Analysis of the companys financial situation vietnam dairy joint stock company (vinamilk)

THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS ANALYSIS OF THE COMPANY''''S FINANCIAL SITUATION VIETNAM DAIRY JOINT STOCK COMPANY (VINAMILK) Group 7 Phan Thị Hương Trâm Đoàn Nguyên Minh Tâm Nguyễn Thị[.]

THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS

-ANALYSIS OF THE COMPANY'S FINANCIAL SITUATION VIETNAM DAIRY JOINT STOCK COMPANY (VINAMILK)

Group 7

Phan Thị Hương Trâm

Đoàn Nguyên Minh Tâm

Nguyễn Thị Kim Ngân

Lê Thị Bảo Ngọc

Vy Bảo Ngọc

Lecturer: Nguyễn Quang Minh Nhi

Evaluate the contribution level of members

Evaluation (Working

Evaluation attitude,

Participation,

(max 100%) Contributions, etc )

Nguyen Thi - Present industry - Actively participate in

Kim Ngan characteristics, company group activities

position, direct - Complete assigned

100%

- Analyze financial ratios - Actively work, ask

- Calculate the company's about work progress.

average dividend growthrate over the past 5 years

Le Thi Bao - Present industry - Participate in good

Ngoc characteristics, company group activities

position, direct - Always give your

100%

- Analyze financial ratios - Actively check the

- Closing price earnings of progress, promote the

work of individuals andthat company's stock in

the whole team

2020

Vy Bao Ngoc - Compare industry - Complete assigned

averages or direct tasks on time

competitors - Participate in group

- Comment on financial activities and work

100%

- Actively contribute tothe group's activityideas

Doan Nguyen - Propose reasons for the - Complete assigned

Minh Tam changing trends of tasks on time

financial ratios over the - Participate in group

100%

situation the group's activity

ideas

2

Phan Thi - Compare industry - Complete assigned

Huong Tram averages or direct tasks on time

competitors - Participate in group

- Comment on financial activities and work

100%

- Actively contribute tothe group's activityideas

Table of Contents

I Overview of Vinamilk Joint Stock Company 5

II Analyze financial ratios 6

1 Liquidity ratios 6

a) Current ratio 6

b) Quick ratio 7

2 Capital structure ratios 7

a) Total debt ratio 8

b) Equity multiplier 9

3 Turnover ratios 9

a) Inventory turnover 9

b) Fixed assets turnover 10

c) Total asset turnover 12

4 Profitability ratios 13

a) Net profit margin 13

b) ROA 14

c) ROI 14

d) ROE 15

5 Market value ratios 15

a) EPS 15

b) P/E 16

c) Market-to-book ratio 17

III Compare with other companies in the same industry 17

1 Liquidity ratios 17

2 Turnover ratios 18

3 Market value ratios 18

IV Conclusion of financial situation 19

I Overview of Vinamilk Joint Stock Company

❖ Business name: Vietnam Dairy Products Joint Stock Company (Vinamilk)

❖ International trading name: Vietnam Dairy Products Joint Stock Company

In the 2022 Global Food and Beverage Industry Report published by Brand Finance,the Vinamilk brand has shown its position as the only representative from Southeast Asia

in the Top 10 most valuable dairy brands globally (6th place) ) and Top 5 strongest milkbrands globally (2nd place) Although it has achieved great brand value, Vinamilk'sdevelopment potential is still highly appreciated when it becomes the most potentialglobal dairy brand in 2022

❖ Type: Joint Stock Company

❖ Charter capital: 20,899.554,450,000 VND

❖ Head office: 10 Tan Trao, Tan Phu Ward, District 7, Ho Chi Minh City, Vietnam

❖ Key employees: Nguyen Hanh Phuc - Chairman of the Board of Directors, Mai Kieu Lien - General Director

❖ Competitors: Due to the diversified product portfolio, each product segment ofVinamilk will have a certain competitor Up to now, the direct competitors to Vinamilk are:Dutch Lady, TH True Milk, Nutifood

In addition to strong competitors such as Dutch Lady, TH true Milk, Nutifood

Vinamilk's competitors also include Nestle, Abbout USA, International Dairy Joint StockCompany (IDP), Frieslandcampina, Mead Johnson These firms all have good

5

capabilities marketing and product research and development Therefore, there is always

a risk of competition with Vinamilk

❖ The main products:

Vinamilk liquid milk, Vinamilk yogurt, Ong Tho and Phuong Nam Star condensed milk,

Dielac powdered milk, Vfresh fruit juice

The reason for the sudden change in 2019 was that Vinamilk's short-term loans in 2019increased more than 7 times in 2018, while current assets increased insignificantly.Specifically, at the end of 2019, parent company Vinamilk is taking short-term loans of morethan 4,800 billion VND, many times higher than the figure of more than 700 billion VND atthe beginning of the year Vinamilk said these loans are secured by tangible fixed assets andinventory It can be said that Vinamilk is promoting the use of debt instruments

to finance corporate assets in order to enjoy the benefits of financial leverage In 2020,

2021 VNM will continue to increase short-term debt, but at the same time increase the

value of short-term assets to a high level, causing the current ratio to increase again The

reason for the change is that enterprises promote short-term assets through short-term

financial investments Investing in this short-term asset can help a business earn a return

that helps offset the interest costs of its debts

It can be seen that Vinamilk's quick ratio decreased gradually in the first 3 years, from 1.7

to 1.2 After that, the company's ratio increased again in 2020 and 2021 However, in

general, Vinamilk's quick ratio in all 5 years is greater than 1, showing that the company has

enough financial resources liquid assets to pay short-term and highly liquid liabilities It can

be seen that the ratio of inventory in short-term assets is not too large and inventories

between years are not fluctuated strongly, so the change of quick ratio is also similar with

the current ratio by the impact of the other two factors, which are current assets and current

liabilities Those are also the causes of Vinamilk's quick ratio change

2 Capital structure ratios

7

bổ sung thêm quick ratio là gì để giải thích cho dễ hiểu

a) Total debt ratio

There are many fluctuations in the overall debt ratio, but in general, this ratio of Vinamilk

increased in the period from 2017 to 2021 (from 28% to 33% over the past five years) This

shows that VNM has an increasing tendency to use debt as a source of capital A high debt

ratio represents a large debt burden, which can lead to insolvency However, if it can make

good use of the debt instrument, the company can take advantage of financial leverage and

have the opportunity to save the tax in order to increase net income

Cause: In 2018, the overall debt ratio decreased because total liabilities did not change too

much, but total assets increased, causing the ratio to change In 2018, tangible fixed assets

increased by 27%, from VND 6,491 billion to VND 8,585 billion The added value mainly

comes from the main activities of investing in machinery and equipment to increase

production capacity and develop dairy farms on an industrial scale according to the business

strategy until 2021 (annual report 2018) In 2019, although total assets and total liabilities

both increased, we can see that the growth of total liabilities is higher than that of total assets

(total debt increased by 43%; total assets increased by 15%), which causes

chỗ ni là ngnhan c ủa nợ ngắn hạn

the overall debt ratio to increase The increase in the use of debt instruments to finance

chỗ ni là ngnhan ts dài h ạn nên nói s ự tăng

assets in 2019 was explained earlier The reason for the increase in total assets intr2019ước rwồasimới nói

in order tontake advantage of financial

cái s ự tăng nào leverage

that the company focused on refinancing investments for subsidiaries In 2020, the overall

cao hơn nên ch ỉ

số mới giảm

debt ratio will decrease due to the increase in total assets from businesses promoting

short-term financial investments

In 2021, we can see that the growth of total debt is higher than that of total assets (total

debt increases by 23%; total assets increases by 9%), which causes the overall debt ratio to

The inventory turnover ratio of Vietnam Dairy Products Joint Stock Company in the past

5 years has always fluctuated In 2017, the inventory turnover ratio was at the highest level

of 7,032 but in 2018 it suddenly dropped sharply to 5,224 In 2019 and 2020, the inventoryturnover ratio increased to 6.639 and 6,773 and in 2021 it decreased to 5,046 From 2017-

2021, despite many fluctuations, the inventory turnover rate has always remained from 5 to

7, not too high or too low, thus ensuring the level of production to meet demand The number

of turnover increases and decreases continuously rather than completely decreasing over theyears, this is a sign that the business does not have too many risks To make it easier tounderstand, we can consider the inventory turnaround time index, from 2017-2021 the indexranges from 54 to 62 days, showing that inventory is only stored for 2 months, after 2 Newgoods will be imported every month

Cause: General influence from fluctuations in all aspects of the world economy,resonance with the shift and change in habits consumer, FMCG industry in 2018 did notgrow as expected In 2018, with the consumer trend showing signs of slowing down, thisled to a decrease in VNM's revenue and at the same time reduced the cost of goods sold

In addition, the inventory turnover index decreased compared to 2017 due to the increase

in inventory at the end of the year to prepare for the production plan in 2019 (annualreport 2018) In 2019, although the global economy is going down, Vietnam at themoment achieved a stable growth rate, causing the retail industry in general and the dairyindustry in particular to record good growth Besides, with the consumption trend fromdelicious to healthy eating, VNM achieved better revenue growth with some keyproducts At the same time, VNM's strategy of premiumizing the product portfolio hasachieved certain achievements With this situation, Vinamilk's revenue has grown morethan in 2018, and at the same time made the cost of goods sold increase Along with that,the decrease in inventory ratio caused a sudden increase in the inventory turnover index

in 2019 Despite the impact of the Covid 19 pandemic, VNM's revenue in 2020 and 2021still increased stable growth

However, compared to revenue growth, COGS growth was higher due to higher inputmaterial prices due to the impact of supply chain disruptions And with the reducedinventory policy in 2021, there has been a sharp drop in inventory turnover

b) Fixed assets turnover

doanh thu 2021 tăng lên có th ể là do10giá thành s ản phẩm tăng lên,

nguyên nhân là do nguyên li ệu đầu vào t ăng giá b ởi sự ảnh hưởng của gián đoạn chuỗi cung ứng Gía thành sp tăng lên có th ể khiến cho khách

2017 2018 2019 2020 2021 Sales 47.458.779 46.893.210 50.771.510 51.531.992 51.966.817.7

to 5,837 from 2017 to 2019 but then rose again to 7,291 in 2021 In 2019, having this ratiolower shows that Vinamilk is not currently using up all its assets their own to the maximum.However, in the following two years, VNM started to improve its index

Cause: In 2018, fixed asset turnover's ratio dropped sharply, due to Vinamilk'srevenue plummeted in 2018 (the reason was explained above) and fixed assets increasedsharply by 32% The added value mainly comes from the main activities of investing inmachinery and equipment to increase production capacity and developing dairy farms on

an industrial scale according to the business strategy until 2021 The gradual increase infixed asset turnover is due to VNM's revenue increasing over the years combined withVNM's gradual decrease in investment in fixed assets determined VNM's reduction ininvestment in fixed assets may be due to the fact that during this period, the enterprisewants to evaluate the effectiveness of its business model by examining the efficiency ofits investment in fixed assets intended to generate revenue

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c) Total asset turnover

Cause: Total asset turnover dropped sharply in 2018 due to the decrease in annualrevenue of the business this year due to the declining trend of consumption, combinedwith the sharp increase in total assets due to the increase in investment in fixed assets ,however, because the factory has just come into operation, the operating capacity is not atits maximum In 2019, the company's revenue and total asset investment both increasedstrongly, so this coefficient did not change too much However, two years later, the Covidpandemic made it impossible for revenue to increase sharply, and at the same time, thebusiness continued to promote investment from short-term assets to take advantage offinancial leverage, making the efficiency of the business more efficient Asset use ofenterprises decreased sharply in the two years 2020 and 2021

4 Profitability ratios a) Net profit margin

Cause: In 2018, although revenue and net profit both decreased, the decrease in netprofit was much larger than the decrease in revenue (net income decreased by 7%; salesdecreased by 1%) Similar to 2019, the revenue growth was larger than the net profitgrowth (8%>2%) The same explanation can be given to the fluctuations of the remainingtwo years as above The reason for the low net profit was the high price of inputmaterials, which caused the cost of goods sold to increase significantly in the context ofbroken supply chains In addition, from 2019 the revenue deductions have increasedsignificantly because businesses want to increase the discount rates for partners toincrease revenue and overcome the impact of the Covid 19 pandemic

2018 and 19: chi phí đầu vào t ăng cao dẫn đến net income giảm mạnh (cuộc chiến thương mại mỹ trung dẫn đến những rủi ro về biến động tỷ giá có th ể khiến giá

nguyên vật liệu đầu vào t ăng cao)

2020: giá đầu vào gi ảm do giá x ăng dầu thế giới giảm khiến giá x ăng dầu trong nước giảm theo khiến cpi giảm 2020 là n ăm dịch bệnh xu hướng tiêu dùng c ủa khách hàng dần trở nên lành m ạnh hơn, việc tiêu th ụ sữa cx trở nên nhi ều hơn

13

Overall, Vinamilk's ROA can still be considered as high rate and earned more money

on less investment However, during this period, VNM's ROA tended to graduallydecrease (from 32.437% to 21,807%) The total assets of the enterprise used forinvestment increased significantly over the years, but the profit after tax remainedunchanged, which shows that the enterprise is having problems using assets, making theassets not promote out of effect Enterprises need to adjust their business plans toimprove the efficiency in using assets

Cause: The decline in ROA over the years is due to the fact that although theinvestment in assets of the enterprise increased rapidly, the growth of net profit wasrelatively low In 2018, the enterprise increased investment in fixed assets, and invested

in short-term assets to take advantage of financial leverage in the following years,causing total assets to increase However, under the strong impact of the Covid 19pandemic, it is difficult for businesses to use assets in the most effective way