VINAMILK

FINANCIAL STATEMENT
ANALYSIS
To analyze Vinamilk using financial ratios in 3-
years-compared

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Table of Contents

Introduction......................................................................................2
1. Company profile:............................................................................................2
2. Information about business areas, products and market:.........................3
3. Company Vision, Mission an Core Values:..................................................4
4. Business philosophy:......................................................................................4

Financial Report Summary....................................................5

Financial Statements..............................................................................6
1. STATEMENT OF FINANCIAL POSITION...........................................6
2. THE SOURCES AND USES OF CASH(2014-2015)................................7
3. STATEMENT OF CHANGES IN FINANCIAL POSITION...................8
4. STATEMENT OF COMPREHENSIVE INCOME (PROFITS AND
LOSSES)..........................................................................................................10
5. STATEMENT OF CASH FLOW..............................................................11
Financial Ratio Analysis......................................................................12
1. SUMMARY OF THE TABLE RATIOS...................................................12
2. LIQUIDITY RATIOS................................................................................13
3. ACTIVITY RATIOS...................................................................................14
4. PROFITABILITY RATIO.........................................................................15
5. CAPITAL STRUCTURE ANALYSIS RATIOS.......................................16
6. CAPITAL MARKET ANALYSIS RATIOS..............................................17

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Introduction
In recent years, dairy has become one of the fastest growing
sectors in the food industry of Vietnam. Along with the common
trend of developing countries, Vietnam dairy's demand is
significantly increasing as a crucial supplementary nutrition
source. One of the most leading dairy companies in Vietnam,
Vietnam Dairy Product Joint-stock Company (Vinamilk), has
operated over 30 years and gained noticeable successes in the
Vietnamese fresh milk market.
Vinamilk today is considered as a Vietnamese enterprise that can
deliver value to consumer successfully by understanding
consumer needs, communicating and building long-term
relationship between their brand and consumers.

1. Company profile:

Vinamilk is the biggest dairy company in Vietnam. Based on the

UNDP 2007 Top 200 largest firms in Vietnam report, it is also the
15th largest company in Vietnam. In 2010, it is the first company
in Vietnam to be included in the Forbes Asia's 200 Best Under A
Billi on list that highlights 200 top - performing small - and mid
-sized companies with annual revenue under US$1 billion.
The company was established in 1976 as the Southern Coffee-
Dairy Company, to take over the operations of three nationalized
dairy factories in South Vietnam: Tho ng Nha t (belonging to a
Chinese company), Trườ ng Tho (formerly owned by Friesland
Foods), and Dielac (Nestle ). It was then renamed to United
Enterprises of Milk Coffee Cookies and Candies I in 1978 and
finally Vietnam Dairy Company was formally established in 1993.
In 2003, follows its IPO to the Ho Chi Minh Stock Exchange, the
company legally change its name to Vietnam Dairy Products Joint

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 Stock Company (Vinamilk). The principal activities of the
Vinamilk are produce and distribute condensed milk, powdered
milk, fresh milk, soya milk, yogurts, ice-cream, cheese, fruit juice,
coffee and other products derived from milk. Vinamilk products
such as powdered milk and condensed milk are also exported to
the Middle East, Cambodia, Philippines and Australia.Vinamilk's
main competitors are Dutch Lady Vietnam, a division of Friesland
Foods, Nestle Vietnam, Abbott, Mead Johnson, Friso and
Nutifood.

2. Information about business areas, products and market:

Principal business activities:

 Producing, trading milk and dairy products.

 Producing and trading beverage.
 Breeding dairy cows, producing fresh milk material (in
100% capital owned companies).
VNM's products are divided into five major categories:

 Liquid milk (UHT and pasteurised milk) under Vinamilk brand

 Yogurt (both drinking and eating yogurt) under Vinamilk brand
 Powdered milk (infant formula, and powdered milk for
adults and seniors), under Dielac and Redielac brands
 Juice and healthy drinks, under Vfresh brand
 Soya milk under Gold Soy brand
 Other products, including cheese, ice
cream and condensed milk Main market:

 Vinamilk products mainly serve Vietnam market with all

lines of product. Domestic market takes account of 80% of
Vinamilk’s total revenue.
 For foreign market, the main markets of Vinamilk are
Middle-East area, South-East Asia, and Africa. Main
exported products are powdered milk and condensed milk.

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3. Company Vision, Mission an Core Values:
Vision: To become a world grade brand in food and beverage
industry, where people put all their trust in nutrient and health
products.
Mission: To deliver the most valuable nutrition to community with our
respect, love and responsibility

Core Values:

 Integrity: Integrity, transparency and morals can be found in

whatever we do.
 Will: We dare to think, to do, to take responsibilities and to
overcome challenges to realize the committed targets
 Creativity: We always highly appreciate the
passion, unique discovery and innovative solutions.
 Efficiency: We always focus on added-values in all our
works, investments and business activities.
 Respectability: Self-respecting, equality and
dedication to the growth of the company are what
we really appreciate at Vinamilk.
 Harmony of interests: Interests of Vinamilk are also the
interests of its employees, partners, government and
society.
 Openness: Constructive and straight communication is
the base for our team to become more united and
stronger.

4. Business philosophy:

Vinamilk desires to become one of the most favourite brands in

every region and territory. Therefore, we keep in our mind and our
heart that the quality and innovation are always our most
important companions. We act with customer-centered approach
and commit to respond to all their needs

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Financial Report Summary
The main objective of this report is to analyze the financial
statements of Vinamilk from 2013-2015.

The specific objectives of the report are:

• To present the financial statements of Vinamilk in recently 3 years.
• To calculate and evaluate the financial ratios of Vinamilk.
• To provide comment about the financial situation of
Vinamilk.

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 Financial Statements

1. STATEMENT OF FINANCIAL POSITION

ASSET= LIABILITIES + EQUITY UNIT:
Million Dong

Year 2015 Year 2014 Year 2013

Current assets 16,731,875 15,522,310 13,018,930
Cash and cash
equivalents 1,358,683 1,527,875 2,745,645
Short-term
investments 8,668,378 7,467,963 4,167,318
Short-term
receivables 2,685,469 2,771,737 2,728,421
Inventories 3,810,095 3,620,107 3,217,483
Other current assets 209,251 134,627 160,063
Non-current assets 10,746,301 10,247,829 9,856,484
Fixed assets 8,214,135 8,890,084 8,918,417
Investment properties 142,368 147,726 149,446
Long-term
investments 940,365 700,375 318,308

Total assets 27,478,176 25,770,138 22,875,414

Liabilities 6,554,260 5,969,902 5,307,061

Short -term liabilities 6,004,317 5,453,263 4,956,398
Long-term liabilities 549,943 516,639 350,663
Owner's equity 20,923,916 19,680,283 17,545,489
Charter capital 12,006,622 10,006,414 8,339,558
Share premium 1,276,994
Retained earnings 5,391,796 7,157,699 6,149,812
Minority interest 119,954 22,864
Total owner's equity and
liabilities 27,478,176 25,770,138 22,875,414

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Sources of cash

Decrease in Short-term receivables 86268

Decrease in investment properties 5358

Increase in Charter capital 2000208

Increase in Liabilities 584358

Net fixed assets acpuisitions 675949

Total sources 3352141

2. THE SOURCES AND USES OF CASH(2014-2015)

UNIT: Million
Dong

Uses of cash

Increase in Short-term investment 1200415

Increase in Iventories 189988

Increase in Other current assets 74624

Increase in Long-term investments 239990

Decrease in Retained earnings 1765903

Decrease in Minority interest 119954

Total uses 3590874

=>Net addition to cash=238733

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 3. STATEMENT OF CHANGES IN FINANCIAL POSITION

ASSET= LIABILITIES + EQUITY

BALANCE SHEET Year 2015 Year 2014 Year 2013

Current assets 60.9% 60.2% 56.9%

Cash and cash equivalents 4.9% 5.9% 12.0%
Short-term investments 31.5% 29.0% 18.2%
Short-term receivables 9.8% 10.8% 11.9%
Inventories 13.9% 14.0% 14.1%
Other current assets 0.8% 0.5% 0.7%
Non-current assets 39.1% 39.8% 43.1%
Fixed assets 29.9% 34.5% 39.0%
Investment properties 0.5% 0.6% 0.7%
Long-term investments 3.4% 2.7% 1.4%
Total assets 100% 100% 100%
Liabilities 23.9% 23.2% 23.2%
Short -term liabilities 21.9% 21.2% 21.7%
Long-term liabilities 2.0% 2.0% 1.5%
Owner's equity 76.1% 76.4% 76.7%
Charter capital 43.7% 38.8% 36.5%
Share premium 5.6%
Retained earnings 19.6% 27.8% 26.9%
Minority interest 0.5% 0.1%
Total owner's equity and
liabilities 100% 100% 100%

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 From the first look of this balance sheet, we can see that the
assets of Vinamilk have been increasing steadily over 3 years. In
2015, their assets went up at 20% in comparision with the year
2013
A large percentage of the current assets is short-term investment,
accounting for a half out of the total current assets or nearly one-
third out of the total assets. This is due to their short-term
investment in stock and bond and they held it to marturity
Although Vinamilk is a producing company, their fixed assets
just comprises nearly one- third out of its total assets. This will be
analyzed deeper in the next parts
Now, let’s see the equity. Their owner equity take about 76% out
of the total assets. It means that Vinamilk is a company financed
mainly on equity (or stocks and shares)

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 4. STATEMENT OF COMPREHENSIVE INCOME
(PROFITS AND LOSSES)
UNIT: Million Dong

Year 2015 Year 2014 Year 2013

100% 100% 100%
Net revenue 40,080,385 34,976,928 30,948,602
59.4% 64.8% 63.9%
Cost of goods sold 23,817,970 22,668,451 19,765,794
40.6% 35.2% 36.1%
Gross profit 16,262,415 12,308,477 11,182,808
Financial income 648,982 1.6% 573,570 1.6% 507,348 1.6%
0.4% 0.2% 0.3%
Financial expenses 162,840 81,698 90,791
Selling expenses 6,257,507 15.6% 4,696,143 13.4% 3,276,432 10.6%
General and Administrative
expenses 1,232,723 3.1% 795,365 2.3% 611,256 2.0%
Operating profit 9,271,226 23.1% 7,308,841 20.9% 7,711,678 24.9%

Other profit 95,915 0.2% 244,640 0.7% 254,638 0.8%

Profit/Loss of investments in 0.17% 0.14%
associates and joint ventures 59,887 43,941

Profit before tax 9,367,141 23.4% 7,613,369 21.8% 8,010,257 25.9%

19.4% 17.3% 21.1%
Net profit after tax 7,769,553 6,068,203 6,534,107
Profit after tax for
shareholders 7,773,410 19.4% 6,068,808 17.4% 6,534,134 21.1%
of the parent company
Earnings per share (VND) 5,837 0.01% 6,068 0.02% 7,839 0.02%

Vinamilk’s development in revenue and net profit after tax have

the same direction with their assets that have been presented
above. The development over three years always stands on 2
figures. Followed by the cost of good sold, Vinamilk showed a
better performance in terms of cost controling and managing when
they successfully kept these figures arround 11 per cent. This
make the interval between cost and revenue larger over
years.While the net profit met an increase trend over 3 years, the
earning per share however experienced a fluctuation between
5,837 VND and 7,839 VND. In contrast to the biggest net profit
after tax gained in year 2015, Vinamilk decided to give each share

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 the smallest dividend. However, this is not a bad decision but a
rational one because when they gained a larger return rate than the
interest rate, the more proportion of plowback, the larger value per
share increase.
5. STATEMENT OF CASH FLOW

Most figures in this statement incured losses. This seems a bad

signal from investing activities. However, negative numbers do not
always mean bad performance because this need a deeper analysis.
In this period, Vinamilk was still being a developing company. It
means that they were in need of a large amount money to invest
for both current assets and longterm assets. Nearly 24% of their

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 total assets came from bank loans and bonds. This therefore
increased the ammount of money to pay for creditors. The same
situation occurred to the finacing activities.

Financial Ratio Analysis

1. SUMMARY OF THE TABLE RATIOS

VINA
MILK
RATIOS Year Year Year
2015 2014 2013
Trailing EPS VNĐ 7,297 6,874 8,411
Book value per
VNĐ 17,435 19,678 21,051
share (BVPS)
P/E Time 17.5 13.9 16.1
s
P/B Time 7.3 4.9 6.4
s
Gross profit
% 40.6 35.2 36.1
margin
Net profit margin % 19.4 17.4 21.1

ROE % 38.3 32.6 39.6

ROA % 29.2 25.0 30.7

Short-term ratio Time 2.8 2.9 2.6
s
Liabilities to assets % 0.24 0.23 0.23
Debt to equity % 0.03 0.03 0.02

 Most of ratios is higher than the industry average

 Most of ratios tend to increase from 2011 to 2013

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 2. LIQUIDITY RATIOS

Liquidity reflects the ability of Vinamilk to meet its short-term

obligations using assets that are most readily converted into cash.
Assets that may be converted into cash in a short period of time
are referred to as liquid assets; they are listed in financial
statements as current assets. Current assets are often referred to as
working capital because these assets represent the resources
needed for the day-to-day operations of the company's long-term,
capital investments. Current assets are used to satisfy short-term
obligations, or current liabilities
Liquidity ratios provide a measure of the company’s ability to
generate cash to meet its immediate needs. There are three
commonly used liquidity ratios:
The current ratio is the ratio of current assets to current liabilities;
Indicates the company's ability to satisfy its current liabilities with
its current assets:
1. The current ratio is the ratio of current assets to current
liabilities; Indicates the company's ability to satisfy its
current liabilities with its current assets
Current ratio = Current assets/ Current liabilities
2. The quick ratio is the ratio of quick assets (generally
current assets less inventory) to current liabilities; Indicates
the company's ability to satisfy current liabilities with its
most liquid assets
Quick ratio = (Current assets – Inventory) / Current liabilities

VINAMILK
1. Liquidity Analysis Year Year Year
Ratios 2015 2014 2013
CURRENT RA0TIO Times 2.8 2.8 2.6
QUICK RATIO Times 2.2 2.2 2.0
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2.5
2
1.5 CURENT RATIO
1 QUICK RATIO

0.5
0
2013 2014 2015

It can be seen that the solvency of the Vinamilk always

guaranteed at around level of 2.8. Thus, this created crucial
advantage in raising capital for business activities as well as
increased credibility for suppliers of the company.
3. ACTIVITY RATIOS
Activity ratios measure company sales per another asset account
—the most common asset accounts used are accounts receivable,
inventory, and total assets. Activity ratios measure the efficiency
of the company in using its resources. Since most companies
invest heavily in accounts receivable or inventory, these accounts
are used in the denominator of the most popular activity ratios.
VINAMILK

2. Activity Analysis Ratios Year Year Year

2015 2014 2013
Assets Turnover Ratio % 1.5 1.4 1.5
Working Capital Ratio % 2.8 2.8 2.6
Inventory Turnover % 6.4 6.6 5.9
Accounts Receivable % 14.7 12.7 12.4
Turnover
Toatl Asset Turnover Times 1.46 1.36 1.35

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 3
2.5
2 Assest Turnover
1.5 Ratio
1 Working Capital
0.5 Ratio
0
2013 2014 2015

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15 Inventory Tunrover
10 Accounts Receivable
Tunrover
5
0
2013 2014 2015

The Day’s sales in inventory have a trend to reduce so this is a good sign
to the investors and analysts indicate that Vinamilk is strong in managed
credit control function.
The asset turnover of 3 years is higher than 1 so this equivalent with the
sale of Vinamilk Company is greater than the total asset, so Vinamilk is
effective its assets being utilized. However, this tends to decrease during 3
years together with the increase in Day’s sales in receivable so that this
company may have some troubles in the quantity of sale or the increasing
in investors combined with the remain stable in sales. Therefore, it reduces
in this factor.

4. PROFITABILITY RATIO

Profitability ratios measure the company’s ability to generate

earnings relative to sales, assets and equity. These ratios assess the
ability of the company to generate earnings, profits and cash flows
relative to relative to some metric, often the amount of money
invested. They highlight how effectively the profitability of the
company is being managed.

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 VINAMIL
K
3. Profitability Analysis Year 2015 Year 2014 Year 2013
Ratios
Return on Assets (ROA) % 29% 25% 31%
Return on Equity (ROE) % 38% 33% 40%
Gross profit margin % 41% 35% 36%
Net profit margin % 19% 17% 21%
Earnings Per Share VN 7,297 6,874 8,411
(EPS) Đ

Profit from operating activities always stand at level of

over 35% of Vinamilk. In 2015 , the turnover reached 41%
(increased by 6%) compared to the previous year, and along with
good control of costs (the cost of inputs in the production and
management costs, interest expenses, ...) contributed to keep ROE
increased in a very high level of 38% - 40%. This shows
Vinamilk's strong position in the domestic milk market and in
consumer trust.

5. CAPITAL STRUCTURE ANALYSIS RATIOS

VINAMILK
4. Capital Structure Analysis Year 2015 Year 2014 Year 2013
Ratios
Liabilities to assets % 0.24 0.23 0.23
Liabilities to equity % 0.03 0.03 0.02

Vinamilk's Liabilities to Assets ratio fluctuated at from 20% to

24%, the debt ratios over the years tend to stabilize at the level of
below 30%. This shows that the company operated by the
conservative strategy and limited the financial risks, thus, the debt
ratios is relatively slow. Consequently, the bank’s loan for
Vinamilk is very safety.

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 6. CAPITAL MARKET ANALYSIS RATIOS
VINAMIL
K
Year Year Year
5. Capital Market
Analysis Ratios 2015 2014 2013
Price Earnings P/E Ratio Time 17.5 13.9 16.1
s
Price to Book Ratio P/B Time 7.3 4.9 6.4
s
Trailing EPS VNĐ 7,297 6,874 8,411

The ratio of P / E of the company at the end of 2015 reached 17.5

and the company's EPS in 2015 was 7,297 VND. Besides, the
ratios of P / E and P / B of Vinamilk is currently at very high
levels. The reasons for this are that investors are expecting
potential growth of the company in the future with impressive
profitability and investment projects are implemented.

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