Sercurity market assignment THE FINANCIAL CONDITION AND PROJECT IN THE NEAR FUTURE OF VIN GROUP

A high debt / equity ratio generally means that a company has been aggressive financing its growth with debt.. Normally, a company with a high DER ratio has a high amount of debt related

BANKING ACADEMY



SERCURITY MARKET ASSIGNMENT

THE FINANCIAL CONDITION AND PROJECT IN THE NEAR

FUTURE OF VIN GROUP

Đỗ Hương Giang Bùi Thị Thùy Dung Nguyễn Thị Quỳnh Ngân Cao Thanh Xuân

Contents

1.Introduction of Vin Group.

The force runner of Vin Group was Technocom - a producing instant noodles company, was held in 1993 in Ukraine At the beginning of 2000, Technocom came back to Vietnam, focused on investing in travel and real estate with 2 trademarks: Vincom and Vinpearl January 2012, Vincom Joint Stock company and Vinpearl Joint Stock company has merged, formally known as Vin Group- Joint Stock Company The charted capital of Vin Group is 26.377.079.540.000 VND and the volume of listed share is 2.637.707.954 shares in 2017

Vin Group are now concentrating in 7 field: Real estate, Traveling- Entertainment, Retail, Medical, Education, Agriculture and Industrial Wishing to bring to the market products and services of international standard and new experience of modern life, in any field, Vin Group also proves the pioneering role change in consuming trend

Vin Group has done wonders to honor the Vietnamese brand and deserved to be one of the leading private economic groups in Vietnam

2 Vin Group’s performances analysis

 Balance sheet

 Income statement

REVENUES 90,423,675 57,670,387 34,054,969

Deduction revenues 69,100 56,044 7,003

Net Sales 90,354,575 57,614,344 34,047,966

Cost of goods sold 62,854,039 40,184,633 22,338,934

Gross profit 27,500,536 17,429,711 11,709,033

Financial income 1,646,395 5,861,557 1,931,520

Financial Expenses 4,070,187 5,389,034 3,282,075

Of which: Interest

Expenses 3,647,094 4,308,067 2,721,940

Profit or loss from join

venture companies 10,801 19,824 39,228

Selling Expenses 8,605,680 6,672,816 2,957,826

General and admin

expenses

7,375,304 5,526,090 3,922,773

Net Profit from

Operating activities 9,106,561 5,723,151 3,517,107

Other incomes 503,636 688,480 283,039

Other Expenses 694,992 618,872 948,045

Other profits -191,356 69,608 -665,006

Profit or lost from join

venture companies

(before 2015)

ASSETS 214,855,098 180,450,850 145,554,358

Current

Assets 100,528,907 87,583,802 67,699,620

Cash and

Cash Equivalents 8,610,504 9,833,332 6,938,465

Short term

financial

investment 203,016 494,157 11,142,980

Short term

Account

Receivables

28,978,153 18,254,656 13,848,128

Inventories 48,615,074 49,782,781 28,027,418

Other Current

Assets 14,122,160 9,218,876 7,742,629

Long-term

Assets 114,326,191 92,867,048 77,854,738

Long term

Account

Receivable

478,499 465,507 254,324

Fixed assets 35,646,902 26,878,731 19,837,151

Real Estate

Investment 17,372,962 17,362,127 16,827,664

Long-term

incomplete assets 45,417,393 33,991,567 18,115,293

Long term

Finacial

Investments

6,528,162 3,347,545 9,597,558

Other long

term assets 8,882,273 10,821,571 13,222,748

Goodwill

(before 2015) 0 0 0

EQUITY 214,855,098 180,450,850 145,554,358

Liabilities 162,548,919 135,184,455 107,969,433

Short term

Liabilities 124,896,668 97,627,931 64,900,384

Long term

Liabilities 37,652,251 37,556,524 43,069,048

Owners

equity 52,306,179 45,266,395 37,584,925

2017 2016 2015

Total profit before tax 8,915,205 5,792,759 2,852,101

Corporate Income Tax

Expenses 3,475,385 2,279,691 1,350,626

Current Corporate

Income Tax Expenses 3,784,542 2,534,169 1,424,643

Deferred Income

Taxes Expenses -309,156 -254,478 -74,017

Profit after Corporate

Income Tax 4,247,289 2,439,511 1,215,775

Benefits of Minitory

shareholders 1,192,530 1,073,557 285,701

 Related ratio

Current ratio 80.49 89.71 104.31

Quick ratio 41.57 38.72 61.13

2.1 Vin Group’s performances and analysis

The balance sheet and income statement of Vin Group gave us an overview of VIC’s financial performances from 2015 to 2017

Firstly, DAR ratio of Vin group increased slightly from 74.18 in 2015 to 74.91 in 2016 and then reached 75.66 in 2017 It showed that the main source of this firm’s capital was

from debt and it tends to increase slightly throughout three years In addition, the company also had a large DER ratio to show that the company is now operating largely debt-based A high debt / equity ratio generally means that a company has been aggressive financing its growth with debt Normally, a company with a high DER ratio has a high amount of debt related to their available equity will not likely to instill much confidence from the creditors that the company can repay the loan On the other hand, a company which has a low DER ratio poses less risk to the creditors and appear to have a reasonable ability to repay the loans On the contrary, aggressive leveraging practices are often associated with high levels of risk and the company with a lot of debt is used to finance increased operations could potentially generate more earnings than it would have without this outside financing If this were to increase earnings by a greater amount than the debt cost (interest), then the shareholders benefit as more earnings are being spread among the same number of shareholders Hence, this is quite normal since Vin Group is not a commodity trading company, but it mainly takes place in the investment field On the other hand, look at the increase in total assets (increase 19% from 2016 to 2017), it can be seen that Vin Group has successfully asserted its position as well as its value The ability of returning on your investment should also be concerned before making final decision ROA provides investors with information about the returns generated by the amount of investment (or amount of assets) Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets and gives a manager, investor, or analyst an idea as to how efficient a company's management is at using its assets to generate earnings In basic terms, ROA tells you what earnings were generated from invested capital (assets) This is why when using ROA as a comparative measure, it

is best to compare it against a company's previous ROA numbers or against a similar company's ROA It can be seen that the index has continuously grew from 2015 to 2017

In the latest figures, 1 dollar of your investment can be bring back 1.98 dollar, while in

2016, investors could only receive 1.35 dollar from 1 dollar invested Another ratio should be concerned is ROE ( Return on equity) This is the most important ratio for shareholders, which measures the profitability of each shareholder The higher the ROE get, the more effective it is for the company to use equity capital, which means that the company can balance its equity with its borrowings to exploit its competitive advantage, capital mobilization process and scale expansion efficiently The higher the ROE is, the more attractive the stock This index is an accurate measure of how much a return is made and how much accrued interest it generates Specifically, in 2017, with 1 share of capital invested by Vin Group shareholders, it will be able to generate 8.12 dollar , about 1.5 times compared to 2016 and 2.5 times higher than that of 2015 With these figures, this company are using the investment effectively from the shareholders

In term of the firm’s main source to repay its loans as well as its liquidity, this can be showed through current ratio and quick ratio The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations To gauge this ability, the current ratio considers the current total assets of a company (both liquid and illiquid) related to company’s current total liabilities The current ratio is mainly used to

give an idea of a company's ability to pay back its liabilities (debt and accounts payable) with its assets (cash, marketable securities, inventory, accounts receivable) As such, current ratio can be used to make a rough estimate of a company’s financial health The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash In balance sheet, with 1 dollar invested in Vin Group,

it will be able to be paid at 0.849 dong, which means that the return rate with current asset is 80.49% In addition, with 1 dollar from investor, the company will be able to pay back 0.41 dollar cash or cash equivalents instantly This is not a good result for Vin Group because if the ratio is less than 100%, the company will not be able to fulfill its debt repayment obligations on time, so in spite of the fact that Vin Group is a big company, the activities of Vin Group are now not fulfilled or excellent However, this figure is not much lower than in the previous years as well as quite high index compared

to other companies, so this does not prove that the company is in financial trouble or about to be bankrupt

Finally, in the field of investing, we can see that the real estate sector with a total investment of 17,372,962 in 2017 is playing the most important part and thus, had an increase from 2016 and 2015 The company also has a high Long-term incomplete figures and points out that Vin group has many investment projects, possibly large real estate This figure is really trustworthy because Vin Group has been holding a lot of investment projects so far, as well as owning many buildings, commercial centers, real estate, etc which have been completed or incomplete nationwide

2.2 Vin Group’s stock market statistic and analysis

23/03/2018

109.5

Tăng 1.5 (1.4%)

Khối lượng 3,455,080

• Giá tham chiếu 108

• Giá trần 115.5

• Giá sàn 100.5

• Giá mở cửa 105.6

• Giá cao nhất 111.2

• Giá thấp nhất 105.5

• GD ròng NĐTNN 1,207,100

• Room NN còn lại 1 8.32 (%)

Đơn vị giá: 1000 VNĐ

• (*) EPS cơ bản (nghìn đồng): 1.61

Trading history

Date Change (+ -/ %)

Ope n Pric e

Highes

t price Lowes t price

Clos e Pric e

Averag

e Price Adjuste d Price Trading Volume

23/03/2018 +1.5 (+1.39%) 105.6 111.2 105.5 109.5 108.25 109.5 3,455,080 22/03/2018 0 (0%) 109 110.7 108 108 109.30 108 2,262,170 21/03/2018 +3.8 (+3.65%) 104.9 108.6 104.5 108 107.17 108 3,520,200 20/03/2018 -0.2 (-0.19%) 103 105.5 103 104.2 104.38 104.2 1,045,660 19/03/2018 +4.7 (+4.71%) 100.2 105 100.2 104.4 103.62 104.4 1,201,010

16/03/2018 +0.2 (+0.20%) 99.4 101 99.4 99.7 99.90 99.7 3,090,070

15/03/2018 -3.0 (-2.93%) 102.9 102.9 99.5 99.5 100.62

In 2017, VIC stock is one of the most outstanding stocks for creating the effect of recovery on the common stock market in Vietnam VIC has been surprised by the sharp rise in prices since the beginning of 2017

In 2018, VIC stock is expected to continue to make a strong move in its direction as well

as business performance Under the partial valuation method, ACBS valuates VIC at VND86,000/share by the end of 2018

This table above shows the changes of stock selling on the market of VIC for the last 7 days from March 15th to March 23th In spite of the fact that there was no changes on March, 22nd , the index seemed to grow on March, 23rd with 1.5 percentages

Specifically, the opening price on 22rd which was the highest opening price for the last 7 days went down from 109 to 105.6 on 23th, while the closing price increased from 108 to 109.5 to be the best closing price that Vin Group’s stock could reach during the past week In addition the highest price that this company’s stock gained on 22nd was 110.7

and then increased to 111.2 on 23rd Meanwhile, the lowest price on 22nd was 108 that decreased 2.5 on the next day In general, the average price in last 2 days fell from 109.30

on 22nd to 108.25 on 23rd However, the adjusted price tends to increase constantly during the past week when it only reached 99.7 initially on 16th and rose to 109.5 on 23rd In the same week, the trading volume on the stock market of VIC showed the constantly fluctuations At the beginning, it kept falling for 2 days to 1,045,660 on 20th and it grew dramatically to reach a peak on 21st of 3,520,200, then dropped gradually to 2,262,170 on

22nd before jumping sharply to 3,455,080 on the last day of the week

To sum up, the market statistic of VIC are showing positive signs of recovery despite of the gloom of Viet Nam’s stock market

3.Project

3.1.Urban railway.

The first project that Vingroup tend to do in the future to mobilize and utilize capital is that investing in URBAN RAILWAY They plan to invest $4.4 billion on this project in Hanoi On June 25th, 2017, Vingroup has signed a Memorandum of Understanding (MoU) with Hanoi authorities to perform this project Accordingly, the project that Vingroup plans to deploy is the first urban railway in Vietnam is built entirely by private capital; in specifically, they will develop parts of five railway route in the capital, including segments connecting Noi Bai International Airport to the Nam Thang Long and Phu Dien areas

This project will bring a lot of opportunity to mobilize capital because urban railway is expected to be the popular vehicle that the resident will volunteer to choose using this kind of transport The first reason is the status of traffic in Hanoi Most of Hanoi citizens feel uncomfortable when in traffic cause they are tired of standing for an hour in the street everyday to wait for traffic jam There are so many vehicles in the city on the rush hour that it takes a lot of time to move on the street Therefore, if they have another choice for urban railway, they can get rid of worrying about being stuck in the traffic, instead they can buy a ticket to go by metro of the railway, and there will have no traffic jam anymore

The next reason why people will choose is that the public transport in Hanoi is very awful We have to admit that, the amount of people on a bus in the rush hour is as much

as about five times more than normal, this will lead to huddling condition in this bus In this condition, social evils can happen like hook on the bus Besides, hustling in this public transport also cause unexpected accidents So that, if urban railway can be put into use, the number of people traveling by bus can be reduced, and as a result, social evils or accidents can be minimized

In conclusion, Vingroup’s urban railway project is the ideal project that can bring a lot of capital to the company, therefore, investing in Vingroup is a good idea to the investors earn profit in the future

The second project that Vingroup tend to do in the future to mobilize and utilize capital is that investing to car manufacturing in Viet Nam The country’s largest real-estate company Vingroup plans to invest up to $3.5 billion to set up a manufacturing and research and development complex, aiming to roll out the first car in 24 months The Hanoi-based developer will break ground on the $1 billion to $1.5 billion first phase of the plant, with a plan to make sedans, sport utility vehicles and electric cars in the future Vingroup want to create an affordable and high-quality car for Vietnamese Vingroup has signed a memorandum of understanding with a major investment bank regarding a potential loan for as much as $800 million, though it plans to fund most of the project itself, she said Vietnam’s ambitions are similar to efforts by companies in China and Malaysia, which have also tried to create cheaper, local brands to woo consumers in a region where foreign brands including Toyota Motor Corp and Volkswagen AG have had years of dominance Vingroup will face the same challenges as Chinese automakers, which have struggled to win over buyers in the world’s biggest vehicle market

Chinese companies such as Geely, BYD, Beijing Auto and Chery have been trying for years to create a domestic car brand Sales of cars bearing Chinese nameplates accounted for 43.5 percent of the total sales during January to July, according to the China Association of Automobile Manufacturers Toyota is Vietnam’s biggest car seller with a

23 percent market share in July, according to the Vietnam Automobile Manufacturers’ Association Ford Motor Co had 12 percent

VINFAST’s automobile complex, to be located in the northern port city of Haiphong, will initially produce sedans and SUVs Vingroup plans to eventually expand to mini and electric cars and targets production of up to 500.000 vehicles per year by 2025 The facility will include an e-scooter plant, which is expected to produce its first model in 12 months

This project will brings a lot of opportunity to mobilize capital because electric cars will

be blossom in future cars market in the world A wide range of Developed countries such

as Japan, USA, Canada, UK, France, Germany, etc are converting from automobiles using natural materials such as gasoline and diesel to electric motors in order to protect the environment and also make use of renewable fuel The European Union (EU) has also set a targeting to "kill" gasoline-fueled cars by 2030 – 2050

Moreover, Vietnam is emerging as the world's leading potential consumer market with a low car ownership ratio of just 23 vehicles per 1.000 people, compared with Thailand's

204 / 1.000 and around 400 / 1.000 in developed countries However, compared with the average Vietnamese income, cars are always a luxury item beyond reach The car dream

of Vietnamese people has been formed many years ago but no one really reaped the results Vingroup Group willing to make a brand of Vietnamese cars, high quality, cheap price closer to consumers in Vietnam Vietnam's automobile industry is expected to be able to compete with South East Asian countries with a leading brand