MID COURSE INTERSHIP REPORT CORPORATE BONDS ISSUANCE PROCEDURE IN CT LAND CORPORATION

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS (Font Times New Roman, size 17, bold, center) -*** MID-COURSE INTERSHIP REPORT Major: International Finance SUBJECT OF THESIS CORPORATE BONDS ISSUANCE PROCEDURE IN CT LAND CORPORATION Student: Le Nguyen Quynh Nhu Student ID: 1913316122 Class: K58CLC2 Intake: 58 Supervisor: Phd Le Trung Thanh Professional consultant: Nguyen Thi Minh Ho Chi Minh City, July 2022 FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness MIDTERM PROFESSIONAL REPORT REMARKS Student’s full name: Student code: Name of the report: Remarks: Assessment of compliance with regulations, progress and work ethics (Maximum of 1.0 point, with one decimal number): Ho Chi Minh City, … /… / Supervisor (Signature with full name) Note: This evaluation remark is enclosed with the report, right after the cover page The student must give this form to the supervisor for comments and scoring of his/her morale, attitude, and diligence and submit the report in accordance with the relevant notice INTERNSHIP ORGANIZATION’S REMARKS Organization’s legal name: Address: Tax code: Main business sectors: We hereby confirm that Mr./Ms has completed an internship at our organization from (DD/MM/YYYY) to……………………(DD/MM/YYYY) - For his/her attitude: - For his/her perception of the organization’s activities: - For the data illustrated in the report (Please confirm the accuracy of the data): - Other remarks: Signature (Please write the full title, sign and seal) STATEMENT OF AUTHORSHIP The Author commits that the Report has been done by themself The process of writing of Corporate Bonds Issuance Procedure in CT Land Corporation and those comments and evaluations this process made is based on information provided from the Corporation The results collected and analyzed in the report are honest, derived from actual observations at the department and through the information published by the company on the official website The data sources are fully cited and have never been published in any other tool by the study authors Ho Chi Minh, July 2022 Student Le Nguyen Quynh Nhu PREFACE Since the Regional Comprehensive Economic Partnership (RCEP) took effect on January 1, 2022, it has opened up good development prospects for Vietnam The latest World Bank report predicts that Vietnam will become the fastest growing country in terms of income and trade among RCEP members In the current production and business activities, the demand to increase capital and expand the market is one of the urgent needs to increase the integration and competitiveness of enterprises Issuance of corporate bonds is a method that is attractive to efficiently finance and support the company performance for the development of business activity Corporate bonds account for most of the total capital supplied to the economy, supporting businesses and production expansion without being too dependent on bank loans Issuing bonds allows corporation to get the ideal financial leverage to implement good projects with high profitability in unfavorable capital conditions In addition, this is also the time to promote the reputation and brand recognition of the enterprise in the market, creating favorable conditions for the next fund raising Besides, the real estate market is a potential place where bond investors are interested in Real estate is also the group with the highest bond interest rates in June 2022, this is the second consecutive month that real estate businesses have re-issued bonds after shutting down in April (based on the HNX, VBMA, FiinGroup stock analysis) Especially in the context that bank credit is under tight control and the State Bank has set up a roadmap for tightening the ratio of short-term capital for medium and long-term loans of banks by the end of this year Therefore, it is extremely important to get to know how to issue corporate bonds This not only helps students hone and consolidate their foundational knowledge, but also contributes to perfecting this method From the above practice, the Author chose the topic "How to issue corporate bonds at CT Land Corporation" for their mid-course internship report The report consists of three main chapters as follows: Chapter 1: Corporation Introduction Chapter 2: Corporate bonds issuing procedure in CT Land Corporation Chapter 3: Lesson learned and recommendations for improving the effectiveness of Corporate bonds issuance procedure In the process of making this report, despite many efforts, I can't help but make a lot of mistakes Therefore, I look forward to receiving truly comments from the school and CT Land Corporation Finally, I appreciate Foreign Trade University and CT Land Corporation for guiding and creating conditions for me to complete this project Especially, I would like to express my gratitude to Ms Nguyen Thi Minh, Head of Finance Department, for the great support, creating favorable conditions for me and assisting me to practice I am grateful to my fellow interns at CT Land Corporation helping me a lot during my internship and writing this report Ho Chi Minh, July 2022 Student Le Nguyen Quynh Nhu TABLE OF CONTENTS List of Abbreviation Diagram appendices .10 CHAPTER 1: CORPORATION INTRODUCTION .11 Introduction .11 1.1 CT Land 11 1.2 Brief history and development of CT Land .11 Mission – Core values .12 Business Structure .13 3.1 Organization chart .13 3.2 Position during the mid-course internship and duties undertake .15 3.2.1 Department organization chart 15 3.2.2 Position and duties undertaken 15 Business situation period 2018 – 2021 16 CHAPTER 2: CORPORATE BONDS ISSUANCE PROCEDURE IN CT LAND CORPORATION 18 Analysis of corporate bonds issuance procedure in CT Land Corporation 18 The evaluation of corporate bonds issuance procedure in CT Land Corporation 22 2.1 Strengths 22 2.2 Weakness 22 3.2 Position during the mid-course internship and duties undertake 3.2.1 Department organization chart Financial Force Finance Department Front Office International Finance Back Domestic Finance Financial Intermediates Data Analysis FS Office Financial Management Private Customers Financial force is divided into two main departments: Finance and Accounting Due to the specific nature of the report, I only focus on finance department In general, the Back office will be the part that prepares the company's statements, records, product pricing, and provides the Front office to deal with customers 3.2.2 Position and duties undertaken Right from the beginning of the internship at CT Land Corporation, the author was assigned by the Finance Manager – Nguyen Thi Minh to undertake the following tasks: To have basic understanding of legal brief of Real Estate projects, the author would regularly research the relevant documents and related laws/regulation To get enough documents to standardize a dossier, the author had the opportunity to contact other departments To be able to present Projects - Products of the company Head of Department will check on knowledge acquisition, research to ensure that the author has the ability to become the contact, holding information of a particular project It was at this time that the author had direct contact with the actual data, the sales situation, the project's financial statements, the promulgated regulatory processes Through the assigned tasks, the author has a deeper understanding of how the corporate bonds issued in CT Land Corporation is actually like And this is an important factor for the author to complete this report Business situation period 2018 – 2021 In the period of 2019-2021, there are many fluctuations in the economy in general and real estate in particular when experiencing the COVID-19 pandemic Which is the reason why the business situation has a little impact The table… will show us that Unit: Million VND Categories Total assets Net Revenue 2018 2019 2020 2021 5,384.2 7,167.35 7,849 9,521.96 48.53 1,078.3 456.73 4,714.1 Gross Profit 7.17 319.2 2.72 57.48 EBIT 328.77 643.38 95.78 5.07 Earnings after tax 197.23 596.94 92.45 54.55 18.99% 36.63% 1.26% 7.82% ROE Source: Consolidated Financial Statements in 2018,2019,2020,2021 of CT Land In 2019 City Land witnessed remarkable growth in Total Assets revenue and profit Total Access were recorded at 7167.3 million VND, 33.11% higher compared to 2018 this increases due to a series of mergers and Acquisitions of its subsidiary companies Consequently, the company makes significant progress concerning operating revenue By the end of 2020, CT Land's bank loan/total assets ratio reached 6% and there was no bond outstanding - This is the outstanding loan balance of the Member Companies for the purpose of implementing the Projects If considering only CT Land, according to information from the Credit Information Center (CIC), CT Land has no outstanding credit in the last years This is a very low value compared to the industry average (about 60%) That proves the strong financial potential and great room for development in the next period This can be seen from the table that the growth rate in CT Land’s revenue is unbelievable when it reaches 2121.9% This can be explained by the construction of new projects, putting some projects into operation in the collection of short-term receivables from sales of goods and rendering of service of customers Table … has drawn the fact that 2020 is a challenging year for CT Land As the company faced a decline in revenues and profits related to the same period last year Revenue fell more than 57.6% between 2019 and 2020, leading to a sharp decline in profit before tax which is only recorded at 95.78 billion VND, equivalent to a decrease of 85% compared to 2019 It is largely explained by the stuff impact at the covid-19 pandemic Overall, the whole bear industry is negatively affected by a part of the economy Therefore, the decline in these numbers is entirely understandable However, with the experience drawn from the year of 2020 and the preparation of contingency plans, the observation of market situation and assessment of financial impacts by the board of directors, the year 2021 shows the prosperity of CT Land, although not much, but still a positive signal CHAPTER 2: CORPORATE BONDS ISSUANCE PROCEDURE IN CT LAND CORPORATION Analysis of corporate bonds issuance procedure in CT Land Corporation Issuance method: Issuance agency Issuance agency: Bao Viet Security ar value: 100,000,000 VND/bond Maturity: 18 months Volume: 2,400 bonds No Con sult ing Adj ust me nt Flowchart Approvement Conducting procedure Responsibility Issuer FD CFO Assistant BOD Issuer FD Security Agency Issuer Note Bond Offering Issuer FD Security Agency Report FD Issuer FD Bank Issuer FD AD Step Fin Dep cooperates with the Issuer to develop and submit the plan of issuance corporate bonds Based on the business plan and development orientation for the CT Land projects, develop a plan of issuance corporate bonds to mobilize capital to meet the needs of project construction and reinvestment FD would submit the plan of issuance corporate bonds to the Assistant General Director/BOD If the Assistant General Director/BOD considers the plan unsuitable, they would request the adjustment If the Assistant General Director/BOD considers the appropriate plan, it is approved Step Conduct bond issuance procedure FD registers business information on the Stock Exchange (HNX or HOSE): + Issuer registers email of the Stock Exchange + The issuer registers to use the corporate bonds specialized website FD and Issuance agency directly work together (consultants and issuance agency) FD will collect company information (the Issuer) for the disclosure + Securities company advises on the organization and implementation of procedures related to bond issuance + FD prepares full legal procedures for projects related to bond issuers FD/Issuers signs a number of contracts with securities companies: + Consulting contract and bond issuance agency + Agency contract for registration, depository, payment and management of Bond transfer Securities company plays the role: + Consult and review necessary legal procedures + Consulting on the release plan + Underwriting of Bonds Issuance / Intermediaries for buying and selling Bonds + Distributing Bond products thanks to a diverse network of institutional and individual customers + Prepare bond purchase and sale documents and guide the issuer of the procedures after the bond issuance FD/Issuers worked with the Bank, signed a number of Contracts with the Bank: Account management Contract, opened blocked account to receive bonds issuance money, Guaranteed asset management Contract, Contract of mortgage of collateral (Notarization and registration of secured transactions with authorities) Step Disclosure before the offering The Corporation announces the issuance of Bonds to investors who buy the Bonds and sends the information disclosure content to the Stock Exchange Within 90 days from the date of information disclosure, the enterprise must complete the distribution of bonds Step Bond offering - Securities companies and FD/Issuer conduct a research and make a list of investors wishing to purchase Bonds Buyers of Bonds must be professional investors: (1)Commercial banks, financial companies, securities companies… (2)The company has contributed charter capital of over 100 billion VND or listed or registered for trading (3) Individuals holding the list of listed securities, registered for trading with a value of at least VND billion or having a taxable income of at least VND billion in the latest year Provide and clarify information for investors, guide the procedure for buying Bonds for investors When an investor decides to buy a bond, processing as follow: + Bond booking Contract + Bond purchase and sale Contract + Collect money to buy Bonds from investors in the form agreed upon between the Investor and the issuer/agreement between the issuer and the bank that manages the creditor's account Securities Company confirms ownership of Bonds and sends depository information an issue the Certificate of Bond ownership to the Buyer after the Buyer has completed the payment Step Report on Bond Issuance Results Report the results of bond issuance to the Stock Exchange within 10 days from the end of the bond issuance The official report would be notified on the specialize website Step Follow up after bond issuing FD/Issuer monitors and reports quarterly to the Stock Exchange Coordinate with the account management bank to manage the proceeds from bond issuance, disburse the project when there are adequate and appropriate payment documents Step Summarize and save documents Periodically FD/Issuer monitors and makes payment of bond principal and interest as agreed, and discloses information and reports to bond-owning investors, depository institutions and the Stock Exchange Issuer, FD, AD gather and store all relevant records in accordance with the CT Land's regulations Collateral Commitment Form of commitment: commit to pay all or part of interest and principal upon maturity with the issuer's assets or third-party assets in accordance with the law on secured transactions Collateral: Land use rights and assets formed in the future (Léman Cap Residence project in Vung Tau) Contract value XX, assessed by Viet Nam Assessment and Evaluation Assets Joint Stock Company (VAAE) Additional measures: payment guarantee by CT Land Corporation The evaluation of corporate bonds issuance procedure in CT Land Corporation 2.1 Strengths In general, the steps in the process are sufficient and necessary to carry out the bond issuance operation Based on the knowledge of bond issuance, the company has succeeded in putting bonds on the stock market Moreover, with the attractiveness and reputation of the company along with the yield that the company brings to investors, it has attracted a large amount of investment money from groups of bond buyers in the market Since then, using corporate leverage to increase profits, although affecting the ratio of total assets to capital, but the bond issuance has supported the company to implement the Metro Star project and the future forecast In 2025, there will be a revenue boom, specifically at 8600 billion The Finance Department has an independent and cooperative way of working, each member of the committee is given the right to self-determination when assigned tasks, and at the same time, flexibly connects members of the committee or the committee when there are questions When an incident occurs, employees are allowed to solve it within their capacity, or support each other before proposing or consulting with senior departments, namely the department head or CFO 2.2 Weakness In 2021, real estate businesses issue bonds with a total value of about 200,000 billion VND, accounting for about 33.16% of the total volume of corporate bonds issued Analysis based on total market capitalization, the Real Estate industry accounts for about VND 1.56 million billion, equivalent to 21% of the total market value In fact, for illustrating more specifically the influence of the real estate industry, after the incident that Tan Hoang Minh mobilized VND 10,000 billion from bonds in April 2022, the domestic bond market belonged to banking sector (accounting for 90.7%) yet have not recorded any issuance from real estate enterprises, the total value of bonds reached 16,472 billion VND, equivalent to a decrease of 23.2% compared to the previous month As a real estate company, the issuance of bonds has not really met financial needs For the specificity of the industry, which is thirsty for capital, it is necessary to supplement a lot of capital mobilized from many different sources Therefore, the abuse and dependence on bond issuance requires clear and tight regulation to ensure proper use and avoid market manipulation Tightening bonds issuance regulations: Decree No 153/2020/ND-CP dated December 31, 2020 stipulating the private offering and trading of corporate bonds in the domestic market and the offering of corporate bonds to the international market has negatively restricted, from the subject (Issuer) to the purpose of the issuance Typically, the form of M&A is the acquisition of shares or the acquisition of a project On the side of CT Land, as a private issuance of corporate bonds company in a separate tranche, it is also directly affected by Decree 153 Currently, CT Land is investing in main projects, most of which are: The projects are still incomplete and the revenue is according to the construction progress, so the budget source is not really stable (very low liquidity ratio) Therefore, tightening the state's bond issuance regulations will cause many difficulties for CT Land in the future CHAPTER 3: LESSON LEARNED AND RECOMMENDATIONS FOR IMPROVING THE EFFECTIVENESS OF CORPORATE BONDS ISSUANCE PROCEDURE IN CT LAND CORPORATION Lesson learned from the practice study and the internship period During the internship at CT Land Corporation, the author has learned a lot of new things about the mission in BO as a finance intern, so that the author has the opportunity to apply the knowledge learned at university and improve themselves In addition, the staff in charge of internship guidance are always enthusiastic to guide and instruct, give points to note as well as teach valuable experiences that you have experienced in the process of working work, so that the author feels completely comfortable and confident during the internship Accordingly, the author has accumulated a number of lessons for himself as follows: In the university lecture hall, the author learned and understood how to analyze, evaluate and issue bonds in theory and the internship process at the company gave the author a deeper approach to the issuance process bonds, especially companies in the field of real estate Initially, the author still encountered many difficulties in understanding the process steps, not familiar with the scientific way of information system and how to write a highly professional report The author is confused because the actual situation of the release is not as simple as in the theory learned in university Under the enthusiastic guidance and support of Team BO, the author has learned a lot of useful experiences not only in the process but also in other related operations (M&A, IPO, DD, FS, etc.) This allows the author to a better understanding of the work of an expert at real estate sector Recommendation for improving the effectiveness of corporate bonds issuance procedure in CT Land Corporation During the process of carrying out the delivery service at Phuong Dong Garment Joint Stock Company, the author found that the company's management has supported, and the close cooperation between departments has been created for the forwarders get a favorable condition to complete their tasks well However, if we want to be more perfect, we need to have some specific solutions: CONCLUSIONS REFRERENCES ... signal CHAPTER 2: CORPORATE BONDS ISSUANCE PROCEDURE IN CT LAND CORPORATION Analysis of corporate bonds issuance procedure in CT Land Corporation Issuance method: Issuance agency Issuance agency:... Business situation period 2018 – 2021 16 CHAPTER 2: CORPORATE BONDS ISSUANCE PROCEDURE IN CT LAND CORPORATION 18 Analysis of corporate bonds issuance procedure in CT Land Corporation. .. understanding of the work of an expert at real estate sector 2 Recommendation for improving the effectiveness of corporate bonds issuance procedure in CT Land Corporation During the process of carrying