Thien Long Group, originally established as Thien Long Ballpoint Pen Establishment in 1981, became publicly listed on the Ho Chi Minh Stock Exchange (HSX) in 2010 under the TLG code Recognized as one of Vietnam's top 50 listed companies by Forbes Vietnam from 2013 to 2018, the company boasts a robust distribution network across all 63 provinces, featuring over 60,000 retail locations Additionally, Thien Long Group is committed to expanding its export markets, successfully delivering its branded products, FlexOffice and Colokit, to more than 60 countries across six continents.
- Mision: bring Thien Long’s products to all regions of Vietnam and the world
- Vision: Thien Long commits to providing the best quality products, stationery products, and services serving the studing, working, and creative activities to conquer the peak of mankind knowledge
- Core value: TLG’s key assets are its people and its culture Driven by these 05 core values: pioneer, dedication, fairness, integrity and humanism
Thien Long offers a wide range of high-quality products from prestigious brands at reasonable prices, catering to the diverse needs of consumers, including kindergartens, elementary schools, high schools, colleges, and professionals.
Thien Long’s writing instruments (TL brand name) includes product lines such as ballpoint pens, gel pens, rollerball pens, fineliners, etc This long-standing product category helped build up the
Since its establishment, the Group has built a strong reputation, contributing to 41% of total revenue by 2017 The Premium Products category, marketed under the Bizner brand, features notable items such as the Premium ballpoint pens (models BIZ-01, BIZ-rB01, TL-075) and Premium pencils (models BIZ-PC01, BIZ-PO1, BIZ-PO2).
Premium notebook (BIZNer-MB-08, BIZNer-MB-09, ) Target customers of this premium product category are business people and high-income earners
Official Supplies (FlexOffice brand name) contributed significantly to the Group’s business with 30% of total revenue
In 2017, Thien Long repositioned Ten Marks brand and implemented the new logo design in accordance with modern trends, suitable for pupils With the slogan “ready to learn well”, Ten
Marks offers a diverse range of high-quality learning tools designed to enhance the educational experience Their product line includes essential items such as chalk, rulers, compasses, pencils, erasers, glue, scissors, and notebooks, catering to various learning needs.
Colokit is the brand that represents Thien Long’s Art Supplies, including products serving the arts Colokit are unique and safe, non-toxic, and certified to meet US standards (ASTM D4236),
European standards (eN71/3 and eN71/9)
4 OWERSHIP STRUCTURE AND ORGANIZATION STRUCTURE
Realizing that Mr Co Gia Tho is the largest shareholder He is founder of Thien Long in
1981 and has been staying with the company since then
Mr Co Gia Tho also holding the posion of Chairman cum CEO of Thien Long An Thinh Investment JSC
Domestics shareholder account for a high proportion( 72,7%)
Sourse: Annual Reporting in 2018 of TLG
Chapter IIBUSINESS STRATEGY ANBUSINESS STRATEGY ANBUSINESS STRATEGY ANBUSINESS STRATEGY AN BUSINESS STRATEGY ANALYSIS ALYSIS ALYSIS ALYSIS ALYSIS
1.1 Rivalry among existing firm 1.1 Rivalry among existing firm
The Vietnamese market presents significant potential, with 85% of the population aged between 5 and 64, indicating a strong demand for stationery products This sector is notably competitive, particularly in the writing pen segment, where key competitors include Thien Long, Hong Ha, Ben Nghe, and KOKUYO Vietnam In contrast, the Chinese market features competitors such as Deli and M &.
G , because the market is quite similar to Vietnam
Hong Ha Stationery Joint Stock Company
Established on October 1, 1959, Hong Ha, formerly known as Hong Ha Stationery Factory, has over 60 years of experience in the stationery industry and is continuously expanding into real estate investment.
Hong Ha JSC has built a deep and extensive product distribution network across the country with nearly 100 distributors and over 10,000 retail points, especially in the North Hong Ha
Stationery Joint Stock Company is one of the typical businesses, outstandingly awarded the Vietnam Golden Star Award in 2018
Ben Nghe Production - Trading Co., Ltd
Established in 1984 as the Dong A ballpoint pen factory, the company evolved into Ben Nghe Private Enterprise in 1989 With over 20 years of experience, it specializes in a wide range of traditional products, including ballpoint pens, stationery, and school supplies.
Ben Nghe has diversified its operations by venturing into various industries, including animal farming, food processing, and helmet production In 2006, the company was recognized as one of the top 100 brands by Tiep Thi Sai Gon newspaper By the end of 2018, Ben Nghe was acquired by TIE-trading, a company specializing in electronics.
Found in 1996, with total 300,000 m² M&G Industrial Park and over 10000 staff In 2014,
M&G produced 4 billion pcs writing instruments, including Gel Pen, Ball pen, Mechanical Pencil,
In China, highlighters, markers, and refills dominate the market, capturing over 40% of the share M&G experienced a remarkable 29% sales increase in 2014, reaching an impressive annual turnover of $795 million Notably, the Discovery Channel selected M&G as the sole pen factory to feature in a television program, highlighting the company's prominence in the industry.
1.2 Threat of new entrants 2 Threat of new entrants 2 Threat of new entrants 2 Threat of new entrants 2 Threat of new entrants
Currently, Thien Long Group is still dominating the Vietnamese pen market with over 60% market share, outstripping other competitors such as Ben Nghe, Hong Ha
Thien Long's ballpoint pen faces challenges in expanding its market presence, as it currently holds a significant share Additionally, the company is contending with increasing competition from established brands in Vietnam, including Plus, Kokuyo, Maped, Deli, and others from China, Thailand, Japan, France, and Germany.
Despite a significant influx of new companies, only a handful can impact TLG's market position, as many face challenges in establishing themselves The increase in entrants is likely to saturate the market, intensify price competition, and ultimately diminish TLG's market share and profitability.
KOKUYO Co., Ltd., established in 1905, has evolved into Japan's leading brand for stationery products and office furniture over more than a century of growth and innovation As a new entrant, KOKUYO significantly impacts TLG's market presence.
VIETNAM (VIETNAM) CO., LTD established KOKUYO is famous for its beautiful, good materials
Because of eye-catching, affordable products such as campus notebooks, campus erasers, KOKUYO is very popular with young people
Thien Long leverages its extensive nationwide distribution network while remaining vigilant against new competitors To strengthen its competitive edge, the company continually enhances its product designs and invests in advanced technologies, aiming to diversify its offerings and improve quality while prioritizing environmental sustainability and consumer health Additionally, Thien Long places significant emphasis on branding and investment, resulting in a strong market reputation for its notebook paper, school supplies, and pens, which fosters trust among consumers.
1.3 Threat of substitute products 1.3 Threat of substitute products
Stationery equipment is essential for individuals of all ages and professions, serving not only as tools for note-taking but also enhancing our overall value While smartphones offer convenience as a substitute, traditional stationery items like pens and notebooks remain indispensable for effective communication and organization.
Smartphones are compact devices equipped with numerous note-taking applications, allowing users to easily capture ideas and information They enable users to take photos and extract text directly from images, while also providing secure document storage on cloud drives Despite their convenience, the costs associated with converting and managing these digital resources can be significant.
For notebook products, TLG produce products with good paper quality, which can be stored for a long time At the same time, there should be more forms of product promotion
In TLG’s case, the following external factors and their intensities impose the moderate force of substitution on the business:
- High substitute availability (strong force)
- Moderate switching costs (moderate force)
- High quality of information (strong force)
INDUSTRY ANALYSIS
1.1 Rivalry among existing firm 1.1 Rivalry among existing firm
The Vietnamese market presents significant potential, with 85% of the population aged between 5 and 64, indicating a strong demand for stationery products This sector, particularly the writing pen segment, is highly competitive, featuring key players such as Thien Long, Hong Ha, Ben Nghe, and KOKUYO Vietnam In contrast, the Chinese market is dominated by competitors like Deli and M &.
G , because the market is quite similar to Vietnam
Hong Ha Stationery Joint Stock Company
Established on October 1, 1959, HONG HA, formerly known as Hong Ha Stationery Factory, has over 60 years of experience in the stationery industry and is continuously expanding into real estate investment.
Hong Ha JSC has built a deep and extensive product distribution network across the country with nearly 100 distributors and over 10,000 retail points, especially in the North Hong Ha
Stationery Joint Stock Company is one of the typical businesses, outstandingly awarded the Vietnam Golden Star Award in 2018
Ben Nghe Production - Trading Co., Ltd
Established in 1984 as the Dong A ballpoint pen factory, the company evolved into Ben Nghe Private Enterprise in 1989 With over 20 years of experience in the stationery industry, it specializes in a wide range of products, including ballpoint pens, stationery, and school supplies.
Ben Nghe has diversified its operations by venturing into various sectors, including animal farming, food processing, and helmet production Recognized for its excellence, Ben Nghe was listed among the top 100 brands by Tiep Thi Sai Gon newspaper in 2006 In late 2018, the company was acquired by TIE-tranding, marking its entry into the electronics market.
Found in 1996, with total 300,000 m² M&G Industrial Park and over 10000 staff In 2014,
M&G produced 4 billion pcs writing instruments, including Gel Pen, Ball pen, Mechanical Pencil,
M&G has captured over 40% of the market share in China for highlighters, markers, and refills, achieving a remarkable 29% sales increase in 2014, resulting in an annual turnover of $795 million Additionally, the Discovery Channel selected M&G as the sole pen factory to feature in a television program, highlighting the company's prominence in the industry.
1.2 Threat of new entrants 2 Threat of new entrants 2 Threat of new entrants 2 Threat of new entrants 2 Threat of new entrants
Currently, Thien Long Group is still dominating the Vietnamese pen market with over 60% market share, outstripping other competitors such as Ben Nghe, Hong Ha
Thien Long's ballpoint pen faces challenges in achieving significant market growth, particularly as the company currently holds a dominant market share Additionally, increasing competitive pressures from established brands such as Plus, Kokuyo, Maped, Deli, and others from China, Thailand, Japan, France, and Germany are intensifying in the Vietnamese market.
Despite the influx of new companies entering the market, only a select few have the capability to significantly impact TLG Many of these newcomers face substantial challenges in establishing their presence, rendering them relatively insignificant However, the sheer volume of entrants is likely to saturate the market, intensify price competition, and ultimately diminish TLG's market share and profitability.
KOKUYO Co., Ltd., established in 1905, has emerged as a dominant force in Japan's stationery and office furniture market, significantly impacting TLG With over a century of growth and innovation, KOKUYO has solidified its reputation as a leading brand in the industry.
VIETNAM (VIETNAM) CO., LTD established KOKUYO is famous for its beautiful, good materials
Because of eye-catching, affordable products such as campus notebooks, campus erasers, KOKUYO is very popular with young people
Thien Long leverages a robust nationwide distribution network while remaining vigilant against new market entrants To strengthen its competitive edge, the company continually enhances its product design and invests in advanced technologies, ensuring a diverse range of high-quality, environmentally friendly products that prioritize consumer health Additionally, Thien Long places significant emphasis on branding and investment, resulting in a strong market reputation for its notebook paper, school supplies, and pens, which fosters consumer trust and loyalty.
1.3 Threat of substitute products 1.3 Threat of substitute products
Stationery equipment is vital for individuals of all ages and professions, as items like pens and notebooks enhance our ability to take notes and add value to our daily tasks While smartphones offer convenience as alternative tools, the unique benefits of traditional stationery remain irreplaceable.
Smartphones, with their compact size and numerous note-taking applications, offer a convenient way to capture and organize information They allow users to take photos and extract text directly from images, while also providing secure document storage in the cloud However, despite their convenience, the associated conversion costs can be significant.
For notebook products, TLG produce products with good paper quality, which can be stored for a long time At the same time, there should be more forms of product promotion
In TLG’s case, the following external factors and their intensities impose the moderate force of substitution on the business:
- High substitute availability (strong force)
- Moderate switching costs (moderate force)
- High quality of information (strong force)
Customers are increasingly inclined to switch from TLG's products to those of competitors due to relatively low switching costs and the high availability of substitutes The ease of finding alternative office supplies makes it simple for consumers to explore other options Additionally, the abundance of quality information available online, from sources like Tiki, Shopee, and Lazada, empowers buyers to effectively compare TLG's stationery products with those offered by rival firms.
Despite TLG's rapid growth and strong brand presence, customer demand remains significant To meet these needs, Thien Long has expanded its product offerings to include premium products under the Bizner brand, office supplies through Flexoffice, school supplies with Điểm 10, and art supplies branded as Colokit.
Thien Long relies heavily on raw materials such as paper, cardboard, plastic, and ink, which constitute approximately 70% of its product costs Fluctuations in these material prices significantly impact the company's gross profit In 2018, the prices of essential materials, particularly paper, saw notable increases, with paper prices rising by 19% and imported paperboard prices increasing by 9% compared to 2017 To mitigate risks associated with price volatility and potential shortages, the company has opted to establish long-term supply contracts with major suppliers, ensuring a stable and cost-effective raw material source Additionally, Thien Long diversifies its supplier base to reduce dependency, actively monitors market price changes for timely adjustments, and enhances its self-production of raw materials to better align with production needs and minimize reliance on the global market.
COMPETITIVE STRATEGY ANALYSIS
➔ Competitive stratege of Thien Long is cost leadership b Hong Ha
➔ Competitive stratege of HHA is cost leadership
In fiscal 2019, Thien Long Group incurred over 785.184 billion Dong in selling and administrative expenses, a significant increase from approximately 79.811 billion Dong in the previous year This figure highlights that Thien Long Group's selling and administrative expenses were 5.33 times higher than those of Hong Ha in 2018, reflecting a strategic emphasis on cost leadership.
Both TLG and HHA employ a cost leadership strategy, but TLG stands out with its extensive distribution system This approach enables TLG to easily reach a broad consumer base, streamline the buying process, and capture a significant share of the stationery market.
CORPORATE STRATEGY ANALYSIS
3 CORPORATE STRATEGY ANALYSIS SIS SIS SIS SIS
3.1 Product capacity enhancement, input materal self-sufficiency and value chain expansion
In 2018, Thien Long achieved a significant increase in automation rates at its factories, rising to 75.3% from 73.5% in 2017, leading to a notable enhancement in productivity This advancement enabled the company to take greater control over quality, pricing, production technology, and ink materials Consequently, the ink output successfully met 100% of the demand for permanent markers, rollerball pens, colored fiber pens, highlighters, and fountain pens, while fulfilling 79% of the demand for oil-based gel pens and 40% for gel pens.
Hong Ha 's cost leadership rate
In addition to enhancing production capacity, significant emphasis was placed on research and development in ink production The company is focused on strengthening new product research and diversifying its product portfolio to cater to various target customers across different market segments.
Marketing capacity is the key investment capacity in 2018 and has brought encouraging achievements
Profit from customers increased by 1.14 times (compared to 2017)
Some outstanding marketing and advertisement activities of Thien Long in 2018
The project is divided into 2 phases:
Phase 1: completed and came into operation since July 2018, including the modules:
Employee portal, human resource data management, attendance checking, salary calculation, social insurance, and tax
Phase 2: is expected to complete in the 2nd quarter of 2019 with the modules recruitment, training, employee assessment, canteen management, and uniform management
Coherently implementing the talent attraction and retention policies, strengthening training to increasingly improve profession and skills for employees in the new context
The program of “Love Vietnamese Word” was firstly held in 24 districts of Ho Chi Minh City
In Phase 1, the software has helped minimize the time spent on paperwork and digitalize many works related to attendance checking, salary calculation, handle the compliance with the
Company’s regulations and the State, and enhance the professionalism in human resource management.
SWOT ANALYSIS
Thien Long is a strong brand, a leading company in pen writing industry in Vietnam that ranked 37th in the top 50 best listed companies in Vietnam by forbes
Each job is described in detail in "Job description" to help employees understand their obligations, responsibilities, powers and development orientation Thien Long also have Professional Research and Development Department
Thien Long boasts a comprehensive distributor network that spans all 63 provinces and cities in Vietnam, featuring over 135 distributors and more than 53,000 points of sale, supported by two warehouses located in the North and South Furthermore, Thien Long's products are exported to over 40 countries across five continents, with established representative offices in the Indochina region.
Thien Long deploys SAP ERP management system which is integrated with great efficiency in human resource management, financial management and accounting management
The company benefits from a cost advantage due to its advanced production line, which incorporates robots and highly specialized workers With an average monthly salary of approximately VND 2.1 million, labor costs represent 30% of the direct expenses.
Thien Long offers a diverse range of products at affordable prices, catering to various budgets from economical to premium options Their extensive product lineup focuses on four main categories: Pen Writing, Office Supplies, Student Supplies, and Art Supplies, ensuring there is something suitable for everyone.
Net revenue in 2019 reached VND 3,252.4 billion, increased by 13.9% compared to 2018
Over the years, revenue has shown consistent growth, leading to a significant decrease in the ratio of total capital costs and operating expenses to net revenue This improvement has resulted in a remarkable profit after tax increase of 18.6% compared to 2018 and 30.2% compared to 2017, culminating in a profit of VND 349,087 million for the Group in 2019.
In 2019, Thien Long raised its equity from VND 1,268,668million to VND 1,806,986 million with an increase of 42.4% over the previous year
Shortages of senior management human resources as the company expands its production scale export
With a development strategy towards the horizontal quality of goods in the country with
Thien Long's ballpoint pens are manufactured using high-quality European standards and advanced imported production equipment The company also employs skilled foreign engineers to ensure exceptional quality in its human resources.
The fact that our production is very limited will lead to higher production costs, resulting in higher product costs
Many product groups with different market segments but using the same marketing plan Model lacks eye-catching and is less diverse than imports of other countries Korea, Japan
Due to limited domestic supply, TLG relies heavily on imported raw materials, which constitute 65% to 70% of its production costs Recently, there has been a notable increase in the prices of essential raw materials, particularly plastics and metals.
Thien Long is the leading enterprise in the field of stationery production in Vietnam with 55% market share of ballpoint pen nationwide
Vietnam has a stable politics, which is a favorable condition for businesses
Vietnam joins the WTO Integration reduces the tariff barriers
Vietnam's education sector boasts around 24 million pupils and students, creating a significant market opportunity The demand for stationery, especially writing materials, is projected to grow annually by 10% to 15%.
Vietnam's economy has developed at a relatively stable level
Vietnam people's income has improved: GDP per capita in 2018 is $ 2,500
Today technology elements are becoming more and more modern with many machines being introduced to help with manufacturing and administration processes
E-commerce is thriving and becoming increasingly important in Vietnam
Every year, thousands of companies participate in the Vietnamese market
Integration brings challenges that are stronger competitors in reducing import tax
The price of raw materials increased due to the increase in world oil prices
Products from Thailand, South Korea, Japan usually have beautiful and trendy designs
Unstable exchange rate affects the price of imported raw materials
The development of information technology has reduced the demand for ballpoint pens in offices
Counterfeit and poor quality goods can affect Thien Long's reputation.
PEST ANALYSIS
A country's political stability significantly impacts the overall economic sectors, particularly the stationery industry In Vietnam, a nation characterized by stable politics, the educational and employment environments are flourishing, creating favorable conditions for stationery companies to thrive.
In recent years, economic growth has significantly boosted the demand for consumer and household goods, including those in the education and office sectors This surge in demand has led to a robust stationery market, reflecting the overall expansion of these industries.
As society evolves, the influence of Western lifestyles and various cultures is reshaping consumer preferences and tastes This shift has led to a growing demand for modern designs that cater to diverse cultural aesthetics Each month, Vietnam sees an influx of smuggled Chinese goods featuring the latest models, alongside trendy Japanese and Korean products, reflecting the ever-changing landscape of consumer trends.
5.4 Technology a Most are manufactured in small businesses The following are examples of technologies of two large businesses:
Thien Long Company specializes in the production of high-quality ballpoint pens, utilizing a closed production cycle Their manufacturing process employs state-of-the-art equipment, specifically designed for pen production, and sourced from advanced countries.
Germany, Taiwan, India, and South Korea leverage robotic technology to produce high-quality products that comply with EAN barcode standards Utilizing advanced design software, they create visually appealing packaging, which is then printed using specialized equipment like pad printers, hot stamping printers, and five-color UV printers Additionally, an automated packing system on a conveyor ensures efficient packaging processes The company’s laboratory is outfitted with specialized equipment tailored for the stationery industry, enhancing product quality and innovation.
For the first time in Vietnam, German HUTT has introduced a pen testing service and established a quality management model compliant with ISO 9001 standards, with quality inspection managed by a specialized department Hong Ha Stationery Joint Stock Company stands out as a leading enterprise in Vietnam, featuring a comprehensive plastic mold production line equipped with advanced technology, including wire cutting machines, electric pulse machines, milling machines, and plating machines sourced from top manufacturers in Taiwan, China, and Japan The company utilizes a diverse array of automatic plastic injection molding machines ranging from 55 to 350 tons for producing plastic products Additionally, notebooks are manufactured using a combination of automated and semi-automatic equipment, including advanced Japanese and German printing technologies such as 1-color, 2-color, 4-color, and 5-color offset printing machines, along with automatic Flexo production lines, gluing machines, back binding machines, and trimmers.
Chapter IIIACCOUNTING ANALYSIACCOUNTING ANALYSIACCOUNTING ANALYSIACCOUNTING ANALYSI ACCOUNTING ANALYSIS S S S S
IDENTIFY KEY ACCOUNTING POLICIES
The financial accounts have been prepared on an accrual basis, adhering to Vietnamese Accounting Standards (VAS) Additionally, the Company has created an English version of the financial statement; however, this translation remains based on the original Vietnamese version and continues to comply with VAS.
In light of globalization, the Ministry of Finance is developing a plan to implement international accounting standards in Vietnam, prompting TLG to prepare reports based on IFRS This approach offers greater flexibility and numerous advantages, enhancing the financial transparency of TLG while aligning with efforts to improve corporate governance and financial reporting quality Furthermore, adopting IFRS is a crucial component of TLG's development strategy, aimed at increasing capital and attracting foreign investors.
TLG uses a regular inventory method, the recognition principle is based on the lower of cost and net realizable value
Cost of inventories is determined on a weighted average basis
The net realizable value is calculated by taking the estimated selling price and subtracting the projected costs for product completion, as well as the expenses related to marketing, sales, and distribution.
Provisions for inventory devaluation are established for obsolete, damaged, or substandard items, as well as when the inventory cost exceeds its net realizable value at the balance sheet date.
Receivables represent the amounts owed by customers or other entities, encompassing trade receivables, prepayments to sellers, and additional receivables These amounts are recorded at their carrying value, adjusted for an allowance for doubtful debts to reflect potential losses.
Allowance for doubtful debts is made for receivables that are difficult to be collectible due to the liquidation, bankruptcy or similar difficulties of the debtor
Fixed assets are recorded at their original cost, minus accumulated depreciation or amortization calculated on a straight-line basis Any gains or losses from the sale or disposal of these assets are determined by the difference between the disposal income and the asset's residual value, and these are reflected in the consolidated income statement.
Intangible assets related to land-use rights with a definite term are amortized using a straight-line method throughout the duration of the land use right certificate In contrast, indefinite land use rights are recorded at cost and are not subject to amortization Additionally, other intangible assets are amortized on a straight-line basis over their estimated useful lives.
Severance allowances for employees who have been with the Group for over 12 months as of December 31, 2008, are accrued at the end of each reporting period These allowances are calculated at a rate equal to half of the average monthly salary for each year of service, in accordance with the Labor Code and relevant guidelines.
The average monthly severance allowance will be recalculated at the end of each reporting period based on the average salary from the most recent six months Any increase in this accrued amount will be reflected in the consolidated income statement.
Sales revenue is recognized when there is a significant risk transfer and ownership of the goods has passed to the buyer, typically at the time of delivery Specifically, revenue is recorded only when all five of the following conditions are met simultaneously.
(1) The group has transferred most of the risks and benefits associated with the ownership of the product or goods to the buyer;
(2) The group no longer holds the right to manage goods such as the owner of goods or the right to control goods;
(3) The revenue is defined relatively firmly;
(4) The group will gain economic benefits from the sales transaction;
(5) Determine the cost associated with the sale of the eagle
Revenue is calculated by assessing the fair value of collected items after subtracting trade and sales discounts, along with any sales returns Interest deposits are recognized on an accrual basis, reflecting the deposit account balance and the relevant interest rate Additionally, investment interest is recorded when the group is entitled to receive the payment.
Borrowers' costs are recognized as part of production and business expenses in the year they are incurred, unless they are capitalized in accordance with Vietnamese Accounting Standards No 16, which pertains to the costs of borrowing.
ASSESS ACCOUNTING FLEXIBILITY
TLG utilizes a regular declaration and weighted average pricing method for effective pricing and inventory management, ensuring that their approach aligns with the specific needs of their business type.
TLG employs the straight-line depreciation method for fixed assets, allowing for a consistent annual depreciation amount This approach simplifies profit comparisons across different years for managers.
The table above reveals that Thien Long's estimated range of fixed assets is significantly higher than that of its competitors, demonstrating the company's versatility This advantage stems from the varied time of use associated with these assets, which enhances their overall utility.
Thien Long, a prominent stationery company in Vietnam aiming for global expansion, is prioritizing brand development strategies However, due to VAS regulations, all marketing and brand development costs must be classified as expenses instead of capitalized assets This accounting practice leads to an inaccurate assessment of TLG's assets, particularly since these costs are likely to contribute to future revenue generation.
Overall, TLG's accounting flexibility is moderate.
EVALUATE ACCOUNTING STRATEGY
In general, TLG’s accounting strategy is almost identical to its competitors and suitable with the stationery industry
In the operation of the group, the members of the Board of Directors are relatively transparent, so we suppose there is no case of deliberate manipulation to increase bonuses
Since 2015, the company has consistently maintained its policies for calculating inventories, amortization, and provisioning, reflecting a commitment to a stable approach that facilitates easier tracking of its development.
There have been no significant fourth quarter adjustments to revenues, estimation and depreciation expense of fixed assets on their annual report.
EVALUATE THE QUALITY OF DISCLOSURE
4 EVALUATE THE QUALITY OF DISCLOSURE
4 EVALUATE THE QUALITY OF DISCLOSURE
4 EVALUATE THE QUALITY OF DISCLOSURE
Thien Long Group demonstrates a strong commitment to transparency, as evidenced by their comprehensive disclosure of both financial and non-financial information Their annual report offers a detailed and clear overview of the company's overall business performance, allowing stakeholders to gain valuable insights into its operational status.
● Key financial indicators in 2019, future business strategic goals,development strategy, company organizational structure are clearly presented
● The report gives people a look at what the company has achieved, such as:
Top 50 most effective trading companies in Vietnam (2013-2019)
Top 50 best listed companies in Vietnam (2013-2019)
Top 40 stationery companies with the highest revenue growth in the world
The business has many contributions to the community,
In its corporate governance report, the company outlined various risk types and detailed its risk management strategy, addressing critical factors such as raw material prices, exchange rates, investment activities, competition, product safety, and product quality.
● The economic, social and environmental activities are clearly publicized
● Most accounting policies, estimates are clear, consistent and don’t change through years
● Besides, the information related to finance is also explained in disclosure note.
IDENTIFY POTENTIAL RED FLAGS
The assets turnover ratio shows a particular constant trend Total assets increased gradually from
2015 - 2018 but decreased in 2019 In conclusion, this coefficient changes not too much There is not concern in this rate
The year-over-year analysis of the receivable turnover ratio reveals a declining trend, attributed to an extended credit policy This decline indicates that businesses are facing challenges in collecting debts from customers Looking ahead, Thien Long must address these collection issues to improve financial performance.
Group need to have a stricter policy to reduce risks of their uncollectibility Comparing to competitor HHA, found that HHA has the ability to recover customer debt greater than TLG
The TLG company's net sales to inventory ratio has remained consistently stable over the years, indicating effective inventory management strategies This steady performance suggests that there are no significant concerns regarding the company's inventory ratio.
UNDO ACCOUNTING DISTORTIONS
Our analysis indicates that Thien Long Group (TLG) exhibits no accounting distortions The company has supplied valuable information that enables users to effectively assess financial data for informed decision-making.
FINANCIAL STA FINANCIAL STATEMENT AN TEMENT AN TEMENT AN TEMENT ANALYSIS TEMENT AN ALYSIS ALYSIS ALYSIS ALYSIS
ANALYSIS OF FINANCIAL STRUCTUE
TLG, HHA, and M&G share a common trait of having positive working capital, indicating that these companies possess sufficient resources to invest in long-term assets while also being able to support short-term operational activities This requirement for positive working capital is particularly significant in the manufacturing sector, as it underscores the necessity for maintaining and expanding production capabilities.
However, there are still a few differences As we have seen, TLG's net cash is negative in 2018 and
In 2019, despite positive performance in the previous three years, TLG faced a cash shortage, highlighted by a declining cash balance and increasing bank loans This situation arose as TLG aimed to enhance exports, necessitating the extension of credit to customers, which resulted in higher receivables Additionally, the expansion of manufacturing led to significant inventory buildup, further straining cash flow Consequently, TLG resorted to borrowing from banks, resulting in an increased debt burden.
M&G has consistently maintained a positive net cash flow that has increased over the years, likely due to its status as a major player in the Chinese market with steady growth This strong financial position enables the company to attract ongoing investments without the need for borrowing, thus avoiding any loan repayment obligations.
HHA has consistently reported negative net cash over the years, indicating instability Despite ongoing net cash growth due to the company's efforts in debt reduction and capital increase from long-term sources, internal instability has hindered sustainable growth This instability ultimately led to HHA's exit from the stock market in November 2019, after five years of trading.
FINACIAL STRUCTURE OF THE THREE STUDIED COMPANY
CASE 2 CASE 2 CASE 1 CASE 1 CASE 1
CASE 1 CASE 1 CASE 1 CASE 1 CASE 1
ANALYSIS OF INCOME STATEMENT
From two above tables, we can see:
Thien Long's revenue surged to 3,252 billion VND, reflecting a 13.9% increase due to market expansion Although selling expenses rose by 15.6%, this aligns with the company's growth strategies Notably, the percentage of selling expenses relative to sales decreased slightly, indicating the effective utilization of Thien Long's sales and administrative teams.
Income from financial activities 29,972,019,720 13,513,154,919 0.92% 0.47% Expenses from financial activities 14,334,036,161 16,908,537,876 0.44% 0.59
Interest expense 11,434,553,822 11,068,142,459 0.35% 0.39% Selling expenses 500,044,195,759 432,623,981,454 15.37% 15.15% Administration Expenses 285,140,218,494 272,748,858,876 8.77% 9.55%
Current income tax expense 94,012,038,665 73,015,976,515 2.89% 2.56% Deffered Income tax charge (6,248,329,163) 870,652,717 (-0.19%) 0.03
In VND In percentage of Net sales revenue
2019 2018 Amount of change % of change
Income from financial activities 29,972,019,720 13,513,154,919 16,458,864,801 121.8% Expenses from financial activities 14,334,036,161 16,908,537,876 (2,574,501,715) (15.2%)
Interest expense 11,434,553,822 11,068,142,459 366,411,363 3.3% Selling expenses 500,044,195,759 432,623,981,454 67,420,214,305 15.6% Administration Expenses 285,140,218,494 272,748,858,876 12,391,359,618 4.5%
Other profits 8,906,031,975 10,370,226,836 (1,464,194,861) (14.1%) Profit before tax 436,850,758,578 368,270,871,380 68,579,887,198 18.6%
Current income tax expense 94,012,038,665 73,015,976,515 20,996,062,150 28.8% Deffered Income tax charge (6,248,329,163) 870,652,717 (7,118,981,880) -
2019 2018 2017 2016 2015 Net cash provide by operating activities 258,168,843,482 43,502,119,449 120,407,329,292 292,907,569,134 151,030,862,924
Acquisitions of fixed assets (tangible or intangible) -84,540,730,238 -215,504,947,563 -146,128,176,279 -135,038,349,499 -47,663,969,037 Proceeds from sale of fixed assets 96,605,895,895 1,477,863,636 1,852,033,119 1,272,116,663 1,421,130,365
Money spent on lending, buying debt instruments of other units -619,000,000,000 _ _ _ _
Money collected for lending, reselling debt instruments of other businesses 153,000,000,000 _ _ _ _
Interests and dividends are divided 11,134,804,294 7,645,687,575 14,676,870,688 15,328,330,255 13,361,519,380
Other financing cash flows 1,045,958,595,775 828,374,937,236 573,064,264,097 602,933,842,572 615,674,080,080 Payment of loan principals -632,495,287,408 -772,248,672,797 -576,920,673,014 -654,127,263,813 -571,031,807,548
Net increase in cash and cash equivalents 44,952,041,450 -207,860,164,564 -70,556,610,622 -1,930,385,938 109,213,976,589
In 2019, the Cost of Goods (COG) significantly impacted sales revenue, increasing by 14.9%, which slightly outpaced the rise in net sales This surge is attributed to the escalating prices of crude oil and plastics, driving up the costs of raw materials, particularly plastics As a response, Thien Long is actively working to gain more control over its input materials to mitigate these rising costs.
TLG has promoted the development of online sales web since the end of 2018, discounting a series of products Therefore, sales deductions in 2019 increased by 80.5% compared to 2018
In 2019, TLG experienced a significant financial revenue increase of 121.8%, reaching nearly VND 30 billion Although interest expenses rose by 3.3% compared to 2018, the company's profit after tax rose by 18.6%, totaling over VND 349 billion Consequently, TLG surpassed its revenue plan by 1% and exceeded its profit plan by 7% for the year.
ANALYSIS OF CASH FLOW
In 2019, TLG experienced a significant increase in fixed asset sales, primarily due to the strategic transfer of land originally valued at VND 59.8 billion, which was sold for VND 95.4 billion to enhance production and business efficiency The company is also actively pursuing major investment projects in fixed assets, including the acquisition of machinery for automatic presses and new assembly machines.
From 2016 to 2019, TLG demonstrated improved cash flow management, as evidenced by a significant increase in net cash flow Although the company's free cash flow (FCF) consistently declined during this period, TLG maintained stable operations, largely due to receiving capital through substantial bond issuance and borrowing This financial strategy underscores TLG's strong performance and resilience in the market.
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