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FOREIGN TRADE UNIVERSITYFACULTY OF BUSINESS ENGLISH--------***--------FINANCIAL REPORTMajor: Business EnglishFINANCIAL STATEMENT AND MANAGEMENTANALYSIS OF VINHOMES JOINT STOCK COMPANYOVER THE PERIOD OF 2018 TO 2020Group : 1Group Name : ICE BEARSClass : TAN410 (1/2021).Intake : KInstructor : Le Thanh...

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FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ENGLISH --------***--------

FINANCIAL REPORT Major: Business English FINANCIAL STATEMENT AND MANAGEMENT ANALYSIS OF VINHOMES JOINT STOCK COMPANY OVER THE PERIOD OF 2018 TO 2020

Group

:1

Group Name

: ICE BEARS

Class

: TAN410 (1.1/2021).3

Intake

: K57

Instructor

: Le Thanh Thuy, M.A.

Hanoi, October 2021

GROUP MEMBERS

1. Bá Thị Vân Anh

1817710004

2. Nguyễn Lê Phương Anh

1817710007

3. Phạm Thị Nguyệt

1817710121

4. Lường Thị Quỳnh Linh

1817710084

5. Nguyễn Thị Hồng Hằng

1817710054

6. Nguyễn Thị Huyền

1817710073

7. Ka Như Quỳnh

1817710173

8. Mai Duy Linh

1817710085

TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES INTRODUCTION .....................................................................................................1 CHAPTER 1: GENERAL INFORMATION ABOUT VINHOMES JOINT STOCK COMPANY .................................................................................................2 1.1.

An introduction to Vinhomes JSC .............................................................2

1.2.

Shares and Shareholders information .......................................................4

1.3.

Organizational structure: ...........................................................................6

1.4.

Products and Services .................................................................................8

CHAPTER 2: MARKET ANALYSIS .....................................................................9 2.1. The market in general ....................................................................................9 2.1.1. Demand for real estate ..............................................................................9 2.1.2. Supply for real estate .................................................................................9 2.1.3. Market growth rate ..................................................................................10 2.2. The industry ..................................................................................................10 2.2.1 Strengths ...................................................................................................10 2.2.2 Weaknesses ...............................................................................................11 2.2.3 Opportunities ............................................................................................11 2.2.4 Threats ......................................................................................................12 CHAPTER 3: CONSOLIDATED FINANCIAL STATEMENT .......................13 CHAPTER 4: TREND ANALYSIS AND INDUSTRY COMPARISION.........14 CHAPTER 5: DEVELOPMENT STRATEGY ...................................................23 5.1. Finding new directions of profit optimization ...........................................23 5.2. Improving financial ratios ...........................................................................23 CONCLUSION ........................................................................................................25 REFERENCES APPENDIXES

LIST OF FIGURES Figure 1.1: Stock movement chart in 2020 of Vinhomes Figure 1.2: Vinhomes JSC’s organizational structure Figure 4.1: Vinhomes JSC Three-years Trend in ROE Figure 4.2. Vinhomes JSC Three-years Trend in ROA Figure 4.3: Vinhomes JSC Three-years Trend in Current Ratio Figure 4.4: Vinhomes JSC Three-years Trend in Quick Ratio Figure 4.5: Vinhomes JSC Three-years Trend in Debt to Total Asset Ratio Figure 4.6: Vinhomes JSC Three-years Trend in Debt to Total Equity Ratio Figure 4.7: Vinhomes JSC Three-years Trend in Inventory Turnover Ratio Figure 4.8: Vinhomes JSC Three-years Trend in Total Asset Turnover Ratio

LIST OF TABLES Table 4.1: Three-year Profitability Ratio Analysis for Vinhomes JSC Table 4.2: Three-year Liquidity Ratio Analysis for Vinhomes JSC Table 4.3: Three-year Debt Ratio Analysis for Vinhomes JSC Table 4.4: Three-year Asset Activity Ratio Analysis for Vinhomes JSC

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INTRODUCTION Real estate plays an important role in Vietnam’s economy through its spread to other development of economic industries such as construction, manufacturing, tourism, finance & banking, construction materials, interior, and exterior furniture. After a slowdown stage (2011-2012), Vietnam’s real estate market has flourished in recent years, with continued economic growth leading to a surge in property prices. The country’s real estate market proved resilient during the pandemic, with both the industrial and residential sectors leading the pack. On to Vietnam’s housing market, which has also seen unprecedented growth in recent years. While demand from foreign investors is one of the factors pushing the market, the majority of the growth comes from Vietnamese citizens (in any new apartment development, foreigners are only allowed to own up to 30% of the total units). As such, the country’s economic progress coupled with a rapidly expanding middle class is the primary demand driver for the expanding housing market, with few signs pointing to a slowdown anytime soon. Vinhomes Joint Stock Company (Vinhomes JSC) is a dominant Vietnambased company operating in the residential real estate industry. The company is involved in the construction and management of residential, office, and commercial buildings. Its products include houses, apartments, villas, as well as offices for sale, lease, and for rent. Vinhomes has ranked the No 1 in Vietnam’s residential market with a 46% market share, according to the Vinhomes JSC 1Q2019 financial report. This entire report has done based on the financial analysis of Vinhomes JSC to understand its financial position throughout the year 2018 to 2020. The fundamental purpose of this report is to gain some proficient knowledge about ratio analysis through which how the company is performing within the industry could be understood. Data has been mainly collected through Vinhomes JSC’s data source. Concerning entire factors, this report is mainly supported by recommendations, which could be helpful for stakeholders of this company.

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CHAPTER 1: GENERAL INFORMATION ABOUT VINHOMES JOINT STOCK COMPANY 1.1.

An introduction to Vinhomes JSC Vinhomes is the No. 1 real estate development, trading, and management

company in Vietnam, founded in 2002 and headquartered in Hanoi, Vietnam. Founded as a subsidiary of Vingroup, the company spun off in 2018 and 10% of shares were sold in an IPO. After the first day of trading, the company was already the second-largest public company in Vietnam, behind parent company Vingroup. Vinhomes develops property in 40 cities across Vietnam and owns 16,000 hectares of land in Vietnam, according to Vinhomes annual report 2020. 1.1.1. History In 2002, Vincom Joint-stock Company was established, formerly Vingroup Joint-stock Company, the parent company of Vinhomes. In 2008, BIDV-PP Urban Joint-stock Company was established – the precursor of Vinhomes – with an initial registered charter capital of VND 300 billion. In 2009, its name was changed to Hanoi Southern City Development Jointstock Company. In 2011, it became a publicly listed company and attained the Decision on accepting registration for stock trading at the Hanoi Stock Exchange (UPCOM), with the stock code NHN Commenced the construction of Vinhomes Times City – a luxury urban complex project (Hanoi) with more than 12,000 apartments. In 2013, Vinhomes Royal City (Hanoi) – a high-end urban complex with more than 5,000 apartments was put into operation. In 2014, Vinhomes Riverside (Hanoi) – a 183,5-hectare luxury urban project – was put into operation. In 2015, Vinhomes Times City was put into operation, adopting Singaporean eco-friendly architectural style.

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In 2018, its name was changed to Vinhomes Joint-stock Company. The company introduced the world-class mega-city model and opened Vinhomes Ocean Park and Vinhomes Smart City for sale. In 2019, it re-planned product lines into branded lines including Vinhomes Diamond, Vinhomes Ruby, Vinhomes Sapphire, and upgraded VinCity projects into Vinhomes-branded smart projects. In 2020, the company launched the online real estate trading floor Vinhomes Online and established Vinhomes Industrial Park Development Investment Joint Stock Company. 1.1.2. Mission By 2021, Vinhomes’s biggest vision is to be a world-class enterprise. Specifically, they are striving to become the No.1 real estate development and management company in Vietnam, recognized for its superior scale, execution speed, and service quality, leading the market to sustainable growth. 1.1.3. Vision To meet its vision, Vinhomes has particular missions along the way. It is to pioneer an ideal living experience in Vietnam’s urban locations, featuring professionally planned residential complexes in harmony with nature, integrated facilities and a green environment, together forming a new lifestyle for the Vietnamese people. Vinhomes also nurtures its communities and develops a modern, lively and gracious environment, so that its residents will enjoy an excellent quality of life. 1.1.4. Core Values Vinhomes strives to uphold 6 core values: 

CREDIBILITY: Vinhomes vigorously protects its Credibility as one would protect one’s honor. The company is fully prepared to execute its plan and spares no effort in meeting its goal.

4 

INTEGRITY: As a foundation of our company, Integrity demands that we remain in full compliance with all applicable laws and ethical standards. It follows that we must always put the interests of our customers first.



CREATIVITY: Vinhomes’s management believes that Creativity is what enables the company to deliver its philosophy, which is expressed as “Dare To Think, Dare To Do”. This philosophy encourages all employees to learn new skills.



SPEED: The company considers Speed of execution and efficiency in operation to be critical to our success. Among the practices that follow our emphasis on speed are. “Fast To Decide, Fast To Invest, Fast To Deploy, Fast To Sell, Fast To Change and Fast To Adapt.”



QUALITY: The place of quality in Vinhomes’s operations is expressed as “Best in People, Best in Products and Services, Best in Quality of Life, and Best in Commitment to Society.”



COMPASSION: The company respects the interests of all its stakeholders. Employees are Vinhomes’s most important resource. The company will continue to promote harmony among the interests of all stakeholders by emphasizing fairness, integrity, unity, and strength.

1.2.

Shares and Shareholders information

1.2.1. Shares information Vinhomes Joint-stock company was officially listed on Ho Chi Minh Stock Exchange (HOSE) on 17 May, 2018. Vinhomes stock (VHM) is a stock in the real estate industry group with the largest market capitalization in Vietnam's stock market and is on the VN30 list of leading stocks in terms of market capitalization and liquidity. Market capitalization on December 31, 2020, is 294,412. The number of shares redeemed on December 31, 2020, is 60,000,000. The number of shares outstanding on December 31, 2020, is 3,289,513,918. The number of shares freely transferable is 3,289,513,918. The number of shares restricted from being transferred is 0.

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Figure 1.1 is the stock movement chart in 2020 of Vinhomes:

Figure 1.1: Stock movement chart in 2020 of Vinhomes (source: Vinhomes’s annual report) In the first quarter of 2020, Vietnam's stock market witnessed the VN-Index continuously decreasing due to the heavy influence of the global Covid-19 epidemic. Thanks to the timely and effective measures of the Government, Vietnam has succeeded in controlling the epidemic. In 2020, Vietnam is one of the countries with the lowest number of infections and deaths from Covid-19 in the world and also one of the rare economies with positive GDP growth. This is positively reflected through the recovery of the stock market and Vinhomes shares from the second quarter onwards. As of December 31, 2020, VHM's share price reached VND 89,500/share, up 63% and 6% respectively compared to the end of March and December 31, 2019.

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1.2.2. Shareholders’ information As of 2020, ownership of insiders are listed below: 

Management Board: + Mrs. Nguyen Dieu Linh – President. + Mr. Pham Nhat Vuong – Member. + Mrs. Pham Thieu Hoa – Member of MB cum General Director. + Mrs. Cao Thi Ha An – Member. + Mr. Tran Kien Cuong – Member. + Mr. Varun Kapur – Independent Member. + Mr. Mueen Uddeen – Independent Member. + Mr. Hoang D. Quan – Independent Member. + Mrs. Ashish Jaiprakash Shastry – Member. + Mrs. Pham Thieu Hoa – General Director. + Mrs. Nguyen Thu Hang – Permanent Deputy General Director. + Mr. Douglas John Farrell – Deputy General Director.



Board of Directors: + Mr. Nguyen Duc Quang – Deputy General Director. + Mr. Pham Van Khuong – Deputy General Director. + Mr. Nguyen Vu Hung – Deputy General Director. + Mrs. Mai Thu Thuy – Deputy General Director. + Mr. Pham Khoi Nguyen – Head of Supervisory Board.



Supervisory Board: + Mrs. Doan Thi Thu Mai – Member of Supervisory Board. + Mrs. Le Thi Duyen – Member of Supervisory Board

1.3.

Organizational structure: Vinhomes considers transparency and efficiency as the guidelines for its

corporate governance model. The Board of Directors is also well aware of how these criteria ensure benefits for shareholders and sustainable development for the Company.

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Figure 1.2 shows the organizational structure in Vinhomes JSC.

Figure 1.2: Vinhomes JSC’s organizational structure. (source: Vinhomes JSC) The Board of Directors of the Company consists of one General Director, one Permanent Deputy General Director, and five Deputy General Directors. The General Director is appointed by the Board of Directors. The Deputy General Directors are appointed by the Board of Directors at the proposal of the General Director. The Supervisory Board is a functional agency independent of the Management and the Board of Directors. The Supervisory Board is elected by the General Meeting

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of Shareholders, on behalf of the General Meeting of Shareholders, supervises all production and business activities of the Company. The Board of Supervisors of the Company consists of three members with a term of 5 years. The current term is from 2018 to 2023. The Management Board of the Company has nine members. The maximum term of each member is five years. Chairman of the Board elected by the Board of Directors. Other than that, there are 8 other small divisions responsible for 8 activities, which are Project Development Division, Construction Division, Sales and Marketing Division, Industrial Real Estate Division, Customer Service Division, Operations Division, Inspection, Safety, Security, and Fire Prevention Division, and Administrative & Support Division. 1.4.

Products and Services Vinhomes is the largest enterprise in Vietnam in the field of residential real

estate development and transfer. The company is currently developing and selling mid- and high-end real estate products in Vietnam. Vinhomes' projects are large-scale urban areas with synchronously developed infrastructure with a diverse system of utilities and services, making the most of the Vinhomes ecosystem. Moreover, the company provides synchronously high-quality services in all Vinhomes urban areas such as 24/7 customer service center, reception, security, etc. Real estate management services also ensure to maintain the urban area according to five-star quality standards, protect and increase the value of customers' properties. Vinhomes owns 27 urban areas in 7 provinces and cities across the country, more than 84,000 apartments, villas, townhouses, serving more than 262,000 residents. In addition, Vinhomes also exploits and manages a system of serviced apartments and 5-star villas under the brand name Vinhomes Serviced Residences, as well as exploits and manages a system of high-class offices for lease in urban areas, contributing helping customers exploit Vinhomes real estate in the best way through participating in the Company's investment programs with higher profitability.

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CHAPTER 2: MARKET ANALYSIS 2.1. The market in general 2.1.1. Demand for real estate The real estate market has fluctuated in the three-year time period. The market has had periods of decline, crisis, freezing, and then strong recovery in which demand for real estate also follows certain fluctuations. Specifically, in the 2017-2018 period, Vietnam was experiencing economic growth leading to the high demand for both industrial real estates and land plots with a "fever" of lands in these years. However, since the outbreak of the pandemic in Vietnam in 2019, demand for real estate has dropped sharply in some segments, especially the resort and hotel real estate segment. Although the demand for rent in the epidemic situation has decreased, the demand for people's housing is still growing. Moreover, according to economic experts, Vietnam is one of the countries with a relatively fast urbanization rate. If people's income level is increasing, the demand for the real estate industry will be greater. In another aspect, the real estate market still recorded bright spots from the segment of land for home gardens, farms, and suburban resorts, coming from the wave of "leaving the city to go home" when the epidemic appeared. 2.1.2. Supply for real estate In 2018, the real estate market experienced a sudden increase in supply. According to the Vietnam Real Estate Brokers Association, the number of apartments successfully traded in 2018 in Hanoi reached 27,595 products, an increase of 132.8% compared to 2017 (20,776 products). The number of real estate products transacted was 3.3 times higher than in 2017, reaching 3,106 products. In the first six months of 2019, there was a decrease in supply and number of transactions in the real estate market, mainly in Hanoi and Ho Chi Minh. In terms of condotel real estate products, in the second quarter of 2019, only more than 5,000 new products were introduced to the market, successful transactions were only close to 1,400 products. The reason is that the new supply is limited, the implementation of project procedures is slow, the condotel products currently have relatively high

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prices, which also affect the transaction volume and there are not many policies to facilitate the development of these product lines. In 2020, the real estate market has faced a shortage of supply. The main reason is due to the limited land fund for housing development in big cities, the high financial cost of land, and the long time for project licensing. The market also showed a decrease in the supply of housing projects and products, especially in the social and affordable housing segments. 2.1.3. Market growth rate With its growth, in 2019, the total amount of FDI registered in Vietnam reached 38 billion USD, up 7.2% compared to 2018. The processing and manufacturing industry has the largest amount of registered capital, accounting for 64, 6%, second is the real estate business, accounting for 10.2%. In 2020, the real estate industry grew by contributed 4.42% of the country's GDP in which the highlight is the industrial real estate segment and the residential segment - the real estate in the provinces adjacent to big cities such as Hanoi and Ho Chi Minh. The outlook for the Vietnamese residential real estate market is steady mainly due to rapid urbaniz...