final report subject financialanalysis vinhomes joint stock company

It has since been renamedVingroup Joint Stock Company and is the parent company of Vinhomes.2008: The predecessor of Vinhomes is BIDV-PP Urban Joint Stock Company,established with an ini

VIETNAM GENERAL CONFEDERATION OF LABOURTON DUC THANG UNIVERSITY

FACULTY OF FINANCE AND BANKING

719C0236

Ho Chi Minh City, 17 May 2022th

Table of Contents

1 Overview 1

1.1 General Information 1

1.2 History of the establishment: 2

1.3 Achievements: 4

1.4 Vission, mission, core values: 4

1.4.1 Vision 5

1.4.2 Mission 5

1.4.3 Core values 6

1.5 Business industry 7

1.6 Industry peers 7

1.7 Company Structure and Capital 8

1.7.1 Company Organization Chart 8

1.7.2 List of major shareholders 8

1.7.3 Ownership Structure 9

1.7.4 Board of management 9

1.7.5 Business operations of the company 11

1.7.6 Residential real estate: 11

1.7.7 Rental real estate: 12

1.8 SWOT Analysis 12

1.8.1 Strengths of Real Estate Business 12

1.8.2 Weaknesses of Real Estate Business 13

1.8.3 Opportunities for Real Estate Business 14

1.8.4 Threats to Real Estate Business 14

1 Macroeconomic analysis 15

1.1 The core factors that affect Real Estate: 15

1.1.1 Natural elements: 15

1.1.2 Economical factors: 16

1.1.3 Market factors 17

1.1.4 Legal factors 17

1.2 The other supporting factors affect Real Estate 17

1.2.1 Legal and political factors 17

1.2.2 Other macroeconomic factors 18

1.2.3 Social factors 19

1.2.4 Effects of the Covid-19 pandemic 19

1.2.5 Inflation situation 20

1.2.6 Interest rate 20

2 Industry Analysis 20

2.1 Supply-demand 20

2.1.1 Supply 21

2.1.2 Demand: 22

2.1.3 Supply and demand relationship: 23

2.2 Competitors 23

2.2.1 Current competitors: 23

2.2.2 Potential competitors: 23

2.2.3 Customers 24

2.3 Barriers 24

2.3.1 Technical barriers 24

2.3.2 Capital barriers 24

2.3.3 Legal barriers 25

2.3.4 Barriers to the State's economic, financial - monetary policies: 25

2.3.5 Administrative barriers: 26

2.4 Summary 26

2.4.1 Apartment segment 26

2.4.2 Summary of real estate market situation 29

2.4.3 Market forecast in 2021 30

1 The change in the Balance Sheet 31

2 Changes in items in the Income Statement 38

3 Liquidity ratios 40

3.1 Current ratio 40

3.2 Quick ratio 44

3.3 Cash ratio 48

4 Solvency ratios (or leverage ratios) 52

4.1 Debt to asset ratio 52

4.2 Debt to equity ratio 55

4.3 Interest coverage ratio 58

5 Activity ratios analysis (or efficiency ratios) 60

5.1 Receivables turnover: 61

5.2 Inventory turnover ratio 63

5.3 Asset turnover ratio: 66

6 Profitability ratios 69

6.1 Return on Assets (ROA) 69

6.2 Return on Equity 72

6.3 Gross profit margin 76

6.4 Net profit margin 79

1 Recommendation: 82

1.1 Vinhomes Joint Stock Company 82

1.2 The Government: 83

1.3 Investment and investors: 84

2 Conclusion: 85

2.1 The change in the Balance Sheet 85

2.2 The change in Income Statement 85

2.3 Liquidity ratios analysis 85

2.4 Solvency ratios (or leverage ratios) 87

2.5 Activity ratios (efficiency ratios) 87

2.6 Profitability ratios 88

3 References 89

CHAPTER 1: BUSINESS OVERVIEW

1 Overview

1.1 General Information

INFORMATION ABOUT COMPANY

Company name: Vinhomes Joint Stock Company (Vinhomes JSC)

International name: Vinhomes Joint Stock Company (Vinhomes JSC)Securities name: VHM

Business registration license: No 0102671977 by The Department of Planningand Investment of Ha Noi issued the first time on 06/03/2008 and the 22ndchange on 12/04/2018

Come from: Vingroup Joint Stock Company

Major: Real estate developm

Charter capital: 300,000,000,000 VND (Three hundred billion dong)COMMUNICATIONS

Headquarters: No 458, Minh Khai Street, Vinh Tuy Ward, Hai Ba TrungDistrict, Ha Noi, Viet Nam

Phone number: (+84 24) 3974 9350

Fax: (+84 24) 3974 9351

Email: info@vinhomes.vn

Website: https://vinhomes.vn

1.2 History of the establishment:

2002: Vincom Joint Stock Company was founded It has since been renamedVingroup Joint Stock Company and is the parent company of Vinhomes

2008: The predecessor of Vinhomes is BIDV-PP Urban Joint Stock Company,established with an initial charter capital of VND 300 billion

2009: Renamed as South Hanoi Urban Development Joint Stock Company.2010: Charter capital increased to VND 2 trillion

2011: Became a public company and received approval to list on the Unlisted PublicCompany market (UPCOM) with ticker symbol of NHN Construction of VinhomesTimes City mixed-use urban complex in Hanoi, with more than 12,000 apartments,started

2013: Vinhomes Royal City, Hanoi, a high-end mixed-use urban complex with nearly5,000 apartments was put into operation

2014: The 183.5-hectare Vinhomes Riverside luxury urban area in Hanoi was put intooperation

2015: Vinhomes Times City withSingapore’s eco-friendlyarchitectural design, commenced itsoperation

2016: Vinhomes Central Park in HoChi Minh City, one of the mosthigh-end modern urban complexes

in Vietnam, with more than 10,000residential units, was opened.2017: Vinhomes Golden River in

Ho Chi Minh City – the most

luxurious urban complex by the Saigon River and in the heart of District 1 wasopened.

2018:

Renamed as Vinhomes Joint Stock Company Charter capital was increased toVND 28.3 trillion and was listed on Ho Chi Minh City Stock Exchange(HOSE) It is the third

largest company in Vietnam in terms of market capital

Vinhomes launched two international-standard mega projects – VinhomesOcean Park and Vinhomes Smart City

The Landmark 81 of the Vinhomes Central Park project, the tallest building inVietnam with 81 floors and 461 meters in height, commenced its operation.2019:

Strategically restructured product branding into three main segments –Vinhomes Diamond, Vinhomes Ruby, Vinhomes Sapphire – and upgradedVinCity projects into Vinhomes branded mega projects

The third mega project – Vinhomes Grand Park in District 9, Ho Chi Minh Citywas officially launched with a high absorption rate

Vinhomes Symphony, a high-end urban complex adjacent to the luxuryVinhomes Riverside urban complex in east Hanoi, was launched.

The bulk sales strategy was promoted, especially in three mega projects, toquickly develop the residential and commercial ecosystem This providedresidents with products and services of high quality and variety

Vinhomes established Vinhomes Industrial Zone Investment JSC (“VHIZ”) toexpand its industrial real estate development business in large cities, includingHai Phong and Quang Ninh, with well-developed marine and roadinfrastructure

"Vietnam's largest man-made freshwater lake with white sand surrounding" forPearl Lake 24,5ha

1.4 Vission, mission, core values:

1.4.1 Vision

Vinhomes is the No.1 real estate

development and management

company in Vietnam, recognized for its

superior scale, execution speed and

service quality, leading the market tosustainable growth, with the vision ofbecoming a world-class enterprise

1.4.2 Mission

To pioneer an ideal living experience

in Vietnam’s urban locations, featuring

professionally planned residential

complexes in harmony with nature,

integrated facilities, and a green

environment, together forming a new

lifestyle for the Vietnamese people.Vinhomes also nurtures itscommunities and develops a modern,lively and gracious environment, sothat its residents will enjoy an excellentquality of life

planning area does not meet the requirements of the area, safety leads to difficulties,and is costly for businesses wanting to enter the market.

2.3.2 Capital barriers

The real estate business is a very capital-intensive business Enterprises with smallscale and limited finance cannot participate in this market, and if they do, they cannotcompete, which can lead to bankruptcy or withdrawal from the industry In somecountries, when banks decide to provide loans for real estate projects, the creditdepartment only needs to look at the balance sheet of revenues and expenditures of thebusiness without requiring collateral A company with strong financial potential, goodcredit history, and reputable development in the market will be the best "guarantee"for banks to decide to lend Raising capital through deposit contracts and installmentpayments when buying real estate, which is very popular in Vietnam, is potentiallyrisky If businesses do not perform well, and projects are in progress due to theappropriation of capital, many disputes will arise

2.3.3 Legal barriers

Laws can be considered as an important factor affecting the establishment anddevelopment of the real estate market through the legal provisions on the right to buy,sell, lease, mortgage, and contribute to joint venture capital, etc by real estate In fact,this factor can promote, limit, or erase the existence of the real estate market due tothe special nature of real estate goods attached to the land, which is always governed

by the State in all periods (except for the original commune)

2.3.4 Barriers to the State's economic, financial - monetary policies:

Economic policies of the Central Government and Local Government are alsosensitive factors affecting the real estate market First of all, policies to encourageproduction by regions and economic zones will be accompanied by regionaldevelopment planning plans, these plans will essentially define and redefine land usepurposes from which areas or regions are included in the planning for the purpose ofland use from agricultural production to production and industrial activities or in theplanning for the construction of new urban areas, commercial and service centers, etc

will simultaneously increase production and business units, increase population,thereby increasing the demand for real estate, promoting the increase of goods andreal estate transactions in the market.

On the contrary, areas and areas that are not focused on investment by the CentralGovernment and Local Government for economic development because the regionalfactors are not suitable for economic development, in general, real estate demand foreconomic production and business activities, for housing needs, residential land of thepopulation is not stimulated, which means that transactions on the real estate marketwill be quiet, affecting the development speed of the real estate market, in therespective region Besides, the financial and monetary policies of the state greatlyaffect the development of the real estate market When the State applied a tightmonetary policy, the real estate market almost stalled and froze, there were timeswhen there were almost no real estate transactions On the contrary, when the Stateapplied an expansionary monetary policy, the real estate market was active again, andreal estate transactions increased markedly

2.3.5 Administrative barriers:

Enterprises want to implement the project is one thing, while the review and approval

of the project by the authorities is another matter Therefore, the dream of completingprojects of enterprises may take a long time, said Dr Nguyen Quang, Director of theUnited Nations HABITAT Program in Vietnam, commented: " Method of planning inVietnam still has many " ask - give " characteristics Planning mainly expresses thewill of the leader and is not based on market orientation Planning determines the use

of land and development works rigidly, allowing only to do what the State prescribes

" According to him, spatial planning must be a tool to control development Thearbitrariness of investment reviewers will be greatly limited and through that, realestate goods will be more diversified, better met, and circulated faster according to theneeds of society

2.4 Summary

2.4.1 Apartment segment

Ho Chi Minh City’s market and neighboring provinces’ markets:

According to the observation of R&D - DKRA Vietnam, the apartment real estatesegment in Ho Chi Minh City and neighboring provinces in the 2021 record receivedabout 41 projects for sale (18 new projects and 23 subsequent phases) New supplywas recorded at approximately 21,138 apartments, equal to 70% compared to 2020(30,042 units) The new supply-to-sales ratio is 81% with about 17,122 units, which is65% compared to the previous year (26,313 units)

New supply and consumption decreased sharply compared to 2020 Ho Chi MinhCity’s market accounts for about 64% of the total new supply in 2021 The supply ofapartments in Binh Duong decreased sharply compared to 2020

The epidemic has accelerated the application of technology in the real estate sector.During the period of the social blockade, many investors and brokerage floors haveintroduced the project and opened for sale online on different technology platforms

In order to stimulate market demand, which is facing difficulties due to the epidemic,many investors have introduced policies to support cash flow for investors' customerssuch as the extension of payment methods, the grace of principal, and loan interestsupport.

The increase in the primary price level, the increase in input costs, and the scarcity ofnew supply are believed to be the major reasons for pressure on price increases.The liquidity of secondary transactions dropped sharply, the secondary market wasalmost "frozen" in the third quarter of 2021 due to the epidemic The secondary pricelevel tends to decrease, locally some projects are about to be handed over in the periodthe fourth quarter of 2021 – to the first quarter of 2022 there was a decrease of about3% - 5% compared to the period before the outbreak

Ho Chi Minh City’s market:

In 2021, Ho Chi Minh City recorded about 22 projects for sale (9 new projects and 13subsequent phases) Supply to the market is about 13,583 units, equal to 77%compared to 2020 (17,579 units) Consumption was recorded at 79% of supply withnearly 10,749 units, equal to 71% of the consumption volume of 2020 (15,229 units)

The supply and demand of the whole market decreased sharply compared to 2020 andearlier, this is the lowest level since 2015 to present The proportion of supply in theEast area decreased compared to the previous year but remained high, accounting for58% of the total supply.

Grade A apartments are still the leading market segment in 2021, accounting for 72%

of supply and 69% of new consumption The market continues the third consecutiveyear of the scarcity of Grade C apartments priced below 30 million VND/m2.The supply and consumption of apartments in Ho Chi Minh City continue itsdowntrend The market suffers difficulties from certain factors such as the proportion

of supply by segment unevenly distributed, problems in licensing procedures theproject has not been completely improved, the complicated disease situation, and thescarcity of supply has caused the price to rise The super luxury apartment market in

Ho Chi Minh City has established a new price level up to nearly 400 millionVND/m2.

2.4.2 Summary of real estate market situation

In 2020, we could see there are many challenges and negative things for the social andeconomic world because of the influence of the COVID-19 pandemic over the world.Although the pandemic brought many bad effects to society, many companies thatworked in the real estate industry still maintain their position in the real estate market,which accounts for 100% in Hanoi and 87% in Ho Chi Minh City, because of the highdemand and limited supply There are many segments in the real estate market butVinhomes are a company working in the field of selling the apartment and rentingoffice so the project will focus on the Apartment Segment

In Ho Chi Minh City and neighboring provinces markets:

The supply of new apartments is mainly concentrated in Ho Chi Minh City andBinh Duong The downtrend still dominates the market in most of thelocalities, except Binh Duong with an increase of about 6% compared to 2019

In 2020, Binh Duong emerged as the center of the market, with a series of newprojects launched for sale

Ho Chi Minh City market:

In 2020, the supply and consumption of apartments in Ho Chi Minh Citycontinued its downward trend starting in 2019 Grade A apartments become themarket leader, accounting for 69% of the supply and 68% of the total market'sconsumption Grade C apartments have almost no new supply in the market.The East continues to lead in new supply and consumption in 2020, accountingfor 66% and 67% in Ho Chi Minh City

The primary price level increased sharply, many projects increased by 5% to10%, and local prices may increase by 15% to 20% compared to the previoussale The liquidity of secondary transactions decreased, and the secondary pricedecreased locally in some projects, ranging from 3% to 5% For projects that

have not yet completed the legal process, the discount rate is 10% to 15%.However, the liquidity in these projects is quite low.

Due to the impact of the Covid-19 epidemic on demand, many investors andbrokerage units have flexibly applied technology in the form of opening andselling apartments online and organizing weekly mini-events In addition, theinvestor also issued many preferential policies to stimulate demand, thepayment schedule is distanced to support customers (payment 20% to 30%until receiving the house, grace period, loan interest for 2-3 years, etc.) 2.4.3 Market forecast in 2021

The market in Ho Chi Minh City and neighboring provinces

New supply increased sharply in most of the localities, particularly:

In Ho Chi Minh City, the new supply of real estate in 2019 increased to 25,000apartments

In Binh Duong, it continued to rise in 2020, in the real estate market in BinhDuong there are 15,000 apartments to be put on the market However, Long An

is in shortage of supply of new apartments

The demand for the real estate market increased in comparison to 2020, but it is hard

to reach the highest point in 2019 and the Binh Duong market may decrease incomparison to 2020 The reasons for those problems are:

The recovery of supply in Ho Chi Minh City caused a great impact on thedemands of neighboring provinces, especially the apartments in Binh DuongThe selling price of apartments in Binh Duong is quite high in 2020 while thenew supply rose significantly, the proportion of buyers that has a purpose forinvestment accounted for a large influence in the real estate market

Ho Chi Minh City inner market

The East and the South continue to maintain a large proportion of newly launchedsupply Grade B and Grade A segments continue to account for a large proportion ofnewly launched supply