(Tiểu luận) introduction of majoreconomic overview and ca mau petroleum fertilizer one member company limited

Our team chose to analyze the financial statements of Petro Vietnam Ca Mau Fertilizer Joint Stock Company DCM in December 2021 to see the business results and financial fluctuations of t

HO CHI MINH CITY OPEN UNIVERSITY SCHOOL OF ADVANCED STUDY

Group: Snow Tomorrow

Ho Chi Minh City, December 2022

MINISTRY OF EDUCATION AND TRAINING

HO CHI MINH CITY OPEN UNIVERSITY

SCHOOL OF ADVANCED STUDY

Group Snow Tomorrow Instructors Đoàn Thị Thanh Thúy

Ho Chi Minh City, December 2022

PROLOGUE

The Covid-19 pandemic that took place in the past year has had a huge negative impact on the world's economy, upsetting the activities of society The fertilizer production industry has suffered a lot since the outbreak, some countries have advocated limiting exports, applying an "export quota" mechanism from time to time The campaign "Vietnamese people give priority to using Vietnamese goods" has built a consumer culture of Vietnamese people in the face of the complicated Covid pandemic, creating a premise to promote the production development of enterprises domestic

But businesses are facing a huge problem with the supply of raw materials for production becoming tighter than in previous years The volatility of the market and the economy has made it difficult for businesses to operate Although facing a huge supply shortage, it is also a condition for businesses to adjust their development strategies

In such a context, many enterprises have been constantly developing, growing stronger, competing with each other in the urea market in particular and the fertilizer market in general Recognizing the important role of financial analysis is essential, providing a comprehensive view of the performance of the business Our team chose to analyze the financial statements of Petro Vietnam Ca Mau Fertilizer Joint Stock Company (DCM) in December 2021 to see the business results and financial fluctuations of the business

TABLE OF CONTENTS

PROLOGUE 2

LIST OF TABLES 5

LIST OF FIGURES 5

CHAPTER 1: INTRODUCTION OF MAJORECONOMIC OVERVIEW AND CA MAU PETROLEUM FERTILIZER ONE MEMBER COMPANY LIMITED 6

1 Company history and development: 6

1.1 Introduce about the company: 6

1.2 Purpose of company establishment: 6

1.3 Capital and business charter: 7

1.4 Company establishment process: 7

2 Functions and Scope of Operation: 7

2.1 Functions and duties of the company: 7

2.2 Size of the company's operations: 8

3 Organization of management apparatus and business lines of the company: 9 3.1 Organization of management apparatus: 9

3.2 Company line of business: 9

CHAPTER II: ANALYSIS OF THE COMPANY'S FINANCIAL SITUATION 10 1 Analysis of current financial situation: 10

1.1 Short-term assets 15

1.2 Long-term assets 15

2 Risk analysis with the market 18

3 Capital structure analysis 21

4 Analysis of short-term financial capacity 25

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6 SWOT analysis 30 CHAPTER III: SOME SOLUTIONS TO ENHANCE YOUR FINANCIAL SITUATION AND BUSINESS EFFICIENCY 32 APPENDIX 35 REFERENCES 39

LIST OF TABLES

Table 1 Analysis of the situation of USE of funds 10

Table 2 Consolidated income statement 16

Table 3 Indicators of financial risk assessment of some enterprises in the same industry in 2021 20

Table 4 Capital structure analysis 22

Table 5 Table comparing the difference of the two periods 24

Table 6 Analysis of short-term financial capacity 25

Table 7 Working capital analysis 27

LIST OF FIGURES Figure 1 Diagram of the management apparatus of DCM 9

Figure 2 The graph shows the difference between the two periods 25

CHAPTER 1: INTRODUCTION OF MAJORECONOMIC OVERVIEW AND CA MAU PETROLEUM FERTILIZER ONE MEMBER COMPANY

LIMITED 1 Company history and development:

1.1 Introduce about the company:

Full name: Ca Mau Petroleum Fertilizer One Member Company Limited (HOSE) English name: PETROVIETNAM CA MAU FERTILIZER JOINT STOCK COMPANY

- It is the third project in the Gas - Power - Fertilizer value chain of the Vietnam Oil and Gas Group (Petrovietnam)

- Being the factory with the best operating efficiency in terms of average capacity by year Moreover, Ca Mau Fertilizer Plant is in the Top 10% of High Capacity Plants in the world

- PetroVietnam Ca Mau Fertilizer One Member Company Limited belongs to the Vietnam Oil and Gas Group which owns 100% of the official capital established to manage and operate Ca Mau Fertilizer Plant

1.2 Purpose of company establishment:

- Serve millions of farmers with highly nutritious lines of fertilizers suitable for a wide range of crops and soils

plants

- Contributing to stabilizing fertilizer resources across the country, towards sustainable business development along with Vietnam's agriculture

- Implementing the Government's direction on a closed factory, contributing to changing the face of the country's agricultural economy towards sustainable green development, towards "greening" Vietnam's industry

- Help farmers have more reliable options for farming activities when fake and poor quality fertilizers are rampant in the market in the face of common difficulties of enterprises

1.3 Capital and business charter:

- Ca Mau Fertilizer Plant operates with a capacity of 800,000 tons/year

- Vietnam Oil and Gas Group is the largest shareholder, accounting for 75.56% of the shares with VND 400,023,057, Foreign shareholders account for 3.39% with VND 17,946,660 and other Shareholders 21.05% with 111,430 283 VND and total charter capital is 5,294,000,000,000 VND

1.4 Company establishment process:

In early 2008, the Vietnam Oil and Gas Group (Petrovietnam) held a wide international bidding and extended the copyright for the Ca Mau Fertilizer Plant Project On October 26, 2012, Prime Minister Nguyen Tan Dung officially issued an order to start construction of Ca Mau Fertilizer Plant On March 9, 2011, in addition to achieving the required progress and quality, the project saved over 150 million USD compared to the total approved investment

2 Functions and Scope of Operation: 2.1 Functions and duties of the company:

PVCFC is an enterprise with the main functions and business lines of: Production, trading and import and export of fertilizers, petroleum chemicals, mainly serving in the agricultural field with the mission of serving millions of farmers with highly nutritious fertilizers suitable for many crops and soils

2.2 Size of the company's operations:

On October 20, 2020, Ca Mau Petroleum Fertilizer Joint Stock Company (PVCFC) officially expanded its brand name from "Ca Mau Fertilizer" to "Ca Mau Fertilizer" This is a breakthrough step of PVCFC to help reach new visions and values

As of 2020, the Company's consumption market is concentrated in the Southwest region and Cambodia, including the main product of Ca Mau Urea and other fertilizer products The total production output of Ca Mau Fertilizer meets more than 50% of the fertilizer demand in the southern provinces

Up to now, PVCFC has marked its presence on the world map with 9 countries the company has exported, including: Cambodia, Thailand, Myanmar, India, Bangladesh, Brazil, Japan, Korea, Sri Lanka Lanka

The Cambodian market alone grew significantly with 163,136 visits, an increase of 140% compared to 2019, which is a good sign for PBCM's export market

Especially, on June 10, 2021, the factory reached the milestone of 8 million tons of products after 10 years of stable operation with 110% of capacity, marking a milestone on the journey of sustainable agricultural development

Product distribution system along the length of the country 13 provinces in the Southwest region, 11 provinces in the Southeast and Central Highlands, 10 provinces in the Central region, and 19 provinces in the North region

3 Organization of management apparatus and business lines of the company:

3.1 Organization of management apparatus:

Figure 1 Diagram of the management apparatus of DCM 3.2 Company line of business:

DCM Company in the field of business:

- Production of basic chemicals, fertilizers and nitrogen compounds

- Wholesale and retail of fertilizers and chemicals used in industry and agriculture - Technical guidance on fertilizer and chemical use

- Warehousing and storage and loading of goods

- Research and experimental development of natural sciences and engineering - Technical testing and analysis

- Maintenance and repair of machinery and equipment

CHAPTER II: ANALYSIS OF THE COMPANY'S FINANCIAL SITUATION

1 Analysis of current financial situation:

Table 1 Analysis of the situation of USE of funds

Total assets at the end of 2021 of Ca Mau Protein Joint Stock Company increased by VND 2354 billion compared to the end of 2020 In which, short-term and long-term assets increased by 3298 billion VND and 943 billion VND, respectively From there, it can be seen that enterprises increase the scale of capital use through the increased volume of total assets Therefore, it shows that the economic and operational potential of enterprises increases significantly, leading to an increase in asset resources More specifically:

With the amount of total assets, the proportion of short-term assets at the end of 2021 accounts for 66% (equivalent to an increase of 61% compared to the end of 2020) However, the proportion of long-term assets only accounts for 4% (up 1% compared to the end of 2020) Thus, the capital investment policy of the Enterprise is inclined to short-term asset investment

decision to invest in short-term assets helps to boost the performance of production and business activities of the enterprise However, a high proportion of long-term assets leads to low liquidity in total assets But with DCM, long-term assets from the end of 2020 to the end of 2021 increased insignificantly, leading to good solvency.

1.1 Short-term assets

Short-term assets at the end of 2021 increased by 3298 billion VND compared to the end of 2020 Specifically due to:

Cash and cash equivalents decreased by 82 billion VND (-82,342,619,969 billion VND) Show that enterprises have been able to reinvest and upgrade production lines or invest in raw materials, crises or unexpected revenue shortages

Customer receivables decreased by 100 billion VND (equivalent to -0.22%) Businesses have tightened sales policies to be able to optimize the source of money back into the business and try to reinvest As a result, short-term receivable provisions are difficult to claim In particular, the proportion of customer receivables accounts for 0% of the proportion of short-term assets Therefore, businesses need to come up with better capital recovery policies

Inventory increased by 1369 billion VND, indicating that enterprises increased productivity of production and business activities to meet market demand during the epidemic

1.2.Long-term assets

Long-term assets at the end of the year decreased by VND 943 billion compared to the beginning of the year, of which the decrease was mainly from intangible fixed assets Fixed assets decreased by 545 billion VND (549,805,306,778 billion VND) There are 2 reasons, the first is that enterprises no longer need to upgrade or repair production lines and the second is that because the equipment and supplies have deteriorated, they will be eliminated from the production line

ISBN Quota Uneven

Density (20-21)

01 Sales revenue and service delivery 2,371,266,604,770 30,72%

10 Net revenue on sales and service provision 2,308,487,804,219 30,53%

11 Cost of goods sold and services provided 844,398,679,796 13,52%

20 Gross profit on sales and service provision 2,649,252,145 111,18%

30 Net profit from business operations 1,245,979,934,103 175,85%

32 Other costs -120,399,305 -4,42%

51 Current corporate income tax ("CIT")

52 Deferred CIT income/(expense) 6,357,892,983 416,67%

61 LNST shareholders Parent company 1,162,412,983,523 176,25%

(Source: DCM's financial statements and the author's calculation and synthesis)

All sales of items from sales and service provision, net revenue, cost of goods sold, from the end of 2020 to the end of 2021, all growth is very good

With profit after tax (code 60) the enterprise has profited 1,163,677,952,665 billion VND Current corporate income tax ("CIT") expenses have incurred 85467 billion VND in taxes to be paid

With sales and service revenue increasing by 2.371.266 billion VND, net revenue on sales and service provision increased by 2,308,487,804,219 billion VND, cost of goods sold

income/expense increased by 6,357,892,983 billion VND From here, gross profit on sales and service provision was determined to increase by 2,649,252,145 billion VND in parallel with net profit from business activities increased by 1,245,979,934,103 billion VND And finally, the profit after tax of shareholders of the parent company increased by 1,162,412,983,523 billion VND

Only with net revenue and cost of goods sold, it has grown steadily and tends to increase sharply from the end of 2020 to the end of 2021 Although in the period of normalization, community reintegration for the domestic market in particular and opening the economy to the world in general, DCM still prioritizes development and revenue growth in the context of fertilizer demand shortage due to the covid 19 epidemic The profit after tax of the enterprise also increased significantly, but with profit before tax and other profits, it decreased but compared to the general proportion, it was not significant

However, on the objective side, even though DCM is profitable and reports good performance, profits outweigh losses But with today's fertilizer market is planning to go backwards More obviously, both the input and output prices of raw materials for fertilizer production are increasing sharply Typically, DAP Lao Cai increased by 1.95 million VND/ton, to 10.4 million VND/ton, AP inventory is almost no longer enough supply to meet demand and the upcoming season in the country Currently, domestic production can meet 30-35% of market demand with the world fertilizer market being squeezed due to the covid 19 epidemic

2 Risk analysis with the market:

It can be said that 2021 is a year of great difficulties and challenges for the world economy as well as for Vietnam due to the impact of the Covid-19 pandemic The world economy has been forecasted to have a serious recession after the epidemic However, Vietnam's economy has a certain development with many bright spots

Covid-19 epidemic along with natural disasters and epidemics, significantly affecting the activities of the economy and people's lives; Unemployment and underemployment rates are high However, "while preventing epidemics and developing socio-economics", Vietnam's economy still achieved positive results with maintaining growth Especially in the fertilizer market, the urea trend in 2021 will increase sharply compared to 2020 due to the influence of the high world urea price

Besides the growth results achieved in 2021, the Vietnamese economy still has many problems to be solved With the growing international integration, all economic fluctuations in the world affect the socio-economic fields of our country Although the epidemic has been somewhat controlled in Vietnam, there are still complicated developments in many countries around the world, aviation activities, tourism, production and trade supply, labor and employment are disrupted paragraph Not only that, export growth has not yet ensured sustainability, so labor productivity is still low (GSO, 2022) In addition, in order to be proactive about input materials, it is possible that some cubic factories will actively import a large amount of Potassium in the last months of the year, in order to reduce the risk of price fluctuations and supply disruptions

In the context of facing the epidemic and the economic situation of the world as well as Vietnam, the fertilizer market will also face many challenges in 2021 The Covid pandemic has disrupted the supply chain and the transportation, delivery, and unloading of goods (both domestic and import-export activities) Specifically, in 2021, fertilizer trading and exporting enterprises face many difficulties and stagnation For Ca Mau Petroleum Fertilizer Joint Stock Company, due to its seniority in the field of fertilizer production, the company's customers are mainly traditional customers Therefore, fierce competition due to the Covid-19 epidemic is inevitable, but the company still has a stable market The company also faces many challenges because of the development of the 4.0 revolution, the surrounding business environment and especially the recent Covid pandemic In addition, the demand from farmers is basically stable but the demand for Urea from the distributive plants has increased sharply (production

increased, even speculation and hoarding of goods appeared in some localities at certain times in 2021

Faced with difficult forecasts that the Company will face in the coming time, the team has calculated a number of financial indicators of the Company and a number of enterprises in the same industry to have a detailed comparison and risk assessment

Table 3 Indicators of financial risk assessment of some enterprises in the same industry in 2021

Total-Debt-to-Total-Assets Ratio TD/TA (times) – 0.32 0.23 0.65

(Source: Financial statements of companies DCM, DPM, BFC and the author's calculation and synthesis)

Note:

DPM: PetroVietnam Fertilizer and Chemicals Corporation (PVFCCo)