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Vinamilk

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I.

Introduction about Vinamilk

Vinamilk Dairy Company was established in 1976. This is one of the first
companies listed on the Vietnam stock exchange. Vinamilk was voted as one of the 100
strongest brands in Vietnam, holding the leading market share and achieving a growth
rate of 20-25%/year. Vinamilk's product portfolio has key products as liquid milk and
powdered milk; products with added value such as condensed milk, edible yogurt and
drinking yogurt, ice cream and cheese. Vinamilk provides the market with a diverse
portfolio of products to consumers.

The company currently has over 200 dairy products with main product groups
including condensed milk, fresh milk - drinking yogurt, powdered milk - nutritional
powder, frozen product groups, soft drinks... respectively accounting for about 37 - 90%
market share nationwide, depending on each product group. With the orientation of
developing into a food corporation, Vinamilk is expanding its business into other fields
such as coffee (Moment), beer (joint venture with SABMiller). In addition, Vinamilk also
increased its scale through financial investment in a number of companies in the industry.
Vinamilk's highlight is its stable and steady business operations over the past many years.

With the orientation of developing into a food corporation, Vinamilk is expanding its
business into other fields such as coffee (Moment) and beer (a joint venture with
SABMiller). In addition, Vinamilk also increased its scale through financial investments
in a number of companies in the industry. Vinamilk's highlight is its stable and steady
business operations over the past many years.
The company's goal is to maximize shareholder value and pursue a business development
strategy based on the following key factors:
 Consolidate, build, and develop a system of extremely strong brands that best meet
the needs and consumer psychology of Vietnamese consumers.
 Develop the Vinamilk brand into the most scientifically reputable and trustworthy
nutritional brand for all Vietnamese people through the strategy of applying
scientific research to the specific nutritional needs of Vietnamese people to
develop the most optimal product lines for Vietnamese consumers.
 Investing in expanding production and business through the market of beverage
products that are good for consumers' health through the key brand VFresh to meet
the trend.
 Consumption trends are rapidly increasing for natural beverage products that are
good for human health.
 Strengthen the distribution system and quality to gain more market share in
markets where Vinamilk has a low market share, especially in rural areas and
small urban areas;
 Exploiting the strength and reputation of the Vinamilk brand as a nutritional
brand with "the most scientific and trustworthy reputation of Vietnamese people"
to dominate at least 35% of the market share of the powdered milk market within
the next 2 years;
 Comprehensively develop a portfolio of milk and dairy products to target a large
consumer base and expand into value-added products with high selling prices to
increase the overall profit margins of the entire company;
 Continue to improve supply system management capacity;
 Continue to expand and develop a proactive, strong, and effective distribution
system.
 Develop raw material sources to ensure a stable, high-quality supply of fresh milk
at competitive and reliable prices.

II. Financial statement analysis


1. Common-size analysis
Viet Nam Dairy Products Joint Stock Company (VNM)
Income statement

The table indicates that Vinamilk's financial performance in 2023 looks promising
when compared to 2022 in a number of important areas. Year-over-year, net sales
climbed by VND 4,734 billion, or 10% more. This implies that Vinamilk's ability to
generate income has increased. It's possible that Vinamilk has grown into new areas or
taken a bigger share of the Vietnamese dairy market. Sales growth can have been
achieved by successfully introducing new items or expanding into untapped markets. It's
possible that strategic marketing campaigns increased customer demand for Vinamilk's
goods and brand awareness. Additionally, gross profit increased by 10% to VND 661
billion. Vinamilk may be maintaining or even increasing its profit margins based on this
expansion and increased net sales.

EBIT increases gradually between 2022 (17,46%) and 2023 (18%) due to rising
costs and rising market share. Compared to 2022, when interest costs grew by 5%
annually, they have doubled in 2023. In comparison to prior years, EBIT dropped
dramatically due to higher interest expenses. But in 2023, Vinamilk stops managing and
maximizes business management expenses, compared to 2022. The cost of business
management in 2023 has not fallen that much from 2022.

Balance sheet
1.1. Assets
Throughout the years, short-term assets have remained consistent, making up
68%. Short-term investments make up 38% of all short-term assets, the biggest
percentage. Then, representing 12% of total assets, there are receivables. Over time,
inventory has consistently made up 11% of the company's total assets. Over the years,
long-term assets have a tendency to decline, making up over 30% of total assets. Ninety-
five percent of long-term assets are made up of fixed assets, which are primarily from
stores and the headquarters. Fixed assets will hardly change in 2022 and 2023.

1.2. Liabilities and Equity


From VND 15,666,145,881,135 in 2022 to VND 17.647.627.338.990 in 2023,
Vinamilk's total liabilities grew. This is a noteworthy gain in total liabilities of VND
17,389,848,253,819, or around 12% more than the same period last year. Short-term
liabilities in 2023 were 17,138,689,974,862 VND, which seems higher than the VND
15,308,423,081,524,00 number from 2022. But without the context of total current assets,
the difference is negligible, making it challenging to identify a clear trend. From 2023 to
2022, there was a notable 42% growth in long-term liabilities. This significant increase
suggests that Vinamilk's long-term debt obligations have grown significantly.
2. Ratio

2.1. Liquidity ratio


Indicate a firm’s ability to pay short-term obligations with short-term assets without
endangering the firm.
2.1.1. Current ratio
The business can still make payments even with a high level of short-term debt in
2022 and 2023, as indicated by the liquidity ratio of 2,06 (2022) and 2,10 (2023).
2.1.2. Quick ratio
Over the most recent one-year cycle, the quick ratio varies irregularly between
1,69 (2022) and 1,73 (2023). Not much has changed in the ratio over time. There is a
significant danger to the firm if inventory is not handled.

2.2. Efficiency ratio


Efficiency ratios indicate a firm’s ability to use assets to produce sales. These are
also called asset turnover ratios.
2.2.1. Inventory turnover
The inventory turnover for the business is 6,51 in 2022 and 5,85 in 2023. The
company's rate of inventory control has declined over time, indicating poor inventory
management. Sales rose despite an increase in the cost of goods sold, but the control rate
wasn't that great.
2.2.2. Accounts Receivable Turnover
A crucial ratio for assessing sales performance is accounts receivable turnover.
With 9,79, the company had excellent receivables management in 2022; but, in 2023, this
number dropped not much to just 9,24. Even overall revenue has grown significantly over
time, in 2022 the pace of growth and decline is not uniform. Companies struggle to keep
track of their receivables.
2.2.3. Day’s sales in inventory
There were 62 inventory turnover days in 2023 compared to 56 in 2022. This
demonstrates that companies are able to import items at a cheaper cost than their rivals
and in huge volumes. It is not beneficial, though, as the asset value will drop, if
Vinamilk's milk products have an excessively high number of asset turnover days.
2.2.4. Day’s sales in receivable
The company's turnover of accounts receivable in 2022 was good, with the days of
37, but in 2023 it quadrupled to 39. When turnover was slow, the company struggled to
manage it and could not accelerate the cycle of reinvestment.
2.2.5. Total assets turnover
The asset turnover of the company has been excellent over the years, averaging
1,24 and 1,15, respectively. This demonstrates that the business has increased
productivity and is more successful at making money out of its assets.

2.3. Leverage ratio


Leverage ratios Indicate whether a firm is using the appropriate amount of debt
financing. In general, higher ratios indicate a greater potential return and greater
bankruptcy risk.
2.3.1. Total debt ratio
Businesses will effectively manage their debt ratio in 2022. It is 0,32 in 2022 and
0.34 in 2023. This indicates that debt is used to finance the majority of the company's
assets. A steadily declining debt ratio is a hint that enterprises should manage their risks.
The rise in short-term debt throughout time indicates that companies are adept at securing
loans to compete in the purchase and sale of goods.
2.3.2. Debt – to – equity ratio
For the corporation, this ratio is still rather high. In other words, the business is
financing its operations with more borrowing than stock. The firm can face extremely
risky when the ratio has consistently been higher than 1.

2.4. Profitability ratio


Profitability ratios Indicate whether a firm is generating adequate profit from its
assets. In general, higher ratios indicate better performance.
2.4.1. Gross profit margin
The gross profit margin of 40% in 2022 and 2023 is 41%, not increasing very
much. This indicates that the business either sold more things or bought goods at steadily
reduced rates and then sold them for greater money..
2.4.2. Operating profit margin and Net profit margin
In the past two years, the operating profit margin and net profit margin have
exhibited an upward trend, which may account for the company's steady transition from
debt to equity in its asset structure and its high turnover ratio. Over time, the profit rate
stays constant, but revenue rises, indicating that Vinamilk's market share is growing and
that a significant amount of items are being sold..
2.4.3. EBIT return on assets (EROA)
The EBIT return on assets progressively declines in 2022 and 2023. This indicates
that assets are expanding more quickly than EBIT. Operating profitability for the
company will either stagnate or rise more slowly if cash flow is not adjusted.
2.4.4. ROA
The ability to use assets effectively is what ROA is all about. The declining
percentage over time indicates that the company's asset utilization rate is subpar. This is a
challenge for enterprises, demonstrating that the efficiency of asset usage is subpar..
2.4.5. ROE
Based on the capital contributions made by shareholders, ROE is profitable. The
company's return on equity (ROE) raised from 4% in 2022 to 5% in 2023, indicating that
there is uncertainty about the company's capacity to turn a profit. The company's actions
were limited to rotating capital, raising the proportion of investment capital, and paying
down debt. In summary, it is unclear how profitable the company is.

III. Conclution

According to a financial study conducted for the years 2022–2023, Vinamilk is


a business that has excellent liquidity, a strong financial position, and the potential to
grow over the next several years. Investor criteria are met by the company's growth in
revenue and profit. In good enough financial standing to grant credit. There is
virtually little chance that the business won't be able to pay back its loan.

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