The interview had the participations of Nguyen Hoang Dung as the researcher and

Mrs. Nguyen Thi Kim Hoa – Vice president of HaiHa Confectionery Joint-stock
Company. This interview was held in participant’s office at April 20th, 2016. It lasts
around 30 minutes long. The researcher mainly focused on HaiHa’s situation, the
current SCM strategy and the future business plan.
Can you describe briefly the current HaiHa’s business situation?
HaiHa has 50 years building and developing to be one of the biggest confectionery
companies in Vietnam. We are now holding around 40% of market share. Our
capacity is 20,000 tons/year and keeps rising. But we also have some competitor
from Thailand, Korea and the USA.
What is the customer’s reaction with your products and foreign product?
Vietnamese seem to prefer foreign products due to their eye-catching package and
also the interesting flavor, which cannot be found in Vietnam. But our products still
have the price advantage. Foreign candies always have double or even ten-fold price
in comparison to our product. And we are investing in new products, which can
compete with foreign products.
What is HaiHa’s target segment?
It is low and middle-income classes. This is our main target for 50 years
What are the confectionery product’s special characteristics?
The demand is very fluctuated. It is also a very seasonal product. The demand will
rise in the special occasion such as the new-year or the mid-autumn festival.
Does your company have any product that closes to Vietnamese traditional good?
Not yet. We are trying to apply some product, but still have some difficulties.
Do you have any evaluation for your company working flow? Is it smooth? Does it
have some difficulty?
I cannot say it is perfect, but it is working. Sometimes, we have some trouble with
balancing the demand with capacity, short in inventory. Currently, we are facing the
trouble when the high season comes. In the high season, all department working
under very high pressure, so they seem a bit off and they lack the consistency among
all departments. For example, before new-year holidays, we have to prepare
ingredients for factories. If there is any new order, 37 which is not in the fixed
schedule, the sale department sends the order to the system. But when factory wanted
to manufacture, there is not enough ingredient due to the purchasing department did
not get the message order.
 The elements supporting the stability of material supply:
During its development, SABECO has built long-term relationships with many
leading materials suppliers in the world (from Europe and Australia). Because
SABECO often signs long-term contracts with malt and hop manufacturers to ensure
a stable material supply, in the cases of supply shortages resulted by crop failures,
natural disasters and marine transportation stagnation, etc, many suppliers will still
reserve a certain amount of materials for SABECO.
I. Overview of the assignment:
1. Objectives:
Corporate financial analysis is one of the most useful method, which helps the investors
make better choice. Through this, the investors not only understand general industry of
Sabeco but also consider detailed information of asset structure, capital structure, operation
efficiency, risk and business valuation. In this assignment, we use the data from financial
statement of Sabeco between 2016 and 2018. The investor can rely on this report to decide
whether to buy or sell stocks.
2. Method used in financial analysis: Comparative method:
- Comparative standard
- Techniques:
 Horizontal analysis (trend analysis) is the technique for evaluating a series of
financial statements data over a period of time.
 Vertical analysis (common-size analysis) is the technique that expressed each
financial statements item as a percent of a base amount.
3. Documents used in financial analysis:
- Financial statements:
 Balance sheeet
 Income statement
 Cash flow statement
 Notes to financial statements
- Other information: information about enterprise’s business characteristics

I. Introduction:
- Trade name : Sai Gon Beer — Alcohol — Beverage Corporation.
- Abbreviated name : SABECO.
- Chartered capital : 6,412,811,860,000 VND.
- Address: 187 Nguyen Chi Thanh, Ward 12, District 5, Ho Chi Minh City, VietNam.
- Business Registration Certificate : No. 0300583659
- Business lines: manufacturing beer, alcohol and beverages.
- Website: http://www.sabeco.com.vn
 1. Overview:
Saigon Beer is leading brand name in Vietnam beer industry with about 140 years of
developing. Saigon Beer is recognized as National Brand and also honored to be the 351st
member in Berlin Beer Academy – one of the cradle of global beer culture.
The unique taste of Saigon Beer is the inspiring taste combined with the spirit of
Saigonese’s generosity and the rich of the Southern land, making it an in dispensable part of
everyday life. With 2 bottle of 610 ml Larue bottle and 330 ml bottle of beer in the first
takeover period. Until now, Saigon beerhas developed 8 type of products such as Saigon
Lager 450 bottle, Saigon Export Beer bottle, Saigon Special bottle, Saigon Lager 355 bottle,
333 Premium, 333 beer can, Saigon Special can, Saigon Lager can.
From a small production of 21.5 million liters in 1977, after 39 years of development, by
2016, Saigon Beer has achieved 1.59 billion liters of output, striving to achieve 1.66 billion
liters til 2017. Although the market has appeared many famous beer brands in the world,
Saigon Beer is still Vietnam's leading beer market in Vietnam, on the way to conquer the
markets such as Germany, the US, Japan, the Netherlands and so on.
2. Activity:
- The principle activites of Group are:
 To produce and sell beer, alcohol, beverages and related products including
materials and packaging materials
 To provide warehousing, logistics and transportation sevices
 To manufature machanical equipment, structural steel construction, and
mechanical equipment installation services
 To construct and provide real estates services
3. Vision & Mission:
- Vision 2015: To become a leading Corporation in the national beverage industry, ranked
in regional and international market.
- Mission:
 Develop Vietnam beverage industry to World standards.
 Appreciate Vietnamese cuisine culture.
 Advance the life quality through the provision of high quality, safe and healthy
beverage products.
 Bring the essential benefits to shareholders, customers, partners, employees and
society.

II. Strategy analysis

1. External factor
Environmental forces which include social, economic, technology, legal and political has
a significant effect on the development of company. Acknowledge these factors will help
business recognize the strength as well as the weakness that can occur during the time running
a business.
2. Social factor
Population and demographic such as age, gender, ethnicity, income and occupation affect
significantly on consumption of alcohol beverage especially beer industry. Cheer for Vietnam
,Vietnam represent a prime market for beer producers. Unlike other countries, the Vietnam
have a tradition of drinking beer and express a strong loyalty to their local brands, especially
Saigon beer. In addition, Vietnam is the country which has the large population. In 2014,
Vietnam has a total population of 85 million. In there, the rate of young people is high, 85
percentage of Vietnam's population are Boomers which have high demand of beer
consumption. Moreover, Vietnamese is affect much on traditional, they not only drink beer
at the Tet holiday, celebration or party but also drink beer in the usual days, so the beer
industry in Vietnam has more opportunity to develop. However, because of the popular
foreign products in Vietnam, for the high society whose income is high, they prefer foreign
products to domestic products. Therefore, it is difficult for the domestic business compete
with foreign brands.
3. Economic factor
In 2007, Vietnam joined WTO that will make Vietnam become well known and gain high
appreciate. Beside, the pressure of integration affects to the economic policies, and state
management and make operation more fluent. In addition, the international trade is more
easier because of the elimination of unreasonable barriers which restrict the growth of
businesses. Moreover, joining WTO contributes to the clean apparatus State and improve the
implementation of the economic policy in Vietnam efficiently to make the system transparent
policies. These factors will facilitate the attraction of foreign investment in the sector.
Thanks to efforts for steady growth and effective investment strategies, SABECO is now
in top three of beers maker in whole southeast Asia and is the 21st largest beer producer in
whole world.
In addition, Vietnam is the country which has high total gross domestic product around
8% in recent years. Although it experienced global recession in 2008 and 2009, it is forecasted
increase the grow rate in next 10 years. Moreover, according to Vietnam general department,
from 2013 the growth rate in Vietnam will continuously increase with fast speed. It is seem
as a opportunity for SABECO to develop its business. Whereas, Vietnam has high inflation
rate, it leads to the cost of production is high so that it causes many difficulties for SABECO
company and whole beer industry.
4. Technology factor.
The development of science - technology has created the modern machinery, materials
richer and higher quality. For the SABECO company, it uses the HACCP- hazard analysis
critical control point system- to indentify the poison in nourishment. The company has
successfully implemented quality management system under ISO 9001 – 2008, ISO 1400
standards at all branches across the country.
 5. Political and legal
To protect the domestic businesses, the Vietnam's government has applies some policies
and legal which will positive or negative effect on beer producers. Encouraging foreign
investment policy which will bring more condition for the foreign company invest in beer
industry. Foreign Investment Law and Law on Promotion of Domestic Investment create
favorable condition for all economic sectors invest in beer industry. Decree No. 40/2008 /
governmental decree provides for the manufacture and sales of alcohol, which provide the
basis standard for improving and controlling product quality and strengthen control on
investments, limiting the widespread development of wine production facility. Therefore, the
no named beer producers whose production cannot reach the basic standards cannot survive
in the market. However, according to Circular No. 12/1999 provides for advertising,
promotion, place Alcohol business, Regulation on promotional advertising costs are 10% of
sales which cause difficult for SABECO promote their product. In addition, the policies on
preventing of alcohol abuse and that government may apply in the future, accompanied by
strengthening propaganda and education on the harmful effects of alcohol which can reduce
the demand of beer.
6. Environmental factor
Vietnam is a area which have tropical climate and abundant mineral water source. This is
really a source of precious raw materials, creating favorable conditions for the development
of beer industry. Moreover, with hot and dry climate, the demand for beer in Vietnam is huge.
However, the natural conditions of Vietnam was not favorable for the development of a
number of raw materials. Especially in the brewing industry, the main raw material barley
and Houblon but both types are not suitable for the climatic conditions Vietnam.

III. Financial Statement Analysis Of Saigon Beer-Alcohol-Beverage

Corporation (Sabeco)
1. Asset tructure analysis:
a. Trend analysis – Horizontal analysis:
 ASSETS 2018 2017 2016 2018/2017 2017/2016

(Milion VND) (%) (Milion VND) (%)

2,971,981
A- CURRENT ASSETS 14,690,168 13,686,327 10,714,346 1,003,841 7.33% 27.74%
823,774
Cash and cash equivalents 4,467,392 4,268,599 3,444,825 198,793 4.66% 23.91%
3,384,480
Short-term financial investments 7,544,188 6,558,801 3,174,321 985,387 15.02% 106.62%
-374,807
Accounts receivable – short-term 765,631 715,326 1,090,133 50,305 7.03% -34.38%
-122,682
Inventories 1,813,754 2,003,535 2,126,217 -189,781 -9.47% -5.77%
-738,783
Other current assets 99,203 140,066 878,849 -40,863 -29.17% -84.06%
-151,157
B- LONG-TERM ASSETS 7,688,358 8,327,362 8,478,519 -639,004 -7.67% -1.78%
2,614
Accounts receivable – long-term 5,861 20,094 17,480 -14,233 -70.83% 14.95%
-454,494
Fixed assets 4,567,091 5,008,100 5,462,594 -441,009 -8.81% -8.32%
1,177
Investment property 54,568 67,658 66,481 -13,090 -19.35% 1.77%
213,687
Accounts receivable – long-term. 2,154,232 2,152,328 1,938,641 1,904 0.09% 11.02%
Long-term financial investments
2,820,824
TOTAL ASSETS 22,378,526 22,013,689 19,192,865 364,837 1.66% 14.70%
 According the table, the quantity of assets resourece in 2018 increased 364,837
miliion VND which compared to the quantity of assets resource in 2017 is
22,013,689. This figures is corresponding to the percentage of increase is 1.66%.
From 2016 to 2017, this items rose 2,820,824 million VND and it is corresponding to
14.70%.
Accounts receivable short-term item is significantly reduced between 2016 to 2017,
espeacially 34.38%. After the period, in 2018, this figures increased 7.03% which
compared to the quantity of accounts receivable short-term is 1,090,133 in 2016. The
fluctuation demonstrated that the company didn’t perform administration effectiveness
and debt collection. In addition, the board of director may also apply a credit sale
policy in order to intrigue the customers.
From 2016 to 2017, the proportion of inventory decreased 5.77% and also reduced
9.47% between 2017 and 2018. This revealed that the company has a sales policy
effectiveness and the quantity of inventory is not stagnant too much. However, with
this tendency, the stagnat of inventory may not sufficent to provide for customers when
market demand is quicky in high level. The company may lose the customers and the
competitors can get the market share.
Fixed assets item decreased gradually over the period time, the percentage of fixed
assets in 2017 compared to its figures in 2016 reduced 8.32%. This demonstrated that
fixed assets resource was majority old property and the company did not highlight in
investment and reconstruction of fixed assets. It may affect the capacity production and
the quality of product. In the next period time, the board of director should boost more
investment in fixed assets so as to increase the effectiveness of production activities and
develop stability.
b. Common-size analysis – Vertical analysis:
ITEMS
2018 2017 2016 2018/2017 2017/2016

A- CURRENT ASSETS 65.68% 62.17% 55.82% 3.51% 6.35%

Cash and cash equivalents
19.97% 19.39% 17.95% 0.58% 1.44%
Short-term financial
investments 33.73% 29.79% 16.54% 3.94% 13.26%
Accounts receivable-short-
term 3.42% 3.25% 5.68% 0.17% -2.43%
Inventories 8.11% 9.10% 11.08% -0.99% -1.98%
Other current assets 0.44% 0.64% 4.58% -0.19% -3.94%
B- LONG-TERM
ASSETS 34.32% 37.83% 44.18% -3.51% -6.35%
Accounts receivable – long-
term 0.03% 0.09% 0.09% -0.07% 0.00%
 Fixed assets 20.42% 22.75% 28.46% -2.33% -5.71%
Investment property 0.24% 0.31% 0.35% -0.06% -0.04%
Long-term financial
investments 9.47% 9.78% 10.10% -0.30% -0.32%
TOTAL ASSETS 100.00% 100.00% 100.00%
Overall, the company's total assets did not change much over the years, they increase
by approximately 3 billion from 2016 to 2018. And we can see from the table, the
proportion of short-term assets is slight higher than the percentage of long-term assets.
The chart also shows that short-term assets only ranged from 55.82% to 65.68% and
long-term assets ranged from 44.18% to 34.32%. In particular, the cash and cash
equivalents had a slight fluctuation. From 2016 to 2017, the percentage of cash and cash
equivalents increased between 17.95% and 19.39%. It shows that this figures was quite
stable so as to ensure the solency to pay due debts.
Accounts receivable short-term decreased by 2.43% from 2016 to 2017, while its
index increased by 0.17 between 2017 to 2018. Besides, there is a large fluctuation in
other assets. Specifically, other assets changed nearly 4% between 2016 to 2017.
Additionally, inventories only changed slightly about 2% which may be caused by
production policies or production technology changes.
2. Resource structure analysis:
a. Trend analysis – Horizontal analysis:
 2018/2017 2017/2016

RESOURSES 2018 2017 2016

LIABILITY 6,254,837 7593163 6,759,685 -1,338,326 -17.63% 833,478 12.33%

Current liabilities 5,925,697 7401585 6,473,889 -1,475,888 -19.94% 927,696 14.33%

Long-term liabilities 329,140 191,578 285,797 137,562 71.80% -94,219 -32.97%

EQUITY 16,111,906 14,420,526 12,433,180 1,691,380 11.73% 1,987,346 15.98%

Owner’s equity 6,412,812 6,412,812 6,412,812 0 0.00% 0 0.00%

Retained earnings 7,473,778 5,823,904 3,852,925 1,649,874 28.33% 1,970,979 51.16%

TOTAL RESOURSES 22,366,743 22,013,689 19,192,865 353,054 1.60% 2,820,824 14.70%

 According the table, from 2016 to 2018, the resources had the same fluctuation with the
assets resource. The figures of this item increased both in 2017 and 2018, respectively 14.70%
and 1.60%. From 2016 to 2017, the current liabilities item decreased 19.94% and increased
14,33% between 2017 and 2018. This tendecy revealed the company has paid short-term
debts and reduced the pressure of payment. In 2017, long-term liabilities item decreased
94,219 million VND corresponding to 32.97% whlie this figures increased 136,726 million
VND in 2018. It is a significant increasing with 71,80%. The fluctuation in this period time
seem seasonable because the company had attention to expand production and business.
Therefore, the short-term debt reduction has shown the assurance of balancing the payment
policy in the short term as well as being suitable for long-term investment that must be
financed from long-term capital.
The equity item has a gradually increasing over the period time. The figures of this item
rose in 2017 and 2018, respectively 15.98% and 11.73%. It is corresponding to 1,987,346
million VND in 2017 and 1,691,380 million VND in 2018. Owner’s equity didn’t change
from 2016 to 2018 and it demonstrated that the increase of equity is majority due to retained
earnings increasing between 2016 and 2018. The retained earnings item has a significant
rising in both 2017 and 2018, respectively 51.16% and 28.33%. This tendency guaranteed
company’s liquidity in order to respond the unexpected situations as well as suitable for the
expanding production and business.
b. Common-size analysis – Vertical analysis:
Items 2018/2017 2017/2016
2018 2017 2016
(0) Total 22,366,743 22,013,689 19,192,866 353,054 2,820,823
resources
(1) Current 14,690,168 13,686,327 10,714,346 1,003,841 2,971,981
assets
(2) Long term 7,676,575 8,327,362 8,478,519 -650,787 -151,157
assets
(3) Current 5,925,697 7,401,585 6,473,889 -1,475,888 927,696
liabilities
(4) Long term 329,140 191,578 285,797 137,562 -94,219
liabilities
(5) Equity 16,111,906 14,420,526 12,433,180 1,691,380 1,987,346
(6) 5,925,697 7,401,585 6,473,889 -1,475,888 927,696
Temporary
resources =(3)
(7)Permanent 16,441,046 14,612,104 12,718,977 1,828,942 1,893,127
recources =(4)
+(5)
Debt ratio= 27.96% 34.49% 35.22% -6.53% -0.73%
[(3) +(4)]/(0)
Equity Ratio 72.04% 65.51% 64.78% 6.53% 0.73%
= (5)/(0)
 Debt/Equity 38.82% 52.66% 54.37% -13.83% -1.71%
ratio =
[(3)+(4)]/(5)
Short-term 26.49% 33.62% 33.73% -7.13% -0.11%
resources
ratio=(6)/(0)
Long-term 73.51% 66.38% 66.27% 7.13% 0.11%
resources
ratio=(7)/(0)
Equity/Long- 98.00% 98.69% 97.75% -0.69% 0.94%
term resources
ratio=(5)/(7)
The equity ratio accounted for about 64.78% in 2016 and increased throughout the
period time. In 2017 and 2018, the equity ratio is respectively 65,51% and 72,04%. It
reveals the company has a high financial autonomy and had not to borrowing more money
to fund for the business operation.
The larger the index, the greater the ownership capital of the company, the company is in
the healthy financial situation that will attract and create trust for the investors of the
company. The greater number the more self-control in the company's finances, the more
active of the company is in its finances, especially when it is needed. Sabeco has a high index
so its high autonomy.
The short-term resources ratio is about one third of the company's total resources. The
index ranged from 26.49% to 33.73%. This index is gradually decreasing over the years, in
2017 this index is lower 0.11% than in previous years and higher 7.13% than in 2018. The
permanent resources accounted for mainly proportion of capital structure, about 2/3. From
2016 to 2017, the long-term resources ratio was quite remain and increased 7.13% in 2018.
It demonstrated that In 2016, Sabeco focused on investing in modernizing technology
including machinery, equipment, devices and expanding capacity of some key factories such
as Sai Gon Nguyen Chi Thanh Beer Factory and Sai Gon Cu Chi Beer Factory. In addition,
Sabeco made a new investment of Wrap Around machine and deployed the conversion of
packaging from the RSC to the Wrap Around container to minimize packaging costs and
enhance the beauty of the image and packaging quality with Sabeco beer products.
3. Long-term financial balance:

ITEMS 2018 2017 2016 2018/2017 2017/2016

(Million (%) (Million (%)

VND) VND)
 Current assets
(1) 14,690,168 13,686,327 10,714,346
1,003,841 7.33 2,971,981 27.74

Current
7,401,585 6,473,889
liabilities (2) 5,925,697 -1,475,888 -19.94 927,696 14.33

Net working
capital (1)-(2) 8,764,471 6,284,742 4,240,457 2,479,729 39.46 2,044,285 48.21

The net working capital were positive and increasing considerably throughout the period.
The index increased by 48.21% in 2017 and 39.46% in 2018 which indicates that the
permanent equity is enough to fund for the non-current assets and a few for current assets,
the company can reach the balance in the long-term funding. Positive Net working capital
can also be estimated that the company have the ability to grow quickly. With its substantial
net working capital due to large investment in current assets , it may have enough resources
to rapidly scale up the business. The incease of long-term debt and owner’s equity
demonstrates the higher of financial autonomy and stimulates the effectiveness of financial
leverage.
4. Short-term financial balance:
Items 2018 2017 2016

Inventories (1) 1,813,754 2,003,535 2,126,217

Short-term account
765,631 715,326 1,090,133
receivables (2)

Short-term liabilities (3) 5,925,697 7,401,585 6,473,889

Short-term borrowings (4) 594,243 722,904 1,042,310

Short-term liabilities
(excluding interest-bearing
short-term liabilities) (5) = (3) - (4) 5,331,454 6,678,681 5,431,579

Net working capital required (6)

= (1) + (2) - (5) -2,752,069 -3,959,820 -2,215,229

Net working capital (7) 8,764,471 6,284,742 4,240,457

Net Fund (8) = (7) - (6) 11,516,540 10,244,562 6,455,686

 Net working capital required had a fluctuation on the period time and the figures was
nagative so it shows a quite good signal and the company's debts are sufficient to finance
inventory and receivables.
In 2017, the net working capital required decreased 1,744,591 million VND because the
items of inventory and short-term receivable declined while short-term liabilities (excluding
interest-bearing short-term liabilities) rose. In 2018, this index increased 1,207,751 million
VND because short-term liabilities (excluding interest-bearing short-term liabilities) had a
dramtic declining 1,347,227 million VND.
Net fund was positive and had a tedency of increasing in the period time. It demonstrated
that the company's financial balance was at a safe level because the company does not need
to borrow more money to offset the Net working capital required. The index increased
dramatically from 2016 to 2017 because the Net working capital rose while Net working
capital required was negative and declined.
In short, Net working capital increased and not offset for the shortage of Net working
capital required so that the Net fund increased.
5. The business performance analysis:
a. Analysis of assets use efficiency:
2016 2017 2018

Total sales and revenues (1) 31,356,350 34,805,639 36,660,641

Cost of good sold (2) 22,299,655 25,327,873 27,864,414

VAT output (10%) (3) 3,056,868 3,419,339 3,594,855

Average total assets (4) 14,989,542 20,604,219 22,190,216

Average historical cost of 9,082,376 9,265,221 9,420,644

fixed asset (5)

Average inventories (6) 2,024,312 2,068,949 1,908,645

Average customer accounts 589,141 380,057 213,140

receivable (7)
Net sales (8) 30,568,678 34,193,391 35,948,553
2017/2016 2018/2017
Items 2016 2017 2018
Assets use efficiency =
2.09 1.69 1.65 -0.4 -19.14% -0.04 -2.37%
(1)/(4)
Inventories turnover
11.02 12.2 14.6 1.22 11.07% 2.36 19.28%
(9) = (2)/(6)
 Average days of
Inventory turnover = 32.67 29.4 24.66 -3.26 -9.98% -4.75 -16.15%
360/(9) (days)
Customer accounts
receivable turnover 57.08 99 185.5 41.89 73.39% 86.56 87.46%
(10)=[(8) + (3)]/(7)
Average days of
Customer Account
6.31 3.64 1.94 -2.67 -42.31% -1.7 -46.70%
Receivable = 360/(10)
(days)
Fixed assets use
3.45 3.76 3.89 0.31 8.99% 0.13 3.46%
efficiency = (1)/(5)
 Assets use efficiency:
In the period time, the assets use efficiency reduced significantly from 2.09 to 1.69,
between 2016 and 2017. It means that one asset could be generated 2.09 net sales and revenue,
after that, the index down 0.4. In 2018, the figures continues having a slight decline 1.65,
meaning that for each asset, this index earned 1.65 net revenue.
 Inventories turnover:
The inventories turnover increased dramtically over years, from 11.02 to 14.60, while
fixed assets use efficiency has a dramatic increasing between 3.45 and 3.89. It means that
each VND of fixed asset cost, net sales and revenue is 3.45 VND in 2016 and this index
increased fastly in 2017 and 2018. The figures peaked at 3.89 which means that fixed asset
price of one VND can generate 3.89 net sales and revenue.
 Customer receivables turnover:
The company showed a high customer receivables turnover ratio and it may suggest that a
company operates on a cash basis. From 2016 to 2018, the index has a dramatic incresing
from 57.08 to 185.53. It may also indicate that the company’s collection of customer accounts
receivable is efficient, and that the company has a high proportion of quality customers that
pay off their debts quickly. A high ratio can also suggest that the company has a conservative
policy regarding its extension of credit. Since the receivables turnover ratio measures a
business’ ability to efficiently collect its receivables, it only makes sense that a higher ratio
would be more favorable. Higher ratios mean that companies are collecting their receivables
more frequently throughout the year. Higher efficiency is favorable from a cash flow
standpoint as well. If company can collect cash from customers sooner, it will be able to use
that cash to pay bills and other obligations sooner. Accounts receivable turnover also is and
indication of the quality of credit sales and receivables. It shows that credit sales are more
likely to be collected than a company with a lower ratio. Since accounts receivable are often
posted as collateral for loans, quality of receivables is important.
Customer account receivable periods were 6.31, 3.64 and 1.94 in 2016, 2017, 2018
respectively. This mean that the average customer takes about 7, 4 and 2 days to pay his or
her bills. If company had a 15-day policy for when payments should be made, then the
average accounts receivable turnover shows that the average customer makes payments early.
 Comparison between Sabeco and Habeco in 2018:
Items SABECO HABECO Difference
Assets turnover 1.65 0.96 0.69
Inventories turnover 14.6 7.8 6.8
Average days of Inventory
24.66 46.15 -21.49
turnover
Customer accounts receivable
185.53 26.13 159.40
turnover
Customer Account Receivable
1.94 13.8 -11.84
period
Fixed assets turnover 3.89 2.67 1.22
The table above shows that the asset use efficiency in Sabeco is bettter than Habeco. In
Sabeco, one asset could be generated 1.65 net sales while the figure in Habeco is 0.96 net
sales. The inventories turnover of Sabeco is approximately two times higher than Habeco. It
means that by comparison to business in the same industry, Sabeco sales fast and inventories
is not stagnant.
The customer accounts receivable of Sabeco is seven times this index of Habeco. Board of
director of Sabeco has a good management policy of receivables so as to finance working
capital in production. In addition, fixed asset turnover of Sabeco is also higher than this
figures in Habeco.
In short, from analysing of assets use efficiency, Sabeco has an efficiency of using assets that
is higher than its in Habeco.
b. Analysis of operating profitability:
2016 2017 2018

Total sales and revenues (1) 31,356,350 34,805,639 36,660,641

Average total assets (2) 14,989,542 20,604,219 22,190,216

Total operating expenses (3) 3,452,818 3,747,087 3,643,797

Interest expense (4) 68,665 25,806 74,635

Profit before tax (5) 5,707,398 6,077,092 5,390,440

Profit after tax (6) 4,517,344 4,948,600 4,402,750

Average Owner’s Equity (7) 12,261,453 13,358,231 15,266,216

2017/2016 2018/2017
Items 2016 2017 2018
 ROS = (5)/(1) * 100% 18.20% 17.46% 14.70%
-0.74% -2.76%
ROA = (5)/(2) * 100% 38.08% 29.49% 24.29% -8.59% -5.2%
RE = [(4) + (5)]/(2) * 100% 38.53% 29.62% 24.63%
-8.91% -4.99%
ROE = (6) / (7) * 100% 36.84% 37.05% 28.84% 0.21% -8.21%
Market price per share 193,020 245,856 250,800
Earning per share 6,194 6,915 6,190
P/E

 Return on sales:
From 2016 and 2017, return on sales (ROS) decreased slighly, while in 2018 the index had
a dramatically dropping from 17.46% to 14.70%. In 2018, the index shows that 14.7 VND of
pre-tax profit will generate 100 VND of sales and revenue.
 Return on assets:
From 2016 to 2017, return on assets (ROA) is dramatically decreasing from 38.08% to
29.49%. It means that 100 VND of investment assets will generate 38.08 VND and 29.49
VND of pre-tax profit in 2016 and 2017 respectively. In 2018, the figures continues dropping
by 5.2% so that 100 VND of investment assets just generate only 24.29 VND of pre-tax profit.
RE eliminates the impact of funding policies, most clearly demonstrating the efficiency of
asset utilization without using debt - equity. RE is also compared with interest rates to
determine whether a company should borrow money from a bank or raise equity from its
owners. If RE> I (interest rate): increase debt, if RE <I: increase equity.
This table shows that the rate of return on assets has decreased significantly from 38.53%
to 29.62% between 2016 and 2017. From 2017 to 2018, the rate of return on assets has
declined by 4.99%.
 Return on owner’s equity:
The table shows that the return on owner’s equity equity increased sharply from 36.84%
to 37,05% in 2015-2016 and between 2016 and 2017, there was a dramatic decline of 8.21%
in the return on equity. It indicate refered that 100 VND of the owner’s equity would genetare
28.84 VND of profit after tax in 2018.
 Comparison between Sabeco and Habeco in 2018:
Items unit Sabeco Habeco
ROS = (5)/(1) * 100% % 14.70 5.32
ROA = (5)/(2) * 100% % 24.29 5.30
 ROE = (6) / (7) * 100% % 28.84 10.56
Earning per share VND 6,190 2153
P/E Time 40.52 37.63

The financial index of Sabeco is higher than the figures of Habeco. In 2018, 100 VND of
the owner’s equity would genetare 28.84 VND of profit after tax while 100 VND of the
owner’s equity of Habeco would genetare only 10.56 VND of profit after tax. The reason is
the assets turnover and ROA of Habeco is lower than its in Sabeco. Therefore, Habeco’s
operating profitability is not as well as this figures in Sabeco.
Baseding on the history data and the figures in 2018, P/E of both company is higher than
20 and demonstrate the potential for development of both Sabeco and Habeco. However, the
investor willing to pay 40.52 VND in oder to buy 1 VND Sabeco’s profit while in Habeco,
the investor pay only 37.63 VND to gian the same profit.
6. Risk analysis:
a. Analyzing short-term liquidity risk:
 Current liabilities coverage ratio:
2018/201
Items 2016 2017 2018 2017/2016
7
10,714,34 1,003,84
1.Current asset 13,686,327 14,690,168 2,971,981
6 1
2.Cash and cash
3,444,825 4,268,599 4,467,392 823,774 198,793
equivalent
3.Inventories 2,126,217 2,003,535 1,813,754 -122,682 -189,781
4.Other current
878,849 140,066 99,203 -738,783 -40,863
asset
-
5.Short-term
6,473,889 7,401,585 5,925,697 927,696 1,475,88
liability
8
6.Net cash flow
719,373 5,067,819 4,542,583 4,348,446 -525,236
from operations
8.Current ratio =
1.66 1.85 2.48 0.19 0.63
(1)/(5)
9.Quick ratio = [(1)
1.19 1.56 2.16 0.37 0.60
– (3) – (4)]/(5)
10.Cash ratio =
0.53 0.58 0.75 0.04 0.18
(2)/(5)
11 Cash flow ratio
0.11 0.68 0.77 0.57 0.08
= (6)/(5)
The table decribes the curent liabilities coverage ratios in SABECO between 2016 and
2018. In general, all current liabilities coverage ratios fluctuated wildly during this survey
period.
 As can be seen from the table, current ratio growing from 1.66 to 2.48 in the 2016-2018
period. Nonetheless, this ratio was more than 1 (1 VND of current liabilities is guaranteed by
more 1 VND of current assets) leading to the assurance for resolvency in short term. Beer
production in 2016 and 2017 is high growth, but still only meet of domestic beer demand
and continue to be large trade deficit. As a result, Sabeco increased its inventory of beer,
Sabeco's short-term assets increased sharply because it stockpiled inventories to meet rising
consumer demand for beer during the year. In general, this index of Sabeco is always high,
so the current debt payment capacity of Sabeco is high and secured for creditors. This index
is good for the development of the company.
Turning to the quick ratio, increasing substantially from 1.19 to 2.16 in the 2016-2018
period. This is demonstrate that Sabeco is committed to maintaining this index as high as
possible, which is a good indication of the Group's financial health.
For 3 years, Cash ratio of Sabeco is always less than 1, only 0.53 to 0.75 the 2017-2018
period because the characteristics of the beer industry is requires enterprises to invest much
in fixed assets so cash and cash equivalents is the lowest funds which can only pay for
essential needs, not enough to cover short-term debt. In general, this index has reached the
average level of the beer industry, which is still conducive to the development of the Group.
 Working capital turnovers:

Items 2016 2017 2018

1. Sales 30,896,052 34,438,171 36,043,019

2.VAT output (10%) 3,089,605 3,443,817 3,604,301

3.COGS 22,301,143 25,327,872 27,864,413

4. Inventories 2,126,217 2,003,535 1,813,754

5.Average inventories 2,024,312 2,068,949 1,908,645

6.Average A/R 1,119,290 921,693 753,457

7. Inventory turnover 11.02 12.24 14.6

= (3)/(5)

8. A/R turnover 30.36 41.1 52.62

= [(1)+(2)]/(6)

9. Days Inventory Held 33.12 29.82 25.00

= 365 / (7)

10. Days A/R Outstanding 12.02 8.88 6.94

 = 365/ (8)

The table decribes the working capital turnover in Sabeco between 2016 and 2018.As can
be seen from table, there is an increase in inventory turnover, from 11.02 times in 2016 to
14.6 times in 2018. It means that the business sold more products which results in the faster
speed of inventories rotation. Therefore, it helps company reduce expenses that are associated
with unsold products like storage costs. Besides, the days of inventory turnover gradually
declined over 3 years, reached 52 days in 2018 . This is a positive trend for the business,
which proves that company is quickly converting their inventory into sales.
For Accounts receivable turnover, there was a markedly increase by 30.36 to 52.62
between 2016 and 2018. This figure indicates that the collection of receivables was efficient.
Shows that the capital appropriation of enterprises is reduced, credit policies are tightened.
In addition, Days of accounts receivable turnover decreased significantly in 2018 compared
to 2016. In details, Days of accounts receivable turnover in 2018 was 6 days. It means that
the business was able to collect receivables averagely in 6 days that year.
b. Analyzing long-term solvency risk:
Items 31/12/2016 31/12/2017 31/12/2018
1.Total liabilities 6,759,685 7,593,163 6,254,837
2. Owner’s equity 12,433,180 14,420,526 16,111,906

3.Total assets = (1)+(2) 19,192,865 22,013,689 22,366,743

4.Long-term liability 285,797 191,578 329,140

5. Long-term resource = (2)+(4) 12,718,977 14,612,104 16,441,046
6. Profit before tax 27,374,569 30,665,278 32,324,587
7. Interest expense 68,665 25,806 74,635
8. EBIT = (6) + (7)
27,443,234 30,691,084 32,399,222

9. Liabilities to assets ratio = (1)/(3) 0.34 0.28

0.35
10. Liabilities to shareholder’s
0.53 0.39
Debt equity ratio = (1)/(2) 0.54
ratio 11. Long-term debt to long–term
0.02 0.01 0.02
capital ratio = (4)/(5)
12. Long-term debt to
0.02 0.01 0.02
shareholder’s equity ratio = (4)/(2)
13. Interest coverage ratio = (8)/(7) 399.67 1189.30 434.10

The table decribes the debt ratios and the interest coverage ratio in Sabeco between 2016
and 2018. Before increasing substantially to in the 2016-2017 period, this ratio fell
considerably to in the 2017-2018 period. Especially, liabilities to assets ratio decreased
markedly from 1.18 to 0.98 during the 2017-2018 period. Because there was a large payment
for suppliers during this period. Others ratios also tended to decrease during this survey.
Capital structure of company was better.
After increasing dramatically to 1189.30, interest coverage ratio decreased by 434.10 from
2017 to 2018. In general, the long-term resolvency risk of this company was low, in addition
the likelihood of payment interest expense was good.
c. Analyzing bankruptcy risk:
Items 2016 2017 2018

1. Net working capital 4,240,457 6,284,742 8,764,471

2. Retained earnings 3,852,925 5,823,904 7,473,778

3. EBIT 27,443,234 30,691,084 32,399,222

4. Sales 30,896,052 34,438,171 36,043,019

5. Total assets 19,192,865 22,013,689 22,378,526

6. Owner's equity 6,412,812 6,412,812 6,412,812

7. Book value of totaliabilities 6,759,685 7,593,163 6,254,837

T1 = (1)/(5) 0.22 0.29 0.39

T2 = (2)/(5) 0.20 0.26 0.33

T3 = (3)/(5) 1.43 1.39 1.45

T4 = (6)/(7) 0.95 0.84 1.03

T5 = (4)/(5) 1.61 1.56 1.61

Z-score = 1.2XT1 + 1.4XT2 + 7.44 7.38 7.94

3.3XT3 + 0.6XT4 + 1.0XT5

Alman Zscore is used to predict the likelihood of a company bankruptcy . From the table
, we can see that in 2016 to 2018 , Z-score was more than 2,99, so the business is predicted
to be in "non-bankrupt sector".This is demonstrate that Sabeco is operation good and strong
growth.
7. Bussiness valuation:
Dividends are expected to grow at a rate of 7,5% percent for the next five years. Following
that, the dividends are expected to grow at a rate of 6% for five years.
Use the SML method to caculate Re with Risk-free rate Rf = 5.1%, Market-risk premium
= 5% and Beta = 0.51
 Re = 5.1 + 0.51 x 5 = 7.65
Year 1 Year 2 Year 3 Year 4 Year 5
Total dividends to common
3206.0 3446.5 3704.9 3982.8 4281.5
equity
Present value factors 0.929 0.863 0.802 0.745 0.692
Present value of dividends 2978.2 2974.0 2969.9 2965.7 2961.6
Sum of present value of
14849.4
dividends,Year 1 through Year 5
(Unit: billion VND)
Computing Dividend in Year 6: D6 = D5 x 5% = 4281.5 x 5% = 4284.1 billion VND
Continuing Value = D6/ (Re-g2) = 259,641.4 billion VND
Present value of continuing value = 259,641.4 x 1/(1 + 7.65%)5 = 179598.9 billion VND
Total present value of
common equity
(1)Present value of dividends through
14849.4
Year + 5

(2)Present value of common value 179598.9

(3)Present value of common equity=(1)+(2) 194448.3

(4)Adjust for midyear discounting (multiply by

1.038
1 + (Re/2)

Total present value ofcommon equity=(3)x(4) 201886.0

Divide by number of share outstanding 641,281,186

Value pershare = 318,417 VND

Current share price = 267,500 VND
Percent difference = 17%
This value estimate is roughly 17% higher than the market price of 267,500 VND at the end
of 2018.
IV. Conclusion and recommendation:
According the report, we can see the financial autonomy and fund stability of Sabeco
is high. Sabeco's financial capacity is also good, which is reflected in indicators of liquidity
analysis. In addition, operating efficiency is quite good and better than other competitors.
Some financial index such as ROA, ROE decreases in the period time, however, those index
is still higher than its in Habeco and competitors in this industry. As a result, Sabeco reachs
the asset use efficiency and the company does not have a signal of bankruptcy, especially Z-
core is always higher than 7.0.
The P/E of Sabeco is high and increases in the period time so that demonstrate the
company has a strong growth. In addition, we also consider the company's strategies that are
focused on implementing investment projects as well as human resources to assess the growth
of the company. We value the company using the dividend discount method: the price per
share is 313.417 VND while the present value of share in the end of year 2018 is 267.500
VND. Therefore, the price per share is higher than 25% of the present value.
From the perspective of the beer industry: Growth rate of the Beer industry is about
5%, the ability to join the industry is not high. The potential of the Beer industry is huge
because the consumer market in Vietnam in particular and Southeast Asia in general is
sufficient large, espeacially, Vietnam is the third largest beer consumer in Asia.
In conclusion, we recommend investors should hold Sabeco’s shares and receive
benefits in the future.