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HANOI UNIVERSITY OF SCIENCE AND TECHNOLOGY School of International Education FUNDAMENTALS OF CORPORATE FINANCE TOPIC: FINANCIAL REPORT OF GEMADEPT ANALYSIS LECTURE: PhD. Nguyen Dang Tue Students 1. 2. 3. 4. Le Thi Linh Nguyen Hai Ha My Le Phuc Nghia Le Thi Quynh 20158218 20158265 20158283 20158333 5...

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HANOI UNIVERSITY OF SCIENCE AND TECHNOLOGY School of International Education

FUNDAMENTALS OF CORPORATE FINANCE TOPIC: FINANCIAL REPORT OF GEMADEPT ANALYSIS

LECTURE: PhD. Nguyen Dang Tue

Students 1. 2. 3. 4.

Le Thi Linh Nguyen Hai Ha My Le Phuc Nghia Le Thi Quynh

20158218 20158265 20158283 20158333

5.

Vu Van Duc

20158265

Hanoi, 10/2018

CONTENTS CHAPTER 1: GEMADEPT COPORATION’S GENERAL INTRODUCTION................3 1.1 Introduce the company overview..............................................................................3 1.2 Products and Service.................................................................................................6 1.3 Size of the company..................................................................................................7

CHAP 2: FINANCIAL REPORT ANALYSIS............................................................8 2.1 Balance sheet, income statement, cash flow analysis................................................8 2.1.1 Balance sheet............................................................................................................8 2.1.2 Income statement....................................................................................................10 2.1.3 Cash flow statement................................................................................................12 2.2 Financial ratios analysis...........................................................................................14 2.2.1 Profitability Margin.................................................................................................14 2.2.2 Liquidity ratios.........................................................................................................15 2.2.3 Interest Coverage ratios..........................................................................................15 2.2.4 Leverage ratios........................................................................................................16 2.2.5 Operating return......................................................................................................18

CHAP 3: OPINIONS INVESMENT....................................................................21 3.1 EVALUATING PROSPECTS FROM BUSINESS ACTIVITIES.............................................21 3.1.1 Prospects for medium and long-term development................................................21 3.1.2 Position and resources of the company:.................................................................22 3.1.3 Competitive position................................................................................................23 3.2 ANALYSIS OF FINANCIAL SITUATION........................................................................24

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Wi t hbou n c e l e s sl o v ea nda ppr e c i at i o n,ou rg r o upwo ul dl i k et oe x t e ndo ur h e ar t f e l tg r at i t ud ean da c k no wl e d gme ntt oPhD.Ng uy e nDangTue . Than ky ou f ory ourun wav e r i n gs u ppo r t , gu i da nc eandi n s i g htt hr ou g h ou tt hes e me s t e ran d t hi sfin alr e p or t . Y ouc on t i nu al l ya ndc on v i nc i n g l yc on v e y e dane x c i t e me n ti nr e g a r dt ot e ac hi n g . Wi t ho uty o urgu i da nc eandpe r s i s t e n th e l p ,t hi sr e p or twoul dn otha v ebe e n p os s i bl e . Ou rr e p or twi l lha v ema n ymi s t a k e s ,wea r el ook i n gf o r war dt ohe ar i n g f e e db ac k san dc o mme nt sf r omy o us oon . Ag a i n ,wes i nc e r e l yt han ky ouf ory ouras s i s t an c ei nt hi sma t t e r .

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CHAPTER 1: GEMADEPT COPORATION’S GENERAL INTRODUCTION 1.1 Introduce the company overview  Name of company: GERMADEPT COORPORATION

 History and Development:  1990, established under Viet Nam Maritime Bureau  1993, one of the first 3 companies being selected by the government for equitization  1995,Establishment of Phuoc Long ICD, the port inland of Viet Nam  1997, Implementation of Midstream operation, river way transport  2000, NO.2 nationwide ranking in container handling volume  2001, Increasing charter capital to VND 200 billion  2002, officially listed on Viet Nam Stock Exchange  2003, Deployment of container liner transport service  2004, established 2 overseas School of International Education 4

 2006, Successful share issuance to raise charter capital up tp VND 475 billion  2007, Purchase of 3 seagoing vessels, launch of 4 service lanes, establishment of 3 joint ventures with reliable international partners .  2008, Putting Germadept Tower, Schenker- Germadept Logistics Center and 2 ports in Dung Quat and Hai Phong into operation  2009, Accomplishment of a new level profit , Initiation of Tan Son Nhat Air Cargo Terminal construction  2010, Increasing charter capital to VND 1000 billion , Putting Tan Son Nhat Air Cargo Terminal into operation, owning 99,98% of proportion of Nam Hai Port Join Stock company  2011, Starting rubber plantation project in Cambodia , Putting Distribution Center 1 in Song Than IZ ( Binh Duong province ) into operation  2012, Putting distribution Center 2 Song Than IZ ( Binh Duong province ) into operation, Starting Construction of Nam Hai Dinh Vu Container port ,  2013, Completing the construction of Nam Hai Dinh vu Container port and putting into operation , restructuring capital construction .  2014, Increasing the charter capital to over 1,161 billion  2015, Increasing the charter capital to over 1,196 billion, starting Construction of a Cold Warehouse project in Hau Giang  2016, Increasing the charter capital to over 1,794 billion , starting construction of Nam Dinh Vu Port in Hai Phong  2017, Increasing the charter capital to over 2,882 billion , having strategic partnership with CJ Logistics( Korea)

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 Award - Germadept has been ranked among Vietnam’sTop 500 largest enterprises - Top 20 Logistics Enterprises in Viet Nam - Top 50 Vietnamese Best Performing Companies, - Top 50 Best Vietnamese Listed Companies by Forbes - Top 1000 enterprises having the largest contribution of corporate income tax to national budget

 Vision: Striving to become a Viet Nam and regional leading corporation in Port Operation and Logistics  Mission: - Possessing and operating most effectively the port system along the coastline

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- Completing the supply chain to provide customer with most efficient logistics solutions and highest competitive service quality in the market - Properly taking investment opportunities to create added values  Target: - Leading port operator with best service quality - Among leading logistics companies in Indochina and ASEAN - No.1 in project cargo transport - Leading carrier in domestic and Vietnam-Cambodia services - Top 3 employee income and welfare in the industry - Among VN30 1.2 Products and Service

Core business: School of International Education 7

- Port operation : one of the core businesses of Germadept Corporation. After 20 years of establishment and development, Germadept is now owning and operating a large port system from North to South , in big cities and key economic zones - Logistics : with good and proper infrastructure as large distribution center, port system along national coastline , large and powerful vessel and truck fleet, Germadept Logistics has gradually combined its strength to offer customers the supply chain management service. Targeting to make Gemadept the top brand \name in Viet Nam until 2015 - Forestry: since the 1st rubber bamboo plantation on July 04, 2011, the project has been in progress for almost 4 years with fruitful results - Real estate: In line with the business diversification strategy, Gemadept has achieved remarkable successes in real estate sector, starting with the market segment of office buildings at the CBD of some big cites.

1.3 Size of the company Year Net Sales Total Assets Stockholder’s Equity Charter Capital

Unit

Value ( in 2017)

VND VND VND VND

3,990,532,084,494 11,291,217,207,272 7,094,537,082,089 2.882.769.570.000

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CHAP 2: FINANCIAL REPORT ANALYSIS 2.1 Balance sheet, income statement, cash flow analysis 2.1.1 Balance sheet 2015 Total Assets Current assets Cash and cash equivalent Short-term investment Short-team receivable Inventory Other current assets Non-current assets Long-term receivable Fixed assets Long-term assets in process Long-term investment Other non-current assets Total Liabilities Current liabilities Non-current liabilities Stockholder equity

2016

2017

8.999.300.920.286 2.678.066.855.242 904.519.085.757 91.441.580.440 1.514.907.461.906 107.208.185.841 59.990.541.299 6.321.234.065.044 198.466.823.330 2.431.673.132.649

10.117.918.996.180 2.140.251.676.214 724.469.956.298 88.716.047.075 1.128.058.857.408 87.029.572.424 111.977.243.009 7.977.667.319.966 151.378.820.840 2.697.536.270.457

11.291.217.207.272 2.223.117.121.083 779.802.200.597 113.000.452.720 1.127.689.185.681 107.800.595.571 94.824.686.514 9.068.100.086.189 127.490.383.350 3.208.464.134.770

1.086.215.278.045

1.823.657.063.794

2.457.808.973.389

2.010.258.432.052 594.620.398.968 3.384.815.508.267 1.605.680.951.595 1.779.134.556.672 5.614.485.412.019

2.308.318.447.213 996.776.717.662 4.251.302.978.148 2.961.152.475.919 1.290.150.502.229 5.866.616.018.032

2.310.194.997.897 964.141.596.774 4.196.680.125.183 2.676.231.766.155 1.520.448.359.028 7.094.537.082.089

Base on balance sheet: - Total Assets increased from 8,999,300,920,286 VND (2015) to 10,117,918,996,180 VND in 2016 and then increased to 11,291,217,207,272 VND in 2017. That means the company has expanded its investment in assets. Specifically, the company has reduced Current assets from 2,678,066,855,242 VND in 2015 to 2,223,117,121,083 VND in 2017, the total non-current assets soared from 6,321,234,065,044 VND in 2015 to 9,068,100,086,189 VND by 2015; This shows that the company is pushing for non-current asset investment, especially fixed assets and long-term assets in the process. In addition, short-term and long-term School of International Education 10

receivables decreased, showing that the company has recovered part of capital from customers. - Total liabilities of the company also increase from 3,384,815,508,267 VND (2015) to 4,196,680,125,183 VND in 2017, of which current liabilities increase sharply from 1,605,680,951,595 VND in 2015 to 2,961,152,475,919 VND in 2016 and then decrease to 2,676,231,766,155 VND in 2017. Meanwhile, non-current liabilities fell from 1,779,134,556,672 VND to 1,520,448,359,028 VND in the period 2015217. As a result, the company might use short-term loans to invest in longterm assets, which is quite dangerous for the company. - Total Stockholder’s equity also increased from 5,614,485,412,019 VND in 2015 to 7,094,537,082,089 VND in 2017. Evaluation : - In the period 2015-2016, total current assets of the company decreased 537,815,179,028 VND, total non-current assets increased 1,656,433,254,922 VND; while total current liabilities increased by 1,355,471,524,324 VND. That means the company did not use short-term loans to invest in current assets, but to invest in non-current assets; this is against the principle of investment. - In the period 2016-2017, total current assets increased 82,865,444,869 VND, total non-current assets increased by 1,090,432,766,223 VND; while the total liabilities of the company decreased 54,622,852,965 VND. That means the company uses stockholder’s equity to invest in assets. - In term of liquidity, the total current liabilities in 2017 are larger than the total current assets, which mean that the company will have difficulty repaying short-term debt. In the worst case, the company may have to sell some of its fixed assets to pay off its short-term debt.

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2.1.2 Income statement 2015 Sales Sales from port operation Sales from logistic services Sale from leasing office Cost of sale Cost cost of port operation Cost of logistic services Gross profit Other profit Financial income Operating income Total accounting protfit before tax Loan interest expens EBIT Net income

2016

2017

3.593.780.842.602 1.699.715.096.053

3.743.839.681.801 1.626.266.580.999

3.990.532.084.494 1.835.237.955.108

1.892.524.904.470

2.116.383.863.392

2.152.902.070.265

1.540.842.079 2.639.663.623.277

1.189.237.410 2.723.430.511.250

2.392.059.121 2.954.816.507.075

986.743.561.404

935.754.045.343

1.125.780.192.171

1.652.920.061.873 946.668.827.731 15.148.364.704 55.700.017.308 490.657.539.766

1.787.676.465.907 1.018.238.369.865 -116.296.788.428 39.239.748.206 597.023.379.551

1.829.036.314.904 1.029.146.169.537 -82.834.106.867 173.076.431.925 733.288.924.680

505.805.904.470

480.726.591.123

650.454.817.813

118.499.734.961 624.305.639.431 460.682.619.983

121.195.333.723 601.921.924.846 443.734.791.018

143.856.433.218 794.311.251.031 581.436.276.874

Based on a income statement :  In the period 2015-2016: - Total revenue of the company increased quite low at 4.18%; Specifically: revenue from port operations fell by 4.32%, revenue from logistic services increased by 11.83%, office leasing revenue dropped sharply by 22.82%. In addition, the cost of port operations decreased 5.17%, logistic service costs increased 8.15%. This shows that, during this period, the company is stepping up investment in logistic services; however, the growth rate of the company is quite low compared with expectations of growth logistic (about 20% per year). - Gross profit increased 7.56%; Meanwhile, net profit increased strongly at 21.68%. This suggests that, during this period, the company's expenses may decrease or increase but not significantly. School of International Education 12

- However, due to the impact of the decrease in revenue from other profit (down 867.62%), the earnings before interest and tax (EBIT) of the company has decreased from 624,305,639,431 VND to 601,921,924,846 (equivalent to 3.59). As a result, net profit fell by 3.68%.  In period 2016-2017: - In this period, total sales of the company continued to increase 6.59%; specifically, revenue from port operations increased by 12.85%, logistic revenue increased by 1.73% and office leasing revenue increased by 101.14%. In addition, total cost increased 8.5%; Specifically: port operating costs increased 20.31%, cost of logistics service increased 2.31%. This shows that, at this stage, the company has shifted focus to invest in port operations. However, the cost of port operation increased 20.31% while revenue from this industry increased only 12.85. This indicates that the company is investing unreasonably. - Gross profit increased by only 1.07%; however, net profit increased strongly at 22.82%. This shows that, during this period, the company has cut unnecessary expenses or the expense increased but not significantly. Therefore, the EBIT increase sharply by 31.96% and the net profit also increase by 31.03% . Evaluation: Through that, in the period 2015-2017, the company has twice changed the direction of investment focus, specifically: 2015-2016 period, concentrated investment in logistics services; in the period 2016-2017, the focus is on port operations. However, both times the change of the company results is not as expected. Although the company's profit in 2017 increased sharply compare to 2016; However, profits do not come mainly from sales (services) but from financial income (such as: loans .....) and in joint ventures.

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2.1.3 Cash flow statement Cash flow statement is a type of report showing the cash flow in or out of the company for a certain period. Based on the cash flow statement, we can know where the company took the money, where the company spent money. This is a tool for managers to control the cash flow of the company Statement of cash flow of GEMADEPT 2015

Net cash flows from operating activites Net cash flows from investing activites Net cash flow from financing activities Net cash flow during the year Beginning cash and cash equivalents Effects of fluctuations in foreign exchanfe rate Ending cash and cash equivalents

2016

2017

757.216.866.332

761.518.412.131

632.876.665.393

-470.602.502.579

-1.236.543.872.891

-840.854.280.104

-334.216.340.822 -47.601.977.069

294.401.666.526 -180.623.794.234

264.398.689.931 56.421.075.220

952.132.979.299

904.519.085.757

724.469.956.298

-11.916.473

574.664.775

-1.088.830.921

904.519.085.757

724.469.956.298

779.802.200.597

- In this statement, we focus on 3 main sections which are: net cash flow from operating activities, net cash flow from investing activities and net cash flow from financial activities. - In 2015, cash flow from operating activities is 757,216,866,332VND, cash flow from investing activities is -470,602,502,579VND and cash flow from financial activities is -334,216,340,822 VND. That means in 2015, revenues from operating activities are greater than operating expenses. In addition, the investment and financial expenses are larger than the revenues from these two activities. Also, the net cash flow during the year was -47,601,977,069VND, showing that in 2015, the company spent more than its revenues, leading to the company's ending cash down to 904,519,085,757 VND

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- In 2016, cash flow from operating activities of the company increased very low (only about 0.57%), the cash flow for investment of the company increased sharply about 162.75%. Besides, in 2016, cash flow from financial activities increased from -334,216,340,822 to 294,401,666,526. That means in 2016, the company has earned money from 2 activities which are operating activities and financial activities. However, due to the sharp increase in spending on investment, the cash flow during year continues to be negative, meaning that in 2016 the company continues to spend more than its revenue. - In 2017, cash flow from operating activities decreased 16.9%, cash flow from financial activities decreased by 10.2%. However, cash flow from investing activities decreased sharply from -1,236,543,872,891 to -840,854,280,104. This shows that in 2017, the company continues to earn money from operating activities and financial activities, however, thanks to the sharp decrease in investment costs leading to the cash flow during year of the company has been positive, showing that in 2017, the company earned more than spending. 2.2 Financial ratios analysis 2.2.1 Profitability Margin 2015

2016

2017

Gross profit

946.668.827.731

1.018.238.369.86

1.029.146.169.53

Operating income Total accounting profit before tax Loan interest expense Net income Total sales

490.657.539.766 505.805.904.470

5 597.023.379.551 480.726.591.123

7 733.288.924.680 650.454.817.813

118.499.734.961 460.682.619.983 3.593.780.842.60

121.195.333.723 443.734.791.018 3.743.839.681.80

143.856.433.218 581.436.276.874 3.990.532.084.49

Net sales

2 1 3....