Analysis of vinamilks financial ratios compared to rival companies habeco and vinacafe

By applying these methods on this report, Group 1 aims to discuss about financial positionand financial performances of Vietnam Diary Joint Stock Company – Vinamilk in thethree-year peri

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NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATIONAL PROGRAMS

REPORT FINANCIAL BUSINESS

Group 1 Advanced Accounting 60

Nguyen An Binh Nguyen Ngoc Huyen Nguyen Thi Khanh Linh Nguyen Thu Phuong Hoang Le Trang Hoang Khanh Van

Ha Noi - 2021

TIEU LUAN MOI download : skknchat123@gmail.com

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Table of Contents

INTRODUCTION 3

I Overview 4

1 Vinamilk 4

2 Product Line 4

3 Market Share 4

4 Development Orientation 4

5 Financial Reports 5

6 Rival companies 9

i Hanoi Beer - Alcohol - Beverage Joint Stock Corporation (HABECO) 9

ii Vinacafe Bien Hoa Joint Stock Company (VCF) 12

II Analysis of Vinamilk operations 16

1 Analysis of Balance Sheet 16

2 Analysis of Cash Flow Statement 18

3 Analysis of Income Statement 19

BI Analysis of Vinamilk's financial ratios compared to rival companies Habeco and Vinacafe 21

1 Liquidity Ratios 21

i Current Ratio (= Current Assets / Current Liabilities) 22

ii Quick Ratio (= (Current Assets - Inventory) / Current Liabilities) 23

iii Cash Ratio (= Cash / Current Liabilities) 24

2 Leverage Ratio 25

i Total Debt to Total Assets Ratio (= Total Liabilities / Total Assets) 25

ii Total Debt to Total Equity Ratio (= Total Debt / Total Equity) 26

3 Efficiency Ratio 27

i Profit ratio from business activities 28

ii ROA coefficient 28

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iii ROE coefficient 28

iv Ratio of the ability to pay interest on EBIT / interest 29

4 Market price indexes 30

i Price to Earning Ratio (P/E) 30

ii Price to Book Ratio (P/B) 31

IV Conclusion 32

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Financial analysis is used to review economic conditions, to develop financial policies, todevelop long-term corporate activities strategies and to recognize investment ventures orbusinesses The processing of financial figures and statistics is used for this A financialanalyst will analyze the financial statements of a company thoroughly, including thestatement of income, balance sheet and cash flow In both business finance and investmentfinance, financial reporting will be carried out One of the most popular methods ofanalyzing financial data is to measure data ratios and equate those of other firms and thepast performance of a firm

By applying these methods on this report, Group 1 aims to discuss about financial positionand financial performances of Vietnam Diary Joint Stock Company – Vinamilk in thethree-year period, staring from 2017 and make comparisons with Hanoi Beer - Alcohol -Beverage Joint Stock Corporation – HABECO and Vinacafe Bien Hoa Joint StockCompany – VCF in term of ratios (discussed below) for the same timeframe

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I Overview

1 Vinamilk

Vinamilk Dairy Company, established in 1976, was one of the first listed companies on thestock exchange of Vietnam After more than 40 years of consumer launch, up to now, thecompany has had 3 branches of sales offices, 2 logistics factories, 14 factories stretchingfrom North to South, and 220,000 points of sale covering all 63 provinces nationwide In

2018, Vinamilk is one of the top 200 companies with the best over a billion-dollar revenue

in Asia Pacific Nowadays, Vinamilk is still the most favored milk brand used byconsumers in Vietnam with revenue in 2019 reaching 56,300 billion VND (equivalent tomore than 2 billion USD) In early 2020, thanks to the strict conditions of complying withthe Covid 19 epidemic prevention regulations, the solidity of resources and appropriatestrategic adjustments, Vinamilk has been able to stand firmly in the domestic market during

a turbulent period because of Covid 19

2 Product Line

Vinamilk provides the market with a wide range of products for consumers The companycurrently has over 250 dairy products with key product groups such as liquid milk, yogurt,and powdered milk; products with added value like condensed milk, cream and cheese, soymilk, fruit juices, and so on

3 Market Share

After years of operation, Vinamilk not only maintains its leading role in the domesticmarket but also competes effectively against foreign dairy brands In general, Vinamikaccounts for over 50% of the domestic market share depending on the type of product.Over 90% of Vinamilk's export turnover is from the Middle East, especially Iraq To reducerisk, Vinamilk is expanding its market to other markets like Australia, the USA, Canada,and Thailand In addition, VNM is trying to penetrate the coffee and beer market

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Make Vinamilk brand the most trusted nutrition brand nationwide through the strategy ofapplying scientific research on consumers' specific nutritional needs to develop the mostoptimal product lines

Strengthen the distribution system and quality to gain more share in markets whereVinamilk's one is not high, especially in rural and small urban areas

Comprehensively develop the portfolio of dairy and dairy products to target a large number

of consumers, and at the same time, expand the manufacture of high value products withhigh selling prices to improve overall profit margin of the whole Company

Continue to improve supply system management capacity

Develop organic milk materials in Moc Chau and expand market share in the North by

raising its ownership in GTN to 75%, Vinamilk and increasing the total herd of cows to

155,000 Until 2021, continue to M & A with dairy companies in other countries to expand market share and sales

Owner's invested capital

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Undistributed profit after tax

Liabilities & Owner’s equity

Total profit before tax

Current income tax

Deferred income tax

Profit after tax

Indirect Cash Flow Statement (VNM)

Unit: 1,000,000 VND

2017 2018 2019

I Cash flows from operating activities

1 Profit before tax 12,228,945 12,051,696 12,795,710

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(Profits)/losses from allowance and provisions

Unrealized foreign exchange (gains)/losses

(Profits)/losses from investing activities

Interest expense

Gain/Losses on disposals of fixed assets

Dividends and interest income

(Increase)/(decrease) in payables (excluding Interest expense

payable, Income tax payable)

(Increase)/decrease in prepayments

(Increase)/decrease in trading securities

Interest paid

Income tax paid

Other receipts from operating activities

Other payments for operating activities

Net cash flows from operating activities

II Cash flows from investing activities

Payments for additions to fixed assets and other long-term assets

Proceeds from disposals of fixed assets

Payments for lending loans, purchase of debt instruments of other

entities

Proceeds from collecting loans, sales of debt instruments of other

entities

Payments for investments in other entities

Collections on investments in other entities

Receipts of interests and dividends

Increase/decrease in term bank deposits

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Buy-back of capital contributions from minority shareholders in

the subsidiary

Other receipts from investing activities

Other payments for investing activities

Net cash flows from investing activities

III Cash flows from financing activities

Proceeds from shares issued, receipt of capital contribution

Payments for shares returns and repurchases

Proceeds from short-term and long-term borrowings

Payments to settle loan principals

Payments to settle finance lease liabilities

Payments of dividends

Other receipts from financing activities

Other payments for financing activities

Net cash flows from financing activities

Net cash flows during the period

Cash and cash equivalents at the beginning of the period

Effect of exchange rate fluctuations

Cash and cash equivalents at the end of the period

6 Rival companies

i Hanoi Beer - Alcohol - Beverage Joint Stock Corporation (HABECO)

Hanoi Beer-Alcohol-Beverage Joint Stock Corporation (HABECO) is the third largest beercompany in Vietnam and is the owner of the Hanoi Beer and Truc Bach Beer brands It isowned and authorized by the Ministry of Industry and Trade, Vietnam and has a strategicpartnership with the Carlsberg Group, which owns more than 10% of the company's shares

as of November 2012

The main operating lines of the Corporation include: Manufacturing and trading Beer - Wine

- Beverage and Packaging; Import and export of raw materials, materials, equipment, spareparts, raw materials, chemicals; Science and technology services, investment consulting,creating investment capital, organizing raw material areas, trading real estate, otherservices, and professions according to the law

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Beer and bottled water products include:

Hanoi only beer cans

Hanoi beer bottles

Hanoi canned beer

Hanoi Premium Beer

Hanoi Premium canned beer

Truc Bach Beer

Truc Bach canned beerHanoi green beerHanoi green beer cansHanoi Bold & Light bottled beer UniAqua bottled water

Balance Sheet (BHN)

Short-term assets

Cash and cash equivalentsShort-term investmentsShort-term receivablesInventory

Other current assets

Long-term assets

Fixed assetsInvestment propertiesLong-term investments

Total assets

Liabilities

Short-term liabilitiesLong-term liabilitiesOwner’s equityOwner's invested capitalCapital surplus

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General administration expenses

Net profits from operating activities

Other profits

Total net profits before tax

Profit after enterprise income tax

Profit after tax of shareholders of the

parent company

Basic earnings per share (VND)

Financial indicators (BHN)

Earnings per share for the last 4 quarters (EPS)

Book value per share (BVPS)

Price to earnings ratio (P/E)

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Price to book ratio (P/B)

Gross profit margin

Return on sales

Return on average equity (ROEA)

Return on average assets (ROAA)

Current ratio (short term)

Interest coverage ratio

Debt to Total Assets Ratio

Debt to Equity Ratio

ii Vinacafe Bien Hoa Joint Stock Company (VCF)

On December 29, 2004, Bien Hoa Coffee Factory was transformed from a state-ownedenterprise to a joint stock company Since the Vinacafé brand name is already well known

in Vietnam and known to many foreign customers, the founding shareholders (mostly ofthe Bien Hoa Coffee Factory) have renamed the company as Joint Stock Company forVinacafe Bien Hoa, its abbreviated name is Vinacafe Bien Hoa

As of December 20, 2013, the Vietnam Coffee Corporation - the largest State shareholder

in Vinacafe, had sold out a majority of its shares in Vinacafe Currently, 90% of VinacafeBien Hoa's shares are in three organizations: Masan Consumer Joint Stock Company(Masan Consumer) with 53.2%, followed by Gaoling Fund (Gaoling Fund) (23.3%) andVietnam Coffee Corporation (12.8%)

Immediately after successfully producing the first batch of instant coffee, the mainproducts of the Bien Hoa Coffee Factory were still preliminary products due to theVietnamese habit of using ground coffee Instant coffee products are mainly exported to theSoviet Union and Eastern European countries only In the late 1980s, Vinacafé instantcoffee orders declined more and more following the disintegration rate of the Soviet Unionand Eastern Europe In 1990, Vinacafé officially returned to Vietnam market althoughsome products of Bien Hoa Coffee Factory were sold in this market before At that time,Vietnamese users still kept the habit of drinking coffee roasting and blending with filter,not popularizing the habit of using instant coffee Therefore, the factory has launchedVinacafe 3-in-1 Instant Coffee to the market, targeting users who have the habit of drinkingcoffee with milk without having to wait for the coffee to drip through the filter

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Products of Vinacafe Bien Hoa Joint Stock Company include:

Common roasted bean coffee

Excellent roasted bean coffee

Natural coffee blended

Absolute Heritage ground coffee

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General administration expenses

Net profits from operating activities

Other profits

Profit / loss from associates

Total net profits before tax

Profit after enterprise income tax

Profit after tax of shareholders of the parent company

Basic earnings per share (VND)

Financial indicators (VCF)

Earnings per share for the last 4 quarters (EPS)

Book value per share (BVPS)

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Price to earnings ratio (P/E)

Price to book ratio (P/B)

Gross profit margin

Return on sales

Return on average equity (ROEA)

Return on average assets (ROAA)

Current ratio (short term)

Interest coverage ratio

Debt to Total Assets Ratio

Debt to Equity Ratio

AI Analysis of Vinamilk operations

1 Analysis of Balance Sheet

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Long-term liabilities

Owner’s equity

Liabilities & Owner’s equity

According to data from Vinamilk's financial statements in the 2017-2019 period, thecompany's total assets had gradually increased over the years In 2019, the company's totalassets reached more than 44,699 billion, a rise of 20% compared to 2018 and 30%compared to 2017 This was a very stable growth for a company that had been operatingfor more than 40 years with a large scale like Vinamilk Between 2017-2019, thecompany's short-term assets expanded 1.2 times and long-term assets have also increasednearly 1.4 times However, in Vinamilk's total asset’s structure, at the end of 2019, short-term assets accounted for 55%, down slightly from 59% of total assets in 2017

Notably, in 2019, short-term assets got bigger by 20%, with a total value of more than 4,100 billion VND, of which mainly growth in short-term investments, reaching more than 3,750 billion VND and contributing more than 90% of the whole In addition, cash and cash equivalents grew by more than 1,100 billion VND in 2019 In contrast to the huge increase in short-term investments, short- term receivables and inventories of the company tended to decrease an amount of 500 billion VND per account The company cut its long-term deposits and converted it into short-term ones This shows that the company was probably in need of fast and safe capital focus to implement the project

or expand production next year.

Regarding the company's long-term assets, the growth in 2019 is 18%, lower than the growth from short-term assets Fixed assets of the company, accounting for more than 75%, long-term assets, always expanding continuously over the years The increase in fixed assets, mainly machinery and equipment, shows that the company might be in the phase of boosting production, with the goal of creating higher and higher growth for the company.

2 Analysis of Cash Flow Statement

Net cash provided by operating activities

Net cash provided by investing activities

Net cash provided by financing activities

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