CORPORATE FINANCE REPORT KINHDO’SFINANCIALSTATEMENTANALYSIS2018 – 2020

CORPORATE FINANCE KINH DO’S REPORT FINANCIAL STATEMENT ANALYSIS 2018 – 2020 WESTERN SYDNEY UNIVERSITY VIETNAM CF-T321WSB-4 LECTURE: VO HONG DUC TU THI KIM THOA Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Table of Contents INTRODUCTION Company Overview Primary Business Line Business Network Board of Directors Subsidiaries ANALYSIS OF PROFIT/LOSS AND BALANCE SHEET YEAR-END BALANCE SHEET OF KDC CORPORATION a Total current assets b Total non-current assets c Total currents liabilities d Total non-current liabilities 10 e Total Stockholders’ equity 10 INCOME STATEMENT 11 a Total operating revenues 11 b Cost of goods sold 12 c Total expenses (before income taxes) 13 d Non-operating (or extraordinary) gains and losses 13 e Earnings per common share (EPS) 14 RATIOS ANALYSIS .15 a Liquidity Ratios 15 b Leverage Ratios (Efficiency ratios) 16 c Leverage Ratios (Long-term solvency ratios) 17 d Profitability Ratios 18 e Market Value Ratios 20 CONCLUSION 21 REFERENCES .22 Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat INTRODUCTION\ Company Overview Company Name: KIDO GROUP CORPORATION Stock Trading Code: KDC Listing Information: listed on the Ho Chi Minh City Stock Exchange under the Listing License No 39 / UBCK-GPNY issued by the State Securities Commission on November 18th, 2005 External Audit Firm: Ernst & Young Vietnam Global Limited (E&Y) Postal Address: 138-142 Hai Ba Trung St., Da Kao, District 1, Ho Chi Minh City, Vietnam Internet Address: Email: info@kdc.vn Website: www.kdc.vn Customer Support: customerservice_kido@kdc.vn Charter capital (as of 31st December 2020): 2,797,413,560,000 VND KIDO, formerly known as Kinh Do Construction and Food Processing Co., Ltd, was founded in 1993 in Ho Chi Minh City, Vietnam Since then, it has become one of the largest food flavoring companies in the domestic market It was in 2001 when the company’s products were strongly exported to America, France, Germany and other Asian countries In October 2015, the firm officially changed its name to KIDO Group Joint Stock Company By 2020, KIDO has been recognized as a National Brand for 12 consecutive years and continues to be in the Top 10 prestigious food companies Primary Business Line Over 27 years of development, KDC has operated mainly in the field of manufacturing, processing, trading and exporting consumer food products such as cooking oil, ice cream, confectionery, snack food and beverage In 2020, it is reported that KIDO successfully maintained its position in the ice cream industry, accounting for 43.5% of market share with popular brands Merino and Celano Additionally, owning 30% of market share in the cooking oil market, the company continued Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat to be No.2 in the industry with honored products including Tuong An Cooking Oil and Seasonal Tuong An Cooking Oil Business Network Currently, KIDO operates with main head office located in Ho Chi Minh City and major subsidiaries The company owns 02 frozen food factories in Bac Ninh and Cu Chi as well as 05 oil factories in Nghe An, Ba Ria - Vung Tau and Nha Be Each year, the total capacity supplied includes more than 20 million liters of yogurt and ice cream individually; over 400,000 tons of oil products, 130,000 tons of refined oil, 120,000 tons of finished oil and 4,000 tons of sesame oil Additionally, KIDO also has a huge tank system of nearly 8,000 m2; liquid storage tank of 22,300 m3 and 04 Jetties at Nha Be Port bearing load capacity: 20,000 DWT, 5,000 tons of oil In order to reach customers throughout the country, KIDO has built a nationwide distribution network of 15 transit warehouses, 300 distributors Providing a variety of consumer food from 450,000 points of sale for dried products and 120,000 selling points for frozen items Board of Directors The Board of Directors (BOD) of KIDO Group has members, including independent members Independent members are selected from thousands of candidates based on qualifications, experiences, and professional qualifications Mr Tran Kim Thanh Mr Tran Le Nguyen Ms Vuong Buu Linh Ms Vuong Ngoc Xiem Ms Nguyen Thi Xuan Lieu Mr Tran Quoc Nguyen Mr Nguyen Van Thuan Mr Nguyen Gia Huy Chuong Mr Nguyen Duc Tri Mr Wang Ching Hua Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Subsidiaries Subsidiaries TAC KDF VOC KDNB Tuong An Vegetable Oil Joint Stock Company (TAC) KIDO Frozen Food Co., Ltd (KDF) Vietnam Vegetable Oils Industry Corporation (VOC) KIDO Nha Be Co., Ltd (KDNB) Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat ANALYSIS OF PROFIT/LOSS AND BALANCE SHEET KDC BALANCE SHEET Year Unit Assets Total current assets Total noncurrent assets Total assets 5,331,754,617,709 42.54% 4,912,948,952,221 41.17% 5,477,496,873,438 44.36% 7,202,662,602,321 57.46% 7,019,204,675,784 58.83% 6,871,658,282,809 55.64% 12,534,417,220,030 100% 11,932,153,628,005 100% 12,349,155,156,247 100% Liabilities and Owners’ equity Total current 2,635,818,701,208 liabilities Total noncurrent 1,540,182,295,283 liabilities Total stockholder 8,358,416,223,539 s' equity Total liabilities and 12,534,417,220,030 owners’ equity 21.03% 2,684,940,017,299 22.50% 3,805,344,840,749 30.81% 12.29% 1,091,562,096,617 9.15% 844,422,862,758 6.84% 66.68% 8,155,651,514,089 68.35% 7,699,387,452,740 62.35% 100% 11,932,153,628,005 100% 12,349,155,156,247 100% TABLE 1: illustrates the amount and percentage of current assets, non-current assets, current liabilities, noncurrent liabilities, and stockholders' equity of Kinh Do Corporation from 2018 to 2020 Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat YEAR-END BALANCE SHEET OF KDC CORPORATION a Total current assets Total current assets of KDC were over 5,331 billion VND in 2018, then slightly decreased to around 4,912 billion VND in 2019 However, in 2020, the value of KDC's total current assets climbed back to over 5,477 billion VND Thus, KDC's total current assets in 2020 were the highest, showing an upward trend between 2018 and 2020 During the 2018-2020 period, while KDC's current assets increased, BIBICA's current assets experienced an opposite trend However, when comparing the assets ratio of the two companies, KDC always had a lower level of current assets than BIBICA throughout 2018 and 2020 To be more specific, in 2018, the ratio of KDC’s current assets was 42.54%, which is lower than 59.37% of BIBICA’s In 2020, although KDC's current assets had reached its highest point (44.36%), it was still lower than BIBICA's (46.50%) b Total non-current assets Initially, KDC’s non-current assets had a total of over 7,202 billion VND in the year 2018, then it continued to drop to around 7,019 billion VND in 2019 Despite the value decline between 2018 and 2019, total non-current assets accounted for 58.83% of total assets in 2019, which was higher than 57.46% in 2018 Finally, the value of non-current assets fell even more in 2020, to about 6,871 billion VND Overall, the value of KDC’s had a declining Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat trend throughout the period The decrease in non-current assets were mostly due to depreciation over time In comparison to BIBICA, KDC's non-current assets had a declining trend, while BIBICA's non-current assets had a growth between 2018 and 2020 However, when it comes to asset ratios, KDC's non-current assets ratio was consistently higher than BIBICA's between 2018 and 2020 In 2018, the ratio of KDC’s was 57.46%, which is higher than 40.63% of BIBICA’s In 2020, the percentage of KDC's non-current assets stopped at its lowest point (55.64%), but still higher than BIBICA's (53.50%) c Total currents liabilities KDC’s total current liabilities, the value was over 2,635 billion VND in 2018, then increased to nearly 2,685 billion VND in 2019, and peaked at 3,805 billion VND in 2020 Overall, the value of KDC’s current liabilities had increased about 1,170 billion VND from 2018 to 2020 As can be seen, both KDC and BIBICA experienced an increase in current liabilities over the 2018-2020 period However, while KDC changed from 21.03% in 2018 to 30,81% in 2020 (increase 9.78%), BBC’s current liabilities had increased about 2.53% This means that KDC’s current liabilities expanded more significantly than BIBICA’s Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat e Earnings per common share (EPS) Table 2: Unit (%) & (VND) Net revenues (Billion VND) After-tax profit (Billion VND) EPS (VND) EPS changes Despite the reduction of net income in 2019, the after-tax profit of KIDO reached 207 billion (40.4% compared to 2018) and enabled a 49.47% increase (97 VND) for shareholders’ earnings per share At the end of 2020, Kido’s financial performance appears to continue its streak thanks to the revenue contribution of edible oil and mooncake product lines, reaching 333 billion VND after-tax earnings Thus, Kido shareholders enjoyed a significant growth EPS at 987 VND per share (nearly 2.5 times the previous period) On the other hand, BIBICA shows more ups and downs during the same period Despite the significant difference between the two companies’ EPS, the performance of KIDO and BIBICA can be measured by common-sized calculations (See table above) BIBICA failed to achieve its financial goals in 2019, leading to a reduction in after-tax earnings despite revenue growth; however, the company recovered in the following years BIBICA’s shareholders received a 13.56% loss in 2019, but the rate increased 2.06% back during 2020 Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat RATIOS ANALYSIS a Liquidity Ratios Table 3: Unit: times Current ratio Quick ratio Cash ratio Liquidity ratios, or short-term solvency ratios, are used to inform about the company’s liquidity These ratios measure the firm’s ability to cover its short-term obligations; therefore, current assets and current liabilities are the main focus in equations As the table illustrates, in 2018, the current ratio of KIDO was the highest among the threeyear-period with 2.02 times This statistics then decreased in the two following years and ended at 1.44 times in 2020 This trend indicates that the financial resources to liquidate bills of KIDO declined, thus was still positive Similarly, BIBICA’s current ratio during the same period witnessed an overall descent despite a slight increase from 1.54 times to 1.67 times between 2019 and 2020 In addition, the curves showing quick ratios of both enterprises follow an almost the same movement of their current ratios with a completely downward trend for KIDO and a fluctuation for BIBICA To put in comparison, the index of KIDO companies are generally lower than BIBICA’s as their average quick ratio in the period are 1.39 times and 1.57 times, respectively, implying that KIDO has a weaker potential to keep the company’s short-term dues in solvent Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Cash ratio of KIDO slightly went up with the initial index of 0.27 times in 2018 and reached its highest of 0.29 in 2020 In contrast, BIBICA’s cash ratio continuously plummeted from 0.94 in 2018 to 0.74 in 2019 and hit the bottom at 0.26 in 2020, which was even lower than KIDO’s stats in spite of a higher starting point b Assets Management (Efficiency ratios) Table 4: Unit: times Total debt ratio Debt / Equity (D/E) Equity multipliers (EM) Times interest earned (TIE) Cash coverage Apart from determining KIDO's company's long-term solvency should also be brought into consideration through several financial leverage ratios If this ratio surpasses the value of 1.0 (or 100 percent), it suggests that the financial system of the company is fragile and the ability to meet obligations is weakened Noticeably, the total debt ratios of KIDO remained a proportion of about one-third to the total asset Therefore, during the three-year period, KIDO’s debt-equity value fluctuated around 0.5 indicating that the firm is in good financial position and in the case of a corporate downturn, KIDO would be capable of utilizing shareholder equity to satisfy the existing obligations Turning to BIBICA, it also witnessed quite similar statistics of total debt ratios and debt-equity value in the same period The greatest difference is that in 2018, BIBICA’s liability was 26.87% of its assets and equaled only 36.74% of the shareholders equity Regarding times interest earned (TIE), it seems that KIDO had enough ability to meet its debt obligations based on its current income This ratio was merely 2.05 times in 2018 but then increased to double in 2020 (4.36 times) Likewise, a similar trend was witnessed in KIDO’s cash coverage rate with 4.14, 4.85, and 6.50 times in the three-year period However, it is notable that BIBICA’s TIE and cash coverage ratio were significantly higher than those of KIDO despite experiencing a plunge over three years In 2018, those ratios were 102.09 and 137.20 respectively, but then in 2020, the record showed that there was merely a-fourth of the starting index with 23.34 and 38.45 times respectively Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat c Leverage Ratios (Long-term solvency ratios) Table 5: Unit: times & days Inventory Turnover (times) Days' sales in Inventory (days) Receivables Turnover (times) Days' sales in Receivables (days) Total assets turnover (TAT) (times) Leverage ratios, or so-called assets management, are important to determine whether the company is operating efficiently It can be observed from the table that the inventory turnover of KIDO came through a fluctuation between 2018 and 2020 BIBICA’s index, however, steadily decreased, thus its turnovers in inventory were still higher than KIDO’s in three consecutive years of the same period In detail, BIBICA mostly doubled KIDO in 2018 with its 9.85 times compared to 5.28 times of KIDO; however, this difference was narrowed in 2019 and 2020 when BIBICA’s index deducted in general while KIDO illustrated a greater efficient inventory management (2019: 8.79-6.14 times, 2020: 7.05-5.41 times) The higher a company’s inventory turnover ratio, the less days are required to renew its goods in stock Therefore, since KIDO had a lower turnover, it needed up to 67.42 days to sell all of its inventory, while BIBICA spent only 51.8 days to so in 2020 Turning to the capability of collecting receivables, KIDO also seems to be weaker than BIBICA Its initial receivables turnover was 8.20 times in 2018, slightly less than 10.05 times of the competitor, but then shinked deeply to 2.69 times in 2019 and recovered inconsiderably to 3.64 times in 2020 In explaining the sudden decline in receivables turnover rate, in 2019, the value of account receivables of KIDO surged from around 941 million at the year beginning to over 2,724 million at the end of fiscal year BIBICA, meanwhile, maintained good ability to collect receivables from customers in 2019 with 9.93 times, equaled to 369.14% of KIDO’s index in the same year Nevertheless, this statistics in 2020 was ultimately recorded to drop to 3.52 times, even lesser than that of KIDO Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat This line chart indicates the total asset turnover rate (TAT) of the two enterprises, KIDO and BIBICA Overally, KIDO experienced a slight increase from 0.6 to nearly 0.7 while the opposite trend occurred to BIBICA, making its TAT decrease from 1.13 in 2018 to 0.79 in 2020 These indexes manifest that although BIBICA was more efficiently using its assets to generate sales, KIDO was improving the ability to utilize its assets However, the statistics of both companies are merely over or even less showing their weakness in their asset management d Profitability Ratios Table 6: Unit: precent (%) Profit margin ROA ROE EBITDA Margin Profitability ratios evaluate the company’s ability to generate profits from its revenues, operating cost, balance sheet assets, or shareholders' equity Profitability ratios is an index showing efficiently how a company earns profit and value for shareholders Overall, the proportion of KIDO’s profit margin considerably increased from 2018 to 2020 On the contrary, the percentage of BIBICA just remained steady after years However, in the same period, the profit margin of BIBICA is much higher than KIDO, it’s proved that KIDO is less profitable and controls costs less effectively than its competitors According to According to Mr Tran Kim Thanh - Chairman of the Board of Directors of KIDO Corporation, because of Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat the level of competition among food businesses is becoming more and more fierce, so KIDO has to continuously invest in the distribution system, increase the cost of promotions to keep the market, and this makes operating costs went up, make KIDO's business results go down and that's also the reason KIDO's stats are low in 2018 Although BIBICA's profit margin declined significantly in 2019, it has returned strongly with a profit margin of 7.86%, higher than the ratio it achieved in 2018 As for KIDO corporation, its profit margin in 2018 was only 1.91% and after years it has doubled the original index Return on Assets (ROA) is an indicator that shows the correlation between a company's profitability relative to its assets ROA indicates the efficiency of the company in using assets to make a profit In general, the return on assets of KIDO is many times lower than BIBICA’s ROA In 2018, the percentage of BIBICA was times higher than KIDO’s return on assets Although by 2020, KIDO's index has improved and BIBICA's return on assets ratio has decreased slightly, the proportion of KIDO is still well under than BIBICA almost times Therefore, the ability of KIDO in using assets to make a profit is ineffective compared to BIBICA Return on Equity (ROE) reflects the ratio of net return to shareholders' equity This index is the most accurate measure to evaluate a capital spent and how much profit is accumulated Once again, in another index, BIBICA’s return on equity percentage is much higher than KIDO with the zenith being 9.51% In 2018, the ratio of BIBICA is roughly times than KIDO return on equity After years, although the growth coefficient of this index of KIDO is higher than BIBICA, the return of equity of BIBICA is still times higher This proves that BIBICA's ability to use investors' capital to generate profits is still Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat much better However, the bright point is, KIDO has gradually narrowed the gap compared to its opponent Earnings before Interest, Taxes Depreciation and Amortization (EBITDA) Margin evaluates a company's operating profit as a ratio of its revenue Overall, the EBITDA Margin of two corporations fluctuated mildly from 2018 to 2020 In years, although there are still certain disparities, in 2019, the ratio of the two sides is approximately equal Although it has caught up, after only one year, BIBICA is far ahead of KIDO in terms of the company's real performance efficiency (9.49% compared to 16.56%) e Market Value Ratios Table 7: Unit: (VND) & (%) EPS PE Ratio Market value ratios are used to assess the market share price of a company’s outstanding stock Investors used these ratios to check whether this company is worth investing in Earning per Share (EPS) is one of the most important things for investors to decide if the amount of money they will spend on that company is worth or not According to the EPS data in Table 7, KIDO’s EPS increased considerably during 2018 to 2020 Nevertheless, although the number of shares is very large and the market price is also very high, when compared to BIBICA’s EPS, KIDO can only receive failure with the EPS is much lower On the other Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat hand, the Price to Earning (PE) ratio of KIDO is much higher than BIBICA's PE Especially in 2018, it is 13 times higher It is demonstrated corporation that business KIDO is less efficient than BIBICA, so it has such low EPS and high PE However, in 2020, the gap in PE ratio has been narrowed, which proves that KIDO has managed business more efficiently CONCLUSION In conclusion, KDC operating performances and its potential development has been evaluated through financial statements analysis, including the comparison with BBC From 2018 to 2020, KDC successfully achieved a significant growth in net profit margin even though some negative statistics appeared in financial capability and operating productivity Taking advantage of strong financial resources, the company strongly invests in M&A activities as well as new product development to strengthen its retail channels and diversify customer’s product baskets Thus, leading to the increase of operating cost in 2019; however, the company recovered the situation as its cost control activities were highly controlled and optimized in 2020 Additionally, the drop in current and quick ratios also indicated the reduction in KDC’s ability to fulfil the short-term obligations Although longterm solvency ratios were slightly increased throughout the period, the firm always maintained the safe total debt ratios at around 0.3 times In terms of operating efficiency, it seems that KDC was less effective than BBC due to the huge difference in business size Despite some limitations, the significant growth in KDC market value, approximately times during the three-year period, makes it reasonable for investors to expect the remarkable developments of KIDO in the future Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat REFERENCE S Báo cáo thường niên 2018 (2019) kdc https://www.kdc.vn/files/documents/20190516%20-%20KDC%20-%20AR %202018%20-%20VN%20(up%20web%20final).pdf Báo cáo thường niên 2019 (2020) kdc https://www.kdc.vn/files/documents/KDC_AR %202019%20VN.pdf Báo cáo thường niên 2020 (2021) kdc https://www.kdc.vn/files/documents/20210601_KDC_AR_2020_VN%20(Website).pdf Báo cáo tài hợp 2018 (2019) bibica http://www.bibica.com.vn/templates/pictures/files/21_BAO%20CAO%20TAI%20CHINH %20HOP%20NH AT%20NAM%202018.pdf Báo cáo tài hợp 2019 (2020) bibica http://bibica.com.vn/templates/pictures/files/660_Final%20BCTN%202019.pdf Báo cáo tài hợp 2020 (2021) bibica http://www.bibica.com.vn/templates/pictures/files/73_BBC%20-%20BCTC%20Hop %20Nhat%20nam%202020.pdf Phuc, H (2019, May 6) Tổng Giám đốc Kido: Chúng đa lac Quan đánh giá chưa diên biên thi trường thưc Phâm đông lanh baodautu.vn Retrieved November 26, 2021, from https://baodautu.vn/tong-giam-doc-kido-chung-toi-dalac-quan-va-danh-gia-chua-dung-dien-bien-thi-truong-thuc-pham-dong-lanhd99746.html KDC: CTCP TẬP đoàn Kido - Kinhdo VietstockFinance Retrieved November 25, 2021, from https://finance.vietstock.vn/KDC-ctcptap-doan-kido.htm?tab=BCTN Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat APPENDIX Data summary: https://docs.google.com/spreadsheets/d/1yQVCvOV2CeWVxMIYxC_NAzDouKVXa3XebL EZF3xCsLk/edit?usp=sharing Formulas used in the report: (Retrieved from: Hillier, D., Westerfield, R., Jaffe, J F., Jordan, B D., Ross, S A., & McGraw-Hill Education (2016) Financial Statements Analysis and Financial Models Corporate finance (p 57) Maidenhead: McGraw-Hill Education.) Group 3_CF-T321WSB-4 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat ... https://www.kdc.vn/files/documents/20190516%20-%20KDC%20-%20AR %20201 8%20-%20VN%20(up%20web%20final).pdf Báo cáo thường niên 2019 (2020) kdc https://www.kdc.vn/files/documents/KDC_AR %20201 9%20VN.pdf Báo cáo thường niên 2020 (2021) kdc https://www.kdc.vn/files/documents/20210601_KDC_AR _2020_ VN%20(Website).pdf... http://bibica.com.vn/templates/pictures/files/660_Final%20BCTN %20201 9.pdf Báo cáo tài hợp 2020 (2021) bibica http://www.bibica.com.vn/templates/pictures/files/73_BBC%20-%20BCTC%20Hop %20Nhat%20nam %20202 0.pdf Phuc, H (2019, May... This session aims to review KIDO’s financial performance in years – 2018, 2019, and 2020 The data is taken from the official annual reports published on KIDO’s website (Used data can be found in