A company analysis and valuation,masters thesis

Dissertation submitted in partial fulfillment of the Requirement for the MSc in Finance FINANCE DISSERTATION ON A COMPANY ANALYSIS AND VALUATION NAME OF STUDENT: NGO MINH NGOC ID No: 17047725 Intake Supervisor: Assoc Prof Dr Do Thi Kim Hao September 2018 ACKNOWLEDGEMENTS During one intensive full-time year drowning in University of West of England environment Over all, I have achieved profoundly valuable knowledge about Banking systems and Finance status in Vietnam and many developed countries Therefore, working in Agribank Lao Cai Branch, it was a great chance for learning, practicing and developing professional skills In order to finish this thesis, I am deeply grateful to all those who have given ideas, valuable comments, as well as their support during three months of the internship First and foremost, I would like to express my deepest gratitude and special thanks to my supervisor, Assoc Prof Dr Do Thi Kim Hao, for her careful and precious guidance, necessary advices Besides, it will definitely be my shortage if I not send my truly thanks to all my lectures at UWE-BAV, whose provide me with the best learning conditions, teaching methods which not only develop my dissertation but also lay the foundation for my career Moreover, I am greatly indebted to Ms Nguyen Thi Huong – Manager of Corporate Clients Department She was my direct supervisor in Agribank Lao Cai Branch, who in spite of being extraordinary busy with her duties, took time out to hear, guide and keep me on the correct path during the training Last but not least, I convey my sincere thanks to my family, friends who are always by my side with the best support helping me complete the dissertation as well TABLE OF CONTENTS CHAPTER INTRODUCTION 1.1 The background 1.2 The objectives 1.3 The methodology 1.4 The methods 1.5 An overview CHAPTER MACROECONOMIC ANALYSIS 10 2.1 World economy 10 2.2 Vietnam economy 11 2.2.1 PEST analysis 12 2.2.2 Financial analysis 14 2.2.3 Summary about Vietnam economy 16 CHAPTER INDUSTRIAL ANALYSIS 17 3.1 The global aviation industry outlook 17 3.2 The Vietnam aviation industry outlook 18 CHAPTER Vietjet Joint Stock Company 21 4.1 Business description 22 4.2 SWOT analysis 22 4.2.1 Strengthens 22 4.2.2 Weakness 25 4.2.3 Opportunities 27 4.2.4 Threats 29 4.3 Ratios analysis 30 4.3.1 Profitability ratios 30 4.3.2 Gearing ratios 31 4.3.3 Investment ratios 32 4.4 Valuation 32 CHAPTER AIRPORTS CORPORATION OF VIETNAM (ACV – up COM) 34 5.1 Business description 35 5.2 SWOT analysis 36 5.2.1 Strengths 36 5.2.2 Weakness 36 5.2.3 Opportunities 36 5.2.4 Threats 36 5.3 Ratios analysis 37 5.3.1 Profitability ratios 37 5.3.2 Gearing ratios 38 5.3.3 Investment ratios 38 5.4 Valuation 38 CHAPTER Vietnam Airlines Corporation (HVN – upCOM) 41 6.1 Business description 42 6.2 SWOT analysis 43 6.2.1 Strengths 43 6.2.2 Weakness 43 6.2.3 Opportunities 43 6.2.4 Threats 43 6.3 Ratios analysis 43 6.3.1 Profitability ratios 43 6.3.2 Gearing ratios 44 6.3.2 Investment ratios 45 6.4 Decision investor 45 CHAPTER General aviation services company (AST – HOSE) 46 7.1 Business description 47 7.2 SWOT analysis 47 7.2.1 Strengths 47 7.2.2 Weakness 47 7.2.3 Opportunities 48 7.2.4 Threats 48 7.3 Financial analysis 48 7.3.1 Profitability ratios 48 7.2.2 Investment ratios 49 7.3 Valuation 49 CHAPTER Compare four companies in Vietnam aviation industry 51 CHAPTER CONCLUSTION 58 REFERENCES 59 APPENDIX 61 LIST OF TABLES AND FIGURES Figure Global growth continues 10 Figure Vietnam GDP growth rate from 2013 to 2018 14 Figure GDP per capital of ASEAN countries from 2017 to 2022 and the CAGR of GDP per capital 2017- 2022 15 Figure Vietnam inflation rate from Jan 2017 to Jul 2018 16 Figure Chart of market share of domestic passenger carriage in Vietnam 2011-2016 19 Figure CASK operating cost index and fuel surcharges (USD cents): 2013 - first half of 2017 24 Figure the chart of number of tourists and the growth of tourists from 2009 to 2017 in Vietnam 28 Figure The profitability ratios of Vietjet JSC 2015 - 2017 31 Figure Gearing ratio of VJC 2017- 2018 31 Figure 10 The Investment ratios of Vietjet JSC 32 Figure 11 Compare between VJC with other enterprises in the world 33 Figure 12 The profitability ratios of ACV (2015-2018) 37 Figure 13 Investment ratios of ACV 2014-2017 38 Figure 14 Compare between ACV with other enterprises in the world 39 Figure 15 Domestic aviation market share from 2015 to 2017 42 Figure 16 The profitability ratios of HVN from 2016 to 2019 44 Figure 17 Gearing ratios of HVN from 2014-2017 44 Figure 18 The investment ratios of HVN from 2015 - 2017 45 Figure 19 The profitability ratios of AST from 2016 to 2019 48 Figure 20 Investment ratios of AST 2016-2018F 49 Figure 21 Compare between enterprises in the aviation industry 50 Figure 22 Sensitivity analysis 50 Figure 23 Key data in main enterprises in aviation industry 51 Figure 24 EV/EBITDA 2017 52 Figure 25 Comparing the P / B and ROE indexes of the national aviation industry (04/2018) 54 Figure 26 Comparing P / B and ROE indexes for national airports (04/2018) 54 Figure 27 ROA and ROE of aviation businesses 2015-2017 55 Figure 28 ROE and Dupont Aerospace Analysis 2016-2017 57 Figure 29 Asset Situation of enterprises 61 Figure 30 Capital structure of aviation enterprises 2016-2017 62 LIST OF ABBREVIATIONS ASEAN Association of Southeast Asian Nations CAGR Compound annual growth rate CPI Consumer Price Index EBITA Earnings before interest and taxes and amortization EBITD Earnings before Interest, Taxes, Depreciation, and Amortization GDP Gross Domestic Product IMF International Monetary Fund OECD Organisation for Economic Co-operation and Development OPEC Operational Expenditures SMEs Small and Medium Enterprises SOEs State Owned Enterprises WTO World Trade Organization A CHAPTER INTRODUCTION 1.1 The background "Asian airlines and their increasing passenger numbers are driving global aviation markets We envisage that APAC will account for up to half of total annual increase in air traffic by 2020," Shukor Yusof, an aviation expert at Endau Analytics, told DW Vietnam's two fundamental transporters - Vietnam Airlines and Vietjet - are additionally performing admirably regarding development and course extension "Vietnam has a youthful, lively populace and this is driving the avionics division locally and provincially," said Yusof The quantity of air travelers going on local aircrafts is evaluated at 21.8 million, up multi year-on-year On the household advertise, four local aircrafts including Vietnam Airlines, VietJet Air, Jetstar Pacific Airlines and VASCO are working 52 residential air courses associating Hanoi, Danang and HCMC with 18 nearby air terminals In addition, Vietnam's aviation segment positions the fifth among ASEAN nations The area served in excess of 94 million travelers including 13 million remote travelers, an expansion of 16 percent contrasted with 2016, more than twofold that of Asia In any case, household traveler development backed off to 13 percent in 2017 from 25 percent in 2016 Among now and 2020, traveler transportation is required to ascend by 16 percent, and from 2020 to 2030, by percent Merchandise transportation will increment by around 18 percent until 2020, and 12 percent somewhere in the range of 2020 and 2030 In conclusion, Vietnam, at present one of the world's quickest developing aeronautics market will be the fifth quickest developing business sector by 2035, as indicated by the International Air Transport Association Therefore, Vietnam currently has seven aviation companies, including Vietjet Joint Stock Company (VJC), Airports Corporation of Vietnam (ACV), Vietnam Airlines Corporation (HVN) and General aviation services company (AST) The research will focus on these four that analyze financial ratios, competitiveness and development indicators in order to find a safe and efficient company for investment 1.2 The objectives This study refers to a macroeconomic analysis, industry analysis and a company analysis on four enterprise including Vietjet JSC (VJC), Airports Corporation of Vietnam (ACV), Vietnam Airlines Corporation (HVN) and General aviation services company (AST) in Vietnam aviation’s industry Therefore, a definitive motivation behind which is to give sound and all around examined speculation proposals In addition, the dissertation gives a glimpse of the aviation market in Vietnam and analyze major competitive factors in the industry At the same time analyzes the main economic indicators of the four companies through financial statements Finally, making investment recommendations to investors should invest in any company to achieve the highest return 1.3 The methodology When study the Macroeconomic, using the PEST model to study the major factor indicators, such as real GDP (nominal GDP), CPI Vietnam inflation Besides, when analyzing the industry, focus on the factors that influence the development of the industry, the competition in the market as well as the trends of consumers in recent years affect how the fashion market (SWOT analysis method) Finally, about company analysis and valuation, based on financial statements, economic indicators, industry analysts' analysis, and stock market performance of the four companies Therefore, the research uses a top-down analysis method from the macroeconomic to each company in this industry 1.4 The methods The ratio analysis in this study focused on some methods such as profitability ratio, gearing ratio and investment ratio, EV/EBITDA From there, the study extracted the analytical data so that the private investors can have a panoramic view of these companies 1.5 An overview The study will focus on three main areas, the first is the study of the world aviation industry History of development, services and activities typical in developed countries as well as emerging countries In addition, learn about the industry in Vietnam, markets, competitors, the ability of companies The final section is a detailed study of the major Vietnamese aviation companies, namely Vietjet Joint Stock Company, Airports Corporation of Vietnam, Vietnam Airlines Corporation and General aviation services company To get the most out of each company's performance, investors should evaluate how the company's stock looks At the same time there are predictions for the future of the business CHAPTER MACROECONOMIC ANALYSIS 2.1 World economy The global economy enhanced in 2017 and will achieve an eight-year high one year from now as indicated by the Organization for Economic Co-task and Development Be that as it may, needs private venture to support development into 2019 The association bumped up its gauge to 3.6 percent during the current year from 3.5 percent in its last figure to achieve 3.7 percent in 2018 Catherine Mann, OECD Chief Economist, says a few elements added to the enhanced economy ―First there has been a continued monetary policy‖ she explains ―But perhaps some people don’t know that actually there is quite a bit of fiscal stimulus in the system and that is added to the growth The third element is that trade has recovered and it’s moving along quite smartly right now.‖ Figure Global growth continues With its most grounded development in 10 years, the euro region was additionally observed outpacing other major created economies this year and was up on past figures The OECD conjectures development of 2.4 percent for 2017 dropping to 2.1 percent in 2018 Be that as it may, Brexit implies Britain is passing up worldwide development The OECD's 2017 development estimate of 1.5 percent makes Britain the weakest economy in the G7 Moreover, development in emerging market sector and creating economies in general is anticipated to fortify to 4.5 percent in 2018, preceding achieving 4.7 percent in 2019 as the recovery in commodity exporters matures and ware costs level off after the current year's expansion In general, the company has grown steadily over the years, but the EBIT of 2018 and 2019 is expected to decline sharply, as the company has to offset the losses for its subsidiaries In addition, it is promoting investment projects, hotels and services in the provinces of Vietnam 7.2.2 Investment ratios Ratios 2016 2017 0.63 5.87 EPS (thousand VND) 10.04 12.57 BV (thousand VND) n/a n/a P/E Figure 20 Investment ratios of AST 2016-2018F 2018F 5.62 13.04 n/a Generally, EPS in 2016 is only 0.63 but after only year, EPS is times higher than 5.87 That shows the development of this company However, the company does not calculate the P/E in these years, so we can evaluate the company based on the appropriate P / E 7.3 Valuation With strong growth in core business income for 2018, we believe the stock will be trading at a P / E 21x higher than its peers in the region The EPS of 2018 is forecasted at VND4,235, thus the target price for this method is VND88,900 Enterp rises Nation AST MALAYSIA AIRPORTS HLDGS BHD MACROASIA CORPORATION BEIJING CAPITAL INTL AIRPO-H Cap ital (Mil USD) 2017 201 ROE ROA % % Vietna m Malay sia Philip pines China 30 1,6 GUANGZHOU BAIYUN INTERNATI-A HNA INFRASTRUCTURE COMPANY- 1.1 18 162.7 46.0 10 ,010 626 7.9 14.5 9.8 H 5.6 23.3 JAPAN AIRPORT TERMINAL CO XIAMEN INTERNATIONAL AIR-A Japan China 3.7 -32.9 9.4 3.1 Vietn am Vietna m Vietna m Vietna m MAS SAS NAS CIA 12 8.8 172 26 7.1 10 -11.2 18.1 6.4 -24.3 14 3.1 8.5 Average ,953 13 9.8 97.4 11 28.5 0.2 8.3 4.9 3 3.7 1.4 5.1 4.1 4.6 8.0 2 3.9 6.0 13 3 0.1 7.6 9.7 6.6 2.3 3.8 4.2 6.5 ,476 935 1 2.5 4.5 5.3 2.3 N /A 1.3 0.8 16.9 N ,3 9.0 6.1 /A 5.4 P P /B 0,2 6.8 8.1 N /E 6,3 236.0 2.8 ,687 China /A 5.9 Singa pore China P /CF 2,8 2017 margin % 234,0 ,801 618 ,926 SATS LTD 30, 2017 Growth of profit after tax %YoY 1 1 5.1 7.5 Figure 21 Compare between enterprises in the aviation industry I also provide the AST share price based on PEG ratio with a core earnings growth of 2018 of 28% Investors can choose P / E ratios in line with their risk tolerance, where lower PEG ratios mean less risky investments P/E PE G1 year Pri ce 74 4,69 2 24 25 0 0.8 0.9 78 81 85 8,933 3,168 7,402 10 1,637 10 5,872 Figure 22 Sensitivity analysis Combining the two approaches, I estimated the fair value of AST at VND97,000 / share CHAPTER COMPARE FOUR COMPANIES IN VIETNAM AVIATION INDUSTRY It can be seen that the market trading in the sector showed a significant recovery after the global financial crisis 2008-2009, thanks to the air transport industry recovering and reaching 15-20 times EBITDA However, the value of these deals has not yet returned to the peak of 2005 and 2007, about 22-24 times EBITDA Normally, the multiple transaction value / EBITDA is proportional to the expected growth of the airport Capit al (Billion dong) VJ C HV N AC V SCS NC T SG N SAS AS T NA 95,5 95 57,4 49 205, 525 9,89 2,59 3,35 3,91 2,81 258 P /E 2017 CIA 39.5 EV/EBI TDA 2017 34.2 11.0 NC 49 23.0 16 13 6.7 9.1 12.6 - 62.3% - 49.2% 7.8 5.5 10.0 689.3 26.0% 41.2% 0 62.1% 34.1 % 19.8 % 240,5 7 6 41 43.9 % 12.0% 23.6 26.132 R OA 2017 7.8% * 2.3% * 8.7% 35.2 % 54.7 % 33.6 % 13.8 % 29.6 % 6.4% 93 19.4% 14 39 13 47 2.5 0 26 7.3 2,369 7.1 3,08 31.9 10 73 59 10 S Me dian Ave rage (*) 20 1,106 15.5 5.7 44 90 11 27.3 %* 12.8 %* 15.9 % 40.9% 08 13 341 5 4.182 88 MA 13,849 24.3 0.8 9.5 R OE 2017 7 29 D/ E 2.379 872 83,014 S 42,360 Pr ofit after tax 2017 4.517 26.7 * 309 Rev enue 2017 * S P /B 2017 3.740.1 13.5 % 24.1 % 28.2 % 19.0 % 8.8% (*) Average P / E and EV / EBITDA based on market cap Source: Bloomberg, FPTS Research Figure 23 Key data in main enterprises in aviation industry I use two EV / EBITDA ratios (with EBITDA of the business) and P / B (along with a comparison with ROE) to compare valuations between freight companies no (VJC and HVN) and Vietnam's airports (ACV) compared with other countries in Asia Pacific The reason I use these two indicators (instead of PE) is because: (1) The airfreight and airfreight sector is heavily costly due to heavy investments in fleet and airport assets (2) The EV / EBITDA eliminates the difference in depreciation of the fleet (both owned and leased / financed) EBITDA also eliminated the revenue from the sale of aircraft by air carriers (3) The P / E is prone to "distortion" due to differences in depreciation policies, differences in leverage and non-core operating income (such as sales of aircraft) Therefore, we avoid using this metric (4) We use the P / B ratio with ROE According to Damodaran, the most influential factor for P / B ratios is the return on ROE According to your research, the higher the ROE, the greater the P / B Investors are often interested in companies with high ROE and P / B are still low compared to the general level of the comparison group to seek investment opportunities (5) The amortization period of fixed assets of ACV and other airports in the area is very different 80,0% Vietjet Air (VJC)* 60,0% 40,0% Korea 20,0% China Philippines Australia Hong Kong Vietnam Airlines (HVN) Malaysia -20,0% India -40,0% - 5,0 10,0 15,0 20,0 25 30,0 35,0 40,0 ,0 EV/EBITDA 2017 (x) Source: Bloomberg, FPTS Research Figure 24 EV/EBITDA 2017 EV / EBITDA 2017 of Vietnam Airlines (Vietnam Airlines) and Vietjet Air (VJC) are 11.0 times and 34.2 times respectively Note that VJC's EBITDA in our calculations has removed the profit from selling aircraft of the business In addition, the EV / EBITDA of VJC was the highest in Asia Pacific, while VJC was also the company with the highest EBITDA growth of 64.1% YoY, much higher compared to the regional average In contrast, HVN shows that the valuation is quite similar to the area Vietnam Airlines (ACV) has EV / EBITDA of 2017 with 23.0 times, the second highest in the region (only 29.6 times behind Thailand with EV / EBITDA) Meanwhile, ACV posted a 12.2% YoY increase in EBITDA, much higher than Thailand's negative growth of -0.4% YoY Regarding the potential of Vietnam's aviation industry, in a press release in October 2016, the International Air Transport Association (IATA) ranked Vietnam 5th in the top five fast-growing markets new passengers every year for the next 20 years Vietnam stands behind only China, the United States, India and Indonesia EV / EBITDA 2017 of Vietnam Airlines (Vietnam Airlines) and Vietjet Air (VJC) are 11.0 times and 34.2 times respectively Note that VJC's EBITDA in our calculations has removed the profit from selling aircraft of the business However, the EV / EBITDA of VJC was the highest in Asia Pacific, while VJC was also the company with the highest EBITDA growth of 64.1% YoY, much higher compared to the regional average In contrast, HVN shows that the valuation is quite similar to the area Besides, Vietnam Airlines (ACV) has EV / EBITDA of 2017 with 23.0 times, the second highest in the region (only 29.6 times behind Thailand with EV / EBITDA) Meanwhile, ACV posted a 12.2% YoY increase in EBITDA, much higher than Thailand's negative growth of -0.4% YoY Regarding the potential of Vietnam's aviation industry, in a press release in October 2016, the International Air Transport Association (IATA) ranked Vietnam 5th in the top five fast-growing markets new passengers every year for the next 20 years Vietnam stands behind only China, the United States, India and Indonesia On the other hand, Vietjet Air and Vietnam Airlines are two high-ROE airfreight companies in the region, accounting for 27.3% and 12.8%, respectively Note that the ROE of VJC and HVN is calculated by eliminating the profit from selling aircraft of the business The P / B ratio of VJC is also the highest in the region (9.5x) while the P / B ratio of HVN is quite similar to that of the region (3.3x) Figure 25 Comparing the P / B and ROE indexes of the national aviation industry (04/2018) ACV has the third highest ROE in the region, reaching 15.9%, followed by Australia (40.4%) and Thailand (16.5%) Meanwhile, ACV's P / B ratio was the second highest in the region at 7.5x, higher than Thailand (7.4x) and lower than Australia (22.9x) Figure 26 Comparing P / B and ROE indexes for national airports (04/2018) The profitability of equity and total assets of aviation businesses are relatively volatile over the years and there are differences between firms In particular, NCT is the enterprise with the highest ROE and ROA ratio in the industry and no difference, while the SCS in the same industry but profitability ROA and ROE are not as high as the NCT Figure 27 ROA and ROE of aviation businesses 2015-2017 Cause is because the history has been running for a long time (2005) while SCS operated from 2010, so the assets almost all depreciated In addition, NCT's warehouses are largely rented out while owned by SCS However, the ROA and ROE of NCT tend to decrease from 2015 to 2017, due to the fact that the NC is facing great competition from ALS, the monopoly position has decreased so profitability is not as high as before VJC has higher ROE than HVN and ROJ of VJC is different from ROE This difference is due to VJC using high leverage, the same happened with HVN ROE and ROA of HVN have a big difference, in 2017 ROE and ROA of HVN are 12.8% and 2.3% respectively This study applied the Dupont methods (Chandler, 1977), the fundamental DuPont Analysis show does not seclude the working exercises from the financing exercises This was evident from our perception with respect to the connection among use and overall revenue A five-advance DuPont show takes care of this issue In this model, with a specific end goal to confine activities and monetary effects on ROE, we will additionally separate the parts utilized in the fundamental model Above all else, separate the Net Profit Margin by: In this model, we figured out how to isolate the impact of intrigue cost on the Net Profit Margin Subsequently, if the organization builds its use, we will have the capacity to see whether this activity will impact its net pay or will support its ROE Clearly, this model gives a more top to bottom examination of the drivers behind the ROE changes Figure 28 ROE and Dupont Aerospace Analysis 2016-2017 It can be seen that the two air carriers VJC and HVN have ROE changes mainly under the change of financial leverage, while port groups and air services have ROE change mainly due to profit net profit changes The reason is that the airfreight group has huge leverage As we have analyzed in the capital structure section, VJC and HVN have invested to expand the fleet to increase domestic and international routes, so VJC and HVN have large leverage most in aviation In contrast, the airport business and aviation services are quite healthy, mainly funded by equity, so financial leverage in the past few years has not changed much, their ROE changed mainly due to the change in net profit margin CHAPTER CONCLUSTION In general, Europe's economy continues to struggle and the need for capital to expand infrastructure in developing countries has led to the proliferation of privatizations of airports (partly or wholly) owned by the Government in recent years The complexity of building new airports due to political, geographic and policy constraints has also helped investors to carry out acquisitions of airports In addition, most investors consider the airport to be a relatively safe asset because airports often generate relatively stable cash flows and relatively high return on investment According to Airport World statistics, the growth rate of the aviation industry in the booming aviation sector reached double the world GDP growth rate In years of slower passenger growth, airports can generate positive cash flow by reducing operating expenses and capital expenditures Financial investors investing in airports are often concerned with the steady cash flow that airports bring and in the long run At the same time, they are concerned about the internal rate of return (IRR) of port projects and the optimal financial structure of airports In contrast, strategic investors (such as airport operators) often improve performance such as increased capacity and cost-effective management In recent years, we have seen the trend of strategic investors "shaking hands" with financial investors increasingly in the acquisition of shares in the airport Currently, airports in Vietnam are very young, and have great potential to improve the revenue of auxiliary activities Aeroports de Paris (ADP - France) has expressed interest in acquiring a number of ACV shares over the years On the policy side, an important point that Aeroports de Paris wanted to achieve during the ACV negotiation process was the introduction of a single airport operator policy for all 22 ACV airports In other words, they want ACV to retain its monopoly position in Vietnam The ADP price paid for this deal will depend heavily on the incentives that ADP can achieve For the State side, it is unlikely that they will also want a high price for the golden hen (similar to the sale of SABECO) as Vietnam is one of the fastest growing air markets on the world EV / EBITDA 2017 of ACV at 23/04 was 23.0 times REFERENCES Airports Corporation of Vietnam (2017) Annual report 2016 Airports Corporation of Vietnam [online] Available from: http://www http://s.cafef.vn.com/ [Assessed 25th Sep 2018] Airports Corporation of Vietnam (2018) Annual report 2017 Airports Corporation of Vietnam [online] Available from: http://www http://s.cafef.vn.com/ [Assessed 25th Sep 2018] Asian Development Bank (2009) Asian Development Outlook 2009: Rebalancing Asia’s Growth Asian Development Bank [online] Available from: http://www.adb.org/Documents/Books/ADO/2009/ [Assessed on 17th Jul 2009] CAPA VietJet Air SWOT: rapid success and growth in booming Vietnam, but future challenges (2017) Available from: https://centreforaviation.com/analysis/reports/ [Assessed 25th Sep 2018] General aviation services company (2017) Annual report 2016 General aviation services company [online] Available from: http://www http://s.cafef.vn.com/ [Assessed 25th Sep 2018] General aviation services company (2018) Annual report 2017 General aviation services company [online] Available from: http://www http://s.cafef.vn.com/ [Assessed 25th Sep 2018] Porter, M.E (1980) Competitive Strategy: Techniques for analyzing industries and competitors New York: Free Press Vietjet Joint Stock Company(2017) Annual report 2016 Vietjet Joint Stock Company [online] Available from: http://www.vietjet.com/Investors/Annual -Reports.html [Assessed 25th Sep 2018] Vietjet Joint Stock Company(2018) Annual report 2017 Vietjet Joint Stock Company [online] Available from: [Assessed 25th Sep 2018] http://www.vietjet.com/Investors/Annual -Reports.html Vietnam Airlines Corporation (2017) Annual report 2016 Vietnam Airlines Corporation [online] Available from: http://www http://s.cafef.vn.com/ [Assessed 25th Sep 2018] Vietnam Airlines Corporation (2018) Annual report 2017 Vietnam Airlines Corporation [online] Available from: http://www http://s.cafef.vn.com/ [Assessed 25th Sep 2018] APPENDIX Financial situation of aviation enterprises Assets Figure 29 Asset Situation of enterprises Similar to the size of sales, the total asset size of the air transport and port groups is not much higher than that of the air services group In 2017, asset size of VJC, HVN and ACV were VND31,908 billion, VND88,434 billion and VND49,161 billion, respectively While in the group of aviation services, SAS is the largest asset company, also reached only 2,150 billion, much lower than VJC, HVN and ACV In short-term assets, the largest proportion of aviation businesses is money, cash equivalents and customer receivables; Inventory accounted for a very small proportion, less than 10% on average VJC and HVN have the right items Collection of travel agents, logistics units, freight agents While port enterprises and aviation services have receivables from the air transport group In long-term assets, the highest proportion is fixed assets, accounting for about 80% The asset structure among small groups in the aviation sector is quite large Transportation, airport and cargo terminal such as VJC, HVN, ACV and SCS have longterm assets, which account for a larger share of total assets, mainly fixed assets Longterm assets of VJC account for a smaller proportion of total assets compared to HVN as VJC utilizes airplanes in the model of chartered and semi-chartered aircraft VJC is much lower than HVN In addition, the fleet of HVN is more than double the VJC In 2017, VJC's long-term assets accounted for only 38.8% of total assets, lower than 76.3% of HVN SCS and NCT jointly service terminal goods, but SCS has a larger proportion of longterm assets The reason is: (1) SCS owns its own warehouse while the current NCs are mostly rented out; (2) SCS has additional lease of aircraft parking space, fixed assets are therefore larger than both absolute and relative value In 2017, long-term assets of SCS accounted for 76.1% of total assets, much higher than the 36.2% of the elderly In terms of asset turnover, the turnover index is quite different among groups in the industry Transport groups, airports and cargo terminals have a relatively low turnover of only 0.3 to 1.0 times While the aeronautical service group (mainly transport, Duty Free, Trade, Ground Service) such as NAS, CIA, SGN, SAS and MAS airfares, NCS has a greater total asset turnover about 1.2-2.1 times Capital Figure 30 Capital structure of aviation enterprises 2016-2017 The capital structure of the air transport group companies has a large difference compared to the rest of the enterprises While VJC, HVN and ACV mainly finance business operations by debt, the remaining businesses are almost equal to equity The ratio of loans / equity of VJC, HVN and ACV in 2017 is 0.9 times; 2.1 times and 2.0 times, while the rest is only 0.0 - 0.8 times The reason is that VJC and HVN have to invest heavily in the fleet while ACV is facing capital pressure to expand the airport and build new aircraft Long Thanh, in contrast, port group companies and aviation services have a fairly healthy financial structure as they not have to invest too much in fixed assets such as air transport VJC and HVN have a gradual decrease in loan / equity ratios from 2016 to 2017, as both companies have pledged to reduce their borrowings to ease the pressure on financial expenses SCS in 2017 swapped 39 billion convertible bonds and repaid shortterm / long-term bank loans Debt / equity ratio fell sharply from 2.2 times in 2016 to 0.2 times in 2017 The debt / Equity ratio is almost unchanged over the period 2016-2017