research report cooperate finance advance tổng công ty hàng hải việt nam vimc

- Big competitors: Palm Logistic Vietnam, VOSCO, AIL- Strategies VIMC used to compete:o Investment and development of seaports: VIMC has invested in building andupgrading seaports nation

Academic Year (Semester): 2022 - 2023 (Semester 2)

Company research: Tổng công ty hàng hải Việt Nam (VIMC)

Student Full Name: Lê Quý Sang

I.Executive Summary 3

2.Core business activities 4

3.Strengths and weaknesses 4

3.1 Strengths: 4

3.2 Weaknesses: 4

4.Main issues of the company 4

II.Main Content 5

1 Analysis on Industry and Business Activities of the company 5

1.1 History and development of the company 5

1.2 Porter’s Five Forces 5

2.Analysis on Profitability and Risk of the company 7

2.1. Profitability factors 7

2.2 Dupont analysis 8

2.3 Inventory turnover 9

2.4 Receivable turnover 10

2.5 Fixed asset turnover 11

2.6 Total asset turnover 12

I.Executive Summary

1 Introduction

- Vietnam Maritime Corporation established in 1995.

- International name: VIMC

- Trading name: Vietnam Maritime Corporation – Joint Stock Company

- Charter capital: VND 12,005,880,000,000

- Investment capital of owners: 12.005.880.000.000 VND

- Model organization:

2 Core business activities

- Sea transportation: VIMC has a large fleet, transporting goods and logistics services oninternational and domestic sea routes.

- Logistic services: VIMC provides freight and logistics services such as warehousing,packaging, multimodal transportation, and comprehensive logistics solutions.

- Investment and seaport development: VIMC invests in building and exploiting seaportsnationwide, including deep-water ports.

- Shipbuilding and ship repair: VIMC also has shipbuilding and ship repair units, meetingthe needs of domestic and foreign enterprises.

3 Strengths and weaknesses

3.1 Strengths:

- A state-owned enterprise, which gives it access to government support and resources.

- Involved in various segments of the maritime industry which can provide diversifiedrevenue streams and reduce the impact of market fluctuations.

- Geographically well-positioned to serve as a transshipment hub for goods movingbetween Asia and other regions, which can benefit VIMC's port and logistics businesses.

- Expanded its international presence and partnerships, which can increase its marketshare and competitiveness.

3.2 Weaknesses:

- Highly competitive and cyclical.

- As a state-owned enterprise, VIMC may face bureaucratic and political challenges thatcan affect its decision-making and efficiency.

- May have limited financial resources and expertise compared to some of its privatesector competitors.

- Environmental and safety regulations are becoming increasingly important in themaritime industry.

4 Main issues of the company

VIMC is an enterprise operating in the fields of sea transport, seaport exploitation and maritimetourism, so there are many potential risks affecting production and business activities as well asthe implementation of the following regulations: objectives of the Corporation In which, thereare main risks in terms of strategy, business operations, and finance, which are force majeurerisks such as: Risk of legal disputes arising from maritime incidents and disputes over transportbusiness, environmental risks such as fire and explosion at sea, oil spills and environmentalpollution during transportation and storage of goods, toxic substances.

II.Main Content

1 Analysis on Industry and Business Activities of the company1.1. History and development of the company

- Vietnam Maritime Corporation established in 1995.

- On 25/06/2010, transformation of the parent company - Vietnam Maritime Corporationinto a company one-member limited liability owned by the State.

- On August 18, 2020, the Corporation officially switched to model operations form a jointstock company and become a public company.

1.2. Porter’s Five ForcesPower of suppliers: low

Number of suppliers : lowDependency on suppliers: mediumPower of buyers: high

Number of customers : mediumPrice : high

Swiching cost: high

Threat of new entrants: medium Barriers to entry : lowEconomies of scale: mediumCapital requirements: highSwiching cost: medium Threat of substitute products: low

Number of subtitute products available: lowBuyer propensity to substitute: lowSwiching cost: low

Rivalry among existing competitors: medium

Number of competitors: mediumDiversity of compertitor: lowIndustry focus: highQuality differences: lowSwitching cost: high

- Big competitors: Palm Logistic Vietnam, VOSCO, AIL

- Strategies VIMC used to compete:

o Investment and development of seaports: VIMC has invested in building andupgrading seaports nationwide to enhance transportation and logistics capacity.This also helps strengthen the competitive position of VIMC in the shippingmarket.

o Development of logistics services: VIMC has expanded its logistics services toprovide comprehensive transportation and logistics solutions to customers Thishelps VIMC strengthen its competitiveness with other logistics service providers.o Cooperation and association with international partners: VIMC has signed

cooperation agreements with international partners to enhance competitiveness inthe international market and provide transportation and logistics solutions for itscustomers.

o Investment in new areas: VIMC has invested in new areas such as renewableenergy, real estate investment and transportation infrastructure to diversify theindustry and strengthen its competitiveness in other markets.

2 Analysis on Profitability and Risk of the companyII.1 Profitability factors

14,342,998,969,885

2 EBITDA 3,289,267,585,643 3,028,892,220,091 2,485,290,619,492 5,477,660,267,159 4,752,457,626,043 3 EBIT 1,271,453,417,981 1,296,525,616,617 1,060,717,089,576 4,140,144,150,885 3,430,970,119,907 4 EBT 548,970,919,279 687,206,544,678 499,549,426,311 3,640,019,290,974 3,055,330,326,381 5 Net profit 276,240,566,655 419,144,137,081 208,834,229,818 3,327,294,933,189 2,540,477,797,891

- But net profit increases dramatically in 2021 VIMC benefits from covid 19, the price oftransportation services in the world has increased, the impact of which will lead to anincrease in freight rates Moreover, in 2021, VIMC carry out a comprehensiverestructuring and it really successful As you can see, the revenue of company was notincrease too much but EBITDA increased dramatically

=> VIMC has reduced a large amount of interest, tax and depreciation Besides that,deduction of the company falls from 12,290,773,218 VND to just 2,705,028,147.

- In 2022, the company's profit will decrease but not significantly.

 Since 2021, the company has been operating effectively.

20180 20192020202120225

ROA & ROE

- ROA and ROE of VIMC reach a peak in 2021 with ROA is 12,5% and ROE is 28,73% Itshows that the company effectively uses shareholders' capital.

II.2 Dupont analysis

- The main factor that makes ROA increases is net profit margin increased by more than20%.

- Asset turnover increases => VIMC focuses on promoting the strengths of the main fieldsare shipping, seaport operation and maritime services.

1 ROA (Net income/average total asset) 1.05% 1.65% 0.85% 12.50% 9.43%

4 ROA (Net profit margin x Asset turnover) 1.05% 1.65% 0.85% 12.50% 9.43%

o Analysis 2 component disaggregation of ROE:1 ROA 1.05% 1.65% 0.85% 12.50% 9.43%2 Leverage 2.88 2.63 2.60 2.30 1.91 3 ROE 3.02% 4.34% 2.22% 28.73% 18.04%

Leverage falls slightly => ROA is the main factor that make ROE increases It shows that thecompany does not use much financial leverage to increase net profit.

o Analysis 3 component disaggregation of ROE:1 Net profit

margin 2.23% 3.79% 2.09% 24.94% 17.71%2 Asset

3 Leverage 2.88 2.63 2.60 2.30 1.91 4 ROE 3.02% 4.34% 2.22% 28.73% 18.04%

ROE increased by the dramatically growth of net profit margin and asset turnover slightincreased.

II.3 Inventory turnover

20180 20192020202120225

20.18 21.43 19.16Inventory Turnover

Inventory Turnover

- VIMC inventory turnover increased steadily from 2018 to 2021, indicating superiorinventory management and more efficient inventory use over that time period

- However, inventory turnover dropped in 2022, which could be reason for concernbecause it indicates that VIMC took longer to sell its inventory than in previous years.

- Several variables could be influencing the decrease in inventory turnover in 2022.Changes in demand for VIMC's products or services, disruptions in the supply chain,production or operational issues, or external factors such as increasing competition orregulatory changes could all be reasons.

II.4 Receivable turnover

4.99 4.85Receivable Turnover

Receivable Turnover

- VIMC's accounts receivable turnover has declined from 2018 to 2020, showing that thecompany took longer to collect its receivables during those years However, in 2021,there was a tiny increase, followed by a decrease in 2022.

- A decline in accounts receivable turnover may indicate that VIMC encountereddifficulties collecting payments from clients or managing its credit terms throughout thetime This could have an effect on the company's cash flow and liquidity.

- The small increase in accounts receivable turnover in 2021 could indicate that thecompany's collection operations or credit management procedures have improved.However, the subsequent decline in 2022 could imply that VIMC encountered difficultiescollecting accounts receivable that year.

II.5 Fixed asset turnover

3.27Fixed asset Turnover

Fixed aset Turnover

- Fixed asset turnover was relatively modest in 2018 and 2019, with values of 1.08 and1.03, respectively This could imply that VIMC was not making the most use of its fixedassets to generate revenue during those years.

- The fixed asset turnover remained low in 2020, at 1.02, implying that VIMC' usage offixed assets to produce revenue did not improve considerably that year.

- However, fixed asset turnover increased significantly in 2021, reaching 1.47 Thissuggests that VIMC generated more revenue from fixed assets in 2021 than in prior years,which could be ascribed to improved operational efficiency or increased fixed assetutilization.

- In 2022, the fixed asset turnover grew dramatically to 3.27, suggesting a significantimprovement in VIMC' use of fixed assets to produce revenue This could be attributableto a number of things, including more commercial activity, enhanced operations, orsuccessful asset management practices.

- Overall, the pattern of VIMC' fixed asset turnover implies that the company's efficiencyin employing fixed assets to create income has fluctuated The considerable increase infixed asset turnover in 2021 and 2022 implies greater performance in this area, whichcould be an indication of improved operational efficiency and profitability for theorganization.

II.6 Total asset turnover

0.5 0.53Total asset Turnover

Fixed aset Turnover

- From 2018 through 2022, VIMC' Total Asset Turnover ratio fluctuated, with some upsand downs along the way.

- The ratio fell from 0.47 in 2018 to 0.41 in 2020, showing a deterioration in VIMC' abilityto generate revenue from its total assets during this time period.

- However, the ratio increased to 0.53 in 2022, indicating an improvement in VIMC'efficiency in generating revenue from its total assets.

- A greater Total Asset Turnover ratio implies that a corporation generates more revenueper dollar of total assets, which may imply improve asset utilization and operationalefficiency.

II.7 Solvency ratios

FinancialLeverage Ratio

0.80 0.69 0.65 0.61 0.52

- D/E decreases from 2018 to 2022 => VIMC has been reducing its reliance on debt forfinancing its operations and/or increasing its shareholders' equity, which could indicate apotentially improved financial position and lower financial risk.

- D/A decreases year by year => VIMC has been reducing its level of debt in relation to itstotal assets over the years, which could indicate a potentially lower financial risk andimproved debt management.

- Financial leverage ratio between 2018 and 2022 => Companies cut costs on financialleverage => The company does not use much financial leverage to make profits.

II.8 Liquidity ratios

- Current ratio is less than one in both 2018 and 2019 (0.9 and 0.94), indicating that thecompany is facing short-term solvency issues and insufficient short-term assets toperform its short-term financial duties But since 2020, it increases year by year 

 It can be observed that when the Current Ratio was less than one in the period 2019, VIMC struggled to pay short-term loans and meet short-term financial obligations.However, the company has made great progress since 2020, with the Current Ratioconsistently over one, showing that VIMC's capacity to pay short-term loans and meetshort-term financial obligations has improved This could imply that the company hasmade steps to improve its financial management, accelerate its operations, or raise freshcash in order to satisfy its financial responsibilities.

2018-II.9 Risk

Working Capital / Total Asset (0.04) (0.02) 0.02 0.10 0.17RE / Total Asset 0.0013 0.0035 (0.014) 0.0857 0.0681Market value of Equity / Book value of

3 Outlook for the company in the next three years

 Forecast

- Profit declined in 2018 due to lower revenue and lower cost of capital In 2020, therewas a big loss due to the impact of Covid-19 and dealing with the backlog of assets andliabilities.

- Vietnam Maritime Corporation made a record profit of VND 3750 billion in 2021 afterrestructuring and benefiting from the impact of the COVID-19 epidemic, when theglobal price of transportation services surged Previously, VIMC was a loss-making andnegative state-owned firm, but it has worked hard to overcome obstacles to development,with the profit of the entire block in the maritime sector expected to reach around VND1,078 billion in 2021.

- Despite the fact that the negative development plan was established owing to thereduction of air transport agency activities and the expectation of lower sea freightprices, VIMC exceeded the plan in 2022 with a pre-tax profit of VND 3,130 billion.VIMC has completed its business plan with positive results, despite the fact that themarine industry is facing several challenges as a result of the impact of the Russia-

Ukraine crisis, China's zero covid policy, and growing inflation However, the shippingindustry will confront many difficulties and obstacles in the future, such as a steepreduction in the charter index, container freight rates that are constantly declining, and alow amount of domestic container freight In addition, the high age of VIMC ships (20years) is also a competitive difficulty with foreign shipping lines.

Year2022Year +1Year +2Year +3Year +4Year +5

=> After years of significant growth in 2021 and 2022, with growth of 34% and 8%,respectively, revenue will decrease in 2023, with negative growth of 7%, as predicted.After overcoming this challenging phase, the company will resume growth due toexcellent foundations and advantages in its industries, but the growth will be slower thanin 2021 Based on the preceding three-year average, revenue growth will range between4% and 9%.