ANALYZING FINANCIAL STATEMENTS OF vinamilk

THE UNIVERSITY OF DANANG
UNIVERSITY OF ECONOMICS


TOPIC:

ANALYZING FINANCIAL STATEMENTS OF
VIETNAM DAIRY PRODUCTS JSC
(2016 – 2020)
Course:

Corporate Finance

Group 1:

Instructor: Nguyen Quang Minh Nhi

Pham Thi Hoai Thuong

Class:

Le Nguyen Van Anh

45K06.1

Nguyen Thi Thuy Linh
Tran Thi Quynh Nhu
Phan Mai Phuong
Hoang Thi Thanh Thanh

Da Nang, November 2021

EVALUATION FORM

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Analyzing financial statements of Vietnam Dairy Products JSC

TABLE OF CONTENTS

I. Company overview .............................................................................................................4
1.1. General information .......................................................................................................4
1.2. Principal activities .........................................................................................................4
1.3. Business areas ................................................................................................................5
1.4. Position ..........................................................................................................................5
1.5. Main source of income ..................................................................................................6
1.6. Competitors ...................................................................................................................6

II. Analysis of financial ratios ...............................................................................................7
2.1. Company’s financial ratios ............................................................................................7
2.1.1. Liquidity Ratios .......................................................................................................7
2.1.2. Capital Structure Ratios .........................................................................................9
2.1.3 Turnover Ratios .....................................................................................................12
2.1.4 Profitability Ratios .................................................................................................17
2.1.5 Market value ratios ................................................................................................20
2.2. Company’s financial ratios in comparison with a benchmark of industry average
2020 ....................................................................................................................................22
III. A brief summary on financial performance of the company ....................................24
REFERENCE LIST .............................................................................................................25

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I. Company overview
1.1. General information
Trade name

Vietnam Dairy Products Joint Stock Company

Traded as

HOSE: VNM

Type

Joint-stock company

Industry

Dairy products, juice

Founded

August 20. 1976

Headquarters

10 Tan Trao, District 7, Ho Chi Minh City, Vietnam

Area served

Vietnam, Asia-Pacific, Europe, Middle East, Africa, North
America

Key people

Mai Nguyen Phong Chau - Chairman of the board
Mai Kieu Lien - CEO

Revenue

59.723 billion VND (2020)

Net income (after tax)

11.236 billion VND (2020)

Number of employees

9.361 (2020)

Website

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1.2. Principal activities
The principal activities of the Group are to:
- Process, manufacture and distribute milk cake, soya milk, fresh milk, refreshment
drinks, bottled milk, powdered milk, nutritious powder and other products from milk
- Trade in food technology, spare parts, equipment, materials and chemical
- Trade in real estate, own or lease land use rights (according to Article no. 11.3 of 2014
Real Estate Law)
- Trade in warehouse, yards
- Provide internal transportation by cars for manufacturing and consuming Company's
products
- Manufacture, sell and distribute beverages, grocery and processing foods, roastedground-filtered and instant coffee (not manufacturing and processing at the head office)
- Manufacture and sell plastic, packaging (not at the head office)

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- Provide healthcare clinic services (not at the head office)
- Raise cattle, cultivation
- Retail sugar, milk and products from milk, bread, jam, candy and products processed
from cereal, flour, starch and other food
- Retail alcoholic drinks, non-alcoholic drinks (carbonated and non-carbonated soft
drinks), natural mineral water, low-alcoholic or non-alcoholic wine and beer
- Manufacture and trade products from tea and wine
- Manufacture, breed, process and trade cattle and poultry products and premix products
for livestock.

1.3. Business areas
As of October 22, 2021, Vinamilk is the 7th largest capitalization company in Vietnam
on HOSE (186,215 billion VND). Vinamilk is currently the leading enterprise of the dairy
processing industry, accounting for more than 54.5% market share of liquid milk, 40.6%
market share of powdered milk, 33.9% market share of drinking yogurt, 84.5% market share
of edible yogurt and 79.7% market share of condensed milk (countrywide). In addition to
strong domestic distribution with a network of more than 220,000 sales points covering 63
provinces and cities, Vinamilk products are also exported to 43 countries around the world
such as the US, France, Canada, Poland, Germany, Japan, Middle East, Southeast Asia, etc.
After more than 40 years of launching to consumers, so far Vinamilk has built 14 factories, 2
logistics factories, 3 branches of sales offices, 1 factory in Cambodia (Angkormilk) and 1
representative office in Thailand. In 2018, Vinamilk was one of the Top 200 companies with
the best revenue over 1 billion USD in Asia Pacific (Best over a billion).

1.4. Position
According to the results of the poll of 100 strongest brands in Vietnam, Vinamilk is the

number 1 food brand in Vietnam, accounting for the leading market share, achieving a growth
rate of 20-25% per year, trusted by consumers and associated with the company. was voted
as the top product of TOP TEN high quality Vietnamese goods for 8 consecutive years from
1997 to 2004. Domestic sales increase by an average of 20% - 25% annually.

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Vinamilk has maintained its leading role in the domestic market and competed
effectively with foreign milk brands. One of Vinamilk's successes is diversifying products to
meet the needs of all customers from infants, children, teenagers, adults, and people with
special needs.

1.5. Main source of income
Based on the consolidated income statement of recent years, Vinamilk's main source of
income comes from sale revenue.
Specifically, in the 2020’s Income Statement, Vinamilk's revenue sources are presented
as follows:
VND

Proportion

Net Revenue

59.636.286.225.547

97.07%

Financial Income

1.581.092.655.317

2.51%

3.882.188.676

0.01%

212.386.195.135

0.35%

Shared profits from affiliates
Other Income

1.6. Competitors
With the attractive characteristics of the industry, the dairy market is becoming more
and more crowded and fierce. Currently, there are more than 50 dairy companies in Vietnam,
most of which are small and medium sized companies.
- Direct competitors:
These are companies that have been operating in the industry, and have a strong
influence on the business situation of enterprises.
There are many dairy brands in Vietnam's dairy market, including both manufactured
and imported dairy products. In which Vinamilk accounted for 35%, Dutch Lady accounted

for 24%, 22% were imported powdered milk products such as Mead Johnson, Abbott,
Nestle... the remaining 19% were domestic brands such as Hanoimilk, TH True Milk, Moc
Chau, etc. Nutifood…
- Indirect competitors:

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Companies specializing in the production of substitute products such as cereal flour,
functional foods (IMC, DOMESCO, BIBICA...) but the potential is not strong enough to
compete with dairy products.
II. Analysis of financial ratios
2.1. Company’s financial ratios
2.1.1. Liquidity Ratios
2.1.1.1. Current ratio
Current ratio = Current assets / Current liabilities
Unit: 1,000,000 VND
Target

2016

2017

2018

2019

2020

Current assets

18,673,827 20,307,434 20,559,756

24,721,565

29,665,725

Current liabilities

6,457,497

14,442,851

14,212,646

1.71

2.09

Current ratio

2.89

10,195,562 10,639,592

1.99

1.93

Comments
• The above results show that each VND of current liabilities of the company at the
end of 2020 has VND 2.09 of current assets that can be used for payment, in which,
this figure at the end of 2019 is 1.71 and at the end of 2018, 2017, 2016 is 17.93,
1.99, 2.89 respectively.
• The company's current ratio at all 5 times is greater than 1, showing that the company
has a high ability to be ready to pay current liabilities.
• Period 2016-2019: The current ratio decreased from 2.89 in 2016 to 1.71 in 2019,
which is a decrease of 1.18. In other words, the coverage of current assets for current
liabilities at the end of 2019 decreased compared to the end of 2016. However, the
ratio increases again in 2020. The reason is that as current liabilities decrease, the
company's debt payment ability is good.
• But at the end of 2016 a too high ratio (2.89) is also not a good sign because it shows
that the enterprise has not used its assets efficiently. Because current assets are high
compared to current liabilities, there will be situations that are not good for the

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business such as having too much idle cash, bad debts in high receivables, high

inventory will easily lead to bad debts to stagnation of capital, poor quality, ...

2.1.1.2. Quick ratio
Quick ratio = (Current assets - Inventory) / Current liabilities
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Current assets

18,673,827

20,307,434

20,559,756

24,721,565

29,665,725

Inventory

4,521,766

4,021,058

5,525,845

4,983,044

4,905,068

Current liabilities

6,457,497

10,195,562

10,639,592

14,442,851

14,212,646

2.91

1.6

1.41

1.37

1.74

Quick ratio

Comments
• Period 2016-2019, the ability to make quick payments tends to decrease, from 2.91
to 1.37. The number 1.37 shows that at the end of 2019, for every VND of current
liabilities, there are VND 1.37 of liquid assets. However, the ratio increases again in
2020.
• The quick ratio of the company over the past 5 times is high, all greater than 1,
reflecting the business has good payment and high liquidity. But at the end of 2016
a too high ratio (2.91) is also not a good sign because it shows that the company is
not using assets efficiently.
•

The quick ratio of the company is much smaller than the current ratio, which means
that the current assets of the company depend too much on inventory.

2.1.1.3. Cash ratio
Cash ratio = Cash & Cash equivalents/Current liabilities
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Cash & Cash
equivalents

655,423

963,335

1,522,610

2,665,194

2,111,242

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Current
liabilities

6,457,497

10,195,562

10,639,592

14,442,851

14,212,646

Cash ratio

0.10

0.09

0.14

0.18

0.15

Comments
• Through the years 2016-2020, the ability to pay quick cash is quite volatile.
• This ratio over the years is less than 1, the company has problems when current
liabilities are due to be paid, so financial managers need to carefully consider current
liabilities that are close to due to ensure the solvency for the business.
2.1.2. Capital Structure Ratios
2.1.2.1. Total debt ratio
Total debt ratio = (total assets - total equity)/ Total assets
Unit: 1,000,000 VND

Targets

2016

2017

2018

2019

2020

Total assets

29,378,656

34,667,318

37,366,108

44,699,873

48,432,480

Total equity

22,405,949

23,873,057

26,271,369

29,731,255

33,647,122

0.237

0.311

0.297

0.335

0.305

Total debt
ratio

Comments
• Over the span of 5 years, the company’s total debt ratio fluctuates steadily around
0.3 (30%). In general, however, this ratio is tending to go up.
• This ratio illustrates what percentage of a company's total resources is its debt (i.e.
what percentage of its total assets was made up of debt). The figures above show
that the company uses about 30% of its total resources as debt, which means that it
is prioritizing using equity. Since this ratio is tending to rise, it seems that this
preference is slightly decreasing.
• However, because of the lower use of debt, the company will also limit the benefit
from the tax shield of loans.
2.1.2.2. Debt/equity ratio

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Debt/equity ratio = Total debt/Total equity
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Total debt

6,972,707

10,794,261

11,094,739

14,968,618

14,785,358

Total equity

22,405,949

23,873,057

26,271,369

29,731,255

33,647,122

Debt/equity
ratio

0.311

0.452

0.422

0.503

0.439

Comments
• The company’s debt/equity ratio fluctuates steadily between 0.3 and 0.5 in the 5year period.
•

This means that the company always uses less debt than equity in its total resources.
Or, the company is prioritizing using equity to finance its production and business
activities.

•

In addition, the fact that this ratio is always less than 1 shows that the company's
resources from equity are abundant, has little external debt, is not under much
financial pressure and is doing business effectively.

2.1.2.3. Equity multiplier
Equity multiplier = Total assets/Total equity
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Total assets

29,378,656

34,667,318

37,366,108

44,699,873

48,432,480

Total equity

22,405,949

23,873,057

26,271,369

29,731,255

33,647,122

1.311

1.452

1.422

1.503

1.439

Equity
multiplier

Comments

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• Between 2016 and 2020, the company’s equity multiplier fluctuates in the same
direction as its debt/equity ratio.
• This ratio indicates how many times a company's total assets are greater than its
equity. From the above numbers, it can be concluded that the company's growth is
driven by equity, not by external debt. It can be seen from this ratio that the
company's debt (or financial leverage) is relatively low compared to shareholder
equity.
Notice: Summing up the reasons for 3 ratios above, the company always keeps a capital
structure in which the debt ratio is always much smaller than the equity ratio in order to create
a healthy financial position to easily raise capital from investors and get more favorable terms
in contracts with its creditors.
2.1.2.4. Net interest cover

Net interest cover = EBIT/ (Interest + finance charges)
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

11.284.125

12.258.383

12.103.063

12.904.534

13.662.354

Interest +
finance
charges

102,450

87,037

118,007

186,969

308,569

Net interest
cover

110.142

140.840

102.562

69.019

44.276

EBIT

Comments
• Although the figures of Company’s Net Interest Cover drop significantly over the
period of 5 years, it's still very large and ideal numbers.
• That means the profits that the company generates from production and trading
activities can easily meet the payment of interests and other financial expenses.
• These ratios are tending to decline sharply over the years, showing that the interest
on debt the company has to pay is growing at a rate greater than its EBIT growth.

2.1.2.5. Debt to gross cash flow

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Debt to gross cash flow = (Interest - bearing debt)/ (Net profit after tax + depreciation +
amortisation)
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Interest - bearing
debt

1,691,665

525,514

1,275,846

5,474,454

7,483,918

Net profit after
tax

9,363,829

10,278,174

10,205,629

10,554,331

11,235,732

Depreciation +
amortisation

1,190,837

1,299,870

1,626,632

1,948,072

2,208,866

0.160

0.045

0.108

0.438

0.557

Debt to gross
cash flow

Comments
• There was a noticeable increase in the company’s Debt to gross cash flow ratio
between 2016 and 2020.
• These ratios are always less than one, which means that the company's OCF still
meets the company's ability to pay its debts. But this ratio is tending to go up sharply,
suggesting the company has indeed taken on more debt to finance its operations.
2.1.3 Turnover Ratios
2.1.3.1 Inventory turnover
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Cost of goods sold

24,458,633

26,806,931

27,950,543

29,745,906

31,967,662

Average Inventory

4,165,930

4,271,412

4,773,452

5,254,445

4,944,056

Inventory turnover

5.87

6.28

5.86

5.66

6.47

Comments
• Inventory turnover in 2016 was 5.87 turns, in 2017 it was 6.28 turns, in 2018 it was
5.86 turns, in 2019 it was 5.66 and in 2020 it was 6.47.

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•

Overall, inventory turnover increased from 5.87 to 6.47 within 5 years. This shows

that the business operates more efficiently, the sales speed is faster, the inventory is
not stagnant much and the inventory management capacity of the enterprise is quite
good. - Therefore, the inventory turnover ratio needs to be large enough to ensure
the level of production to meet customer demand.
Reasons

•

From the table above, it can be seen that inventory turnover tends to increase over 5
years. Cost of goods sold in 2020 increased by 30.7% compared to 2016, and the
average inventory in the period of 2020 was 18.68% higher in 2016. With this change
of two factors, the number of rounds is determined. Inventory turnover has resulted
in a higher inventory turnover in 2020 compared to 2016.

2.1.3.2 Days’ sales in inventory
Targets

2016

2017

2018

2019

2020

Days

365

365

365

365

365

Inventory turnover

5.87

6.28

5.86

5.66

6.47

Days’ sales in inventory

62.18

58.12

62.29

64.49

56.41

Comments
• Overall, the number of days of inventory turnover decreased from 62.18 days to
56.41 days within 5 years, although in 2018 and 2019 there was an increase but not
significantly.
•

Although in 2020, the number of days has decreased, but overall the index is still
high. With the main business of the business is the production of dairy products, a
high level of inventory is not good, it will increase storage costs or can reduce the
value of inventory due to spoilage.
Reasons

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•

This coefficient tends to decrease because the increase in the number of inventory
turns, the lower the number of days an inventory turnover will decrease, so the faster
the enterprise's inventory turnover will be, the more inventory will be involved in
more rotations. The faster the inventory turnover, the faster the business will be able
to reduce the reserve capital but still ensure the capital for production and business

needs, improving the efficiency of capital use better.

2.1.3.3 Receivables turnover
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Sales

46,794,339

51,041,075

52,561,949

56,318,122

59,636,286

Average Accounts
receivable

2,776,076

3,729,193

4,615,575

4,571,301

4,845,203

16.86

13.69

11.39

12.32

12.31

Receivables
turnover

Comments
• The receivables turnover ratio indicates the speed at which a company can collect its
receivables from customers.
• The turnover of receivables in 2016 was 16.86 rounds, in 2017 it was 13.69 rounds,
in 2018 it was 11.39 rounds, in 2019 it was 12.32 rounds, in 2020 it was 12.31
rounds.

• Overall, the number of turnovers in 2018 decreased by 32.44% compared to 2016.
This shows that the company's credit policy is looser year by year so it is not possible
to guarantee the recovery of debts from clients. By 2020, this number of revolutions
will increase to 12.31 but still lower than 2016.
•

In general, it shows that the company's debt recovery level has decreased over 5
years → the company's credit policy is ineffective and has many risks.
Reasons

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• From 2016 to 2018 the number of receivables turnover of the enterprise decreased
from 16.86 to 11.39, this proves that the recovery speed of the enterprise's
receivables takes place slower, the capital of the enterprise is also occupied and must
be the high investment in the collection of receivables is due to the inefficient, less
strict and not strict credit policies of the company's receivable management
mechanism. This is not good for the company because the longer the accounts
receivable turnover, the longer it takes to collect the cash. The reason is that the
company has a poor collection process, a bad credit policy, or a customer with
insufficient financial or credit capabilities. This increases the risk of bad debt for the
company, making revenue slower or the business will lose a lot of expenses. The
enterprise's failure to collect debt means that the amount of money of the enterprise

is occupied more and more, the amount of cash will decrease, reducing the initiative
of the enterprise in financing working capital in production and Enterprises may
have to borrow from banks to further finance this working capital.
•

By 2020, this target will increase to 12.31 again, because the company has become
more efficient in managing its receivables. However, the business will trade off
losing customers because customers will switch to competitors' products that offer
longer credit periods. And so, our business will have a decrease in profit.

2.1.3.4 Days’ sales in receivables
Days’ sales in receivables = 365 days/Receivable turnover
Targets

2016

2017

2018

2019

2020

365

365

365

365

365

Receivables turnover

16.86

13.69

11.39

12.32

12.31

Days’ sales in receivables

21.65

26.67

32.05

29.63

29.65

Days

Comments
•

This index indicates the time the firm needs to convert credit sales to cash. This
index was lowest in 2016 (21.65 days) and it started to increase sharply from 2017
to 2018 (26.67 days and 32.05 days). Although it declined in two years, 2019 and

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2020, this index was high in general (29.63 and 29.95 days). It means the firm needed
more time to collect money from customers during the period from 2017 to 2020.
Reasons
•

The figure for Days’ sale in receivable of the company has increased over the years,
which is explained by the fact that the company offers more chances for customers
to buy on credit in its policy.

2.1.3.5 Fixed asset turnover
Fixed asset turnover = Sales/Non-current assets
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Sales

46,794,339 51,041,075 52,561,949 56,318,122 59,636,286

Non-current assets

10,725,564 12,532,356 15,583,117 18,392,329 19,372,531
4.36

Fixed asset turnover

4.07

3.37

3.06

3.08

Comments

•

During the period from 2016 to 2019, this index fell sharply from 4.36 to 3.06. It
represents for every one dollar invested in fixed assets, a return of fewer dollars is
earned. Also, a lower fixed asset turnover implies less effective utilization of
investments in fixed assets to generate revenue. The year 2020 saw a slight increase
to 3.08 in this ratio. It indicates that there is greater efficiency in regards to managing
fixed assets; therefore, it gives higher returns on asset investments.
Reasons

•

This fixed assets turnover index was created to indicate the efficiency if a company
is using these assets to generate revenue. In general, this index has decreased over
the years as a result of using less effectively the company’s fixed assets; however,
the company is still managing these assets well.

2.1.3.6 Total asset turnover
Total asset turnover = Sales/Total assets
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Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Sales

46,794,339 51,041,075 52,561,949 56,318,122 59,636,286

Total assets

28,428,416 32,022,987 36,016,713 41,032,991 46,566,177
1.65

Total asset turnover

1.59

1.46

1.37

1.28

Comments
•

The asset turnover ratio helps investors understand how effectively companies are
using their assets to generate sales. The table below shows this index decreased
during this period (from 1.65 to 1.28 times). This indicates the company is not
efficiently using its assets to generate sales.

2.1.4 Profitability Ratios
2.1.4.1 Profit margin
Profit margin = (Net income/Sales) *100%
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Net income

9,363,829

Sales

46,794,339 51,041,075 52,561,949 56,318,122 59,636,286

Profit margin

10,278,174 10,205,629 10,554,331 11,235,732

20.01%

20.14%

19.42%

18.74%

18.84%

Comments
• From 2016 (20,01%) to 2017 (20,14%): the profit margin increases. However,
during the period 2017-2020, the profit margin tends to decrease, from 20,14% to
18,84%. The number 18,84% shows that at the end of 2020, for 100 VND of revenue,
there is VND 18,84 of net income.
•

The profit margin is decreased during 2017 to 2020. A falling profit-to-sales ratio
signals possible financial troubles.
Reasons

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•

One of the simplest factors that can lead to lower margins is a higher cost of goods
sold. Over time, the business's suppliers want to increase their own sales and profits.
Their own production or supply costs may increase. These factors can lead to them
negotiating or simply charging you a higher price for the goods. If higher COGS
negatively affects gross profit margin.

2.1.4.2 Return on assets (ROA)
Return on assets = (Net income/Total assets) x100%
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Net income

9,363,829

Total assets

29,378,656 34,667,318 37,366,108 44,699,873 48,432,480

Return on assets

31.87%

10,278,174 10,205,629 10,554,331 11,235,732

29.65%

27.31%

23.61%

23.20%

Comments
• The ratio of profit after tax to total assets of Vinamilk in the period of 2006-2020
was above 20% and sometimes over 30%, in 2016 it was 31,87%. This is a very
impressive indicator even for businesses in Vietnam and around the world, not to
mention the company's long-term sustainability.
• Compared to many companies in the dairy and food business in Vietnam, this is an
impressive return on assets. This shows that the company has used its assets very
well in bringing profits to the company.
Reasons
•

A falling ROA suggests that the company may have been over-invested in assets that
are unable to generate revenue growth, a sign that the company may be struggling.

2.1.4.3 Return on investment (ROI)
Return on investment = (EBIT/Total assets) *100%
Unit: 1,000,000 VND

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Targets

2016

2017

2018

2019

2020

EBIT

11,284,125 12,258,383 12,103,063 12,904,534 13,662,354

Total assets

29,378,656 34,667,318 37,366,108 44,699,873 48,432,480

Return on investment

38.41%

35.36%

32.39%

28.87%

28.21%

Comments
• In the period 2016-2019, there is a decreasing trend, from 38,41% to 28,21%. This
shows that the profit before deducting other expenses of the business is decreasing
over the years but not too much.
•

ROI is a popular metric for heads of marketing because of marketing budget
allocation. Return on Investment helps identify marketing mix activities that should
continue to be funded and which should be cut.
Reasons

• Economic factors, investment-related costs, and investor behavior, can affect ROI.
Investment fees are a major cause of reduced ROI due to its consistency and ability
to compound across portfolio growth. While they appear in small percentages, they
will eventually add up and cause drag on ROI.
•

Investment behavior is a major contributor to ROI volatility, and numerous financial
crashes and countless studies have proven it.

2.1.4.4 Return on equity (ROE)
Return on equity = (Net income/Total equity) *100%
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Net income

9,363,829

Total equity

22,405,949 23,873,057 26,271,369 29,731,255 33,647,122

Return on equity

41.79%

10,278,174 10,205,629 10,554,331 11,235,732

43.05%

38.85%

35.50%

33.39%

Comments

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Analyzing financial statements of Vietnam Dairy Products JSC

• ROE increased from 2016 (41,79%) to 2017 (43,05%), up 1.26%. This shows that
the profit after tax of the business increases.
• From 2017 to 2020, ROE gradually decreased from 43,05% to 33,39%. However,

this ROE ratio is still relatively high compared to other businesses.
•

ROE is always interested in shareholders and they are the ones who give equity to
the business.
Reasons

• Inconsistent profits, excess debt as well as negative net income are all factors that
can affect the return on common stockholders’ equity.
•

The main accounts that influence owner’s equity include revenues, gains, expenses,
and losses. Owner’s equity will increase if you have revenues and gains. Owner’s
equity decreases if you have expenses and losses. If your liabilities become greater
than your assets, you will have a negative owner’s equity.

2.1.5 Market value ratios
2.1.5.1 Earning per share
EPS = Profit attributable to ordinary shareholders/ Number of ordinary shares in issue
Unit: 1,000,000 VND
Targets

2016

2017

2018

2019

2020

Profit attributable to
ordinary shareholders

8,425,584

9,224,009

9,220,587

9,538,488

9,967,771

1,445

1,451

1,741

1,741

2,089

5,830.95

6,335.47

5,294.70

5,447.51

4,770.06

Number of ordinary
shares in issue
EPS

Comments
• The EPS ratio shows how much money a company makes per share and is also used
to calculate key financial ratios.
•

In general, the company's EPS has increased and decreased year over year, from
2016 to 2017 EPS increased from 5.830,95 to 6.335,47, showing that the company

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Analyzing financial statements of Vietnam Dairy Products JSC

earns more money per share compared to 2016. However, by 2018 it will drop to
5.294.70. From 2019 to 2020, this number continues to decrease from 5.447,51 to
4.770,06

2.1.5.2 Price/ Earnings ratio
Price/ Earnings ratio = Price per share/Earnings per share
Unit: VND
Targets

2016

2017

2018

2019

2020

Price per share

125,600

208,600

120,000

116,500

108,800

Earnings per share

5,830.95

6,335.47

5,294.70

5,477.51

4,770.06

21.54

32.8

22.64

21.26

22.81

Price/ earnings ratio

Comments
• The P/E ratio shows that to have 1 dong of profit, shareholders have to spend 21,54
dong of capital when investing in stocks in 2016. Meanwhile, in 2017 they only need
to spend 32,8 dong. By 2018, they are willing to spend 22,64 dong of capital to
receive 1 dong of profit, so in this period it can be seen that the company has high
income, great growth potential, so the P/E ratio is high. than. From 2019 to 2020,
there is a change that shows that the company continues to develop
Reasons
• Any change in the economy will affect the P/E. High spending requirements will

cause revenue to increase, all operating costs will decrease, so income will increase
at this time. Therefore, the demand for stocks of investors will also increase, making
the P/E ratio also increase

2.1.5.3 Market - to - book ratio
Market - to - book ratio = Market value per share/ Book value per share
Book value per share= (Equity - Intangible fixed asset)/ Number of ordinary shares in
issue

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Analyzing financial statements of Vietnam Dairy Products JSC

Unit: VND
Targets

2016

2017

2018

2019

2020

Market value
per share

125,600

208,600

120,000

116,500

108,800

Book value
per share

15,226

16,299.1

14,903.33

16,413.1

15,557.91

Market - to book ratio

8.25

12.80

8.05

7.1

6.99

Comments
• The Market - to - book ratio tells us how many times the stock price is above or
below the book value of the business.
• Looking at this index, we can see that Vinamilk’s stock is having a great growth rate,
investors expect a lot from it. Investors are willing to spend 12,8 dong (in 2017) to
be able to own 1 dong of capital of VNM stock.
Reasons
• The company is efficient and has high profit potential, leading to an increase in the
value of the stock, which means that the market price of the company will also
increase.

2.2. Company’s financial ratios in comparison with a benchmark of industry average
2020
Ratios

1. Liquidity Ratios

2. Capital Structure
Ratios
3. Profitability Ratios

Vietnam Dairy
Products Joint
Stock Company

Food and
beverage industry
average

Current ratio

2.09

2.22

Quick ratio

1.74

1.47

Debt/ equity ratio

0.439

0.87

ROA

23.199%

6.41%

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Analyzing financial statements of Vietnam Dairy Products JSC

ROE

33.393%

11.26%

P/E

22.81

24.53

P/B

6.99

4.29

4. Market Value Ratios

Comments:
By comparing with the industry average, we can see:
- The current ratio compared to the industry average ratio is not too different.
Meanwhile, the company's quick payment ability is much higher, this shows that the company
is completely able to pay off its loans quickly. However, holding too many assets will make
the company less profitable compared to different competitors in the industry.
- The company's debt/equity ratio is also much lower than the industry average, which
brings less risk to the business (the company is not prioritizing using debts). However, the
business will also limit the benefit from the tax shield of loans. As can be seen from this
comparison, the company is under less financial pressure than many other players in the
industry. This is an advantage that helps the company attract more investors than other
competitors.
- The profitability ratios (ROE, ROA) of Vinamilk are much higher than the industry
average. The company's ROA is 3 times higher than the industry average, indicating that the
company is enjoying a very high return on asset value. Similar to ROA, the company's ROE
is 3 times higher than the industry average, proving that the company is effectively managing
and using its capital. Thus, the business operates with high efficiency.
- In terms of valuation, Vinamilk's current valuation is lower than the industry in terms
of P/E. Thus, compared to the general level of the industry, Vinamilk is currently an effective
business enterprise, undervalued. In contrast to the P/E ratio, Vinamilk's P/B ratio is higher
than the industry average, which shows that the company can do good business in the future.
Therefore, investors have great expectations on Vinamilk's stock, they are willing to spend an
amount higher than the book value of the business to be able to own it.

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Analyzing financial statements of Vietnam Dairy Products JSC

III. A brief summary on financial performance of the company
Based on the results of financial statement analysis, it can be seen that in the past 5 years,
Vinamilk's financial situation, although Vinamilk's financial condition faced many
difficulties, the company was still able to overcome and operate well in a fiercely competitive
environment. The company still has problems related to inventory management. The current
solvency of the business is very good, which shows that the company is holding a lot of shortterm assets which have low profitability.
VNM's financial health is also considered to be relatively good although the debt/total
assets ratio tends to increase, however, this ratio is still at a low rate compared to the industry
average. The enterprise has a high level of financial autonomy, does not depend much on
external debt, is not under much financial pressure and is doing business effectively.
VNM's profitability is evaluated very well, far exceeding the industry average. With the
business situation having positive changes and stable financial health, VNM's stock is being
valued relatively high, however, compared to the general level of the industry, this stock is
still being priced low. The reason is that VNM's EPS growth has been very low recently, even
negative, so it is difficult for investors to spend more money on this stock.
However, in general, compared to the company's ratio on the industry average,
Vinamilk's position is quite high compared to other companies in the market.
With the recent positive signals along with the stricter management of the company,
affirming a future development in the industry in particular and the Vietnamese economy in
general.

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Analyzing financial statements of Vietnam Dairy Products JSC

REFERENCE LIST
1. Vinamilk’s Financial Statements (2016, 2017, 2018, 2019, 2020)
(Download link: />2. />3. />4. />
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