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Writing business overview (online)
Content : Companies’ strategies and what are the expected effects on financial performance
SZC - Hunt (Supporter: Mathys)
LHG - Linh (Suppoter: Huyen)
Submission
By taking example of “Exercise Inditex and H&M” + Chapter 5 in Business analysis and valuation
(about H&M and Inditex comparison), “ROE decomposition methodology (answers)” and “Vinamilk –
Nestle case 2014-2021”,
answer to the following questions in an Excel file:
1. What are the main differences in the two companies’ strategies and what are the expected
effects on financial performance?
2. Calculate the EBIT and NOPAT (i.e. net operating profit after tax).
3. Create the common-size income statement (including the EBIT margin). Explain your choice
for the line item considered as related to “EBIT” (or your own calculation of EBIT).
4. Create the average managerial balance sheet over 3 years for the two companies.
5. Calculate the ratios and periods: average WCR / Revenue, days sales outstanding (DSO), days
Established on May 23, 2006, Long Hau Corporation (stock symbol: LHG) is the investor of Long Hau Industrial Park projetcs
with a total area of nearly 500 hectares. Their product are industrial land, ready built factory for lease, build-to-suit factory,
long hau high-rise factory, long hau high-tech factory in da nang, long hau trading center. The project is divided into phases:
Long Hau Industrial Park with area of 137,02 hectares (in 2006), Long Hau Industrial Park Extended with area of 108.48
hectares (in 2009), Long Hau Commune's Residential - Resettlement Area has total area of 55 hectares (in 2009) and now is
Long Hau Industrial Park 3 – Phase 1 with area of 123.98 hectares. From 2017 to 2021, Long Hau Corporation planned to
achieve on earning after tax is respectively 101 billions, 127,5 billions, 127,7 billions, 122 billions & 161 billions.
SZC
Sonadezi Chau Duc Joint Stock Company (Stock code: SZC - HOSE). After more than 15 years of establishment, until now
Chau Duc Urban & Golf Park, invested by Sonadezi Chau Duc Joint Stock Company, has been completing synchronous
technical infrastructure. With a scale of 2,287 ha, the industrial park has been completed. Chau Duc Urban & Golf Course is
one of the leading large industrial complex investment projects in the country, including an industrial park (1,556 ha) and a
commercial urban area - a 36-hole international standard golf course. The enterprise is expected to submit to shareholders
the 2021 plan with total revenue of 584.3 billion dong, profit after tax of 176.3 billion dong, respectively increasing by 26.5%
and decreasing by 5.2% compared to the previous year. From 2017-2021, their expected ROA is respectively 3.3,3.8,4.3,4.2
& 5.76 and ROE is 6.5, 8.4, 11.2, 14.7 & 22.1. In 2021, the business is expected to complete the procedures to expedite the
signing of land lease contracts with customers who have signed the agreement in 2020.
For LHG & SZC, both companies stategy is focusing on completing the project and attracting more investor for the upcoming
years. While LHG expects their EAT around 120 to 160 billions, SZC is planning to achieve over 170 millions. Besides, SZC
also expectS their return on asset & equity, which is more specific than LHG.
BALANCE SHEET
VND Billion CY2021 CY2020 CY2019 CY2018
-Current Assets 2.014 1.716 1.397 1.437
-Cash and Cash Equivalents 92 261 151 352
-Cash 63 54 38 35
-Cash equivalents 29 206 113 317
-Short term financial investment 986 433 335 279
-Short-term investments 0 0 0 0
-Provision for short term investment loss 0 0 0 0
-Held to maturity Investment 986 433 335 279
-Short term Account Receivables 303 314 341 339
-Account Receivable 21 41 34 22
-Prepaid for suppliers 11 9 12 11
-Short term Internal Receivable 0 0 0 0
-Construction contract in progress receivables 0 0 0 0
-Short-term loan Receivables 0 0 0 0
-Other Receivables 271 264 296 307
-Provision for doublful debt 0 0 0 0
-Deficiency Assets waiting for solution 0 0 0 0
-Inventories 627 700 562 464
-Inventory 627 700 562 464
-Provision for decline in inventories 0 0 0 0
-Other Current Assets 7 9 7 3
-Short-term prepaid expenses 1 1 1 1
-Discounted VAT 6.00 7.00 6 3
-Tax and States Account Receivables 0.00 1.00 1.00 0.00
-Government bonds purchased for resale 0 0 0 0
-Other current assets 0 0 0 0
-Long-term Assets 832 884 838 680
-Long term Account Receivable 5 5 5 0
-Long-term trade receivables from customers 0 0 0 0
-Long term prepaid for suppliers 0 0 0 0
-Business capital in subsidiary uints 0 0 0 0
-Internal Longterm Receivables 0 0 0 0
-Long-term loans receivables 5 5 5 5
-Other Long term Receivables 5 5 5 0
-Provision for doubtful Long-term receivable -5 -5 -5 -5
-Fixed assets 70 75 57 50
-Tangible Fixed Assets 68 74 56 49
-Financial leases fixed assets 0 0 0 0
-Intangible Fixed Asset 2 2 2 2
-Construction in progress (before 2015) 0 0 0 0
-Real Estate Investment 466 509 451 280
-Original Price 739 739 639 437
-Acumulated Depreation and Amortization -273 -230 -188 -157
-Long-term incomplete assets 39 41 93 127
-Long-term cost of work in progress 0 0 0 0
-Capital Construction in Process 39 41 93 127
-Long term Finacial Investments 202 206 204 202
-Investments in subsidiaries 0 0 0 0
-Investments in associates 102 106 104 102
-Other long term Investments 100 100 100 100
-Provision for long-term investments 0 0 0 0
-Long term held-to-maturity Investment 0 0 0 0
-Other long term assets 50 47 28 21
-Prepaid expenses 50 47 28 21
-Deferred Income Tax 0 0 0 0
-Long-term equipment, material and spare parts 0 0 0 0
-Other long term assets 0 0 0 0
-Goodwill 0 0 0 0
-Goodwill (before 2015) 0 0 0 0
TOTAL ASSETS 2.845 2.6 2.235 2.117
-Liabilities 1.381 1.316 1.044 970
-Short term Liabilities 816 753 591 582
-Short term Loan and Liabilities 46 43 21 21
-Payment for suppliers 42 73 61 25
-Prepaid from Customers 41 37 0 12
-Tax and other payable to State Budget 11 11 4 2
-Employees Payable 10 14 8 6
-Expenses Payable 547 458 424 319
-Internal Payable 0 0 0 0
-Construction contract in progress payables 0 0 0 0
-Other Account Payables 72 82 38 170
-Bonus and welfare funds 47 35 35 26
-Short-term unrealized revenue 0 0 0 0
-Provision for short term Payables 0 0 0 0
-Price stabilisation Fund 0 0 0 0
-Government bonds purchased for resale 0 0 0 0
-Long term Liabilities 565 563 453 388
-Long-term Payable for suppliers 0 0 0 0
-Long term prepaid from Customers 0 0 0 0
-Long term Expenses Payables 0 0 0 0
-Internal Payables of Business Capital 0 0 0 0
-Internal Payable 0 0 0 0
-Other long-term payables 54 76 76 69
-Loans and Long term Liabilities 140 167 88 48
-convertible bond 0 0 0 0
-Preferred shares 0 0 0 0
-Deferred Income Tax Payable 369 318 288 271
-Provision for unemloyment pension allowance 0 0 0 0
-Unrealized Revenue (Long term) 2 2 1 2
-Technology-science development fund 0 0 0 0
-Provision for long-term liabilities 0 0 0 0
-Owners equity 1.464 1.284 1.191 1.147
-Capital and researves 1.464 1.284 1.191 1.147
-Paid-in capital 500 500 500 500
-Share premium 72 72 72 72
-Convertible Bonds Option 0 0 0 0
-Other capitals of Owners Equity 0 0 0 0
-Treasury shares 0 0 0 0
-Property revaluation differences 0 0 0 0
-Exchange differences 0 0 0 0
-Development and Investment Fund 97 97 97 80
-Financial Provision Fund 0 0 0 0
-Other Funds of Owners Equity 0 0 0 0
-Undistributed Profit after Tax 794 614 521 495
-Non Controlling Shareholders 1 1 1 1
-Business Arrangement Assistance Fund 0 0 0 0
-Capital Construction Investment 0 0 0 0
-Expenditures and Other Funds 0 0 0 0
-Minority shareholderss Equity 0 0 0 0
TOTAL EQUITY 2.845 2.6 2.235 2.117
CY2017
820
332
488
217
271
13
6
6
-
20
60
199
13
4
9
-
208
42
9
33
166
-
166
Common-size income statement
CY2021 CY2020 CY2019 CY2018 CY2017
100% 100% 100% 100% 100%
47.3% 54.3% 64.3% 43.3% 44.5%
52.7% 45.7% 35.7% 56.7% 55.5%
7.7% 11.8% 11.4% 16.5% 16.4%
45.0% 33.9% 24.4% 40.2% 39.1%
Non-operating assets
Long-term non-operating assets 925 973 892 710
Short-term non-operating assets 986 433 335 279
Cash and cash equivalents 92 261 151 352
Marketable securities
Total non-operating assets 2003 1667 1378 1341
Debt
Non-current debt (including provision 140 167 88 48
Current debt 46 43 21 21
Total Debt 186 210 109 69
Non-operating assets
Long-term non-operating assets 949 932.5 801 743
Short-term non-operating assets 710 384 307 321
Cash and cash equivalents 177 206 252 404
Marketable securities
Total non-operating assets 1835 1522.5 1359.5 1467.5
Debt
Non-current debt (including provision 154 128 68 44
Current debt 44.5 32 21 22.5
Total Debt 186 210 109 69
307
270
161
-343
-736
-341
53
0
0
11
-302
-238
-579
776
362
456
1594
1015
1.988
39
24
63
65
LHG
Q5 CY2021 CY2020 CY2019
Average WCR / Revenue -24.81% 2.87% 13.19%
DSO 156.3 204.0 221.2
DIO 645.6 649.0 479.7
DPO 500.6 464.9 353.9
CCC 301.3 388.2 346.9
Q6
EBIT margin 45% 34% 24%
Net operating assets turnover -1.6 -2.6 -3.1
RNOA before tax -73.64% -86.34% -74.68%
Q7
ROE 2612.25% 2785.05% 1293.43%
= ROCE after tax 22.63% 16.16% 12.47%
+ Spread: ROCE after tax - Cost of debt after tax 37.90% 31.88% 25.57%
x Financial leverage (i.e. Debt / Equity) 68.3 86.9 50.1
ROE: Net profit of the period / Average equity 10872.36% 8231.64% 6571.69%
Q8 Checking: ROE (direct calculation) minus ROE (f 8260.11% 5446.59% 5278.26%
CY2018
-36.05%
264.1
746.1 không có Cost of merchandise chỉ có COGS
646.5 không có Cost of merchandise chỉ có COGS
363.8
360
40%
-1.0
-42.04%
-95.70%
-36.05%
-59.65%
1225.83%
16.98%
35.96%
33.6
0.2
0.2
0.8 Effective income tax rate, tuy nhiên ở Q2 chỉ có tax rate
20.74%
-42.04%
-39%
3.13%
139%
-42.04%
40.23%
-1.0
3.13%
46
1,468
23.19%
16
69
Brands 0 0 0
Customer relations 0 0 0
Leasehold and similar rights 191 411 508
Goodwill 64 64 64
Capitalised development expenditure 10,177.00 10,973.00 9,046.00
Buildings and land 745 813 831
Equipment, tools, fixtures and fittings 30,894.00 40,079.00 41,608.00
Right-of-use assets 59,535.00
Participations in associated companies 247 210 126
Other shares and participating rights 539 429 352
Long-term receivables 907 912 885
Deferred tax receivables 5,714.00 4,322.00 3,794.00
Total fixed assets 109,013.00 58,213.00 57,214.00
Stock-in-trade 38,209.00 37,823.00 37,721.00
Accounts receivable 3,086.00 5,879.00 6,329.00
Tax receivables 1,686.00 1,555.00 1,448.00
Other receivables 1,667.00 1,075.00 1,235.00
Forward contracts 730 661 372
Prepaid expenses 3,440.00 2,967.00 2,881.00
Short-term investments 960 2,242.00 1,162.00
Cash and cash equivalents 15,580.00 10,070.00 10,428.00
Total current assets 65,358.00 62,272.00 61,576.00
200,004.00
91,914.00
108,090.00
80,427.00
7,081.00
13
20,569.00
281
41
20,809.00
4,625.00
16,184.00
2017
-35,634.00
-736
-7,175.00
-577
-91,178.00
2017
18
8
592
64
6,361.00
824
38,994.00
1,039.00
2,916.00
50,816.00
33,712.00
5,297.00
2,375.00
1,377.00
497
2,770.00
601
9,117.00
55,746.00
106,562.00
207
1,015.00
58,491.00
59,713.00
445
0
350
5,331.00
6,126.00
7,215.00
918
9,745.00
125
903
2,769.00
19,048.00
40,723.00
106,562.00
BALANCE SHEET
VND Billion CY2021 CY2020 CY2019 CY2018
-Current Assets 352 237 560 398
+Cash and Cash Equivalents 199 89 292 236
+Short term financial investment 60 80 120 90
+Short term Account Receivables 52 46 144 70
+Inventories 7 3 1 1
+Other Current Assets 34 18 3 1
-Long-term Assets 5.264 4.181 2.53 2.183
+Long term Account Receivable 0 0 0 0
+Fixed assets 307 308 316 320
+Real Estate Investment 41 43 45 72
+Long-term incomplete assets 4.856 3.768 2.106 1.733
+Long term Finacial Investments 53 53 50 48
+Other long term assets 7 9 14 10
-Goodwill (before 2015) - - - -
TOTAL ASSETS 5.616 4.418 3.09 2.581
-Liabilities 4.151 3.154 1.894 1.425
+Short term Liabilities 1.259 1.043 446 219
+Long term Liabilities 2.892 2.11 1.448 1.206
-Owners equity 1.466 1.264 1.196 1.156
+Capital and researves 1.466 1.264 1.196 1.156
-Expenditures and Other Funds - - - -
-Minority shareholderss Equity - - - -
TOTAL EQUITY 5.616 4.418 3.09 2.581
INCOME STATEMENT
VND Billion CY2021 CY2020 CY2019 CY2018
-Gross Operating Revenue 713 433 329 290
-Deduction revenues - - - -
-Net Sales 713 433 329 290
-Cost of goods sold 262 199 152 149
-Gross profit 451 234 177 142
-Financial income 13 22 27 13
-Financial Expenses 7 8 10 11
-Of which: Interest Expenses 7 8 10 11
-Profit or loss from join venture companies - - - -
-Selling Expenses 11 4 7 6
-General and admin expenses 54 31 31 25
-Net Profit from Operating activities 392 213 156 113
-Other incomes 5 7 0 0
-Other Expenses - - - 1
-Other profits 5 7 0 0
-Profit or lost from join venture companies (bef - - - -
-Pretax Profit 397 220 156 113
-Corporate Income Tax Expenses 73 34 22 15
-Current Corporate Income Tax Expenses 73 34 22 15
-Deferred Income Taxes Expenses - - - -
-Net Profit After Tax 324 186 134 97
-Benefits of Minitory shareholders - - - -
-Net Profit After Tax of Parent Company 324 186 134 97
CASHFLOW
VND Billion CY2021 CY2020 CY2019 CY2018
Cash flows from Operating Activities - Indirect method
-Pretax Profit 397 220 156 113
Adjustments
-Depreciation of Fixed Assets Expenses 231 149 110 112
-Amortisation of goodwill - - - -
-Provision for short term investment loss 0 -2 1 1
-Unrealised foreign exchange gain/(loss) 0 0 0 0
-Profit/(loss) from liquidating fixed assets - - - -
-Profit/(loss) from investing activities -13 -22 -27 -13
-Interest Expenses 7 8 10 11
-Interest income and dividend - - - -
-Other adjustments - - - -
Operating profit/(loss) before changes in Worki 622 353 251 224
- Increase/(decrease) in receivables -26 88 -77 57
-Increase/(decrease) in inventories -4 -2 0 0
-(Increase)/decrease in payables 183 219 443 199
-Increase/(decrease) in prepaid expenses 8 -1 -4 3
-Increase/(decrease) in trading securities - - - -
-Interest paid -7 -8 -10 -11
-Income Tax paid -63 -34 -18 -16
-Other Incomes from Operating Activities - - - -
-Other Incomes from Operating Activities -10 -3 -13 -8
Cash flows from Operating Activities - Direct method
-Cash provided by Sales, services, and other r 825 786 731 -
-Cash payments to goods and service Supplier -42 -40 -36 -
-Cash payments to employees -39 -39 -32 -
-Cash payments to Interest -7 -8 -10 -
-Cash payments to Corporate Income Tax -63 -34 -18 -
-Proceeds from operating activities 115 47 46 -
-Other Cash payments to Operating activities -85 -100 -110 -
Net cashflow from operating activities 704 611 572 448
Cash flows from Investing activities
-Purchases of fixed assets and other long term -1.099 -1.477 -468 -449
-Proceeds from depleting, acquisiting fixed ass - - - 0
-Loans granted, purchases of debt instruments -40 - -70 -110
-Collection of loans, proceeds from sales of de 60 40 40 120
-Investments in other entities - -3 -1 -
-Proceeds from divestment in other entities - - - -
-Proceeds from Interest, Dividends and shared p 11 24 26 12
Net Cashflow from Investing activities -1.068 -1.416 -474 -427
Cash flows from Financing activities
-Proceeds from issue of shares, capital contribu- - - -
-Cash payments to capital contribution and Buy- - - -
-Short , long term loan received 1.104 901 124 340
-Payment of Princial Loans -558 -211 -81 -160
-Payment of financial lease - - - -
-Dividends and Profit paid -72 -88 -84 -49
-Interests, dividends, profits received - - - -
Net Cashflow from Financing activities 474 602 -42 132
Net Cash and Cash equivalents during the peri 110 -203 56 153
Cash and cash equivalents at beginning of year 89 292 236 83
Effect of foreign exchange differences 0 0 0 0
Cash and Cash equivalents at end of year 199 89 292 236
CY2017 Q2. EBIT and RNOA CY2020 CY2019 CY2018
312 Gross Profit 93,544.00 122,453.00 110,887.00
83 S,G & A 90,445.00 105,107.00 95,394.00
100 EBIT 3,099.00 17,346.00 15,493.00
122 Income Tax 39.42% 22.70% 19.10%
1 NOPAT 1877.2207602 13408.215629 12533.885543
6
1.889 Q.3 Common size Income
0 Statement Normal Income Statement
327 CY2021 CY2020 CY2019
73 Revenues 187,031.00 232,755.00 210,400.00
1.428 COGS 93,487.00 110,302.00 99,513.00
48 Gross Profit 93,544.00 122,453.00 110,887.00
13 S,G & A 90,445.00 105,107.00 95,394.00
- EBIT 3,099.00 17,346.00 15,493.00
2.201 Interest expenses 1,299.00 331.00 146.00
1.083 Interest incomes 252 376.00 292.00
367 Profit Before Tax 2,052.00 17,391.00 15,639.00
716 Income Tax 39.42% 22.70% 19.10%
1.118 Net profit 1243 13443 12652
1.118
-
-
2.201
CY2017
220
-
220
115
104
17
12
12
-
6
21
83
0
-
0
-
83
10
10
-
73
-
73
CY2017
83
10
-
-
0
-
-17
12
-
-
88
-63
0
113
-8
-
-12
-12
-
-3
-
-
-
-
-
-
-
105
-301
0
-100
250
-3
-
17
-137
-
-
170
-31
-
-42
-
97
64
19
0
83
CY2017
108,090.00
87,521.00
20,569.00
22.23%
15997.342304
Non-operating assets
Long-term non-operating assets 786 639 478 0
Short-term non-operating assets 3,357.00 3,978.00 2,769.00 2,475.00
Cash and cash equivalents 15,580.00 10,070.00 10,428.00 9,117.00
Marketable securities
Total non-operating assets 19,723 14,687 13,675 11,592
Debt
Non-current debt (including provision 59,503.00 11,157.00 10,937.00 795
Current debt 25,157.00 11,527.00 13,089.00 13,542.00
Total Debt 84,660.00 22,684.00 24,026.00 14337
Non-operating assets
Long-term non-operating assets 713 559 239
Short-term non-operating assets 3,667.50 3,373.50 2,622.00
Cash and cash equivalents 12,825.00 10,249.00 9,772.50
Marketable securities
Total non-operating assets 17,205 14,181 12,634
Debt
Non-current debt (including provision 35,330.00 11,047.00 5,866.00
Current debt 18,342.00 12,308.00 13,315.50
Total Debt 53,672.00 23,355.00 19,181.50