Coporate Finance Group Report Vinh Plastics.pdf

PART 1 INTRODUCTION Summary of activities of VINH Plastic Joint Stock Company Company introduction Company name: VINH PLASTIC PACKAGING JOINT STOCK COMPANY English name: VINH PLASTIC &

HO CHI MINH UNIVERSITY OF TECHNOLOGY

OFFICE FOR INTERNATIONAL STUDY PROGRAMS

School of Indusincl Monagement GIN & BK - OISP

COPORATE FINANCE

GROUP REPORT

Vinh Plastics

Class: CC02

Lecturer Pham Tien Minh Group member:

Group Leader contact: Mai Duc Hoang Anh

Name: Mai Duc Hoang Anh Bui Ngoc Thien Huong

Email: anh.mai090974752 1@hcmut.edu.vn Lai Bao Ngoc

Phone number: 0909747521 Nguyen Hanh Doan Nhu

Ho Chỉ Minh City, May 10^, 2021

1952560

1952278

1952873

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Table of Contents

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PART 1 INTRODUCTION

Summary of activities of VINH Plastic Joint Stock Company

Company introduction

Company name: VINH PLASTIC PACKAGING JOINT STOCK COMPANY English name: VINH PLASTIC & BAGS JOINT STOCK COMPANY

Short name: VBC

Address: Block 8, Ben Thuy Ward, Vinh City, Nghe An Province

Chairman of the Board of Directors: Mr Ngo Quang Viet

Director of the company: Mr Le Xuan Tho

History begin

Vinh Plastic and Packaging Joint Stock Company was established in November 1996 with the name Vinh Plastic and Packaging Enterprise under the Economic Cooperation Corporation - Military Zone 4 - Ministry of Defense In 2002, the enterprise transformed its ownership form and was equitized into Vinh Plastic and Packaging Joint Stock Company In order to meet the market demand, the Company has expanded production scale from an original factory, now put into operation two more new packaging factories with modern technology imported from other countries Advanced packaging production technology

¢ Charter capital of the Company: 74,999,720,000 VND (Seventy-four billion, nine hundred and ninety nine million, seven hundred and twenty thousand dong)

3 Oriented development

In the following years, the Company always tries to set the first goal of sustainable development firm The economic development of the Company is always associated with the development of the community and commune associations and positive environmental impacts The development

of the Company is a combination of the strategic economic, environmental and social goals That helps the Company grow and develop sustainably, as well as create a good image in the hearts of employees and investors like partners

4 Operational objectives

In the following year, the Company will continue to promote well the capacity of equipment in the facilities and maintain existing markets and exploiting, selecting new markets that are both effective and efficient payment function Capture the changing consumer tastes, research investment plans the bottom bag gradually replaces the traditional cement bag Continuing to invest in phase II of the House Project packaging machine at Facility II Gia Liet, Nehi Xuan, Ha Tinh as required by ISO standard 22,000 on food hygiene and safety and requirements of high quality bags Complete improve the investment in equipment for the production of 1.5-2 tons container bags and PP bags, and film covers BOPP types to meet the increasing demand for quality and quantity of the market

I Summary of plastic market

1 Business:

Producing, buying and selling cement packaging, PP, PE packaging and plastic products Buying and selling materials, raw materials, packaging production equipment of all kinds (plastic resins, Krapt paper, machine packaging machinery .)

2 Raw materials into production

PP, PE plastic resins materials The company mainly uses imported goods and partly uses domestic production

Kraft paper is imported from Russia, Korea accounts for about 50%, the rest is originated from Vietnam and Southeast Asian countries Some other input materials such as: sewing thread, printing ink and other materials used domestically all meet technical requirements as well as ensure the quality required by customers

3 Product market

With the motto: “ 1 Customers decide the success of the Company; 2 Product quality is the

deciding factor for customers; 3 The employee decides on the two above factors ”,

implementing the above principle, so in recent times the company's products have stood firm and developed domestically and internationally

4 Domestic market

Currently the company is a supplier of large KP, KPK bags, Jumbo, Sling bags for cement

factories such as: The Vissai; Nghi Son Cement; Song Gianh Cement; But Son Cement; Thanh

Thang Cement; Hoang Mai Cement with production from 100 to 120 million bags of cement / year and 2,400,000 bags of Jumbo, sling / year The company is also providing PP, OPP bags for fertilizer factories, sugar production, and bags for the agricultural sector such as: Ninh Binh

Fertilizer; Lam Thao fertilizer; Binh Dien fertilizer; Thach Thanh Sugar Factory; Quy Hop

Street; Thanh Chuong Tapioca Factory

5 International markets

Jumbo bag products; Sling; PP bag; OPP; The Company's PK is present in New Zealand, Japan,

Korea, USA, Fiji, Singapore, Thailand, Philippines, Malaysia, Cameroon markets and is

highly appreciated by the market for product quality as well as delivery progress

PART 2 ANALYSE FINANCIAL STATEMENTS

VINH PLASTICS

| 5 Financial Ratio Groups (2016, 2017, 2018)

2016

Total debt ratio

term debt ratio

Times interest earned ratio

Turnover

s sales in i

Receivables turnover

collection

Fixed assets turnover

Total asset turnover

Profit

share

Market to book ratio

1 Liquidity ratios: the ability to pay bills in the short-run

Current | In general, current ratio measures | The current ratios of VINH company in 2016, Ratio capability of a business to meet its | 2017 and 2018 were higher than 1, which short-term obligations with current | means that the current assets of VINH could

The ratios for VINH company in 3 | years

years remained above 1 time

Quick The quick ratio of VINH started In terms of quick ratio which is measured the Ratio with 0.77 in 2016, then reach the _| ability to meet current liabilities by using peak at 0.81 times in the next year | current assets excluding inventory It is clear and finally decreased to 0.68 in that all figures were lower than 1 in the

2018 period of 3 years Therefore, our group think

that the company depended mainly on inventory account

Cash Ratio | The cash ratios in the first 2 year | The cash ratios of VINH through 3 years

then declined by 0.01 in 2018 All | liabilities than cash and cash equivalents were lower than 1 That means the company had insufficient

cash on hand to pay off short-term debts Net NWC to TA measures the degree | The higher working capital over total assets working | that working capital should meet _| ratio is indicative of liquidity and financial capital to | daily obligations in relation to strength However, we see that high ratio in

total assets

management of inventory

the same in the next 2 years with 0.07

2 Debt/Leverage ratios: The ability to meet long-term obligations

In the years 2016 to 2018, the debt

Debt ratio ratio witnessed a upward trend which

equity multiplier express the similar

is ranged from 0.41 to 0.46

—— purpose, they show the extent of debt

i 1.591 £2016 Debt equity | was in the year 0 » Dut sheet Companies finance their assets

i later i in 2 | ratio ater it went up in 2 years later, at through debt and equity, which forms

1.68 in 2017 and 2.08 in 2018 the foundation of those formula The equity multiplier also had the According to the table above, VINH same trend which is grow in the scale reported the high equity multiplier

3.87 and 4.35 respectively conclude that the company faced Equity more leverage since a large portion of multiplier the assets was financed using debt,

and only a small portion was financed

by equity

recession year by year increased by

5% from 2016 to 2017 And then

drop to 14% in 2018 LTD ratio indicates the extent of debt

financing relative to capitalization (permanent financing) We see that

VINH relied much on long-term debt

as LTD ratio of the company was quite high over the period

Time interest

earned ratio

4.33, 3.68, 3.58

Times interest earned ratio decreased

significantly over the course of 3

years under each respective data:

The positive number of time interest earned ratio and cash coverage ratio indicates that VINH company can

afford the income taxes (The earning

profit before tax > Interest)

Cash coverage

ratio

3-year period

14.95, 4.73 and 5.00 are figures of

cash coverage ratio that represent the

fluctuation of this quantity over the

3 Activity/Efficiency ratios: how efficiently or intensively a firm uses its assets to generate

sales

Inventory | The figure for inventory Over 3 years, there was the improvement of the Turnover | turnover starting from 6.35 in | figure for VINH company Higher inventory

2016 hit the peak in the next | turnover typically means that VINH was selling

year with 7.46 and decreased | their goods quickly and there was also

by 0.16 in 2018 significant demand for those products

Inventory | In 2016, 2017 and 2018, the However, the high figure also means that there Turnover in | inventory turnover in days was insufficient inventory and the company

missed out on sale opportunities

respectively

Receivable | The receivable turnover was | We propose that the ratio was quite low from turnover | 4.08 in 2016 and slightly 2016 to 2018 However, an upward trend of

decreased at 3.85 in 2017 But

then in 2018 it was recovered

receivable turnover during 3 years indicates

improvement of VINH company (quicker

at 4.14 which was nearly two

times it was in 2017

collection process) The company’s collection

of account receivable was more efficient and VINH had a larger proportion of quality

Average Over the same period, the

Collection | networking turnover rate was_ | CUStomers that pay debts quickly

Period fluctuated from 89 days in

2016 to 98 days in 2017 and

then drop down at 88 days in

2018

Net-working | NWC turnover was increased | VINH company witnessed the efficient

turnover | in 2017 and reached the liabilities for supporting sales with regard to

plateau at 28.80 in 2018 high net-working capital turnover

Fixed assets

Turnover

The number of fixed assets

turnover witnessed that

reached the highest point at

12.41 in 2016 In 2017, it had

a dramatic decrease at 9.08

and then slightly increased at

9.90 in 2018

Total asset

turnover

The figures reached the peak

at 2.11 in 2016 but slightly

went down at 1.91 in 2017

and minimally came back to

the play at 2.06 in 2018

decreased, generally its data was high compared

to the market

In terms of total asset turnover, a downward trend indicated that the efficiency using the company’s asset to generate sales was reduced through years

4 Profitability ratios: measure how efficiently a firm uses its assets and manages its

operations

Profit It is clear that there was a Profit margin in 2016 was 3.78% that margin | downward trend from 3.78% in _| means 100 dollars of sales may profit

2016 to 2.99% in 2018 3.78 dollars A downward trend for profit Return on | The figure was continueously margin showed that VINH experienced assets reduced year by year from 7.96% lower effectiveness in generating profits (ROA) | to 6.15% (2016-2018) with the given investment in assets Return on | The fluctuation of ROE started

Thi that 100 dollars of

equity | from 27.35% in 2016 to 25.80% | "P3 áievew 664086

(ROE) | in 2018 in common shareholder’s equity earned

shareholders saw a 127.35% of return on

their investment this year The improvement of ROE in 2018 indicate

that VINH was a growing company

5 Market performance ratios: how the market values the firm relative to the book values

Earnings | The EPS had a EPS measures earning capacity of an ordinary share per share | significant drop from | The lower a company’s EPS, the less profitable it is (EPS) 8,847 VND to 3,717 considered to be

VND (2016-2018)

Price Starting from 7.91 in

earnings | 2016, VINH company

ratio (PE) | witnessed a dramatic pay for each dollar of earnings A considerable

decrease in the next

year with just 4.85

times and increased

inconsiderably to 4.98

in 2018 decline in EPS of VINH indicated the lower value

so the investors would pay less for a company's”

shares if they think the company has lower profits relative to its share price

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