Corporate Finance PETROLIMEX GAS CORPORATION JSC

VIETNAM NATIONAL
Ho UNIVERSITY
Chi Minh CityHO CHI MINH CITY

April, 2022 OF TECHNOLOGY
HO CHI MINH CITY UNIVERSITY
FACULTY OF ENVIRONMENT AND NATURAL RESOURCES

PETROLIMEX GAS CORPORATION
JSC
FINANCIAL STATEMENT ANALYSIS

CORPORATE
FINANCE
Lecturer: Dr. Nguyễn
Thu Hiền
ASSIGNMENT
REPORT
Class: CC01

TABLE OF CONTENT


LIST OF FIGURES

2
2


LIST OF TABLES

ABSTRACT
The primary goal of this project is to apply what we have learned to examine the
financial performance of PETROLIMEX GAS CORPORATION - JOINT STOCK
COMPANY (PGC). We will calculate, analyze, and comment on PGC's financial ratios
(Liquidity Ratio, Leverage Ratio, Efficiency Ratio, Profitability, and Market Performance
Ratio) from 2019 to 2021 by collecting data from the Balance Sheet, Income Statement, and
other sources on finance websites. Following that, PGC's financial ratios in 2021 were
compared to those of three other companies: VIETNAM NATIONAL PETROLEUM
GROUP (PLX), PETROVIETNAM GAS JOINT STOCK CORPORATION (GAS), and
PETROVIETNAM

TECHNICAL

SERVICES

CORPORATION

(PVS)

to

provide

comparative reviews related to the company's operations, thereby recommending whether to
buy or sell those companies to investors. In addition, we also calculate PGC's BETA and
company value. We can determine the risk performance of PGC investments based on these
figures. By combining analytical data from PGC's financial ratios, BETA, and company
value, we can make comments and reviews on PGC's financial performance, and from there,
we can thoroughly evaluate PETROLIMEX GAS CORPORATION - JOINT STOCK
COMPANY (PGC’s future) development direction.

PART 1: COMPANY OVERVIEW
1.

COMPANY OVERVIEW
1.1 Company introduction

Petrolimex Gas JSC (PGJ), or Vietnam National Petroleum Group, is known as a stateowned petroleum company that was established in 2006 and is headquartered in Hanoi,
Vietnam.
1.2 Company activities

Petrolimex is involved in the business of importing, exporting and trading petroleum
and petrochemical products. It also provides other related products such as oils, greases,

3
3


asphalt, and liquefied petroleum gas (LPG) for commercial, residential as well as industrial
uses. Besides, Petrolimex has invested in other sectors, which can be named as engineering,
installation, mechanical and oil equipment, insurance, banking and other commercial and
services activities offered by its member units.
1.3 Business scope
1.3.1 Storage system

There are storages set up all over the country to make sure the fluent supply over
market demand, which are located in Duc Giang Oil Depot (Ha Noi), Thuong Ly Oil Depot
(Hai Phong), Nha Be Oil Terminal (HCM City), Central Oil Storage Cluster (Phu Khanh Binh Dinh - Da Nang - Nghe An), Southwestern Oil Storage Cluster (Can Tho), B12 Oil
Terminal, etc1.
1.3.2 Product

Being a corporation that makes up approximately 50% out of total national market
share, Petrolimex has taken the lead in petroleum business downstream, including refining
and marketing. It is also the first and only enterprise that supplies high-standard eco-friendly
fuel in the country, including Euro 5-standard Diesel (DO 0.001S-V), Euro 4-standard Ron 95
(RON 95-IV), etc.
1.3.3 Supply system

Petrolimex has 43 out of 69 member units that directly trade oil products in 62 out of 63
provinces and cities nationally. Abroad, it has Petrolimex Singapore One Member Co., Ltd
and Petrolimex Laos One Member Co., Ltd and an office in Cambodia recently. Having
distributed 2,471 stations across the country 2, Petrolimex along with other domestic oil
source companies and petro-oil distributors to satisfy the demand of the country’s socioeconomic development as well as the consumption of residents.
2.

ANALYSIS OF PETROLEUM MARKET IN VIETNAM
2.1 Petroleum supply
1 Nguyen Quang Dung, Petroleum Trading, />2 Nguyen Quang Dung, Vietnam National Petroleum Group (Petrolimex),
/>
4
4


2.1.1 Import source

In order to meet the need for petroleum, Vietnam has mainly imported petroleum from
abroad. At the moment, there are 36 companies3 are licensed by the government to import and
distribute petroleum and petrochemical products, in which Petrolimex accounts for the largest
weight, approximately 50%, followed by PV Oil, Saigon Petro, Mipecorp and Thalexim with
21%, 7%, 5% and 3%4 respectively.
2.1.2 Domestic supply

Vietnam currently has only 2 Condensate plants producing gasoline for domestic use,
which are the Binh Son and Nghi Son factory. Both plants can supply about 70-75% gasoline
demand, which is 13 million tons of petroleum a year while the demand is about 20 million
tons5.
2.2 Petroleum demand

The demand of petroleum has a tendency to increase since gasoline and oil products are
strategic essential fuels and play a significant role in the operation of most fields in the
national economy.
2.3 Competitions in the petroleum market in Vietnam

The petroleum market in Vietnam has gradually limited its monopoly in the business
since the appearance of many enterprises entering the petroleum industry. On the contrary,
this makes the Vietnamese petroleum market become vibrant. Enterprises positively solidify
their goods sources, strongly satisfy the gasoline consumption demand of customers and do
business effectively.
2.4 Assessment of the petroleum industry in Vietnam
2.4.1 Advantages

The scale is increasing, proving that the petroleum market is blooming.
3 Cổng thông tin điện tử Bộ Công Thương (MOIT), Import and Export Petroleum Company, />page=petroleum_define&key=petroleum_daumoi&menu_id=66.

4 Nguyen Minh Ngoc, Petroleum market share in Vietnam in 2020, by brand,
/>
5 Phan Phương, Phó Thủ tướng Lê Văn Thành: Làm chủ nguồn xăng dầu sản xuất trong nước,
/>
5
5

There are many new participants and competition in the petroleum business.
2.4.2 Disadvantages

The Vietnamese petroleum market in the beginning until now is still dependent on the
import sources.
The market is still monopolized by the government.
The distribution system is limited.
The petroleum market has developed recently, therefore it is still deficient. 

6
6


PART 2: FINANCIAL STATEMENT ANALYSIS
I.

TREND ANALYSIS
Table 1: GAS PETROLIMEX’S Financial Performance in 2019, 2020 and 2021 (PGC)

PGC’s Financial Performance
No.

Financial Ratio

2019

1

2020

2021

Liquidity ratios

1.1

Current Ratio

1.77

1.70

1.56

1.2

Quick Ratio

1.14

1.13

1.11

1.3

Cash Ratio

0.04

0.05

0.04

1.4

Short-term Ratio

1.31

1.25

1.24

1.5

Interest Coverage

5.33

5.92

9.65

15.36

15.18

17.67

24

24

21

10.10

8.71

9.85

36

42

37

2

Efficiency ratios

2.1

Inventory Turnover

2.2

Day’s Sale in Inventory

2.3

Receivables Turnover

2.4

Days of Sales Outstanding

2.5

Fixed Assets Turnover

8.18

7.80

10.01

2.6

Total Assets Turnover

1.59

1.45

1.55

2.7

Equity Turnover

3.69

3.43

4.08

3

Leverage ratios

3.1

Debt to Assets

32.55%

35.97%

42.14%

3.2

Debt to Equity

74.86%

87.74%

117.74%

3.3

Total Debt Ratio

0.57

0.60

0.64

3.4

Equity Multiplier

2.30

2.44

2.80

4

Profitability ratios

4.1

Gross Profit Margin

21.15%

22.42%

17.05%

4.2

Net Profit Margin

4.89%

4.44%

7.31%

4.3

EBIT margin

7.56%

6.68%

9.29%

4.4

Return of Assets (ROA)

7.41%

6.03%

5.81%

4.5

Return of Equity (ROE)

17.21%

14.27%

15.25%

1947.00

2085.00

5
5.1

Market performance ratios
Earnings Per Share (EPS)

2448.00

7

7


5.2

Price Earnings Ratio (PE)

6.09

10.27

11.41

5.3

Dividend Yield

0.13%

0.16%

0.01%

5.4

Book Value per Share (BVPS)

14330

12950

14398

5.5

Beta

0.28

0.70

0.82

4.89%

4.44%

7.31%

6

Dupont Analysis

6.1

Profit Margin

6.2

Assets Turnover Ratio

1.61

3.15

2.03

6.3

Total Assets Turnover

161.24%

314.51%

202.79%

6.4

Equity Multiplier

2.30

2.44

2.80

6.5

Financial Leverage

299.94%

244.05%

279.40%

1. Liquidity ratios

Figure 1: Liquidity Performance of PGC in 2019, 2020 and 2021

Looking at the current ratio, we can see that this index is larger than one over the years,
which proves that Gas Petrolimex has the ability to repay debts and use assets quite
effectively. However, this rate tends to decrease slightly in the past three years. The Quick
Ratio also shows that the company can afford to pay its short-term debts on time without
relying on inventory. But the Cash Ratio shows a rather low result and tends to be volatile..
This means that the solvency of the business is at an average level.
GPC is still able to pay debts without having to depend on other money sources.
2. Efficiency ratios

Figure 2: Efficiency Performance of PGC in 2019, 2020 and 2021

In Inventory Turnover, we can see a moderate increase of 2.31 from 2019 to 2021, in
addition to that Day's Sale in Inventory also tends to decrease, PGC has also made inventory
management efforts at a pretty good level. Along with that, Fixed Assets Turnover also
tended to increase and Total Assets Turnover fluctuated, the company's performance seems to
be positive but more efforts are needed. Receivables Turnover had a slight decrease, making
the ability to collect debts of customers and receivables decreased.
 On this ratio GPC still maintains a fairly good level of converting various items into
revenue or cash except for collection of debts from customers or accounts receivable.

8
8


3. Leverage ratios

With a significant increase in Debt to Assets from 32.55% (in 2019) to 42.12% in
(2021), signaling a not very positive direction because of the ability to pay off debt. In
addition, by 2021, GPC's D/E falls in the range of 1.17, which is greater than 1, which proves
that the company's assets are financed largely by liabilities. And from there it is likely that the
company will have to face some difficulties in paying its debts. And a high Equity Multiplier
also means that the business is also having a high level.
 Adoption of Leverage ratios for GPC is still heavily dependent on liabilities.
4. Profitability ratios

Figure 3: Leverage Performance of PGC in 2019, 2020 and
2021

Regarding the Gross Profit
Margin ratio of GPC when

compared with 3 other companies, namely PLX, GAS and PVS in 2021, it shows that the
company still has good sales performance because this index is far ahead of two rival
companies, PLX and PVS, only 0.66 lower than GAS. The profitability of GPC is also on a
positive trend with a strong increase from 4.89% to 7.31% between 2019 and 2021. In
contrast, Return of Assets and Return of Equity saw a slight decrease, This indicates that the
company has a setback in using the assets and capital of its shareholders to earn profit
effectively, however, when compared to 3 companies in the same industry, the ratio of GPC is
lower. on average.

Figure 4: Profitability Performance of PGC in 2019, 2020 and
2021

 In terms of Profitability ratios and
comparison with other three companies in the same industry, GPC is still a company with
decent growth potential.
5. Market Performance ratios

With the fluctuation trend over the years of Earning Per Shares, it shows that the
business situation of the business is not very positive. Along with that is the Dividend Yield
continuously falling sharply and at the lowest level in the same industry, showing that
investors will receive less dividends. Regarding the Beta ratio being less than 1, it shows that
the volatility in price is lower than the volatility of the market.
 Through the three years of 2019, 2020 and 2021, businesses are still not very positive
in the market, so they need to make more efforts to improve these indicators.

9
Figure 5: Market Performance of PGC in 2019, 2020 and
2021

9


II.

INDUSTRY-BENCHMARK ANALYSIS
Table 2: Financial Performance Comparison among 4 companies in 2021

No.

1
1.1
1.2
1.3
1.4
1.5
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
3
3.1
3.2
3.3
3.4
4
4.1
4.2
4.3
4.4
4.5
5
5.1
5.2
5.3
5.4

5.5
6
6.1
6.2
6.3
6.4

Financial ratio

PGC
PLX
Liquidity ratios
Current ratio
1.56
1.78
Quick ratio
1.11
0.79
Cash ratio
0.04
0.18
Short-term ratio
1.24
1.17
Interest coverage
9.65
7.28
Efficiency ratios
Inventory turnover
17.67

13.87
Day’s sale in inventory
21
26
Receivables turnover
9.85
24.46
Days of sales outstanding
37
15
Fixed assets turnover
10.01
11.15
Total assets turnover
1.55
2.70
Equity turnover
4.08
6.46
Leverage ratios
Debt to assets
42.14%
23.02%
Debt to equity
117.74%
52.42%
Total debt ratio
0.64
0.56
Equity multiplier

2.80
2.28
Profitability ratios
Gross profit margin
17.05%
7.51%
Net profit margin
7.31%
1.84%
Ebit margin
9.29%
2.59%
Return of assets (ROA)
5.81%
4.51%
Return of equity (ROE)
15.25%
10.81%
Market performance ratios
Earnings per share (EPS)
2085.00
2269
Price earnings ratio (PE)
11.41
23.76
Dividend yield
0.01%
0.02%
Book value per share (BVPS)
14398

22222
Beta
0.82
0.95
Dupont analysis
Profit margin
7.31%
1.84%
Assets turnover ratio
1.39
2.63
Equity multiplier
2.80
2.28
Financial leverage
279.40%
227.72%

GAS

PVS

2.96
2.91
0.34
3.10
37.84

2.03
1.54

0.67
1.79
18.89

26.51
14
9.77
37
4.17
1.11
1.55

6.25
58
3.13
117
4.65
0.56
1.12

10.15%
15.32%
0.34
1.51

5.04%
9.94%
0.49
1.97

17.71%
11.21%
14.57%
12.22%
17.06%

6.16%
4.77%
6.06%
2.36%
4.74%

45311
21.23
0.03%
27270
1.30

1260
21.67
0.04%
26197
1.33

11.21%
1.00
1.51
150.92%

4.77%

0.58
1.97
197.21%

1. Liquidity ratios

10 
10


Today,we will rely on common criteria of Chart 1 to analyze and evaluate the financial
performance of Petrolimex Gas Corporation - Joint Stock Company (PGC) with 3 other
competitors, namely Vietnam Gas Corporation. (GAS), PetroVietnam Technical Services
Corporation, Vietnam Petroleum Technical Services Corporation (PVS) and Vietnam
National Petroleum Group (PLX), respectively.
Firstly, we'll compare PGC's 2021 current ratio to that of three competitors in this chart.
Although PGC's current ratio is as low as 1.56 compared to the three companies above,
theoretically this is a positive number. Because as long as a company's current ratio is above
1 and not too high, it is certain that the company has the ability to pay its short-term
Figure 6: Liquidity ratios of PGC, PLX, GAS, PVS in 2021

debts.Also, this number is only
alarming when the company's

current ratio is less than 1 or too high.
Quick ratio data, like current ratio data, illustrates a company's capacity to pay down
short-term loans. However, the quick ratio differs from the current ratio in that the current
ratio's formula includes prepaid costs and inventory in the numerator, but the quick ratio's
formula does not. Because these things are often not accessible to satisfy short-term
commitments for the next 90 days, the quick ratio excludes them. This also demonstrates that,

for loans or contracts with a term of less than 90 days, PGC can pay on time, with a quick
ratio of 1.11 compared to the general market.
PGC has the best liquidity ratio of the three corporations listed above. Although GAS
has the greatest current and quick ratios, at 2.96 and 2.91, respectively, this demonstrates that
the company's operations are inefficient, and there is little potential to engage in long-term
initiatives. In the case of PLX, the current ratio remains constant at 1.78, but when the quick
ratio is taken into consideration, the value drops below 1. (PLX has a lot of inventory).
2. Efficiency ratios

Efficiency ratios assess a company's capacity to efficiently utilise its assets and manage
its obligations in the present or short term. Despite the fact that there are numerous efficiency
ratios, they all assess the time it takes to earn cash or income from a client or to liquidate
inventories.

11 
11
Figure 7: Efficiency ratios of PGC, PLX, GAS, PVS in 2021


Inventory turnover ratios, asset turnover ratios, and receivables turnover ratios are
characteristics of efficiency ratios. These ratios assess a company's capacity to manage its
assets and how well it uses its assets to produce revenue. And this is also considered a data to
evaluate the company.
When comparing the inventory turnover ratios of the four companies. Initially,we must
remember that a lower inventory turnover ratio indicates weak sales and possibly excess
inventory, also known as overstock. It could be the result of a problem with the merchandise
being offered, or it could be the result of insufficient marketing.
A high ratio, on the other hand, indicates high sales or insufficient inventory. The
former is preferable, whereas the latter may result in a loss of business.
Then, we analyze the above graph and we see that GAS's inventory turnover ratios

peaked at 26.51 percent. Next that, in second, third, and fourth place, respectively, are PGC,
PLX, and PVS, with figures of 17.67, 13.87, and 6.25. And from that, we can conclude that
compared to the general average, PGC's Inventory turnover ratios are the best compared to
the average (16,075).
Once we look at the Receivable Turnover and Total Asset turnover ratios of the above
enterprises in 2021, we can see that PLX has the highest Receivable Turnover and Total Asset
turnover ratios at 24.46 and 2.7, respectively, demonstrating their ability to operate. The
capital of the company is excellent. Meanwhile, PGC is still lagging behind, ranking second
in terms of capital recovery.
3. Leverage ratios

To begin with, the majority of the equity multipliers of enterprises are greater than one,
with the largest one being PGC's capital ratio, which is approximately 3.0, followed by PLX,
PVS, and finally GAS at 2.28, 1.97, and 1.51, respectively. The number is an important part
of the PGC corporate landscape since having the highest equity multiplier is considered a bad
sign. So it demonstrates that the company is utilizing a significant amount of debt to finance
its assets. produce. As a result, in order to maintain a healthy business and repay debt, PGC
must generate more cash flow.
Following that, we'll look at total debt ratio data. PGC still has the highest leverage
ratio of the four companies, with a total debt ratio of 0.64. Meanwhile, GAS(0.34) has a small
Figure 8: Leverage ratios of PGC, PLX, PVS, GAS in 2021
12 
12


share, followed by PVS(0.49) and PLX(0.56). Previously, the PGC company was in a bad
situation when its total debt ratio was close to one, and when this number was higher, it
meant that the PGC enterprise was paying a lot of debt and interest.
Based on the preceding two conclusions, we can conclude that PGC lacks a stable
source of income into which we can invest capital.

4. Profitability ratios

Figure 9: Profitability ratios of PGC, PLX, PVS, GAS in 2021

In addition to determining a company's ability to repay debt and interest. We also keep
a close eye on the company's annual profit. When calculating the rate of return, we will
undoubtedly consider the first investment firm's Profit Margin, as it is regarded as one of the
most important metrics for assessing a company's overall financial health.
Looking at chart 4, we can see that GAS has the highest net profit margin at around
11%. However, this figure for PLX is the lowest at around 2%, which may be part of the
reason for the weakness. This is due to the company's inefficient investment and spending
management. In comparison to the common ground, PGC is still growing steadily, with a net
profit margin of nearly 7%.
Following that is Return on assets, which is an important component of a company's
profitability ratios. So, what exactly is Return on Asset? Return on assets (ROA) is a ratio
that informs investors about how effectively a company generates revenue from its assets. As
a result, the higher the number, the better a company can leverage its assets to generate
profits. And, as shown in chart 4, GAS has the ability to leverage its assets. The highest
assets, when holding a ROA of more than 12%, then the ability to take advantage of it
decreases, are PGC, PLX, and PVS, with ROAs of 5.81%, 4.51 %, and 2.36 %, respectively.
Finally, we will discuss the above four businesses' rates of return on equity. GAS's ROE
is expected to be exceptionally high in 2021, at 17.06 percent. Investors, because they know
that this company has the best ability to leverage shareholders' equity to generate profits
among the three companies mentioned above. Also, the three companies' investment
opportunities. As the ROE number decreases, the remaining company will gradually
decrease.

13 
13

Even though PGC does not have the highest profitability ratios, it is well worth
considering as a secondary investment opportunity.
5. Market value ratios
Table 3: Market value ratios of PGC, PLX, GAS and PVS in 2021

PGC
11.41
14398
To make a final decision, investors typically look at a company's P/E ratio. Because the
higher a company's P/E ratio, the greater its investment potential. As a result, many people
are willing to pay a very high price to buy stocks of the company there. And, based on Table
1, when comparing P/E ratios to buy shares, we will undoubtedly choose PLX because its P/E
is the highest at 23.76. In contrast, PGC Enterprises' share price is as low as 11.41, so
investors will not choose to purchase shares.
Furthermore, Book Value per Share (BVPS) influences investor decisions. When
compared to market value, the higher the Book Value per Share (BVPS), the greater the
compensation for creditors and shareholders. If a company goes bankrupt, the larger it is. As
a result, many people prefer companies with a high Book value per share to avoid the risk of
bankruptcy. As a result, if PGC chooses a company to buy shares in, it will undoubtedly be
eliminated first in this list.

PART 3: BETA EVALUATION
The beta (β) of investment security (i.e., a stock) is a measurement of its volatility of
returns relative to the entire market. It is used as a measure of risk and is an integral part of
the Capital Asset Pricing Model (CAPM). A company with a higher beta has greater risk and
also greater expected returns.
In this paper, we use 2 different ways to calculate the beta for making comparisons and
deeper analyses.
By collecting the data from cophieu68 website and using functions from Excel, we

have the following table:
-

Time frame: from 31/12/2020 to 31/12/2021.

14 
14


-

Assume that there are 251 trading days in 2021.

N.O
1
2
3
4
5
6
7
8
9
10
11
12

Date
2021-1231
2021-1230

2021-1229
2021-1228
2021-1227
2021-1224
2021-1223
2021-1222
2021-1221
2021-1220
2021-1217
2021-1216

Table 4: Daily Return for VN-INDEX & PGC in 2021
VNClose
Close
Ticket
INDEX
Ticket
Price
Price
Returns

PGC
Returns

VN-INDEX

1498.28

0.828%

PGC

23.8

0.422%

VN-INDEX

1485.97

0.010%

PGC

23.7

3.493%

VN-INDEX

1485.8199

-0.573%

PGC

22.9

0.219%

VN-INDEX

1494.39

0.370%

PGC

22.85

0.219%

VN-INDEX

1488.88

0.802%

PGC

22.8

0.441%

VN-INDEX

1477.03

1.378%

PGC

22.7

0.000%

VN-INDEX

1456.96

-1.402%

PGC

22.7

0.442%

VN-INDEX

1477.67

-0.072%

PGC

22.6

0.000%

VN-INDEX

1478.74

0.095%

PGC

22.6

0.444%

VN-INDEX

1477.33

-0.166%

PGC

22.5

-1.316%

VN-INDEX

1479.79

0.215%

PGC

22.8

-1.724%

VN-INDEX

1476.61

0.075%

PGC

23.2

0.651%

VN-INDEX

1134.6801

0.325%

PGC

18.3794

0.000%

VN-INDEX

1131

-5.113%

PGC

18.3794

-4.616%

VN-INDEX

1191.9399

-0.189%

PGC

19.2688

0.775%

VN-INDEX

1194.2

0.573%

PGC

19.1206

1.842%

VN-INDEX

1187.4

0.114%

PGC

18.7747

-2.062%

VN-INDEX

1186.05

-0.523%

PGC

19.17

-1.020%

VN-INDEX

1192.28

0.624%

PGC

19.3676

0.000%

VN-INDEX

1184.89

1.473%

PGC

19.3676

-0.759%

VN-INDEX

1167.6899

0.968%

PGC

19.5158

0.765%

VN-INDEX

1156.49

1.162%

PGC

19.3676

-2.488%

VN-INDEX

1143.21

0.941%

PGC

19.8617

-0.495%

…
238
239
240
241
242
243
244
245
246
247
248

2021-0120
2021-0119
2021-0118
2021-0115
2021-0114
2021-0113
2021-0112
2021-01-11
2021-0108
2021-0107
2021-0106

15 
15


249

250
251

2021-0105
2021-0104
2020-1231

VN-INDEX

1132.55

1.078%

PGC

19.9605

0.000%

VN-INDEX

1120.47

1.504%

PGC

19.9605

1.000%

VN-INDEX

1103.87

0.325%

PGC

19.7628

0.000%

1. Covariance Method

Where

Re = the return on an individual stock
Rm= the return on the overall market

By using Excel, we have the figure below:

Then, we can easily estimate out Beta:

This value of beta shows that the volatility of this security's price is lower than the
volatility of the market, which means that company risk is less than market risk. It also points
out that a one-point increase in VN-INDEX just only make the stock of PGC increase 0.69
points. With a beta of 0.69, this stock is 31% less risky than the whole VN-INDEX portfolio
on the market.
2. Slope method

Where

x = excess stock return (Re - Rf)
y = excess market return (Rm - Rf)
= sample means of known x
= sample means of known y

Using the aforementioned calculation and data from the stock market and stock price in
2018, we get the following beta:

16 
16


Through observation, we can see that that even when we use multiple ways to compute
beta, the result is the same. This is due to the fact that we utilise the same period of data –
from 31/12/2020 to 31/12/2021 (daily pricing) in the computation.
3. Beta comparison

We also collect PGC’s Beta provided by some different securities companies.
Table 5: Beta from various source

PGC’s Beta
Calculation method
The statistics clearly show that there is a considerable discrepancy between the beta
value determined by our team and the beta value supplied by securities firms. In general, the
variation stems from the use of various time periods in the computation, which produces
different findings. The website cophieu68 estimates the beta value for 52 weeks till the latest
date is March 18, 2022, however PGC's stock price has increased dramatically from midSeptember 2021 to today. As a result, cophieu68's beta has the highest value, much larger

than 1 and double the value of 2021, whereas beta provided by CafeF is just 0.41 since this
firm only evaluates the value of 100 sessions' most recent transaction.
4. Cost of equity (using CAPM model)

Where:

= Expected return on a security

= Risk-free rate
= The beta of the security
= Expected return of the market
= Equity market premium
No

Parameter

Value

1

Risk free-rate

= 3.18%

Note
Vietnam 10Y Bond Yield
was 3.18% on Friday April
22, according to over-thecounter interbank yields
quotes for this government
bond maturity.

17 
17


Risk premium rate
= 3.56%
2

Market expected rate of
return:

Default spread
DS = 3.06%

Country Default Spreads
and Risk Premiums, Last
update: January 5, 2022
Country Default Spreads
and Risk Premiums, Last
update: January 5, 2022

= 9.8%
3

Beta

Based on the above result
Cost of equity = 7.76%

PART 4: COMPANY VALUE

1. ESTIMATE WACC

The calculation of weight average cost of capital:
WACC = wERE + wDRD(1-TC) + wPRP
However, according to Audit Consolidated Financial Statements for 2021, PGC does
not have preferred stock, therefore, the formula turns out to be:
WACC = wERE + wDRD(1-TC)
E: Market value of equity
E= Equity – Treasury shares + Undistributed profit
= 603.426.380.000 - 49.700.000 + 119.247.893.803
= 722.624.573.803
D: Market value of debt
D = Short-term debt = 1.022.905.627.753 VND
V: Market value of the firm (1.841.733.557.794 VND)
1.1

Weights

wE: Proportion of capital financed with equity = E/V = 39.24%
wD: Proportion of capital financed with debt = D/V = 55.54%

18 
18


The cost of equity

1.2

RE = RF + β(RM – RF)

RF = 2%/year
RM = 3.02% + 7.4% + 2% = 12.42%
β = 0.69
⇒ RE = 9.19%
The cost of debt

1.3

Debt at the beginning of year (including short-term and long-term debt) =
685.568.464.744 VND
Debt at the end of year = 1.022.905.627.753 VND

Corporate tax fee

1.4

The PGC JSC is subject to a corporate tax fee of 20%.
WACC
2. ESTIMATE FREE CASH FLOW TO FIRM FOR THE THREE YEARS
2.1

Cash flow from operation
CFO = NI + D&A – ΔWorking Capital

CFO: Cash flow from operations
NI: Net Income (120.032.000.000)
D&A: Depreciation & Amortization Expense (47.922.000.000)
ΔWorking Capital: Change in Working Capital (63.001.000.000)
⇒ CFO = 120.032.000.000 + 47.922.000.000 – 63.001.000.000
= 104.953.000.000 VND

2.2

Free cash flow to firm in the first year
The calculation of free cash flow to firm in the first year:

19 
19


FCFF = CFO + (IE(1-TR)) – CAPEX
FCFF: free cash flow firm
CFO: cash flow from operations (104.953.000.000)
IE: Interest expense (32.368.024.952)
TR: Tax rate (20%)
CAPEX: Capital expenditure (12.199.000.000)
⇒ FCFF = 104.953.000.000 + [32.368.024.952(1-20%) –12.199.000.000]
= 118.648.400.000 VND
2.3

Free cash flow to firm in the third year
Internal growth rate:

b: The retention ratio = 20%
FCFFt = FCFFt-1 (1+g) = FCFF0(1+g)t
⇒ FCFF3

= FCFF0(1+0.012%)3 = 118.648.400.000 (1+0.012%)3
= 118.691.118.500 VND

3. VALUE OF THE FIRM

Assume firm growth constantly from year 4 onward, the value of the firm is calculated
as:

CONCLUSION
The Covid-19 outbreak will continue to have a significant impact on the domestic
economy in 2021. The outbreak struck all major provinces and cities, including Hanoi, Ho
Chi Minh City, Binh Duong, Da Nang, Bac Ninh, and Bac Giang, which are highly populated
and home to numerous manufacturing firms. The outbreak has had a significant impact on all
parts of the economy; overall GDP in the third quarter declined by 6.17% over the same

20 
20


period, the worst reduction ever. GDP would expand by 2.58% in 2021 compared to 2020, far
less than the 6.5% objective set by the government at the start of the year.
Domestic demand for LPG will fall dramatically in all areas in 2021 as a result of the
pandemic's overall economic impact. According to numerous LPG trading firms in Vietnam,
the impact of the Covid-19 pandemic on LPG demand this year is many times more than the
period of drop caused by the Covid-19 epidemic in the same period last year.
With the involvement of hundreds of gas trading firms representing hundreds of various
brands, the output LPG market continues to confront strong competition. Unfair competition
in the sector (mixed commodities of low quality, unlawful extraction, appropriation of each
other's cylinders, etc.) continues to be a problem for major gas enterprises.
Nevertheless, despite the aforementioned difficulties, the Corporation still has a number
of favourable elements, most notably the Corporation's continued backing from the Vietnam
National Petroleum Group and other petroleum firms. In terms of assisting the Corporation in
meeting its business objectives and expanding its market share in the next years, the
industry's involvement in the development of the LPG market is critical. In terms of brand,

Gas Petrolimex has established a name in the industry and is well regarded by customers and
consumers for both product and service quality. Furthermore, the Corporation's contracting
processes and business rules have been enhanced and will have a good impact, providing
motivation for employees to boost labour productivity and productivity and business
efficiency.
Although production and business activities in 2021 will continue to face many
challenges, LPG price fluctuations will have a negative impact on the Corporation's business
performance, but the production and business results will still ensure the completion of the
plan assigned by the General Meeting of Shareholders. Total net revenue from products and
services reached VND 3,393.9 billion, representing 121% of the plan and 118% of the
performance in 2020; consolidated pre-tax profit reached VND 160 billion, representing
100% of the plan and 102% of the 2020 implementation.

21 
21


REFERENCE
[1] (n.d.). Retrieved from Vietstock: />[2] Consolidated Financial Report for the year 2019. (2020, March 24). Retrieved from

Petrolimex
Gas
Corporation
JSC:
/>f/434804ab69d34661903d4dad427903a7/PGC-31%20Dec%202019-CFS-VN.pdf
[3] Consolidated Financial Report for the year 2020. (2021, March 29). Retrieved from

Petrolimex
Gas
Corporation

JSC:
/>f/78a56130641b4915a7f8f500130be532/PGC-31Dec20-CFS-VN-Hop%20nhat%20final.pdf
[4] (2022, March 19). Retrieved March 19, 2022, from CafeF: />
cong-ty-gas-petrolimexctcp.chn
[5] Consolidated Financial Report for the year 2021. (2022, March 31). Retrieved from

Petrolimex
Gas
Corporation
JSC:
/>f/467203a10ba6419fb1a0a0d621f360b6/20220331-PGC-Bao%20cao%20tai%20chinh
%20hop%20nhat%202021%20da%20kiem%20toan.pdf
[6] PGC - TCT Gas Petrolimex. (2022, March 19). Retrieved March 19, 2022, from Dstock:

/>[7] Vietnam Government Bond 10y. (2022, April 24). Retrieved April 24, 2022, from Trading

Economics: />[8] Beta.

(n.d.).
Retrieved
from
Corporate
Finance
Institute:
/>
[9] Calculate

Beta.
(n.d.).
Retrieved

March
/>
19,

2022,

from

Cophieu68:

[10] Damodaran, A. (2022, January 5). Retrieved from Country Default Spreads and Risk

Premiums: />[11] Dũng, N. Q. (n.d.). Vietnam National Petroleum Group (Petrolimex). Retrieved from

PETROLIMEX:
/>[12] Dzung,

N. Q. (n.d.). Petroleum trading. Retrieved
/>
from

PETROLIMEX:

[13] Import and Export Petroleum Company. (n.d.). Retrieved from Cổng thông tin điện tử Bộ

Công
Thương
(MOIT):
/>page=petroleum_define&key=petroleum_daumoi&menu_id=66
[14] NICKOLAS, S. (2021, January 18). The Formula for Calculating Beta. Retrieved from

Investopedia: />[15] Phương, V. Đ. (2022, April 22). Đại hội đồng cổ đông Tổng Công ty Gas Petrolimex năm

2022.

Retrieved

from

Petrolimex

Gas

Corporation

JSC:

22 
22


/>APPENDIX
Daily Return for VN-INDEX & PGC in 2021
N.O

Date

Ticket

Close Price

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29

30
31
32
33
34
35
36
37

2021-12-31
2021-12-30
2021-12-29
2021-12-28
2021-12-27
2021-12-24
2021-12-23
2021-12-22
2021-12-21
2021-12-20
2021-12-17
2021-12-16
2021-12-15
2021-12-14
2021-12-13
2021-12-10
2021-12-09
2021-12-08
2021-12-07
2021-12-06
2021-12-03

2021-12-02
2021-12-01
2021-11-30
2021-11-29
2021-11-26
2021-11-25
2021-11-24
2021-11-23
2021-11-22
2021-11-19
2021-11-18
2021-11-17
2021-11-16
2021-11-15
2021-11-12
2021-11-11

VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX

VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX

1498.28
1485.97
1485.8199
1494.39
1488.88

1477.03
1456.96
1477.67
1478.74
1477.33
1479.79
1476.61
1475.5
1476.02
1476.21
1463.54
1467.98
1452.87
1446.77
1413.58
1443.3199
1482.05
1485.1899
1478.4399
1484.84
1493.03
1500.8101
1488.87
1463.63
1447.25
1452.35
1469.83
1475.85
1466.45
1476.5699

1473.37
1462.35

VN-INDEX
Returns
0.828%
0.010%
-0.573%
0.370%
0.802%
1.378%
-1.402%
-0.072%
0.095%
-0.166%
0.215%
0.075%
-0.035%
-0.013%
0.866%
-0.302%
1.040%
0.422%
2.348%
-2.061%
-2.613%
-0.211%
0.457%
-0.431%
-0.549%

-0.518%
0.802%
1.724%
1.132%
-0.351%
-1.189%
-0.408%
0.641%
-0.685%
0.217%
0.754%
-0.182%

Ticket
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC

PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC

Close
Price
23.8
23.7
22.9
22.85
22.8
22.7

22.7
22.6
22.6
22.5
22.8
23.2
23.05
23.5
23.95
23.95
24.4
23.45
21.95
20.55
22
23.2
23.1
23.9
23.7
24.3
24.55
24.55
24.6
23.45
25.2
27
27.9
27.6
27.4
28.7

29.3

PGC
Returns
0.422%
3.493%
0.219%
0.219%
0.441%
0.000%
0.442%
0.000%
0.444%
-1.316%
-1.724%
0.651%
-1.915%
-1.879%
0.000%
-1.844%
4.051%
6.834%
6.813%
-6.591%
-5.172%
0.433%
-3.347%
0.844%
-2.469%
-1.018%

0.000%
-0.203%
4.904%
-6.944%
-6.667%
-3.226%
1.087%
0.730%
-4.530%
-2.048%
0.000%

23 
23


38
39
40
41
42
43
44
45
46
47
48
49
50
51

52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81

82
83

2021-11-10
2021-11-09
2021-11-08
2021-11-05
2021-11-04
2021-11-03
2021-11-02
2021-11-01
2021-10-29
2021-10-28
2021-10-27
2021-10-26
2021-10-25
2021-10-22
2021-10-21
2021-10-20
2021-10-19
2021-10-18
2021-10-15
2021-10-14
2021-10-13
2021-10-12
2021-10-11
2021-10-08
2021-10-07
2021-10-06
2021-10-05

2021-10-04
2021-10-01
2021-09-30
2021-09-29
2021-09-28
2021-09-27
2021-09-24
2021-09-23
2021-09-22
2021-09-21
2021-09-20
2021-09-17
2021-09-16
2021-09-15
2021-09-14
2021-09-13
2021-09-10
2021-09-09
2021-09-08

VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX

VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX

VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX

1465.02
1461.5
1467.5699
1456.51
1448.34
1444.3
1452.46
1438.97
1444.27
1438.01
1423.02
1391.63
1385.4
1389.24
1384.77
1393.8
1395.33
1395.53
1392.7
1391.85
1391.91
1394.8
1394.09

1372.73
1365.99
1362.8199
1354.63
1339.54
1334.89
1342.0601
1339.21
1339.3101
1324.99
1351.17
1352.76
1350.6801
1339.84
1350.48
1352.64
1345.87
1345.83
1339.7
1341.4301
1345.3101
1343.98
1333.61

0.241%
-0.414%
0.759%
0.564%
0.280%
-0.562%

0.937%
-0.367%
0.435%
1.053%
2.256%
0.450%
-0.276%
0.323%
-0.648%
-0.110%
-0.014%
0.203%
0.061%
-0.004%
-0.207%
0.051%
1.556%
0.493%
0.233%
0.605%
1.127%
0.348%
-0.534%
0.213%
-0.007%
1.081%
-1.938%
-0.118%
0.154%
0.809%

-0.788%
-0.160%
0.503%
0.003%
0.458%
-0.129%
-0.288%
0.099%
0.778%
-0.618%

PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC

PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC

29.3
27.4

27.2
26.8
26.7
27.2
27.9
27.55
28.5
28.95
29
28.45
28.45
27.6
26.4
27.45
28.15
28.5
29.1
29.4
28.6
28.7
28.7
30
28.6
30.3
30.7
31
29.2
27.3
26.55
24.85

23.25
24.45
24.85
24.7
25.4
26.1
24.4
22.85
21.4
20.6
20.8
21.45
21.25
21

6.934%
0.735%
1.493%
0.375%
-1.838%
-2.509%
1.270%
-3.333%
-1.554%
-0.172%
1.933%
0.000%
3.080%
4.545%
-3.825%

-2.487%
-1.228%
-2.062%
-1.020%
2.797%
-0.348%
0.000%
-4.333%
4.895%
-5.611%
-1.303%
-0.968%
6.164%
6.960%
2.825%
6.841%
6.882%
-4.908%
-1.610%
0.607%
-2.756%
-2.682%
6.967%
6.783%
6.776%
3.883%
-0.962%
-3.030%
0.941%
1.190%

-0.943%

24 
24


84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107

108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129

2021-09-07
2021-09-06
2021-09-01
2021-08-31
2021-08-30
2021-08-27
2021-08-26

2021-08-25
2021-08-24
2021-08-23
2021-08-20
2021-08-19
2021-08-18
2021-08-17
2021-08-16
2021-08-13
2021-08-12
2021-08-11
2021-08-10
2021-08-09
2021-08-06
2021-08-05
2021-08-04
2021-08-03
2021-08-02
2021-07-30
2021-07-29
2021-07-28
2021-07-27
2021-07-26
2021-07-23
2021-07-22
2021-07-21
2021-07-20
2021-07-19
2021-07-16
2021-07-15

2021-07-14
2021-07-13
2021-07-12
2021-07-09
2021-07-08
2021-07-07
2021-07-06
2021-07-05
2021-07-02

VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX

VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX
VN-INDEX

1341.9
1346.39
1334.65

1331.47
1328.14
1313.2
1301.12
1309.55
1298.74
1298.86
1329.4301
1374.85
1360.9399
1363.09
1370.96
1357.05
1353.05
1357.79
1362.4301
1359.86
1341.45
1345.55
1334.74
1332.4399
1314.22
1310.05
1293.6
1277.0699
1276.9301
1272.71
1268.83
1293.67
1270.79

1273.29
1243.51
1299.3101
1293.92
1279.91
1297.54
1296.3
1347.14
1374.6801
1388.55
1354.79
1411.13
1420.27

-0.333%
0.880%
0.239%
0.251%
1.138%
0.928%
-0.644%
0.832%
-0.009%
-2.299%
-3.304%
1.022%
-0.158%
-0.574%
1.025%
0.296%

-0.349%
-0.341%
0.189%
1.372%
-0.305%
0.810%
0.173%
1.386%
0.318%
1.272%
1.294%
0.011%
0.332%
0.306%
-1.920%
1.800%
-0.196%
2.395%
-4.295%
0.417%
1.095%
-1.359%
0.096%
-3.774%
-2.003%
-0.999%
2.492%
-3.993%
-0.644%
0.225%

PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC

PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC
PGC

21.2
21.15
19.8
19.7
19.4
18.35
18.15
17.85
17.85
18
18.1
18.7

18.85
18.45
19
19.35
19.7
19.65
18.3
17.2
17
17.2
17
16.9
16.9
16.8
16.7
16.6
16.6
16.5
16.6
16.7
16.4
16.3
16
16.5
16.6
16.3
16.2
16.05
17.15
17.3

17.9
17.9
18.2
17.65

0.236%
6.818%
0.508%
1.546%
5.722%
1.102%
1.681%
0.000%
-0.833%
-0.552%
-3.209%
-0.796%
2.168%
-2.895%
-1.809%
-1.777%
0.254%
7.377%
6.395%
1.176%
-1.163%
1.176%
0.592%
0.000%
0.595%

0.599%
0.602%
0.000%
0.606%
-0.602%
-0.599%
1.829%
0.613%
1.875%
-3.030%
-0.602%
1.840%
0.617%
0.935%
-6.414%
-0.867%
-3.352%
0.000%
-1.648%
3.116%
1.146%

25 
25