Analyzing the financial situation of saigon beer, alcohol joint stock company how to improve financial performance

ACADEMY OE POLICY AND DEVELOPMENT INTERNATIONAL SCHOOL OE ECONOMIC AND EINANCE -—■ X GRADUATION THESIS Financial performance Analysis: The case of Sai Gon - Dong Xuan Beer and Wine JSC M.Fin Pham M Hang Phuong Nguyên Huyen Ly 5053402015 Supervisor Student name Student no Hanoi, May 2018 Table of Contents TABLE LIST CHART LIST ACRONYM LIST ACKNO WLEDGEMENT PREEACE CHAPTER THEORITICAL BACKGROUND .7 1.1 Deíĩnition 1.2 Purposes of corporate íĩnancial analysis 1.3 Methods of ílnancial analysis .9 1.4 Eactors affecting ílnancial períồrmance .17 CHAPTER BSD’S HNANCIAL ANALYSIS .18 I Introduction 18 2.1 Holding company 18 2.2 Subsidiary company: Sai Gon-Dong Xuan Beer & Wine Joint Stock Company.,20 II BSD’s íĩnancial períồrmance 39 2.3 Purpose and use of ratio analysis: 39 2.4 Ratio analysis .42 2.5 constructing the dupont identiíy 61 2.5 SWOT 63 CHAPTER CHALLENGE OPPORTUNITIES AND SOLUTIONS 64 3.1 Domestic and international contexts 64 3.1 DRAWBACK 68 3.2 SOLUTIONS 68 3.3 Limitation of research 71 REFERENCES 72 Appendix 73 TABLE LIST Table 1.1 BSD’s Shareholders Structure Table 1.2 BSD’s main Products Table 1.3 BSD’s organizational structure of the production management apparatus Table 1.4 Organization chart of personnel accounting Table 1.5 Labor structure Table 1.6 Materials for producing goods Table 1.7 Process of reííned alcohol production Table 1.8 Processing of producing alcohol Table 1.9 Distribution of Products Table2.1 BSD’s Index Table 2.2 Short-term solvency ratios Table 2.3 Asset Utilization Ratios Table 2.4 Long term solvency ratios Table 2.5 SWOT 1Ipage CHART LIST Chart 1.1 BSD’s current ratio in years Chart 1.2 BSD’s quick ratio in years Chart 1.3 BSD’s cash ratio in years Chart 1.4 The short-term solvency ratios for BSD, BSL and THB Chart 1.5 The short-term solvency ratios for BSD in years Chart 1.6 Total asset tumover Chart 1.7 Inventory turnover Chart 1.8 Receivables tumover ratio Chart 1.9 Capital structure for BSD, BSL and MS in 2016 Chart 1.10 BSD Capital structure Chart 1.11 Total asset tumover over years Chart 1.12 Inventory tumover over years Chart 1.13 Receivable tumover over years Chart 1.14 Proíitability ratio for BSD in years Chart 1.15 Proíitability ratio for BSD and BSL in 2016 Chart 1.16 BSD’s Eaming per Share in years Chart 1.17 Share tumover in years Chart 1.18 BSD and its rival market value ratio ACRONYM LIST EBIT: Eaming before interest and taxed ROS: Retum On Sales BEP: Break-Even Point ROA: Retum On Asset ROE: Retum On Equity EPS: Eaming Per Share BSD: Sai Gon - Dong Xuan Beer Joint Stock Company BSL: Sai Gon - Song Lam Beer Joint Stock Company THB: Thanh Hoa Beer Beer Joint Stock Company ACKNOWLEDGEMENT This report would never have been possible without the consistent support and assistance of the people whom I approached during the various stages of writing this report Firstly, I would like to express my heartfelt gratitude to my academic supervisor Ms Hang Phuong Lecturer, Academy of Policy and Development, for her valuable advice, encouragement, direction, and assistance Writing this report would have been impossible without her guidance I am extremely grateful to Mr Tien Nguyên, Director, for his valuable time and expert insight into the various components of this report I would also like to thank Ms Binh Hoang, Chef Accountant, for being involved with me through my intemship process and providing a lot of relevant documents and information that were vital in producing this report She provided me with the data that was required for the completion of this report And finally, I heartily thankful to each and every person of staff of various departments and down the line in SG-DX Beer & Wine Joint Stock Company, who has directly or indirectly helped me during my intemship I would like to them know that without their support there would have a lot difference in this task PREFACE Background Nowadays, with the innovation of the market economy and the increasingly tierce competition among economic sectors, it has created difficulties and challenges for enterprises In that context, in order to be able to assert each business needs to master the situation as well as business results To achieve that, businesses always have to pay attention to the íĩnancial situation as it directly relates to business activities of enterprises and vice versa Recognizing the importance of analyzing the íinancial situation for business development, combining theoretical backgrounds leamed at the school and practical reference materials, along with help and guidance enthusiasm of the instructors, I chose the topic:” Analyzing the íinancial situation of Sai Gon - Dong Xuan Beer & Wine Joint Stock Company & How to improve íinancial efficiency” New area of challenge and new technology problems has arisen; where I have done some little work so for and where I have so for only ignorance rather than even a modicum of knowledge This essay helped to collect convenient and very signiíicant knowledge about the surgical device market in Vietnam as a whole While conducting the essay, I have leamt business market development strategies, íinancial situation analysis and evaluation And recognizing clearly the role of íinancial efficiency in the process of production and business activities and through the fact íinding in Saigon Beer, Alcohol Joint Stock Company, I decided to select the topic:” Analyzing the íínancial situation of Saigon Beer, Alcohol Joint Stock Company & How to improve íinancial períồrmance Obịective and purposes of research - Objective of research The focus is on financial analysis and find Solutions to improve financial períồrmance in Saigon Beer, Alcohol Joint Stock Company - Purpose of research Evaluate the íĩnancial situation of the company in recent years, draw the results achieved by the company, along with its shortcomings, limitations and causes From this point of view, there are practical Solutions that can be applied to the current situation of the Company to help the Company improve its tĩnancial performance Scope of research About spatial: Research on tĩnancial analysis and how to improve tĩnancial performance/ Abouttime: 2013-2016 Method of research Derived from the perception of the views, theories, quality characteristics of the tinancial situation in Saigon Beer - Liquor Joint Stock Company in particular, combined with the characteristics of the situation in the market economy In general, general social Science research methods are: statistical data collection, analysis, comparing, tables, summation of the facts, to draw some conclusions about the issue posed Structure of research Apart from the introduction and conclusion, the thesis is divided into chapters: Chapter 1: Literature Review Chapter 2: BSD’s Financial Analysis Chapter 3: Challenge Opportunities and Solutions CHAPTER THEORITICAL BACKGROUND 1.1 Defínition 1.1.1 Corporation A Corporation is a legal entity that is separate and distinct from its owners Corporations enjoy most of the rights and responsibilities that an individual possesses; that is, a Corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes It is often referred to as a "legal person." (McGraw-Hill/Irwin, 2014) 1.1.2 Corporate Finance Corporate íinance consists of the íĩnancial activities related to running a Corporation, usually with a division or department set up to oversee the íinancial activities Corporate íĩnance is primarily concemed with maximizing shareholder value through long-term and short-term íĩnancial planning and the implementation of various strategies Everything from Capital investment decisions to investment banking falls under the domain of corporate íĩnance (Welch, 2011) 1.1.3 Capital Investments One of the tasks in corporate íĩnance is to make Capital investments, and the corporate íinance department is responsible for the deployment of a company's long-term Capital The decision process of making Capital investments is mainly concemed with Capital budgeting, a key corporate íinance procedure Through Capital budgeting, a company identiíĩes Capital expenditures, estimates future cash flows from proposed Capital projects, compares planned investments with potential proceeds, and decides which projects to include in its Capital budget Making Capital investments is perhaps the most important corporate íinance task and can have serious business implications Poor Capital budgeting that causes overinvesting or under-investing could put a company in weaker íinancial condition, either because of increased financing costs or having an inadequate operating capacity (Fridson, 1991) CHAPTER CHALLENGE OPPORTUNITIES AND SOLUTIONS 3.1 Domestic and international contexts - Potential market With Vietnam's average income and increasing consumer demand, Vietnam is becoming one of the most attractive consumer markets in the world Vietnamese people are increasingly focusing on the quality of the items, setting higher standards, creating a tierce competition between domestic and foreign manufacturers With the consumption of beer in 2016 reached 3.8 billion liters, Vietnam has become the leading consumer of beer in ASEAN, ranked third in Asia On average, Vietnamese people drink about 41 liters of beer a year, making the output of Vietnam beer industry in the past 10 years always grows from to 10% per year In the past, Vietnam beer had to compete for market share with íồreign beer companies due to the opening of integration Nowadays, competition from domestic brewers is even more intense than beíồre product type This is reílected in the beer industry in the country continuously launched canned beer Products, new bottles with eye-catching design, modem, delicate and most of the quality is increasingly high with more thorough inspection of taste to satisíy customers to increase market share quickly Vietnam beer market is dominated by domestic beer brands such as Hanoi Beer Alcohol - Beverage Corporation (Habeco) and Beer - Alcohol Beverage Corporation Saigon (Sabeco) But this may change soon after the continued expansion of the breweries, as a series of "big guys" in the brewery claim to increase their production capacity to meet the needs of the market Events Anheuser-Busch InBev (Belgium) inaugurates a 50 million liters Budweiser brewery in Binh Duong Province by 2015 and has increased its capacity to 100 million liters per year recently rated as one among the coníirmed strong growth of the alcoholic beverage sector in Vietnam Determining that Vietnam is the most important market in Southeast Asia, Sapporo (Japan) owns the Sapporo beer brand, constantly expanding its íactory investment as well as strong spending on advertising brand in Vietnam Recently, Sapporo has increased the capacity of the brewery in Long An province from 40 million liters to 100 million liters per year Representative of Sabeco said that in the past five years, the level of competition beer industry in particular has never been so íierce In addition to the hundreds of domestic brewing establishments, there have been the appearance of the world's largest brewers from Germany, Belgium, Japan, and Thailand Vietnam market so they are ílexible in the advertising strategy, marketing, especially the discount for distributors, this is what the domestic brewing enterprises cannot run Although domestic brewers still dominate the domestic market by continuing to invest in, expand the national market as well as diversiíy Products to reach more customers, but to compete and keep Being firm with the íồreign beer companies, local beer companies must focus on making good branding and distribution Systems from the beginning, along with the need to ensure the quality of Products according to taste traditional Although there are advantages when large numbers of Vietnamese consumers often support domestic Products, domestic beer companies need more effort to improve the packaging, quality and price are really competitive to keep íirmly in the long run Vietnamese beer’s development Sabeco has set a target to increase domestic beer market share from 40% to 50% and increase its production from 1.7 billion liters to billion liters in the Corning time as it pushes its Products into the retail network of ThaiBev Sabeco's ambition is fully achievable because it currently has 10 regional trading companies with about 1,200 íirst-level dealers With the strong investment and business strategy inherited from ThaiBev, many believe that Sabeco will be more power to increase the position beíồre the opponent In addition, Sabeco has more than 20 brewers in the country exploit the market in the South and gradually promote the market in the Central and northem At the same time, Sabeco also has a closed production process of metal packaging Thus, owning a platform is too strong will create a little push for Sabeco gradually dominate the market of Vietnamese beer against both domestic and íồreign competitors Vietnam is becoming a notable market because of its Street food culture which has led to continuous increase in beer consumption Thereíồre, buying large quantities of domestic brewing companies for immediate entry into the market is the right strategy that íồreign corporations are aiming for, especially looking to own brewery with The existing large capacity and the widespread distribution network of domestic brewers This is the highlight that the big beer companies have landed in Vietnam in recent years Beíồre the above-mentioned reality, it is required that domestic brewing enterprises have to create their own way, in which the promotion of equipment investment, technology, quality improvement, change of labels andpackages are all Weak to increase competitiveness in the market In addition, in order for Vietnamese brewers to compete well, there should be policies to support the State in terms of Solutions and policies In addition, maintaining and developing the brand as well as prestige Companies need to be proactive, accurate and predictable in line with the changes in the market, thereby improving production and business activities and improve their competitiveness in the industry Industry 4,0 Industry 4.0 introduces what has been called the “smart factory,” in which Cyber physical Systems monitor the physical processes of the factory and make decentralized decisions The physical Systems become Internet of Things, communicating and cooperating both with each other and with humans in real time via the wireless web For a factory or System to be considered Industry 4.0, it must include: Interoperability — machines, devices, sensors and people that connect and communicate with one another Information transparency — the Systems create a Virtual copy of the physical world through sensor data in order to contextualize information Technical assistance — both the ability of the Systems to support humans in making decisions and solving problems and the ability to assist humans with tasks that are too difficult or unsafe for humans Decentralized decision-making — the ability of cyber-physical Systems to make simple decisions on their own and become as autonomous as possible In very dangerous working environments, the health and saíety of human workers could be improved dramatically Supply chains could be more readily controlled when there is data at every level of the manufacturing and delivery process Computer control could produce much more reliable and consistent productivity and output And the results for many businesses could be increased revenues, market share, and proíĩts In general, brewers in Vietnam have not put many modem machines into production and capacity is not enough to serve customer’s needs Besides, there is a systemic lack of experience and manpower to create and implement these Systems — not to mention a general reluctance from stakeholders and investors to invest heavily in new technologies This will be a big challenge for Vietnamese beer manufacturers 3.1 DRAWBACK - It can be seen that the growth rate of revenue is much higher than the growth rate of proíit targets Therefore, in addition to expanding the scale, enterprises need to consider and pay attention to the cost management, avoid the large backlog of expenses in the structure of revenue of enterprises, help businesses to invest and use Capital efficiently - The short-term solvency ratios of BSD have decreased compared to last year However, since the company has no overdue debts, it still ensures the payment of short-term debts The company also needs to pay attention and have a reasonable cash reserve policy, and manage short-term debt, monitor and compare debt to improve this ratio With the ability to pay immediately such public, it may find it difficult to pay its debts as well as hard to have the provider’s trust - ROE is not commensurate with the company's advantages and resources Specitically, the not worry about the output, inputs are imported from the parent company helps the company has the advantage of focusing on production However, the results of the company are still quite low and average 3.2 SOLUTIONS 3.2.1 Establish a specialized unit in charge of íinance of BSD - Currently, BSD only has accounting department and Chief accountant takes responsibility for tĩnancial activities - Establish intemal control, set up internal Tinancial control and deploy to all departments to ensure the production and business activities of the company in accordance with the regulations To ensure the tĩnancial control is carried out on a regular basis, timely overcome problems in the operation of BSD 3.2.2 Good relationship with commercial banks Create a credible relationship between the company and commercial banks, credit institutions and customers to create favorable conditions when making loans, reducing interest rates and take advantage is the Capital occupied Make the most of Capital raising channels through strategic shareholders and subsidiaries where company holds dominant shares 3.2.3 Improve production efficiency of the company Revise adjusting cost items, cutting down unreasonable costs - The business owner should review existing operations and develop a strategic plan with longer-term goals for the business Goals include: tĩnancial metrics and staff performance hurdles - Once the goals have been set, the business owner should meet with all staff to discuss the goals and see their opinion on processes and policies required to achieve the objectives - An implementation plan should be developed by the business owner and senior staff members that measures and monitors the policies and procedures to ensure that the outcomes are in line with the overall objectives 3.2.4 Marking efficient accounting process - Training - the first way to ensure you’re effectively managing your business accounts is to ensure that the person/people in charge are fully up to speed with both your intemal procedures and any tĩnancial software you use Develop BSD’s staff by providing training so they understand the processes and can utilise technology resourcefully - especially if they use general office staff rather than experienced accounting experts Creating a process manual for reference is also useful, especially when recruiting new employees - Batch Processing and deadlines - entering every invoice or individual piece of data as it lands on your desk is not the most efficient way to work Consolidate this work into set batches for Processing to save time, and make sure that other employees are clear on their submission deadlines - this will ensure you’re ready to create and present accurate data for reporting and tax purposes, and will help you to provide consistent output It’s worth remembering that missed HMRC deadlines come at a cost, so compliance is key - Utilise modem technology - old software and poorly maintained Systems are a real time-drain, so make sure you have a modem, fit-for-purpose accounting solution in place The leaps in accounting technology have been impressive over the last few years, and a new System that makes the process more efficient will soon pay for itself - Collaborate and integrate - make sure that all departments understand that they’re there to work together, not in seclusion Whether through an intranet System, meetings or whatever way works best for corporate, ensure that communication and a sense of collaboration is instilled in the very fabric of your business facilitating the agenda of point number two Also make sure that its software programmes are ‘talking to each other’, not just your physical staff - Outsource BSD’s accounting - from hiring a part-time bookkeeper to outsourcing to an accounting firm, or even procuring the Services of a freelance tinancial manager or director, they can often reap both time and cost savings by shipping their accounts out to an extemal supplier 3.2.5 Increasing cash In order to increase the amount of cash in a sustainable manner, the company can exploit three activities: cash from operating activities, cash from investing activities, íĩnancial expenses However, it is now of paramount concem for businesses to raise money from production 3.2.6 Using leverage In the course of operations, an enterprise may use a loan or a debt, on the one hand, to offset Capital shortages, on the other hand to hopefully increase ROEs or EPS, but also increase ílnancial risk We have: ROE = [BEP + (BEP-r)] X (1-t) BEP: Economic Retum on Assets D / E: Debt ratio on equity r: loan interest rate The above íồrmula shows that ROE depends on BEP, loan interest rate and debt to equity ratio Thereíồre, if BEP> r, the more loaned íĩrms use, the higher the retum on equity Einancial leverage is ampliíĩed by increasing ROE 3.3 Limitation of research In my research, the comparison in the analysis may not be adequate The reason is that the two companies have different Capital and asset policies or different cash flow or debt management policies leading to different indicators REFERENCES - https://www.stockbiz.vn/Stocks/BSD/Ratios.aspx https://www.mvestopedia.com/ http://s.cafef.vn/upcom/BSD-cong-ty-co-phan-bia-ruou-sai-gon-dong-xuan.chn http://www.cophieu68.vn/export.php Clyde p Stickney, p B (1998) Financỉaỉ ReportingAndStatement Anaỉysis: A Strategic Perspective South Westem Educational Publishing Fridson, M (1991) Financỉaỉ Statement Anaỉysis: A Practỉtỉonerk Guỉde WILEYFINANCE Gibson, c H (n.d.) Financiaỉ Statement Anaỉysis - Ỉ3th edition Love, A (2013) Principỉes of Investing: A Compỉete Introductỉon to Stock Ovnership, Basic Vahiation, and RiskAssessment McGraw-Hill/Irwin (2014) Fundamentals of Corporate Finance Standard Edition Welch, I (2011) Corporate Finance: An Introductỉo Appendix Balance Sheets and Income Statements of BSD over 2013, 2014, 2015 and 2016 Soìirce: vietstock.vn INCOME STATEMENT Year2014 Year2015 Year2016 Net revenue 212,975 228,730 250,070 Cost of goods sold 177,114 191,703 214,257 Gross proíit 35,861 37,027 35,813 Einancial income 2,924 2,872 2,521 Einancial expenses 477 253 2,123 Selling expenses 11,086 11,037 14,379 General and Administrative expenses 10,464 10,818 10,872 Operating proíit 16,758 17,792 10,960 74 I p a g e Other proíit 283 -847 312 Proíit beíore tax 17,041 16,944 11,272 Net proíit after tax 13,586 13,510 9,284 Proíit after tax for shareholders of the parent company 13,586 13,510 9,284 Eamings per share (VND) 4,529 4,053 BALANCE SHEET Year2014 Year2015 Year2016 Current assets 126,785 107,400 98,320 Cash and cash equivalents 24,735 2,108 43,248 Profit/Loss of investments in associates and joint ventures 75 I p a g e Short-term investments Short-term receivables 50,641 Inventories 50,276 Other current assets 1,133 Non-current assets 56,824 Fixed assets 36,741 Investment properties Long-term investments 8,531 Total assets 183,609 Liabilities 96,399 Short -term liabilities 96,399 Long-term liabilities 10,000 54,246 15,893 40,498 38,016 548 1,162 64,134 63,585 37,250 35,364 3,937 3,507 8,531 8,531 171,534 161,905 96,327 87,783 95,527 87,783 800 75 I p a g e Owner's equity 87,210 Charter Capital 30,000 Share premium Retained earnings 40,381 Minority interest Total owner's equity and liabilities 183,609 75,207 74,122 30,000 30,000 27,028 24,998 171,534 161,905 76 I p a g e ... íinding in Saigon Beer, Alcohol Joint Stock Company, I decided to select the topic:” Analyzing the íínancial situation of Saigon Beer, Alcohol Joint Stock Company & How to improve íinancial períồrmance... applied to the current situation of the Company to help the Company improve its tĩnancial performance Scope of research About spatial: Research on tĩnancial analysis and how to improve tĩnancial performance/ ... a joint stock company to now, the General Assembly of Shareholders has conducted the meeting every months, has elected to the authorities, the key positions of the Company such as the Board, the