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

HỌC VIỆN TÀI CHÍNH

VIỆN ĐÀO TẠO QUỐC TẾ Institute of International Finance Education

D U A L D E G R E E P R O G R A M M E - D D P

RESEARCH REPORT

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

1 Introduction 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

2.7 Solvency ratios 12

2.8 Liquidity ratios 13

2.9 Risk 14

3 Outlook for the company in the next three years 14

 Forecast 14

 Valuation 16

 Recommendation 16

III Conclusion 18

IV References 19

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 on international 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 seaports nationwide, including deep-water ports

- Shipbuilding and ship repair: VIMC also has shipbuilding and ship repair units, meeting the 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 diversified revenue streams and reduce the impact of market fluctuations

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

- Expanded its international presence and partnerships, which can increase its market share and competitiveness

3.2 Weaknesses:

- Highly competitive and cyclical

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

- May have limited financial resources and expertise compared to some of its private sector competitors

- Environmental and safety regulations are becoming increasingly important in the maritime industry

4 Main issues of the company

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

II Main Content

1 Analysis on Industry and Business Activities of the company

1.1. History and development of the company

- Vietnam Maritime Corporation established in 1995

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

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

1.2. Porter’s Five Forces

Power of suppliers: low

Number of suppliers : low

Dependency on suppliers: medium

Power of buyers: high

Number of customers : medium

Price : high

Swiching cost: high

Threat of new entrants: medium

Barriers to entry : low

Economies of scale: medium

Capital requirements: high

Swiching cost: medium

Threat of substitute products: low

Number of subtitute products available: low

Buyer propensity to substitute: low

Swiching cost: low

Rivalry among existing competitors:

medium

Number of competitors: medium

Diversity of compertitor: low

Industry focus: high

Quality differences: low

Switching 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 and upgrading seaports nationwide to enhance transportation and logistics capacity This also helps strengthen the competitive position of VIMC in the shipping market

o Development of logistics services: VIMC has expanded its logistics services to provide comprehensive transportation and logistics solutions to customers This helps 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 in the international market and provide transportation and logistics solutions for its customers

o Investment in new areas: VIMC has invested in new areas such as renewable energy, real estate investment and transportation infrastructure to diversify the industry and strengthen its competitiveness in other markets

2 Analysis on Profitability and Risk of the company

II.1 Profitability factors

PROFITABILITY

1 Revenue 12,367,790,703,736

11,068,940,643,74

13,338,768,815,63

7

14,342,998,969,88

5

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

- Net profit of VIMC are very low from 2018 to 2020 especially in 2020 Because in 2020,

VIMC moves to operate under the model of joint stock company so the company's

operation is not stable yet

- But net profit increases dramatically in 2021 VIMC benefits from covid 19, the price of

transportation services in the world has increased, the impact of which will lead to an

increase in freight rates Moreover, in 2021, VIMC carry out a comprehensive

restructuring and it really successful As you can see, the revenue of company was not

increase 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 2019 2020 2021 2022 5

10

15

20

25

30

35

ROA & ROE

ROA ROE

- ROA and ROE of VIMC reach a peak in 2021 with ROA is 12,5% and ROE is 28,73% It shows 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 than 20%

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

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

17.71

%

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 the company 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 slight increased

II.3 Inventory turnover

20180 2019 2020 2021 2022

5

10

15

20

25

16.25 16.68

20.18 21.43 19.16 Inventory Turnover

Inventory Turnover

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

- However, inventory turnover dropped in 2022, which could be reason for concern because 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 or regulatory changes could all be reasons

II.4 Receivable turnover

0

1

2

3

4

5

65.5

5.02

4.4

4.99 4.85 Receivable Turnover

Receivable Turnover

- VIMC's accounts receivable turnover has declined from 2018 to 2020, showing that the company 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 encountered difficulties collecting payments from clients or managing its credit terms throughout the time 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 the company's collection operations or credit management procedures have improved However, the subsequent decline in 2022 could imply that VIMC encountered difficulties collecting accounts receivable that year

II.5 Fixed asset turnover

0

0.5

1

1.5

2

2.5

3

3.5

1.08 1.03 1.02

1.47

3.27 Fixed asset Turnover

Fixed aset Turnover

- Fixed asset turnover was relatively modest in 2018 and 2019, with values of 1.08 and 1.03, respectively This could imply that VIMC was not making the most use of its fixed assets to generate revenue during those years

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

- However, fixed asset turnover increased significantly in 2021, reaching 1.47 This suggests 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 asset utilization

- In 2022, the fixed asset turnover grew dramatically to 3.27, suggesting a significant improvement in VIMC' use of fixed assets to produce revenue This could be attributable

to a number of things, including more commercial activity, enhanced operations, or successful asset management practices

- Overall, the pattern of VIMC' fixed asset turnover implies that the company's efficiency

in employing fixed assets to create income has fluctuated The considerable increase in fixed asset turnover in 2021 and 2022 implies greater performance in this area, which could be an indication of improved operational efficiency and profitability for the organization

II.6 Total asset turnover

0

0.1

0.2

0.3

0.4

0.5

0.6

0.47

0.44

0.41

0.5 0.53 Total asset Turnover

Fixed aset Turnover

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

- The ratio fell from 0.47 in 2018 to 0.41 in 2020, showing a deterioration in VIMC' ability

to 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 revenue per dollar of total assets, which may imply improve asset utilization and operational efficiency

II.7 Solvency ratios

Financial

Leverage 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 for financing its operations and/or increasing its shareholders' equity, which could indicate a potentially improved financial position and lower financial risk

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

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

II.8 Liquidity ratios

Current

Asset

8,413,203,191,05

4

8,957,921,437,44 0

9,986,683,425,50 6

12,520,601,447,96 8

12,835,961,755,12 2

Current

Quick Ratio

Cash Ratio

- VIMC's progressive increase in current assets from 2018 to 2022 may imply that the company has busy business activities, significant liquidity, and the ability to service short-term debt in the near future

- Current ratio is less than one in both 2018 and 2019 (0.9 and 0.94), indicating that the company is facing short-term solvency issues and insufficient short-term assets to perform 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

2018-2019, 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 Ratio consistently over one, showing that VIMC's capacity to pay short-term loans and meet short-term financial obligations has improved This could imply that the company has made steps to improve its financial management, accelerate its operations, or raise fresh cash in order to satisfy its financial responsibilities

II.9 Risk

Working Capital / Total Asset (0.04) (0.02) 0.02 0.10 0.17

RE / Total Asset 0.0013 0.0035 (0.014) 0.0857 0.0681 Market value of Equity / Book value of

Revenue / Total Asset 0.469 0.437 0.407 0.501 0.532

The company has an average risk of insolvency with a Z-score between 2 and 3 This could imply that VIMC is having financial difficulties and must take the appropriate steps to ensure the sustainability and solvency of the company's debts in the future

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, there was a big loss due to the impact of Covid-19 and dealing with the backlog of assets and liabilities

- Vietnam Maritime Corporation made a record profit of VND 3750 billion in 2021 after restructuring and benefiting from the impact of the COVID-19 epidemic, when the global price of transportation services surged Previously, VIMC was a loss-making and negative 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 VND 1,078 billion in 2021

- Despite the fact that the negative development plan was established owing to the reduction of air transport agency activities and the expectation of lower sea freight prices, 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 the marine industry is facing several challenges as a result of the impact of the