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Tiêu đề Setting Up Corporate Valuation Advisory Service At Mekong Securities Joint Stock Company
Tác giả Nguyen Quang Huy
Người hướng dẫn MBA. Pham Sy Long
Trường học National Economic University
Chuyên ngành Bachelor of Business Administration in English (E-BBA)
Thể loại thesis
Năm xuất bản 2014
Thành phố Hanoi
Định dạng
Số trang 97
Dung lượng 0,98 MB

Cấu trúc

  • I. Rationale (13)
  • II. Objectives (14)
  • III. Research questions (14)
  • IV. Research methodology (14)
  • V. Data collection (15)
  • VI. Structure of thesis (15)
  • CHAPTER 1 THEORETICAL BACKGROUND ON CORPORATE (15)
    • 1.1. Theoretical background on securities company (16)
      • 1.1.1 Definitions of Securities Company (16)
      • 1.1.2 Classification of Securities Company (16)
      • 1.1.3 The roles of Securities Company (17)
    • 1.2 Theoretical background on corporate valuation (18)
      • 1.2.1 Corporate value (18)
      • 1.2.2 Principles of corporate valuation (18)
      • 1.2.3. Definition and theoretical background (19)
      • 1.2.4. Misconceptions about valuation (20)
      • 1.2.5 Reasons for valuation application and using situation (22)
      • 1.2.6 Valuation approaches (23)
      • 1.2.7. Discounted cash-flow valuation (26)
      • 1.2.8 Economic value added valuation (35)
      • 1.2.9 Asset-based method (41)
  • CHAPTER 2 SETTING UP CORPORATION VALUATION ADVISORY (16)
    • 2.1. Introduction of Mekong Securities Joint Stock Company (43)
      • 2.1.1 Overview of Mekong Securities Joint Stock Company (43)
      • 2.1.2 Professional services at MSC (43)
      • 2.1.3 MSC’s organization structure (45)
    • 2.2 Setting up corporate valuation advisory service in MSC (48)
      • 2.2.1 General description of corporation valuation advisory service (48)
      • 2.2.2 Market research (49)
      • 2.2.3 Price strategy (54)
      • 2.2.4 Selling plan (55)
      • 2.2.5 Human resources (57)
      • 2.2.6 Financial plan (60)
        • 2.2.6.1 Estimated cost (60)
        • 2.2.6.2 Forecast income statement (62)
      • 2.2.7 Legal requirements for providing corporation valuation advisory service (63)
      • 2.2.8 Corporation valuation process (66)
      • 2.2.9 Carry out the entire valuation process (66)
  • CHAPTER 3 RECOMMENDATIONS WHEN LAUNCHING SERVICE (43)
    • 3.1. General comment (78)
      • 3.1.1 Strengths of MSC (78)
      • 3.1.2 Weaknesses of MSC (79)
      • 3.1.3 Opportunities for MSC (79)
      • 3.1.4 Threats for MSC (79)
    • 3.2 Recommendations when launching service (80)
      • 3.2.1 Valuation method (80)
      • 3.2.2 Legal issues (80)

Nội dung

Rationale

After nearly two decades of transitioning from a closed economy to a government-controlled market-oriented economy, Vietnam has made significant economic progress This rapid development presents challenges for all businesses, both state-owned and private, as they strive to determine their corporate value Consequently, this evolution sets a benchmark and establishes new requirements for businesses seeking to secure financing.

In recent decade, equitization advisory service and M&A advisory service are two core services which generate huge profits for all securities companies.

In today's competitive landscape, customers are increasingly seeking purpose-driven services that foster change and innovation Securities companies are no longer competing solely on network strength or service fees; instead, they are differentiating themselves through a diverse range of advisory services that cater to evolving client needs.

In the realm of M&A and equitization advisory services, securities companies adhere to essential procedures while offering clients the flexibility to select their preferred service packages A critical aspect of this process is corporate valuation, which significantly impacts the execution of equitization or M&A transactions This phase often demands considerable time and effort from both clients and securities firms As of January 2013, these practices remain pivotal in the advisory landscape.

Vietnam, there are only 83 companies who have permissions for providing valuation advisory service However, there are only 53 companies in Hanoi.

According to the forecast and historical data about M&A and equitization, it is very easy to see that this trend still develop rapidly in Vietnam, especially in

Hanoi presents a significant opportunity for securities companies, as 53 firms currently fail to meet market demand This gap allows for enhanced competition and the potential growth of valuation services in the region.

Chuyên đề thực tập Tốt nghiệp

In response to the growing demand for advisory services, numerous companies have expanded their offerings to meet client needs However, Mekong Securities Joint Stock Company (MSC) has yet to introduce this service, highlighting a significant gap in their portfolio To capitalize on this lucrative opportunity and better serve their customers, it is essential for MSC to implement an advisory service.

Hence, from above practical requirements, the topic “Setting up corporate valuation advisory service at Mekong Securities Joint Stock Company” is selected for my thesis research.

Objectives

This research will focus on the some following objectives

- Understanding the market of valuation advisory service in Hanoi

- Setting up corporate valuation advisory service which is a new advisory service at MSC

- Understanding the legal requirements for providing this new advisory service.

Research questions

From the above objectives, the research is conducted to find the answer for the following questions:

- How potential the market is to provide the corporate valuation advisory service?

- How to set up a new advisory service at MSC?

- What are legal requirement to get permits from the government for providing this new advisory service?

Research methodology

Chuyên đề thực tập Tốt nghiệp

Data collection

This research employs the secondary data collection method, primarily utilizing it for corporate valuation advisory services and other pertinent materials The gathered secondary data serves as a theoretical foundation and provides essential recommendations.

Structure of thesis

The research consists of 3 chapters, which are further described as follows

THEORETICAL BACKGROUND ON CORPORATE

Theoretical background on securities company

A Securities Company is a licensed financial institution operating in the securities market, authorized by the State Securities Commission to engage in various business activities within this sector As a legal entity, it possesses its own capital and financial accounting system, allowing it to conduct one or multiple professional business activities related to securities.

According to the business formulation which is regulated in the Law on

Enterprise 2005, a securities company can be: a joint stock company, a limited liability company or a partnership company.

A partnership is a business structure involving at least two partners who share ownership and operate under a common name In this arrangement, there is at least one general partner, who is an individual fully responsible for the partnership's obligations with their entire personal assets Additionally, there may be limited partners, who are only liable for the partnership's debts up to the amount they invested.

Chuyên đề thực tập Tốt nghiệp their capital contributed to the partnership) Partnership is not permitted to issue any type of securities.

A limited liability company (LLC) is a business structure comprising up to fifty members, who can be either individuals or organizations Members are only liable for the company's debts and obligations to the extent of their capital contributions Notably, an LLC is not permitted to issue shares.

A joint stock company is an enterprise where the charter capital is divided into equal shares, allowing for both organizations and individuals to become shareholders The minimum number of shareholders required is three, with no upper limit on the total Shareholders are only liable for the company's debts up to the amount of their contributed capital Additionally, joint stock companies have the right to issue securities to raise capital.

It is very easy to see that a joint stock company and a limited liability company have advantage outweigh disadvantage in comparison with a partnership.

Therefore, all securities company will establish as a joint stock company or a limited liability company.

1.1.3 The roles of Securities Company

Securities companies are crucial in facilitating fund mobilization for issuers, primarily handling public offerings Currently, most public issuances are managed by consulting firms, specifically securities companies, which is mandatory for initial and public offers.

A securities company enhances investor efficiency by providing expert consultation, saving time, and minimizing risks They play a crucial role in increasing the liquidity of financial products and supplying essential information to administrative authorities for effective market management.

Chuyên đề thực tập Tốt nghiệp

SETTING UP CORPORATION VALUATION ADVISORY

Introduction of Mekong Securities Joint Stock Company

2.1.1 Overview of Mekong Securities Joint Stock Company

Mekong Securities Joint Stock Company (MSC) was established with the certificate of Business registration No 103001480 dated October 14 th , 2002 by

The Hanoi Authority for Planning and Investment oversees MSC, a company engaged in securities and financial advisory services MSC operates under a licensed framework, ensuring compliance in its securities activities.

10/GPHDKD dated February 18 th , 2003 by State Securities Commission.

With a charter capital of VND 100 billion, MSC is dedicated to supporting its clients in the stock market by offering top-notch securities services This commitment has fostered enduring relationships with customers, ensuring they receive high-quality service consistently.

Full name of company: Mekong Securities Joint Stock Company

Address: No.61, Thai Thinh II Street, Dong Da District, Hanoi.

MSC is dedicated to excellence by offering unique services tailored to our customers' needs Our brokers prioritize strong relationships with investors, showcasing their expertise, commitment, and readiness to address any concerns.

Chuyên đề thực tập Tốt nghiệp queries in order to bring more value, trust, and satisfaction to the customer.

- Transforming ownership: performing comprehensive corporate transformation services including: financial advisory before and after transformation, capital restructuring.

- Corporate finance: Analyzing and reforming capital structure.

- Public offering: determining capital requirements, building offering plan, setting up an offering file in accordance with current legal requirements, acting as underwriter and distributing agent.

- Investment consultancy: Providing fundamental and technical analysis for investors.

- Other advisory services: advising on equity structure, managing shareholder registry.

 Underwriting and Organizing share Auction:

Securities underwriting involves the process of placing newly issued securities, where the underwriter commits to purchasing a portion or all of the issuer's securities This guarantees that the underwriter will resell these securities to investors or buy any remaining unsold securities at a predetermined price agreed upon with the issuer.

Issuing securities through underwriting is the safest choice for issuers, as it transfers some or all of the issuance risk to the underwriter, ensuring a guaranteed minimum amount is raised In return for assuming this risk, the underwriter charges an advisory service fee.

MSC serves as a key intermediary for auctioning stock, assisting clients in developing a comprehensive auction plan and procedure They prepare necessary announcements and documentation, calculate starting prices using advanced, client-specific valuation models, and utilize modern auction software to ensure precision throughout the auction process.

Chuyên đề thực tập Tốt nghiệp

MSC collects and provides research reports categorized in industry, sector and company.

- MSC acts as an intermediary depository for customers Shareholders can perform their right with MSC through MSC; they also can trade their stock through MSC.

- From depository service, MSC has developed some additional services including: managing shareholder registry.

MSC’s structure is organized in compliance with following laws:

 Law on Enterprise 2005, approved by Vietnam National Assembly

 Law on Banking and Financial Institution 2004, approved by Vietnam

Chuyên đề thực tập Tốt nghiệp

Chuyên đề thực tập Tốt nghiệp

Ms Phan Thi Tuyet Nhung, Chairwoman

Master of Finance, having over 10 years of experience throughout various positions: Chief Accountant, CFO… and deep knowledge of the financial sector.

Ms Tran Thi Hue Chi - Member of Board of Management

Master of Banking and Finance, having 20 years of experience in the financial sector and enrolled in the ECC Securities Corporation and Vietnam Development

Mr Vu Van Hung - Member of Board of Management

A highly respected businessman in Vietnam, he boasts over 20 years of experience in investment and corporate governance, fostering strong relationships with key partners in the industry.

Mr Pham Sy Long – Director of the Investment Banking Services Sector

MBA, California State University – Fullerton, the United States; Bachelor of

Finance, RMIT University Australia; having over 10 years of experience as lecturer at the Business School, National Economics University, Hanoi and over

8 years as the expert in the financial consulting services sector.

Mr Pham Tri Thanh - CFO

With a degree from the National Economics University and eight years of experience as a senior auditor for leading companies, I specialize in corporate finance consulting and firm valuation across diverse industries.

Ms Trinh Quynh Giao – Specialist of the Investment Banking Services Sector

Master of Finance and Banking, University of Paris Dauphine and European

The School of Management at the University of New South Wales, Australia, offers a Bachelor’s degree that equips students with essential skills in finance and banking With seven years of experience in both international and Vietnamese enterprises, including prominent organizations like PricewaterhouseCoopers and the Bank of Investment and Development, graduates are well-prepared for successful careers in the financial sector.

Vietnam (BIDV) Securities Corporation, Indochina Capital Company.

Chuyên đề thực tập Tốt nghiệp

RECOMMENDATIONS WHEN LAUNCHING SERVICE

General comment

In today's business landscape, equitization and mergers and acquisitions (M&A) have become primary strategies for companies seeking growth in size, capital, market reach, and business sectors A critical aspect of this process is accurately determining corporate value, which is essential prior to any equitization or M&A activities However, the market is highly competitive, with numerous stakeholders including government entities, securities firms, and valuation companies As a result, MSC is likely to encounter various challenges while also capitalizing on potential advantages in this environment.

MSC boasts extensive experience in financial consultation and investment banking advisory services, setting its valuation corporation advisory apart from competitors Leveraging this expertise, MSC offers clients valuable insights and guidance on financial matters and related issues, ensuring a comprehensive approach to their advisory needs.

MSC's later entry into the market compared to some competitors can be seen as a strategic advantage This delay enables MSC to analyze and adopt effective practices from both local and international players, ultimately enhancing its service offerings.

MSC can provide a service to clients with the high quality.

MSC is the pioneering securities company to offer corporate valuation services, positioning itself as a market leader By leveraging its unique strengths, MSC successfully combines traditional securities offerings with innovative new services.

Chuyên đề thực tập Tốt nghiệp

MSC's primary challenge in delivering this service is its lack of experience, as it is a new entrant in the market This inexperience hinders MSC's ability to accurately assess corporate value, resulting in a longer timeline to earn the necessary trust from potential clients and the market at large.

In 2012, MSC underwent a comprehensive restructuring of its operations, management, and ownership, making it a critical period for the company As MSC focuses on stabilizing its operations post-restructuring, it faces vulnerabilities and challenges that require significant time and effort to address.

- Vietnam is in the age of globalization which is the age of economic integration.

To enhance competitiveness in the domestic market against foreign rivals, local enterprises are increasingly opting for strategies such as issuing shares, mergers and acquisitions, and equitization A crucial step in these strategies is accurately determining corporate value, which has led to a growing demand for corporate valuation services.

In recent years, Vietnam's stock market has faced instability, leading to substantial losses for securities companies across the nation To combat this downturn, the introduction of new advisory services represents a crucial opportunity for these firms to improve their performance MSC is also adapting to this trend by implementing innovative solutions to navigate the challenging market landscape.

MSC is a newcomer in the advisory service sector, necessitating a significant investment of time to establish trust and build a solid reputation Additionally, reaching the target customers effectively requires a strategic approach and patience.

Determining the value of intangible assets using the asset-based method poses significant challenges, particularly for MSC, due to the absence of specific guidelines This lack of clarity can lead to various issues for asset owners, complicating the valuation process and potentially impacting financial assessments.

Chuyên đề thực tập Tốt nghiệp always over estimate their businesses Therefore, this step may consume the most time and efforts of MSC.

Recommendations when launching service

Decree No 59/2011/ND-CP outlines two primary valuation methods: the asset-based method and the discounted cash flow (DCF) method To achieve the most precise and acceptable valuation, MSC valuators are encouraged to utilize a combination of these methods In certain instances, to enhance the accuracy of the valuation, MSC valuators may need to employ multiple valuation techniques.

MSC valuators should implement the EVA method, highlighted in the previous chapter, as it is a reliable measure of managerial skills and a strong indicator of future company value growth This approach not only informs owners about their corporate value but also guides managers on areas needing improvement to enhance future value.

Before determining corporate value, valuators must carefully consider the purpose of the valuation Different client objectives necessitate the application of the most suitable valuation method to ensure accurate results and client satisfaction Additionally, the type of business influences the chosen method; for instance, Vietnamese state-owned enterprises are legally required to use the asset-based approach for corporate valuation Consequently, valuators need to be diligent in selecting methods that align with client goals while adhering to legal regulations.

MSC must keep up to date with the change of the laws on determining the corporate value However, MSC also need to keep up with the requirements of

Ministry of finance to maintain and develop this service in terms of size and

The graduation internship topic focuses on the importance of understanding the legal framework surrounding state-owned enterprises Adhering to legal changes is crucial for ensuring proper implementation of equitization and valuation, which are vital steps in the overall process.

To effectively serve international clients, MSC must adhere to international valuation standards, ensuring that its advisory services are comparable to world-class offerings This commitment not only enhances the quality of MSC's services but also supports the organization's growth, particularly in light of the establishment of the ASEAN Economic Community by the end of 2014.

(AEC) will be established, MSC will be dealing with the tough international competitions At that time, Vietnam must be following the international rules.

Therefore, it is a good time for MSC to prepare for it.

Chuyên đề thực tập Tốt nghiệp

In today's competitive landscape, securities companies face increasing challenges in delivering high-quality and diverse services This intense competition not only drives innovation but also presents significant opportunities for rapid growth and development within the industry.

This thesis proposes the establishment of a new advisory service aimed at enhancing the competencies of MSC in competitive markets The corporation valuation advisory service is designed to meet the significant market demand, and it has been developed specifically in alignment with the context of Vietnam.

Law, Vietnam Valuation standard and the good local and international practices

MSC's new advisory service leverages its unique strengths to penetrate new markets, setting it apart from competitors The company's extensive experience in consultation services enhances the quality of service provided, offering clients additional benefits that distinguish MSC in the industry.

Chuyên đề thực tập Tốt nghiệp

2 Ministry of Finance, Circular No 202/2011/TT-BTC dated December 30 th ,

3 Ministry of Finance, Circular No 127/2012/TT-BTC

4 Ministry of Finance, Vietnam Valuation Standard No 04 and 07 (TDGVN 04,

07), issued in accordance with Decision No 48/2005/QD-BTC dated August 14 th ,

5 Ministry of Finance (2013), Announcement No 48: List of companies providing valuation advisory service

6 Mekong Securities Joint Stock Company’s Profile, Reports

7 Nguyen Viet Phuong (2004) Quy trình xác định giá trị doanh nghiệp tại công ty kiểm toán và dịch vụ tin học AISC – chi nhánh Đà Nẵng

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Chuyên đề thực tập Tốt nghiệp

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23 Nguyen Vu Thuy Linh (2013), Discounted cash-flow and Economic value added methods in corporate valuation, Lahti University Of Applied Sciences -

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25 Barlow, B (2008) DCF Valuation Wall Street prep Address: www.wallstreetprep.com/extrafiles/sampledownloads/DCF.pdf (Accessed on:

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Chuyên đề thực tập Tốt nghiệp

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Chuyên đề thực tập Tốt nghiệp

Appendix 1: Fee of corporation valuation (unit: million VND)

From to From To From To From To

Chuyên đề thực tập Tốt nghiệp

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