dự án phân tích tài chính công ty cổ phần Vinamilk

UEH UNIVERSITY
COLLEGE OF BUSINESS
SCHOOL OF FINANCE

CORPORATE FINANCE TERM PROJECT

FINANCIAL STATEMENTS ANALYSIS OF
VIETNAM DAIRY PRODUCTS JOINT
STOCK COMPANY - VINAMILK

SUBJECT: Corporate Finance
LECTURERS: Vũ Việt Quảng
CLASS CODE : 21C1FIN50502805
GROUP MEMBER:
1. Châu Kiều Anh
2. Phạm Thị Hoàng Anh
3. Vũ Thị Hiền Anh
4. Trần Vũ Bảo
5. Trần Trương Nhã Ca
1

Ho Chi Minh , 11/2021

TABLE OF CONTENTS


I. INTRODUCTION.
1. Overview of Vinamilk
1.1. Back to comity
Vinamilk Dairy Company was established in 1976. This is one of the
companies that made the initial listing on Vietnam's stock exchange. In 2016,

Vinamilk was ranked by Forbes as a Vietnamese billion dollar enterprise with a
brand
value of more than 1.5 billion USD. In 2020, despite
facing the Covid-19 pandemic, the company is
still defined. The price increased by 200
million USD compared to 2019, reaching the
milestone of more than 2.4 billion USD. In
2020,
Vinamilk officially owns 75% of the charter capital
of GTNfoods GTNfoods Joint Stock Company, which means Dairy Cow Breed
Joint Stock Company. Moc Chau officially became a member unit of
Vinamilk.
According to the financial report of Vinamilk in the second quarter of 2020,
revenue from domestic business reached VND 25,456 billion. Direct exports
reached VND 2,451 rate, up 7.7% over the same period last year. In the first 6
months of 2020, Vinamilk's revenue reached VND 29,648 billion, up 6.7%
compared to 2019.
Up to now, Vietnam Dairy Products Company has exported products to 54
countries and territories with a total turnover of more than 2.2 billion USD.
Vinamilk's shares are classified as blue-chip stocks in Vietnam, for businesses
with stable growth and revenue.
*Stock code: VNM.
* Listing floor: HOSE
*Trading name: Vietnam Dairy Products Joint Stock Company, another name is
Vinamilk.
*Type: Joint Stock Company.

1.2. Products
2

Vinamilk's product portfolio includes liquid milk and powdered milk as the
main products; value-added products such as condensed milk, eating and
drinking yogurt, ice cream and cheese. Vinamilk provides the market with a
diverse list of products for users.

The company currently has over 200 dairy
products with special product groups,
drinking fresh milk, powdered milk nutritional powder, frozen product group,
water - beverage ... respectively using about
37 - 90 % market share nationwide, each
product group.

1.3. Market
Maintaining the leading role in the domestic market and effectively
competing with foreign milk brands. VNM uses about 30-80% market share
in water products. 90% of VNM's export turnover is to the Middle East
market, especially to Iraq. To reduce risks, VNM is expanding to other
schools such as Australia, USA, Canada, Thailand. In addition, VNM is
trying to enter the coffee and beer market.
1.3.1. Local field
Vinamilk is the leading enterprise in Vietnam in producing milk and dairy
products.This show, Vinamilk used about 39% of the national market
share.Currently, the company has over 240 distributors on Vinamilk's
product distribution system and over 140,000 points of sale nationwide.
Sales through all Supermarket systems nationwide.
1.3.2 Overseas market
Focusing on business performance mainly in the Vietnamese market, which
accounted for about 80% of revenue in the last 3 financial years. Product
export markets outside Vietnam to countries such as: Australia, Cambodia,

Iraq, Kuwait, Maldives, The Philippines, Suriname, UAE and the US.
3

1.4. Competitor


The Vietnamese dairy market is highly competitive.Besides domestic dairy
manufacturers such as Hanoimilk, Longthanhmilk or more recently TH
Truemilk... Vinamilk also has to compete with imported products with big
names like Abbott, Mead Johnson, Nestlé,Dutch Lady .However, last year
Vinamilk continued to hold the leading position with the overall calculation for
all dairy products at about 37%.

1.5. Oriented development company
With the orientation to develop into a food
group, Vinamilk is expanding its business
into different fields such as coffee (Moment),
beer (joint venture with SABMiller).
Besides, Vinamilk also increased its financial
scale through a number of companies in the
industry.
The highlight of Vinamilk is its stable and
steady business activities for many years.The
company's goal is to maximize shareholder
value and pursue a business development
strategy based on the following key factors:

* Consolidate, build and develop a strong brand system that best meets
the needs and focus of Vietnamese users.
* Developing Vinamilk brand into the most trusted and scientifically

reputable nutrition brand for all Vietnamese people through the strategy
of applying Scientific Research on the specific format needs of
Vietnamese people to develop deploying the most optimal product lines
for Vietnamese users.
* Invest in expanding production and business through the market of
healthy beverage products for users through the main brand VFresh in
order to meet the rapidly increasing use trend of soft drink products.
from nature and good for human health.
* Strengthening system and distribution quality, adding parts in
4
markets Vinamilk has a low market share, especially in rural areas and
small urban areas.


* Exploiting the strength and reputation of the Vinamilk brand as a
nutrition brand with "the most prestigious and reliable Vietnamese
people" to capture at least 35% of the powdered milk market share within
2 years next.
* Comprehensively develop a list of dairy and dairy products aimed at
a large number of consumers, and at the same time expand into
synergistic products with high selling prices to improve the overall profit
ratio of the whole company.
* Continue to upgrade the power supply system.
* Continue to expand and actively develop the system, firmly and
effectively.
* Developing raw materials to ensure a stable supply of high quality
fresh milk at competitive prices and reliability.

II. FINANCIAL STATEMENT ANALYSIS.
1. Analysis of income statement statements for the period

of 2019 - 2020
1. 1 Revenue

-Vinamilk has grown quite impressively over the past 3 years, with an
average annual revenue more than 3,000 billion VND . Due to an increase in
milk production over the years, as well as VNM's active launch of many new
product lines, the company achieved this result.
-VNM's primary consumption market is still the domestic market, but with
5
the investment in two overseas
dairy factories, VNM's foreign revenue is
changing dramatically. Vinamilk's revenue is expected to increase in the
coming years when VNM plans to increase the number of cows on its farms


by 20,000 by 2022-2023, increasing the quantity of raw fresh milk available
to meet the needs of domestic and foreign consumers.
-As of the end of 2019, the enterprise's revenue amounted to 56,400 billion
VND, up 7.1% over the same time period in 2018 and completing 100% of
its business plan. Due to its efforts to overcome the challenges of 2020,
Vinamilk ended the financial year with a total revenue of 59,723 billion
VND, an increase of 5.9% compared to the same period in 2019.

-Fresh milk is still the VNM product line that generates the most revenue,
followed by powdered milk, yogurt, and condensed milk. The Vietnamese
milk market still has a tremendous amount of potential, and if it maintains its
present growth rate, the company's sales of fresh milk will continue to
increase.
-In terms of revenue structure by geography, revenue from the domestic
market still accounts for a major portion of the enterprise's total revenue.

Specifically, the domestic business segment is expected to reach 47,555
billion VND by the end of 2019, up 6.3% over the same time period last
year. Compared to the 2.7% growth in 2018, the 6.3% growth in 2019 was
6
mainly due to:
. In terms of output growth, several key product lines posted double-digit
growth. In addition, a number of high-end product lines also posted


impressive growth, demonstrating Vinamilk's prudent strategy of
premiumizing its product portfolio.
. Vinamilk is one of the pioneers participating in the National School
Milk Program. At the end of 2019, Vinamilk had won the bid in public
bidding in 21 provinces and cities across the country, implementing the
School Milk Program.

1.2 Profit

-The profitability of the company fluctuates from year to year, but the
growth rate is positive, although it is not as high as in previous years. The
profit of enterprises was almost flat in 2018 because of fierce competition
from the market and fluctuating costs of capital. By the end of 2019, the
enterprise's profit reached VND 10,554 billion, up 3.4% over the same
period.
-Amid challenges such as the pandemic, trade war, global supply chain
stagnation,etc, Vinamilk has developed a flexible business strategy, is firm in
challenges, and achieves positive growth. Specifically, post-consolidation
profit reached VND 11,236 billion in 2020, an increase of 6.5% over the
same period last year, making it 105% of the year plan. (Moc Chau Milk
after a year with Vinamilk recorded a profit after tax of VND 281 billion, an

increase of 68.2% compared to 2019). Vinamilk and its member companies
contributed more than VND 5,200 billion to the State budget in 2020, up
10% from 2019.

1.3 Cost of Goods Sold
-Over the period of 2018-2020, Vinamilk's cost of goods sold to net revenue
ratio always exceeds 50%. The proportion decreased from 53.18% in 2018 to
7 increased to 53.6% in 2020. The reason is that the
52.82% in 2019, and then
Covid epidemic has influenced the price of imported raw materials.
-With about 60% of ingredients being imported milk powder, VNM's profit
margin will be greatly affected by changes in world powdered milk prices.


1.4 Selling expenses
-The ratio of selling expenses to net revenue of Vinamilk decreased steadily
in the period 2018-2020. As a result, if VNM's proportion of selling expenses
was 23.3% in 2018, it will be 22.5% in 2020.
-This ratio is reduced because the company actively controls sales support
and promotion expenses to match market conditions.

1.5Business administration expenses
-VNM's ratio of administrative expenses to net revenue increased between
2018 and 2020, specifically from 2.16% in 2018 to 3.28% in 2020. The
increase in ratio was mainly due to the consolidation of GTN's
administrative costs.

2. Balance sheet

8

Billions dong

2018

2019

2020

Current Assets

20,560

24,722

29,666

Q3/202
1
34,446


Cash and cash equivalents
Short-term financial investments
Accounts receivable – short-term
Inventories
Other current assets
Long-term Assets
Accounts receivable – long-term
Fixed assets

Investment property
Long-term work in progress
Long-term financial investments
Other non-current assets
TOTAL ASSETS
Liabilites
Current Liabilites
Short-term borrowings
Short-term accounts payable to
suppliers
Advances from customers
Other short-term payables
Long-term Liabilites
Long-term borrowings
Other long-term liabilites
Equity
Owners’ Equity
Share capital
Retained profits
Other Funds
TOTAL RESOURCES

9

1,523
8,674
4,639
5,526
197
16,806

88
13,365
90
868
1,067
1,325
37,366
11,095
10,640
1,060
3,991

2,665
12,436
4,503
4,983
134
19,978
21
14,894
62
944
987
3,071
44,700
14,969
14,443
5,351
3,648

2,111
17,314
5,187
4,905
148
18,767
20
13,854
60
1,063
973
2,797
48,432
14,785
14,213
7,316
3,199

2,977
18,666
6,118
6,381
142
17,621
25
13,058
60
1,205
676
2,597

52,068
18,193
17,766
9,038
3,709

536
5,053
455
216
239
26,271
26,271
17,417
7,155
1,699
37,366

245
5,199
526
123
403
29,731
29,731
17,417
7,875
4,439
44,700

111
3,587
573
167
406
33,647
33,647
20,900
6,910
5,837
48,432

243
4,776
427
80
347
33,875
33,875
20,900
5,844
7,131
52,068


*Common-Size Balance Sheets
Billions dong
Current Assets
Cash and cash equivalents
Short-term financial

investments
Accounts receivable – shortterm
Inventories
Other current assets
Long-term Assets
Accounts receivable – longterm
Fixed assets
Investment property
Long-term work in progress
Long-term financial
investments
Other non-current assets

2018
55.0%
4.1%

2019
55.31%
5.96%

2020
61.25%
4.36%

Q3/2021
66.16%
5.72%

23.2%

27.82%

35.75%

35.85%

12.4%

10.07%

10.71%

11.75%

14.8%
0.5%
45.0%

11.15%
0.30%
44.69%

10.13%
0.31%
38.75%

12.26%
0.27%
33.84%

0.2%

0.05%

0.04%

0.05%

35.8%
0.2%
2.3%

33.32%
0.14%
2.11%

28.61%
0.12%
2.19%

25.08%
0.12%
2.31%

2.9%

2.21%

2.01%

1.30%

3.5%

6.87%

5.78%

4.99%

TOTAL ASSETS

100%

100%

100%

100%

Liabilites
Current Liabilites
Short-term borrowings
Short-term accounts payable to
suppliers
Advances from customers
Other short-term payables
Long-term Liabilites
Long-term borrowings

Other long-term liabilites
Equity
Owners’ Equity

29.7%
28.5%
2.8%

33.5%
32.3%
12.0%

30.5%
29.3%
15.1%

34.9%
34.1%
17.4%

10.7%

8.2%

6.6%

7.1%

1.4%
13.5%

1.2%
0.6%
0.6%
70.3%
70.3%

0.5%
11.6%
1.2%
0.3%
0.9%
66.5%
66.5%

0.2%
7.4%
1.2%
0.3%
0.8%
69.5%
69.5%

0.5%
9.2%
0.8%
0.2%
0.7%
65.1%
65.1%

Share capital
Retained profits
Other Funds
TOTAL RESOURCES

46.6%
19.1%
4.5%
100%

39.0%
17.6%
9.9%
100%

43.2%
14.3%
12.1%
100%

40.1%
11.2%
13.7%
100%

10

*Comment: Looking at the common-size balance sheets for Vinamilk, we
see that current assets were 66,16 percent of total assets in Q3/2021, up from

55 percent in 2018. Current liabilities rose from 28.5 percent to 34.1 percent
of total liabilities and equity over that same time. Similarly, total equity
declined from 70.3 percent of total liabilities and equity to 65.1 percent.
A large percentage of the current assets is short-term investment, accounting
for a half out of the total current assets or nearly one-third out of the total
assets. This is due to their short-term investment in stock and bond and they
held it to marturity. Although Vinamilk is a producing company, their fixed
assets just comprises nearly one- third out of its total assets. Their owner
equity take about 68 percent out of the total assets. It means that Vinamilk is
a company financed mainly on equity (or stocks and shares).

3. CASH FLOW TABLE:
2018
2019
I.
Cash flow from operations
1.Profit before tax
12.051.696 12.795.710
2. Adjusting the allowances
1.008.157
1.460.160
-Depreciation and
1.626.632
1.948.073
amortization
-Provisions
-91.866
7.333
-Net profit from investment

-22.434
5.717
in associates
-Write-off of fixed assets (net)
-Unrealized foreign exchange
-1.358
6.458
difference gains and losses
-Gains and losses from
70.048
43.964
liquidation of Fixed Assets
-Profit and loss from
54.344
66.439
investment activities
-Deposits
-678.576
-726.648
-Income
-Interest expenses
-Direct expenses from profits
3. Operating profit before
11
changes in working capital
-Increase and decrease in
accounts receivable
-Increase, decrease inventory

2020

13.518.536
1.571.803
2.208.867
49.504
-304.519
637
43.139
608.149

51.367

108.825

-1.177.793
143.818

13.059.853

14.255.870

15.090.339

-108.536

373.595

-714.955

-1.685.437

401.995

-270.075


- Increase or decrease in
payables (Excluding interest
-14.513
-399.803
payable, corporate income
tax payable)
-Increase or decrease the
68.659
16.409
upfront cost
- Increase or decrease in
-4.480
other short-term assets
- Interest payable on loan
-110.740
-227.917
- Paid corporate income tax
-1.879.580
-2.033.592
- Other proceeds from
business activities
- Other expenses from
-1.189.467
-972.149
business activities

-Net cash flow from operating
8.140.239
11.409.929
activities
II.
Cash flow from investing activities
1.Money spent to purchase
and construct fixed assets and
-2.158.249
3.185.795
other long-term assets
2.Proceeds from liquidation
and sale of fixed assets and
94.476
114.090
other long-term assets
3.Money spent on lending,
buying debt instruments of
-3.215.380
other entities
4.Loan recovery, resale of
debt instruments of other
1.392.178
2.598
entities
5. Capital contribution to
joint venture companies
6. Short-term investment
spending
7. Money spent on capital

-12.250
-2.158.238
contribution to other units
8. Cash back from capital
18.468
1.513
contribution to other entities
9. Interest earned on deposits

-212.798
23.641
23
-212.769
-2.286.331

-1.236.907
10.180.169

-1.264.817
150.343
-4.881.271
31.566

-8
21.632

12

10. Loan interest, dividends
and profit distribution

11. Money spent to buy back

782.637
-134.857

665.791

1.140.546


the capital contribution of
minority shareholders
Net cash flow from investing
activities
III.

TARGETS

-6.747.875

-4.802.010

Cash flow from financing activities

1. Proceeds from issuing
shares, receiving contributed
capital from owners
2. Payment of capital
contribution to owners,
repurchase of shares of an

issued enterprise
3. Short-term and long-term
loans received
4. Loan principal payment
5. Payment of finance lease
debt
6. Other payments from
financial activities
7. Payment from equitization
8. Dividends and profits paid
to owners
9. Capital contribution of
minority shareholders to
subsidiaries
10. Social welfare fund
spending
Net cash flow from financing
activities
Net cash flow for the period
Cash and cash equivalents at
the beginning of the period
Effects of exchange rate
changes on foreign currency
conversion
Cash and cash equivalents at
the end of the period
•

-1.045.145

127.769

-3.326

-1.159

-14.364

4.827.980

10.426.775

7.769.145

-4.103.589

-6.233.113

-5.753.602

-7.256.172

-7.836.251

-7.927.712

-6.535.107

-3.515.979

-5.926.534

559.987

1.146.075

-548.374

963.336

1.522.610

2.665.195

-713

-3.491

-5.577

1.522.610

2.665.195

2.111.243

13

Cashflow ANALYSIS OF COMPANY:
2018

2019

2020


Cash flow from operating
activities

8.140.239

11.049.929

10.180.169

Cash flow from investing
activities

-1.045.145

-6.747.875

-4.802.010

Cash flow from financing
activities

-6.535.107

-3.515.979

-5.926.534

Net cash flow for the
period

559.987

1.146.075

-548.374

Cash and cash equivalents
at the end of the period

1.522.610

2.665.195

2.333.243

-Cash flow from operating activities of the company is mostly always
positive except for some elements of the years which are still negative.
This partly shows the efficiency in the main business of the company.
The company's cash flow from business activities in 2020 is at 10,200
billion, down 8.5% compared to 2019. A significant part of revenue has
not yet brought real cash flow to the company but is a part of the
account receivables increased and inventories increased. This is a bad
sign when the company has excessive sales promotion activities,
leading to a sharp increase in revenue but not corresponding increase in

cash flow. Adjusted cash flow increased due to a sudden increase in
provisions in 2020 after a decrease in 2018, also showing an increasing
risk in the company's business. In addition to the provision due to the
decline in the value of its financial investments, it is noted that the
provision for bad debts of the company has increased more than in the
past year. This is a sign that boosting revenue in the period is showing
signs of bringing significant risks and the company needs to pay more
attention in appraising debts for customers and tightening its selling
conditions. The risk to receivables can lead to loss of company assets,
affecting existing and new shareholders and more importantly,
negatively affecting the image of the company in the market.
especially in this sensitive period. Another note is that the company's
money spent on tax obligations to the state has increased rapidly in
recent years and is much larger than the company's revenue growth.
The main use of financial resources of the company for investment
activities with little use
14 of borrowed money as profit leverage and tax
shield of the company has more or less affected the real cash flow and
profits of the company.


-Cash flow from investment activities in the period 2018-2010 was
negative, especially in 2019.This shows that the company always
carried out many of its investment activities during this period.
However, in 2020, the company's cash flow from investment activities
increased to 1,945,865 compared to 2018. This is not because the
company has narrowed its investment activities this year. Money spent
on procurement and construction of fixed assets of the company in
2020 still increased by 41% compared to 2019 and was the highest
investment year in the whole research period. The fact that the negative

investment cash flow is less than 2019 is mainly because the company
has recovered its bank deposits, along with the sale of financial
investment assets to prepare a budget to increase investment for
operations production for next year. This is reflected in the increased
holdings of cash and highly liquid assets. With this move of Vinamilk,
investors can hope for big projects to expand production of the
company in the near future.
-Cash flow from investment activities of the company is mainly used
for the expansion of fixed assets, expansion of production and business
activities. The company's investment in financial companies in the
period 2018-2020 is almost very small, except for investment in capital
contribution to subsidiaries in 2019 also for the purpose of serving the
company's main production activities. The decision to focus on
investing in its own operations instead of making profits from
Vinamilk's financial activities in the current difficult financial market
period is the right decision when it always brings very good growth in
profit. profits over the years.
-Cash flow from financial activities of the company in the period 20182020 is also always negative, and the largest part of expenditure
belongs to cash flow to pay dividends to shareholders. Because
Vinamilk's policy in investing is to mainly use cash flow from its own
capital, it is understandable that the company's cash flow from
financial activities is negative and also shows the safety of its
investments. investment activities of the company, reducing interest
rate risks and pressure from new shareholders.
*Comment
-The growth in revenue and profit of the company has brought growth
in real cash flow from operating activities, showing that the company is
15
really generating profits
for itself. Even so, part of the extra revenue

that didn't generate real cash flow for the company was still in accounts
receivable.With the provision ratio for bad debts increasing sharply in
2019, the company is at risk of losing its real revenue due to the


inability to collect debts.The increase in mobilizing cash and liquid
assets of the company in 2020 is understood as a move to prepare for
major investment projects in 2021, creating prospects for strong and
sustainable growth stable in the following years for the company.

IV. Analysis of Financial Idndicators of the period
2018-2020.
1. Short-term solvency ratios:
2018

2019

2020

2018-2019 2019-2020
(+;-)

(+;-)

Current ratio

1.22

1.71

2.08

+0.49

+0.37

Quick ratio

0.89

1.36

1.74

+0.47

+0.37

Cash ratio

0.09

0.18

0.14

+0.09

-0.04

D/E

0.42

0.5

0.43

+0.08

-0.07

1.1 Current ratio
-The current ratio of Vinamilk for the period 2018-2020 showed that
corresponding to 1 VND of Short-term Liabilities , Vinamilk has 1.22, 1.71,
2.08 , 2.08 of assets payment mobility.
-These ratios tend to increase year by year : in 2019 it increased 0.49 , in 2020
it increased 0.37 mainly because Short-term Assets tend to grow faster than
Short-term Liabilities.
16

-But in general, the annual index is greater than 1, which is good sign, which
means that Vinamilk has the ability to fulfil its debt repayment obligations
when it is due.


1.2 Quick ratio
-The quick ratio of Vinamilk for the period 2018-2020 shows that for 1 VND
of Short-term Liabilities , Vinamilk has 0.89 , 1.36, 1.74 of liquid assets with
quick liquidity ready to pay.

-These ratios tend to increase year by year : in 2019 it increased 0.47 , in 2020
it increased 0.38 . In which , Short-term Assets increase year by year but
Inventories are stable.Specifically , in 2018 Short-term Assets increased
sharply from VND 20,559 Billion to VND 31,249 Billion ( an increase of 52%
compared to 2018).
-In conclusion, over the past 3 years, the Quick ratio at Vinamilk has remained
at a level greater than 1 but tends to increase gradually. It can be seen that
Vinamilk is able to pay for Short-term Liabilities with Short-term Assets
without selling its Inventories.

1.3 Cash ratio
-The Cash Ratio of Vinamilk for the period 2018 - 2021 are 0.09 , 0.18, 0.14
,respectively, which means that the company has enough cash and cash
equivalents to pay 9% (in 2018), 18% (in 2019), 14% (in 2020 ) short-term
liabilities.
-The Cash Ratio tends to unstable increase and decrease year by year . Mainly
due to unstable increase and decrease of Cash and cash equivalents, specifically
: in 2019 Cash and cash equivalents increased from VND 1,522 Billion to VND
2,665 Billion (up 75%) , in 2020 it will decrease to VND 2,111 Billion (down
20%).
-In conclusion , the Cash ratio is less than 1 , this shows that the company
currently does not have enough cash to pay short-term Liabilities, but in
return , this also shows that the company used cash efficiently , maximizing
profits benefits and doesn’t leave money in the bank account.

2. Asset management, or turnover ratios
2018

2019 2020

2018-2019 2109-2020
(+;--)

(+;-)

+0.97

+0.55

17

Inventory turnover

5.06

5.97

6.52


Payable turnover

1.66

2.06

2.25

+0.4

+0.19

Receivable turnover

11.33

12.51

11.50

+1.18

-1.01

Days of sales
outstanding

32.22

29.19

31.75

-3.03

+2.56

2.1 Inventory turnover
-Vinamilk’s inventory turnover from 2018 to 2021 reached 5.06, 5.97, 6.52,
6.52. Taking into account the rise in statistical data, we can surmise that

Vinamilk’s strategy was effective. Which leads to this upward trend is the
increase in cost of goods sold as well as the stability of inventory. Inventory
turnover has become more and more increased yearly, which shows that
Vinamilk sells good quite fast and the inventory is not so holdup. The Vinamilk
enterprise can face less risk if the inventory section in Financial Statement
decreases year by year.

2.2 Payable turnover
-The payable turnover of Vinamilk for the period 2018-2020 are 1.66 , 2.06,
2.25, 2.25. These ratios tend to increase slightly over the year : in 2019 it
increased 0.4, in 2020 it increased 0.19. Because cost of good sold increases
year by year, specifically in 2021 , it is forecast to increase to 33 trillion VND
compared to 28 trillion VND (up 17%) , still average total assets is stable at 14
trillion VND.
-In conclusion , payable turnover of Vinamilk is higher than previous years,
which proves that the business is appropriating capital and paying faster than
last year.

2.3 Receivable turnover
-Vinamilk’s receivable turnover for the period 2018-2021 are 11.33, 12.51,
11.50, 11.50. The ratios tend to unstable increase and decrease year by year
because annual sales are increasing year by year , and average receivables are
18
not stable. Specifically, annual
sales is forecasted to increase to nearly 63
trillion VND (up nearly 20% compared to 2018) .


-In conclusion, Vinamilk’s receivable turnover stability shows that the ability to
collect debts from customers is good, and shows that Vinamilk's partners do

quality business and are able to repay loans quickly.

2.4 Days of sales outstanding
-Number of days of outstanding sales of Vinamilk in the period of 2018-2021
is, 32.22, 29.19, 31.75, 31.75, respectively. That means it took Vinamilk 32.22,
29.19, 31.75 days to recover its receivables. The average collection periods
fluctuate with unstability, specifically in 2019 it decreased from 32.22 to 29.19
(down 10%) and in 2021 increased from 29.19 to 31.75 (up 8.7%). This may
show that Vinamilk's ability to manage debts is limited and unstable.

3. Financial leverage ratios
.Total debt ratio = ( Total Assets - Total Equity) / Total Assets
.Debt equity ratio = Total Debt / Total Equity
.Equity Multiplire ( EM) = Total Assets / Total Equity
2018

2019

2020

TAT

1.41

1.26

1.23

D/E

0.42

0.5

0.43

EM

1.422

1.503

1.439

-TAT Vinamilk has increased and decreased over the years but the difference is
not too large, indicating that the company has maintained its asset efficiency.
The D/E of Vinamilk for the period 2018-2020 are 0.42, 0.5 , 0.43, . The ratios
tends to unstable increase and decrease year by year. Mainly due to slight
increase in Liabilities and sharp increase in owner’s equity, specifically : in
2020 Owner’s equity increased from VND 26,271 Billion to 35,474 Billion (an
increase of 35% compared to 2018). Over the past 3 year, the D/E is less than
1, this shows that Vinamlik rarely depends on the form of capital mobilization
19
by debt.


4. Profitability measures
.Return on Assets (ROA) = Net Income / Total Assets
.Return on Equity (ROE) = Net Income / Total Equity
.Profit Margin = Net Income / Sales

2018

2019

2020

NI

10,205,629,711,239 10,554,331,880,891 11,235,732,234,125

TA

37,366,108,654,179 44,699,873,386,034 48,432,480,673,629

ROA
TE

27.3%
23.6%
23.2%
26,271,369,291,927 29,731,255,204,364 33,647,122,229,822

ROE

38.9%

Sales

52,629,230,427,284 52,629,230,427,284 59,722,908,393,326

PM
EBIT
Interest

19.4%
18.7%
18.8%
12,103,063,684,975 12,904,534,532,544 13,662,354,552,201
51,367,418,852
108,824,893,987
143,818,465,177

TIE

235.62

35.5%

118.58

33.4%

95

4.1 Return on Assets (ROA)
-VNM's ROA in 2020 is 23.2 (about 0.4% difference compared to 2019). Based
on this figure, VND 100 of assets will generate VND 23.2 in profit after tax for
VNM. The fact that there isn't much difference between the years indicates that
VNM has used its assets more and more effectively to earn profits.

4.2 Return on Equity (ROE)
-VNM's ROE in 2020 is 33.4 (about 2.1 difference compared to 2019). Based
on this figure, 100 VND of equity will generate 33.4 VND of profit after tax for
VNM.
-It can be seen that equity has not been used efficiently by the business when
ROE has slight declined over year. The reason for this decline is that the
growth rate of net income is significantly lower than the growth rate of total
equity efficiently by the business when ROE has slight declined over year.

4.3 Profit margin (PM)
-Accordingly, the profit margin
will reach 18.8% in 2020, an increase of 0.1%
20
compared to 2019. The stable and growing profit margin in the last 2 years
shows the effectiveness in cost control.


-Although there is not much difference, Vinamilk's profit margin is higher than
that of other competitors such as Moc Chau milk, Ha noi nilk. This is a good
sign in the midst of a period when businesses are being affected by the Covid19 pandemic.

4.4 Times Interest Earned (TIE) Ratio
-Interest coverage ratio for the period 2018-2020 are 235.61, 118.58, 94.99
respectively. These ratios tends to decrease lower year by year and the primary
reason is the increase in interest. As the number of interest in 2020 reached 143
trillion VND, exceeding a 180% higher in 2018, which had only 51 trillion
VND. This data shows that, interest coverage ratio of Vinamilk was always
greater than 2 but there was a downward trend, instead . All the evidence leads
to the conclusion that Vinamilk has a positive interest coverage ratio and their
industrial activity creates a great cash flow.

5. Market value ratios.
EPS
(Thousand dong)
Market value
per share
P/E
P
BV
(Thousand dong)
P/B

2018
5.3

2019
5.48

2020
4.77

119,992

116,504

108,804

22.64
119,992

21.26
116,504

22.81
108,804

15.08

17.07

16.1

7.96

6.83

6.76

-EPS has decreased over the years, but EPS is still high and higher than
competitors at present. In addition, the high EPS shows that VNM is a good
company with outstanding value and attractiveness to investors.
According to statistics, VNM's P/E ratio increased sharply from 2019 to 2020
(21.26 -22.81), showing that the company is on a strong development track.
The book-to-market ratio compares a company's book value to its market value.
-From 2018 to 2020, the market-to-book ratio decreased from 7.96 to 6.76 due
to the impact of the covid-19 epidemic, which made VNM's stock price drop.
But in general the number is more than 1, which shows that VNM is expected
to be a highly-developed company.

6. The DuPont analysis

21

.ROE = (NI / Sales) x (Sales / TA) x (TA / TE)
= PM x TAT x EM
.ROA=(NI / Sales) x (Sales / TA)


= PM x TAT

PM

2018
19.4%

2019
18.7%

2020
18.8%

TAT
ROA
EM
ROE

1.41
27.3%
1.442
38.81%

1.26
23.6%
1.503
35.42%

1.23
23.2%
1.439
33.31%

-The chart above shows that ROE of VNM has decreased over time. This
decline results from the fact that the growth rate of net income is considerably
lower than the growth rate of effective total equity of the company. Although
the efficiency of using total assets has decreased over the years, the difference
is not too much. Besides, ROA has a slight fluctuation, showing that VNM is
still stable in using its assets to earn profit.
-During the last three years, covid 19 has adversely affected VNM's financial
position, causing ROA and ROA to fluctuate, though VNM has attempted to
keep the indexes at stable levels.

7. Internal & Sustainable growth rate next year
.Detention ratio (b) = Dividends / Net Income
.Internal growth rate = (ROA x b) / ( 1 - ROAxb )
. Sustainable growth rate = (ROE x b) / ( 1 - ROExb )
2021
ROA

23.2%

Detention ratio

0.32

Internal Growth rate

0.08

ROE

33.31%

Sustainable growth rate

0.119

=> Internal growth rate = 0.08 (8%). The maximum growth rate that VNM can
achieve with no external financing is 8%.
22

=> Sustainable growth rate = 0.119 (11.9%)
Thus, BMP can expand at a maximum rate of 11.9% per year without external
equity financing.


V. Challenges:
-Most raw materials are imported from abroad. The brand has not been able
to be self-sufficient in domestic raw materials. This has greatly affected the
revenue and profit of the brand.
-In the market, there are more and more foreign milk brands imported from
Europe, so Vinamilk's powdered milk market share, which holds a monopoly

position, tends to decline.
-COVID-19 has caused unprecedented difficulties to the economy and the
dairy industry is no exception:
.It is forecasted that in 2021 and 2022, due to the decrease in purchasing
power of the domestic market due to the impact of the COVID-19
epidemic and the burden of increasing raw material prices, the pressure on
gross margin will continue to decrease, which leads to Vinamilk's revenue
possibly falling. will decrease, while the tax rate will increase because
some of Vinamilk's factories have expired tax incentives. Although the
export market has good growth in revenue, it is difficult to compensate for
the reduced profit margin. Due to the increase in the price of raw materials
and the risk of the COVID-19 outbreak. In the past 4 years, VNM's
compound growth rate has decreased to 4% compared to the previous 10
years to 14.2%.

VI. Recommendations
1. Support policy from the government
-Improve the legal environment, create an open business environment,
support enterprises to export to international markets.
-Supporting businesses throughout their existence such as: tax reduction,
input cost reduction.
-Educate on the benefits of providing nutrients from milk.

2. Production development of the company:
-Consolidate, build and develop a system of strong brands to best meet the
needs and consumer psychology of Vietnamese consumers.
-Developing the source of raw materials ensures a steady supply of high
quality, competitively priced and reliable fresh milk.
-Invest in comprehensive upgrading of factories and build new factories with
modern technology according to international standards in order to improve

production capacity to meet market demand.
-Develop a comprehensive
23 dairy and dairy product portfolio targeting a wide
range of consumers, and expand into value-added products with high selling
prices to improve the company's overall profit margin. Everyone in the
company.


-Strengthen corporate governance and risk management to minimize possible
damage to the company and shareholders.
-Combining technology with human creativity helps businesses operate more
and more efficiently.
-Develop the scale and structure of production in the direction of modernity,
automation, use of new material technology to ensure the criteria of quality,
safety, hygiene and environment according to Vietnamese and international
regulations.

3. Management of reserves and capital rotation:
-Through the data of 2018, 2019 and 2020, it can be seen that the efficiency
of capital use tends to decrease (ROE gradually decreases over the years).
Therefore, it is necessary to take measures to improve the capital turnover as
well as the company's net profit ratio

4. Determining a reasonable funding policy and capital
structure
-It is necessary to build a flexible capital structure suitable to each business
period to create a solid financial foundation for the business.

5. Payment management:
-Through analyzing the company's financial situation, it can be seen that the

company is often misappropriated capital, so the company often borrows to
offset these amounts. Therefore, it is necessary to have a reasonable payment
policy (discount, invest in modern methods) to avoid risks affecting the
company's production and business situation.

VII. Conlusion
-In today's fiercely competitive market economy to be able to stand firm and
survive, development is an issue that almost all businesses are very
concerned about.
-In 2020 – the dairy industry grew negative 6% (AC Nielsen) when the
whole country was negatively affected by the Covid-19 epidemic. Vinamilk
has maintained growth, ensuring all activities are carried out quickly in the
face of challenges and difficulties - by focusing on financial stability in the
context of all sectors in FMCG in general and the dairy industry in general.
are strongly affected by Covid. Since then, Vinamilk has risen and achieved
24
outstanding achievements:
 Revenue reached VND 59,723 billion in the whole year of 2020, an
increase of 6% compared to 2019 and completed 100% of the whole year














plan- In which, domestic net revenue reached VND 50,842 billion, up 6.9%
compared to 2019.
Consolidated gross profit margin in 2020 reached 46.4%, down 79 basis
points from the previous year due to the impact of the Covid-19 epidemic,
which made production output unstable, small and odd lots increased.
Stable raw milk prices and increasing output are important factors in
stabilizing the Company's gross profit margin.
Consolidated selling and administrative expenses in 2020 reached 25.8% of
net revenue, remaining stable compared to 25.5% in 2019.
Net profit reached 11,235 billion dong for the whole year, up 6.5% y/y and
fulfilling 105% of the full year plan. Consolidated net profit margin in
2020 reached 18.8%, up from the previous year due to optimization of cash
flow, expenses and tax incentives. In 2020, the CIT rate will be 16.9%, a
decrease compared to the previous year.
Significant financial ratios: no material changes and kept at a safe level.
Cash and cash equivalents: From the continuous positive business results
and performance for many years, the Company has maintained a high value
of capital in cash while managing cash flow effectively, flexibly and
safely, ensuring ensure to fully meet capital needs for production and
business as well as investment projects as planned.
Account receivable :During the year, there were no more significant bad
debts, continuing to maintain the receivables management policy and
customer credit policy in the direction of creating favorable conditions for
customers to expand their business scale and safety.
Account payable: The Company maintains a reasonable and strict supplier
payment policy in line with the Company's operational situation.
=>To get such results also thanks to the efforts of all personnel and the

company's board of directors who have the right sales and marketing
strategies and the close supervision of the management department,
management of quality as well as the training of human resources and
improvement of machinery and equipment. However, the company still faces
a number of difficulties and limitations, so in order to operate more
effectively and continuously improve its position, the company needs to
promote its strengths and overcome its weaknesses. weaknesses and
limitations mentioned above.

*REFERENCES
.Book: Corporate Finance_10th
edition, Stephen A. Ross, Franco Modigliani
25
Professor of Finance and Economics, Sloan School of Management,
Massachusetts Institute of Technology, Consulting Editor, Chapter 3, page 4386.