year 2020 The company’s total debt is just right, neither too high nor too low, this is a good sign for the company, the company can take advantage of financial leverage to increase profitability.

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This ratio in 2020 was relatively low, meaning that the amount of debt financing

through lenders is lower than equity through equity and that was a good change

In terms of the debt-equity ratio of the company, this number stood at 87% in

2018 In 2018, it decreased to 51% (down by 26% compared to 2018) In 2020, this

ratio continued to lower to 34% (down by 17% compared to 2019) Overall, in 3 years,

the debt-equity ratio of the company was always lower than 1, which means that

companies used less debt than equity used to finance assets This made the company

less dependent on debt and the possibility of financial autonomy was rather good

The company’s equity multiplier is a financial leverage ratio that measures the

amount of a firm’s assets that are financed by its shareholders by comparing total assets

with total shareholder’s equity In other words, the equity multiplier shows the percentage

of assets that are financed or owned by the shareholders Conversely, this ratio also

shows the level of debt financing is used to acquire assets and maintain operations And in

HABECO’s case, this figure decreased from 1.87 in 2018 to 1.51 in 2019 Then in the final

year, this ratio bottomed out at 1.34 This trend illustrated the disadvantages of the

company which means the company needed to use more debt to finance its assets.

2.1.4 Profitability Ratios

Table 2.4 HABECO’s profitability Ratios from 2018 to 2020

As can be seen in the bar chart, the profitability ratios of HABECO

experienced little changes from 2018 to 2020

The 3-year period introduced a minimal increase to the company’s profit margin.

This figure stood at 0.05 in 2018, slowly climbed to 0.06 in 2019 and continued to grow to

only 0.09 in 2020 Despite this positive trend, the ratio was still a rather small number.

Between 2018 and 2019, the ratio of return on assets increased from 5% to 7%

Subsequently, this ratio increased to 9% in 2020 The numbers above illustrate that

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the company was earning more money on less investment However, as a ROA ratio of

9% was still an average number, the company still needs to aim higher in the future

With regards to return on equity ratio, this figure stayed constant at 10%

throughout 2019 before moving up to 12% in 2020 According to William O'Neil's

CANSLIM criteria, the ROE of the business must be at least 15% HABECO's ROE

in the last 3 years was always less than 15%, showing that HABECO's business

was not very good and the company had not really used capital effectively

2.1.5 Market Value Ratios

Table 2.5 HABECO’s market Value Ratios from 2018 to 2020

HABECO’s price-sales ratio went down slightly from 0.27 to 0.21 from 2018 to

2020 This downward trend made the company quite attractive and worth investing in

There was a significant upturn of 0.93 in the company’s market-to-book ratio

until 2019, which was followed by a marginal increase to 2.53 in the final year This

figure was constantly kept above 1 throughout the years, indicating that the

company had healthy future profit projections and investors would be willing to pay

a premium for that possibility

The P/E ratio of the company lowered continuously over the years, from

over 37 in 2018 to over 32 and 27 in 2019 and 2020 respectively Although it was

still a respectable figure, the downward trend would inevitably undermine the

investors’ confidence in the company and its prospects for the future growth

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2.2 Horizontal analysis of HABECO’s financial statements in

comparision with SABECO and HAIDUONG BEER in 2020

2.2.1 Short-term solvency, or liquidity ratios

Table 2.6 Short-term solvency, or liquidity ratios of HABECO,

SABECO and Hai Duong Beer in 2020

The chart shows that HABECO's liquidity position is the lowest and least

likely in its ability to pay off its current liabilities with its total current assets

HABECO's Quick Ratio is 2.24, significantly lower than SABECO's and lower

than HAIDUONG BEER Therefore, HABECO has the lowest quick ratio and is

least likely to meet its short-term obligations with its most liquid assets

Regarding cash ratio, all 3 companies have ratio <1 So all three companies

have more current liabilities than cash and cash equivalents HABECO has a cash

ratio of 0.47, so it will be able to pay liabilities higher than HAIDUONGBEER 0.34

and lower than SABECO of 0.53

For NWC to TA, all three firms show a positive ratio which is considered to

be a sign of strength The best NWC to TA is still SABECO 0.52, the lowest

possibility is HABECO of 0.36

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2.2.2 Asset management, or turnover ratios

Table 2.7 Asset management, or turnover ratios of HABECO, SABECO and Hai

Duong Beer in 2020

HABECO's DSI is significantly higher than SABECO's DSI, and about 70%lower than HAIDUONG BEER This indicates that HABECO's business ismoderately efficient among all three companies HABECO's high DSI indicates apossibly slow sales performance or an excess of purchased inventory, which hasnot yet optimized inventory like SABECO

Coming to DSO, HAIDUONG BEER's index is amazing at only 1.04 Itsreceivables lead to the ability to allocate that revenue to other operations HABECOhas the lowest DSO, and both its cash flow and liquidity may increase as a result

Turning to the Inventory Turnover index A high inventory turnover of SABECO generally means that goods are sold faster A low turnover rate of HAIDUONG BEER indicates weak sales and excess inventories, which may be challenging for its business.

A high NWC turnover ratio shows that management is being very efficient inusing a company's short-term assets and liability for supporting sales Therefore,the data table shows that HAIDUONG BEER has the highest index (3.43) whichmeans the best use of NWC HABECO ranks 2nd with 2.73 points SABECO wasthe least efficient in using its working capital to support sales and growth

Coming the Fixed asset turnover indicator HABECO has the lowest score, which means that the company uses its fixed assets to generate sales in the least effective way.

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SABECO has the highest index of 5.77 indicating the business has less moneytied up in fixed assets for each unit of currency of sales revenue.

Total asset turnover of HAIDUONG BEER is the highest, so the company isoperating more efficiently, using assets more efficiently to produce sales ascompared to HABECO and SABECO with a lower ratio

2.2.3 Long-term solvency, or financial leverage ratios

Debt-equity ratio of HABECO is still the highest 0.34 This is a negative signwhen a high D/E ratio is often associated with high risk; it means that HABECOhas been aggressive in financing its growth with debt

About Equity multiplier index, HABECO is still the highest with 1.34, indicating asignificant portion of a firm's assets are financed by debt SABECO and HAIDUONGBEER are slightly lower, indicating that the two companies are more likely to minimizedebt from lenders or the management is avoiding the use of debt to purchase assets

2.2.4 Profitability Ratios

Table 2.9 Profitability Ratios of HABECO, SABECO and Hai Duong Beer in 2020

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Coming to the Profit margin index, it can be seen that the highest SABECO'sindex is 0.18, the highest among the three companies mentioned above This is apositive signal that shows a good possibility of converting revenue into profit WhileHABECO and HAIDUONG BEER are less than 0.09 and 0.05 respectively.

Next, another important metric when it comes to business health is ROA SABECO's ROA is still the highest, showing that the company utilizes its assets in terms

of profitability HABECO and HAIDUONG BEER bring in less profit from total assets.

SABECO's ROE is the highest with 0.23 HABECO and HAIDUONG BEERare equivalent, the difference is not significant It can be seen that SABECO's ROE

is at a high and stable level, partly showing that this company uses capital moreefficiently than the other two companies

2.2.5 Market Value Ratios

Table 2.10 Market Value Ratios of HABECO, SABECO and Hai Duong Beer in 2020

Price-sales ratio of SABECO with 4.47 is nearly 100% higher than HABECO and

completely superior to HAIDUONG BEER with only 0.61 That price-sales ratio ofSABECO significantly above the average may suggest overvaluation The number

of HAIDUONG BEER may indicate the stock is undervalued

Market-to-book ratio of SABECO continued to completely outperformHABECO and HAIDUONG BEER All three of the company's ratios are above 1,indicating that the stock is overvalued

Price-earning ratio of HABECO is the largest, slightly larger than SABECO with26.47 and equal to about 245% of HAIDUONG BEER This high ratio of HABECOindicates a positive future performance, and investors have higher expectations forfuture earnings growth and are willing to pay more for the company

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CHAPTER 3: STOCK INVESTMENT DECISION

From the above analysis, it is clear that HABECO has been more and more likely to pay off current debt obligations without raising external capital and it seems that this is more because of the company's ability to pay off its current liabilities with its accounts receivable, instead of cash and inventories The figures also show that the more money the business is being occupied, the amount of cash will decrease, reducing the initiative of businesses in financing working capital in production and businesses may have to borrow from banks to finance this working capital when it comes to analyzing the efficiency of asset management In terms of long-term solvency, the company’s time interest earned ratio in this period was quite high, which means it could afford to pay additional interest expenses In this respect, the business was less risky, and the bank should not have had a problem accepting its loan However, profitability ratios showed a less desirable result, with HABECO's ROE in the last 3 years always less than 15%, showing that HABECO's business was not very good, and the company had not really used capital effectively.

The graph shows that SABECO has the best ability to pay off current debt obligations without raising external capital The analysis object of the report (HABECO) has the lowest overall short-term solvency index compared to the other two companies.

The chart shows that there is a significant competition in turnover ratiobetween the two companies, SABECO and HAIDUONG BEER Each company inturn has a larger edge in each index For example, SABECO has the advantage ofDay's sales in inventory, Inventory turnover and Fixed asset turnover Days' sales

in receivables NWC turnover and Total asset turnover are higher SABECO lostcompletely when comparing on the asset management index

HABECO has the highest financial leverage ratios This too much debt can

be dangerous for the company and its investors However, if HABECO's operationscan generate a higher rate of return than the interest rate on its loans, then thedebt may help to fuel growth

HABECO has an average Profitability Ratios, although it is far behind theperformance of SABECO HABECO should make improvements in its use of assets

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internally to generate income Market value ratio of HABECO is at an averagelevel, generally still behind SABECO But the price earnings ratio of HABECO isvery high, showing that the company has great growth potential.

The figures regarding short-term solvency, long-term solvency, assetsmanagement, profitability and market value of HABECO’s is in an acceptable range incomparison with the average industry, not too far behind but also not too far ahead.Nevertheless, the period of three-previous-successive years indicates a downtrend inthe figures of benefits and uptrend in the figures of drawbacks and if put intoconsideration, the drawbacks outweighed the benefits, therefore, buying stock ofHABECO is not recommended Especially for those who are young and have littlemoney capital, it is unnecessarily risky, and it is recommended they should chooseanother company’s stocks or choose to invest in another form of investments

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Thanks to street food culture and rapid urbanization, beer consumption inVietnam is forecast to reach the highest growth rate in the 2016-2021 period.According to forecasts, the output of Vietnam's beer industry in the next 5 yearswill grow 4% -5% / year, and the value will be higher because high cost productsare gradually becoming more popular With a median population of 30 years andstrong economic growth, Vietnam has a young and dynamic consumer class It isestimated that each year Vietnam has 1 million more people turning 18 years old,the age at which the law starts drinking alcohol It can be said that the beer market

in Vietnam still has a lot of potential for HABECO to develop HABECO needs toutilize its brand name and brand name to expand its market share further

REFERENCE

1 Habeco.com.vn n.d Tổng công ty Cổ phần Bia - Rượu - Nước giải khát

Hà Nội [online] Available at: <https://habeco.com.vn/?page=home> [Accessed 3

December 2021]

2 VietstockFinance 2021 BHN: Tổng Công ty cổ phần Bia - Rượu - Nước

giải khát Hà Nội - HABECO | VietstockFinance [online] Available at:

noi.htm> [Accessed 8 December 2021]

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1 Summarized figures used in ratio-calculations

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2 Ratios-calculating formulas

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3 Short-term solvency, or liquidity ratios of HABECO from 2018 to 2020

3 2,5 2 1,5 1 0,5

25

35

20 30

20 15

10

5 5

0

0 2020

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5 Long-term solvency, or financial leverage ratios of HABECO from 2018

to 2020

1,8 50

0,6

0,2 0

Times interest earned Ratio 14,71 22,54 34,76 Cash Coverage Ratio 24,08 36,72 54,23 Total Debt Ratio 0,46 0,33 0,25 Debt-Equity Ratio 0,87 0,51 0,34 Equity Multiplier 1,87 1,51 1,34

6 Profitability Ratios of HABECO from 2018 to 2020

0,12 0,1 0,08 0,06 0,04 0,02

0

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7 Market Value Ratios of HABECO from 2018 to 2020

3 2,5 2 1,5 1 0,5

0

Market-to-book ratio 1,62 2,59 Price-earnings ratio 37,63 32,44

8 Short-term solvency, or liquidity ratios of HABECO, SABECO and Dai

Duong Beer in 2020

4 3,5 3 2,5 2 1,5 1 0,5 0

HABECO SABECO DAI DUONG BEER Current Ratio 2,58 3,77 3,78

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9 Asset management, or turnover ratios of HABECO, SABECO and Dai

Duong Beer in 2020

60 50 40 30 20 10

0

10 Long-term solvency, or financial leverage ratios of HABECO, SABECO

and Dai Duong Beer in 2020

1,4 1,2 1 0,8 0,6 0,4 0,2 0

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11 Profitability Ratios of HABECO, SABECO and Dai Duong Beer in 2020

12 Market Value Ratios of HABECO, SABECO and Dai Duong Beer in 2020

7,00 6,00 5,00 4,00 3,00 2,00 1,00 -

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13 Extended DuPont chart for DuPont Analysis of HABECO in 2020

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14 HABECO’s Balance Sheet in 2018 (1)

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Tiêu đề	HABECO’s Financial Statements Analysis In The Period Of 2018-2020
Tác giả	Vũ Thanh Tựng, Vu Trong Cao Sang, Trần Đoàn Lõm
Người hướng dẫn	Dr. Quyen Do Nguyen
Trường học	Foreign Trade University
Chuyên ngành	Logistics & Supply Chain Management
Thể loại	Mid-term report
Năm xuất bản	2021
Thành phố	Hanoi

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