MASTER IN FINANCIAL MANAGEMENT Investment project analysis the case of Hai Phong Plastic Factory Project, the European Plastic Joint Stock Company Graduate student Nguyen Thi Thanh Mai Supervisor Asso[.]
MASTER IN FINANCIAL MANAGEMENT Investment project analysis- the case of Hai Phong Plastic Factory Project, the European Plastic Joint Stock Company Graduate student: Nguyen Thi Thanh Mai Supervisor: Assoc.Prof.Dr Nguyen Van Dinh Hanoi, 2022 ABSTRACT Thesis Title: "Investment project analysis - the case of Hai Phong Plastic Factory Project, the European Plastic Joint Stock Company" Pages: 116 University: Vietnam National University Graduate School: International School Date: December 2021 Degree: Master Graduate Student: Nguyen Thi Thanh Mai Supervisor: Dr Nguyen Van Dinh The process of integration with the economy of the region and the world has opened up many challenges and opportunities for businesses, especially in investment projects Therefore, every business and investor need to improve the capacity and efficiency of investment project analysis to help businesses make the most optimal decisions and plans for their investment projects The purpose of this thesis is to study the method of analyzing investment projects through several specific aspects affecting the results of project implementation such as political and environmental factors and ways of book-based risk calculation (Long, European Plastics Joint Stock Company (Europlast ) By quoting previous studies on investment projects and investment analysis, this thesis has summarized the concepts of investment and investment projects, investment analysis process and steps, financial and non-financial factors as ii well as risk management in investment projects From there, it is possible to give an overview of related concepts to apply the case study "analysis of Hai Phong plastic factory investment project" at Europlast First, the thesis does qualitative and computational research, including key criteria such as NPV, IRR, WACC, CAPM, scenario analysis, sensitive analysis, and computer simulation Then this study examines non-financial factors through SWOT analysis of investment projects, applies the process of investment project analysis steps of (Ribeiro, 2010; Aaro J.Shenhar (2001) and uses PESTEL model questionnaire by Richardson, 2006; Shilei, L., & Yong, W., 2009; Katko, 2006) After being adopted and performing qualitative and quantitative analysis steps, the thesis has built a scale and measured through the observed variables of the project "Hai Phong plastic factory" From the research results, the thesis also raises the managerial implications to help improve the efficiency of investment project analysis This research result is beyond practical significance to suggest solutions to improve the investment project analysis process of enterprises (in particular, an overview of the actual situation of investment analysis of the "Hai Phong plastic factory" project) aims to help businesses make better investment decisions Besides, this is also a reference source for other studies, encouraging the implementation of similar studies in other business organizations Key words: Europlast, European Plastic Joint Stock Company, Hai Phong plastic factory, Investment project analysis, Capital budgeting method, scenario analysis, sensitive analysis, computer simulation, SWOT, PESTEL, financial analysis, nonfinancial analysis iii ACKNOWLEDGEMENT First words, I would like to sincerely thank the teachers who are teaching at the International School, Vietnam National University, Hanoi, and the Postgraduate Section for their dedication to imparting knowledge, experience and supporting me throughout my study at the school I would also like to express my deep gratitude to my supervisor, Associate Professor Nguyen Van Dinh, who enthusiastically guided me in theory as well as practical implementation so that I could complete this thesis I am very grateful to him for always conscientiously following my thesis from the very beginning to its completion He has always been thorough and patient with a student with many shortcomings like me and let me know that knowledge is limitless and learning is never enough Next, I would like to thank the MFM2019A class for always standing by my side, sharing documents, encouraging, and supporting each other during their study at the school During the process of writing this thesis, I have also received a lot of support from people around me The help not only from the working unit, the commanders who created favorable conditions for me to complete my studies at IS-VNU but also from my close friends who always support me in all aspects Finally, thanks dad for your advice, thanks mom for your encouragement, and thanks to my family for always loving and being by my side all the time Wishing all of you, who have always accompanied me along this journey, always have good health and achieve much success in life Once again, I would like to express my sincere thanks! Thank you! Nguyen Thi Thanh Mai iv TABLE OF CONTENTS Table of Contents ABSTRACT .ii ACKNOWLEDGEMENT iv TABLE OF CONTENTS v LIST OF FIGURES viii LIST OF TABLES ix ABBREVIATION x INTRODUCTION xi Chapter Literature Review and theoretical background 1.1 Literature reviews 1.2 Theoritical background 1.2.1 Investment analysis concept 1.2.2 Steps of analyzing investment project 1.2.3 Project financial analysis 1.2.4 Project non- financial analysis 22 1.2.5 Factors affecting investment performance 27 1.2.6 Identified gaps 30 1.2.7 Analytical framework 30 Chapter Research Methodology 32 2.1 Research approach 32 1.2 Research data 34 v 2.2.1 Data source 34 2.2.2 Data collection 35 1.3 Survey 35 2.3.1 Target respondent 35 2.3.2 Sampling 36 2.4 Data analysis 36 Chapter Analys 39 3.1 Overview of European Plastics Joint Stock Company 39 3.1.1 General introduction of European Plastic Joint Stock Company 39 3.1.2 Organizational structure of the company 42 3.1.3 Main performance indicators of European Plastics Joint Stock Company 45 3.2 Actual situation of investment analysis of the project "Hai Phong Plastic Factory" at European Plastics Joint Stock Company 51 3.2.1 Overview of Hai Phong plastic factory investment project 51 3.2.2 Investment project formulation process 52 3.2.3 Investment project analysis method that Europlast is using 55 3.3 Evaluation of investment project analysis activities at European Plastics Joint Stock Company 65 3.3.1 Strengths 66 3.3.2 Weaknesses and causes 67 Chapter Proposed solutions and recommendations 70 4.1 Proposed solutions 70 vi 4.1.1 Business context analysis 70 4.1.2 Project risk analysis 77 4.2 Recommendations 82 4.2.1 Recommedations for project analysis 82 4.2.2 Other recommendations 88 CONCLUSIONS 92 REFERENCES 95 APPENDICES 100 Appendix 1: Cash flows projection 100 Appendix 2: Income statement 104 vii LIST OF FIGURES Figure 1-1 Steps of analyzing investment project Figure 1-2 Factors affecting investment performance 28 Figure 1-3 Analytical framework of research 31 Figure 2-1 Research approach/steps 34 Figure 3-1 Organization chart at the production plant of Europlast 43 Figure 3-2 Number of employees of Europlast over the years 44 Figure 3-3 Competency of professional staff at Europlast 45 Figure 3-4 Implementation diagram of Europlast 's investment project preparation 54 Figure 4-1 Computer simulation analysis 82 Figure 4-2 Diagram of the organizational model of the formulation and analysis of investment projects 86 viii LIST OF TABLES Table 1-1 Compare the actual application of assessment methods 13 Table 1-2 Percentage of project appraisal methods that companies around the world are using Table 1-3 Statistics on the percentage of small and medium-sized enterprises using investment project appraisal methods 15 Table 3-1 Main business indicators 2016 - 2019 47 Table 3-2 Overall assumption of business plan 58 Table 3-3 Capacity Scenarios 64 Table 3-4 NPV and IRR 65 Table 4-1 The combination PESTEL analysis and SWOT analysis 77 Table 4-2: Interviewee profile 80 Table 4-3 Questions of questionnaire 81 Table 4- 83 Table 4-5 Strengths, Weaknesses, Opportunities, and Threats indicators 85 Table 4-6 Sensitive matrix analysis 89 ix ABBREVIATION IRR Internal rate of return NPV Net present value PP Payback period DPP Discounted Payback Period ARR Accounting rate of return PI Profitability index RRR Required rate of return WACC Weighted average cost of capital DCF Discounted cash flows method CAPM Capital asset pricing model x ... choose the topic My master thesis is "Investment project analysis - the case of Hai Phong Plastic Factory Project, European Plastic Joint Stock Company" The thesis was established with the desire... structure of the company 42 3.1.3 Main performance indicators of European Plastics Joint Stock Company 45 3.2 Actual situation of investment analysis of the project "Hai Phong Plastic Factory" ... next project of the business For European Plastics Joint Stock Company, analyzing the project "Hai Phong Plastic Factory" helps the company to recognize problems and perfect the investment project