To deal with the question how to improve activities of fundamental analysis in a securities companies, my research focuses on basic theory combined with reality available in stock market of Vietnam. Basic theory involves key definitions about financial market and securities companies; important and popular models used to value and analyze a company and the industry it belongs. Reality involves status of Thang Long Securities Company, where I take my internship, and issues of stock market as well as management of Government and SSC. Then, I give some comments about activities of fundamental analysis in TLS and recommendations to improve them. In my opinion, I want to keep advantages of TLS and change to improve limitations rather than change everything in analysis procedure. I give recommendations for both TLS and Government and SSC. That is because TLS cannot change environment around its operations itself. Some problems come from company, but others come from regulations and weak in management of Government. In fact, development of stock market of Vietnam in long term needs combination of both authorities and all of securities companies. Therefore, my research structure includes three chapters. At the beginning, chapter one shows readers the theory of financial market, securities companies and its operations. Next, chapter two continues to detail the status of TLS in business, power of TLS in general as well as the activities of fundamental analysis in TLS now. There are many statistics about TLS and other securities companies with significant tables and charts. I also raise my ideas, comments on reality of TLS based on data collected during the time of internship. Finally, chapter three solves emerged issues of fundamental analysis in TLS. By recommendations for TLS, Government, and SSC, I notice the importance of changes in both company and the environment around company. Recommendations divide according to the objectives they stress. For example, there have recommendations for SSC, or for Government. They are just main points of my research. If reader wants to understand more clearly, you would read in details.
ACKNOWLEDGEMENT During my internship, I have an opportunity to learn much more about professional and standardized quality in working of securities company and have time to take this research Although the time of internship is short, I have received much help from my supervisor and Thang Long Securities Company I sincerely thank my lectures of Advanced Program, and Banking and Finance Faculty who have created a good chance for me to apply my knowledge in theory and get more experience in reality This internship helps develop my skills useful for my work in future as well as improve my basic knowledge available I respectfully thank to my supervisor M.S Nguyen Thi Thuy Duong, who has instructed me to finish my research Moreover, to have the basic and actual knowledge to implement this research, I really thank to Dr Quach Manh Hao, general director of TLS, and Dr Pham The Anh, head economist of TLS, and all staffs of Analysis Department of TLS Director, manager and all staffs in Analysis Department of TLS help so much in instructing me to work professional and supply useful data, statistic, and documents to complete my research Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance TABLE OF CONTENTS ACKNOWLEDEGEMENT TABLE OF CONTENTS ABBREVIATION LIST OF TABLES LIST DIAGRAMS EXECUTIVE SUMMARY Security market line 20 Profitable markets that yield high returns will attract new firms This results in many new entrants, which eventually will decrease profitability for all firms in the industry Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will fall towards zero (perfect competition) 28 The threat of substitute products or services 29 The bargaining power of customers (buyers) 29 The bargaining power of suppliers 30 ABBREVIATION HO Head Office SBV State Bank of Vietnam SSC State Securities Commission of Vietnam SRTC The Securities Research and Training Center MOF Ministry of Finance GOV Government TLS Thang Long Securities Company Report Fundamental analysis report Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance LIST OF TABLES Table 2.1: Chartered capital of some leading securities companies 2010E 35 Table 2.2: Revenues structure of TLS 36 Table 2.3: Personnel of TLS 40 Table 2.4: Models used by some securities companies 42 Table 2.5: PEs of ITC and similar real estate companies in 12 months cycle 43 LIST OF DIAGRAMS Diagram 1.1: Operations of primary market Diagram 1.2: Operations of secondary market Diagram 1.3: Types of data sources 15 Diagram 1.4: Security Market Line 18 Diagram 1.5: Industry life cycle 25 Diagram 1.6 Porter’s five forces 28 Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance Diagram 2.1: Management structure of TLS 33 Diagram 2.2: Total assets and equities of TLS 34 Diagram 2.3: Brokerage market shares of some leading securities companies in 2009 35 Diagram 2.4: Brokerage market shares of some leading securities companies in the first half of 2010 35 Diagram 2.5: Number of management accounts 36 Diagram 2.6: Total revenues, expenses and gross revenues of TLS in recent years 37 Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance EXECUTIVE SUMMARY To deal with the question how to improve activities of fundamental analysis in a securities companies, my research focuses on basic theory combined with reality available in stock market of Vietnam Basic theory involves key definitions about financial market and securities companies; important and popular models used to value and analyze a company and the industry it belongs Reality involves status of Thang Long Securities Company, where I take my internship, and issues of stock market as well as management of Government and SSC Then, I give some comments about activities of fundamental analysis in TLS and recommendations to improve them In my opinion, I want to keep advantages of TLS and change to improve limitations rather than change everything in analysis procedure I give recommendations for both TLS and Government and SSC That is because TLS cannot change environment around its operations itself Some problems come from company, but others come from regulations and weak in management of Government In fact, development of stock market of Vietnam in long term needs combination of both authorities and all of securities companies Therefore, my research structure includes three chapters At the beginning, chapter one shows readers the theory of financial market, securities companies and its operations Next, chapter two continues to detail the status of TLS in business, power of TLS in general as well as the activities of fundamental analysis in TLS now There are many statistics about TLS and other securities companies with significant tables and charts I also raise my ideas, comments on reality of TLS based on data collected during the time of internship Finally, chapter three solves emerged issues of fundamental analysis in TLS By recommendations for TLS, Government, and SSC, I notice the importance of changes in both company and the environment around company Recommendations divide according to the objectives they stress For example, there have Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance recommendations for SSC, or for Government They are just main points of my research If reader wants to understand more clearly, you would read in details Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance INTRODUCTION Rationale The history of stock market is a long story In 12th century, France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks Because these men also traded with debts, they could be called the first brokers A common misbelief is jthat in late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurze, and in 1309 they became the "Brugse Beurse", institutionalizing what had been, until then, an informal meeting, but actually, the family Van der Beurze had a building in Antwerp where those gatherings occurred; the Van der Beurze had Antwerp, as most of the merchants of that period, as their primary place for trading The idea quickly spread around Flanders and neighboring counties and “ Beurzen ” soon opened in Ghent and Amsterdam In the middle of the 13th century, Venetian bankers began to trade in government securities In 1351, the Venetian government outlawed spreading rumors intended to lower the price of government funds Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century This was only possible because these were independent city-states not ruled by a duke but a council of influential citizens The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits - or losses In 1602, the Dutch East India Company issued the first share on the Amsterdam Stock Exchange It was the first company to issue stocks and bonds The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock exchange to introduce continuous trade in the early 17th century The Dutch "pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we know them" Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance There are now stock markets in virtually every developed and the most developing economies, with the world's biggest market being in the United States, United Kingdom, Japan, India, China, Canada, Germany, France, South Korea and the Netherlands By the time now, stock market becomes a familiar term with any people Although the market has time to be bear or bull, it still keeps the critical position in financial market in the worldwide The market capitalization value of the most development stock markets in the world can be as big as thousands of billion dollars According to recent research of one independent group, China Stock Market is blooming in 2009 and rise to the second in range of the biggest stock markets in the world, just under the giant U.S Stock Market To meet the demand of customer for services, Securities Company was founded as indispensible along with the long history of stock market All of investors want to gain profit Beginning with such desire of investors, analyzing services were created to help the investors identify opportunity and limit risk The relationship between risk and return asked for a serious consideration from securities companies Their advices play a key role in ultimate decisions of investors Therefore, analyzing activities is very important without any exception in securities companies Analysis in securities companies consists of two types of technical analysis and fundamental analysis They are different in functions and objectives Technical analysis bases on charts, trends, and diagram to give the sight about history and available trend in the future while fundamental analysis bases on financial statements, historical data, and information collected to understand deeper status of that company Fundamental analysis also helps investors estimate value of firm and equity through significant models and their assumptions Research question In limited dimension of this research, we just concern about activities of fundamental analysis in Thang Long Securities Company Procedures to write a Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance report in fundamental analysis have so many processes that they may let analysts be confused That is why the result is not good as much as possible due to obvious reasons and personal reasons During my internship, I recognize some issues, which may hint the better results of fundamental analyzing reports, and raise some ideas, which may help develop available efforts of such company Therefore, my research question focuses on how to improve activities of fundamental analysis in Thang Long Securities Company Research objectives - Stud basic theory of securities companies and their activities of - fundamental analysis field Analysis and valuation of fundamental analysis activities in Thang Long - Securities Company Suggest some solutions to improve activities of fundamental analysis in Thang Long Securities Company Research methodology The methods used in research methodology dialectical materialism, historical materialism method of Marxism - Leninism, abstract methods of science, statistical sampling methods combined with analysis case, comparison and modeling Research scope Research will concentrate on study of activities of fundamental analysis in Thang Long Securities Company from 2008 to the first half of 2010 Research structure Apart from introduction and conclusion, my thesis include three chapters Chapter 1: Securities companies and fundamental analysis in securities companies Chapter 2: Reality of fundamental analysis activities in Thang Long Securities Company Chapter 3: Solutions to improve the activities of fundamental analysis in Thang Long Securities Company CHAPTER Supervisor: M.S Nguyen Thi Thuy Duong Nong Thi Quynh Anh - Class: Advanced Finance