PHÂN TÍCH ĐÁNH GIÁ HIỆU QUẢ dự án“đầu tư NHÀ máy kết cấu THÉP AN PHÁT e

Investment project for An Phat steel structure factory ANALYZING AND EVALUATING THE RESULTS OF THE INVESTMENT PROJECT FOR AN PHAT STEEL STRUCTURE FACTORY Investor: An Phat Joint Stock Company Place: Khai Quang Industrial Zone – Vinh Yen – Vinh Phuc Total sum: 69.000.000.000 VND Land leasing square: 13 000 m2 TABLE CONTENTS Page List of tables List of abbreviated notation FOREWORDS Name Thread 2:Problems statement 3.2 RESEARCH OBJECTIVES: 44.1.5 Research methodology 6.Research data 7.Structural topic Conclusion: 1 2 3 Chapter I: Theoretical basis for analysis and evaluation of investment projects 1.1 The general concept of investment projects 1.1.1 The concept of investment projects 1.1.2 Classification of investment projects 1.1.3 The period of investment projects 1.2 The content study the feasibility of investment projects 1.2.1 The feasibility study 1.2.2 The nature and purpose of the feasibility study 1.2.3 Major contents of the feasibility study 1.3 Economic and financial analysis of investment projects 1.3.1 Identify investment 1.3.2 Estimated annual revenue of the project 1.3.3 Estimated the annual cost of the project 1.3.4 Tabulate the basic parameters of the project 1.3.5 Preparation of financial reports expected 1.3.6 Evaluate the effectiveness of the project 1.4 Sensitivity analysis 4 11 11 11 12 16 16 19 19 20 21 28 34 Chapter II: Introduction of steel structure projects Phat 2.1 The need for investment in plant construction steel structure in the area 2.2 Introduction to the investor 2.3 Pursuant to the implementation of the project 2.4 Description of the investment project 2.4.1 Design capacity 2.4.1.1 Power 2.4.1.2 Characteristics 2.4.2 Technology 2.4.3 Location, area and scale construction 2.4.4 Equipment List 2.4.5 Construction Category 2.4.6 The total project construction and installation of equipment and 2.5 Organization of production model 2.5.1 Business organization model 36 36 36 39 40 40 40 40 41 42 44 46 51 52 52 2.5.2 Labor Forecast 2.5.3 Scheduled for production planning 2.5.4 Estimates of production costs and product prices 2.5.4.1 Cost estimates 2.5.4.2 On cost estimates 2.5.5 Define project working capital needs 54 55 57 57 58 58 Chapter III: The economic and financial analysis of investment projects 3.1 The production plan and projected revenues, production costs 3.2 Plan to raise capital for the project 3.3 Plan of the interest payments and loan 3.4 Preparation of the project's cash flow table 3.5 Calculation of indicators NPV, IRR, payback period of the project 3.6 Sensitivity analysis with the assumption 3.6.1 Costs by 5% 3.6.2 Revenue fell 5% 3.7 Conclusions on the feasibility of the project 3.8 Conclusions and recommendations 59 59 66 69 70 72 74 74 76 78 78 LIST OF TABLES Climatic conditions in the project area 43 Equipment List 45 Table Estimated capital construction work items 50 Table Estimates of investment and construction equipment 51 Table Table Table Structure of labor and the number of used 54 Table Cost estimates for the first five years 57 Table Estimates of production costs 58 Table Calculate revenue 60 Table 15 years of operating revenue 60 Table 10 The first 5-year average salary costs 61 Table 11 Depreciation of items in 15 years 63 Table 12 Cost of production for 15 years 64 Table 13 Fixed capital investment 66 Table 14 Capital in 15 years 67 Table 15 The sumary of investment capital: 68 Table 16 Capital Structure 68 Table 17 Plan of the interest payments and bank loans 69 Table 18 Project cash flow 70 Table 19 Break-even point 73 Table 20 Sensitivity analysis when costs increased by 5% 74 Table 21 The sensitivity of the project as revenue fell 5% 76 LIST OF ABBREVIATIONS CB: Being cash AR: Receivables AP: Payables AI: In Stock EBT: Earnings before tax EBIT: Earnings before interest and taxes payable NPV - Net Present Value: the net present value index Bi - Benefit: The benefits of the project Ci - Cost The cost of the project r: discount rate AV - Annual Value: Annual Target current value B / C - Benefit / Cost: The ratio of benefit / cost IRR - Internal Rate of Returns: the internal rate of return KH: Depreciation and amortization Bd: Maintenance PP - Payback method: return on investment time Fe: Iron Si: Silicon Mn: manganese P: Phosphorus S: Sulfur C: Carbon Cr: Chromium RC: Reinforced concrete IZ: Industrial Import: Import and Export Fixed assets: Fixed assets YT: Health VLD: Working capital VCD: Fixed capital NVLC: Main materials NVLP: Material subDT: Revenue FOREWORDS Title: Analyzing and evaluating the results of the investment project for An Phat Steel Structure Factory Rationale: Investment activity is first and foremost decision affecting to the development and potential growth of the business Investment activities are focused through the implementation of investment projects Efficient investment projects will benefit long-term for business, helping businesses develop by leaps and bounds and meet fierce changes of the market The decision to invest or not depends on other factors The first factor is economic policy, on the basis of the law and the state economic policy to create fair playing field for all businesses The second is the competitive market factors, to survive and develop, products and services of the business have to meet needs of the market The third is the financial cost factors, changes in interest rates and tax policies affect capital structure and the capital of the enterprise Another factor that has a big impact is the fourth element of scientific and technical progress This factor will affect the choice of equipment, depreciation of fixed assets, etc The fifth factor is the analysis of the project, assessment of the feasibility of the project This one is seen as the most important, having Crucial influence on investment decisions Currently our country is in the process of industrialization and modernization The investment projects to build factories, industrial parks, export processing zones, etc is important because it produces local products to boost the domestic economy, reduces imports and create jobs for employees in the locality The construction project requires big capital investment, long payback, so the analysis and evaluation of its socio-economic effects must be very meticulous, careful and accurate new, bringing high performance for the investment An Phat Group Joint Stock Company, is a corporation doing business in multiple industries: industrial and civil construction, import and export, medical equipment, education, mining and mineral processing… to develop the field of construction of industrial buildings, prefabricated steel building business in the North, focusing mainly on the key provinces of the North West economy zone Recognizing the importance of the analysis and evaluation of the effectiveness of investment projects for enterprises with the knowledge learned in the MBA program and research results in business the author chose the subject “Analyzing and evaluating the results of the investment project for An Phat Steel Structure Factory” as his thesis Aims In this thesis, I apply the theory learned in the MBA program, the research material to analyze, evaluate, study the factors related to the effectiveness of the project and propose solutions guaranting for investment projects with efficiency, limiting risk to the business, bringing significant profits and achieving their business goals, contributing to improve the position of enterprises in the sector Research methodology To complete this thesis, the author uses the methods learned in MBA program such as statistics, market analysis, gathering data, processing data and using data of consulting services in the technical stage Since then draw the conclusions on the basis processes: information collection - information processing - forecasts of future market prices - solutions offer to find the optimal solution - the conclusion Research data The data learned in MBA program will be used, especially on course of Project Management, Corporate Finance, and Strategic Management Besides, real figures from a number of projects in domestic and foreign plants and data sources from other specialized agencies are used as well There is also the data looked up from Internet network under verification Organization Besides the forewords, conclusions and references, the structure of the thesis consists of three chapters: Chapter I: Theoretical background Chapter II: Introduction of investment project for An Phat Steel Structure Factory Chapter III: The economic and financial analysis of investment projects Due to time constraints, though getting the dedicated guidance of the Instructor and the efforts of the author, the thesis can not avoid the shortcomings Hoping that the author could receive feedback from your teacher, and experts all friends Conclusion Research is a real investment project of An Phat Group Joint Stock Company During study procedure, it will point out what is the key leading to effective project, what is the key leading to poor or ineffective projects, so that the investors have an additional perspective on the future of the project We look forward to the contribution of the faculty of the program and especially Associated Professor Doctor Tran Van Binh CHAPTER I THEORETICAL BACKGROUND 1.1 The general concept of investment projects 1.1.1 The concept of investment projects Investment activities (or “investment”) is the process of using the financial resources, labor, natural resources and other physical assets in order to directly or indirectly reproduce simply and reproduce extensively of production material and technical base of the economy in general, of the Postage and Telecommunications (MPT) in particular Starting from the effective range of the investment results, there may be different interpretations of investment Investment in a broad sense is the sacrifice of present resources to carry out certain activities in order to return to investors expected results in the future which is greater than the resources spent to achieve those results Resources can be money, natural resources, labor and wisdom The results could be the increase of financial assets, physical assets, intellectual property and resources Investment in the narrow sense includes only activities to use existing resources in order to bring the socio-economic outcomes in the future which is greater than the resources used to achieve these results Thus, investment is active use of financial resources, material resources, labor and intellectual resources in manufacture for a relatively long time to gain economic benefits 1.1.2 Classification of investment projects Classification according to the investment management function  Direct investment: the investment method in which the investor directly involve in managing capital spent In direct investment, investor and the manager of capital and is considered a subject Direct investment can be domestic investment or foreign investment in Vietnam Investors are fully responsible for investment results  Indirect investment: is a method in which investors are not directly involved in managing capital spent In indirect investment, the investor and manager of capital is not a subject This type of investment is also known as financial investments such as shares, securities, bonds, etc  Loans: This is a form of loan as profit through interest on loans Classification by capital source:  Domestic investment: is the investment of finance into manufature by Vietnam's business organizations, Vietnamese citizens, the Vietnamese people residing abroad, foreigners permanently residing in Vietnam Domestic investment is subject to the Law of Domestic Investment  Foreign investment in Vietnam: direct foreign investment in Vietnam, (or “foreign investment” for short) happens when the foreign investors give capital into Vietnam in cash or any other assets to carry out investment activities in accordance with the Law on Foreign Investment in Vietnam  Foreign investment: this is the kind of investment of one country's institutions or individuals into others Classification according to investment properties:  Extensive investment (new investment): Investment for the construction of buildings, factories, established companies, opening new stores, new services New investment is not on the basis of existing ones which is growing up This type of investment requires a lot of capital, high technology and management; time of investment and the time required for recovery operations is long, and it is high risk  Intensive investment: this is the kind of investment to restore, renovate, upgrade, refurbish, synchronize, modernize and expand of existing objects It is the method in which the investors directly involve in the management of capital spent, it requires less capital, and time of recovery is fast Classified according to time use:  Short-term investment  Medium-term investment  Long-term investment Classified by sector of activity:  Investment for bussiness  Investment for scientific researches  Investment for management Classified according to the nature of using capital:  Development investment: direct investment method, in which the capital is given out in order to increase property values This is the fundamental mode to open extensive reproduction 10 Table 15: General investment No I Item Value The total investment capital 69,292.0 Fixed capital investment 59,292.0 Construction 43,905.7 Machinery, equipment and other costs 15,386.3 II Mobile capital 10,000.0 Table 16: Capital structure No Item Value Self and mobilized 18,000.0 Long-term and medium-term 46,292.0 loans Short-term borrowings 5,000.0 3.3 Plan of the interest payments and loan 64 Scale % Of fixed % Of total capital investment 26.0% 30.4% Table 17: Interest payment plans and loans bank (unit: MillionVND) Item Annual long-term loans Annual payment of principal Interest Interest paid annually 46,292.00 Year Year Year Year Year Year Year Year Year Year 10 46,292.00 46,292.00 41,423.11 35,055.43 27,691.45 20,043.55 8,436.22 - - - 0.00 4,868.89 6,367.68 7,363.98 7,647.90 11,607.32 12,692.65 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 5,555.04 5,555.04 4,970.77 4,206.65 3,322.97 2,405.23 1,012.35 - - - 65 Annual short-term loans 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 Interest 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Interest paid annually Total interest paid annually 500.0 500.0 500.0 500.0 500.0 500.0 500.0 500.0 500.0 500.0 6,055.0 6,055.0 5,470.8 4,706.7 3,823.0 2,905.2 1,512.3 500.0 500.0 500.0 66 3.4 Establishment of the project's cash flow table Table 18: Cash flow of project (Unit: Million VND) Năm 10 11 12 13 14 15 51,000.00 59,500.00 76,500.00 85,000.00 85,000.00 86,275.00 87,569.10 88,882.70 90,215.90 91,569.10 92,942.68 94,336.82 95,751.87 97,188.15 98,645.97 revenue 10000 other revenues Capital investment 69,292.00 Fixed capital 59,292.00 Working capital Operating costs depreciati on and amortizati on interest 10,000.00 41256.9 47635.3 60223.5 66166.6 66103.9 67001.4 67879.5 68799.3 69805.8 70827.4 76967.1 78102.1 79254.3 80423.6 81610.6 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 2,927.00 2,927.00 2,927.00 2,927.00 2,927.00 6,055.00 6,055.00 5,470.80 4,706.70 3,823.00 2,905.20 1,512.30 500 500 500 500 500 500 500 500 67 -777.60 1,344.00 6,340.00 9,661.00 10,607.40 11,902.70 13,711.60 15,117.70 15,444.40 15,776.00 12,548.58 12,807.72 13,070.57 13,337.55 13,608.37 -194.4 336 1585 2415.25 2651.85 2975.675 3427.9 3779.425 3861.1 3944 3137.145 3201.93 3267.643 3334.388 3402.093 -583.20 1,008.00 4,755.00 7,245.75 7,955.55 8,927.03 10,283.70 11,338.28 11,583.30 11,832.00 9,411.43 9,605.79 9,802.93 10,003.16 10,206.28 69,292.00 9,937.50 11,528.70 14,691.50 16,418.15 16,244.25 16,297.93 16,261.70 16,303.98 16,549.00 16,797.70 12,838.44 13,032.79 13,229.93 13,430.16 23,633.28 69,292.00 8817.6575 9076.7946 10263.474 10177.206 8934.702 7954.0592 7042.041 4250.26 3646.776 3128.977 2021.529 1734.684 1488.524 1277.306 1899.996 69,292.00 60,474.34 51,397.55 41,134.07 30,956.87 22,022.17 14,068.11 -7,026.07 -2,775.81 870.97 3,999.95 6,021.48 7,756.16 9,244.68 10,521.99 12,421.99 Taxable income Corporate Income Tax after-tax income 10 cash flow 11 NPVn 12 Cumulativ e Profit 68 3.5 Calculate indicators NPV, IRR, payback period of the project Net current time The project's net present value is calculated as follows: n Bi NPV = T i=0 n - (1+r)i Ci - T i=0 (1+r)i Calculated in 10 years with a discount rate of 10% NPV = 12421.99 million VNĐ Internal rate of return NPV1 IRR = r1 + (r 2- r1) NPV1-NPV2 According to calculations, the internal rate of recovery in the 10 years of the project is 0.1907295 69 Breakeven point of the project Table 19: The break-even point of the project (Unit: Million VND) Item Revenu Year Year Year Year Year Year Year Year Year Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 51.000,0 59.500,0 76.500,0 85.000,0 85.000,0 86,275.0 87,569.1 88,882.7 90,215.9 91,569.1 92,942.68 94,336.82 95,751.87 97,188.15 98,645.97 51.777,6 58.156,0 70.160,0 75.339,0 74.392,6 74,372.3 73,857.5 73,765.0 74,771.5 75,793.1 80,394.07 81,529.15 82,681.25 83,850.64 85,037.57 18.020,6 18.562,1 18.971,2 18.550,4 17.604,0 16,743.7 15,376.4 14,418.5 14,546.7 14,676.8 18,768.15 18,984.77 19,204.64 19,427.81 19,654.32 33.756,9 39.593,9 51.188,8 56.788,6 56.788,6 57,628.5 58,481.1 59,346.5 60,224.8 61,116.3 61,625.92 62,544.38 63,476.61 64,422.83 65,383.25 53.299,8 55.482,6 57.338,1 55.891,8 53.040,3 50,427.3 46,290.5 43,389.3 43,757.8 44,132.0 55,700.60 56,332.98 56,974.92 57,626.56 58,288.05 104,5% 93,2% 75,0% 65,8% 62,4% 58.4% 52.9% 48.8% 48.5% 48.2% 59.9% 59.7% 59.5% 59.3% 59.1% e Costs The charge Variable costs Breake ven point D breakev en revenue Breakev en rate 70 3.6 Sensitivity analysis with the assumption 3.6.1 Costs raise by 5% Table 20: Sensitivity analysis of the cost increasing by 5% (unit: Million VND) Year Revenue 10 11 12 13 14 15 51,000.00 59,500.00 76,500.00 85,000.00 85,000.00 86,275.00 87,569.10 88,882.70 90,215.90 91,569.10 92,942.68 94,336.82 95,751.87 97,188.15 98,645.97 Other revenues 10000 Investme nt capital: 69,292.00 +Fixed capital 59,292.00 + Mobile capital 10,000.00 CP annual operating 43319.75 50017.07 63234.68 69474.93 69409.1 70351.47 71273.5 72239.27 73296.09 74368.77 80815.5 82007.21 83217.02 84444.78 85691.13 amortizat ion 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 2,927.00 2,927.00 2,927.00 2,927.00 2,927.00 Interest 6,055.00 6,055.00 5,470.80 4,706.70 3,823.00 2,905.20 1,512.30 71 500 500 500 500 500 500 500 500 Taxable income -2,840.45 -1,037.77 3,328.83 6,352.67 7,302.21 8,552.63 10,317.63 11,677.74 11,954.11 12,234.63 8,700.22 8,902.61 9,107.86 9,316.37 9,527.84 -710.111 -259.4413 832.2063 1588.167 1825.55 2138.16 2579.407 2919.434 2988.53 3058.66 2175.066 2225.654 2276.96 2329.093 2381.96 -2,130.33 -778.32 2,496.62 4,764.50 5,476.65 6,414.47 7,738.22 8,758.30 8,965.58 9,175.97 6,525.17 6,676.96 6,830.89 6,987.28 7,145.88 -69,292 8,390.37 9,742.38 12,433.12 13,936.90 13,765.35 13,785.37 13,716.22 13,724.00 13,931.28 14,141.67 9,952.17 10,103.96 10,257.89 10,414.28 20,572.88 -69,292 7444.868 7670.38 8685.77 8639.142 7571.254 6727.830 5939.734 3577.691 3069.93 2634.23 1567.06 1344.85 1154.134 990.47 1653.956 -69,292 -61,847.1 -54,176.8 -45,490.9 -36,851.8 -29,280.6 -22,552.8 -16,613.1 -13,035.3 -9,965.40 -7,331.17 -5,764.11 -4,419.26 -3,265.12 -2,274.65 -620.70 CIT Profit after tax Project cash flow NPV n Cumulati ve Profit 72 When the cost raises by 5%:  NPV = -620.70  With r = 0,15, NPV = 1111.228  With r2 = 0.2 NPV = -13 888.22  IRR = 0.154 3.6.2 Revenue decreased by 5% Table 21: Sensitivity of the project while revenue fell 10% (Unit: MillionVND) 73 Year Revenue 10 11 12 13 14 15 48,450.00 56,525.00 72,675.00 80,750.00 80,750.00 81,961.25 83,190.65 84,438.57 85,705.11 86,990.65 88,295.55 89,619.98 90,964.28 92,328.74 93,713.67 Other revenues 10000 Investme nt capital: 69,292.00 + Fixed capital 59,292.00 + Mobile capital 10,000.00 CP annual operating 41256.9 47635.3 60223.5 66166.6 66103.9 67001.4 67879.5 68799.3 69805.8 70827.4 76967.1 78102.1 79254.3 80423.6 81610.6 Depreciat ion and amortizat ion 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 4,465.70 2,927.00 2,927.00 2,927.00 2,927.00 2,927.00 Interest 6,055.00 6,055.00 5,470.80 4,706.70 3,823.00 2,905.20 1,512.30 500 500 500 500 500 500 500 500 74 Taxable income CIT Profit after tax -3,327.60 -1,631.00 2,515.00 5,411.00 6,357.40 7,588.95 9,333.15 10,673.57 10,933.61 11,197.55 7,901.45 8,090.88 8,282.98 8,478.14 8,676.07 -831.9 -407.75 628.75 1352.75 1589.35 1897.2375 2333.2863 2668.3913 2733.4013 2799.3863 1975.362 2022.72 2070.744 2119.536 2169.018 -2,495.70 -1,223.25 1,886.25 4,058.25 4,768.05 5,691.71 6,999.86 8,005.17 8,200.20 8,398.16 5,926.08 6,068.16 6,212.23 6,358.61 6,507.05 Project cash flow 69,292.00 8,025.00 9,297.45 11,822.75 13,230.65 13,056.75 13,062.61 12,977.86 12,970.87 13,165.90 13,363.86 9,353.08 9,495.16 9,639.23 9,785.61 19,934.05 Cumulati ve Profit 69,292.00 7120.6744 7320.0832 8259.3669 8201.3532 7181.5057 6375.0933 5619.9911 3381.3589 2901.2688 2489.3412 1472.728 1263.82 1084.528 930.6821 1602.597 Revenue 69,292.00 62,171.33 54,851.24 46,591.88 38,390.52 31,209.02 24,833.92 19,213.93 15,832.57 12,931.30 10,441.96 -8,969.23 -7,705.41 -6,620.89 -5,690.20 -4,087.61 75 When the revenue decreases 5% :  NPV = -4087.61  With r1 = 0.1, NPV = 18978.91  With r2 = 0.15, NPV = -2456.89  IRR = 0.157 3.7 Conclusions on the feasibility of the project - Under normal conditions the investment project investment efficiency but efficiency is not high, in particular:  Net Present Value: NPV = 12421.99  Payback period: T = years months  Internal Rate of Return: IRR = 19.07%  The annual contribution to the state budget of about billion  Create jobs for about 150 direct employees - However, in the case of risks, basing on risk analysis and forecast the impact of future, we can see:  When project revenues decreased 5% ineffective projects  When project costs increased by 5% ineffective Such projects not have the financial safety We recommend that investors take a number of measures to ensure financial security and increase efficiency projects such as: - Increase the lifespan of the project activity by altering the structure of machinery and equipment in order to increase profits - Take measures to accurately forecast the price to take measures to reduce the risks of a product discount… - Implement methods to save raw materials, negotiate to reduce and stabilize price 76 3.8 CONCLUSION AND RECOMMENDATIONS The thesis completes the following meanings: Provide readers to have a practical look in fact, at the efficiency of the project investment, so that the investor has the option for good project management Investors know the progress, the stage to raise capital in order to minimize interest loans for investment projects Disseratation has been completed on the basis of research, synthesis, analysis and evaluation of the basic theoretical knowledge learned in the MBA program, other relevant documents, together with the knowledge, experience of author during working time with An Phat joint stock company and a number of other units Under the thoughtful guidance of teacher Dr Tran Van Binh, these papers have been completed, reading the essays, the readers will find useful advices to be applied in investment management activities general and mineral processing projects in particular.The author hopes that the subject can add an objective perspective for An Phat joint stock Company believing in its right investment * Recommendations drawn from the study: The author strongly recommends that to avoid the unfortunate breakdown in future, draining assets of the state and the people, with the big project licensing authority before licensing investment, the the effectiveness of the project should be reassessed before the licensing decision Hanoi, Octorber 2012 Student Nguyen Quang Hai 77 78 ... too: revenue and costs Revenue reflects completion has been achieved from the project activities (sales and service revenue) Meanwhile, the cost of that level of effort has been consumed (consumption... expected balance sheet, revenue and expenditure balance table The financial statements help investors see the financial situation of the project and it is the source of data helps to calculate the indicators... services that projects create and is expected to supply the market corresponding to each period during the project life cycle To estimate the annual revenue of the project, it need to estimate the