(Tiểu luận) financial statement analysis an phat bioplastics joint stock company (aaa) over the period of 2020 2022

Ministry of Education and Training National Economics University School of Trade and International Economics -*** - n Mid-term Assignment Financial Statement Analysis An Phat Bioplastics Joint Stock Company (AAA) over the period of 2020-2022 Class: LSIC 63 – Business Finance Student: NGUYỄN THỊ MINH ÁNH ID: 11219567 Hanoi, March 2023 Table of Contents LIST OF TABLES AND FIGURES ABSTRACT PART I THEORETICAL BASIS FOR FINANCIAL STATEMENT ANALYSIS n I- FINANCIAL STATEMENT II- SOURCES AND USES OF CASH III- FINANCIAL RATIOS Short-term solvency, or liquidity, ratios Long-term solvency, or financial leverage, ratios .6 Asset management, or turnover, ratios Profitability ratios Market value ratios IV- APPLICATION OF DUPONT FINANCIAL MODEL .7 PART II ABOUT AN PHAT BIOPLASTICS JOINT STOCK COMPANY IIIIIIIV- COMPANY NAME AND ADRESS DEVELOPMENT HISTORY .10 BOARD OF DIRECTORS 10 SHAREHOLDERS STRUCTURE 11 PART III 12 MARKET ANALYSIS 12 IIIIIIIV- OVERVIEW OF THE PLASTIC INDUSTRY 12 BUSINESS SITUATION OF ENTERPRISES 13 FOREIGN INVESTMENT IN THE PLASTIC INDUSTRY .13 IMPORT AND EXPORT TURNOVER OF VIETNAM'S PLASTIC INDUSTRY 14 PART IV 15 ANALYSIS OF AN PHAT BIOPLASTICS JSC FINANCIAL STATEMENTS 2020-2022 15 I- SOURCES AND USES OF CASH 15 Balance Sheet 15 Income Statement .17 III FINANCIAL RAITOS (BETWEEN YEARS AND OTHER PEER COMPANIES OF THE INDUSTRY, INDUSTRY AVARAGE) 19 Between 2020-2022 19 2 Industry comparison 21 IV DUPONT ANALYSIS .22 DuPont analysis - ROA 22 DuPont analysis - ROE 22 PART V 22 INDUSTRY COMPARISION 22 CONCLUSION .25 REFERENCES 26 List of tables and figure Figure 1: DuPont financial model Figure 2: An Phat Bioplastics JSC Board of Directors Figure 3: An Phat Bioplastics' shareholder structure 12 13 Table 1: An Phat Bioplastics JSC Shareholders Structure Table 2: Vietnam's plastic export and import turnover over the years Table 3: Standardised financial statements Table 4: An Phat Bioplastics Balance Sheet 2020-2022 Table 5: An Phat Bioplastics Income Statement 2020-2022 Table 6: An Phat Bioplastics JSC Financial Ratios 2020-2022 Table 7: AAA's current ratio's industry comparison 2020-2022 Table 8: AAA's Quick Ratio's Industry comparison 2020-2022 Table 9: Comparison between AAA and 10 others peer companies 12 16 16 17 19 20 22 23 24 Y n n ABSTRACT The aim of Financial Statement Analysis is to provide the full scenario of the company to investors by using the historical data of the company along with current situation as well as forecast for the data in the future In this report, I applied all techniques that I have learnt so far from the subject Financial Statement Analysis to analyse the performance of An Phat Bioplastics Joint Stock Company in the period of 2020-2022 Data has been mainly collected through An Phat Bioplastics JSC’s data source Concerning entire factors, this report is mainly supported by recommendations, which could be helpful for stakeholders of this company PART I THEORETICAL BASIS FOR FINANCIAL STATEMENT ANALYSIS I- Financial Statement Financial analysis is the process of examining a company’s performance in the context of its industry and economic environment to arrive at a decision or recommendation Often, the decisions and recommendations addressed by financial analysts pertain to providing capital to companies—specifically, whether to invest in the company’s debt or equity securities and at what price An investor in debt securities is concerned about the company’s ability to pay interest and to repay the principal lent An investor in equity securities is an owner with a residual interest in the company and is concerned about the company’s ability to pay dividends and the likelihood that its share price will increase Overall, a central focus of financial analysis is evaluating the company’s ability to earn a return on its capital that is at least equal to the cost of that capital, to profitably grow its operations, and to generate enough cash to meet obligations and pursue opportunities n II- Sources and uses of cash Sources: Cash inflows when we “sell” something and we add to the cash account - Decrease in asset account - Increase in liability or equity account Uses: Cash outflows when we “buy” something - Increase in asset account - Decrease in liability or equity account III- Financial ratios Short-term solvency, or liquidity, ratios Short-term solvency analysis is an assessment of the ability to meet debt payment obligations for a period of less than one year from the date of incurred by the business Short-term debts include accounts payable to sellers, payable to employees, short-term loans, The short-term solvency analysis includes the following contents: Short-term debt solvency coefficient, fast solvency coefficient, and instant solvency coefficient Current Ratio This indicator indicates whether the total value of short-term assets currently exists that the business guarantees short-term solvency The higher this indicator shows the ability of the business to pay short-term debt as possible and vice versa This high indicator shows that a part of the shortterm asset is invested from stable capital sources, indicating autonomy in financial activities If this target is low, i.e short-term assets not compensate for short-term debt, indicating that the business is having difficulty repaying debts due to adversely affect business performance The Quick (or Acid-Test) Ratio This indicator measures the liquidity of the number of times that cash, receivables and shortterm financial investments guarantee short-term debt Here, inventory is excluded when calculating the quick solvency factor because it is often the least liquid current asset It’s also the one for which the book values are least reliable as measures of market value because the quality of the inventory isn’t considered Some of the inventory may later turn out to be damaged, obsolete, or lost n More to the point, relatively large inventories are often a sign of short-term trouble The firm may have overestimated sales and overbought or overproduced as a result This indicator, if too high and prolonged, is not good, can lead to reduced capital efficiency But this indicator is too low, lasts as long as possible because there may be financial risks, the risk of bankruptcy may occur Long-term solvency, or financial leverage, ratios Long-term solvency analysis is an assessment of the ability to meet debt payment obligations for a period of more than one year Long-term debts include accounts payable to sellers, workers' payables, long-term loans,… Long-term solvency analysis includes the following contents: longterm debt solvency coefficient and interest payment ability coefficient Total Debt Raito This indicator indicates the ability to pay long-term debt for the entire net value of fixed assets and long-term investments, etc This target is as high as possible to demonstrate the longterm solvency of the business in the future, contributing to the stability of the financial situation If this target is low, it is not possible to confirm that the long-term solvency in the future of the business is bad However, businesses still need to take early action on this target Document continues below Discover more from: Corporate finance 328 documents Go to course Test Bank for Fundamentals of Corporate Finance 10th 107 Edition by Ross Corporate finance Test Bank Fundamentals of Corporate Finance 12th edition Chapter Corporate finance n 31 97% (66) 100% (17) TN1 corporate finance 38 Corporate finance 100% (12) Brooks Answers Introductory Econometrics for Finance 56 18 Corporate finance 94% (17) Corporate-Finance-Note-Chapter to Chapter 6, online note with full of useful information Corporate finance 100% (7) Ebook Tài doanh nghiệp (Lý thuyết & thực 148 hành quản lý ứng dụng cho doanh nghiệp Việt Nam)… Corporate finance 100% (7) Debt-quity ratio = Equity multiplier = Long- term debt ratio = Times interest earned ratio = Asset management, or turnover, ratios Inventory turnover = Days’ sales in inventory = Receivables turnover = Days’ sales in receivables = NWC turnover = Fixed asset turnover = Total asset turnover = Profitability ratios Profit margin = Return on assets (ROA) = n Return on equity (ROE) = ROE = x x Market value ratios Price-earnings ratio = Because the PE ratio measures how much investors are willing to pay per dollar of current earnings, higher PEs are often taken to mean that the firm has significant prospects for future growth PEG ratio = PEG ratio = Price-sales ratio = IV- Application of DuPont financial model The DuPont analysis is a formula used to track a company's financial performance It was developed in 1914 by F Donaldson Brown, who worked for the DuPont Corporation The DuPont financial model is often used to analyse the link between factors that affect financial indicators to be analysed Thanks to the analysis of the relationship between the factors, it is possible to detect the factor that has influenced the analytical target in a strict logical sequence and the analyst will be aware of the causes and improve the possible weakness The DuPont financial model is often used to analyse the return on total assets (ROA), return on equity (ROE) n Figure 1: DuPont financial model From the above model it can be seen that, in order to improve the profitability of a co-asset that the enterprise is using, corporate governance must study and consider what measures are available for the continuous improvement of the profitability of revenue and the movement of assets A simple calculation of a company's ROA and ROE may be simple and can give an idea into a company's performance, but it still does not provide the full picture The ROA and ROE ratios are useful only when compared to the company's competitors or with the market The DuPont analysis helps make this comparison more detailed and accurate If a company's performance is lower than its peers, the DuPont analysis can help identify the specific figures and areas that are performing poorly, thus helping a company improve Thus, financial analysis under the DuPont model has great significance for corporate governance, not only evaluating business performance in a deep and comprehensive way, but also fully and objectively evaluating the factors affecting business performance Thereby, the system of meticulous and authentic measures to strengthen the improvement of the business management organization, contributing to constantly improving the business efficiency of the business in the next business periods PART II ABOUT AN PHAT BIOPLASTICS JOINT STOCK COMPANY n An Phat Bioplastics Joint Stock Company (An Phat Bioplastics) is Southeast Asia’s No enterprise in the field of manufacturing and exporting high quality thin monolayer film An Phat Bioplastics is currently a public company, and a key member and the pioneer of An Phat Holdings With nearly 20 years of experience, An Phat Bioplastics has been attracting a large number of domestic and international customers, establishing strategic business relationships with customers in more than 50 countries around the world Along with the development of the traditional business of thin monolayer film, in recent years, An Phat Bioplastics has shifted its strategic goals to diversified its products and focusing on developing AnBio compostable compound and AnEco compostable products, such as bags, knives, spoons, forks, straws, gloves…, meeting the green consumption trend in Vietnam and over the world I- Company name and adress - Company name: + In Vietnamese: Công ty Cổ phần Nhựa An Phát Xanh + In English: An Phat Bioplastics Joint Stock Company - Abbreviated name: An Phat Bioplastics., JSC Winmart, Big C, Mega Market, and Lotte have cut their use of single-use plastic bags and replaced them with other environmentally-friendly packaging According to the Ministry of Industry and Trade, after the pandemic, 2022 will have many prospects for the plastic industry thanks to the signing of a series of new-generation Free Trade Agreements, which opens up opportunities to attract investment not only in foreign countries FTA cooperation, but also other countries come to invest and produce goods in Vietnam to take advantage of the opportunities of the FTA II- Business situation of enterprises The plastic industry is one of the relatively young industries of Vietnam but has a very fast development speed So far, there have been more than 4,000 enterprises operating in this industry, of which more than 99% are private enterprises, concentrated mainly in the South of Viet Nam (accounting for more than 80% of the country's plastic enterprises) This is the area where many industrial parks concentrating in processing industry producing plastic packaging products Most of the plastic enterprises are SMEs n The competitiveness of Vietnamese plastic enterprises in general is rather low due to their small production scale and limited technological capacity Currently, Vietnamese plastic enterprises mainly use Chinese technology Machinery, equipment, and production lines imported from China account for more than 40% However, recently many plastic enterprises have invested in more advanced technology from Korea and Japan to produce engineering plastic products, or German technology to produce construction plastic products III- Foreign investment in the plastic industry Compared to many other industries, Viet Nam’s plastic industry is very potential for foreign investors In the past years, Viet Nam's plastic industry has witnessed a large wave of investment shifting from China to Vietnam There are many reasons for this shift including cheaper labour costs compared to China, some new Chinese policies prohibiting the import of waste plastics affecting the plastic recycling activities of China’s enterprises Chinese plastic products are subject to anti-dumping duties in some markets, including Europe In addition, Vietnam has signed many free trade agreements with many major partners, creating more opportunities for investment and export, attracting more foreign investors into Viet Nam's plastic industry Especially, investors from ASEAN (Thailand, Indonesia), Korea and Japan have invested and bought shares in Viet Nam’s big plastic companies Currently, the number of domestic plastic enterprises accounts for about 85%, the remaining 15% are enterprises with foreign capital The participation of foreign investors in Vietnam's market has significantly changed the face of this industry On the one hand, the participation of foreign investors has made the investment 14 market in this field more exciting, attracting capital and technology from abroad to help modernize the domestic plastic industry On the other hand, 100% domestic plastic enterprises will have to compete with very strong foreign plastic enterprises, leading to the situation that many Vietnamese plastic enterprises have been sold to foreign countries, or exit from the market IV- Import and export turnover of Vietnam's plastic industry For many years, the plastic industry has always been in a state of trade deficit, with export turnover much lower than import turnover The trade deficit has increased from 7.3 billion USD in 2015 to 14.6 billion USD in 2020 There are many reasons for the trade deficit in the plastic industry Firstly, currently, the supply of domestic plastic materials can only meet about 20% of the market demand, the remaining 80% of material demand in Vietnam must be imported from abroad Secondly, a large part of imported plastic materials is used to produce products that are inputs from other industries such as electronics, automobiles - motorcycles, construction etc but when exported, the value of these plastic components is not included in the export turnover of the plastic industry Thirdly, the main products of the plastic industry are packaging products, household items and plastic pipes used for construction, which mainly serve the domestic market The export of these products is negligible n Unit: Billion USD 2015 2016 2017 2018 2019 2020 Import 9.9 10.9 13.3 15.3 15.5 19.6 Export 2.6 2.8 3.3 4.2 4.7 Deficit 7.3 8.1 10.0 11.1 10.8 14.6 Table 2: Vietnam's plastic export and import turnover over the years Source: Compiled from ITC Trademap 15 PART IV ANALYSIS OF AN PHAT BIOPLASTICS JSC FINANCIAL STATEMENTS 2020-2022 I- Sources and uses of cash Sources and Uses of Cash (December 31,2022) [VND millions] SOURCE OF CASH Current assets Decrease in cash 258,398 Decrease in A/R 461,712 Decrease in Inventory 469,631 Decrease in other CA 14,329 Decrease in LT Receivables Decrease in LT assets in progress n Increase in LT Debt Increase in Shareholder's Equity TOTAL SOURCES 98,038 217,425 21,564 663,282 2,204,379 USE OF CASH Increase in Prepaid Expenses Increase in Fixed assets Increase in LT Investments Increase in other LT assets 23,958 1,159,586 22,450 Decrease in CL 195,169 TOTAL USES 2,204,839 Table 3: Standardised financial statements 16 803,676 Balance Sheet 1,363,569 1,500 1,264,200 16,985 472,098 21,760 3,140,112 1,105,171 1,500 802,488 820,661 2,467 7,431 2,739,718 112,602 1,272,185 223,748 2,207,094 12,828 3,828,457 6,968,569 14,564 1,295,783 6,323 3,366,580 35,278 4,718,528 7,458,246 Liabilities Current liabilities: Accounts Payable Total current liabilities Long-term debt Total Liabilities 2,689,124 2,689,124 295,669 2,984,793 1,848,167 1,848,167 754,744 2,602,911 1,652,998 1,652,998 776,308 2,429,306 3,296,669 4,365,658 5,028,940 6,281,462 6,968,569 7,458,246 n An Phat Bioplastics JSC Balance Sheet 2020-2022 [VND millions] 2020 Assets Current assets: Cash and cash equivalents 616,523 Investment 301,600 Accounts Receivable 1,328,600 Prepaid expenses 20,273 Inventory 417,239 Other current assets 21,483 Total current assets 2,705,718 Non-current assets: Long-term Receivable 50,987 Fixed assets 1,457,932 Long-term assets in progress 214,308 Long-term Investment 1,839,372 Other long-term assets 13,145 Total non-current assets 3,575,744 Total Assets 6,281,462 Shareholder's Equity Total Liabilities & Shareholder's Equity Check 0.000 2021 0.000 Table 4: An Phat Bioplastics Balance Sheet 2020-2022 17 2022 0.000 1.1 Asset Total asset value increases steadily from 2020 to 2022, increasing by nearly 20% after years The value of short-term and long-term assets in general increased, in which long-term assets tend to increase faster, accounting for a higher proportion of short-term assets The proportion of long-term assets will be at 63% in 2022 In 2021, liquidity ratios improved because the Company successfully auctioned 75 million shares, earning VND 1068 billion, so cash and cash equivalents increased significantly The company's short-term and long-term financial investment activities tend to decrease markedly through 2022 1.2 Capital The value of liabilities has decreased steadily over the years (maintained at about 65%), in which short-term debt tends to decrease and long-term debt tends to increase Owner's equity is increasing, with a growth rate of 32% after years, largely due to the issuance of additional shares and retained earnings n The increasing interest of non-controlling shareholders means that the company's profits will have to be distributed more to other shareholders 1.3 Company's capital structure Debt/Equity= 0.48 (2022), compared to the average of listed plastic enterprises, this is a relatively safe level of financial leverage Currently, the growth rate of total debt is still lower than the growth rate of equity Income Statement An Phat Bioplastics JSC Income Statement 2020-2022 [VND millions] 2020 Revenue from sales and services 4,420,545 Revenue deductions Net revenues from sales and services rendered Costs of Goods Sold (204) 18 4,420,341 2021 2022 5,130,177 5,530,345 (1,073) (79,672) 5,129,104 (4,568,905) 5,450,673 (4,839,338) (3,967,632) Gross revenues from sales and services rendered 452,709 560,199 611,335 Financial Income 92,152 163,636 99,823 Financial Expense (153,453) (140,174) (321,253) Selling Expense (112,060) (297,643) (259,977) Administration Expenses (65,777) (58,421) (67,173) 213,571 227,597 62,755 3,011 3,523 (3,081) (259) (70) 3,264 66,019 Net income Other income 3,420 Other Expenses (3,827) Other loss/profit (407) Earnings Before Taxes 213,164 227,527 Income Taxes (25,007) (39,789) (34,944) n Net Earnings 188,157 187,738 31,075 Table 5: An Phat Bioplastics Income Statement 2020-2022 2.1 Revenue analysis In 2021, the company's revenue reached VND 5130 billion, an increase of 16% compared to 2020 The sharp increase in the price of plastic resins made this segment's revenue also increase In particular, in 2021, the new Industrial Park - An Phat Industrial Park (formerly Quoc Tuan Industrial Park - An Binh) with a total area of 180ha and a commercial area of 130ha has received the Investment Certificate Conclusion: Producing, selling, and trading in plastic products and packaging is the main business activity, accounting for the largest proportion in the total revenue of the Company AAA's plastic products can be divided into main categories: Biodegradable products and materials; Packaging; Raw materials and chemicals for plastic industry 2.2 Expenses analysis In 2020-2021, the company reduces financial costs due to unfavourable financial activities The cause is the negative impact of the Covid-19 epidemic on the world economy 19 Cost of goods sold is quite high, about 89% of total revenue The increase in cost of goods sold is equivalent to the increase in revenue in the period of 2020-2022 This is detrimental to the company Compared to its competitors, AAA still needs to improve its cost efficiency If costs continue to increase, the selling price should be increased with the increase in costs n 20 III Financial ratios (between years and other peer companies of the industry, industry avarage) Between 2020-2022 An Phat Bioplastics JSC Financial Ratios (2020-2022) [VND millions] 2020 2021 2022 Solvency Current Ratio 1.01 1.70 1.66 The Quick Ratio 0.85 1.44 1,2 Financial leverage Debt to total equity ratio 0.48 0.37 0.33 D/E ratio 0.91 0.60 0.48 0.72 0.77 0.80 Asset management ratios Total asset turnover 7.43 8.00 8.07 Inventory turnovers 8.92 10.72 12.54 4.26 3.67 5.2 Profitability ratios (%) Profit Margin n Receivables turnover ROAE 6.29 4,9 5.3 ROAA 3.07 2.84 2.54 ROS 3.81 2.47 0.74 ROA 3.17 3.12 1.5 ROE 7.21 6.12 2.68 EPS 1367 1042 441 BVPS 18146 16709 16134 P/E 10.53 19.39 15.49 Table 6: An Phat Bioplastics JSC Financial Ratios 2020-2022 1.1 Solvency analysis  Liquidity ratios reflect the level of financial safety, ability to pay short-term debts and ensure that the Company does not fall into a state of insolvency The short-term solvency ratio of the Company has been maintained stable and greater than over the years, showing that the company can completely pay the arising debt obligations In 2021, liquidity ratios improved because the Company successfully auctioned 75 million shares, earning VND 1068 billion, so cash and cash equivalents increased 21  Overall solvency ratio: From 2020 to 2022, the coefficient is >1 Reflecting basically, with the total current assets, the enterprise can fully meet its debts In 2021, the coefficient is 2.2, reflecting the solvency of the business very well This means that for every debt, there is still 2.2 dong secured, which means that the company's debt still has collateral for AAA's liquidity  Quick ratio: We see that in all years, quick ratio is > 1, reflecting the business has good solvency and high liquidity that proves the security and ability to pay short-term debts with the available money This shows that the financial position of the group is quite stable, it can positively affect the operation of the group in the future  Instant Ratio: Cash and cash equivalents herein include cash, bank deposits, cash in transit, short-term securities investments and other short-term investments that can be easily converted to cash within months without major risk This coefficient < 1: With the current amount of cash and cash equivalents, the enterprise cannot guarantee instant payment of payable debts within months However, here we still see a growth coefficient, businesses are also trying to improve 1.2 Capital structure analysis n The debt/total assets ratio of the parent and consolidated companies continued to improve, to 0.31 and 0.60 in 2021, respectively, as the company actively paid debt during the year, while the equity increased due to capital increase of the company Debt/Equity structure=0.48 (2022), compared to the average of listed plastic enterprises, this is a relatively safe level of financial leverage Currently, the growth rate of total debt is still lower than the growth rate of equity From the table above, we can see that the number of inventory turnovers fluctuates gradually higher and higher, indicating that the enterprise has ensured solvency, and at the same time, the inventory turnover has also decreased specifically showing the business The business of enterprises is more effective The number of receivables turnover has increased significantly, specifically increasing to rounds, proving that the debt collection work of the enterprise is very good Regarding the average collection period, it also clearly shows the efforts in debt collection, specifically, it has been reduced by nearly month 1.3 Operational efficiency analysis 22 Consolidated inventory turnover increased to 12.54 times compared to 10.72 times in 2021 and 8.92 times in 2020 Total asset turnover increased from 0.9 times in 2020 to 1.41 times in 2021 Receivables turnover increased from 7.43 times in 2020 and times in 2021 to 8.07 times in 2022 According to statistics, in years 2020-2022, the company's ROS is always positive, proving that the company is profitable However, this number is decreasing Enterprises need to take measures to optimize and improve ROS such as cost control, product life cycle, increase in revenue., Analysing and evaluating factors such as: product demand, buyer's income, competitor's product price, etc… and then, making reasonable business strategies, easily controlling ROS 1.4 Profitability analysis Net profit margin decreased compared to 2020 due to the sudden increase in transportation costs, which increased selling expenses ROE, ROA decreased because in the year the Company increased equity, the newly collected capital did not create business efficiency in the year Industry comparison Industry comparison n Short-term solvency - Current ratio 2020-2022 Company 2020 2021 2022 An Phat Bioplastics JSC (HOSE: AAA) 1.01 1.70 1.66 Binh Minh Plastics JSC (HOSE: BMP) Dong A Plastic JSC (HOSE: DAG) 4.00 1.37 5.03 1.21 4.20 1.54 Tan Binh Culture JSC (HNX: ALT) 5.43 6.07 4.83 Tien Phong Plastic JSC (HNX: NTP) 1.35 1.16 1.65 Average 2.63 3.03 2.78 Table 7: AAA's current ratio's industry comparison 2020-2022 Industry comparison Short-term solvency - The Quick Ratio 2020-2022 23 Company An Phat Bioplastics JSC (HOSE: AAA) 2020 0.85 2021 1.44 2022 1.20 Binh Minh Plastics JSC (HOSE: BMP) 2.57 3.08 2.95 Dong A Plastic JSC (HOSE: DAG) 0.69 0.43 0.51 Tan Binh Culture JSC (HNX: ALT) 5.43 6.07 4.83 Tien Phong Plastic JSC (HNX: NTP) 0.87 0.73 0.61 Average 2.08 2.35 2.02 Table 8: AAA's Quick Ratio's Industry comparison 2020-2022 Compared to some other companies in the industry, AAA's short-term ratio and quick ratio are average, but lower than some companies like BMP or ALT We see that Binh Minh Plastics Joint Stock Company is focusing on the company's autonomous financial foundation However, the downside is that the company uses very low financial leverage, so the ability to grow and expand business activities is more limited In general, in 2022, AAA's solvency indicators are improved compared to 2021, solvency is always maintained at a safe level AAA Company has balanced its finances to ensure that its solvency by maintaining its short-term solvency ratio is always greater than This ratio is at a safe and moderate level in line with its strategic use use the company's financial leverage IV DuPont analysis DuPont analysis - ROA n The company's ROA is mainly influenced by the company's return on sales In 2020, the return on sales fell sharply while the asset utilization efficiency increased, but the ROA results still decreased at the same rate as the rate of return on sales However, in 2022, the opposite happened, ROA was affected by the understanding of asset use because in 2022, the company invested heavily in fixed assets, leading to a sharp increase in the company's total assets DuPont analysis - ROE ROE represents a company's financial leverage With the same amount of assets, a properly leveraged firm in its asset structure can generate a higher ROE than an unlevered firm However, financial leverage will increase risk Corporate debt is more sensitive to the economic cycle, especially during difficult times, when revenue declines Decreasing financial leverage indicates diminishing liquidity risk After using the DuPont model, in the case of AAA, we can clearly see that: AAA's ROE from 2020 to 2022 increased over the years thanks to a marked improvement in all factors, showing positive signs 24 PART V INDUSTRY COMPARISION Table 9: Comparison between AAA and 10 others peer companies n AAA is a business that does quite well compared to other businesses in the plastic packaging industry With VND5028 billion in equity and VND7458 billion in total assets in 2022, AAA is considered the largest enterprise in the plastic packaging industry listed on the stock exchange market The company stands out for its higher profitability compared to other players in the industry; the growth rate of revenue and profit is higher and higher than the growth rate of capital Compared to other companies in the same industry, An Phat is proud to be a leading company in plastic production In the business report, the number of An Phat's customers is always stable At the same time, the company also maintains the good relationship with its strong partners and longtime experts- those that extensive experience in the field of thin film packaging plastic Although An Phat's stock has potential, the complicated developments of the Covid-19 epidemic may affect the company's production and capital mobilization process However, you should not be too worried because the loss rate when buying AAA shares is only low 25 PART VI DEVELOPMENT STRATEGY The following part provides some suggestions for AAA’s 2023 development strategy: I Production and business activities Firstly, the company needs to balance accounts receivable and inventory, increasing the amount of cash for the company Accumulate cash or create new cash inflows to ensure good solvency, ready to cope with future fluctuations The company should also continue to improve the company's ROA and ROE targets to increase the attractiveness of the stock Currently the new ROE is at 16%, should be improved up to the target level of 20% n Secondly, the company should build a medium and long-term strategy of green transformation through restructuring of self-decomposing packaging products, suitable for changing the society’s consumption mindset and habits At the same time, the company disseminates this vision and strategy to all departments and divisions so that all employees can understand their roles and positions in the journey to realize the company's business goals Thirdly, the company determines the necessary resources to realize green transformation goals such as human resources for research, development and expansion of green products, financial resources to invest in completing the value chain At the same time, there should be a plan to prepare resources, as well as to track and monitor the progress of the implementation of the goals II Investment activities The company should balance the benefits of reducing the cost of capital from financial investment activities, in which: - Take advantage of VND capital to send to credit institutions with high interest rates, increase financial income, balance interest expenses to optimize loan balance at credit institutions, thereby reducing interest expenses direct loan - Research on a partial shift from bank deposits to holding corporate bonds with resale rights Because the market interest rate in 2022 is decreasing due to the adjustment of the operating 26 interest rate of the State Bank and the impact of the COVID-19 epidemic, leading to a decrease in the capital absorption capacity of the market - The company closely monitors factors that can cause exchange rate fluctuations such as domestic and foreign economy and finance to adjust financial policies accordingly The company makes and monitors plans for specific loan and payment for each loan Simultaneously, the company seeks and takes advantage of long-term loans with preferential interest rates and control cash flow Lastly, the company uses financial leverage prudently CONCLUSION n The year 2023 continues to be a challenging journey due to concerns about the speed of the global economic recovery, inflationary pressures, geopolitical tensions that lead to socioeconomic instability At the same time, indirect supply chain segments would drive up prices for goods, energy, and transportation However, looking on the bright side, there are certain opportunities for AAA during these tough times, such as: market expansion thanks to free trade agreements, the shift of global supply chains to Vietnam, government's economic promotion policies and changing consumer behaviour consumption From this backdrop, AAA need to continue to invest in the future, further improve the way they operate, increase digitization and automation, and expand their core business, sticking to the target of green transformation by serving the people with environmentally friendly products This will remain the focus of the business strategy to establish An Phat Xanh Plastic JSC as the pioneer in the green industry, playing an important role in the journey of building sustainable thinking and consumption habits of the society 27 REFERENCES 2021 AAA Annual Meeting Report (2021) bmweb (n.d.) Overview of Vietnam’s Plastic Industry (Part 1) [online] vioit.org.vn Available at: https://vioit.org.vn/en/strategy-policy/overview-of-vietnam-splastic-industry part-1 4796.4144.html CFA Institute (2022) 2023 CFA Program Curriculum Level I Volume John Wiley & Sons Ross, S.A., Westerfield, R and Jordan, B.D (2015) Fundamentals of corporate finance New York McGraw-Hill SGT (2022) Doctor of Materials Science with French nationality becomes Board Chairman of An Phat Bioplastics [online] The Saigon Times Available at: https://english.thesaigontimes.vn/doctor-of-materials-science-with-french-nationalitybecomes-board-chairman-of-an-phat-bioplastics/ [Accessed Mar 2023] VietnamPlus (2021) Vietnam to need 80,000 tonnes of biodegradable plastics annually by 2025 | Environment | Vietnam+ (VietnamPlus) [online] VietnamPlus Available at: https://en.vietnamplus.vn/vietnam-to-need-80000-tonnes-of-biodegradableplastics-annually-by-2025/200764.vnp [Accessed Jan 2023] n 28