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UNIVERSITY OF ECONOMICS HO CHI MINH CITYSCHOOL OF FINANCEFINANCIAL MANAGEMENTGROUP ASSIGNMENT REPORTTopic: CDBECO FINANCIAL ANALYSISLecturer: Mrs. Tu Thi Kim ThoaClass : IBCGroup: 5Members: Bùi Nguyễn Phương Thảo - 31191024855Võ Thu Thảo - 31191021217Lê Dương Anh Tuấn - 31191025110Hồ Thảo Vy - 31191...

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY SCHOOL OF FINANCE

FINANCIAL MANAGEMENT GROUP ASSIGNMENT REPORT Topic:

CDBECO FINANCIAL ANALYSIS

Lecturer: Mrs. Tu Thi Kim Thoa Class : IBC02 Group: 5 Members:

Bùi Nguyễn Phương Thảo - 31191024855 Võ Thu Thảo - 31191021217 Lê Dương Anh Tuấn - 31191025110 Hồ Thảo Vy - 31191025222 Nay Đinh Nhật Vỹ - 31201024701

⤺⤻⇜฀⇝⤺⤻ 2021, October

TABLE OF CONTENTS PART I: INTRODUCTION Founding Expansion Organizational structure The overall market Competitors

2 3 3 4 5 5

PART II: ANALYSIS OF PROFIT/LOSS AND BALANCE SHEET Balance sheet Income statement

6 6 10

PART III: RATIO ANALYSIS Liquidity ratio Long-term solvency ratios Efficiency ratio Profitability ratio Market value ratio

13 13 14 15 16 18

PART IV: CONCLUSION IN EACH OF ASPECTS IN GENERAL

18 18 20

PART V: REFERENCES

21

1

PART I: INTRODUCTION

Chuong Duong Beverage Joint Stock Company was formerly the Usine Belgique factory belonging to B.G.I Group (France). This was the largest beverage factory in the South before 1975. In mid-1977, BGI Group officially transferred ownership and handed over the entire factory to the state with the name “Chuong Duong Soft Drink Factory”. After many years of operation in the beverage industry, Chuong Duong is currently one of the leading companies in Vietnam. Company background1 Name

Chuong Duong Beverages Joint Stock Company

Short name

CDBECO

Parents company

Saigon Beer - Alcohol - Beverage Corporation (SABECO)

Postal address

606 Vo Van Kiet Street, Cau Kho Ward, District 1, Ho Chi Minh City

Internet address

www.cdbeco.com.vn

Independent audit firm

KPMG Limited Vietnam

Tax code

0300584564

Stock code

SCD

1

Công Ty Cổ Phần Nước Giải Khát Chương Dương. Thongtindoanhnghiep.co. (2015). Retrieved 19 September 2021, from https://thongtindoanhnghiep.co/0300584564-cong-ty-co-phan-nuoc-giai-khat-chuong-duong.

2

Listing floor

Ho Chi Minh City Stock Exchange

Industries served

Beverage

Geographic areas served

Vietnam

Current Chairman

Neo Gim Siong Bennett

a) Founding Chuong Duong has been a familiar soft drink brand to most people in the Southern part of Vietnam for more than 60 years with its unique sarxi flavor. Having been present in Vietnam since the 1950s, but Chuong Duong really marked an important turning point only when officially operating as a joint stock company on June 2, 2004 with a charter capital of VND 85 billion. In that total amount, Saigon Beer - Alcohol - Beverage Corporation (SABECO) held 51% controlling stake.2 Currently, as of March 16, 2021, SCD's largest shareholder is still Sabeco with 62% of charter capital, followed by Venture Investment Joint Stock Company and PYN Elite Fund holds 12.47% and 5.65% of charter capital respectively. b) Expansion Currently, the company is operating with a production line for extracting glass bottles, a line for filling PET bottles and a line for filling cans; with over 500 employees working 2 shifts/day. The average output of the Company has grown continuously from 2.7 million liters in the period 1977 - 1985 to 22.9 million liters in 1988 - 1992 and reached more than 38 million liters up to the present time. According to CDBECO's 2020 financial report, the company's net revenue in the year is about 259 billion VND and profit after tax is 12.8 billion VND, equivalent to a decrease of 3% and 26% compared to the 2019 results. Currently, the classification of small and medium-sized enterprises is based on the average number of employees participating in social insurance per year and revenue or capital source (with priority given to revenue). From the above information, it can be seen that CDBECO is a medium-sized enterprise in the manufacturing sector with more than 500 employees and 85 billion VND investment capital. 2

Câu chuyện thương hiệu - Chương Dương. Retrieved 19 September 2021, from https://www.cdbeco.com.vn/cau-chuyen-thuong-hieu/.

3

c) Organizational structure The structure of CDBECO's Executive Board

Board of Directors

Mr. Neo Gim Siong Bennett

Chairman

Mr. Tran Duc Hoa

Member

Mr. Trinh Huy Hoa

Member

Mr. Dang Trung Kien

Member

Mr. Pham Tan Loi

Member

Majority-owned subsidiaries No.

Name

Address

1

Branch of CD Beverage Joint Stock Company in Nha Trang

40 2/4 Street, Vinh Hai Ward, Nha Trang City

2

Sales and Distribution Center

176/5 Pham Hung Street, Block 1, Ward 09, Ho Chi Minh City

3

Branch of Chuong Duong Beverage Joint Stock Company

Lot D-5B, 5D, 5F-CN, My Phuoc Industrial Park 3

4

Go Dau Branch - Chuong Duong Beverage Joint Stock Company

280 Go Dau Street, Tan Quy Ward, Tan Phu District, Ho Chi Minh City

4

d) The overall market

The company's business areas include: ● Producing and trading in beverages (mainly). ● Producing and trading in raw materials, packaging, equipment and technology related to the beverage sector. The company's main products include: ● Carbonated soft drinks (glass bottles, cans and PET bottles): sarxi, orange flavor, strawberry flavor, mint, Cream soda, soda. ● Non-carbonated beverage: aloe vera flavor. ● Bottled purified water. e) Competitors Beverage is a commodity in the FMCG industry, it has great consumption in the world with advantages of convenience and deliciousness. In Vietnam, the beverage market is considered to have strong growth nationally. Currently, according to estimates of the Vietnam Beer and Alcoholic Beverage Association (VBA), there are about 1800 beverage production facilities in the country with an annual growth rate of 6-7%. Among them, prominent brands in the market can be listed as Coca Cola, Pepsico, Vinamilk, Vinacafé, Trung Nguyen Coffee, Tan Hiep Phat Group, TRIBECO, Lavie, Vinh Hao, Sanna Khanh Hoa,... However, in this report, we choose Sanna Khanh Hoa Beverage JSC (SKN) as a direct competitor based on the following criteria: ● Both Chuong Duong and Sanna Khanh Hoa are Vietnamese companies operating in the field of beverage production. ● Sanna's most recent three-year financial statements is clear, audited by FAC and available on the official web. ● Sanna has the same level of awareness and satisfaction as Chuong Duong in the Vietnamese beverage market.

5

PART II: ANALYSIS OF PROFIT/LOSS AND BALANCE SHEET a) Balance sheet Through data collection and comparison with other companies in the same FMCG industry that Chuong Duong Beverage is doing business in, our group chose Sanna Khanh Hoa Beverage to compare with Chuong Duong, as a direct competitor. According to the financial statements published by Chuong Duong Beverage and Sanna Khanh Hoa companies for the years 2018, 2019 and 2020, respectively, we have two balance sheets with the following absolute values. Besides, according to the balance sheet in the financial statements announced by the company, Sanna Khanh Hoa does not disclose long-term debts (non-current liabilities). Therefore, it is not shown in Sanna Khanh Hoa's absolute balance sheet below. Chuong Duong

In absolute value (VND) 2018

2019

2020

Asset Current asset

192,566,273,595

206,885,924,503

182,251,660,440

Non-current asset

43,069,208,100

40,515,659,043

227,283,080,585

Total

235,635,481,695

247,401,583,546

409,534,741,025

Current liabilities

45,692,923,589

42,329,352,132

39,810,293,760

Non-current liabilities

720,000,000

8,401,218,750

176,266,087,207

Stockholders' equity

189,222,558,106

196,671,012,664

193,458,360,058

Total

235,635,481,695

247,401,583,546

409,534,741,025

Liabilities and Stockholders' equity

Sanna Khanh Hoa

In absolute value (VND) 2018

2019

2020

Asset Current asset

32,886,957,500

37,244,792,302

42,605,477,538

Non-current asset

33,213,123,992

26,474,857,605

21,371,836,006

Total

66,100,081,492

63,719,649,907

63,977,313,544

Current liabilities

15,419,199,164

12,419,317,443

10,251,113,847

Liabilities and Stockholders' equity Non-current liabilities Stockholders' equity

none 50,680,882,328

none 51,300,332,464

none 53,726,199,697

6

Total

66,100,081,492

63,719,649,907

63,977,313,544

Because the size of each company is different, in this case we will compare the ratios through the common-size balance sheet shown below, which also mentions the changes in each year. ● Chuong Duong Beverage Common-size balance sheet Chuong Duong

In percentage 2018

2019

2020

Asset Current asset

81.72

83.62

44.50

Non-current asset

18.28

16.38

55.50

Total

100.00

100.00

100.00

Current liabilities

19.39

17.11

9.72

Non-current liabilities

0.31

3.40

43.04

Stockholders' equity

80.30

79.49

47.24

Total

100.00

100.00

100.00

Liabilities and Stockholders' equity

Change in each year Chuong Duong

In percentage

Change

Current asset

Non-current asset

From 2018 to 2019:

1.90

-39.12

From 2019 to 2020:

-1.90

39.12

Change

Current liabilities

Non-current liabilities

Stockholders' equity

From 2018 to 2019:

-2.28

03.09

-0.81

From 2019 to 2020:

-7.39

39.64

-32.26

In this form, we can see that although current assets of Chuong Duong Beverage increased slightly from 2018 to 2019 at about 1.9%, from 81.72 to 83.62%.

7

However, their current assets were 44.5% of total assets in 2020, down from 83.62% in 2019, strongly decreased 39.12%. Current liabilities declined from 17.11 % to 9.72% of total liabilities and equity over the period of 2019-2020 – the time of Covid-19. Total equity decreased from 74.49% of total liabilities and equity to 47.24%. Overall, Chuong Duong Beverage’s current assets, current liabilities and total equity all decreased after the Covid-19 shock. Thus, the company’s liquidity, as measured by current assets compared to current liabilities, decreased over the year. ● Sanna Khanh Hoa Common-size balance sheet Sanna Khánh Hòa

In percentage 2018

2019

2020

Asset Current asset

49.75

58.45

66.59

Non-current asset

50.25

41.55

33.41

Total

100.00

100.00

100.00

23.33

19.49

16.02

Liabilities and Stockholders' equity Current liabilities Non-current liabilities

none

none

none

Stockholders' equity

76.67

80.51

83.98

Total

100.00

100.00

100.00

Change in each year

Sanna Khánh Hòa

In percentage

Change

Current asset

Non-current asset

From 2018 to 2019:

8.70

-8.70

From 2019 to 2020:

8.14

-8.14

Change

Current liabilities Non-current liabilities Stockholders' equity

From 2018 to 2019:

-3.84

none

3.84

From 2019 to 2020:

-3.47

none

3.47

8

In this form, we can see that Sanna Khanh Hoa's current assets increase year by year by over 8%. As we can see, from 2018 to 2019, their current assets rose from 49.75 percent to 58.45%, and despite the impact of the Covid-19 epidemic in 2020, the company's current assets are still up 8.14 percent in that year, to 66.59% compared to 2019. In addition, the company's current liabilities also decrease year by year by over 3.5% per year. In 2020, despite being affected by the epidemic, they still decreased by 3.47%. At the same time, the company's total equity is still increasing year by year, especially during the epidemic period, this number has increased by about 3.47%. Therefore, in general, the above figures can be concluded that the company's cash flow and liquidity are in good condition in the last 3 years. ● Chuong Duong Beverage and Sanna Khanh Hoa comparison: It can be seen that, in the period of 2018 - 2019, current assets of Sanna Khanh Hoa increased much faster than Chuong Duong Beverage (at 8.7% compared to a rate of only 1.9%). During the Covid-19 pandemic in 2020, Chuong Duong Beverage's current assets plummeted with 39.12%, from 83.62% of total assets to 44.5%. Meanwhile, the decline rate of Sanna Khanh Hoa was only 8.7%, much lower than Chuong Duong Beverage. In addition, in terms of current liabilities, both companies have a decreasing trend in the years from 2018 to 2020, in the period of 2019 - 2020, Chuong Duong Beverage has a decrease of more than 2 times compared to Sanna Khanh Hoa (7.39% compared to that of Sanna Khanh Hoa - about 3.47%). However, in terms of total equity, Chuong Duong Beverage is decreasing year by year, while Sanna Khanh Hoa is still growing, especially during the Covid-19 pandemic in 2020. From that, it can be seen that, in normal state, the growth rate of current assets of Chuong Duong Beverage is slower than that of Sanna Khanh Hoa, and when the pandemic occurs, this stat decreases much more than the opponent. Although current liabilities have decreased over the years, the total equity of Chuong Duong Beverage has also kept that trend, while this index of Sanna Khanh Hoa - their direct competitor, has increased over the years, despite the pandemic situation. complex. Therefore, it can be concluded that Sanna Khanh Hoa has a liquidity advantage over Chuong Duong Beverage, as measured by current assets compared to current liabilities, and Sanna Khanh Hoa's balance sheet has grown “stronger” over the years.

9

b) Income statement With an annual growth rate of the beverage market forecasted at 6% to 2020, the beverage industry in Vietnam is one of the fastest growing FMCG sectors. However, the complicated pandemic situation has prevented the development of many industries, including the beverage market. Although domestic companies have tried to cope with this change, there are still many difficulties. As a case in point, Chuong Duong Beverage’s operating revenue has decreased 104,694,979,234 VND, about 39.2% compared to the previous year, 2019. The reasons for this drop in revenue are supposed to be: - The Covid-19 wave in 2020 has reduced the demand for consumer shopping. - Covid 19 has disrupted the global supply chain, affecting the flow of goods. - Insufficient supply due to production interruption.

However, this significant reduction has happened even before the Covid-19 spread widely in Vietnam. From 2017 to 2019, the operating revenues gradually went down. From 327,297,597,399 VND in 2017, it decreased by 49,298,295,803 VND (15.06%) in 2018 and continuously dropped to 267,086,490,066 VND. These datas explain the company’s performance, which is getting worse over the years. There has been a decline in units sold over the years, therefore, cost of goods sold (which are directly tied to the production of the products, including the cost of labor, materials, and manufacturing overhead) and total expenses also gradually went down. Specifically, ● Cost of goods sold in 2017 was 327,297,597,399 VND, decreased 15,58% in 2018, 7.3% and 37.87% in 2019 and 2020 respectively. In 2020, the year of difficulties for most industries, the cost of goods sold

10

of Chuong Duong Beverage was 74,892,892,159 VND, approximately 77.11% smaller than that in 2017. ● Similarly to the cost of goods sold, total expenses experienced a downward trend during the 2017-2020 period. During 4 years from 2017 to 2020, total expenses were 90,994,719,162 VND, 78,314,146,099 VND, 66,514,529,427 VND, 53,199,281,264 VND respectively. In other words, the total expenses lessened around 15% annually. Besides manufacturing and trading soft drinks, the company also invests in real estate and producing things related to the beverage sector such as raw materials, packaging, equipment and technology. These activities give the company both gains and losses every year.

The year 2018 witnessed a significant increase in the total non-operating gains 2,201,607,931 VND compared to just about 446,371,020 VND in 2017 (a 393,22% rise). This data showed that the company was making positive changes thanks to the reduction of expenses such as sales, corporate management and financial expenses.3 In addition, the company also invested in real estate projects such as the land plot in My Phuoc and Vo Van Kiet. From the year 2018 onwards, the amount of non-operating gains steadily decreased to the present, 495.67% and 45.11% respectively. However, the figure for non-operating losses showed an opposite pattern. From 2017 to 2019, it kept increasing from 521,395 VND to 5,524,979 VND and reached a peak at 502,884,966 VND. This was the result of the construction of a new factory in Dong Nai Province that commenced at the end of 2019. In the following year, the amount of non-operating losses was estimated at 236,516,599 VND, a decrease of 3

Quang Thang. (2018, October 20). “Vua” Sá Xị Chương Dương đang trở lại? ZingNews.vn. Retrieved September 24, 2021, from https://zingnews.vn/vua-sa-xi-chuong-duong-dang-tro-lai-post885716.html.

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50% compared to 2019 because the company must focus on recovering from the impact of the pandemic. Overall, it is clear that the non-operating gains over years is always higher than non-operating losses but the company has to put more efforts to achieve the best results. Different from Chuong Duong Beverages, Sanna Khanh Hoa has less non-operating activities. That is the reason why Sanna Khanh Hoa’s operating gains are much lower than Chuong Duong.

It is clearly stated that the gap between non-operating gains of Chuong Duong and Sanna Khanh Hoa is large. In this aspect, while Chuong Duong had 446,371,020 VND in 2017 and always greater than 500 million VND, it even peaked at 2,201,607,931 VND in 2018; Sanna Khanh Hoa had the highest non-operating gains was only 200,124,234 VND during that 4 year period. Sanna Khanh Hoa hadn't put too much effort on investing in non-operating activities. As ...