MEMBERS OF GROUP

No NAME Task
Researching data + share price
1 Lê Thị Hải Anh
analysis
Researching data + Assets and
2 Nguyễn Hà Trang
Capital structure
Researching data + Excutive
3 Vũ Phương Thảo
Summary + Dupont analysis
Researching data + Overview +
4 Nguyễn Thùy Dương
Editing word
5 Phạm Thùy Dung Researching data

Table of Contents
1
I/ EXECUTIVE SUMMARY……………………………………………….……. [3]
II/ VINAMILK COMPANY: OVERVIEW…………………………………..… [4]
1. Development history…………………………………………………….. [4]
2. Products………………………………………………………….............. [5]
3. Recent performance……………………………………………………... [5]
a) In domestic market…………………………………………………….… [5]
b) In foregin market………………………………………………………… [5]
c) Financial Stetaments……………………………………………………... [6]
d) Competitors………………………………………………………..……... [11]
III/ VINAMILK COMPANY’S PERFORMACE………………………...……. [12]
1. Dupont analysis………………………………………………………… [12]
a) Basic Dupont Equation………………………………………………...… [13]
b) Extend Dupont Equation………………………………………………… [15]
c) Comparison with two competitors………………………………………. [16]
2. Firm’s share analysis……………………………………………………. [17]
IV/ ASSETS STRUCTURE AND CAPITAL STRUCTURE……………….…. [18]
1. Assets structure………………………………………………………… [18]
a) Short - term Assets………………………………………………………… [18]
b) Long - term Assets………………………………………………………… [19]
2. Capital structure…………………………………………………..…… [20]
 I/ EXECUTIVE SUMMARY
  This report provides an anlysis and evaluation of the current and recent performances of
the Vinamilk, focusing on the profitability, asset utilization and financial leverage of the
company by using DuPont ratios Analysis as well as calculating ROS,ROA,ROE, total assets
turnover,… Moreover, the firm’s asset structure, capital structure and leverage policy would
be evaluated too applied horizontal and vertical analyses with ratios such as:debt ratio, equity
ratio cash ratio,…and so on. All the data can be found in the Vinamilk’s Balane Sheet and
Income statement in 2017 and 2018. Almost the data analysed show that the company has
been in the best condition comparing to the rest of peers and is top 1 in the Vietnamese dairy
product industry. In particular, the company has the outstanding owners’s equity in the asset
structure.The report also finds the prospects of the company in its current position are quite
positive and it is promised to have many developing potentials in the future. However, to get
the better business result through years, the recommendations to Vinamilk include:
* Adjusting the administration expenses
* Adjusting the more approriate capital structure
* Improving the management in all sections
To sum up, the report brings a clear view into the financial situation of Vinamilk, probably
these are the reasons explaining the always among highest positions of Vinamilk in domestic
food&drinks industry.

II/ VINAMILK COMPANY: OVERVIEW

1. Development history

* Vietnam Dairy Products Joint Stock

Company (Vinamilk) was established on
August 20, 1976 through the unity of three
milk brands in Southern Vietnam,
including Dielac, Truong Tho and Thong
Nhat. It was renamed United Enterprises of
Milk Coffee Cookies and Candies in 1978.
It became the Vietnam Dairy Company,
formally established in 1993. In 2003,
following its IPO to the Ho Chi Minh Stock
Exchange, the company legally changed its
name to Vietnam Dairy Products Joint
Stock Company (Vinamilk).
* Throughout its history, Vinamilk has
demonstrated consistent development with its
outstanding achievements, such as:

1. 1st postion in Top 50 Vietnamese best
listed companies 2013 (Forbes 2013).
3. Win the Global Food Industry Award
(by the International Union of Food
Science and Technology 2014).
2. Products
2. Top 10 Vietnamese high quality product (From
1995 to present Association of Vietnamese High
Quality Products)
4. GLOBAL 2000: The world’s largest public
companies (Forbes 2017).
 The principal activities of the Vinamilk are to produce and distribute condensed milk, powdered milk,
fresh milk, soya milk, yogurts, ice-cream, cheese, fruit juice, coffee and other products derived from milk.

3. Recent performance
a) In domestic market
Market share of Vietnam dairy industry
(2018) Currently, the whole dairy industry of Vinamilk
continues to maintain its market leadership position
nationwide at 55% market share. Vinamilk's fresh milk
products topped 100% in both volume and sales. Vinamilk
also holds more than 80% market share of yoghurt, 80%
market share of condensed milk, 40% market share in
powdered milk industry.
Vinamilk's sales system spread throughout the country
through traditional sales channels (including 208
Vinamilk Friesland Campina
Moc Chau milk (GTNFood) TH Milk distributors with a retail system of up to 250,000 points), a
Others modern channel (including most supermarkets and
convenient shops. Vinamilk's "Vietnam Dairy Dream"
chain has increased by nearly 450 points and is connected to an online shopping system at
www.giacmosuaviet.com.vn which is another bright spot for Vinamilk in 2018.
b) In foreign market

Since 1997, total export turnover of Vinamilk has reached about USD 2 billion (equivalent to about
VND 45,520 billion). So far, Vinamilk has been exported to 43 countries and territories, including
countries that require very high quality in nutritional products such as Japan, Canada, USA, Australia,
Thailand... from international dairy factories.
c) Financial statement
* The consolidated report on December 31st, 2017 of Vinamilk company
* The consolidated report on December 31st, 2018 of Vinamilk company
 d) Competitors

Although holding a large share of domestic milk market share, Vinamilk still faces fierce competition
from companies. One of them is GNT Food with Moc Chau Milk brand and Hanoi Milk Joint Stock
Company with Izzi milk brand which is loved by many children.
III/ THE VINAMILK COMPANY’S PERFORMACE
1. Dupont analysis

Return on
Equity
(ROE)

Return on
Assets Equity
multiplier
(ROA)

Profit margin Total Assets

Total Assets Total Equitiy
(ROS) turnover

Net Profit Net Sales Net Sales Total Assets

Dupont analysis breaks ROE into its constituent components to determine which of these
components is most responsible for changes is ROE. According to Dupont Analysis, ROE is
affected by three things:
1. Operating efficiency, which is measured by profit margin (ROS)
2. Asset use efficiency, which is measured by total asset turnover
 3. Financial leverage, which is measured by the equity multiplier.
Therefore, Dupont Analysis is represented in mathematical form by the following calculations:
a) Basic Dupont Equation
Net profit after taxes Net profit after taxes Net sales
ROA= = ×
Total assets Net sales Total assets

ROA=Net profit margin× Total assets turnover

Profit margin Total assets ROA

Year
(ROS) (%) turnover (times) (%)
2017 20,1 1,59 32,04
2018 19,4 1,46 28,3
Table 1

The profitability on the asset of Vinamilk is According to table 1, from 2017-2018,

affected by the profitability on the sales and ROA of the firm decreased from 32,04% to
the overall effectiveness of the firm in 28,3%, about 3,74%. This decrease in
utilizing its assets to generate sales ROA comes from the changes in two
indicators: ROS and total assets turnover.

Firstly, to analyze the effect of ROS to ROA, we evaluate the essential expenses generating the
sales of Vinamilk.
 Cost of good Selling Administratio
Year Net sales (%)
sold (%) expense (%) n expense (%)
2017 53,17 23,3 2,15 100
2018 52,5 22,6 2,48 100

Table 2: The percentage of expenses on sales

According to table 2, two in three types of expenses which are COGS and Selling expense in
2018 were better than those in 2017. They were lower through years showing that the company
saved the cost of purchasing materials, ordering cost, delivering cost,…and so on that are related
to COGS and the selling expense. However, the increase in the Administration Expense, from
2,15% to 2,48% just made the ROS go down slightly, about 0,7% due to the two all decline in
COGS and Selling expense. Clearly, the Administration Expense management in 2018 was not
effective yet as those in last year which affected not so well to ROS ratio.
Next, with the total assets turnover, from table 1, the total assets turnover declined from 1,59
times to 1,46 times. According to the 2017 and 2018 Balance Sheets of Vinamilk, the total value
of assets was increasing through years. It proved that in 2018, the company used its total assets
investment ineffectively.
In general, the decrease in both two indicators: ROS and total assets turnover made the ROA
of the company fell about 4% too, which was a significant changes affecting the operating
 efficiency of the company. The reasons of this decrease probably were the ineffective
management of the Vinamilk in assets and expenses, which reduced the operating efficiency and
assets use effciency of the company.

b) Extend Dupont Equation

Net profit after taxes Net profit after taxes Net sales Total assets
ROE= = × ×
Total equity Net sales Total assets Total equity

ROE = Net profit margin× Total assets turnover × Equity multiplier

Equity multiplier
Year ROA (%) ROE (%)
(times)
2017 32,04 1,38 44,34
2018 28,3 1,43 40,66
Table 3
The profitability on the shareholders’ equity Firstly, as the analysis in the Basic Dupont
was affected by the profitability on the assets Equation, ROA dropped almost 4% from 2017
and the financial leverage to 2018 because the ineffective management of
According to the table 3, from 2017-2018, Administration Expense and total assets made
ROE dropped from 44,34% to 40,66%, about the growth rate of net profit lower than the
3,68%. The decrease in ROE was caused by growth rate of total assets. The ROS’s decline
ROA and equity multiplier of the company. was the main reason making ROE fall through
years.
Secondly, with the equity multiplier, However, the change of company’s
from 2017 to 2018, the equity multiplier equity multiplier was just between 1,3
rose from 1,38 times to 1,43 times -a and 1,4 times which was generally low.
slight increase. It meant that Vinamilk It was actually a good signal that
was using less equity to finance the Vinamilk has low financial leverage.
assets although the total equity was The company used quite less debt to
increasing through years. The company finance the assets but used mainly the
was using more debt to finance the shareholders’ equity.
assets and made the financial leverage
work more effectively.
In conclusion, the decrease in ROE of the Vinamilk from 2017-2018 came from the
significant decline in ROA, which was caused by the ineffective investment and working capital
decisions. The financing decision of the company was better than last year showing at the increase
of equity multiplier. However, Vinamilk is the company that focused on financing assets by
equity, so the financing decisions have not worked as expectation.

c) Comparison with two competitors

Vinamilk GTN Food Hanoi Milk

ROA (%) 28,3 16 24
ROE (%) 32,03 20 64

Table 4: The ROA, ROE index of Vinamilk and two competitors in 2018 (Source: VN Index)

Comparing with two rest of peers, Vinamilk had the highest ROA in 2018 (28,3%) which meant
that Vinamilk turned assets into profit most efficiently of three companies. While comparing on
ROE, Vinamilk with 32,03% return on equity was lower than 64% return on equity of
 Hanoimilk.It was a sign that Vinamilk might not turn its owners’s capital into profit as effectively
as its peer.
However, based on the basic accounting equation: Asset = Liability + Equity, it can be found
easily that the more outstanding debt, the greater gap between assets and owner’s equity. That
would make the greater gap between ROA and ROE too. Hanoimilk is an example of this case
when its ROE and ROA was 64% and 24% showing that company was facing the high riskiness.
On the other hand, Vinamilk had not the too big gap between ROA and ROE, which was a hint of
safe level and quite effective
Elements
Year: 2017 Year: 2018 resources management of the
(VND)
company.
(1) Net
9.937.500.000.00
profit per 10.204.000.000.000 Maintaining the high ROE and
0
share ROA evenly proved that Vinamilk
has done good performances in
(2) Stock making the financial decisions.
1.563.729.347 1.926.345.609
quantity
The higher the EPS, the better because
the amount you receive per share will be
(3) EPS 5.296 5.295 higher.

2. Firm’s share price analysis

EPS: (Earning per sale) indicate how much
profit the investor receives per share they hold.
 Elements (VND) Year: 2017 Year: 2018

(4) Stock’s
200.000 120.000
market price

(3) = (1) / (2) (5) Revenue per

share 5296 5295
After analyzing, we can see that EPS of 2017
was higher than EPS of 2018.
In 2017 stock were less than 2018 but the EPS
(6) P/E 37,76 22,66
higher, so that using capital in 2017 was more
efficient than 2018.

(6) = (4) / (5)

P/E: (Pricing per earning) measuring the related
The P/E in 2017 was bigger than 2018 so that the
between market price (P) and earning per share forecast of investor about company’s growth will
(EPS). higher in the future.
Reflecting the percentage revenue paid for
shareholder. P/E is higher, the company’s
growth is better.

IV/ ASSETS STRUCTURE AND CAPITAL STRUCTURE

 According to the balance sheet, Vinamilk’s assets and capital grew by 7,8% from 34.667 VND
billion in 2017 to 37.366 VND billion in 2018.
1. Assets structure

a) Short - term Assets

Short - term Assets structure ratio 2017 2018

1. Current Assets/ Total Assets 58,58 55,02
2. Cash/ Current Assets 4,47 7,41
3. Current Financial Investments/ Current Assets 52,01 42,19
4. Current Receivables/ Current Assets 22,61 22,57
5. Inventories/ Current Assets 19,8 26,88
6. Others/ Current Assets 0,84 0,96

Table 5: Short - term Assets structure of Vinamilk company (unit: %)

* The current assets: Accounted for more than a half of total assets and it decreased minimally from
58,58% in 2017 to 56,02% in 2018.
* Cash: There was a slight increase in the amount of money hold by the firm from 4,74% to 7,41%.
However, this proportion of cash was too low, which can lead to inability to pay debts.
* Current Financial Investments: Accounted for a large proportion of Total Current Assets, but it
decreased by 10% between 2017 and 2018.
* Accounts Receivables: Constituted about 22,5% and about remained unchanged during the year.
The company maintained a good policy on receivables management, therefore it could keep long –
term business relationship with customers. Moreover, if the receivables form customers are too much,
the firm might be get some certain risks.
* Inventories: Made up 19,8% of Current Assets in 2017 and went up by 7% during one year. There
was no significant low turnover of inventory in the recent years.

b) Long – term Assets

Long – term Assets structure ratio 2017 2018

1. Long – term Assets/ Total Assets 41,42 44,98
2. Fixed Assets/ Total Assets 30,6 35,77
3. Fixed Assets/ Long – term Assets 73,88 79,62

Table 6: Long - term Assets structure of Vinamilk company (unit: %)

Long – term Assets: Accounted for about 44% of total assets. Including in Long – term Assets are
Fixed Assets, which comprised the largest percentage of Long – term Assets with approximately
79%. Fixed Assets also made up about 30% of Total Assets and climbed to 35% during the 2017 –
2018 period.
Conclusion: Vinamilk company has been using an effective investment policy.
2. Capital structure

Capital structure ratio 2017 2018

1. Debt to equity ratio 45,21 42,32
2. Debt ratio 31,14 29,69
3. Equity ratio 68,86 70,31

Table 7: Capital structure of Vinamilk company (unit: %)

There was a slight increase in the debt ratio, but generally fluctuated around 30% of Vinamilk’s
assets in the year. The equity ratio made up the remaining proportion of 70% in the 2017 -2018
period. Overall, the Debt ratio of the firm was not too high and the company primarily used the
owner’s equity to finance assets. This means that the firm had strong potential in sources of equity
capital.
Conclusion: The firm has been using leverage policy effectively.