(Tiểu Luận) Topic Financial Analysis Report Of Quang Ninh Mineralwater Corporation.pdf

UNVIVERSITY OF ECONOMICS – DANANG UNIVERSITY

Đa Nang, 11/2023.

IMAGE TABLE OF CONTENTS 4

CHAPTER 1: OVERVIEW OF QUANG NINH MINERAL WATER CORPORATION 5

1.1 Introduction of the company 5

1.1.1 Fragmented information 5

1.1.2 History of formation and development 8

1.2 Business activities 11

1.3 Key products of the Company 11

1.4 The organizational structure of the company 11

1.5 Management apparatus structure 12

CHAPTER 2: ANALYSIS OF THE INTERNAL AND EXTERNAL ENVIRONMENT 13

3.1.1 Current ability to pay 29

3.1.2 Fast payment ability 30

3.1.3 Customer receivable turnover 31

3.1.4 Average collection period 33

3.1.5 Inventory turnover 34

3.2 Debt parameters 35

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3.2.1 Debt to equity parameters 35

3.2.2 Debt-to-asset parameters 36

3.2.3 Long-term debt to long-term capital parameters 37

3.2.4 Coverage capacity parameters 39

3.3 Profitability parameters 40

3.3.1 Profitability on sales 40

3.3.2 Net profit margin 41

3.3.3 Profitability on investment capital 42

3.3.4 Income on total assets (ROA) 44

3.3.5 Income on equity (ROE) 45

3.4 Market parameters 46

3.4.1 Earnings per share parameters (EPS) 47

3.4.2 Price to earnings (P/E) 48

CHAPTER 4: STRENGTHS AND WEAKNESSES ANALYSIS 50

4.1 Strength 50

4.2 Weakness 51

CHAPTER 5: PROPOSe 52

5.1 Solutions to optimize inventory tunnover 52

5.2 Solutions to control the average collection period ratio so that the company has enough cash to serve production and business activities 52

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IMAGE TABLE OF CONTENTS

Picture 1 - Logo of Quang Ninh Mineral Water Corporation 4

Picture 2 - Quang Hanh natural mineral water factory 5

Picture 3 - Suoi Mo 1 natural mineral water factory 6

Picture 4 - Suoi Mo 2 natural mineral water factory 2 7

Picture 5 - Labor structure according to professional level 14

Picture 6 - GDP growth in 2022 16

Picture 7 - Unemployment rate in the working age by quarter, 2020-2022 17

Picture 8 - Population structure by age group, 2020-2021 21

CHAPTER 1: OVERVIEW OF QUANG NINH MINERAL WATERCORPORATION

1.1 Introduction of the company

1.1.1 Fragmented information

Picture 1 - Logo of Quang Ninh Mineral Water CorporationCompany Name: QUANG NINH MINERAL WATER JOINT STOCKCOMPANY

Abbreviated name: QNWCORP

The Company's headquarters is located at: Group 3A, Area 4, Suoi Mo Street,Bai Chay Ward, Ha Long City, Quang Ninh Province.

Phone: 033.3847038Fax: 033.3847311

Email: nuockhoangquangninh@yahoo.com.vnWebsite: http://nuockhoangquangninh.com.vn/5

Official date of becoming a public company: April 15, 2016 (according toOfficial Dispatch No 1952/UBCK-GSĐC dated April 15, 2016 of the StateSecurities Commission).

Business registration certificate: No 5700379618 issued by the Department ofPlanning and Investment of Quang Ninh province for the first time on September1, 2004, registered for the 10th change on December 13, 2021.

Type of business: Joint Stock Company.

Legal representative: Nguyen Thieu Nam - Chairman of the board of directorsCharter capital: 80,000,000,000 VND (Eighty billion VND)

The company has 3 affiliated factories including:

• Quang Hanh natural mineral water factory: Address: Km 9, Quang HanhWard, Cam Pha town, Quang Ninh province.

Picture 2 - Quang Hanh natural mineral water factory6

Suoi Mo 1 Natural Mineral Water Factory: Address: Group 3A, Area 4, BaiChay Ward, Ha Long City, Quang Ninh Province.

Picture 3 - Suoi Mo 1 natural mineral water factory

Suoi Mo 2 Natural Mineral Water Factory: Address: Cai Dam, Bai ChayWard, Ha Long City, Quang Ninh Province.

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Picture 4 - Suoi Mo 2 natural mineral water factory 21.1.2 History of formation and development

Before equitization, Quang Ninh Mineral Water and Trading Service One Member Company Limited was an enterprise under the management of the Quang Ninh Provincial Party Committee with the main business lines of exploiting, producing and trading natural mineral waters, soft drinks, daily water

The Company's predecessor was Quang Ninh Mineral Water Enterprise, established on July 17, 1989 under Decision No 381/QD-UB of the People's Committee of Quang Ninh province and managed by the Quang Ninh Provincial Party Committee.

In 1993, Quang Ninh Mineral Water Enterprise was merged into Quang Ninh Coastal Company according to Decision No 1396/QD-UB dated July 15, 1993 of the People's Committee of Quang Ninh province and became a member unit of 8

Duyen Hai Quang Ninh Company under the management of Quang Ninh Provincial Party Committee Office.

In 2002, Quang Ninh Mineral Water Enterprise was separated and renamed Quang Ninh Mineral Water Company according to Decision No 463/QD-UB dated January 28, 2002 and managed by the Quang Ninh Provincial Party Committee.

In 2004 the Company transformed into; Quang Ninh Mineral Water and Trading Service Company Limited according to Decision No 2492/QD-UB dated July 26, 2004 and is directly managed by the Quang Ninh Provincial Party Committee office.

In 2006, Quang Ninh Mineral Water One Member LLC was renamed Quang Ninh Mineral Water and Trade Service One Member LLC according to Decision No 32 - QD/VPTU dated January 10, 2006 of the Provincial Office Quang Ninh Committee until now.

On October 19, 2015, Quang Ninh Provincial Party Committee approved the equitization plan and transformed Quang Ninh Mineral Water and Trading and Services One-Member LLC into a joint stock company in Decision No 03-QD-TU The Company's charter capital is 80,000,000,000 VND (Eighty billion VND).

On December 2, 2015, the Company coordinated with Ban Viet Securities Joint Stock Company to successfully conduct a public auction of 159,100 shares (accounting for 1.99% of charter capital) at Ban Viet Securities Joint Stock Company (due to the total price) offering value at par value of less than 10 billion VND) with a starting price of 11,100 VND/share Highest successful bid: 13,500

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VND/share, lowest successful bid: 11,100 VND/share, average successful bid: 11,421 VND/share.

On December 22, 2015, the Company successfully organized the first GeneralMeeting of Shareholders of Quang Ninh Mineral Water Joint Stock Company and officially operated in the form of a Joint Stock Company under Business

Registration Certificate No 5700379618 issued by the Department of Planning andInvestment of Quang Ninh province for the first time on September 1, 2004, registered for the 7th change on December 25, 2015.

December 22, 2016: The company officially registered to trade on the trading system for unlisted securities ("UpCom") organized by Hanoi Stock Exchange.

Since the official transformation into a joint stock company (December 25, 2015) until now, the Company has had no change in equity, the Charter Capital level remains unchanged at 80,000,000,000 VND (Eight) ten billion dong).

When the company was first established, it only had a 90 m2 factory and a mineral water production line with a capacity of 1,000 bottles/shift Up to now, theCompany has a total industrial area of 9,000 m2 and over 3,000 m2 of spacious, clean and beautiful factory with 5 relatively modern machinery and equipment lines, producing and consuming 45 million liters of mineral water / year with 10 product categories of 4 different mineral water brands, which are:

- Quang Hanh natural mineral water,

- Quang Hanh –Faith mineral water with salted lemon flavor, - Suoi Mo natural mineral

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1.2 Business activities

Production of non-alcoholic beverages and mineral waterWater exploitation, treatment and supply

General support services

Other business support service activitiesRetailing of beverages in specialized storesWholesale of beverages

1.3 Key products of the Company

Quang Ninh Mineral Water Joint Stock Company mainly produces and trades mineral water exploited from mineral springs in Quang Ninh Current main production products include:

Natural mineral product line: Quang Hanh natural mineral water with added carbonation 500 ml, Quang Hanh Faith mineral water - salted lemon flavor 355 ml.

Bottled water product line: Suoi Mo drinking water in 18.9L

1.4 The organizational structure of the company

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1.5 Management apparatus structure

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CHAPTER 2: ANALYSIS OF THE INTERNAL AND EXTERNALENVIRONMENT

2.1.2 Medium and long-term development strategy

Maintain and stabilize traditional market areas, gradually perfect the distribution system in accordance with the shift in product structure and market trends.

For traditional products:

Implement improvements and upgrade packaging designs and quality of traditional products to meet existing customer needs.

Maintaining key traditional products, in order to maintain the brand and unique characteristics of Quang Hanh natural mineral water, serves as a basis to maintain consumer trust, from which the Company develops new products The new product is inherited from available mineral water sources that the Company is managing and exploiting

For new product development work:

Being able to manage the exploitation and production of natural mineral waterfrom mineral water with high mineralization content in Quang Hanh is a unique 13

advantage of the Company This is also the most important condition for the Company to focus on researching and producing new products with high commercial value.

New products will be developed on the basis of evaluating customer segmentsand consumer markets, but must ensure the unique characteristics of each natural mineral water source that the Company is managing and exploiting

Maintain financial management implementation according to the statistical accounting ordinance Take advantage of the State's loan and tax reduction policiesas well as other local incentives in the fields of investment, product development, and export

Make full use of your own capital sources, carry out investment loans according to the roadmap corresponding to the investment stages to match the development speed and planned consumption results to minimize financial costs ofloan capital

Increase capital turnover, especially capital in products with high commercial value, through flexible application of payment methods for customers Strive to increase investment capital turnover for circulating packaging through recovery management and use of circulating packaging to reduce bank loans to improve business efficiency

Diversify flexible payment methods for suppliers, make the best possible use of material capital through suppliers at the same level while still ensuring financial security for the Company, focusing on Focus on expanding markets and improving production and business efficiency

2.1.3 Human resources

Classification by qualifications: unskilled workers make up the majority, due to the characteristics of the industry, qualifications are not emphasized A small 14

number of workers at the University and College level with management, specialized and technical knowledge take on higher operational positions They arepeople who have been trained and graduated with bachelor's degrees through professional schools and training classes

Picture 5 - Labor structure according to professional levelThe company has well implemented training policies, compensation policies, and labor safety policies Working regime of 8 hours/day, overtime not exceeding 4 hours/day, as well as a policy to improve the quality of shift meals to ensure the health of workers working most effectively.

2.2 External environment

2.2.1 Macro environmentEconomic factors

- Lending interest rates of banks: Contrary to the trend of increasing interest rates in the world, Vietnam still keeps low lending interest rates to support economic recovery, accordingly, the State Bank of Vietnam is also excited Reduceinterest rates from 0.5 - 1% in 2021 and 2022 to support businesses.

- Monetary policy: According to Mr Pham Chi Quang, Director of the Monetary Policy Department (State Bank) in 2023, besides supporting the process of economic growth recovery, the most important and consistent goal of The State Bank is responsible for administering monetary policy to ensure the stability of the15

currency and control inflation Strive to reduce lending interest rates Synchronous and flexible management of monetary policy tools contributes to maintaining macroeconomic stability, controlling inflation, and actively supporting socio-economic recovery and development Reasonable monetary regulation, close coordination with fiscal policy to create favorable conditions for the issuance of government bonds.

Effective monetary policy has continued to create and strengthen the confidence of businesses and people Through contact, most businesses highly appreciated the support policies of the Government and the Central Bank In particular, interest rate and exchange rate policies have positive effects and directlysupport businesses thanks to the reduction of loan interest rates and financial costs,thereby reducing costs to maintain and stabilize costs stability and recovery, overcoming difficulties.

- Economic inflation rate: In 2022, GDP growth in the first quarter is 5.05%, in the second quarter: 7.83%, in the third quarter: 13.71% and in the fourth quarter: 5.92%; for the whole year is 8.02%, much higher than the set target of 6.0-6.5% as well as the reality over the past many years and even higher than in 2021 (2.58% ) due to the Covid-19 epidemic blockade, which seriously affected production and business activities.

2023: According to the report of the General Statistics Office, gross domestic product GDP in the third quarter of 2023 is estimated to increase by 5.33% over the same period last year In general, GDP in the first 9 months of 2023 will increase by 4.24% over the same period last year period last year The total added value of the service sector increased by 6.32% In September, the consumer price index (CPI) increased by 1.08% compared to the previous month Compared to December 2022, September CPI increased by 3.12% and compared to the same period last year increased by 3.66% Average CPI in the third quarter of 2023 16

increased by 2.89% compared to the third quarter of 2022 In the first 9 months of this year, CPI increased by 3.16% over the same period last year; Core inflation increased by 4.49% With GDP, CPI, and inflation rising basically not high, business and production activities of enterprises will become more favorable

Picture 6 - GDP growth in 2022

- Tax policy: In 2023, the tax industry continues to implement preferential corporate income tax policies for businesses with new investment projects and expansion investments according to the law on income tax enterprises for enterprises that meet the conditions of preferential areas (areas with difficult or extremely difficult socio-economic conditions) and meet the conditions of preferential fields and industries.

- Unemployment rate: unemployment of workers continues to maintain a downward trend compared to the previous quarter and the same period last year Specifically, the number of unemployed people of working age in the third quarter of 2022 is nearly 1.06 million people, down 13.9 thousand people compared to the previous quarter and especially down 658.1 thousand people over the same period 17

last year The unemployment rate among the working age in the third quarter of 2022 is 2.28%, down 0.04 percentage points compared to the previous quarter and down 1.70 percentage points over the same period last year

Picture 7 - Unemployment rate in the working age by quarter, 2020-2022- TPP Agreement: Participating in signing the Trans-Pacific Strategic Economic Partnership Agreement will create many new opportunities for the non-alcoholic beverage industry in Vietnam such as: Increased exports due to tax elimination by TPP countries According to commitments, the self-certification mechanism of origin is applied, opportunities to attract investment from US businesses and other TPP countries into Vietnam's beverage industry, Vietnamese businesses have the opportunity to participate into the global value chain However, TPP also brings many challenges when the beverage industry has to accept competition from foreign businesses The reduction of import tax from 30%on carbonated beverages to 0% has brought Vietnam's beverage industry into fierce competition The preference for using foreign products among a segment of Vietnamese consumers will reduce the market share of purely domestic enterprises.18

Political, policy and legal factors

In Vietnam the political environment is relatively stable, so there is a good opportunity for

economic sectors, business and development enterprises Stable political institutions and expanded political policies help economic sectors and businesses have favorable conditions in developing production and business relationships withoutside parties.

The legal system in our country still has some unclear points, which also greatly affects copyright protection as well as unfair competition companies have anegative impact on the company's development.

Vietnam's accession to the World Trade Organization (WTO) opens up opportunities but also brings many difficulties for Vietnamese businesses, and the mineral water industry is no exception when it has to compete fiercely with other companies Foreign countries have strong capabilities in branding, finance, technology and management.

Natural elements

For Quang Ninh mineral water, the main raw material is natural mineral waterVietnam belongs to the tropical climate zone with hot and humid monsoons, summers often have long periods of heat, and the demand for beverage products is huge The environment is increasingly polluted, requiring companies to invest in industrial processes Modern technology to treat waste in accordance with allowed standards will increase the company's production costs Natural disasters like

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storms and floods make it difficult to transport from the place of production to the place of consumption.

During the rainy and stormy season, the business's production and business progress is likely to stagnate when the factory has to stop operating, and product quality is also seriously affected This negatively impacts the Company's production and business situation Therefore, it is necessary to have contingency plans to anticipate risks caused by natural disasters, storms and floods, to the stability of production in the organization.

The social environment

Society is increasingly developing, since then people are paying special attention to taking care of their health Therefore, adding an amount of water everyday is one of the habits of Vietnamese people People's healthy lifestyle has helpedthe company have a certain position in the market.

According to the General Statistics Office, Ministry of Planning and Investment, the average population in 2022 of the country is estimated at 99.46 million people, an increase of 955,500 people, equivalent to an increase of 0.97% compared to 2021 In particular, the population urban population 37.09 million people, accounting for 37.3%; The rural population is 62.37 million people, accounting for 62.7% The large population has made Vietnam a potential market for beverage consumption, including mineral water This is also an opportunity for Quang Ninh Mineral Water Joint Stock Company to develop.

Vietnam is a country with a young population structure The number of people aged 15-40 is quite high, and this is the age group assessed by Euromonitor as having the greatest demand for non-alcoholic beverages in Vietnam, including 20

the mineral water industry Understanding this, the company has invested heavily to provide a large amount of water to the market to be able to compete with other competitors.

With a young population structure, mainly of working age, it can be seen that the demand for water is high, especially bottled water because of the convenient nature of the product It can be seen that a bottle of water is often found in school bags, students as well as working people In addition to the young population structure, the population structure over 65 years old is still a part of helping the company develop, because it can be said that at any age, water is still an essential part of life.

Picture 8 - Population structure by age group, 2020-2021Technology environment

This is an important element of competition, new technology will create new products with better productivity and quality To ensure bottled pure water meets standards according to current regulations, Quang Ninh Mineral Water Joint Stock 21

Company invests in full facilities, ensuring completion and mutual

complementarity The final product is of the best quality One of the indispensable steps in the bottled purified water production process is ozone disinfection Ozone is a special chemical-free disinfectant and a powerful oxidizer During bottled water ozonation, the ozone system is controlled to maintain a specific dissolved ozone concentration for a preset contact time, providing powerful disinfection before the bottling step The reaction time to allow the desired disinfection and oxidation is typically 0.2-0.5 ppm for 5-20 minutes The systems quickly achieve high dissolved ozone concentrations and oxidation potential During the ozone disinfection step, a protective environment is created to combat bacteria, viruses and parasites such as Cryptosporidium and Giardia cysts in the treated water Additionally, ozone is very effective against unwanted flavors In addition to investing in a bottled pure water treatment machine with a production water pump capacity of 15m3/h, the company also always equips itself with automated facilities to optimize production time, human resources as well as being able to stand firm in the market.

2.2.2 Micro environment• Competitors

Every business does business in an environment with different competitors.Mineral water businesses in the Central region are companies with

competitive products of the same type, trying to invest, win customers, and divide the market share of Quang Ninh Mineral Water Company in provinces from Binh Thuan to Da Nang Da Nang.

In Ho Chi Minh City, the East and Binh Thuan, the brands Lavie, Aquafina (and recently more bottled water brands from Tribeco, Numberone, Vinamilk ) 22

are competitors with Quang Ninh in the market consumption of bottled products These are competitors with strong brands and systematic business strategies, quite complete distribution systems and strong financial potential It will certainly be a threat and cause many difficulties for Quang Ninh Mineral Water Company.

Cheap 20-liter bottled drinking water brands are growing widely in localities, also partly affecting the sales and market share of Quang Ninh Mineral Water JointStock Company.

Quang Ninh has a distribution system throughout the country Quang Ninh mineral water products are sold in large and small supermarkets, markets, grocery stores, beverage distribution agents, school canteens, etc Therefore, the company'sproducts are easily accessible reach all customers.

Quang Ninh Mineral Water Company's products are aimed at all customers, from civil servants, workers, and farmers; from urban to rural areas; from adults to children.

Suoi Mo natural mineral water is exploited and produced from well No 45 with a depth of over 140m at Bai Chay, Ha Long This is a rare water source that nature bestows, so the company's suppliers are mainly suppliers of machinery and equipment along with raw materials and flavorings to create delicious flavors for all kinds of products Fresh mineral water such as: Industrial ozone machine of Dr.Ozone - A brand specializing in manufacturing and distributing reputable and quality industrial ozone machines Plastic bottles and glass bottles are also provided by reputable domestic companies such as Dong Tam Plastic Trading and

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Production Company Limited The level of adverse impact (high prices, short-termpayments ) of the supplier on the company is insignificant.

2.3 2.3 SWOT analysis of the company

2.3.1 Strength

Owning many mineral mines: Currently the Company is managing and exploiting production and business 06 wells are natural mineral water mines managed by the Ministry of Natural Resources and Environment - Department of Mineral Exploitation and Provincial People's Committee Quang Ninh licensed Thereserves and time allowed for exploitation rights are eligible to increase target output and develop and expand domestic consumption market share.

Highly reputable in the industry: The company has registered its own copyright for 06 trademarks, many of which have high reputations in the industry and are trusted and chosen by consumers.

Good quality products: The Company's products are manufactured according to two international standard quality management systems HACCP and ISO 9001: 2008, at the source of mineral mines with unique properties suitable for current and future consumption trends In particular, products produced at boreholeNo 4 - Quang Hanh have high mineralization content and are highly appreciated by experts.

Modern production line: The company has 14,408.7 m2 of industrial space,including over 7,500 m2 of factory and machinery system qualified to produce over 70 million liters of mineral water of all types per year Skilled technical staff, master of existing technological equipment and capable of receiving new technology, operating modern equipment according to industry development trends.

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2.3.2 Weakness

Marketing activities are not strong: There are few incentive programs and promotions on holidays, etc Besides, the company has not invested much in promoting products and brands.

Haven't diversified many product types, only stopping at certain products and sizes.

The product does not really stand out in the hearts of customers: due to its characteristics, the design is quite boring and not eye-catching.

2.3.3 Opportunity

Reasonable price: On the market, there are currently many products originating from natural mineral water along with quite diverse forms of distribution, promotion, and sales promotion, creating high competitive pressure However, Quang Ninh Mineral Water Joint Stock Company has quite cheap prices,suitable for most people's budgets, which creates a high position in the industry.

Large-scale population: According to the General Statistics Office, Ministry of Planning and Investment, the average population in 2022 of the country is estimated at 99.46 million people, an increase of 955,500 people, equivalent to an increase of 0.97% compared to for 2021 Of which, the urban population is 37.09 million people, accounting for 37.3%; The rural population is 62.37 million people, accounting for 62.7% Vietnam is a country with a young population structure The number of people aged 15-40 is quite high, and this is theage group that is considered to have the greatest demand for non-alcoholic beverages in Vietnam, including the mineral water industry The large population and young population structure make Vietnam a potential market for beverage consumption, including mineral water.

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Mineral water market potential: According to assessments of retail establishments, food and beverages are the two industries with the leading stable growth in stores and supermarkets These are all industries that provide daily necessities directly to consumers In particular, out of every 10 shopping carts at the supermarket, there will be 5 shopping carts containing bottled mineral water products This is an opportunity for businesses to grow.

E-commerce is growing: Texting purchases is now becoming part of normal consumer behavior The survey shows that at least 1 in 3 Vietnamese consumers chat with businesses once a week Texting and conversational business behavior is popular among all age groups, especially Millennials and GenZ This isa new consumer demand; At the same time, it is a trend that brings many opportunities for businesses of all sizes to connect and develop online business.

2.3.4 Threat

Risk of input raw material prices: 2022 takes place in a situation where the economy is entering a phase of gradual recovery after the Covid 19 pandemic However, with difficulties due to rapidly increasing world inflation; political conflict between Russia and Ukraine; The Chinese government's Zero Covid policy has caused input raw material prices to fluctuate, affecting the Company's selling price policy.

Competition from competitors in the same industry: the beverage market ingeneral and the mineral water market in particular is a market with a lot of potential, thus creating fierce competition between businesses producing the same product Industry: must provide food safety and quality products at reasonable prices to attract consumers This makes it increasingly difficult to maintain and develop the market.

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