HABECO’S FINANCIAL STATEMENTS ANALYSIS IN THE PERIOD OF 2018 2020

FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS -ỴỴ🕮ĨĨ - MID-TERM REPORT TOPIC HABECO’S FINANCIAL STATEMENTS ANALYSIS IN THE PERIOD OF 2018-2020 Group number: Group members: Vũ Thanh Tùng – 1815530063 Vu Trong Cao Sang – 1815530050 Trần Đoàn Lâm – 1815530029 Intake: 57 Major: Logistics & Supply Chain Management Instructor: Dr Quyen Do Nguyen Hanoi, December 2021 TABLE OF CONTENTS INTRODUCTION CHAPTER 1: GENERAL INFORMATION ABOUT HABECO 1.1 About HABECO 1.2 Vision Statements, Mission Statements and Core Value Statements 1.2.1 Vision 1.2.2 Mission 1.2.3 Core values 1.3 Product ranges CHAPTER 2: HABECO’S FINANCIAL STATEMENTS ANALYSIS FROM 20182020 2.1 Vertical analysis of HABECO’s financial statements from 2018-2020 2.1.1 Short-term solvency, or liquidity ratios 2.1.2 Asset management, or turnover ratios 2.1.3 Long-term solvency, or financial leverage ratios 2.1.4 Profitability Ratios 2.1.5 Market Value Ratios 2.2 Horizontal analysis of HABECO’s financial statements in comparision with SABECO and HAIDUONG BEER in 2020 2.2.1 Short-term solvency, or liquidity ratios 2.2.2 Asset management, or turnover ratios 10 2.2.3 Long-term solvency, or financial leverage ratios 11 2.2.4 Profitability Ratios 11 2.2.5 Market Value Ratios 12 CHAPTER 3: STOCK INVESTMENT DECISION 13 CONCLUSION 15 LIST OF TABLES Table 2.1 HABECO’s short-term solvency, or liquidity ratios from 2018 to 2020 Table 2.2 HABECO’s asset management, or turnover ratios from 2018 to 2020 Table 2.3 HABECO’s long-term solvency, or financial leverage ratios from 2018 to 2020 Table 2.4 HABECO’s profitability Ratios from 2018 to 2020 Table 2.5 HABECO’s market Value Ratios from 2018 to 2020 Table 2.6 Short-term solvency, or liquidity ratios of HABECO, SABECO and Hai Duong Beer in 2020 Table 2.7 Asset management, or turnover ratios of HABECO, SABECO and Hai Duong Beer in 2020 10 Table 2.8 Long-term solvency, or financial leverage ratios of HABECO, SABECO and Hai Duong Beer in 2020 11 Table 2.9 Profitability Ratios of HABECO, SABECO and Hai Duong Beer in 2020 11 Table 2.10 Market Value Ratios of HABECO, SABECO and Hai Duong Beer in 2020 12 INTRODUCTION Today, more and more people are choosing to step out of their comfort zone to make money by investing in public companies This investment also follows the law of the market: High risk high return To maximize the return on investment, investors need to prepare a huge amount of knowledge, skills and experience before putting money in the stocks of the above companies: general macro knowledge economy, knowledge of the specific industry, and most importantly, from a micro perspective, must grasp the analysis of the company's operations and financial health through specific indicators from financial statement analysis The analysis of financial statements will be a key factor to help investors predict the company's growth, thereby making a decision whether to invest in the company or not Drinking alcohol has been a cultural beauty of Vietnamese people for a long time It is said that “Betel is the beginning of the story, the cup of wine or beer is the beginning of the fun” This cultural feature is also evidence for the potential consumption of the beer industry in Vietnam Among the beer and wine companies in Vietnam, HABECO is a large company with great potential for growth Realizing the potential of HABECO development in profitable investment, we chose the research topic: " HABECO’S FINANCIAL STATEMENTS ANALYSIS IN THE PERIOD OF 2018-2020" By analyzing the data of specific items in HABECO's financial statements, and then comparing it with data from HABECO's main competitors, this report will draw conclusions for the question: Is it worth the investment in HABECO to maximize profit? In addition, the article also contains useful information for those who want to learn about the Vietnamese beer market as well as basic information about HABECO Our report will consist of three main parts: • CHAPTER 1: GENERAL INFORMATION ABOUT HABECO • CHAPTER 2: HABECO'S FINANCIAL STATEMENTS ANALYSIS FROM 2018-2020 • CHAPTER 3: STOCK INVESTMENT DECISION CHAPTER 1: GENERAL INFORMATION ABOUT HABECO 1.1 About HABECO • Company name: Hanoi Beer Alcohol and Beverage Joint Stock Corp • Company abbreviation: HABECO • Hose: BHN • Headquarters: 183 Hoang Hoa Tham, Ba Đinh, Ha Noi • Tel: 024.38453843 • Email: contact@habeco.com.vn • Website: https://www.habeco.com.vn • Tax code : 0101376672 • Logo: 1.2 Vision Statements, Mission Statements and Core Value Statements 1.2.1 Vision Build HABECO into one of the strong corporations, playing a key role in the Beer, Wine and Beverage industry and becoming one of Asia's leading enterprises in beer production and trading 1.2.2 Mission HABECO defines its mission to provide Vietnamese and regional consumers with quality beverage products, ensuring food hygiene and safety; Contribute to building and forming a Vietnamese drinking culture, support responsible drinking; Responsibility to the Government and society in social security work; Research and develop a portfolio of strategic brands with added value, in order to meet the increasing demand of domestic and foreign consumers 1.2.3 Core values “CUSTOMER TRUST IS THE FOUNDATION OF PRINCE QUALITY” determining the best satisfaction of customers' needs and requirements is the guideline throughout all activities, and is the foundation of HABECO's success and longevity 1.3 Product ranges • Hanoi bottled beer • Truc Bach canned beer • Hanoi can beer • Green Hanoi Beer • Hanoi Premium Beer • Hanoi green beer cans • Hanoi Premium canned beer • Hanoi Bold & Light bottled beer • Truc Bach Beer • UniAqua bottled water CHAPTER 2: HABECO’S FINANCIAL STATEMENTS ANALYSIS FROM 2018-2020 2.1 Vertical analysis of HABECO’s financial statements from 2018-2020 2.1.1 Short-term solvency, or liquidity ratios 2018 2019 2020 Current ratio 1,39 1,80 2,58 Quick ratio 1,18 1,53 2,24 Cash ratio 0,45 0,56 0,47 NWC to TA 0,16 0,24 0,36 Table 2.1 HABECO’s short-term solvency, or liquidity ratios from 2018 to 2020 Overall, the company has been more and more likely to pay off current debt obligations without raising external capital It seems that this is more because of the company's ability to pay off its current liabilities with its accounts receivable, not with cash and inventories The company’s current ratio experienced a noticeable upward trend over the 3-year period The figure stood at 1.39 in 2018 before growing by 0.42 in the following year and reached its peak at an incredible number of 2.58 in the year 2020 The increase in the company’s current ratio indicates its enhanced ability to pay off its current liabilities with its total current assets In general, a good current ratio is anything over 1, with 1.5 to being the ideal In this case, the company had been having more than enough cash to meet its liabilities while using its capital effectively Turning to the quick ratio, there was a similar upward trend over the given years The company’s figures stood at respectively 1.18, 1.53 and 2.24 in 2018, 2019 and 2020 This means that the company was more likely to meet its short-term obligations with its most liquid assets This is also a good ratio as it stayed above the 1.0 level and almost doubled from 2018 to 2020 The company’s cash ratio was the only ratio to witness a downturn over the years This figure rose minimally to 0.56 in 2019, but then fell to 0,47 in 2020, at almost the same level as it was in 2018 This figure shows that the company was less likely to repay its short-term debt with cash or near-cash resources As for networking capital to total asset ratio, which is quite low, indicating serious cash flow difficulties for the company, the 3-year period only introduced a marginal increase from 0.16 to 0.36 2.1.2 Asset management, or turnover ratios 2018 2019 2020 Inventory turnover 8,51 10,77 9,16 Days' sales in inventory 42,91 33,89 39,83 Receivable turnover 21,27 25,11 19,55 Days' sales in receivables 17,16 14,53 18,67 NWC turnover 6,06 5,03 2,73 Fixed asset turnover 2,85 3,26 2,94 Total asset turnover 1,00 1,21 0,98 Table 2.2 HABECO’s asset management, or turnover ratios from 2018 to 2020 In the period of years, total asset turnover was not stable In 2018 every VND in assets of the company brought in 1.01 VND of revenue In 2019, one VND in assets brought in 1.21 VND in revenue (increased by about 20% compared to the number in 2018) The 2020’s total asset turnover dropped down to 0.98, which is marginally lower than that of 2018 We can see that the company used its assets exceptionally efficiently in 2019, but this was no longer the case in 2020 The company's inventory turnover in 2018 was 8.51, the number of days inventory was 43 Inventory turnover in 2019 was 10.77, days in inventory was 34 In 2020, inventory turnover decreased from 10.77 to 9.16 with the inventory days rising to 40 days The higher the inventory turnover ratio, the faster the sales and the inventory is not stagnant in the business This means that the business will be less risky if seen in the financial report, the item of inventory value decreases over the years In 2018, receivable turnover was 21.27; average collection period was 18 days However, in 2019, the company's receivable turnover increased sharply from 21.27 to 25.11; average collection period was down to 15 days After reaching a peak in 2019, the company's receivable turnover plummeted to 19.15 in the final year Average collection was up to approximately 19 days The lower receivable turnover index shows that the more money the business is being occupied, the amount of cash will decrease, reducing the initiative of businesses in financing working capital in production and businesses may have to borrow from banks to finance this working capital 2.1.3 Long-term solvency, or financial leverage ratios 2018 2019 2020 Total debt ratio 0,46 0,33 0,25 Debt-equity ratio 0,87 0,50 0,34 Equity multiplier 1,87 1,50 1,34 Long-term debt ratio 0,08 0,05 0,03 Times interest earned ratio 14,70 22,54 34,76 Cash coverage ratio 24,08 36,72 54,23 Table 2.3 HABECO’s long-term solvency, or financial leverage ratios from 2018 to 2020 The company’s time interest earned ratio rose quickly from well below 15 to almost 35 between 2018 and 2020 Overall, the company’s time interest earned ratio in this period was quite high, which means it could afford to pay additional interest expenses In this respect, the business was less risky and the bank should not have had a problem accepting its loan There was an even sharper increase of roughly 30 in the company’s cash coverage ratio This number started at about 24 in 2018, before rising to almost 38 in 2019 and surging to its peak at over 54 in the final year The business could cover its interest expenses nearly 54 times over, leaving more than enough in cash to cover other obligations It can be seen that the company’s debt-equity ratio is high, which is good for the company In the period from 2018 to 2019, there was a downturn of 0.13 in the company’s total debt ratio, which was followed by a similar decrease to 0.25 in the year 2020 The company’s total debt is just right, neither too high nor too low, this is a good sign for the company, the company can take advantage of financial leverage to increase profitability This ratio in 2020 was relatively low, meaning that the amount of debt financing through lenders is lower than equity through equity and that was a good change In terms of the debt-equity ratio of the company, this number stood at 87% in 2018 In 2018, it decreased to 51% (down by 26% compared to 2018) In 2020, this ratio continued to lower to 34% (down by 17% compared to 2019) Overall, in years, the debt-equity ratio of the company was always lower than 1, which means that companies used less debt than equity used to finance assets This made the company less dependent on debt and the possibility of financial autonomy was rather good The company’s equity multiplier is a financial leverage ratio that measures the amount of a firm’s assets that are financed by its shareholders by comparing total assets with total shareholder’s equity In other words, the equity multiplier shows the percentage of assets that are financed or owned by the shareholders Conversely, this ratio also shows the level of debt financing is used to acquire assets and maintain operations And in HABECO’s case, this figure decreased from 1.87 in 2018 to 1.51 in 2019 Then in the final year, this ratio bottomed out at 1.34 This trend illustrated the disadvantages of the company which means the company needed to use more debt to finance its assets 2.1.4 Profitability Ratios 2018 2019 2020 Profit margin 0,05 0,06 0,09 Return on assets (ROA) 5,26 6,73 8,60 Return on equity (ROE) 9,82 10,10 11,52 Table 2.4 HABECO’s profitability Ratios from 2018 to 2020 As can be seen in the bar chart, the profitability ratios of HABECO experienced little changes from 2018 to 2020 The 3-year period introduced a minimal increase to the company’s profit margin This figure stood at 0.05 in 2018, slowly climbed to 0.06 in 2019 and continued to grow to only 0.09 in 2020 Despite this positive trend, the ratio was still a rather small number Between 2018 and 2019, the ratio of return on assets increased from 5% to 7% Subsequently, this ratio increased to 9% in 2020 The numbers above illustrate that HABECO was getting more effective in converting the money it invested into net income, 35 SABECO’s Balance Sheet in 2020 (1) 36 SABECO’s Balance Sheet in 2020 (2) 37 SABECO’s Balance Sheet in 2020 (3) 38 SABECO’s Balance Sheet in 2020 (4) 39 SABECO’s Income Statement in 2020 (1) 40 SABECO’s Income Statement in 2020 (2) 41 SABECO’s Statement of Cashflow in 2020 (1) 42 SABECO’s Statement of Cashflow in 2020 (2) 43 HAD’s Balance Sheet in 2020 (1) 44 HAD s Balance Sheet in 2020 (2) 45 HAD’s Income Statement in 2020 46 HAD’s Statement of Cashflow in 2020 (1) 47 HAD’s Statement of Cashflow in 2020 (2) 48 HABECO’s Financial Figures and Ratios 49 SABECO’s Financial Figures and Ratios 50 HAD’s Financial Figures and Ratios ... profitable investment, we chose the research topic: " HABECO’S FINANCIAL STATEMENTS ANALYSIS IN THE PERIOD OF 2018- 2020" By analyzing the data of specific items in HABECO's financial statements, and then... over the 3-year period The figure stood at 1.39 in 2018 before growing by 0.42 in the following year and reached its peak at an incredible number of 2.58 in the year 2020 The increase in the company’s... turnover index shows that the more money the business is being occupied, the amount of cash will decrease, reducing the initiative of businesses in financing working capital in production and businesses