NATIONAL ECONOMICS UNIVERSITY
SCHOOL OF ADVANCED EDUCATIONAL PROGRAMS
REPORT
FINANCIAL BUSINESS
Group 1
Advanced Accounting 60
Nguyen An Binh
Nguyen Ngoc Huyen
Nguyen Thi Khanh Linh
Nguyen Thu Phuong
Hoang Le Trang
Hoang Khanh Van
Ha Noi - 2021
Table of Contents
INTRODUCTION......................................................................................................................3
I.
Overview............................................................................................................................4
1.
Vinamilk..........................................................................................................................4
2.
Product Line....................................................................................................................4
3.
Market Share...................................................................................................................4
4.
Development Orientation................................................................................................4
5.
Financial Reports............................................................................................................5
6.
Rival companies..............................................................................................................9
II.
i.
Hanoi Beer - Alcohol - Beverage Joint Stock Corporation (HABECO).....................9
ii.
Vinacafe Bien Hoa Joint Stock Company (VCF)..................................................12
Analysis of Vinamilk operations......................................................................................16
1.
Analysis of Balance Sheet.............................................................................................16
2.
Analysis of Cash Flow Statement.................................................................................18
3.
Analysis of Income Statement......................................................................................19
III.
Analysis of Vinamilk's financial ratios compared to rival companies Habeco and
Vinacafe....................................................................................................................................21
1.
Liquidity Ratios.............................................................................................................21
i.
Current Ratio (= Current Assets / Current Liabilities)..............................................22
ii.
Quick Ratio (= (Current Assets - Inventory) / Current Liabilities)........................23
iii.
Cash Ratio (= Cash / Current Liabilities)..............................................................24
2.
Leverage Ratio..............................................................................................................25
i.
Total Debt to Total Assets Ratio (= Total Liabilities / Total Assets).........................25
ii.
Total Debt to Total Equity Ratio (= Total Debt / Total Equity).............................26
3.
Efficiency Ratio.............................................................................................................27
i.
Profit ratio from business activities...........................................................................28
ii.
ROA coefficient.....................................................................................................28
1
iii.
ROE coefficient.....................................................................................................28
iv.
Ratio of the ability to pay interest on EBIT / interest............................................29
4.
IV.
Market price indexes.....................................................................................................30
i.
Price to Earning Ratio (P/E)......................................................................................30
ii.
Price to Book Ratio (P/B)......................................................................................31
Conclusion.....................................................................................................................32
2
INTRODUCTION
Financial analysis is used to review economic conditions, to develop financial policies, to
develop long-term corporate activities strategies and to recognize investment ventures or
businesses. The processing of financial figures and statistics is used for this. A financial
analyst will analyze the financial statements of a company thoroughly, including the
statement of income, balance sheet and cash flow. In both business finance and investment
finance, financial reporting will be carried out. One of the most popular methods of analyzing
financial data is to measure data ratios and equate those of other firms and the past
performance of a firm.
By applying these methods on this report, Group 1 aims to discuss about financial position
and financial performances of Vietnam Diary Joint Stock Company – Vinamilk in the threeyear period, staring from 2017 and make comparisons with Hanoi Beer - Alcohol - Beverage
Joint Stock Corporation – HABECO and Vinacafe Bien Hoa Joint Stock Company – VCF in
term of ratios (discussed below) for the same timeframe.
3
I.
Overview
1. Vinamilk
Vinamilk Dairy Company, established in 1976, was one of the first listed companies on the
stock exchange of Vietnam. After more than 40 years of consumer launch, up to now, the
company has had 3 branches of sales offices, 2 logistics factories, 14 factories stretching from
North to South, and 220,000 points of sale covering all 63 provinces nationwide. In 2018,
Vinamilk is one of the top 200 companies with the best over a billion-dollar revenue in Asia
Pacific. Nowadays, Vinamilk is still the most favored milk brand used by consumers in
Vietnam with revenue in 2019 reaching 56,300 billion VND (equivalent to more than 2
billion USD). In early 2020, thanks to the strict conditions of complying with the Covid 19
epidemic prevention regulations, the solidity of resources and appropriate strategic
adjustments, Vinamilk has been able to stand firmly in the domestic market during a turbulent
period because of Covid 19.
2. Product Line
Vinamilk provides the market with a wide range of products for consumers. The company
currently has over 250 dairy products with key product groups such as liquid milk, yogurt,
and powdered milk; products with added value like condensed milk, cream and cheese, soy
milk, fruit juices, and so on.
3. Market Share
After years of operation, Vinamilk not only maintains its leading role in the domestic market
but also competes effectively against foreign dairy brands. In general, Vinamik accounts for
over 50% of the domestic market share depending on the type of product. Over 90% of
Vinamilk's export turnover is from the Middle East, especially Iraq. To reduce risk, Vinamilk
is expanding its market to other markets like Australia, the USA, Canada, and Thailand. In
addition, VNM is trying to penetrate the coffee and beer market.
4. Development Orientation
The Company's main goal is to maximize share value and pursue a business development
strategy based on the following key factors:
Consolidate, build, and develop a system of powerful brands to best meet the needs and
consumer sentiment of Vietnamese people
4
Make Vinamilk brand the most trusted nutrition brand nationwide through the strategy of
applying scientific research on consumers' specific nutritional needs to develop the most
optimal product lines
Strengthen the distribution system and quality to gain more share in markets where
Vinamilk's one is not high, especially in rural and small urban areas
Comprehensively develop the portfolio of dairy and dairy products to target a large number
of consumers, and at the same time, expand the manufacture of high value products with high
selling prices to improve overall profit margin of the whole Company
Continue to improve supply system management capacity
Develop organic milk materials in Moc Chau and expand market share in the North by raising
its ownership in GTN to 75%, Vinamilk and increasing the total herd of cows to 155,000
Until 2021, continue to M & A with dairy companies in other countries to expand market
share and sales.
5. Financial Reports
Balance Sheet (VNM)
Unit: 1,000,000 VND
2017
2018
2019
Short-term assets
20,307,435
20,559,757
24,721,565
Cash and cash equivalents
Short-term investments
Short-term receivables
963,336
10,561,714
4,591,703
1,522,610
8,673,927
4,639,448
2,665,195
12,435,744
4,503,155
4,021,059
169,623
5,525,846
197,926
4,983,044
134,427
Long-term assets
14,359,884
16,806,352
19,978,308
Fixed assets
10,609,309
13,365,354
14,893,540
95,273
90,248
62,018
Long-term investments
555,498
1,068,661
986,676
Other long-term assets
3,046,029
2,193,646
4,014,904
Total assets
34,667,319
37,366,109
44,699,873
Liabilities
10,794,261
11,094,739
14,968,618
Short-term liabilities
10,195,563
10,639,592
14,442,852
Long-term liabilities
598,698
455,147
525,766
Owner’s equity
23,873,058
26,271,369
29,731,255
Owner's invested capital
14,514,534
17,416,878
17,416,878
Inventory
Other current assets
Investment properties
5
Undistributed profit after tax
Liabilities & Owner’s equity
5,736,921
7,155,434
7,875,462
34,667,319
37,366,109
44,699,873
Income statement (VNM)
Unit: 1,000,000 VND
2008
Net Sales
2009
2010
8,208,982
100%
10,613,771
100%
15,752,866
100,0%
(5,610,969)
-68.4%
(6,735,062)
-63,5%
(10,579,208)
-67,2%
2,598,013
31,6%
3,878,709
36,5%
5,173,658
32,8%
264,810
3,2%
439,936
4,1%
448,530
2,8%
(197,621)
-2,4%
(184,828)
-1,7%
(153,199)
-1,0%
Interest expenses
(26,971)
-0,3%
(6,655)
-0,1%
(6,172)
0,0%
Selling expenses
(1,052,308)
-12,8%
(1,245,476)
-11,7%
(1,438,186)
-9,1%
Administration expenses
(297,804)
-3,6%
(292,942)
-2,8%
(388,147)
-2,5%
Operating Profits
1,315,090
16,0%
2,595,399
24,5%
3,642,656
23,1%
136,903
1,7%
143,031
1,3%
982,987
6,2%
(6,730)
-0,1%
(7,072)
-0,1%
(374,202)
-2,4%
Net others income
130,173
1,6%
135,959
1,3%
608,786
3,9%
Losses
(73,950)
-0,9%
0
0,0%
(235)
0,0%
Total profit before tax
1,371,313
16,7%
2,731,358
25,7%
4,251,207
27,0%
Current income tax
(161,874)
-2,0%
(361,536)
-3,4%
(645,059)
-4,1%
39,259
0,5%
6,246
0,1%
9,344
0,1%
1,248,698
15,2%
2,375,693
22,4%
3,616,185
23,0%
Cost of goods sold
Gross Profits
Financial Income
Operating expenses
Other income
Other expenses
Deferred income tax
Profit after tax
Indirect Cash Flow Statement (VNM)
Unit: 1,000,000 VND
2017
2018
2019
12,228,945
12,051,696
12,795,710
1,299,870
1,626,632
1,948,073
I. Cash flows from operating activities
1. Profit before tax
2. Adjustments for
Depreciation and amortization
6
(Profits)/losses from allowance and provisions
9,212
(91,866)
7,333
Unrealized foreign exchange (gains)/losses
3,716
(1,358)
6,458
(67,134)
(576,618)
(1,513)
Interest expense
29,439
51,367
108,825
Gain/Losses on disposals of fixed assets
11,626
43,964
(770,1280
(726,648)
24,621
67,952
(Profits)/losses from investing activities
Dividends and interest income
Goodwill
Others
5,717
3. Operating profit before changes in working capital
12,770,169
13,059,853
14,255,870
(Increase)/decrease in receivables
(1,599,146)
(108,536)
373,595
(Increase)/decrease in inventories
318,470
(1,685,437)
401,995
(Increase)/(decrease) in payables (excluding Interest expense
958,730
(14,513)
(399,803)
(10,000)
68,659
16,409
payable, Income tax payable)
(Increase)/decrease in prepayments
(Increase)/decrease in trading securities
Interest paid
Income tax paid
(4,480)
(65,131)
(110,740)
(227,917)
(1,933,510)
(1,879,580)
(2,033,592)
Other receipts from operating activities
149
Other payments for operating activities
(837,987)
(1,189,616)
(972,149)
Net cash flows from operating activities
9,601,595
8,140,239
11,409,929
(2,672,989)
(3,185,795)
(2,158,249)
120,711
94,476
114,090
1,199,162
(3,215,380)
301,872
193,016
2,598
(86,830)
(147,107)
(2,158,238)
23,329
18,468
1,513
754,960
782,637
665,791
II. Cash flows from investing activities
Payments for additions to fixed assets and other long-term assets
Proceeds from disposals of fixed assets
Payments for lending loans, purchase of debt instruments of other
entities
Proceeds from collecting loans, sales of debt instruments of other
entities
Payments for investments in other entities
Collections on investments in other entities
Receipts of interests and dividends
Increase/decrease in term bank deposits
(218,249)
7
Buy-back of capital contributions from minority shareholders in
the subsidiary
Other receipts from investing activities
6,206
Other payments for investing activities
Net cash flows from investing activities
(1,770,989)
(1,045,145)
(6,747,875)
III. Cash flows from financing activities
Proceeds from shares issued, receipt of capital contribution
Payments for shares returns and repurchases
127,769
(5,983)
(3,326)
(1,159)
2,777,050
4,827,980
10,426,775
(4,224,187)
(4,103,589)
(6,233,113)
(5,805,808)
(7,256,172)
(7,836,251)
(7,535,345)
(6,535,107)
(3,515,979)
Net cash flows during the period
295,260
559,987
1,146,075
Cash and cash equivalents at the beginning of the period
655,423
963,336
1,522,610
12,653
(713)
(3,491)
963,336
1,522,610
2,665,195
Proceeds from short-term and long-term borrowings
Payments to settle loan principals
Payments to settle finance lease liabilities
Payments of dividends
Other receipts from financing activities
Other payments for financing activities
Net cash flows from financing activities
Effect of exchange rate fluctuations
Cash and cash equivalents at the end of the period
(276,417)
6. Rival companies
i.
Hanoi Beer - Alcohol - Beverage Joint Stock Corporation (HABECO)
Hanoi Beer-Alcohol-Beverage Joint Stock Corporation (HABECO) is the third largest beer
company in Vietnam and is the owner of the Hanoi Beer and Truc Bach Beer brands. It is
owned and authorized by the Ministry of Industry and Trade, Vietnam and has a strategic
partnership with the Carlsberg Group, which owns more than 10% of the company's shares as
of November 2012.
The main operating lines of the Corporation include: Manufacturing and trading Beer - Wine
- Beverage and Packaging; Import and export of raw materials, materials, equipment, spare
parts, raw materials, chemicals; Science and technology services, investment consulting,
creating investment capital, organizing raw material areas, trading real estate, other services,
and professions according to the law.
8
Beer and bottled water products include:
Hanoi only beer cans
Truc Bach canned beer
Hanoi beer bottles
Hanoi green beer
Hanoi canned beer
Hanoi green beer cans
Hanoi Premium Beer
Hanoi Bold & Light bottled beer
Hanoi Premium canned beer
UniAqua bottled water
Truc Bach Beer
Balance Sheet (BHN)
Unit: 1,000,000 VND
2017
2018
2019
Short-term assets
5,330,869
5,385,393
4,196,519
Cash and cash equivalents
2,154,885
1,733,702
1,297,005
Short-term investments
1,560,567
2,043,123
1,570,539
Short-term receivables
334,766
431,414
374,516
Inventory
950,173
805,568
638,557
Other current assets
330,478
371,586
315,902
Long-term assets
4,281,136
3,817,453
3,575,657
Fixed assets
3,591,082
3,219,183
2,887,037
7,404
6,834
6,712
306,856
273,431
292,104
Total assets
9,612,005
9,202,846
7,772,176
Liabilities
5,091,035
4,272,091
2,590,613
Short-term liabilities
4,519,238
3,869,913
2,328,507
Long-term liabilities
571,797
402,178
262,106
Owner’s equity
4,520,970
4,930,755
5,181,563
Owner's invested capital
2,318,000
2,318,000
2,318,000
253,602
711,306
987,117
Investment properties
Long-term investments
Capital surplus
Undistributed profit after tax
9
Minority interests
Liabilities & Owner’s equity
9,612,005
9,202,846
7,772,176
Income Statement (BHN)
Unit: 1,000,000 VND
2017
2018
2019
Net sales
9,801,760
9,100,267
9,335,205
Cost of goods sold
7,234,212
6,852,694
6,878,041
Gross profits
2,567,548
2,247,573
2,457,164
134,982
140,195
149,853
69,948
46,399
31,272
1,262,191
1,344,299
1,439,147
General administration expenses
471,586
429,927
503,118
Net profits from operating activities
902,291
611,305
650,534
Other profits
(32,824)
15,147
18,990
Total net profits before tax
869,467
626,452
669,523
Profit after enterprise income tax
658,051
484,333
523,128
657,059
498,994
540,139
2,774
2,059
2,281
Financial income
Financial expenses
Selling expenses
Profit after tax of shareholders of the
parent company
Basic earnings per share (VND)
Financial indicators (BHN)
Unit: 1,000,000 VND
2017
Earnings per share for the last 4 quarters (EPS)
Book value per share (BVPS)
Price to earnings ratio (P/E)
2018
2019
2,835
2,153
2,330
19,488
21,262
22,345
45.02
37.63
32.44
10
Price to book ratio (P/B)
6.55
3.81
3.38
26.19
24.70
26.32
6.71
5.32
5.60
Return on average equity (ROEA)
11.88
10.56
10.68
Return on average assets (ROAA)
6.78
5.30
6.36
Current ratio (short term)
1.18
1.39
1.80
Interest coverage ratio
14.18
14.70
22.54
Debt to Total Assets Ratio
52.97
46.42
33.33
Debt to Equity Ratio
22.21
12.21
9.05
Gross profit margin
Return on sales
ii.
Vinacafe Bien Hoa Joint Stock Company (VCF)
On December 29, 2004, Bien Hoa Coffee Factory was transformed from a state-owned
enterprise to a joint stock company. Since the Vinacafé brand name is already well known in
Vietnam and known to many foreign customers, the founding shareholders (mostly of the
Bien Hoa Coffee Factory) have renamed the company as Joint Stock Company. for Vinacafe
Bien Hoa, its abbreviated name is Vinacafe Bien Hoa.
As of December 20, 2013, the Vietnam Coffee Corporation - the largest State shareholder in
Vinacafe, had sold out a majority of its shares in Vinacafe. Currently, 90% of Vinacafe Bien
Hoa's shares are in three organizations: Masan Consumer Joint Stock Company (Masan
Consumer) with 53.2%, followed by Gaoling Fund (Gaoling Fund) (23.3%). and Vietnam
Coffee Corporation (12.8%)
Immediately after successfully producing the first batch of instant coffee, the main products
of the Bien Hoa Coffee Factory were still preliminary products due to the Vietnamese habit of
using ground coffee. Instant coffee products are mainly exported to the Soviet Union and
Eastern European countries only. In the late 1980s, Vinacafé instant coffee orders declined
more and more following the disintegration rate of the Soviet Union and Eastern Europe. In
1990, Vinacafé officially returned to Vietnam market although some products of Bien Hoa
Coffee Factory were sold in this market before. At that time, Vietnamese users still kept the
habit of drinking coffee roasting and blending with filter, not popularizing the habit of using
instant coffee. Therefore, the factory has launched Vinacafe 3-in-1 Instant Coffee to the
market, targeting users who have the habit of drinking coffee with milk without having to
wait for the coffee to drip through the filter.
11
Products of Vinacafe Bien Hoa Joint Stock Company include:
1. Instant coffee:
Wake-Up Coffee
Vinacafe
Classic
Green tea energy efficiency F247
Bésame 3 in 1
Coffe Phil Instant drink
2. Coffee roast:
Common roasted bean coffee
Heritage Crown coffee grind
Excellent roasted bean coffee
Vinacafe Selected Coffee Blended
Natural coffee blended
Vinacafe Natural ground coffee
Absolute Heritage ground coffee
Balance sheet (VCF)
Unit: 1,000,000 VND
2017
2018
2019
Short-term assets
2,829,758
1,571,368
1,651,014
Cash and cash equivalents
2,495,715
195,174
218,388
43,705
1,095,156
1,214,119
276,210
271,748
209,197
14,127
9,290
9,310
Long-term assets
753,586
645,268
574,314
Fixed assets
666,555
595,439
524,529
Total assets
3,583,343
2,216,637
2,225,329
Liabilities
2,818,126
814,442
783,258
Short-term liabilities
2,812,041
807,943
778,142
Long-term liabilities
6,085
6,500
5,116
765,217
1,402,194
1,442,071
Short-term investments
Short-term receivables
Inventory
Other current assets
Investment properties
Long-term investments
Owner’s equity
12
Owner's invested capital
Capital surplus
Undistributed profit after tax
265,791
265,791
265,791
29,974
29,974
29,974
260,832
900,756
943,677
3,583,343
2,216,637
2,225,329
Minority interests
Liabilities & Owner’s equity
Income Statement (VCF)
Unit: 1,000,000 VND
2017
2018
2019
Net sales
3,248,845
3,434,935
3,097,446
Cost of goods sold
2,029,622
2,593,805
2,232,972
Gross profits
1,219,223
841,130
864,474
Financial income
91,973
33,061
10,514
Financial expenses
12,138
18,399
20,623
Selling expenses
723,030
33,302
17,218
General administration expenses
122,938
45,634
38,875
Net profits from operating activities
453,090
776,855
798,271
184
(544)
(6,852)
Total net profits before tax
453,274
776,311
791,419
Profit after enterprise income tax
369,343
636,977
677,776
Profit after tax of shareholders of the parent company
372,494
639,924
680,820
14,015
24,076
25,615
Other profits
Profit / loss from associates
Basic earnings per share (VND)
Financial indicators (VCF)
Unit: 1,000, 000 VND
2017
2018
2019
Earnings per share for the last 4 quarters (EPS)
14,015
24,076
25,615
Book value per share (BVPS)
28,790
52,755
54,256
13
Price to earnings ratio (P/E)
18.91
6.06
6.95
9.20
2.77
3.28
Gross profit margin
37.53
24.49
27.91
Return on sales
11.37
18.54
21.88
Return on average equity (ROEA)
25.55
59.05
47.87
Return on average assets (ROAA)
11.08
22.07
30.65
1.01
1.94
2.12
Interest coverage ratio
40.70
43.94
42.09
Debt to Total Assets Ratio
78.65
36.74
35.20
Debt to Equity Ratio
53.21
24.44
23.95
Price to book ratio (P/B)
Current ratio (short term)
II.
Analysis of Vinamilk operations
1. Analysis of Balance Sheet
Table of Assets (VNM)
Unit: 1,000, 000 VND
2017
Short-term assets
Cash and cash equivalents
2018
2019
2017
2018
2019
20,307,435 20,559,757 24,721,565 58.58% 55.02% 55.30%
963,336
1,522,610
2,665,195
2.77%
4.07%
5.96%
Short-term investments
10,561,714
Short-term receivables
4,591,703
4,639,448
4,503,155 13.24% 12.41% 10.07%
Inventory
4,021,059
5,525,846
4,983,044 11.59% 14.79% 11.15%
169,623
197,926
Other current assets
8,673,927 12,435,744 30.46% 23.21% 27.82%
134,427
0.48%
0.52%
0.30%
Long-term assets
14,359,884 16,806,352 19,978,308 41.42% 44.98% 44.69%
Fixed assets
10,609,309 13,365,354 14,893,540
30.6% 35.77% 33.32%
Investment properties
95,273
90,248
62,018
0,27%
0.24%
0.14%
Long-term investments
555,498
1,068,661
986,676
1.6%
2.86%
2.07%
Other long-term assets
3,046,029
2,193,646
4,014,904
8.79%
5.87%
8.98%
Total assets
34,667,319 37,366,109 44,699,873
100%
100%
100%
Liabilities
10,794,261 11,094,739 14,968,618 31.13% 29.69% 33.48%
Short-term liabilities
10,195,563 10,639,592 14,442,852 29.41% 28.47% 32.31%
14
Long-term liabilities
598,698
455,147
525,766
1,73%
1.22%
1.18%
Owner’s equity
23,873,058 26,271,369 29,731,255 68.86% 70.31% 66.51%
Owner's invested capital
14,514,534 17,416,878 17,416,878 41.87% 46.61% 38.96%
Undistributed profit after tax
Liabilities & Owner’s equity
5,736,921
7,155,434
7,875,462 16.55% 19.15% 17.62%
34,667,319 37,366,109 44,699,873
100%
100%
100%
According to data from Vinamilk's financial statements in the 2017-2019 period, the
company's total assets had gradually increased over the years. In 2019, the company's total
assets reached more than 44,699 billion, a rise of 20% compared to 2018 and 30% compared
to 2017. This was a very stable growth for a company that had been operating for more than
40 years with a large scale like Vinamilk. Between 2017-2019, the company's short-term
assets expanded 1.2 times and long-term assets have also increased nearly 1.4 times.
However, in Vinamilk's total asset’s structure, at the end of 2019, short-term assets accounted
for 55%, down slightly from 59% of total assets in 2017.
Notably, in 2019, short-term assets got bigger by 20%, with a total value of more than 4,100
billion VND, of which mainly growth in short-term investments, reaching more than 3,750
billion VND and contributing more than 90% of the whole. In addition, cash and cash
equivalents grew by more than 1,100 billion VND in 2019. In contrast to the huge increase in
short-term investments, short-term receivables and inventories of the company tended to
decrease an amount of 500 billion VND per account. The company cut its long-term deposits
and converted it into short-term ones. This shows that the company was probably in need of
fast and safe capital focus to implement the project or expand production next year.
Regarding the company's long-term assets, the growth in 2019 is 18%, lower than the growth
from short-term assets. Fixed assets of the company, accounting for more than 75%, longterm assets, always expanding continuously over the years. The increase in fixed assets,
mainly machinery and equipment, shows that the company might be in the phase of boosting
production, with the goal of creating higher and higher growth for the company.
2. Analysis of Cash Flow Statement
2017
2018
2019
Net cash provided by operating activities
9,601,595
8,140,239
11,409,929
Net cash provided by investing activities
(1,770,989)
(1,045,145)
(6,747,875)
Net cash provided by financing activities
(7,535,345)
(6,535,107)
(3,515,979)
15
Net cash increase for period
295,260
559,987
1,146,075
Cash at end of period
963,336
1,522,610
2,665,195
Cash flow from operating activities of the company had always been positive over the years.
This partly shows the efficiency in the company's main business. Cash flow from operating in
2019 of the company was 11,409 billion, up 40% compared to 2017. The main reason was the
sharp decline in inventories and the decrease in receivables in revenue of businesses. Much of
the revenue brought real cash flow to the company and was a part of the reduced receivables
and reduced inventory. This was a very good sign that the company has a moderate sales
promotion. The revenue has increased slowly but the cash flow has increased significantly
accordingly.
Cash flow from investing activities in the period 2017-2019 had been negative, especially in
2019, this number was the largest, increasing more than 6 times compared to the previous
year. This shows that the company always carried out many of its investment activities during
this period. Cash flow from investment activities of the company was mainly used for the
expansion of fixed assets, expansion of production and business activities. The company's
investment in finance companies for the 2017-2019 period was very small. The decision to
focus on investing in its operations instead of making profits from Vinamilk's financial
activities during the current difficult financial market was the right decision when it always
brought very good growth in profit over the years.
Cash flow from financing activities of the company in the period 2017-2019 had been always
negative, and the largest share of spending belonged to the cash flow to pay dividends to
shareholders. Due to the policy of Vinamilk in investing mainly using the cash flow from its
own capital, the negative cash flow from financial activities was understandable and showed
the safety of the companies, investment activities of the company, reducing interest rate risks
and new shareholder pressure.
Comment:
The growth in the company's revenue and profit has resulted in real cash flow growth from
the business, showing that the company is making a profit for itself. However, a part of the
added revenue did not generate real cash flow for the company but was still in the receivables
except for 2018 (there was a sudden decrease in provisions). With the bad debt provisioning
rate increasing again in 2019, the company was at risk of losing its real revenue due to
inability to recover debts. Increasing the company's mobilization of cash and liquid assets in
16
2019 was understood as a move to prepare to conduct major investment projects in 2020,
creating prospects for strong and sustainable growth. firm in the following years for the
company
3. Analysis of Income Statement
Table of Revenue - Expenses
2017
Total revenues
2019
51,857,393
53,321,867
57,125,440
98.4%
98.6%
98.6%
1.6%
1.4%
1.4%
52.5%
53.2%
52.8%
Revenue from operating activities
/ Total revenues
Financial income / Total revenues
COGS / Net sales
Total expenses
2018
(39,628,448) (41,270,171) (44,329,730)
COGS / Total expenses
Selling and general administration expenses
/ Total expenses
Financial expenses / Total expenses
67%
67%
67%
32%
32%
32%
0.2%
0.3%
0.4%
Table of Revenue Growth, Cost of Goods Sold
2017 2018 2019
Net sales
COGS
Total net profits before tax
Profit after enterprise
Growth
Annual average
2017-2019
growth
9%
3%
7%
19%
6%
10%
4%
6%
20%
6.6%
9%
-1%
6%
14%
4.6%
10%
-1%
3%
12%
4%
17
income tax
Net sales in 2019 was 56,318 billion VND, up 4% compared to 2018. However, net sales
fluctuated when it increased to 9% in 2017, decreased sharply to only 3% in 2018 and then
went up to 7% in 2019. Compared to rival companies, Vinamilk's net sales were much higher
when all indexes were greater than 3%. This was a Vinamilk's positive sign as Vinamilk's
revenue growth was still quite good. Vinamilk's net sales accounted for the majority of total
revenues (98.4-98.6%). This means that Vinamilk mainly focused on its core business and
generated real profits from core business, not investing much outside the industry to make
profits. In addition, in 2019, Vinamilk's total revenue was more than 57,000 billion VND
(about 5-20 times higher than rival companies), proving that Vinamilk had a high level of
revenue in the industry.
Along with the growth of revenue is the growth in company profits. In 2017, Vinamilk's pretax profit increased to 9%, reaching more than 12 billion VND. In 2018, the company is
showing signs of loss when the profit margin is -1%. But then, Vinamilk's pre-tax profit in
2019 jumped to 6% (equivalent to more than 700 million VND). The growth rate of profit
over the 3 years 2017-2019 is 14%, the average annual profit growth is 4.6%. Profits mainly
from operating activities is a good sign that the correct operation of the main operating line
and main operating profit results are always good. Vinamilk's cost of goods sold accounts for
the largest proportion in the total expenses of the enterprise. Therefore, an increase in the cost
of goods sold reduced the company's profit in the period. As can be seen, the ratio of Cost of
goods sold / net sales increased to 53.2% in 2018 and then decreased to 52.8% in 2019. This
means that in 2019, company had a higher profit compared to last year. 2018 had been a
difficult year for VNM, but it was improved in 2019 as the company's profits increased.
Comment:
Vinamilk's revenue and operating profits grew at a not too high rate over the years 2017-2019
but still very high and stable compared to other companies in the same industry as well as
listed companies on the Vietnamese stock exchange. Revenue and profit mainly come from
the company's core business and not from out-of-industry investment or unusual activities
during the year. Since then, it shows that Vinamilk is in a period of relatively stable growth
and tends to last when there is a lot of investment and development continuously. With the
current business results, investment profit in the company is not too high, but positive, stable,
18
and low risk. That is evidenced by the continuous increase in Vinamilk's stock price over the
years and among the highest in the market.
III.
Analysis of Vinamilk's financial ratios compared to
rival companies Habeco and Vinacafe
1. Liquidity Ratios
Firm
Current Ratio
Quick Ratio
Cash Ratio
i.
2017
2018
2019
VNM
1.99
1.93
1.71
BHN
VCF
1.18
01.01
1.39
1.94
1.80
2.12
VNM
1.60
1.41
1.37
BHN
0.97
1.18
1.53
VCF
VNM
0.91
0.09
1.61
0.14
1.85
0.18
HBN
VCF
0.48
0.89
0.45
0.24
0.56
0.28
Current Ratio (= Current Assets / Current Liabilities)
19
The current ratio represents the firm's ability to secure short-term liabilities from short-term
assets. In general, during the analysis period from 2017 to 2019, the current ratios of 3
companies all exceeded 1.0. VNM's coefficient tended to decrease gradually year by year,
from 1.99 times (2017) to 1.71 times (2019). However, these coefficients were still kept at a
fairly high number, nearly 2.0 times. In contrast to VNM, two competitors, BHN and VCF,
had their ratio increased. The ratio of BHN significantly increased from 1.18 times in 2017 to
1.80 times in 2019. However, it was VCF that outperformed when its ratio in 2019 (2.12)
doubled that in 2017 (1.01). In 2019, VNM’s both rivalries had higher coefficients than VNM
had which was 1.71 times. Although VNM had a noticeable decline in the 3 years 2017 2019, but overall, the current ratio of the company is always kept at a quite high level and
shows a stable ability in paying short-term liabilities. With this data, the bank can completely
feel secure when lending the company short-term loans to supplement working capital for the
company's operations.
ii.
Quick Ratio (= (Current Assets - Inventory) / Current Liabilities)
20
Quick ratio represents the company's ability to pay short-term debts from short-term assets
that can be converted to fast money. Like the current ratio comparison table, the quick ratio
of Vinamilk decreased gradually while this ratio of the two rival companies increased
strongly. Looking at the table, at the end of 2017, Vinamilk's quick ratio was the highest
among the 3 companies (1.6 times), but, just 2 years later, Vinamilk's ratio was significantly
lower than the other. However, that was not a problem because other liquid assets were still
enough to ensure Vinamilk's debt obligations. Another note is that the quick ratio of Vinamilk
was much smaller compared to the current ratio, which means that inventories contribute a
significant proportion to the company's short-term assets.
iii.
Cash Ratio (= Cash / Current Liabilities)
21
Cash ratio represents a company's ability to instantly pay off any outstanding debts or
unexpected expenses. In 2017, the cash ratio of Vinamilk reached the bottom with the
coefficient of only 0.09 times. That means the company's cash and cash equivalents are just
enough to be able to immediately pay off 1/10 of all short-term debts. It can be said that at
that time, Vinamilk had great difficulties in meeting all these debts. However, after 2 years,
Vinamilk's cash ratio has gradually increased again, from 0.09 in 2017 to 0.18 in 2019.
Although the VNM is still much lower than the same year coefficients for BHN (0.56) and
VCF (0.28), it is showing signs of a recovery to the stability level.
Comment:
In general, the company's liquidity ratios are at a lower level than the market. However, with
the company's current liabilities (current ratio is always above 1.5, quick ratio is always
above 1), the company's ability to pay debts is guaranteed. Although the company's debt is
large, short-term assets are always residual to fulfill the debt service obligations when due,
thus reducing the risk of liquidity of current and future liabilities. In conclusion, the
company's financial situation is quite stable.
2. Leverage Ratio
Firm
Debt to Assets
Debt to Equity
i.
2017
2018
2019
VNM
BHN
0.31
0.53
0.3
0.46
0.33
0.33
VCF
0.79
0.37
0.35
VNM
0.45
0.42
0.50
BHN
1.13
0.87
0.50
VCF
3.86
0.58
0.54
Total Debt to Total Assets Ratio (= Total Liabilities / Total Assets)
22
Total-debt-to-total-assets is a measure of the company's assets that are financed by debt rather
than equity. According to the data table, in the period from 2017 to 2019, the debt to total
assets ratio of Vinamilk fluctuated from only 0.30 to 0.33. This means the company had a
policy of using debt at a reasonable and stable level over time and the financial autonomy of
VNM was very good when having guaranteed equity capital of more than 65% of total assets
value and being less affected when there are interest rate fluctuations in the market. In
addition, in 2019, Vinamilk's debt usage level is not much different from the two companies
in the same industry.
ii.
Total Debt to Total Equity Ratio (= Total Debt / Total Equity)
23
The ratio is calculated by taking the company's total debt and dividing it by the book value of
common equity. In general, during the comparison period, the ratio of Vinamilk was not more
than 0.50. In 2019, compared to the other 2 companies, VNM’s ratio was not much different.
They all had the number around 0.50, which is at a safe level. This means Vinamilk and their
two rival companies had stable financial ability.
Comment:
Vinamilk has a strategy to use its equity capital in investment activities rather than borrowing
from banks. Vinamilk's financial capacity is very good, and the company has very little risk
of debt balance. But using too much equity will affect the ability to improve company profits
and dividends distributed to shareholders. It is very safe to provide credit to Vinamilk.
3. Efficiency Ratio
Operating Profits/Net sales
FIRM
2017
2018
2019
VNM
20.14%
19.42%
18.74%
BHN
VCF
6.71%
11.37%
5.32%
18.54%
5.60%
21.88%
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