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

THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS

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

Evaluation

by group (max 100%)

Nguyen Thi

Kim Ngan

- Present industry characteristics, company position, direct

competitors

- Analyze financial ratios

- Calculate the company's average dividend growth rate over the past 5 years

- Actively participate in group activities

- Complete assigned work on time

- Actively work, ask about work progress

100%

Le Thi Bao

Ngoc

- Present industry characteristics, company position, direct

competitors

- Analyze financial ratios

- Closing price earnings of that company's stock in

2020

- Participate in good group activities

- Always give your opinion

- Actively check the progress, promote the work of individuals and the whole team

100%

Vy Bao Ngoc - Compare industry

averages or direct competitors

- Comment on financial ratios

- Complete assigned tasks on time

- Participate in group activities and work enthusiastically

- Actively contribute to the group's activity ideas

- Conclusion of the company's financial situation

- Complete assigned tasks on time

- Participate in group activities and work enthusiastically

- Actively contribute to the group's activity ideas

100%

c

Phan Thi

Huong Tram

- Compare industry averages or direct competitors

- Comment on financial ratios

- Complete assigned tasks on time

- Participate in group activities and work enthusiastically

- Actively contribute to the group's activity ideas

100%

4

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

c

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 milk brands globally (2nd place) Although it has achieved great brand value, Vinamilk's development potential is still highly appreciated when it becomes the most potential global 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 of Vinamilk 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 Stock Company (IDP), Frieslandcampina, Mead Johnson These firms all have good

6

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

II Analyze financial ratios

19.828.855.240.231

23.931.776.664.071

29.091.665.553.974

12.911.012.291.043

15.812.637.654.901

The reason for the sudden change in 2019 was that Vinamilk's short-term loans in 2019 increased 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 more than 4,800 billion VND, many times higher than the figure of more than 700 billion VND at the beginning of the year Vinamilk said these loans are secured by tangible fixed assets and inventory It can be said that Vinamilk is promoting the use of debt instruments

c

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

19.828.855.240.231

23.931.776.664.071

29.091.665.553.974

12.911.012.291.043

15.812.637.654.901

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

ratio là gì để gi ả i thích cho d ễ hi ể u

39.415.110.695.231

43.016.376.910.393

47.813.425.086.580

26.544.331.214.494

30.105.364.619.350

32.000.787.431.679

12.911.012.291.043

15.812.637.654.901

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

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

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

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

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

s ố m ớ i gi ả m

increase The company has exploited long-term economic relationships with financial institutions to take advantage of financial leverage (Annual report 2021)

39.415.110.695.231

43.016.376.910.393

47.813.425.086.580

26.544.331.214.494

30.105.364.619.350

32.000.787.431.679

23.675.568.949.025

25.736.367.936.729

26.120.319.280.754

27.773.728.042.223

Inventory 3.447.759.30

3.261

4.531.768.842.734

3.876.560.751.360

3.856.553.157.650

5.504.479.715.927

Inventory

turnover

short-term debt

10

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 inventory turnover 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 the years, this is a sign that the business does not have too many risks To make it easier to understand, we can consider the inventory turnaround time index, from 2017-2021 the index ranges from 54 to 62 days, showing that inventory is only stored for 2 months, after 2 New goods 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 not grow as expected In 2018, with the consumer trend showing signs of slowing down, this led 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 (annual report 2018) In 2019, although the global economy is going down, Vietnam at the moment achieved a stable growth rate, causing the retail industry in general and the dairy industry

in particular to record good growth Besides, with the consumption trend from delicious to healthy eating, VNM achieved better revenue growth with some key products At the same time, VNM's strategy of premiumizing the product portfolio has achieved certain achievements With this situation, Vinamilk's revenue has grown more than 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 2021 still increased stable growth

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

b) Fixed assets turnover

c

doanh thu 2021 t ă ng lên có th ể là do giá thành s ả n ph ẩ m t ă ng lên, nguyên nhân là do nguyên li ệ u đầ u vào t ă ng giá b ở i s ự ả nh h ưở ng c ủ a gián đ o ạ n chu ỗ i cung ứ ng Gía thành sp t ă ng lên có th ể khi ế n cho khách hàng ít tiêu dùng h ơ n, đ ây có th ể là lý do mà l ượ ng hàng t ồ n kho khá l ớ n D ẫ n đế n vi ệ c vòng quay hàng t ồ n kho gi ả m độ t ng ộ t trong n ă m 2021

Fixed assets 6.578.193.5

61.054

8.667.870.641.168

8.729.549.347.732

7.638.105.002.753

6.616.862.182.899

to 5,837 from 2017 to 2019 but then rose again to 7,291 in 2021 In 2019, having this ratio lower 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's revenue plummeted in 2018 (the reason was explained above) and fixed assets increased sharply by 32% The added value mainly comes from the main activities of investing in machinery and equipment to increase production capacity and developing dairy farms on an industrial scale according to the business strategy until 2021 The gradual increase in fixed asset turnover is due to VNM's revenue increasing over the years combined with VNM's gradual decrease in investment in fixed assets determined VNM's reduction in investment in fixed assets may be due to the fact that during this period, the enterprise wants to evaluate the effectiveness of its business model by examining the efficiency of its investment in fixed assets intended to generate revenue

50.771.510.534.450

51.531.992.143.718

51.966.817.711.789

Total

assets

32.509.573.337.670

34.317.285.376.581

39.415.110.695.231

43.016.376.910.393

47.813.425.086.580

Cause: Total asset turnover dropped sharply in 2018 due to the decrease in annual revenue of the business this year due to the declining trend of consumption, combined with 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 at its maximum In 2019, the company's revenue and total asset investment both increased strongly, so this coefficient did not change too much However, two years later, the Covid pandemic made it impossible for revenue to increase sharply, and at the same time, the business continued to promote investment from short-term assets to take advantage of financial leverage, making the efficiency of the business more efficient Asset use of enterprises decreased sharply in the two years 2020 and 2021

c

9.814.109.826.048

10.085.159.996.024

10.728.728.148.728

10.426.791.805.457

Sales 47.458.779.6

19.504

46.893.210.033.874

50.771.510.534.450

51.531.992.143.718

51.966.817.711.789

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

2018 and 19: chi phí đầ u vào t ă ng cao d ẫ n đế n net income gi ả m m ạ nh (cu ộ c chi ế n

th ươ ng m ạ i m ỹ trung d ẫ n đế n nh ữ ng r ủ i ro v ề bi ế n độ ng t ỷ giá có th ể khi ế n giá nguyên

v ậ t li ệ u đầ u vào t ă ng cao)

2020: giá đầ u vào gi ả m do giá x ă ng d ầ u th ế gi ớ i gi ả m khi ế n giá x ă ng d ầ u trong n ướ c

gi ả m theo khi ế n cpi gi ả m 2020 là n ă m d ị ch b ệ nh xu h ướ ng tiêu dùng c ủ a khách hàng

d ầ n tr ở nên lành m ạ nh h ơ n, vi ệ c tiêu th ụ s ữ a cx tr ở nên nhi ề u h ơ n