lOMoARcPSD|12794556

Pttcdn D01 HOA PHAT - Phân tích tài chính doanh nghiệp
công ty hoà phát
phương pháp nghiên cứu khoa học (Trường Đại học Ngân hàng Thành phố Hồ Chí
Minh)

Studocu is not sponsored or endorsed by any college or university

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 lOMoARcPSD|12794556

BANKING UNIVERSITY H O A P H AT G R O U P
STUDENT RESEARCH JOINT STOCK COMPANY

Lecturer TRAN MINH TAM

Class D01

Nguyễn Thị Ngọc Loan 030631150345 Nguyễn Hà Huyền Linh 030631150293

Nguyễn Thị Mỹ Hạnh 030630142531 Lương Thị Thanh Hạnh 030631150290
Nguyễn Thị Kim Thoa 030631150303 Hà Thị Thu Hằng 030631150278

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 lOMoARcPSD|12794556

t s
MACROECONOMIC OVERVIEW

GDP growth
Interest rate
Rate of exchange
Anti-dumping policy steel industry

INDUSTRY ANALYSIS
STEEL IN VIETNAM:
Opportunities and Challenges

OVERVIEW ABOUT BUSINESS ACTIVITIES

Analyze the profit structure
Horizontal analysis
Vertical analysis
Capital structure analysis
c o n
FINACIAL RATIOS ANALYSIS
Coefficient of capital structure
Coefficient of solvency
The profitability indicators of capital
Market indexes

n t e n t s
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 lOMoARcPSD|12794556

Executive
Summary
From the point of view of the
bank, we decided to give Hoa Phat
company a loan for the following
reasons:

Through the statement of business, it

is easy to find that from 2014 to the
end of 2016 after-tax profit of Hoa
Phat continued to increase, which
demonstrates the ability of the com-
pany development is very high.

Besides focusing on developing its Phat is growing increasingly,

main product is the production of
iron, .. Hoa Phat also expanded to
other areas such as investment in
agricultural development and some
other industries. When Hoa Phat
steps into new areas, the profits that
companies bring from new fields are
high profits, which proves that Hoa
diversely and strongly. Hoa Phat
has abilities to manage and use the
company's capital, Which is guar-
anteed at the best level.
Through other financial coefficients
that we get;
Current solvency increased from
2014 to the end of 2016 is increased
from (3.23 -12.67)
Solvency rapid increases from 2014
to the end of 2016 increased from
(0.99 to 9.53)

From these coefficients, we decided

to give Hoa Phat a loan because the
repayment capacity of the enter-
prise is greater than 1 and increas-
ing by each year.

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MACROECONOMIC OVERVIEW

MACROECONOMIC
OVERVIEW
Table 1: The growth rate of the steel industry from 2011 to 2016
2011 2012 2013 2014 2015 2016
Steel productions 9.151 9.212 10.289 12.331 15.022 17.544
Growth rate -1.10% 0.67% 11.69% 19.85% 21.82% 16.79%
Consumption 9.697 10.956 11.769 14.441 18.487 22.588
Growth rate -8.30% 12.98% 7.42% 22.70% 28.02% 22.18%

Source: VSA 2016

Figure 1: Asean finished steel product 2011 & 2015 As we all know, the steel industry is con-
sidered as a leading industry in the nation-
al economy, an indispensable source of
strategic supplies for industry, construc-
16%
tion and defense. Especially, with the goal

01
15% Indonesia of striving the country to 2020 "basically
26%
Malaysia become an industrialized country in the
direction of modernization"- TS.Tran
34%
16% Philippines
22%
Singapore Dinh Thien, the steel industry becomes
Thailand more and more important in the cause of
Vietnam industrialization and modernization.
26% 9%
2% 12%

21% 1%
Vietnam steel industry in recent years,
especially in the last 3 years has seen a
strong development in terms of capacity,
output and actual demand. This is clearly
Soure: SEAISI shown in the summary table below.

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MACROECONOMIC OVERVIEW

1 GDP Growth
In 2016, Vietnam's economy has a GDP growth rate of
6.21%, lower than the 6.68% growth of 2015, not reach-
ing the targeted growth of 6.7%. However, it can be con-
sidered as a success when taking into account the condi-
tion of the world economy and the country’s difficulties.

Hoa Phat has contributed VND 3,435 billion to the state

budget, an increase of 24% compared to 2015 and in the
top 30 largest income taxpayers in Vietnam.

Table 2: GDP growth

6T/2014 9T/2014
Unit: %
5.18 5.62

Q1/2015 6T/2015 9T/2015

02
6.03 6.28 6.5

Q1/2016 6T/2016 9T/2016

5.46 5.52 5.93

Source: vietstock.vn, 2017

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MACROECONOMIC OVERVIEW

2 Interest Rate Figure 2: GPD growth

Most businesses use loans to finance 8.000%

their businesses. Therefore, the inter- 6.000%
est rate movement has a great impact 4.000%
on the business. Currently, the general 2.000%
interest rate is stable and tends to .000%
decrease compared to 2012. According

9T 14
Q1 14
6T 15
9T 15
Q1 15
6T 16

9T 16

6
01
to statistics of the National Center for

0
0

0
0
0

0
0
/2
/2

/2
/2
/2

/2
/2

/2
6T
Socio-Economic Information and Fore-
casting, current lending rates are Source: vietstock.vn, 2017
around 6 - 9% per annum for short
term and 9-11% per annum for medium
and long term. Especially in July, the In addition, the deposit interest rates of
State Bank of Vietnam has decided to banks are as follows:
reduce the interest rate effective from
10/7/2017, according to the Decision In which, the banks with the highest
1424 / QD - NHNN and Decision interest rates are DongA, ACB, Viet-
1425 / QD - NHNN have created combank, BIDV and Agribank. And one
favorable conditions for business of the important partners of Hoa Phat
development. joint stock company is BIDV.

Table 3: The deposit interest rates of banks

Bank 1 month 2 month 3 months 6 months 9 months 12 months 18 months 24 months 36 months

Đông Á Bank 4.9 5 5.2 6.1 6.4 7.1 7.2 7.2 7.2
7.7

03
OCB (Phương Đông) 5.4 5.4 5.5 6.5 6.8 7.4 7.5 7.6
(>500 tỷ)
Bắc Á Bank - 5.3 5.4 6.7 6.8 7.2 7.4 7.4 7.4

AB Bank 4.9 4.9 5.3 6.1 6.1 7.4 6.5 6.5 6.5

HD Bank 5 5 5.2 6.3 6.4 7 7.6 6.9 6.9

BIDV 4.3 4.3 4.8 5.3 5.5 6.9 6.8 6.8 6.8

Sacombank 5 5.1 5.4 6 6 6.8 6.6 6.7 6.8

Vietinbank 4.3 4.3 4.8 5.3 5.5 6.8 6 6.5 7

VPbank 5.2 5.2 5.4 6.2 6.4 6.8 7.1 7.2 7.2

Agribank 5.5 5.8 6 6.5 6.5 6.5 7.5 7.5 6.8

Vietcombank 4.3 4.3 4.8 5.3 5.5 6.5 6.5 6.5 6.5

Techcombank 4.9 5 5.15 5.7 5.7 6.4 6.7 6.8 6.9

7.2
MB Bank 4.4 4.5 4.9 5.4 5.6 x x x
(>200 tỷ)
ACB 4.4 4.4 4.8 5.5 5.6 6.2 6.9 6.5 6.7

(Interest rates updated on 14/9/2017)

Source: Bac A bank.

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MACROECONOMIC OVERVIEW
3 Rate of Exchange
To serve for production and trad-
ing company, the company has
imported modern machinery and
equipment from countries around
the world such as: imported
modern Danieli line of technology
in Italy, direct import of bearings
of the three largest manufacturers
in the world is FAG (Germany),
SKF (Sweden), NSK (Japan)…
Besides business also exports
4 Anti-dumping
Policy Steel Industry
04
On 21/8/2017, the Ministry of
Industry and Trade issued Deci-
sion No. 3283 / QD-BCT on the
application of official anti-dump-
ing measures for some H-shaped
steel products imported into Viet-
nam, exported Originating from
the People's Republic of China.
In September 2014, the Ministry
of Industry and Trade issued Deci-
sion No. 7896 / QD-BCT on the
application of anti-dumping mea-
sures for some cold rolled stainless
steel products imported into Viet-
nam from other countries. It
includes China, Indonesia, Malay-
sia and Taiwan (China).
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consumption markets such as
Australia, USA, Thailand…,
According to statistics of import
and export goods of the General
Department of Customs in 9/2016
imported from China with 8.22
million tonnes, Iron and steel of
Japanese origin reached 2.11
million tons,… So the exchange
rate change affects the business
operations of the business.
Facilitate the development of
domestic production enterprises,
including Hoa Phat Joint Stock
Company, while protecting the
young enterprises in the steel
industry.
Under the impact of trade defense
trends, businesses are in the
process of expanding their capaci-
ty. Specifically, HPG and HSG,
with growth rates of 36% and 26%
in 2013 -1016 respectively, are the
leaders in taking advantage of
market conditions.
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INDUSTRY ANALYSIS

INDUSTRY
ANALYSIS
There is a strict price competition in
Vietnam steel market, making corporate
production cost the most important
matter. Currently, BOF steel producers
have been taking the lead.

Input prices have sharply

increased recently. Iron ore
and hard coking coal prices
soared the most, indirectly forc-
ing the prices of other materials
and semi-products to increase as
well. Therefore, the whole indus-
try’s production cost are boosted.

05
Ministry of Industry and
Commerce (MIC)’s Deci-
sion 2968, which imposed
additional safeguard tariff on
steel bar and billet, helped
increasing sale volume and steel
price. Thanks to this decision,
there was a huge profit spreading
through steel industry. However,
only a few steel companies did
have a sustainable growth.

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INDUSTRY ANALYSIS

There was a dramatic growth in both production and sale volume compared with in
2015, especially in March when the Decision 2968 (MIC) imposed additional safeguard
tariff on steel bar and billet. Construction steel sales volume increased by 21.5% yoy
(10M2016), reaching 6.44 mn ton. However, impacts of the safeguard tariff did not last
long. The sales volume growth rate (yoy) gradually slowed down month by month. By
October 2016, production volume rose by 12.2% yoy, but sales volume grew by 10%
yoy only, and gross margin of industry in 3Q2016 fell.

Domestic steel production in the

first 7 months of 2017 still grew
Figure 3: Production and sale volume over the same period, reaching
of domestic producers in 10M2016 11,252,437 tons, up 12.8% over
the same period of 2016.
1200 Steel sales in the country
Thousand ton

1000 reached 9,493,042 tons, up

800
15.1% respectively over the
600
same period last year.
400
Import situation: By the end of
30/6/2017, imported steel prod-
200
ucts reached over 10,127 million
tons, with total import turnover
0
6

6
01

01

01

01

01

01

01

01

01

01

reached over $ 5.288 billion,

/2

/2

/2

/2

/2

/2

/2

/2

/2

/2
01

02

03

04

05

06

07

08

09

10

Production Sale
down 15% in volume but up
Source: VSA, VCBS 21% in price. Tri. China is still
the main import market, with
imports of nearly 4 million tons
Figure 4: Construction steel market share of steel, accounting for 48% of
in 2016 and the first 6 months of 2017 the total imported steel prod-
ucts.

06
Hoa Phat Export situation: By the end of
Pomina 30/6/2017, the export of steel
22%
PoscoSS
products reached 2.505 million
40%
30% 28%
tons, with total export turnover
Vinakyoei
of $ 1.672 billion, up 26% in
12% TISCO volume and up 50% in value.
9% 12%
Others ASEAN remains the main export
10% 11%
7% market, with exports of more
In: 6T2017
10% 9%
Out: 2016 than 1.18 million tons of steel,
accounting for 58% of the total
export of finished steel products.
Source: VSA. Vietnam products export growth
in the first 6 months Welded
steel pipe: up 320%; Construc-
tion steel: up 45%; KL & SPM:
increased by 24%.

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STEEL IN VIETNAM
OPPORTUNITIES
CHALLENGES AND
CHALLENGES
Operating capacity
Steel industry has not yet operated at full
capacity. Currently, domestic production has
met the demand for construction steel, cold
rolled steel, steel pipes, metal sheets and color
coatings, but Vietnam still imports a lot of
steel, mainly products Domestic hot rolled
steel (HRC), steel fabricated ..
International economic integration
Vietnam has entered into international trade
agreements such as the WTO, TPP, etc. The
integration puts the steel industry in perspec-
tive of the advantages and challenges. Busi-
nesses have to face cheap imported steel prod-
ucts from China. China is the largest steel
producer with more than 50% of global
output. At present, the slower-than-expected
growth of China's economy has led to surplus
supplies of steel products, and as a result Chi-
nese manufacturers are finding ways to export
excess output countries. This has led to cheap
Chinese steel products flooding the markets,
including Vietnam, which has intensified
fierce competition in the domestic market.
Dumping
Vietnam's steel products are constantly being
investigated by countries in the region and in
the world, including Malysia and Thailand.
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INDUSTRY ANALYSIS
Technology and environment
The technology of the steel industry in Viet-
nam is intermingled with modern technolo-
gy in comparison with the world, but there
are still backward technological lines, high
energy consumption and environmental
impact. About 40% of the technological
lines of the steel industry are obsolete,
polluting the environment typically for
Formosa (Ha Tinh).
OPPORTUNITIES
International economic integration
Vietnam has signed 11 bilateral and multilat-
eral free trade agreements with regions and
countries by the end of 2015. It is a condition
07
for Vietnam's steel industry to increase over-
seas consumption. The ASEAN Economic
Community (AEC) is Vietnam's main export
market for the last five years.
The real estate market
The real estate market recovered, the rise of
infrastructure projects and high-class apart-
ment buildings, villas, houses ... Specifically,
in Q2 / 2017 the market received 9,580 apart-
ments from 31 less than the same period last
year by 7% but up to 80% compared to the
previous quarter (according to Hai Phat real
estate trading floor). That is the condition for
increasing steel consumption to promote the
steel industry to develop further.
 lOMoARcPSD|12794556

INDUSTRY ANALYSIS

Political factors
Plan of decreasing
Policy of licensing restrictions on steel sector investment
The policy of exchange rate is not stable, led the businesses in the steel industry have to add the cost to
purchase foreign currency to import raw materials.

Economic factors
The Vietnam's steel consumption per capita is still very low 149.7 kg of steel / people year (2010),
compared with a world average of 193 kg and 275 kg of the ASEAN region.
Imbalance development: Developing fast but unsustainable, imbalances between developed
upstream and downstream.
High growth potential of export
Real estate market is in slow down
GDP growth rate is decreasing recent years.

Social factors
Corporate Social Responsibility (CSR):
Social responsibility is not merely the implementation of humanitarian activities as understood by
many companies, but also includes responsibilityfor ensuring economic growth, efficiency, compli-
ance with laws on wages, insurance, occupational safety issues for workers, business ethics and
share with the community difficulties.
Attitudes toward product quality.
Workforce is abundance and unbalance.

Technological factors
Backward technology in steel production of Vietnam.
According to VSA’s statistics, there are nearly 30% steel enterprises use outdated technologies,
more than 40% of the technology used in the average. Only about 30% using advanced technology
and modern

08
Pressure on tasks Research and Development
Pressure from information technology.

Environmental factors
Urbanization rate As we know, the process of urbanization will increase the demand for means of
transports, roads and bridges as well as housings. All these elements make steel demand grow in
Vietnam.
Power cost is quickly increasing recently
Shortage of land area for developing the steel projects around HCM City area.

Legal factors
Threat of dumping lawsuits: Indonesia has applied anti-dumping for Vietnam's steel products, the
additional import tax from 5.9 to 55.6% will be applied during the three years since 3/2013. Malaysia
and Thailand also expressed concern to the dumping of cold rolled steel, color coated sheet and
galvanized sheet of the Vietnamese companies.
Environmental protection law came into being in 2005

Soure: Vietnam’s Steel Sector Insides

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OVERVIEW ABOUT BUSINESS ACTIVITIES

OVERVIEW ABOUT
BUSINESS ACTIVITIES
1 Analyze the Profit Structure
Table 4: Source of HOA PHAT Company profit
2014 2015 2016
ITEM value proportion value proportion value proportion
Net operating profit/( loss) (15,374,085,546) -1.29% (26,328,280,961) -1.47% (48,922,611,193) -0.86%
Profit from financial activities\
1,195,128,464,655 100.01% 1,813,812,849,983 101.11% 5,750,294,564,338 100.72%
( not excluding loan interest)
Other expenses 15,273,167,284 1.28% 6,378,953,728 0.36% 7,664,698,809 0.13%
EBIT 1,195,027,546,393 100.00% 1,793,863,522,750 100.00% 5,709,036,651,954 100.00%

The profit of financial activities accounted for the highest proportion of the three divisions of the enter-
prise in the three years. Specifically, in 2015, it accounts for 101.11% of EBIT and falling slightly to
100.72% of EBIT in 2016. The main operating activity profit of enterprises over the years are negative
and tend to increase from -1.29% in 2014, -0.86% in 2016. This means that enterprises have not paid
much attention to the production and business the enterprise and focus mainly on financial activities.
However, the tendency of changes that partly proves that enterprises have begun to focus on production
and business activities. The other profit accounts for a negligible share of the three components of profit-
ability and tends to decrease, which has little impact on performance of tendency. Earnings before tax
increased sharply in the three years from 1195027546393.00 in 2014 to 5709036651954.00 in 2016.
Profit increased due to the increase of the profit of financial, decrease other profits and increase profits
from the net operating profit, which is still negative though.

In February 2015, Hoa Phat
Group (HPG) issued a resolution to
establish Hoa Phat Livestock Feed
and Trading Company Limited with
100% of capital from the group.
Authorized capital is 300 billion.
This company will carry out animal
husbandry, animal feed processing
and occupations which agricultural
related occupations.
09
In 2014, the Group purchased Other projects such as the
additional steel pipe plants in the establishment of Hoa Phat Minerals
Central, expanded the 6ha furniture Joint Stock Company, Hoa Phat -
factory in Pho Noi and is building SSG Mining Joint Stock Company
the No.3 kiln in the core segment have been deployed to find and
(steel). The Group has signed a exploit minerals such as copper, lead,
contract to purchase equipment for zinc ... in Vietnam, Laos, and Cam-
this factory with a Dutch supplier. bodia; which will meet the demand
According to the plan, Hoa Phat's for input materials for the Group's
feed products will appear on the projects as well as domestic
market in January 2016. consumption.

Hoa Phat's main income is mainly from financial activities.

So the profit of financial activities is highest proportion of
profit structure.

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OVERVIEW ABOUT BUSINESS ACTIVITIES

Table 5: Compare the structure of HOA PHAT company profit

2015/2014 2015/2016
ITEM
value proportion value proportion
Net operating profit/( loss) (10,954,195,415) -0.18% (22,594,330,232) 0.61%
Profit from financial activities
618,684,385,328 1.10% 3,936,481,714,355 -0.39%
( not excluding loan interest)
Other expenses (8,894,213,556) -0.92% 1,285,745,081 -0.22%
EBIT 598,835,976,357 3,915,173,129,204

ccording to the table, we see that the proportion of net operating profit tends to increase continu-
ously over the three years and that the proportion of other profit also increase from 2014 to 2016.
The proportion of profit from financial activities began to decrease over the years from 1.1% in 2014 to
-0.39%. This partly demonstrates that the structure of corporate profits tends to switch to production,
However, this change is not significant.

2 Horizontal Analysis
Table 6: Analyze trends in business results of Hoa Phat in the period 2014 - 2016
VNĐ change % change
ITEMS 2014 2015 2016 2015/2014 2016/2015 2015/2014 2016/2015
Net sales 29,442,756,667 26,162,521,000 77,559,819,947 (3,280,235,667) 51,397,298,947 -11.14% 196.45%
Costs of goods sold 12,961,352,808 12,961,352,808 64,205,671,438 - 51,244,318,630 0.00% 395.36%
Gross profit/( loss) 16,481,403,859 13,201,168,192 13,354,148,509 (3,280,235,667) 152,980,317 -19.90% 1.16%
Admisnistrative overheads 31,855,489,405 39,529,449,153 62,276,759,702 7,673,959,748 22,747,310,549 24.09% 57.55%

10
Net operating profit/( loss) (15,374,085,546) (26,328,280,961) (48,922,611,193) (10,954,195,415) (22,594,330,232) 71.25% 85.82%
Finacial income 1,306,874,480,387 1,906,513,504,388 5,679,674,023,028 599,639,024,001 3,773,160,518,640 45.88% 197.91%
Financial expenses
111,746,233,732 92,700,654,405 (70,620,541,310) (19,045,579,327) (163,321,195,715) -17.04% -176.18%
( not excluding loan interest)

Profit from financial activities

( not excluding loan interest) 1,195,128,246,655 1,813,812,849,983 5,750,294,564,338 618,684,603,328 3,936,481,714,355 51.77% 217.03%

Other income 17,087,860,027 6,958,601,854 8,114,457,950 (10,129,258,173) 1,155,856,096 -59.28% 16.61%

Other expenses 1,814,692,743 579,648,126 449,759,141 (1,235,044,617) (129,888,985) -68.06% -22.41%
Other profit/( loss) 15,273,167,284 6,378,953,728 7,664,698,809 (8,894,213,556) 1,285,745,081 -58.23% 20.16%
Earning before interest and tax( EBIT) 1,195,027,328,393 1,793,863,522,750 5,709,036,651,954 598,836,194,357 3,915,173,129,204 50.11% 218.25%
Loan interest expenses 424,189,445 422,657,217 20,922,222 (1,532,228) (401,734,995) -0.36% -95.05%
Earning before tax( EBT) 1,194,603,138,948 1,793,440,865,533 5,709,015,729,732 598,837,726,585 3,915,574,864,199 50.13% 218.33%
Corporate income tax 6,068,773,819 2,492,111,243 18,357,879,105 (3,576,662,576) 15,865,767,862 -58.94% 636.64%
Earning after tax( EAT) 1,188,534,365,129 1,790,948,754,290 5,690,657,850,627 602,414,389,161 3,899,709,096,337 50.69% 217.75%

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OVERVIEW ABOUT BUSINESS ACTIVITIES

Net sales in 2015 was 26,162,521,000, in

NET SALES 2014 was 29,442,756,667 , net sales decreased

(3,280,235,667) corresponding -11.14%
Net sales in 2016 was 77,559,819,947,in 2015
was 26,162,521,000 , net sales increased
51,397,298,947 corresponding 196.45%.

EBIT in 2015 was 1,793,863,522,750, in 2014 was 1,195,027,328,393,

EBIT increased 598,836,194,357 corresponding 50.11%.
EBIT in 2016 was 5,709,036,651,954, in 2015 was 1,793,863,522,750,
EBIT increased 3,915,173,129,204 corresponding 218.25%.
EBIT increased because of:
In 2014 prices of In 2015, continued 2015 to 2016 EBIT
input materials to invest in expan- increased 218.25%
decreased, interest sion of production because:
rates decreased, at all factories in Profit from finan-
especially the real Hung Yen, Da cial activities( not
estate market Nang and Binh excluding loan
emerged with the Duong, especially interest) increased
segment of medi- to buy steel pipe quickly 217.03%
um-priced housing. mill project in Long and other profit
Anpany expanded increased 20.16%
in the central compare to 2015.
region – Central
Highlands.

EARNING BEFORE TAX( EBT) EARNING AFTER TAX( EAT)

EBT 2014 was 1,194,603,138,948 , in 2015 was
1,793,440,865,533 compared to the 2014 EBT
increased 598,837,726,585 corresponding to
the rate of increase 50.13% because of: Interest
costs 2015 compared to 2014 decreased 0,36%
and EBT 2015 compared to the 2014 increase
50.11% (Overall, the 2015 interest rate tends
to decrease against 2014)
EBT 2016 was 5,709,015,729,732 increased
3,915,574,864,199 compared to the 2015 EBT
corresponding to the rate of increase 218,33%
because of: Interest costs 2016 compared to
2015 decreased 95.05%% and EBT 2016 com-
pared to the 2015 increase 218.25%.
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11
EAT 2015 was 1,790,948,754,290, in 2014
was 1,188,534,365,129, EAT increased
602,414,389,161 corresponding 50.69%.
EAT 2016 was 5,690,657,850,627, in 2014
was 1,790,948,754,290, EAT increased
3,899,709,096,337 corresponding 217.75%.
In 2015 EAT increased because: Profit from
financial activities( not excluding loan inter-
est) increased 51.77%, Loan interest expenses
decreased 0.36% and Corporate income tax
decreased 58.94%.
In 2016 EAT increased quickly because: Profit
from financial activities( not excluding loan
interest) increased 217.03%, other profit
increased 20.16%, loan interest expenses
decreased 95.05%
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3 Vertical Analysis
Table 7: Analyze the cost-effectiveness of Hoa Phat in the period 2014 - 2016
On Sales Change
ITEMS 2014 2015 2016 2014 2015 2016 2015/2014 2016/2015
Net sales 29,442,756,667 26,162,521,000 77,559,819,947
Costs of goods sold 12,961,352,808 12,961,352,808 64,205,671,438 44.02% 49.54% 82.78% 5.52% 33.24%
Gross profit/( loss) 16,481,403,859 13,201,168,192 13,354,148,509 55.98% 50.46% 17.22% -5.52% -33.24%
Admisnistrative overheads 31,855,489,405 39,529,449,153 62,276,759,702 108.19% 151.09% 80.30% 42.90% -70.80%
Net operating profit/( loss) (15,374,085,546) (26,328,280,961) (48,922,611,193) -52.22% -100.63% -63.08% -48.42% 37.56%
Finacial income 1,306,874,480,387 1,906,513,504,388 5,679,674,023,028 4438.70% 7287.19% 7322.96% 2848.50% 35.77%
Financial expenses
111,746,233,732 92,700,654,405 (70,620,541,310) 379.54% 354.33% -91.05% -25.21% -445.38%
( not excluding loan interest)
Profit from financial activities
1,195,128,246,655 1,813,812,849,983 5,750,294,564,338 4059.16% 6932.87% 7414.01% 2873.71% 481.15%
( not excluding loan interest)
Other income 17,087,860,027 6,958,601,854 8,114,457,950 58.04% 26.60% 10.46% -31.44% -16.14%
Other expenses 1,814,692,743 579,648,126 449,759,141 6.16% 2.22% 0.58% -3.95% -1.64%
Other profit/( loss) 15,273,167,284 6,378,953,728 7,664,698,809 51.87% 24.38% 9.88% -27.49% -14.50%
Earning before interest and tax( EBIT) 1,195,027,328,393 1,793,863,522,750 5,709,036,651,954 4058.82% 6856.62% 7360.82% 2797.80% 504.20%
Loan interest expenses 424,189,445 422,657,217 20,922,222 1.44% 1.62% 0.03% 0.17% -1.59%
Earning before tax( EBT) 1,194,603,138,948 1,793,440,865,533 5,709,015,729,732 4057.38% 6855.00% 7360.79% 2797.62% 505.79%
Corporate income tax 6,068,773,819 2,492,111,243 18,357,879,105 20.61% 9.53% 23.67% -11.09% 14.14%
Earning after tax( EAT) 1,188,534,365,129 1,790,948,754,290 5,690,657,850,627 4036.76% 6845.47% 7337.12% 2808.71% 491.65%

EBIT in 2014 was 1,195,027,328,393 , EBIT in 2015 was 1,793,863,522,750 and in 2016 EBIT was
5,709,036,651,954.EBIT increased from 2014 to 2015.

EBT/NET SALES

12
E arnings before taxes on sales in 2014 was
4057.38%, in 2015 was 6855.00%, increased
2797.62% compared to 2014. It was result from
impact of 2797.80% increased in EBIT on sales
and 0.17% growth in loan interest expenses on
sales compared to 2014.

Earnings before taxes on sales in 2016 was

7360.79%, increased 505.79% compared to the
previous year. It was result from impact of
504.20% growth in EBIT on sales and (1.59%)
decreased in loan interest expenses on sales
compared to 2015. Because interest rates are on
the downward trend.

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2014 to 2015 the increase is higher than in 2015 and 2016 because of:
In 2014 prices of input materials decreased, interest rates
decreased, especially the real estate market emerged with the segment
of medium-priced housing.
In 2015, continued to invest in expansion of production at all
EBIT
factories in Hung Yen, Da Nang and Binh Duong, especially to buy
steel pipe mill project in Long Anpany expanded in the central region
– Central Highlands. NET
EBIT On Sales in 2014 was 4058.82%. It was result from financial
profit (not excluding loan interest) on sales 4059.16% ,other profiton
sales 51.87%. On the other hand, due to the loss in core business , so
main operating profit on sales was down 52.22%.
SALES
In 2015, main operating profit on sales was (100.63%), decreased Earnings before interest
48.42% compared to 2014, financial profit (not excluding loan inter- and taxes on sales (EBIT)
est) on sales was 6932.87%, increased 2873.71% compared to 2014 in 2014 was 4058.82%, in
and other profit on sales was 24.38%, decreased 27.49% compared to 2015 was 6856.62%, and
2014; so EBIT on sales in 2015 was 6856.62%, increased 2797.80% in 2016 was 7360.82%.
compared to the previous year. So EBIT On Sales in
2015 increased 2797.80%
In 2016, EBIT on sales was 7360.82%, increased 504.20% compared compared to 2014, in
to 2015.It was result from financial profit (not excluding loan interest) 2016 increased 504.20%
on sales 7414.01%, increased 481.15% compared to 2015, main oper- compared to 2015.
ating profit on sales (63.08%), increased 37.56% compared to 2015
and other profit on sales 9.88%, decreased 14.50% compared to 2015.

Return on sales – ROS In 2016, ROS was

in 2014 was 4036.76% , 7337.12%, increased
in 2015 was 6845.47%, 491.65% compared
increased 2808.71% 2015. It was result from
compared to 2014. It impact of 505.79%

13
EAT/NET SALES was result from impact
of 11.09% reduction in
corporate income
expenses on sales ,
growth in EBT on sales ,
higher than 14.14%
growth in corporate
income expenses on
lower than 2797.62% sales.
reduction in EBT on
sales compared to 2014.

ROS in 2015 increased 2808.71% compared to 2014. It was result from impact of 2873.71% growth in
financial profit (not excluding loan interest) on sales, 48,42% decreased in main operating profit on sales,
27,49% decreased in other profit on sales, 0.17% growth in loan interest expenses on sales, and 11,09%
decreased corporate income expenses on sales.

ROS in 2016 was 7337.12%, increased 491.65% compared to 2015. But this increase is lower than 2015
compared to 2014 because of:

Scale industry expands faster than speed compared to the speed of expansion of the business.
Inventory increase.

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OVERVIEW ABOUT BUSINESS ACTIVITIES

4 Capital Structure Analysis

Table 8: Financial structure analysis
CHANGE
ITEMS 31/12/2014 31/12/2015 31/12/2016
2015/2014 2013/2012
SHORT-TERM ASSETS 417,341,985,199 727,572,437,118 2,678,376,858,621 310,230,451,919 1,950,804,421,503
SHORT-TERM PAYABLES 129,219,019,165 210,778,630,594 211,460,052,426 81,559,611,429 681,421,832
WORKING CAPITAL 288,122,966,034 516,793,806,524 2,466,916,806,195 228,670,840,490 1,950,122,999,671
LONG-TERM LIABILITIES AND OWNER'S EQUITY 8,241,039,429,526 9,420,450,233,404 13,972,551,230,780 1,179,410,803,878 4,552,100,997,376
LONG -TERM ASSETS 7,952,916,463,492 8,903,656,426,880 11,505,634,424,585 950,739,963,388 2,601,977,997,705
NET WORKING CAPITAL 288,122,966,034 516,793,806,524 2,466,916,806,195 228,670,840,490 1,950,122,999,671
NET WORKING CAPITAL / WORKING CAPITAL 100.00% 100.00% 100.00% 0.00% 0.00%
NET WORKING CAPITAL / SHORT-TERM ASSETS 69.04% 71.03% 92.10% 1.99% 21.08%

NET WORKING CAPITAL

At the end of 2014, the company Keeping increasing steadily, net working
reached 288,122,966,034 vnd in net working capital rose up from 516,793,806,524 vnd at the
capital.In comparison with the last year, net end 2015 to 2,466,916,806,195 vnd, making a
working capital of Hoa Phat Group Joint Stock 1,950,122,999,671 vnd growth in 2016. This
Company in 2015 increased with could be explained by the fact that long-term
228,670,840,490 vnd growth.The reason for this liabilities and owner’s equity in this year had
wasthe increased of 1,179,410,803,878 vnd in increased 4,552,100,997,376 vnd while the
long – term liabilities and owner’s equity while long- term assets also grown, but only by
the long- term assets only increased 2,601,977,997,705 vnd.
950,739,963,388 vnd. With the increase of net working capital
over the years, the solvency was guaranteed
more certainly and the financial position of the
company also became safer and safer.

NET WORKING CAPITAL/ WORKING CAPITAL

14
-At the 2014, 2015, 2016 , Net working capital ratio on working capital always remained stable at 100%.
-Long-term capital spons 100% financing for working capital needs.
-Financial structure is safe, stable and low risk.

NET WORKING CAPITAL/ SHORT- TERM ASSETS

From 2014 to 2016, long-term liabilities and owners’s equity of Hoa Phat was not only enough to
sponsor for long-term assets but also for short-term assets.
In 2014, 69.04 % of short - term assets was sponsored by long - term liabilities and owner’s equity. This
percentage increased by 1.99 % in 2015, it continued to rise in 2016 and reached 92.10 %, making a
growth of 21.08 % in change.
The trend of increasing in the ratio of net working capital over short - term assets showed that
the capital structure of Hoa Phat was oriented to become more and more stable so that the financial risk
as well as the liquidity risk would be less.

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Table 9: Assets, Liabilities and Owner’s Equity

TARGET 2014 2015 2016 proportion compare
ASSET
ASSET 2014 2015 2016 2015/2014 2016/2015
Short-term assets 417,341,985,199 727,572,437,118 2,678,376,858,621 4.99% 7.55% 18.88% 2.57% 11.33%
Cash and cash equivalents 298,740,078,905 514,591,242,289 664,810,224,233 3.57% 5.34% 4.69% 1.77% -0.66%
Financial investments Short- term 79,100,000,000 177,450,000,000 - 0.95% 1.84% 0.00% 0.90% -1.84%
Short -term accounts receivable 34,332,534,430 33,293,022,648 2,006,611,218,864 0.41% 0.35% 14.15% -0.06% 13.80%
Inventory 523,432,038 500,379,018 493,655,585 0.01% 0.01% 0.00% 0.00% 0.00%
Other current assets 4,645,939,826 1,737,793,163 6,461,759,939 0.06% 0.02% 0.05% -0.04% 0.03%
Long-term assets 7,952,916,463,492 8,903,656,426,880 11,505,634,424,585 95.01% 92.45% 81.12% -2.57% -11.33%
Long-term accounts receivable - 272,004,000,000 148,004,000,000 0.00% 2.82% 1.04% 2.82% -1.78%
Fixed assets 52,473,828,613 48,485,035,169 58,029,076,301 0.63% 0.50% 0.41% -0.12% -0.09%
Real Estate Investments 222,056,574,478 240,923,131,255 226,571,903,611 2.65% 2.50% 1.60% -0.15% -0.90%
Investments in long-term financing 7,675,952,203,801 8,336,643,654,496 11,071,287,679,806 91.71% 86.56% 78.05% -5.15% -8.50%
Other long-term assets 2,433,856,600 5,600,605,960 1,741,764,867 0.03% 0.06% 0.01% 0.03% -0.05%
TOTAL ASSETS 8,370,258,448,691 9,631,228,863,998 14,184,011,283,206 100.00% 100.00% 100.00% 0.00% 0.00%
CAPITAL CAPITAL
LIABILITIES MUST PAY 129,219,019,165 210,778,630,594 211,460,052,426 1.54% 2.19% 1.49% 0.64% -0.70%
Short -term debt 129,219,019,165 210,778,630,594 211,460,052,426 1.54% 2.19% 1.49% 0.64% -0.70%
Short -term loans - - - 0.00% 0.00% 0.00% 0.00% 0.00%
Pay for sellers 4,008,594,878 998,098,414 5,142,478,766 0.05% 0.01% 0.04% -0.04% 0.03%
Tax payable State Budget 49,546,584 27,162,332 8,268,648,795 0.00% 0.00% 0.06% 0.00% 0.06%
Pay workers 1,066,786,500 868,719,500 1,242,441,000 0.01% 0.01% 0.01% 0.00% 0.00%
Other payables 1,613,115,400 2,464,378,865 2,266,202,609 0.02% 0.03% 0.02% 0.01% -0.01%
Bonus and welfare fund 122,480,975,803 206,420,271,483 194,540,281,256 1.46% 2.14% 1.37% 0.68% -0.77%
Long -term liabilities - - - 0.00% 0.00% 0.00% 0.00% 0.00%
EQUITY 8,241,039,429,526 9,420,450,233,404 13,972,551,230,780 98.46% 97.81% 98.51% -0.64% 0.70%
Equity 8,241,039,429,526 9,420,450,233,404 13,972,551,230,780 98.46% 97.81% 98.51% -0.64% 0.70%
Surplus equity 2,207,350,817,068 674,149,437,068 674,149,437,068 26.37% 7.00% 4.75% -19.37% -2.25%
Treasury shares - (638,500,000) (1,093,000,000) 0.00% -0.01% -0.01% -0.01% 0.00%
Development Fund - 300,416,193,231 502,000,000,000 0.00% 3.12% 3.54% 3.12% 0.42%
Financial reserve fund 210,868,755,750 - - 2.52% 0.00% 0.00% -2.52% 0.00%
Undistributed profit 1,003,738,106,708 1,117,008,913,105 4,368,745,233,712 11.99% 11.60% 30.80% -0.39% 19.20%
TOTAL CAPITAL 8,370,258,448,691 9,631,228,863,998 14,184,011,283,206 100.00% 100.00% 100.00% 0.00% 0.00%

By looking at asset structure and capital

structure in 2015 and 2016, we see that the com-
ANALYSIS OF THE

15
pany's asset structure changes in the direction of
increasing short-term assets and decreasing the
weight of long-term assets. The proportion of
short-term assets at the end of 2014 is 4.99%
PROPORTION
and it is 18.88% at the end of 2016. In particular,
Based on the balance sheet data, we see that
the proportion of short-term receivables in the
the share of long-term assets in a company's
asset structure in 2016 increased by 13.74%
asset structure decreases. Mainly a decrease in
compared to that of the year 2014, the propor-
the proportion of long-term financial invest-
tion of cash and cash equivalents in 2015
ments: In 2014, it is 91.71% and it decreases
increased 1.77% compared to 2014 and
5.15% compared to 2015, that ‘s down 13.66%
decreased slightly 0.65% compared to 2016, a
compared to 2016. In long-term financial
decrease in the proportion of other short-term
investments, Investments in subsidiaries amount
assets and the proportion of inventory is rela-
to 90.60% of long-term financial investments in
tively stable.
2014 and this figure will fall to 78.67% by 2016.
In addition, the decrease in the proportion of
fixed assets and real estate investments also con-

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tributes to reducing the share of long-term
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OVERVIEW ABOUT BUSINESS ACTIVITIES

HOA PHAT
EVALUATE THE COMPANY'S DIVESTMENT
Divestment of Hoa Phat Company in subsidiaries on just
bring some advantages and difficulties for this business

Restructuring of corporate funds in accordance with the activities and objectives of the
ADVANTAGE

parent company in the future.

Redirect investment more profitable, narrowing the project does not bring big profits
for businesses in the future.
To concentrate resources and develop other projects capable of yielding higher profit-
ability for businesses

The degeneration in the corporate capital will affect the subsidiaries, which could
DIFFICULT

lead to bankruptcy of enterprises receiving capital from Hoa Phat Company

The impact to the economic situation of the industry and the region.
When capital Hoa Phat degeneration must have a reasonable plan and effective use of
funds recovered from the divestments, so profits must reinvest higher than the initial
investment.

List of companies that Hoa Phat divestments

1. JSC Hoa Phat livestock development 340 140 000 000
2. Trading Co., Ltd. and produced 300 billion
3. Company Limited Hoa Phat Minerals Mitraco 98.42 billion
4. Livestock Co. TMV Da Nang Hoa Phat 30,000,000,000

Short-term debt at the end of 2014 was 129,219,019,165, equivalent to

SHORT-TERM LIABILITIES
1.54%; in 2015 was 210,778,630,594. This increase is due to: Payable to the seller
ANALYSIS OF THE PROPORTION

decreased 0.04%, Other pay increase 0.01%, Bonus and welfare funds increased
0.68%, Tax payable and the state budget to pay workers less reduction.
The proportion of short-term debt increased from 2014 to 2015 in line with
the trend of increasing short-term assets.

16
The short-term debt at the end of 2016 was 211,460,052,426, equivalent to
OF CAPITAL STRUCTURE

1.49%, down 0.7% against 2015. This decrease was due to: Payables to sellers
increased by 0.03%, Taxes and payments to the state budget increased 0.06%,
Other pay less 0.01%, Bonus and welfare funds decreased 0.77%.

Long-term capital at the end of 2014 is 8,241,039,429,526, equivalent to

LONG-TERM CAPITAL

98.46%, 2015 is 9,420,450,233,404, accounting for 97.81%, long-term capital is

reduced by 0.64% compared to 2014. This reduction is due to: Equity increased
18.53%, Equity surplus fell 19.37%, Treasury shares fell 0.01%, Development fund
increased 3.12%, Financial reserve decreased 2.52%, undistributed profit
decreased 0.39%.
The proportion of long-term capital decreases from 2014 to 2015 is in line
with the trend of decreasing the proportion of long-term assets.
Long-term capital at the end 2016 is 13,972,551,230,780, equivalent to
98.51%, an increase of 0.7% over 2015. This increase is due to: Equity decreases
by 16.68%, equity surplus decreases by 2.25%, treasury shares increase, fund for
development investment increases by 0.42%, financial reserve decreases, undis-
tributed profit increases by 19.20%.

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FINALCIAL RATIOS ANALYSIS

FINACIAL
RATIOS
ANALYSIS
1 Coefficient of Capital Structure
Table 10: Coefficient of capital structure of Hoa Phat group
ITEMS 2014 2015 2016
Liabilities 129,219,019,165 210,778,630,594 211,460,052,426
Owner's equity 8,241,039,429,526 9,420,450,233,404 13,972,551,230,780
Capital 8,370,258,448,691 9,631,228,863,998 14,184,011,283,206
Short-term debt 129,219,019,165 210,778,630,594 211,460,052,426
Total assets 8,370,258,448,691 9,631,228,863,998 14,184,011,283,206
Debt ratio 0.0154 0.0219 0.0149
Equity ratio 0.9846 0.9781 0.9851
Debt to equity ratio 0.0157 0.0224 0.0151
Financial leverage ratio 1.0157 1.0224 1.0151
Short -term debt/ Total assets ratio 0.0154 0.0219 0.0149

17
In 2014 - 2016, the fluctuation of Hoa Phat' s
capital struture ratios was not much, these ratios
tended to be more and more stable over the years.

The dept to equity ratio was about 1.57% in

2014, 2.24% in the next year and 1.51% in 2016,
showing that the company was highly financially
independent and seft governing with little strings
attached or pressure from debtor.

Besides that, the company also had 1.54% of

total capital financed by dept in 2014, 2.19% in the
next year and 1.49% in 2016.

The financial leverage ratio showed that the

total capital which the company used for a manu-
facturing process was equal to 1.0157 the equity in
2014, 1.0224 in the next year and 1.0151 in 2016.

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FINALCIAL RATIOS ANALYSIS

2 Coefficient of Solvency
The Current Ratios The current solvency ratio at all three times is
greater than 1, indicating that HPG has suffi-
Current ratio coefficient at the end of 2014 cient short-term assets to cover short-term
417,341,985,199 liabilities. However, at the end of 2016, this
= 3.23
129,219,019,165 ratio increased sharply because at the moment,
HPG has short-term assets increased because
Current ratio coefficient at the end of 2015
other receivables are not recoverable. The
727,572,437,118
= 3.45 current solvency ratio of the industry average
210,778,630,594
of late 2014 is 0.97, end of 2015 is 0.97, end of
Current ratio coefficient at the end of 2016 2016 is 1.12. Thus, HPG is more likely to pay
2,678,376,858,621 its current payment than the industry average
= 12.67
211,460,052,426 and low payment risk.

The Quick Ratios The ability to pay quickly at all three times is
greater than one indicates that high liquidity
Quick ratio at the end of 2014 short-term assets are capable of paying off
15,112,023,349 + 79,100,000,001 + 34,332,534,430 short-term liabilities. However, at the end of
= 0.99
129,219,019,165 2016, this ratio increased sharply because at
the moment, HPG has short-term assets
Quick ratio at the end of 2015 increased because other receivables are not
4,841,242,289 + 177,450,000,000 + 33,293,022,648 recoverable. The average liquidity ratio of the
= 1.02
210,778,630,594 steel industry in 2014 is 0.42, 0.47 in 2015 and
Quick ratio at the end of 2016 0.53 in 2016. This shows that the sector's high
7,710,224,233 + 2,006,611,218,864 liquidity assets are equivalent to 50% of
= 9.53 short-term assets. While HPG is equal to
211,460,052,426
100% of short-term assets.

Inventory Turnover

18
Inventory Turnover in 2014
(435,117,672 + 523,432,038)/2
= 13.31
12,961,352,808 / 360

Inventory Turnover in 2015

(523,432,038 + 500,379,018)/2
= 14.22
12,961,352,808 / 360

Inventory Turnover in 2016

(500,379,08 + 493,655,5851)/2
= 2.79
64,205,671,438 / 360

Inventory turnover is 13.31, 14.22 and 2.79

days, respectively. Inventory turnover in 2016
is reduced to 2.79 days due to a 3 times
increase in COGS from 2014 and 2015.

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FINALCIAL RATIOS ANALYSIS

The number of days of sales through the three

years is 0.58, 13.4 and 10.12 days respectively.
Time for Collection
The collection period of 2014 is at least due to Time for collection in 2014
the fact that in 2014 the receivables are small. (28,948,343 + 65,720,830)/2
= 0.58
Demonstrated that HPG was effective in man- 29,442,756,667 / 360
aging customer receivables.
Time for collection in 2015
(65,720,830 + 1,881,718,644)/2
= 13.4
26,162,521,000 / 360

Time for collection in 2016

(1,881,718,644 + 24,803,994,233)/2
= 10.12
77,559,819,947 / 360

The Times Interest Earned Ratios

Table 11: Times interest earned Ratio
ITEMS 2014 2015 2016 2015/2014 2016/2015
EBIT 1,195,027,328,393 1,793,863,522,750 5,709,036,651,954 598,836,194,357 3,915,173,129,204

Interest expenses 424,189,445 422,657,217 20,922,222 -1,532,228 -401,734,995

Times interest earned ratio 2,817 4,244 272,870 1,427 268,625

19
The company's loan loss coverage from 2014
to 2016 is positive, showing that the company
uses pre-tax profit and interest expenses to
cover its interest expenses. On the other hand,
we see that the ratio increases over the years
and the rate of increase is not stable, especially
in 2016 the coefficient of interest guaranteed
from 4,244 in 2015 to 272,870 in 2016, an
increase of 268,625 times. Meanwhile, in 2015
it will increase by 1,427 times compared to
104, this is because in 2016, interest expenses
decreased by 401 734 995 VND and EBIT
increased by 3 915 173 129 204 VND com-
pared to 2015. In short, the company is highly
capable of paying for interest payments.

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FINALCIAL RATIOS ANALYSIS

3 The Profitability Indicators of Capital
ROI
Table 12: ROI of Hoa Phat Group
2014 2015 2016
EBIT 1,195,027,328,393 1,793,863,522,750 5,709,036,651,954
AVERAGE CAPITAL 8,370,258,448,691 9,631,228,863,998 14,184,011,283,206
ROI 14.28% 18.63% 40.25%

Table 13: Comparison between Hoa Phat and Hoa Sen

2014 2015 2016
Hoa Phat Group 14.28% 18.63% 40.25%
Hoa Sen Group 7.6% 10.57% 20.5%

The company's ROI is high and increasing over Compared to competitors such as Hoasen
the years. In 2016 ROI increased 21.62% com- Group, the company's ROI is much higher and
pared with 2015. It shows the ability to make a twice as often.
profit on a high capital investment.

ROA
Table 14: ROA Hoa Phat Group

20
2014 2015 2016
EAT 1,188,534,365,129 1,790,948,754,290 5,690,657,850,627
I*(1 - t) 339,351,556 338,125,774 16,737,778
TOTAL ASSETS 8,370,258,448,691 9,631,228,863,998 14,184,011,283,206
ROA 14.2% 18.6% 40.12%

Table 15: ROA of Hoa Phat Group and The industry average
2014 2015 2016
Hoa Phat Group 14.2% 18.6% 40.12%
Industry Average 3% 4% 11%

ROA of the company increased steadily over the
years as the company increased the efficiency of
capital savings. In 2015, ROA increased 4.4%
2015 by 4.4% compared to 2014 and in 2016
increased 21.52% compared to 2015.
Compared to the industry average ROA of the
company is always higher, proving that the
company increased the efficiency of capital
savings.

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FINALCIAL RATIOS ANALYSIS

Table 16: ROE of Hoa Phat group

EAT
2014
1,188,534,365,129
2015
1,790,948,754,290
ROE 2016
5,690,657,850,627
AVERAGE EQUITY 8,241,039,429,526 9,420,450,233,404 13,972,551,230,780
ROE 14.42% 19.01% 40.73%

Table 17: ROE of Hoa Phat group The industry average

2014 2015 2016
Hoa Phat Group 14.42% 19.01% 40.73%
Industry Average 11% 11% 29%

ROE of the company increased over the corporate income tax.

years. In 2015 ROE increased 4.59% compared
to 2014, ROE increased by 21.72% in 2016
compared with 2015.
By 2016 1 investor's equity in the company
gives the owner of 0.4073 profit after deducting
Compared to the industry average, the ROE
of the company is always higher, demonstrat-
ing that the equity efficiency of the owner
invested in the company was higher than that
of other peers.

Table 18: EPS of Hoa Phat group

EPS

21
2014 2015 2016
EAT 1,188,534,365,129 1,790,948,754,290 5,690,657,850,627
The Average Number
of Ordinary Shares 450,480,354 607,397,872 787,826,613
Circulated in the Period
EPS 2638 2949 7223

Table 19: Comparison between Hoa Phat and Hoa Sen

2014 2015 2016
Hoa Phat Group 2638 2949 7223
Hoa Sen Group 4113 7085 10704

The earnings per share of the company have
increased over the years, especially in 2016, it
increased nearly 3 times compared to 2015.
However, compared to its competitors, Hoa
In 2016, EPS of the Hoa Phat Group is 7223
while that of the Hoa Sen Group is 10704.
References
http://www.cophieu68.vn/statistic_index.php?currentPage=2&id=^thep

Sen Group, the company's EPS is much lower.

https://www.hoasengroup.vn/vi/bai-vi-
et/hsg-bctc-rieng-cong-ty-me-ndtc-20142015-da-kiem-toan/2987

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FINALCIAL RATIOS ANALYSIS

4 Market Indexes
Table 20: Market indexes of Hoa Phat group
31/12/2013 31/12/2014 31/12/2015 31/12/2016
Number of 419,052,533 732,887,569 842,765,656
Outstanding Shares
481,908,175

EAT 1,188,534,365,129 1,790,948,754,290 5,690,657,850,627

Number of Average
450,480,354 607,397,872 787,826,613
Shares Outstanding
EPS 2,638 2,949 7,223
Quity 7,817,702,988,062 8,241,039,429,526 9,420,450,233,404 13,972,551,230,780
Average Equity 8.029E+12 8.831E+12 1.170E+13
Book Value of a Stock 17,824 14,539 14,847
The Market Value of a Stock 53,000 29,200 43,150
P/E 20.09 9.90 5.97
P/B 2.97 2.008 2.906

Steel Index (Raw Materials)

P/E is 8.3, P/B is 1.8 ( Viet captial securities, update 3/6/2016)

Table 21: Market indexes Hoa Sen Group

31/12/2014 31/12/2015 31/12/2016
P/E 11.15 6.05 6.93
P/B 2.01 1.09 2.42
Source: http://s.-
cafef.vn/hose/HSG-cong-ty-co-phan-tap-do-
an-hoa-sen.chn

P / E fell from early 2015 and end of 2016

As of December 31, 2014, the company's P / E of 20.09 means

22
that in order to have a profit of the company, the market has
to invest 20.09 dong.
As of 31/12/2015 the company's P / E of 9.90 means that in
order to have a profit of the company, the market must invest
9.09 dong. The market dropped 11 dong because the market
price of one share fell
As of 31/12/2016 the company's P / E of 5.97 means that in
order to have a profit of the company, the market has to
invest VND5.97 billion. With the average P / E of the sector
at 8.3, the company is still low. But compared to Hoa Sen
Group, the P / E is still higher.
The average P / B of the steel industry is 1.8, which is higher
than the industry P / B of the Hoa Phat Group as of
31/12/2014 to 31/12/2015. The market price index compared
to the book price reflects the success of Hoa Phat in increas-
ing the assets for the owners and maximum market value of
the company. However, from the perspective of the owner, a
high P / B ratio may be a sign that the company is overvalued.

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Disclosures
This report is based on the data collected from
various resources of the reliable authors. All the
references are used in this report are cited fully.
This report is not intended to serve as an advice for
any economic decisions and the authors of this
report do not hold any financial interest in the
company. The sole purpose of this report is to serve
for the purpose of learning and researching.
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