INTRODUCTION OF THE BIBICA CORPORATION . BIBICA CORPORATION ( BBC

SUMMARY Objectives: Apply financial analysis techniques to identify the company's financial situation and fluctuations in the context of actual investment decision making with the goal of maximizing long-term profitability Method: By applying a number of scientific methods such as statistical methods, methods of compiling, comparing and analyzing financial statements of companies Results: In general, we found that BBC’s business results and financial indicatorsin the past years were good, BBC shares were a good stock It has long been appreciated by the market In addition, Bibica is a high growth company in the future And will be a reliable address to investors interested Recommendations We value the stock of Bibica company in 2016 with the basic technical analysis method, using the P / E method to calculate the price / per share in 2016 is P(2016) = EPS(2016) x P/E (2016) = 4.86 * 19.2 = 93.312 ( million dong ) ( Recource: http://s.cafef.vn/hose/BBC-cong-ty-co-phan-bibica.chn) Bibica will has a lot of competion in the future The market consumption can be norrowed but Lotte’s stategic parnership gives Bibica a competitive advantage over its competitors In our view, this partnership will help the BBC expand its market share in luxury goods in the near future Therefore, we predict that Bibica is stable development in the future and investors should hold the stock in the long – term with th buying price range is 90.000 dong – 95.000 dong per share INTRODUCTION OF THE BIBICA CORPORATION BIBICA CORPORATION ( BBC ) 443 Ly Thuong Kiet St, Ward 8, Tân Bình Dist., Ho Chi Minh City, Viet Nam Tel : 028.3971 7920 - 028.3971 7921 - Fax: 028 3971 7922 Email: bibica@bibica.com.vn - Website: www.bibica.com.vn BIBICABIEN HOA FACTORY Bien Hoa Industrial Zone, An Binh Ward , Bien Hoa, Dong Nai Province BIBICA EASTERN FACTORY Lot J1 - CN, D1 Street, My Phuoc Industrial Zone, My Phuoc Ward, Ben Cat, Binh Duong Province BIBICA HANOI FACTORY - BRANCH OF BIBICA CORPORATION B18, Sai Dong B Industrial Zone, Sai Dong Ward, Long Bien District, Ha Noi I INDUSTRY ANALYSIS Overview of the confectionery industry in Vietnam The Vietnamese confectionary industry currently has about 30 industrial production enterprises, about 1,000 small ones and some companies importing from abroad According to the report of VietinBankSC, growth of confectionery in the period of 2006-2010 is 35%, but in the period 2010-2014 only reached 10%, forecast from 2015-2019 growth of only about 8- 9% However, compared to the world average of 1.5% and South East Asia of 3%, the growth of confectionery in Vietnam is still much higher, considered as potential land for many businesses domestic and foreign BMI forecasts that demand for confectionery in the domestic market will reach about 40 trillion dong by 2018 Currently consumption of confectionery in Vietnam is only kg / person / year, lower than the world average of 2.8 kg / person / year Especially, in the rural market, confectionery consumption is still very limited, so promising potential growth Confectionery market is characterized by season, consumption increased sharply in the post-September lunar month to Lunar New Year, in which the main items bring traditional Vietnamese flavor like moon cake, candy hard soft, high quality cookies, nuts, nuts are consumed strongly In terms of market share, in the supermarkets, Vietnam confectionery always accounts for about 70%, confectionary of neighboring countries such as Thailand, Malaysia, China accounted for about 20% and European confectionery accounted for about 6-7 % There are currently more than 30 well-known confectionery producers in the market However, most Vietnamese enterprises are affected by fluctuations in product prices due to the change in input materials and raw material prices, which are mainly imported materials sugar, flour Rivalry Among Existing Firms ( Competitors in the industry ) Due to the variety of models, quality, taste, there are many kinds of candy in the market today Thus, competition among enterprises in the confectionery industry is huge The following are major competitors in the industry of BIBICA a) Mondelez Kinh Do Kinh Do Joint Stock Company - is the leading confectionery market in Vietnam with a market share of 32% and an annual sales growth rate of over 20% Kinh strong biscuits, crackers The merger between KDC and NKD and Vinabico will help KDC increase its financial strength and corporate governance Mondelez Group has acquired Kinh Do Group's confectionery division and launched Kinhel Mondelez in 2015 This combination enables the company to grow its business in both modern sales channels and traditional channels, based on the industry's best product portfolio The market is mainly domestic (90% of sales) The distribution network of the company is spread across the country, leading distribution capacity in Vietnam with 120,000 retail points, 1,800 sales personnel across the country Main products: moon cake, biscuits, soft cake Price: 100.000 VND - 1.000.000 VND Therefore, the customer segment is aimed at mid-range and high-end customers b) Hai Ha Confectionery Company Hai Ha Joint Stock Company - HAIHACO market share accounts for 6.5% of the market share of confectionery in the country, after Kinh Do and Bibica Business products: Candy is the main product of the company (accounting for 76% of sales in the country) with products such as Chew soft candy, foam candy, Jelly, in addition to products such as foam cream , crackers, crackers, chocolate chip cookies with brand: long-pie, hi-pie, lolie Target customers: low-income, medium-income customers This is one of the advantages of the company because other companies focus primarily on middle and high end customers c) Huu Nghi Food Company According to cafef.vn, the company's revenue in 2016 is over 1,000 billion VND / year, the output is about 20,000 tons / year Its main products are sweet bread, dry bread, ice cream, jam with prominent products such as staff, lucky sandwich (sandwich market 76% in the country) Target customers: low-income customers d) Foreign companies Currently in the market, confectionery products imported from Thailand, Indonesia, Malaysia, and other countries in Europe also appear and occupy a large market share in Vietnam However, the price of the product is quite high, so the target customers are customers with relatively high income In addition, foreign-invested units such as Vinabico- kotobuki joint venture, perfectti confectionery… The large manufacturing companies, Mostly, about 35% -40% of total confectionery production in the country Imported products account for 30% of market share (including official and unofficial) mainly from Thailand, Malaysia, Hong Kong and China Some imported confectionary products are domestic units produced Threat of new entrant With the increasing demand for food, plus the investment incentives from the state and high efficiency in confectionery business, more and more investors are involved in this field This is a rival group not yet in the market but the future will appear and business with the company's products Beside the potential competitors to enter the industry, Bibica faces very strong competitors in the confectionery business when Vietnam joins AFTA, WTO as Kellogs, manufacturers Cookies from Malaysia, France New entrants in the business sector can reduce their business profits by exploiting new production capacities, hoping to gain market share with the resources they need Threat of substitute products Confectionery products are not the main consumer product on a daily basis but the demand for this product is always changing due to consumer demand The requirements for alternative products for confectionery items are huge, since confectionery products are satisfying the demand for enjoyment, snacking needs, nutritional needs, a commune communication As a gift, donation, so can see in addition to choosing to buy candy, the consumer also has many other options such as buy cream, milk, jelly, but still satisfy the demand as when consuming confectionery Thus competitive pressure from alternative products to the products of the business is very high In addition, there are some alternative products that can take the position of confectionery products are fast food and processed food Bargaining power of buyer In the market today, there are thousands, millions of confectionery products with extremely varied designs and different flavors, in addition to imported products with high quality, cheap This is a great opportunity for customers to choose the right product Therefore, the buyer side increasingly put pressure on businesses in terms of price, service as well as quality of goods Bargaining power of suppliers The main input of the confectionery industry is sugar, flour, milk In which, raw materials have to import a large proportion Therefore, the fluctuation of the exchange rate will have a strong impact on the cost of confectionery, resulting in high costs, reduced profits However, in the market today there are many suppliers of different materials, so the business has many choices of suppliers Therefore, the pressure from suppliers on the business is relatively small II FINANCIAL STRUCTURE ANALYSIS OF BIBICA JOINT STOCK COMPANY (Souce Document: The Banlance Sheets 2014,2015,2016 are attached at the last page) According to the consolidated financial statements (audited) in 2014, 2015, 2016 of Bibica ( BBC) Joint Stock Company, we analyze the financial structure analysis of BBC Asset structure analysis Based on Tables and ( appendices / i,ii), we see: - Total Assets in 2014-2015 increased to 113,775,187,623 VND which the proportion rised 12.74% ( Short-term assets increased by 150,107,597,562 VND with an increase of 26.20% and long-term capital decreased by 36,332,409,939 VND with a decrease of 11.35%) The Period of 2015-2016, the total assets rised by 34,245,709,451 VND with the increasing rate is 3.40% (Curent assets increased by 66,256,956,814 VND with the increasing rate was 9.16%, long-term assets decreased by 32,011,247,363 VND with a decrease of 11.28% As a result, the Company's asset structure changes in the direction of increasing the proportion of short-term assets and reducing the proportion of long-term assets - In terms of short-term assets: tends to increase through 2014, 2015 and 2016 (increasing by 26.2% in 2016 and 2016-2015 by 9.16%) and accounting for high proportion of total assets (in 2014, accounting for 64.15% , accounting for 71.81% in 2015, 75.81% in 2016) As follows: • Cash & cash equivalents: Increasing over the years and generally occupy a high proportion, especially in 2015-2016 this proportion is large in the structure of assets of enterprises (in 2015 accounting for 71.81%, 2016 accounted for 75.81%, up 9.16% ) This shows that the company has great financial potential, low risk of default, investment for business activities of enterprises are guaranteed without interruption due to lack of money In addition, cash equivalent accounted for a large proportion in this item (in the Banlance Sheets at the last page), proving that the company prioritizes investment in short-term securities with a withdrawal period not exceeding months because in 2014 - 2016, the stock market in Vietnam The recession, the high risk, may be the reason why the company has shifted to invest in securities with higher safety levels or because of the nature of the industry and the main activity of the company is the production of consumer goods It is not possible to invest in longterm securities but short-term stock investments (with a withdrawal period of no more than months) to make a profit in idle time and quickly recover to maintain stable production in production • Short-term Financial investment: Increase over the years and also account for an increasing proportion of total assets In particular, in 2014-2015 this indicator will increase considerably (2.5 times more than in 2014), 2016 accounts for more than 20.08% of total assets (while in 2014 the proportion is only low of over 4% in total assets) and a 22.98% increase from 2015 In particular, the holding to maturity accounts for the majority of short-term financial investment from 2014 to 2016 This shows that the company has a tendency to invest short-term securities at low risk to make profits while the money of the business is idle • Accounts receivable - short-term: The sharp decrease in the year 2015-2016 is 52.13% and the proportion in the structure of assets also decreased significantly (in 2015, more than 20% while in 2016 only 9.36%) The reason for this sharp drop is that the company has already made other short term receivables The company limits the amount of capital occupied In addition, it can be seen that the amount of customer receivables less fluctuate in 2015-2016 should be speculated that the sharp decline in 2015 - 2016 is due in the period of making financial statements, enterprises have not yet recover principal, dividend or interest from short-term securities investment risk (because the enterprise has a large financial investment short) • Inventories: The rate of reduction in 2014-2015 is 3.75% but the sharp increase in 2015-2016 is 20.86% The downside may be due to the difficult economic situation in the period 2014-2015, the price of raw materials increased especially sugar, consumers reduce the enterprises reduce inventory to reduce inventory costs In addition, the impact of other short-term receivables in Accounts receivable - short-term in 2014-2015 has not yet been received But by 2015-2016 the inventory ratio will increase as the economy stabilizes, the company expects the price of sugar to increase, thus buying more inventory to reduce raw material costs and short-term receivables Others are recovered so the company invests in the business with the desire to expand the market, attract customers Generally speaking, in the years 2014-2016, the proportion of inventory to total assets is still stable so it does not cause much difficulties for the company in its business activities • Other current assets: Short-term prepayment accounts for a high proportion of other current assets As Bibica is expanding its business likely rent storehouse, machinery and other services will increase, but will account for a small proportion of total assets It does not affect the business situation of the company This proves that Bibica has great potential for producing products - Regarding Non-curent Assets: In general, the proportion of long-term assets tends to decrease from 2014 to 2016 The main reason is the large depreciation of fixed assets The company uses the method of quick depreciation while fixed assets still have high proportion of total assets Therefore, the reduction of this asset may be beneficial because the company will take the cost of depreciation to invest in new equipment • Long-term work in progress: Increasing in 2015-2016 because in this period, Bibica is investing in the construction of the first phase Hung Yen and soft candy project Hifat It then shows that Bibi is trying to expand production Source of fund analysis a) financial autonomy: According to the analysis of table ( appendices/iii), in 2015, the debt ratio increased by 1.71%, the funding rate decreased by 1.71% compared to that of 2014, due to the increase in debt of 49,354,441,735VND, increasing by 19.59% (mainly Long-term debt increased by 70.01% y / y) The share of equity in total staff in 2015 is 70.08%, and 71.79% in 2014 The share of total liabilities in FY2012 is 29.92% and in FY2014 it is 28.21% (mainly payable to sellers) Equity increased by 64.420.745.888VND, with a growth rate of 10.05% and total assets increased 113.775.187.623, the rate increased by 12.74% Meanwhile, in 2016, the debt ratio fell by 2.23%, the rate of financing increased due to the debt reduction of 13,012,998,434VND with a reduction of 4.32%, the owner's equity increased 47.258.707.885, the rate of increase is 6.70 % and total assets increased by 34,245,709,451VND, with an increase of 3.40% Businesses tend to reduce debt ratio and increase funding rates in 2016 In 2015, businesses with high debt ratios and low funding rates show a higher degree of dependence on debtors and less autonomy than in 2014 and 2016 But overall, Bibica remains one The company is financially autonomous and independent of the creditors (the debt-to-equity ratio is still relatively low, ranging from 38% to 43%) Enterprises are tending to reduce the debt ratio and increase the funding rate in 2016, which proves that the financial independence of enterprises is guaranteed and continues at a high level, creating conditions for production activities Business development and confidence of investors, b) fund stability Short-term resources ratio relatively low (about 25%-28%), Long-term resource ratio is high(72%-75%), Owner’s equity/ Long-term resouces ratio is high, but mainly due to equity surplus, Investermant and developmant fund and retained profits In general, the financial situation of enterprises is quite stable Analysis of long-term financial balance According to the table ( appendices/iv), BIbica has a large net working capital and increases through the following years: net working capital in 2014, 2015, 2016 is 332,371, 441,088, 521,759 with the unit of calculation is VND million In general, the net working capital tended to increase positively over the past three years due to good policies such as issuance of bonds and shares Short-term debt also tends to increase but at a faster rate than short-term assets Thus, Bibica's financial situation is very good Because short-term assets make up for short-term capital It does not lead to a financial imbalance Short term financial balance According to the table and table 5.1( appendices/v,vi), it can be seen that the demand for working capital of the company has decreased gradually (from 2014 to the end of 2016) by 106,395,545,734 Especially in 2016, when the index has a negative value of 63,458,899,586 (NWCR < 0) That is, inventory and receivables are less than short-term debt This is a very good thing for BIBICA, because it means BIBICA is short term creditors to provide capital needed for the business cycle, the financial ability of the company is always "healthy" The cause of this change was the decrease in Accounts receivable - short-term in 2016 (down 106,198,893,211 over the same period last year), and this was explained in the consolidated financial statement 2016 page 18 BIBICA's net fund over the next years from 2014 to 2016 is more than 0, showing a very healthy financial balance as BIBICA does not have to borrow to offset a net working capital deficit On the other hand, BIBICA does not face short term liquidity problems and idle money can invest in high liquidity securities to continue to lucrative for the company III OPERATIONAL EFFICIENCY ANALYSIS Assets use efficiency, fixed assets turnover, working capital turnover and disaggregating working capital turnover: Based on the calculation in the table ( appendices/vii), we can draw some comments: • The effective use of assets in 2014 shows that asset generated 1.34 revenue By 2015, asset created 1.26 revenue In 2016, coin generated 1.25 revenue The efficiency of using total assets is higher than the industry average Demonstrate, the efficiency of using the property of the business is very effective And the index has declined over the years and is always low This proves fast moving assets, contributing to increased sales Facilitate profitability for the company Specifically, from 2014 to 2016, the efficiency of asset use decreased by 0.09 times • The effective use of fixed assets is the residual value up to the time of making the report The effective use of fixed assets, in 2014 is dong - the original price (the residual value) divided by the average fixed asset used in the period generated 1.92 VND - net revenue In 2015 is dong - the original price (the residual value) divided by the average fixed asset used in the period generated 2.00 VND - net revenue In 2016 is dong - the original price (the residual value) divided by the average fixed asset used in the period generated 2.14 VND - net revenue The index over years is higher than the industry average, increasing over the years Demonstrated the better use of the company's assets The company is expanding its production and meeting the market demand for Bibica's market share And demonstrate the high financial independence of the company Specifically, from 2014 to 2016, the fixed asset use increased by 0.22 times • In terms of efficiency on the working capital cycle, in 2014 this indicator shows that dong of revenue will bring 2.20 dong of pre-tax profit for the company By 2015, dong of revenue will bring 1.82 dong of profit before tax for the company And in 2016, dong of revenue will bring 1.67 dong of pre-tax profit for the company This depends on the business sector and the level of high or low working capital However, this indicator is quite high Demonstrate that the company's deductions are low The company has fulfilled the plan set • In terms of working capital mobility, in 2014 the number of turns is 2.20 2015 will have a rotation of 1.82 2016 has a rotation of 1.67 rounds Thus, for three years, the company has gradually reduced the number of revolving funds This indicator compared to the sector average is still low In 2014, the company's working capital needs 163 days to make a round Similarly, 2015 is 198 days And 10 2016 is 215 days The result of the cycle of working capital revolves gradually over the years, extending the working capital period to 52 days from 2014 to 2016 In fact, the company has not saved working capital It may be because the company has not shorten the time consuming inventory and time to collect the sales… • The number of days of rotation from 2014 to 2015 increases to 36 days, from 2015 to 2016 increased to 16 days The total number of days of the spin over years increased to 52 days This makes stalled capital, the slow movement of working • capital, causing the waste in the use of capital In general, net sales of years are high But comparing net sales with working capital, net sales is still low The turnover of each year is quite slow, so the efficiency of using working capital each year has not reached the results Based on the slow turnover of the company's working capital, it can be seen that companies are not effectively using their capital or wasting their working capital ROS, ROA AND DISAGGRETING ROA: According to table ( appendices/viii) we can see: a) ROS: The rate of return on sales (ROS) of the Company increases gradually from 2014 to 2015, but falls immediately afterwards (2016): The highest in years is 2015, for every 100 net revenue generated 8.89 co-profits Bibica has a fairly smooth year 2015 with revenue, profit growth over the same period However, in 2016, it will decrease This is because of the decline in revenue due to the rapid increase in input costs As the company shares information, the 2015 growth has external factors to support There are many raw materials such as plastic, milk, plastic packaging and Bibica continues to receive the import limit of 1,000 tons at 16% cheaper than domestic prices So, in 2016, when these supporting factors are no longer available, it will lead to a reduction in turnover - The number of asset cycles decreases but is always low, which indicates that the assets are moving fast , contributing to increase sales and improve profitability for the company This shows that the business situation of the company is positive b) ROA: As with ROS, ROA will also increase from 2014 to 2015, but will decline in 2016 Although BIBICA's gross margin has increased, pretax profit has declined from 2015 to 11 2016, resulting in a reduction in ROA between these two years In the last years (2014, 2015, 2016) the ROA was positive (> 8.5%), showing that the company is financially capable and is using its assets very well c) Disaggregating ROA: We obtion : • Dis ROA = Net income + (1-t )*Interest expense + MI in earnings Average total asset • Net income - Usually income from continuing operations; may or may not include restructuring costs • t: Marginal statutory tax rate (found in footnotes) • Interest expense - From income statement (or footnotes if shown net on income statement) • MI in earnings - Earnings belonging to minority interest in consolidated subsidiaries; often not material enough to show on income statement • Average total assets - Usually from comparative balance sheets (weighted average may be used if there are large changes But for the three years 2014 to 2016, BIBICA does not carry out an external borrowing plan, so interest expense = Therefore Disaggregating ROA = ROA Return on assets variation (RE): As we can see from the table (appendices/ix), ROA = RE , because Bibica don’t have Interest expense The means is that the company don’t borrow money from banks Operrational efficiency analysiss of equity: According to the table ( appendices/x) we obtain: a) ROE: ROE increased sharply in 2014-2015 (by 3.15%) but decreased slightly in 2016 (by 2.08%) It is easy to understand that after-tax profit increased rapidly in 2014-2015, but decreases in 2015-2016 and Net sales also grew over the years Therefore, we can speculate that the decrease of ROEin 2015- 2016 is due to the high cost of the company However, generally high as well as stable 12 the ROE of the company was b) Influence factors on ROE: • ROS and Assets Turnover: Formular: ROE = ROS * Assets Turnover * * (1-T) According to the Formular, we can see ROE is directly proportional to the ROS and Assets Turnover Indeed, From the above the table, in 2014-2015, ROS and Assets Turnover increased significantly, ROE also rose dramatically And in 2015-2016, ROS declined and Assets Turnover was no change, the ROE was decreasing • Self – fund ratio: We obtain: ROE= * According to the Formular, we can see ROE is inversely proportional to the self-fund ratio Indeed, from the above the table, in 2014-2015, self-fund ratio decreased significantly ( by 1.82%), ROE rose dramatically (by 3.15%) On the other hand, in 2015-2016, it was increasing ( by 0.33%), the ROE falls • Debt to equity ratio: ROE= ( debt to equity ratio * (RE-r) + RE) * (1-T) According to the Formular, we can see ROE is directly proportional to the Debt to equty ratio Indeed, From the above the table, in 2014-2015, the Debt to equty ratioincreases significantlyto42.7%, ROE also rosesharply (by 3.15%) And in 2015-2016, the Debt to equty ratiois arapid declineof 38.29%, the ROE drops • Interest coverage ratio (ICR): Formular: ROE = (1- ) * (1-T) * RE * (1+ ) According to the Formular, we can see ROE is directly proportional to ICR Because the interest expense of Bibica is equal by zero so ICR so the company wil have the ability to pay highly, especsially if the corporation want to borrow the banks in the future • INDICATOR FROM CASH FLOW: As you can see the table 10 ( appendices/xi ) The 2014 CF margin was 11.56% (the company earned 0.11156 dong in 1dong of total revenue) By 2015, CF margin will increase to 12.97% and increase sharply to 1.,64% in 2016 (the company earns 0.11384 dong per total revenue) Total revenue increased slightly but increased slightly by 4% in 2015 and 7.26% in 2016 In addition, the CFO 13 increased sharply over the years (up 16.62% in 2015 and 13.08% in 2016) so CF margin increased over the years • CF from operations to net income in 2015 fell from 225.43% to 177.06% (Net income soared to 48.49% in 2015) but by 2016 this index has increased to 215.23% (Net income decreased 5.36%) In general, CF from BIBICA's net income is quite high, but by 2015 it is the lowest in years but still reaches 177.06% (that is, in a net profit the company earned 1.7706 dong) • CF per share has increased sharply over the years (due to the increase CFO over the years that Bibica doesn't issue outstanding shares) By 2016, CF per share reached 11,336 (that is stock bring to 11,336 dong from business operating ) CF per share of Bibica is high reflects the company's strong business capacity, high dividend payout • and the company's stock rise on the stock market CF return on assets also increased over the years, from 14.59% in 2014 to 15.09% in 2015 and by 2016, it increased by 1.7% to 16.79% (this means the company invested 1dong in asset so receive 0.1679 dong from business activities This shows that Bibica is increasingly using assets effectively and contributing to improving its investment capacity IV THE RISK ANALYSIS OF BIBICA Business risk analysis (qualitative & quantitative analysis) According to the table 11 ( appendices/xii) , we can see that and of Bibica were 4.63 and 9.67, respectively The rate is high and it reflects 1% changes in consumption will lead to 4.63% and 9.67% changes in profit In the other words, the profit of the business is very sensitive to market when revenue fluctuates In addition, thanks to it, we could predict that in 2014 and 2015, the enterprises had the fixed cost ratio higher than variable cost (especially in 2015) Therefore, DOL is at high level and close to the break even point of the company So it causes risks for the Bibica corporation if the revenue decreases On the other hand, ( at -1.03%) is negative It means that businesses are operating in the loss area because CM (Contribution margin) is smaller than the fixed cost In terms of absolute valua | |= 1.03% is at low level so the profit of the business is less sensitive to market when revenue fluctuates Therefore, if the businesses increases by1% in revenue will reduce 1.03% loss, but if the company falls by 1% of revenue , this will lead to increase the losses by 1.03% 14 Financial risk analysis Because Bibica's interest expenses for the three years 2014, 2015 and 2016 are zero, Bibica doesn’t use financial leverage, so DFL = This shows that the Return On Equity is not affected by interest expense, in other words, 1% increase/ decrease in earnings before interest and taxes, the return on equity also increases/decrease by 1% Analysis of bankruptcy risk (insolvency risk analysis, current ratio, quick ratio, Cash ratio, Cash flow ratio) Through the table 12 ( appendices/xiii ) , we see that Bibica company is very capable of paying It is expressed through the following criteria: Current ratio for 2014, 2015, 2016 are 2.38, 2.57, 2.95 In general, over the past three years, the current liquidity tend to increase as the enterprises implement policies well Short-term debt also tends to increase but at a slower rate than short-term assets Quick ratio in 2014 are 2.03, rising to 2.27 in 2015 and rising to 2.58 in 2016 Current payment of Bibica Company for consecutive years from 2014 to 2016 are larger than 1, Bibica has excess capacity to pay The company has a very good financial position Fast payment of Bibica Joint Stock Company for consecutive years from 2014 to 2016 are greater than Bibica Company has overdue and short term ability to pay current liabilities And with the current assets can move quickly to pay short-term debt Bibica's cash ratio for the three consecutive years from 2014 to 2016 is positive, indicating the ability to pay abundantly, positively impacting the business results The cash flow rate that the company's assets invested from occupancy are low In addition, the Company's cash flow for the three consecutive years of 2014 - 2016 is less than (low) Also demonstrates that the company's assets are invested mainly from equity So the financial situation of the company in years is very positive, it has a positive impact on the business of the company Compared with other companies in the same industry, Bibica's short-term payment ability is the highest, which proves that its financial capacity is very good Interest coverage, Inventory, turnover, receivables turnover According to the table 13 ( appendices/xiv) , we can see: a) Interest coverage ability For 2014 - 2016, the company does not use debt, so BIBICA's interest coverage is zero 15 b) Inventory turnover Inventory turnover generally improved, which is good given the company is expanding its production and meeting the market demand for Bibica's market share Inventory turnover ratio is high, showing that Bibica is selling fast, inventory is not stagnated much and cash is not deposited in inventory / cost price This means that Bibica will be less risky if inventory items in the financial statements are reduced over the years c) Receivables turnover This is an indicator of the effectiveness of the credit policy that BIBICA applies to its clients The revolving rate has been rising over the years, showing that BIBICA is able to pay its customers fast loans and the ability to convert receivable debts to high cash, thus contributing to the improvement of cash flow Proactive in financing working capital in production This is also one of the reasons that BIB ICA does not use debt instruments for the next three years from 2014 to 2016 However, this is a disadvantage for the company because BIBICA will be able to lose customers if the competitors offer longer credit term And so our business will collapse sales d) Altman z-score As calculated in the table 14 ( appendices/xv) , Z > 2.99, this shows that the company is very safe, non bankrupt sector The reason is the company is effective in business activities leading to high profit making T1, T2, T3, T5 high But the main reason is that Bibica's Market price per share in 2016 increased sharply (in 2015 is 55,000VND, up to 93,300VND in 2016), it also leads to increased T4 V PROSPECTIVE ANALYSIS / BUSINESS VALUATION Vietnam economy: Vietnam is a stable, secure country in terms of politics and society, and this is an important factor contributing to the attention of international investors in Vietnam The legal system is also more and more in line with international practices, stricter on the management and protection of workers' rights, towards sustainable development Vietnam is becoming more integrated into the regional and global economy • In general, the socio-economic situation in the first three months of 2018 still keep positive trend from the end of 2017, continue to change strongly and achieve positive results in many fields, many targets are higher over the same period 16 • Specifically: CPI in February increased 0.73%, average two months increase 2.90%; Exports continued to increase sharply, reaching USD 33.62 billion, increasing by 22.9%; USD 1.08 billion trade surplus (the trade deficit was nearly USD 50 million); Industrial production index increased by 15.2%, more than times higher than same period last year (2.4%) • For the stock market, Minister Dung said that after the deep decline in early February due to the impact of the world market, the VN-Index recovered after the Lunar New Year, reaching over 1,100 points • It is important to note that inflationary pressures this year will be greater as crude oil and commodity prices on the world market tend to increase and Vietnam absorbs a large amount of foreign currency from FDI, more, overseas remittances • Prospects 2018: According to many experts, Vietnam's economy will turn to 2018 with certain favorable factors, but the challenge is very difficult In terms of advantages, the optimistic forecast of global economic and trade growth in 2018 could be firstly highlighted, facilitating export growth and economic growth, if Vietnam takes advantage The opportunity for free trade agreements has been signed US economy is forecasted to continue to grow steadily, European economy continues to recover Economic growth of China may slow but still remain above 6% Crude oil prices in 2018 are forecast to remain stable at $ 51 to $ 55 per barrel, the IMF forecasts optimistic, at $ 55 a barrel • In the country, the basic factor is that macroeconomic stability continues; Institutional reform and administrative procedures, improvement of investment and business environment, reduction of production and business costs, etc will be promoted by the Government Investment - business In particular, the implementation of the Resolution of the TW5 Conference on Promoting Institutional Reform, the promotion of the private sector to become an important engine of the economy is expected to create a new impetus for the economy Private development Along with that, the confidence of foreign investors in Vietnam's development prospects continues to be strengthened, especially after the APEC summit meeting and in the context of security in many unstable countries • State-owned enterprises are also expected to operate more effectively after restructuring through equitization and divestitures, as well as new developments in the fight against corruption 17 • With the maintenance of macroeconomic stability and high growth in 2017, forecasts for domestic demand in 2018 will continue to increase, facilitating production • Besides the advantages, difficulties and challenges to the economy is still great In the country, many of the risk challenges for the fourth quarter mentioned above will continue into 2018 In addition, the economy's high growth rate in 2017 is also a challenge for growth 2018, especially in the context of depletion of resources, production of mining industry continues to decline, manufacturing industry is difficult to break new, agriculture still facing high risks due to the impact of natural disasters and turn In fact, it can also be seen that the breakthrough in productivity, investment efficiency and competitiveness of both the economy and the business community can not be expected The advantages of cheap labor are rapidly disappearing due to the impact of the industrial revolution 4.0 • Outside the country, the international situation will continue unpredictable changes The trend of protectionism and domestically produced production of some developing countries will affect exports and capital inflows into Vietnam In particular, the reduction of tariffs on imports in ASEAN for many items, including cars, will directly affect some production sectors if Vietnamese enterprises fail to improve their competitiveness In terms of price and quality • In the context of the above, many international experts and organizations forecast that Vietnam's economy in 2018 will continue to grow at a high rate, but it is unlikely to exceed 2017 growth 6.5% - 6.7% on the basis of maintaining macroeconomic stability, controlling inflation, ensuring large balances, protecting the environment then it is a great success in the context of the economy is in the process of transformation, restructuring for sustainable development a) Swot analysis Strength: Bibica’s brand is always trusted by consumers to win the title of Vietnam high quality goods from 1997-2006 Bibica’s brand was selected as a strong brand in the top 100 strong brands in Vietnam The company's products are consumed mainly in the domestic market Domestic sales accounted for 96% - 97% of total sales of the Company in the Mekong Delta There are 42 distributors in the Southeast, 23 distributors in the Central region And 18 30 distributors in the North Up to now, export products account for only 3% - 4% of total export revenue with the majority of export products b) Weakness: Confectionery is not a necessity, not serving the essential needs of people There are many alternative products on the market, so purchasing power of the people will reduce the impact of the company's revenue Every year, the company has to import some materials for production such as flour, flavoring, milk powder So, when the exchange rate fluctuates with the input cost changes, the impact on results of production and business activities of the Company c) Opportunity: So Vietnam's economy in recent years is growing at 7-8% / year, which will stimulate demand for people, which will be the opportunity for BBC business growth d) Challenge: When Vietnam joins AFTA, the tariff on imported confectionery products will be reduced The selling price of these products can therefore be more competitive, thus affecting the Company's business For the domestic market, BCC must compete with Kinh Do Company, Hai Ha Company, Hai Chau Company Business performance of bibica company Although in the third period of 2014 - 2016, the overall situation of the economy is difficult But the BBC has maintained stable business operations thanks to the government's stimulus policies Revenue in 2014 reached 1126.7 billion 2015 is 1171.7 billion And 2016 is 1293 billion The speed of growth compared to the three companies in the same industry is BBC third speed However, BBC's after tax profit is relatively stable, with no significant fluctuation in comparison with other companies From 2014 to 2016 most other companies have profound decline but BBC still grow steadily Seasonal and Mid-Autumn Festival produce high growth Thanks to the construction and installation of high-grade chocopie confectionery production line in Mien Dong factory with the total investment of 300 billion VND in co-operation with Lotte Korea in 2009 BBC uses very good fixed assets, compared to its peers, the BBC behind HHC Business performance in the three years 2014-2016 has increased the BBC's ROA from 2014 to 2016 The BBC's 19 use of very low leverage has made BBC's ROE not as high as its peers In terms of common ground, these two indicators of the BBC is quite stable Financial situation of bibica company The liquidity of the BBC is very good, because the business is mainly seasonal products, BBC's current payment target is quite high compared to other non-banking businesses This indicator tends to increase in recent times, however, the increase of this index is mainly from short-term receivables With relatively low average collection period, these receivables are very good, with average days The BBC may loosen its trade credit policy to attract dealers to sell its products BBC has used very little debt, the lowest among its peers, so its risk of losing its liquidity is very low But using too little debt will make the BBC lose competitiveness in business Do not take advantage of the interest expense Prospectus and potential of bibica company Bibica now accounts for 8% of the confectionery market, second only to giant Mondelez, who owns the Kinhdo confectionery brand But if it only counts domestic brands, it is the biggest brand Bibica has an advantage over other companies in researching consumer tastes in Vietnam as well as selling and distribution systems As the competition slowed down, Bibica accelerated, increased its capacity and scale to gain market share At this stage, businesses set annual growth rate of 20-25% Along with increasing production capacity, the company will step up the development of the distribution system and seek new markets In 2016, this business has 95,000 selling points The target for 2017 will increase to 115,000 points, by 2018 will grow to 125,000 points This unit has also exported to 21 countries, including hard markets like Japan Conclude: BIBICA is a firm that has firmly established its brand name in the confectionery market in Vietnam With a clear development strategy, a large number of projects have been implemented that will drive growth and development In particular, the signing of a strategic cooperation agreement with Korean Lotte Company is an important turning point in the development of the company, opening up great opportunities in the beginning The company aims to become a leading company in confectionery production in Vietnam BBC shares are a good stock It has long been appreciated by the market In addition, Bibica is a 20 high growth company in the future And will be a reliable address to investors interested Investors should invest the stock in the long – term Appendices The calculation table and Financial reports in 2014, 2015, 2016 of Bibica in the APPENDICES file (included separately) ) 21 WORK ASSIGNMENT Class: 41K15.1 CLC Lecture: Trần Thị Nga Group 2: Lê Diệp Cúc Phương Course Title: Financal Analysis Nguyễn Thị Hạnh dung Nguyễn Thị Thu Hà Trương Bảo Trân EXECUTOR INTRODUCE ABOUT THE COMPANY • • • • • • • • • • • • • • • • • • • • • • • • INDUSTRY ANALYSIS FINANCIAL STRUCTURE ANALYSIS OPERATIONAL EFFICIENCY ANALYSIS Assets use efficiency Fixed assets turnover Working caital turnover Disaggregating working caital turnover ROS ROA Disaggregating ROA RE ROE Impact factors to ROE Indicator from cash flow THE RISK ANALYSIS Business risk analysis Qualitative analysis Quanlitative analysis Financial risk analysis Insolvency risk analysis Current ratio Quick ratio Cash ratio Cash flow ratio Interest coverage ability Inventory turnover Receivables turnover Alman Zscore PROSPECTIVE ANALYSIS/BUSINESS VALUATION SUMMARY AND CONCLUSION APPENDICES FORMALITY Hanh Dung Hanh Dung Cuc Phuong Thu Ha Bao Tran Bao Tran Hanh Dung Cuc Phuong Thu Ha Bao Tran Cuc Phuong Thu Ha ... Fax: 028 3971 7922 Email: bibica@ bibica.com.vn - Website: www .bibica. com.vn BIBICABIEN HOA FACTORY Bien Hoa Industrial Zone, An Binh Ward , Bien Hoa, Dong Nai Province BIBICA EASTERN FACTORY Lot... payment of Bibica Company for consecutive years from 2014 to 2016 are larger than 1, Bibica has excess capacity to pay The company has a very good financial position Fast payment of Bibica Joint... inventory and receivables are less than short-term debt This is a very good thing for BIBICA, because it means BIBICA is short term creditors to provide capital needed for the business cycle, the