LUẬN văn THẠC sĩ stock valuation in vietnam theory, practice and recommendation the case SACOM

vietnam national university, HANOI hanoi school of business Ngo Viet Duc STOCK VALUATION IN VIETNAM THEORY, PRACTICE AND RECOMMENDATION THE CASE SACOM master of business administration thesis Hanoi - 2007 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com vietnam national university, HANOI hanoi school of business Ngo Viet Duc Stock valuation in Vietnam THEORY, PRACTICE AND RECOMMENDATION the case sacom Major: Business Administration Code: 60 34 05 Master of business administration thesis Supervisor: DR CHU THANH TRAN PHUONG LAN, MBA Hanoi – 2007 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ABSTRACT i TÓM TẮT ii ACKNOWLEDGMENTS iii LIST OF TABLES v LIST OF FIGURES vi INTRODUCTION CHAPTER 1: LITERATURE REVIEWS: STOCK AND STOCK VALUATION 1.1 STOCK – DEFINITION, TYPES AND FEATURES 1.2 VALUATION 1.2.1 Valuation .8 1.2.2 Value .8 1.2.3 Price 10 1.2.4 Time value of money 10 1.2.5 Present value .11 1.3 VALUATION MODELS 13 1.3.1 Internal Rate of Return (IRR) .15 1.3.2 CAPM 16 1.3.3 Book Value (BV) 18 1.3.4 P/E ratio (P/E) .18 1.3.5 Dividend Discount Model (DDM), Discounted Cash Flow (DCF) 19 CHAPTER 2: APPLIED VALUATION METHODS IN EVALUATING CABLES AND TELECOMMUNICATION MATERIALS JOINT-STOCK COMPANY (SAM) .22 2.1 OVERVIEW OF VALUATION METHODS IN VIETNAM 22 New requirements for enterprise valuation 23 2.1.1 Valuation before 1996 23 2.1.2 Valuation 1996 – 1998 24 2.1.3 Valuation 1998 – present 25 2.1.4 Pros and cons of valuation methods in Vietnam .27 2.2 CABLES AND TELECOMMUNICATION MATERIALS JSC – SACOM OVERVIEW 30 2.3 HISTORY OF SAM VALUATION AND PRICE 31 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 2.3.1 Stock market and SAM at early stage 31 2.3.2 Price adjustment and decrease period 32 2.3.3 SAM Internal Value 33 2.4 VALUATION OF SAM AT PRESENT .35 2.4.1 Applied Advantageous valuation method to value SAM quarterly stock prices in 2006 35 2.4.2 Applied P/E (Group D) to value SAM quarterly stock prices in 2006 .36 2.4.3 Applied Dividend discount model – DDM (group C) to value SAM quarterly stock prices in 2006 37 2.4.4 Applied Discounted Cash Flow Model – DCF (group C) to value SAM quarterly stock prices in 2006 40 CHAPTER 3: COMMENTS AND RECOMMENDATION OF THE VALUATION METHODS IN VIETNAM 44 3.1 COMMENTS 44 3.1.1 Advantegeous value 44 3.1.2 P/E multiple 45 3.1.3 DDM, DCF 45 3.2 RECOMMENDATION TO APPLY VALUATION MODELS IN VIETNAM 47 3.2.1 Internal adjusting factors 49 3.2.2 External adjusting factors 50 CONCLUSION 52 REFERENCES 53 APPENDIX 54 APPENDIX Beta of SAM over 280 weeks (2000-2006) 54 APPENDIX SAM’s historical Balance Sheets 60 APPENDIX SAM’s historical Income Statements 62 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1.3.2 Securities Market Line 17 Figure 2.3.2 SAM price movement (2000 – 2006) 30 LIST OF TABLES Table 1.3.4 P/E facts 19 Table 2.1 Number of joint stock companies 2000-2004 22 Table 2.1.1 Equitized enterprises before 1996 24 Table 2.2 SAM Fundamental Financial Indicies 2000-2005 28 Table 2.3.1 Comparison between market price and listed price as expected by enterprises 29 Table 2.3.3 Value of five listed securities according to accounting figures 31 Table 2.4.1 SAM years Fundamental Financial Indicies 35 Table 2.4.2 P/E of listed stock 36 Table 2.4.4 (a) Historical FCFE for 05 years (2002-2006) 37 Table 2.4.4(b) Cashflow projection until the end of high growth period (2008) Table 2.4.4(c) Cashflow projection until the end of high growth period (2008) LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com INTRODUCTION Necessity of the thesis The activity in stock market exchanges has increased much in Vietnam nowadays Consequently, the stock market is playing a growing important role to the society Many institutions as well as individuals are heavily invested in the stock market In order for the stock market to develop normally and stably, understanding valuation techniques of firms is very important Without some sorts of model to estimate value, investors would not be able to arrive at conclusions on what price to buy or sell an asset When researching different valuation results of a specific firm, the value often differs – we can see the sample in SAM case discuss in next chapter Different in valuation may come from different views of the future or assumption or technique and, hence, different recommended values We can’t know which of these values is the most accurate and this is only one of the many difficulties involved in valuation In Vietnam stock market, the situation is much more difficult since it’s an emerging market and to some aspect, there’s no rule for market like this in its early stage This study will focus on several valuation models that mostly use in firm valuation in Vietnam: Multiples (P/E), ABV, DDM and DCF in order to show the different of each method and their results, through understanding of those model and try to find the possible adjustment to make it accuracy Purpose The overall purpose of this study is to establish some improvements of the available valuation method currently applied in Vietnam stock market The aim is to expose some weaknesses of the method and the reasons behind Further, the study will be LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com conducted to find solutions of these problems This will be accomplished by a literature study and a subsequent case study Methodology The Thesis uses quantitative and qualitative approach and includes statements that will give the reader an insight in, how the research area was approached, why it was conducted in this way, how the work progressed, and, finally, the authors own critical opinions of the study The intention is to introduce the reader to how the study was conducted as well as a give the opportunity to develop a personal perception concerning the trustworthiness of the study Outline of the Study In the second part of this thesis the literature study will be conducted The study helps to understand the core concepts and the basic theories of valuation as well as the basic understanding of stock market and value of a thing It also contains a brief introduction of the development of Vietnam stock market and valuation history in Vietnam That information is necessary for the discussion to valuation in practice The third part of the thesis is the case study of SAM company In this we try to use different approach of valuation to find solutions for value of SAM By understanding different methods, we can understand difficulties with each valuation we applied and can work out to find ways to increase the accuracy of valuation The final part of the thesis is concerned with recommendations and conclusions of how the valuation process can be improved and what should be adjusted to increase the usefulness and accuracy of the valuation process involved in Vietnam stock market LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: LITERATURE REVIEWS: STOCK AND STOCK VALUATION “Valuation: the determination, through prior analysis, of a price for a business that might be paid by an investor “ (Hervé, 1993:95) In this chapter relevant theories connected to our problem discussion will be discussed The chapter begins with definitions and some possible discussions about some concepts that will be important when the analysis is conducted Thereafter, basic theories of models are introduced This is to give the reader insight how valuation models work Lately, history of Vietnam stock market is presented for setting up a scenario for valuation in early stage 1.1 STOCK – DEFINITION, TYPES AND FEATURES Stock, also referred to as a share, is commonly a share of ownership in a joint stock company (Copeland et al, 2000) The owners and financial backers of a company may desire additional capital to invest in new projects within the company If they were to sell the company it would represent a loss of control over the company It may be represented by a certificate and can be common or preferred, voting or nonvoting, redeemable, convertible, etc… There are kinds of stocks: 1.1.1 Common stock Common stock, also referred to as common shares, is the most usual and commonly held form of stock in a corporation (DeAngelo, 1990) The other type of shares that LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com the public can hold in a corporation is known as preferred stock Common stock that has been re-purchased by the corporation is known as treasury stock and is available for a variety of corporate uses Common Stockholders are not guaranteed dividends, buy they expect to receive higher dividends during the company’s prosperous periods If a company fails or liquidates, common stockholders are paid, after bondholders and preferred stockholders Common stockholders assume the greater risk, but generally exercise the greater control and may gain the greater award in the form of dividends and capital appreciation The terms common stock and capital stock are often used interchangeably when the company has no preferred stock Holders of common stock have voting powers in the corporation and participate in the profits of the corporation by way of dividends, but only after preferred stockholders have been paid their dividends (DeAngelo, 1990) 1.1.2 Preferred stock Preferred stock is a security that shows ownership in a corporation and gives the holder a claim, prior to the claim of common stockholders, on earnings and also generally on assets in the event of liquidation (Copeland et al, 2000) Most preferred stock pays a fixed dividend that is paid prior to the common stock dividend This stock does not usually carry voting rights Preferred stock has characteristics of both common stock and debt A preferred stock shareholder forfeits his voting rights, but receives dividends (which are set at a specified rate) before the common stock shareholder In the event LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com of liquidation, bankruptcy preferred stock shareholders are paid before common stock shareholders It can be considered that a preferred stock is a hybrid between a share and a bond which, as opposed to ordinary shares, has a fixed yield, providing the issuer achieves a minimum profit (DeAngelo, 1990) The fixed income stream of preferred stock makes it similar in many ways to bonds 1.1.3 Rights Options granted to shareholders to purchase additional shares directly from the company concerned Rights are issued to shareholders in proportion to the securities they may hold in a company (Fama and French, 1992) Rights allow existing shareholders of a corporation to subscribe to shares of a new issue of common stock before that stock is offered to the public on the stock market A right usually has a life of to weeks, is transferable, and entitles the holder to buy the new common stock below the Public Offering Price Rights are often granted to protect existing shareholders from the effects of dilution 1.1.4 Warrants A warrant gives investors the right, but not the obligation, to buy a share at a certain price (the exercise price) by a certain date in the future (Fama and French, 1992) Warrants often accompany a share issue and they can be traded in the stock market in their own right The value of warrants is likely to be more volatile than the underlying shares, and this can be a high-risk area of investment Because of this it is a regulatory requirement to sign a warrants risk warning prior to trading LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com If investors wish to take advantage of short rise up of market, P/E seems to be a good tool for them to trade daily P/E changes everyday can help them adjust their portfolio for safe position within a turbulence market If investors follow long term strategy, DCF will be a good indicator for them to considered a bargain for a life investment However, whenever investors wish to using DCF in Vietnam, the constrain always is shortage of data (historical performance, sales, market shares, industry indices…) Lack of reliable inputs can create wrong models and thus, wrong results (as know as ―garbage in, garbage out‖) Also because of weakness of un-developed market and inadequate accounting and auditing system, our valuation models could not take into account the concepts of goodwill, preferential conditions, enterprises’ advantages The difficulties stay in market general: stock market is so young, investors are not well equipped with stock market theories and practices, market movement greatly follow government’s policy… valuation methods therefore can not truly reflect value of stocks In general, the main problems that every time we start to valuate any firm in Vietnam are: It is difficult to find sufficiently large numbers of observations It is difficult to find the appropriate data, especially internal data Unable to overcome the fences leads to bad analyzing business in general: how its trading environment? what its earnings could be? How to calculate risks involved? Those difficulties is not limited When we look at Vietnam stock market, we should keep in mind of a very young and newly emerging market, which can develop in 48 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com different way The un-predictable movement of Vietnam market is strongly supported by large pool of investors who know less or almost nothing about stocks, bonds, valuation, earnings… the fact that the market is booming (or bubble as warning by IMF, 2006) make every party enjoy profits and ignore warnings sign In order to get a sound development and also take good position in this ―junior‖ 6year-old stock market, we should consider some important factors that could adjusting any assumption and theories in valuation methods applied in Vietnam practice We can divide those adjusting factors into 02 main groups: 3.2.1 Internal adjusting factors Whether management board is highly appreciated? Management is the key aspect of every business As a result, the quality of management of a business can have a significant impact on the value placed on it When Vietnam State-owned-enterprises (SOEs) equitized, the old management board is about to replace SOEs became a joint-stock company later and prepare to be lited on stock market, a newly and well equipped management team should be in place to suit the changing situation Whether the business in starting period? After changing from SOEs to Joint-stock companies, there are 02 scenarios may happen: Businesses slow down in their first few years to adapt new environment create new relationship in their new name (the previous relationship, assigned contracts when being SOEs under General corporation, Ministry has now gone) Businesses are highly leveraged in their first few years and potentially loss making, but growing rapidly By understand this situation, we can adjust valuation of any newly company since its current bad performance does not truly reflect future growth The assumption in 49 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com that case should depends much on market views as to the future health of the market in which it operates Reliability of Accounting systems? The relevance and reliability of the business’s accounts affects valuation Reliability of past data may be questionable if there is a lack of verification when any changes to the accounting system occurred The equitization process make many SOEs had to change to new accounting principles Many of the initial sales of state-owned enterprises in Vietnam in the past were based on very low valuations of individual assets and liabilities Accounting changes may affect reported profits or balancesheet values, which can be very influential because the results shown on a company’s financial statements have a direct input into most valuations Sometimes, valued assets such as land and buildings are not re-valued to reflect changes in their valuations 3.2.2 External adjusting factors Supply and Demand relationship? The currently booming of Vietnam stock market was largely believe that because of the Supply and Demand relationship, that put stock price much higher in compare with its value On the market, 51% of most of stocks was owned by Government and a limit of 49% was given to foreign investors with long-term strategy and holding pool of capital that larger than GDP of Vietnam What will be left for domestic investors who mostly think of speculator and short term invest? Hype for the stock has caused investors to buy the stock for a higher price than they normally would Valuation in this period is much more difficult and should consider the situation to get a better assumption to take good short position How Legal Framework affect companies’ operation? Study about legal framework would help create effective valuation of a business If there are uncertainties in the legal environment, an appropriate discount should be 50 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com applied to the value Investors always look for safe and stability society to invest and pay full value of stock Other ways to improve valuation reliability – Gathering and following news and reports generate by companies in the past to keep tracks of what they are doing and operating – Collecting database of quarterly financial indices to improve future value comparisons – Updating the political and macro-economical movement to adjust assumption over periods (encouraging foreign investment, inflation rate, interest rate, gold price…) The best method of valuation is that investors should be conservative about their inputs and should not resist changing them when needed Aggressive assumptions can lead to inflated values and cause you to pay too much for a stock The best way forward is to examine valuation from a variety of perspectives If the company looks inexpensive from all of them, we are confidence to believe that would be a good investment for us 51 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CONCLUSION There are several opinions on what creates value in a firm Therefore, there are several different approaches to estimate the value of a firm To investigate all of these valuation approaches and try to make of improvements is a huge works Such research would demand an extremely large quantity of reliable information and, thereby, easily lead to an overload of information to gather as well as to analyze On this thesis, we just focus on an aspect of valuation in Vietnam practice only and evaluate value using a case study of SACOM Corporation (SAM) 04 most familiar methods are used (Advantageous BV, P/E multiple, DDM and DCF) in the study At each result, recommendation is cited to shows the pros and cons of the method and the possibilities to make it more reliable in Vietnam environment As an emerging market, Vietnam practices are far different from those in developed nations, the study at the end shows that using valuation methods that closely mark to market (P/E multiple) could be a good tools for short term investors and using DCF are far better for long term investors in Vietnam The thesis also cites that other non-financial market factors are also important that affect every assumption made in each valuation models The relationship between those factors and its effects to value of stocks would be interesting and can be the scope for further study 52 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com REFERENCES Copeland et al (2000), Valuation: Measuring and Managing the Value of Companies, John Wiley & Sons, New York Damodaran (2002), Investment Valuation, Tools and Techniques for Determining Value of Any Asset 2nd edition, John Wiley & Sons Inc, New York DeAngelo (1990), ―Equity Valuation and Corporate Control‖, The Accounting Review, 64 (1) Fama and French (1992), ―The Cross-Section of Expected Stock Returns‖, Journal of Finance, (2), 427-466 Kaplan & Ruback (1995), ―The valuation of cash flow forecasts: An empirical analysis‖, Journal of Finance, 50 (4) Markowitz and Harry (1999), ―The early history of portfolio theory: 1600-1960‖, Financial Analysts Journal, 55 (4) French CW (2003), "The Treynor Capital Asset Pricing Model", Journal of Investment Management, (2), 60-72 Ross Stephen (1977), ―The Capital Asset Pricing Model (CAPM), Short-sale Restrictions and Related Issues‖, Journal of Finance, 32 (177) Internet sources Bloomberg website: www.bloomberg.com Cables and Telecommunication Materials Corporation: www.sacom.com.vn General Statistics Organization: www.gso.gov.vn Hochiminh Securities Trading Center: www.vse.org.vn Ministry of Finance: www.mof.gov.vn State Securities Commission: www.ssc.gov.vn 53 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com APPENDIX APPENDIX Beta of SAM over 280 weeks (2000-2006) SAM Beta = SLOPE (SAM’s weekly return, Market weekly return) = 0.9616 Time period 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 SAM’s price weekly average 18700 20060 19640 20800 21080 22400 23840 25260 27700 27500 28800 30820 33800 36680 39920 40620 38960 37720 38440 41220 45260 47180 50600 55500 60500 65800 72000 65800 62400 59700 51840 43020 40860 41240 35840 32900 36400 39920 43800 43860 40520 37460 Market weekly average 110.36 117.512 113.506 117.856 120.288 126.454 136.218 145.978 159.61 167.578 180.162 194.902 210.584 229.164 250.456 252.702 251.924 253.016 259.926 274.536 300.682 318.994 344.706 377.528 411.028 463.148 543.962 482.772 434.202 417.218 366.23 304.948 285.898 274.162 239.456 219.204 242.074 265.106 290.532 293.346 275.422 253.676 Return weekly (SAM) 7.27% -2.09% 5.91% 1.35% 6.26% 6.43% 5.96% 9.66% -0.72% 4.73% 7.01% 9.67% 8.52% 8.83% 1.75% -4.09% -3.18% 1.91% 7.23% 9.80% 4.24% 7.25% 9.68% 9.01% 8.76% 9.42% -8.61% -5.17% -4.33% -13.17% -17.01% -5.02% 0.93% -13.09% -8.20% 10.64% 9.67% 9.72% 0.14% -7.62% -7.55% Return weekly (Market) 6.48% -3.41% 3.83% 2.06% 5.13% 7.72% 7.16% 9.34% 4.99% 7.51% 8.18% 8.05% 8.82% 9.29% 0.90% -0.31% 0.43% 2.73% 5.62% 9.52% 6.09% 8.06% 9.52% 8.87% 12.68% 17.45% -11.25% -10.06% -3.91% -12.22% -16.73% -6.25% -4.10% -12.66% -8.46% 10.43% 9.51% 9.59% 0.97% -6.11% -7.90% 54 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 34860 32000 29820 29520 28000 26500 25100 25900 26800 28300 27940 27980 28480 29500 29200 29800 29900 30140 29700 235.382 218.582 207.17 205.274 196.776 188.346 183.696 189.612 192.27 202.01 199.796 198.992 203.618 211.122 209.456 209.152 207.59 205.606 204.444 -6.94% -8.20% -6.81% -1.01% -5.15% -5.36% -5.28% 3.19% 3.47% 5.60% -1.27% 0.14% 1.79% 3.58% -1.02% 2.05% 0.34% 0.80% -1.46% -7.21% -7.14% -5.22% -0.92% -4.14% -4.28% -2.47% 3.22% 1.40% 5.07% -1.10% -0.40% 2.32% 3.69% -0.79% -0.15% -0.75% -0.96% -0.57% 62 28700 200.05 -3.37% -2.15% 63 28300 197.048 -1.39% -1.50% 64 29020 200.002 2.54% 1.50% 65 28700 198.842 -1.10% -0.58% 66 28160 195.822 -1.88% -1.52% 67 28820 194.674 2.34% -0.59% 68 30220 196.516 4.86% 0.95% 69 30540 194.104 1.06% -1.23% 70 30460 190.416 -0.26% -1.90% 71 30420 191.43 -0.13% 0.53% 72 30640 190.264 0.72% -0.61% 73 30880 190.934 0.78% 0.35% 74 30680 189.466 -0.65% -0.77% 75 30380 185.81 -0.98% -1.93% 76 30100 182.042 -0.92% -2.03% 77 30120 182.766 0.07% 0.40% 78 29640 179.802 -1.59% -1.62% 79 29900 179.832 0.88% 0.02% 80 30140 178.98 0.80% -0.47% 81 30300 177.858 0.53% -0.63% 82 29860 175.186 -1.45% -1.50% 83 29780 175.456 -0.27% 0.15% 84 30000 175.812 0.74% 0.20% 55 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 85 30180 176.906 0.60% 0.62% 86 30920 184.284 2.45% 4.17% 87 30780 184.11 -0.45% -0.09% 88 30960 185.436 0.58% 0.72% 89 30740 183.81 -0.71% -0.88% 90 30700 182.708 -0.13% -0.60% 91 30660 179.21 -0.13% -1.91% 92 30120 174.26 -1.76% -2.76% 93 29820 171.78 -1.00% -1.42% 94 29200 168.378 -2.08% -1.98% 95 29400 167.35 0.68% -0.61% 96 28640 164.958 -2.59% -1.43% 97 27060 164.744 -5.52% -0.13% 98 19280 162.655 -28.75% -1.27% 99 18800 158.784 -2.49% -2.38% 100 18540 153.314 -1.38% -3.44% 101 18000 145.938 -2.91% -4.81% 102 18520 148.18 2.89% 1.54% 103 18560 149.286 0.22% 0.75% 104 18980 152.332 2.26% 2.04% 105 19300 152.75 1.69% 0.27% 106 19680 156.748 1.97% 2.62% 107 19680 155.792 0.00% -0.61% 108 19400 152.96 -1.42% -1.82% 109 19320 152.112 -0.41% -0.55% 110 19340 151.94 0.10% -0.11% 111 19400 152.104 0.31% 0.11% 112 19420 151.956 0.10% -0.10% 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 19700 19700 19660 19580 19500 19200 19140 18540 18400 18600 18540 18400 18380 18280 18060 152.282 152.028 150.984 150.166 149.122 145.16 141.86 142.678 142.262 142.33 141.588 140.348 140.256 139.326 137.97 1.44% 0.00% -0.20% -0.41% -0.41% -1.54% -0.31% -3.13% -0.76% 1.09% -0.32% -0.76% -0.11% -0.54% -1.20% 0.21% -0.17% -0.69% -0.54% -0.70% -2.66% -2.27% 0.58% -0.29% 0.05% -0.52% -0.88% -0.07% -0.66% -0.97% 56 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 17800 17140 16720 17640 18700 20060 21140 21180 20720 21400 21360 21400 21980 23240 26740 27480 28660 32180 36660 39220 39160 38960 40920 43760 39460 38580 38560 38820 38680 38780 38800 38380 38200 38640 38400 38380 38220 38060 38060 37800 37300 35580 36220 37660 37420 37180 37180 37140 37220 37060 36560 135.722 133.226 132.42 136.078 141.476 153.572 162.644 164.176 161.906 165.864 166.892 166.752 172.086 180.728 206.456 212.512 216.19 237.262 260.076 264.71 261.436 260.608 268.696 274.528 259.304 255.384 259.242 263.166 260.538 261.078 257.31 251.784 247.08 251.346 249.58 249.098 247.296 244.43 244.204 239.056 234.006 222.408 223.386 232.552 232.432 230.71 231.522 230.614 232.588 232.584 231.976 -1.44% -3.71% -2.45% 5.50% 6.01% 7.27% 5.38% 0.19% -2.17% 3.28% -0.19% 0.19% 2.71% 5.73% 15.06% 2.77% 4.29% 12.28% 13.92% 6.98% -0.15% -0.51% 5.03% 6.94% -9.83% -2.23% -0.05% 0.67% -0.36% 0.26% 0.05% -1.08% -0.47% 1.15% -0.62% -0.05% -0.42% -0.42% 0.00% -0.68% -1.32% -4.61% 1.80% 3.98% -0.64% -0.64% 0.00% -0.11% 0.22% -0.43% -1.35% -1.63% -1.84% -0.60% 2.76% 3.97% 8.55% 5.91% 0.94% -1.38% 2.44% 0.62% -0.08% 3.20% 5.02% 14.24% 2.93% 1.73% 9.75% 9.62% 1.78% -1.24% -0.32% 3.10% 2.17% -5.55% -1.51% 1.51% 1.51% -1.00% 0.21% -1.44% -2.15% -1.87% 1.73% -0.70% -0.19% -0.72% -1.16% -0.09% -2.11% -2.11% -4.96% 0.44% 4.10% -0.05% -0.74% 0.35% -0.39% 0.86% 0.00% -0.26% 57 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 36780 36360 36160 35920 35520 35140 35880 36440 36680 36900 37240 37120 37040 37100 36300 36360 36240 36520 36840 36600 37020 38000 37760 37800 37560 37560 37580 37620 37380 37600 38240 38380 38420 38500 38200 38260 38260 37900 37920 38040 38380 37640 37260 38560 39020 39180 40780 40580 43100 45780 49380 234.452 233.106 231.214 227.902 225.21 222.322 229.46 229.974 232.72 237.214 238.216 235.25 235.31 234.91 233.716 234.468 233.658 234.906 237.494 237.174 239.626 246.474 245.668 246.056 245.868 246.064 245.418 243.954 242.242 243.446 244.508 246.416 246.102 246.66 246.208 247.21 249.164 248.212 245.188 247.802 249.428 247.936 248.152 253.766 258.654 264.774 279.252 278.988 287.128 295.728 307.504 0.60% -1.14% -0.55% -0.66% -1.11% -1.07% 2.11% 1.56% 0.66% 0.60% 0.92% -0.32% -0.22% 0.16% -2.16% 0.17% -0.33% 0.77% 0.88% -0.65% 1.15% 2.65% -0.63% 0.11% -0.63% 0.00% 0.05% 0.11% -0.64% 0.59% 1.70% 0.37% 0.10% 0.21% -0.78% 0.16% 0.00% -0.94% 0.05% 0.32% 0.89% -1.93% -1.01% 3.49% 1.19% 0.41% 4.08% -0.49% 6.21% 6.22% 7.86% 1.07% -0.57% -0.81% -1.43% -1.18% -1.28% 3.21% 0.22% 1.19% 1.93% 0.42% -1.25% 0.03% -0.17% -0.51% 0.32% -0.35% 0.53% 1.10% -0.13% 1.03% 2.86% -0.33% 0.16% -0.08% 0.08% -0.26% -0.60% -0.70% 0.50% 0.44% 0.78% -0.13% 0.23% -0.18% 0.41% 0.79% -0.38% -1.22% 1.07% 0.66% -0.60% 0.09% 2.26% 1.93% 2.37% 5.47% -0.09% 2.92% 3.00% 3.98% 58 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 48800 50280 49760 48820 47400 47580 47700 47200 46960 47160 46820 47940 44820 42880 47120 51900 58600 61900 67700 73800 71800 76600 79400 86900 94100 96600 90900 92900 92300 91700 94500 94600 90900 90500 89300 89600 88400 82700 74200 75600 85200 71500 73800 78200 77600 78100 78300 83300 81800 83400 83900 303.78 315.428 320.272 315.44 307.416 310.36 313.268 315.424 310.634 308.26 306.178 306.262 309.886 314.876 325.19 346.98 375.418 407.152 416.466 443.962 460.862 500.1 533.502 555.602 596.034 604.88 555.662 567.874 551.452 536.558 546.194 544.0375 509.424 507.05 505.69 505.704 487.26 452.284 416.876 431.008 465.58 478.408 486.506 511.668 507.49 513.352 522.006 536.534 527.752 523.328 524.39 -1.17% 3.03% -1.03% -1.89% -2.91% 0.38% 0.25% -1.05% -0.51% 0.43% -0.72% 2.39% -6.51% -4.33% 9.89% 10.14% 12.91% 5.63% 9.37% 9.01% -2.71% 6.69% 3.66% 9.45% 8.29% 2.66% -5.90% 2.20% -0.65% -0.65% 3.05% 0.11% -3.91% -0.44% -1.33% 0.34% -1.34% -6.45% -10.28% 1.89% 12.70% -16.08% 3.22% 5.96% -0.77% 0.64% 0.26% 6.39% -1.80% 1.96% 0.60% -1.21% 3.83% 1.54% -1.51% -2.54% 0.96% 0.94% 0.69% -1.52% -0.76% -0.68% 0.03% 1.18% 1.61% 3.28% 6.70% 8.20% 8.45% 2.29% 6.60% 3.81% 8.51% 6.68% 4.14% 7.28% 1.48% -8.14% 2.20% -2.89% -2.70% 1.80% -0.39% -6.36% -0.47% -0.27% 0.00% -3.65% -7.18% -7.83% 3.39% 8.02% 2.76% 1.69% 5.17% -0.82% 1.16% 1.69% 2.78% -1.64% -0.84% 0.20% 59 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com APPENDIX SAM’s historical Balance Sheets Accounts ASSETS Current Assets Cash and Cash Eqv S.Term Marketable Secs Accounts Receivable Inventory Other Current Assets Total Current Assets 2003 2004 2005 2006 4,632,156,971 27,319,688,684 172,690,391,343 43,904,416,988 83,823,821,661 68,446,719,532 3,652,470,081 160,555,168,245 95,070,761,186 165,312,210,790 3,794,285,410 291,496,946,070 182,516,899,942 299,238,501,230 4,606,287,154 659,052,079,669 756,207,964,297 615,149,499,497 915,948,680 1,416,177,829,462 92,307,710,900 91,237,003,400 163,928,612,528 (72,691,609,128) 0 1,070,707,500 2,379,350,000 (1,308,642,500) 71,428,719,909 59,343,339,909 172,894,213,749 (113,550,873,840) 0 12,085,380,000 13,512,990,000 (1,427,610,000) 78,884,014,615 77,932,274,615 221,063,412,304 (143,131,137,689) 0 951,740,000 2,379,350,000 (1,427,610,000) 75,313,883,972 64,119,195,172 259,651,081,654 (195,531,886,482) 10,242,948,800 11,133,640,000 (890,691,200) 951,740,000 2,379,350,000 (1,427,610,000) 7,210,705,152 874,445,000 14,291,208,864 44,250,261,174 99,676,826,976 66,000,019,169 265,749,684,450 291,760,795 100,392,861,052 260,948,029,297 129,970,189,947 421,467,136,017 244,560,860,760 903,612,940,429 341,355,329,217 1,757,533,158,679 0 0 Fixed Assets and Longterm Investments Fixed Assets Tangible Fixed Assets At cost Accumulated Depreciation Financial Lease fixed assets At cost Accumulated Depreciation Intangible Fixed Assets At cost Accumulated Amortisation Long term financial investments Other Fixed Assets Total Fixed Assets and L/T Investments TOTAL ASSETS Liabilities and Share holder's Equity Current liabilities Short-term borrowings Current portion of long term debts Trade creditors Dividends payable Other liabilities Total Current Liabilities Long-term liabilities Long-term Borrowings/debts Other Long-term Liabilities 89,559,528,020 210,620,945,165 988,917,797,336 11,419,396,834 22,058,907,687 33,478,3\04,521 20,524,261,737 38,463,442,720 148,547,232,477 57,520,757,077 79,850,672,443 347,992,374,685 0 0 988,917,797,336 30,696,618,099 0 11,505,233,504 15,681,817,293 30,696,618,099 0 60 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Total Long-term Liabilities Total Liabilities Shareholder's Equity Operating Capital Preferred Equity Differences from asset revaluation Exchange rate differences Retained Earnings Other Reserves Total Shareholder's Equity Total Liabilities and Shareholder's Equity 11,505,233,504 44,983,538,025 15,681,817,293 164,229,049,770 347,992,374,685 30,696,618,099 1,019,614,415,435 180,000,000,000 180,000,000,000 418,140,000,000 558,540,000,000 0 362,419,668 27,200,672,334 8,401,399,270 0 77,238,086,247 0 137,480,565,744 0 179,378,743,244 215,964,491,272 257,238,086,247 555,620,565,744 737,918,743,244 260,948,029,297 421,467,136,017 903,612,940,429 1,757,533,158,679 61 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com APPENDIX SAM’s historical Income Statements 2003 2004 2005 2006 332,002,269,372 485,917,181,313 836,381,888,597 1,655,765,870,600 884,291,600 26,780,000 1,292,400,000 884,291,600 26,780,000 Net sales 331,117,977,772 485,890,401,313 836,381,888,597 1,654,473,470,600 Costs of goods sold 227,011,002,877 364,649,110,279 647,498,903,614 1,295,032,087,975 Gross Profits 104,106,974,895 121,241,291,034 188,882,984,983 359,441,382,625 Incomes from financial activities 24,524,760,858 35,184,996,350 51,155,062,689 71,857,036,992 Expenses for financial activities 13,835,439,515 15,740,790,401 26,103,456,625 50,495,285,290 Net profits from financial activities 65,746,774,522 70,315,504,283 111,624,465,669 237,089,060,343 Selling expenses 989,147,115 931,206,413 6,262,014,037 9,616,357,284 Administrative expenses 768,577,281 2,740,009,078 15,658,012,650 38,869,972,937 Operating profits 220,569,834 (1,808,802,665) (9,395,998,613) (29,253,615,653) Extraordinary Incomes 3,099,250,496 10,940,828,813 9,536,472,945 14,243,276,189 Extraordinary Expenses 65,930,274 82,888,000 28,786,500 1,899,868,084 Extraordinary Profits 3,033,320,222 10,857,940,813 9,507,686,445 12,343,408,105 Profit before Tax 69,000,664,578 79,364,642,431 111,736,153,501 220,178,852,795 Income Tax 8,625,083,072 6,269,346,008 8,549,178,809 16,399,838,345 Profit after Tax 60,375,581,506 73,095,296,423 103,186,974,692 203,779,014,450 Revenues Revenues from Exports Deductions Sales rebates Sales returns 1,292,400,000 62 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com .. .vietnam national university, HANOI hanoi school of business Ngo Viet Duc Stock valuation in Vietnam THEORY, PRACTICE AND RECOMMENDATION the case sacom Major: Business Administration... a thing It also contains a brief introduction of the development of Vietnam stock market and valuation history in Vietnam That information is necessary for the discussion to valuation in practice. .. assumptions: they define risk in terms of variance of returns and argue that investment should be viewed from the standpoint of the marginal investor Valuation is the process of "estimating" the value