(Tiểu luận) analysis of the performance of the kinh bac citydevelopment holding corporation

Executive SummaryThe purpose of this report is to provide the readers with the financial health andinvestment plans of Kinh Bac City Development Holding Corporation KBC from 2018 tothe f

ANALYSIS OF THE PERFORMANCE OF THE KINH BAC CITY DEVELOPMENT HOLDING CORPORATION

BOARD OF MEMBERS

Ph m Tr n Vân H ngạ ầ ằ Ratio Analysis + Key Finding 1

Đ H ng Anhỗ ồ Total Liabilities & Equity + Key Finding 2

Analysis + Conclusion

INSTRUCTOR:

BUI THU HIEN

NGUYEN THUY ANH

Table Of Contents

1 Introduction

1.1 Executive Summary

1.2 General Information of Kinh Bac City Development Holding Corporation

1.3 Vision Statement

1.4 Mission Statement

1.5 Key Milestones of Kinh Bac City Development Holding Corporation

2 Balance Sheet Analysis

2.1 Total Asset

2.1.1 Growth Rate

2.1.2 Current Assets

2.1.2.1 Cash

2.1.2.2 Inventory

2.1.2.3 Account Receivables

2.1.3 Non-Current Assets

2.1.3.1 Fixed Assets

2.1.3.2 Long-term Unfinished Assets

2.2 Total Liabilities

2.2.1 Current Liabilities

2.2.2 Non-Current Liabilities

2.3 Equity

2.3.1 Stockholders’ Equity

2.3.2 Retained Earnings

3 Income Statement Analysis

3.1 Net Revenue

3.2 Total Expense

3.3 Net Income

4 Ratio Analysis

4.1 Liquidity Ratios

4.1.1 Current Ratio

4.1.2 Quick Ratio

4.1.3 Cash Ratio

4.2 Asset Management Ratios

4.2.1 Inventory Turnover

4.2.2 Receivables Turnover

4.2.3 Total Asset Turnover

4.3 Long-term Solvency Ratios

4.4 Profitability Ratios

4.4.1 Profit Margin

4.4.2 Return On Asset

4.4.3 Return On Equity

5 Key Findings

5.1 COVID-19 Depression and its impacts on KBC’s financial performance

5.2 The effects of the Trang Cat project on KBC's financial indicators

6 Conclusion

REFERENCES

APPENDIX

1 Introduction

1.1 Executive Summary

The purpose of this report is to provide the readers with the financial health andinvestment plans of Kinh Bac City Development Holding Corporation (KBC) from 2018 tothe first 6 months of 2023 The report’s analysis is mostly focused on the financial condition

of KBC and the changes in investing activities of KBC over the years

Our first step is to analyze every published financial document of KBC including,Balanced Sheet, Cash Flows Report, Financial Statements… We seek to identify any suddenchange in either Assets, Liabilities or Cash Flows to figure out the company’s financial healthand investment plans Then we analyze the associated figures with a list of ratios: LiquidityRatio, Cash Ratio… to discover the information indicated through the reported data.Additionally, we will also compare the documents and the results with 2 other rivalcompanies: Viglacera Company (VGC) and SONADEZI Chau Duc Shareholding Company(SZC)

Finally, the paper will conclude with some key findings we have gathered through ourresearch With solid facts and concise deduction, we hope we can prove that Covid-19 andthe investment in “Trang Cat Industrial Zone and Urban Area Project” has massively affectedthe financial performance of Kinh Bac City Development Holding Corporation (KBC)

1.2 General Information of Kinh Bac City Development Holding CorporationKinh Bac City Development Holding Corporation (KBC) was established on March 27, 2003,with a primary focus on providing expansive areas suitable for the construction of factories,workplaces, and residential spaces Notably, KBC has capitalized on the extensiveagricultural land reserves allocated for conversion into urban zones, thereby facilitating thegrowth of the real estate and hospitality industries Moreover, the province of Bac Ninh haswitnessed substantial advancements in modern infrastructure projects and transportationnetworks in recent years These developments have significantly bolstered the real estatebusiness sector across the region and have had a direct positive impact on the specificexpansion of KBC The land plots allocated to KBC through licensing possess primelocations, strategically positioned in terms of transportation accessibility and picturesquelandscapes.

1.3 Vision Statement

Kinh Bac City Development Holding Corporation (KBC) aspires to establish itself as thepreeminent corporation in Vietnam, specializing in the provision of contemporary andsustainable spaces for both work and residence Through its unwavering commitment tomodernity and sustainability, KBC aims to set the benchmark for the industry, offeringcutting-edge solutions that cater to the evolving needs of individuals and businesses Byleveraging its expertise and capitalizing on its extensive land holdings, KBC seeks to lead themarket by delivering innovative and environmentally conscious spaces that promoteproductivity, comfort, and a high quality of life Through its visionary approach anddedication to excellence, KBC aims to shape the future of working and living spaces inVietnam, setting new standards for others to follow

1.4 Mission Statement

KBC has made significant contributions to society by creating conduciveenvironments for work and living, primarily through the establishment of the Green andModern Industrial Park This industrial park has attracted high-tech, multinationalcorporations from around the world, who have chosen Vietnam as their investmentdestination and have set up factories within the park By providing these corporations withstate-of-the-art facilities and infrastructure, KBC has played a vital role in promotingeconomic growth and technological advancement in the region

Furthermore, KBC has been instrumental in meeting the housing needs of varioussegments of society The corporation has developed new residential areas specificallydesigned to cater to the expatriates working in the industrial park, as well as workers andresidents in general These residential areas offer dream houses that combine modernamenities, comfort, and a high standard of living, thereby contributing to the overall well-being and satisfaction of the residents.

In addition to its tangible contributions, KBC has implemented standardized andinnovative company governance procedures that serve as a benchmark for other enterprisesoperating on a large scale These procedures ensure operational efficiency, reduce errors,comply with regulatory requirements, and maximize value for shareholders By creating aharmonious and creative working environment, KBC fosters a positive organizational culturethat promotes employee satisfaction, productivity, and innovation

Overall, KBC's contributions encompass both tangible infrastructure development andintangible governance practices, all of which have had a profound impact on society, theeconomy, and the well-being of its stakeholders

1.5 Key Milestones of Kinh Bac City Development Holding Corporation

December 18, 2007: Became a public company in 2007, with 88,000.000 shares first

listed on Hanoi Stock Exchange

December 18, 2009: Listed on the Ho Chi Minh Stock Exchange.

2012: Was the toughest year for KBC, with negative business results of VND 483.9

billion, the share price decreased to the lowest level of VND 4,800 per share, and started torecover from the end of 2013 until now

2014 - 2015: Was the most successful corporation in Vietnam in debt restructuring

and divestment projects that were not the core business Large investors continued to invest inKBC’s IP such as LG, Samsung’s satellites, Apple’s satellites, Korean, Chinese, Hongkongcorporations Credit institutions and investment funds came back to grant new credit limits tothe Corporation

Mác… 100% (84)

24

TRIẾT-1 - Phân tích nguồn gốc, bản chấ… Triết học

Mác… 100% (63)

7

2019-08-07 Giao trinh Triet hoc… Triết học

2016: KBC’s FDI attracting accounted for 12.06% of the total registered FDI of the

whole country Trang Due IP contributed to bringing Haiphong to the top of the country andQuang Chau IP to the fifth position in attracting FDI in Vietnam

2017: The first time to open for sale the Phuc Ninh UA - Bac Ninh with a subzone of

6.27 ha and 22 ha The first time to bring corporate bond products listed on HOSE

2018: IPs of KBC simultaneously achieved strong growth in attracting investment.

The growth rate of IPs reached an occupancy rate of more than 30% Que Vo, Trang Due IPgot an occupancy rate of above 97%

2019: IPs reached 100% occupancy rate: Que Vo IP in Bac Ninh with a scale of

611ha, with a business cycle completion time of 12 -15 years; Trang Due in Hai Phong with ascale of 402 ha, with a business cycle completion time of 12 -15 years

2020 - 2021: The Pandemic made it impossible for investors to come to Vietnam to

finalize contracts, and business operations of domestic enterprises, including KBC weredelayed, leading to business results not being achieved as expected In 2020, KBC completedthe payment of land-using fees for Trang Cat UA in Haiphong province with a scale of 584.9

ha, with a total payment to the state budget of 3,500.4 billion VND In 2021, KBC completedthe legal procedures and put into business for Nam Son Hap Linh IP in Bac Ninh province,with a scale of 300 ha

2 Balance Sheet Analysis

It can be seen that KBC has experienced a significant change in the year 2020, with

Triết học Mác Lênin 99% (77)QUAN ĐIỂM DUY VẬT BIỆN CHỨNG VỀ M… Triết học

Mác… 100% (33)

20

Total Assets going from 16,4 thousand billion Vietnam Dong to 23,7 thousand billion, almost

a 50% increase Most of the increase belongs to the Current Assets, rising from 13,9 thousandbillion to 21,4 thousand billion In 2021, the Current Assets also increased, but the increase ofFixed Assets was even more significant, doubled compared to 2020, going from 2,4 thousandbillion to 4,9 thousand billion In 2022, both Current Assets and Fixed Assets kept onincreasing further, with Fixed Assets still having a more significant growth

2.1 Total Asset

2.1.1 Growth Rate

KBC Growth Rates (in percentages) and Total Assets (in million VND) from 2018 to 2022 The growth rate of a company refers to the rate at which various financial metrics orkey performance indicators (KPIs) of the company change over a specific period It is oftenexpressed as a percentage and can apply to various fields, including economics, finance,population studies… We measure the growth rate of KBC during the timeframe of 2018 to

2022

Using the total assets at the end of 2018 as base value, It is clear that KBC hasexperienced a sporadic growth spurt in the year 2020 Total assets in 2020 went from 16,4

thousand billion Vietnam Dong to a shocking 23,7 thousand billion Vietnam Dong It isalmost a 50% increase And this phenomenon is unique to only KBC

VGC Growth Rates (in percentage) and Total Assets (in million VND) from 2018 to 2022

SZC Growth Rates (in percentage) and Total Assets (in million VND) from 2018 to 2022

As seen from the 2 graphs above, this kind of growth does not happen to SZC nor

VGC, as they both have extremely steady growth rate, with VGC growing at a lower ratecompared to KBC, and SZC having very similar growth to KBC Additionally, the amount ofTotal Asset of SZC over the year is always at least 4 times smaller compared to KBC andVGC Although SZC also experienced a sharp increase in total assets by the end of 2020, thedifference in rates is not as high as KBC Therefore, our group decided to take notice of thissudden change, and may attempt to provide a reasonable explanation, by looking throughother investments, liabilities and debts written in the yearly financial reports

2.1.2 Current Assets

The amount of Current Assets of KBC also far outclass the other 2 companies Atleast 14 thousand billion Vietnam Dong in 2019 and peaks at 27 thousand billion VietnamDong in 2022 Meanwhile, VGC is from 6 thousand billion Vietnam Dong to 9 thousandbillion Vietnam Dong SZC never exceeds 1,7 thousand Billion in Current Assets, after theirpeak in 2022 In 2020, SZC’s Current Assets dropped down to 236 billion, the lowest of the

3 companies

CURRENT ASSET (in million VND)

2018 2019 2020 2021 2022

INVENTORY 8,592,832 7,547,759 11,533,861 11,515,238 12,287,310ACCOUNT

2.1.2.2 Inventory

KBC Inventory represents goods that KBC holds for sale, which are real estateprojects, including apartments, houses, urban areas, shopping centers, and other types of realestate It can also be land that KBC owns that will be used for future development orinvestment

It can be seen from the above graphs that KBC Inventory is extremely high in the last

5 years, the highest out of the 3 Similar to Current Asset, KBC’s Inventory also goes through

a significant increase in 2021, going from 7,5 thousand billion to 11,5 thousand billion Afterreading through the details regarding the Inventory in the 2020 Financial Statement, it can beseen that a large proportion of the increase, 3,5 thousand billion Vietnam Dong, was used toinvest in Trang Cat Industrial Zone and Urban Area Project Meanwhile, SZC barely has anyInventory before 2022 After 2022, SZC’s Inventory increases to 1,3 thousand billionVietnam Dong and has barely changed ever since VGC’s Inventory increases gradually overthe year, regardless of the ups and downs in Current Assets

2.1.2.3 Account Receivables

Receivable can be divided into 2 categories: Current Receivables and Long termReceivables There is a common trend in all 3 companies, all of them have more CurrentReceivables than Long term Receivables In certain years, SZC barely had any Long termReceivables to collect

The amount of Current Receivable in KBC is the largest of the 3, and alsoexperienced a sudden growth spurt in 2021, despite always taking up around 30% of TotalAssets VGC’s Current Receivables barely experience any change for the first 3 years untilthe sudden drop in 2021 to 886 billion Vietnam Dong, then slowly rises again in thefollowing years SZC Current Receivable only changed in 2021, then slowly came back to theusual amount of 60 billion Vietnam Dong

2.1.3 Non-Current Assets

NON-CURRENT ASSETS (in million VND)

FIXED ASSETS 157,073 253,727 256,277 248,553 365,388LONG-TERM

2.1.3.1 Fixed Assets

Fixed Assets typically refers to an asset that a company has acquired or initiated for aspecific purpose but has not yet completed These assets are typically expected to providefuture economic benefits to the company once they are finished and put into productive use

In the case of KBC, the assets may include: Real Estate Projects, Land, Infrastructure,Tools and Equipment, Vehicles, Other investments may also be included

As seen from the above graphs, it is clear that KBC’s Fixed Assets only took up areally small proportion in Total Assets Despite showing signs of growth, 365 billion VietnamDong is the highest it has ever been, unlike the other 2 companies VGC’s Fixed Assets arealways above 3,7 thousand billion Vietnam Dong, while SZC grows from 300 billion to 600billion in 5 years

2.1.3.2 Long-term Unfinished Assets

Long-Term Unfinished Assets" refers to assets owned by an organization or companythat have been initiated but are not yet completed as of the financial reporting date This caninclude projects or tasks that are in the process of being executed and are expected togenerate profit or value in the future once they are completed

Examples of long-term unfinished assets can include construction projects likebuildings, infrastructure, manufacturing facilities, or projects related to the development ofnew products or services These assets remain incomplete and cannot generate profit or actualvalue until they are finished and put into use or sold in the market

In financial reporting, long-term unfinished assets are typically recorded as part offixed assets or long-term assets and are held in the section of assets that are not yet completedfixed assets or fixed assets in use Once these assets are completed, their value is transferred

to fixed assets and is depreciated over time

Even though KBC seems to be the company with the Highest Total Assets, theirLong-term Unfinished Assets is the lowest of the 3 There is also a sudden increase, but ithappens 1 year earlier compared to the other 2 Both VGC and SZC significantly increasetheir Long-term Unfinished Assets in 2021, while KBC increase theirs in 2020

later, KBC’s current liabilities rose even more dramatically, going up by about 4trillion VND in 2022 A combination of additions to trade payables, advances fromcustomers, other payables, and short-term loan accounts for this, approximately aquarter of which came from receiving shares transfer of Saigon - Da Nang InvestmentJoint Stock Company However, since the start of 2023, KBC seems to have been able

to reduce its current liabilities, going down to 7.3 trillion VND by the second quarter

of this year Compared to KBC, VGC started out with more current liabilities, whichincreased at a diminishing pace up until the point of plateauing at 8.4 trillion VNDand got taken over by KBC’s figure in 2022 This trend continues and by the secondquarter of 2023, VGC’s current liabilities are still at around 8.3 trillion VND, thusmaking VGC the firm with the most current liabilities out of the three yet again Thefigure for SZC follows the same pattern of rising from 2018 to 2021 and stabilizing in

2022, albeit with much lower numbers, only reaching 1.6 trillion VND in the secondquarter of 2023 Regarding this data, it can be seen that due to the effects of COVID-

19, the current liabilities of all 3 firms have become much larger than they were in

2019 and before, especially through the period of 2019-2021, in which the figures forall 3 experienced a rise However, while VGC and SZC are still stuck with the samelevels of current liabilities from 2021 and have yet to recover, KBC has been able tostart bringing them down in 2023

2.2.2 Non-Current Liabilities

In general, KBC and VGC hold much more non-current liabilities than SZC.Regarding KBC, the figure for this firm’s non-current liabilities rocketed in 2020,going from 2 trillion VND to just over 6 trillion VND Of this 4 trillion VNDincrease, 2.5 trillion VND came from long-term debts secured by assets related to theTrang Cat project This debt continues to contribute to KBC’s liabilities even until thesecond quarter of 2023, with only around 0.3 trillion VND having been paid off.Moreover, it can be seen that the figure for KBC’s non-current liabilities experienced

a surge in 2021 as the company issued bonds It then went back to approximately thelevel of 2020 in 2022 and stabilized since VGC and SZC’s non-current liabilities alsostay at around 5.4 trillion VND and 3 trillion VND respectively up until the secondquarter of 2023 after hitting those levels in 2022 However, the period right beforethat, the year 2021, was a turbulent one, with KBC’s figure for non-current liabilitiesincreasing by just under 2 trillion VND compared to the previous year while that ofVGC decreased by approximately the same amount SZC’s non-current liabilities rose

by around 1 trillion VND as well Over the given timeframe, VGC is the firm with themost stable non-current liabilities, while those of KBC and SZC witnessed significantincreases compared to before COVID-19 The figures for their current liabilities havestayed at those levels since In terms of KBC, this company ended up with the most

non-current liabilities out of the three despite starting out with less than VGC.2.3 Equity

2.3.1 Stockholders’ Equity

According to the chart, KBC operates on a far larger amount of equity thanVGC and SZC, especially after 2021 Out of the 6 trillion VND surge in equity thatKBC experienced in 2021, over 3 trillion VND came from share capital and sharepremium The company also managed to raise more funds in 2022, which addedaround 2 trillion VND to its equity Besides, the increased retained earnings between

2021 and the second quarter of 2023 also contribute to the continuing growth ofKBC’s equity even after 2022, indicating efficient business activities VGC’s equityalso rose, albeit much more slowly than that of KBC, going up by around 3 trillionVND from 2018 to the first half of 2023 The figure for SZC’s equity increased evenmore slowly, starting out at 1.2 trillion VND in 2018 and ending up at 1.6 trillionVND in the second quarter of 2023 Considering the upward trend that the liabilities

of these 2 firms experienced, it can be concluded that VGC and SZC have becomemore dependent on liabilities over time, whilst KBC generally depends more onequity to fund business activities

2.3.2 Retained Earnings

According to the chart, the retained earnings of KBC, VGC, and SZCgenerally increase over the given timeframe, with the figures for all 3 firmsexperiencing a jump in 2021 Compared to the retained earnings of VGC and SZC,that of KBC is far larger in volume and witnessed much more rapid growth Between

2022 and the second quarter of 2023 is an especially prosperous period for KBC, withits retained earnings rising by an average of 1 trillion VND per quarter, reaching 7.6trillion VND by the end of June 2023

3 Income Statement Analysis

2,150,96367%

4,245,982197%

950,26622%

VGC 8,816,903

100%

10,161,631115%

9,455,26693%

11,211,146119%

14,607,944130%

100%

329,422114%

432,981131%

713,222165%

858,889120%

First and foremost, it is worth noting that the net revenue of the company hasconsistently remained positive throughout the past five years, indicating that they have beenable to generate more income than their expenses This is a positive indication of thecompany's financial health, as it demonstrates their ability to cover costs and potentiallyreinvest in their business It is also important to highlight that the net revenue has shown ageneral upward trend over the years, with the exception of a significant drop in 2022.Furthermore, when considering the net revenue over the course of five years, from 2018 to

2022, it is notable that the highest recorded net revenue was achieved in 2021, amounting to4,245,982,000,000 VND However, it is remarkable that this record was surpassed in just sixmonths of 2023 This recent surge in net revenue may be attributed to the recovery from thedecline experienced in 2022

In terms of the company's net revenue scale compared to two other corporations in the

industry, namely VGC and SZC, it falls relatively in the middle This indicates that while thecompany maintains a moderate position within the industry.

Overall, the company's consistent positive net revenue, the upward trend observedover the years (excluding the drop in 2022), and its position relative to other industry playersdemonstrate a favorable financial standing

3.2 Total Expense

A significant portion of the company's total expenses is attributed to the Cost ofGoods Sold It is noteworthy that KBC has demonstrated commendable proficiency inexpense management, as evidenced by the relatively stable fluctuation within a specificrange Moreover, in the year 2023, the total expenses incurred by the company were 25%lower than those in 2021 This reduction in expenses is particularly remarkable consideringthe fact that the corporation achieved a higher net income in 2023 compared to 2021 Thisindicates a notable improvement in expense management practices employed by KBC, whichhas contributed to the overall financial performance of the corporation