Principles of Corporate Finance

INDIVIDUAL ASSIGNMENT

Full name: Nguyễn Ngọc Yến

Class: MKT1611

Student ID: HS153166

Lecturer: Nguyễn Phú Hà

Course: FIN202 – Principles of Corporate Finance

Date: Spring2022

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INTRODUCTION

ABOUT FPT

FPT Group, the abbreviation of FPT Joint Stock Company (formerly

known as Technology Investment and Development Company), is one of
the largest information technology service companies in Vietnam with the
main business field: is to provide information technology products and
services. According to the Stevie® Award, FPT is honored to win the
Silver Award and is the only Vietnamese enterprise to be honored in the
category of Enterprises that respond to Covid-19 most effectively (Most
Valuable Corporate Response).

VISION AND MISION OF FPT

FPT Telecom wishes to become a new type of organization, rich and

strong, with efforts and creativity in science, engineering and technology,
satisfying customers, contributing to national prosperity, giving each of
its members something fully developed in terms of talent and material,
rich in spirit. FPT's goal is to integrate all services on a single connection
to help customers enjoy all broadband connection services in their daily
lives. me. FPT Company believes that technological development is the
most important condition for future economic and social development
goals. FPT understands that its top responsibility is to bring the best
quality information and communication technology products and services
to companies and individuals using its products and services. At the same
time, the company will always create the best working conditions for all
employees of the company so that they try their best to serve well and be
dedicated to the company's work. The company's slogan is "FPT strives
to satisfy customers on the basis of deep understanding and best meets
their needs with dedication and constantly improving competence".

OPERATING SEGMENT

FPT Group has 7 subsidiaries and 4 affiliated companies, the head office
is located at FPT Building, Duy Tan street, Hanoi. List of member
companies under FPT include:

FPT Software Company Limited (FPT Software)

FPT Information System Company Limited (FPT Information System)
FPT Telecom Joint Stock Company (FPT Telecom)

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 FPT Online Services Joint Stock Company (FPT Online)
FPT Education Company Limited (FPT Education)
FPT Investment Company (FPT Investment)
FPT Smart Cloud Co., Ltd (FPT Smart Cloud)

4 companies associated with FPT include:

FPT Securities Joint Stock Company (FPT Securities)

FPT Investment Fund Management Joint Stock Company (FPt Capital)
Synnex FPT Joint Stock Company (Synnex FPT)
FPT Digital Retail Joint Stock Company (FPT Retail)

FINANCIAL STATEMENT ANALYSIS

INCOME STATEMENT

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In 9 months, FPT Corporation recorded VND 24,953 billion in revenue and
VND 4,575 billion in pre-tax profit, up 17.9% and 20% respectively over the
same period last year with the main driving force from the technology and
telecommunications segments.

After 9 months, the company has achieved about 72% of revenue target and
74% of profit for the whole year.

In the third quarter alone, FPT achieved VND 8,722 billion in revenue, VND
1,639 billion in pre-tax profit; increased 15% and 18% respectively over the
same period last year. This is also the highest quarterly profit since 2018.

GENERAL FINANCIAL HEALTH

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Overseas, sales increased in all regions, especially in the US and Europe, driven
by high COVID-19 vaccination rates and a gradual recovery in economic
activity.

Revenue from IT services in foreign markets reached VND 10,415 billion,

profit before tax of VND 1,732 billion, up 18.6% and 22.1% respectively over
the same period last year.

In the first 9 months of the year, FPT recorded large orders, including 16
projects with a scale of over 5 million USD/project, up 167% over the same
period last year.

Revenue from digital transformation in 9 months reached VND 3,947 billion,

up 59.6% over the same period last year, focusing on digital technologies such
as cloud computing (Cloud), artificial intelligence (AI), low code,...

In the domestic market, IT services recorded VND 3,880 billion in revenue, up

32.3% and VND 365 billion in pre-tax profit, up 92.7% over the same period
last year.

In which, products of the Made by FPT ecosystem recorded VND 415 billion in
revenue, up 54.9% over the same period.

In 9 months, the telecommunications sector brought in VND 9,232 billion in

revenue and VND 1,783 billion in pre-tax profit, up 11% and 21.9%
respectively over the same period last year.
Thanks to the increased profit from the television segment, along with the
postponement of investment in infrastructure due to the complicated situation of
the COVID-19 pandemic, in the first 9 months of the year, the pre-tax profit
margin of the telecommunications service segment , including broadband and
other services, continued to improve, reaching 20.8% and 14% respectively.

BALANCE SHEET

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TOTAL ASSET

In general, FPT's total assets tend to increase sharply in the next three years,
from 2018 to 2021, ranging from $29 to $53 billion, with the maximum value in
2020 being about $57.6 billion.

TOTAL LIABILITIES AND EQUITY

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With the leading position in the industry, the financial situation at FPT has
always remained stable, with the scale of assets - capital sources continuously
expanding.
Total assets increased by 25% to 41,734.3 billion VND, the highest increase in
the past 5 years. In which, short-term assets increased by 35% to 25,612.5
billion, long-term assets increased by 11.84% to 16,121.8 billion.
Abundant cash with nearly 4,700 billion dong, accounting for 11.2% of total
assets. Besides, the enterprise also holds 12,434 billion dong of short-term
investment value (30% TTS), helping to create stable financial income and
proactiveness in business activities. This source of excess liquidity also limits
the pressure of interest payment from increasing sharply in 2020.

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 Short-term and long-term receivables decreased slightly by 0.41%, at VND
7,185.67 billion (about 17.2% TTS) excluding provisions. It should be noted
that, as of December 31, 2020, FPT's asset structure has about VND 842 billion
of bad debt, an increase of 75% compared to the end of 2019, accounting for
2% of TTS. The enterprise has made provision for about 80.4% of bad debts,
equivalent to 677 billion. The remaining receivables are mainly short-term from
customers (5,564.4 billion), of which no customer accounts for more than 10%
of the short-term receivable balance. Although the proportion is not too large
and the receivables are spread from many sources, the small change in
receivables is still a risk of reducing assets in case bad debts increase.
Inventories were little changed with a total value of VND 1,290 billion,
accounting for a small proportion (3%) of total assets, although provision was
increased to VND 115 billion. The Group's inventory is mainly raw materials
(38%) and production in progress (40%).

NET WORKING CAPITAL

Increased spending on buying fixed assets, capital construction investment

highest in 3 years, with VND 1,670 billion for new purchases, mainly
machinery and infrastructure, mining rights and software. Besides, FPT also
spent an additional 723.6 billion VND on the construction of FPT Tower, the
construction of FPT University in Da Nang and many other projects. This
shows the potential to drive education profits in the future.
Financial leverage is relatively high with a debt to total asset ratio of 55.4%,
equivalent to VND 23,128.7 billion (+39.37%). Especially, during the year,
enterprises increased their debt by about 4,500 billion VND, mainly short-term

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debt, making the total debt volume account for 31% of TTS, equivalent to
12,740.21 billion VND. However, the positive cash volume and cash flow still
help FPT ensure its ability to pay both principal and interest upon maturity.
Cash flow from operating activities has been continuously positive for 3
consecutive years, a record high in 2020 with VND 6,340 billion (1.6 times
higher than 2019). Positive business cash flow combined with abundant cash
allows the company to expand investment to increase scale and repay debt in
the following years.

CASH FLOW STATEMENT

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CASH FLOW IN OPERATING ACTIVITIES

The cash flow employed in FPT operations has varied during the three years
from 2018 to 2020, with the numbers of cashflow increasing rapidly from 2018
to 2019 (+50 percent). Following that, the yearly operating cash flow fell to -
10,4 percent in 2020, however it was still higher than the first year's operational
cash flow. This indicates that, despite the fact that Covid-19 will create a dip in
2020, FPT fared well on its business, and it is expected that operational cash
flow will be a positive account with a continuous growth rate.

CASH FLOW IN INVESTING ACTIVITIES

Based on the company's disclosures over this time period, we can conclude that
FPT-investment FPT's operations caused the most apparent change in the
general pattern of the cash flow statement. . Following the discontinuation of
200 specific brands, which accounted for only 2% of company sales. In 2020,
the total amount spent on investment activities is expected to be somewhat more
than -1,5 billion USD (+ 62.9 percent). Overall, the investing cash flow follows
an uncertain trajectory, but we can anticipate that it will maximize the overall
company's investment account.

CASH FLOW IN FINANCING ACTIVITIES

In general, throughout the course of three years (2018-2020), funding operations

grew increasingly low-cost. Following a decrease in 2018-2019. In 2019, and
2020, there was an increase trend of roughly -9B USD and -8B USD,
respectively. Furthermore, a positive trend in numbers does not imply good
financial management. However, it demonstrated that the corporation would
credit a larger dividend paid (7,05B USD) owing to an increase in profit and
that a positive insurance stock (529M USD) could be projected by higher
earnings-per-share items.

FINANCIAL RATIO ANALYSIS

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LIQUIDITY RATIO

From 2018 to 2020, the debt-to-equity ratio has been increase, with ratios raise
from 3.78 to 3.42. Even if the range of this ratio is much below 4, it is still too
high since FPT relies on loans to obtain capital rather than shareholder equity,
reaching a higher point than its sector, which is 2.8 on average. ore to
progressively lessen the danger of having to pay liabilities.

EFFICIENCY RATIO

RECEIVABLE TURNOVER RATIO

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 Overall, receivable turnover increased from 9.38 in 2018 to 10.5 in 2020, with.
an average value of 9.2. This is due to consumers' restricted trade credit terms. In
comparison to the industry index of 10.49, forecasted with a higher rate is less
potential to accept credits and face competitive credit conditions from others in
their industrial peer groupings.

INVERTORY TURNOVER RATIO

FPT-inventory Cola's is sold little under 4,4 times every year on average during
the last three years. It rose from 4.26 to 4.33 during 2018 and 2019 before falling
to 4.11 in 2020, indicating that inventory sales are declining and inventory control
is inadequate. Based on the average value of 4.23, which is substantially lower
than the industry average (equal 6.33), FPT-inventory Cola's liquidity was
troublesome and its inventory's liquid ability was obstructed.

TOTAL ASSET TURNOVER RATIO

Furthermore, total asset turnovers change little, reaching values of 0.43 and 0.38 in
2018 and 2020, respectively, for an average value of 0.396, which is much lower
than the industry average of 0.63. This turnover rate is not equal to one, which is
unsurprising given that the beverage products business typically has a lower index
than other industries. However, the fact that FPT-rate FPT's is lower than the
industry indicates a difficulty with utilizing assets bought and inefficiently
producing sales income, which is most likely driven by some other external
challenges.

PROFITABILITY RATIO

Indicators are all fluctuating in the same direction, with a significant increase
trend followed by a modest fall from 2018 to 2020. To begin, the net profit margin
climbed from 20.20 percent to 23.94 percent and then declined to 23.47 percent
last year, while the average index was 22.23 percent, much higher than the industry
(13.5 percent). There is no debate about FPT-efficiency FPT's in turning profit
from sales. The bigger the net profit margin, the greater the company's
profitability. Following that, the proportion of ROA climbed from 7.73 percent to
10.33 percent in 2019 before falling slightly to 6.87 percent in 2020. ROE is not
immune to this trend, reaching a high of 46.99 percent in 2018 and 2019, before
falling slightly to 43.14 percent in 2020. When compared to the overall industry
average, the three-year average ROE of 41.67 percent is greater (38.65 percent).
Furthermore, FPT-average Cola's ROA stays lower but virtually the same as the
industry's ratio, at 8.97 and 9.08, demonstrating the effectiveness of employing
corporate assets and shareholders' investment to generate profit at a higher
management level.

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MARKET VALUE RATIO

Although the book value grows continuously year after year, the market value
swings. EPS grew quickly from $1.5 in 2018 to a peak of $2.07 (+38 percent) in
2019, and then decreased to 1.79 (-13.5 percent) in 2020. Coke's average EPS of
1.78 is less than half of the sector's EPS of $2.84; the firm confronts competition
from other businesses in the same industry due to its low stock market
attractiveness; risk management measures are needed to support EPS growth in the
future.

CONCLUSION
In which, revenue from the education and investment segments continued to
grow well thanks to the company's technological advantages, with the education
business being the focus in the future with a uniform increase in enrollment and
a sharper increase in tuition fees. for program quality feedback. The
announcement segment including digital advertising and Internet service
providers, Smart Homes and pay TV packages continue to gain more market
share after the Netflix supplier may be taxed in Vietnam. Value orders and
brand power are huge for IT. In the short term, I think FPT is capable of
planning the set revenue for this segment, then increasing it steadily in the
future. In addition, we also strongly hope that the epidemic situation at the
client companies can progress in 2021 thanks to the vaccination process. The
global economy is expected to recover more strongly in 2022. However,
business expansion in technology segment means that labor costs, management
and loan payment payment will increase sharply in the following years.

REFERENCE

https://finance.vietstock.vn/FPT/tai-chinh.htm?tab=KQKD&languageid=2
https://www.abs.vn/uploads/files/bao_cao_fpt.pdf
https://www.investing.com/equities/fpt-corp-ratios
http://www.fpts.com.vn/FileStore2/File/2021/03/05/20210305_-_FPT_-
_BCTC_rieng_da_kiem_toan_nam_2020_TV.pdf

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