MINISTRY OF EDUCATION AND TRAINING

NATIONAL ECONOMICS UNIVERSITY

----------

GROUP ASSIGNMENT
SUBJECT: CORPORATE FINANCE
Topic:

Student names: 11212990 – Lê Quý Bảo Lâm

11213738 – Bùi Đức Mạnh
11212834 – Lê Nam Khánh
11210513 – Nguyễn Hồng Anh
11210637 – Nguyễn Thị Quỳnh Anh
11211534 – Đặng Bạch Dương
11211860 – Đỗ Trần Thu Hà

Instructor:
Location: Ha Noi

Execution time: 25/10/2023 – 06/11/202

 TABLE OF CONTENTS
INTRODUCTION ............................................................................................................. 1
HABECO and its financial statements ............................................................................ 2
I. Overview of HABECO and the beverage industry: ............................................. 2
II. Horizontal analysis: ................................................................................................. 4
1. Company structure: ............................................................................................. 4
2. HABECO's strategy on investment during COVID:........................................ 5
3. The downsizing of the company: ........................................................................ 7
4. HABECO’s income statement: ........................................................................... 7
5. HABECO’s main operation amidst COVID times: .......................................... 8
III. Ratio analysis: ...................................................................................................... 9
1. Liquidity .............................................................................................................. 10
2. Asset management ............................................................................................. 14
3. Debt Management .............................................................................................. 19
4. Profitability Ratios ............................................................................................. 23
5. Market value ....................................................................................................... 30
IV. Summary ............................................................................................................. 32
V. Conclusion & Solution .......................................................................................... 34
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INTRODUCTION

In recent years, the Beverage industry has always been a rapidly growing industry, one
of the most attractive industries in the Vietnamese market. Every year, this industry
contributes about 60,000 billion VND to the country's budget. Notably, the beer production
industry in Vietnam only began to develop after the state implemented an open economy
policy in the 1990s. Hanoi Beer-Alcohol-Beverage Joint Stock Corporation, also known as
HABECO, is one of the two largest beer production corporations in Vietnam.

HABECO, with a history of more than 130 years, has gradually affirmed its position,
continuously conquering new heights to affirm the class of a Vietnamese brand. In 2003,
the Minister of Industry and Trade issued a decision to establish the Hanoi Beer-Alcohol-
Beverage Joint Stock Corporation (HABECO) by reorganizing the Hanoi Beer Company
and transferring some companies in the same industry to become member units of the
corporation. In 2008, HABECO transformed into a Joint Stock Corporation, which allowed
it to develop more effectively and quickly.

By encouraging Vietnamese people to prioritize the use of Vietnamese products,

HABECO has introduced many products that have become popular with consumers and a
source of pride for the Vietnamese people. Over the years, HABECO has been honored
with prestigious domestic and international awards, making its products a symbol of the
Capital's culture and a diplomatic symbol of Vietnam's hospitality. Hanoi Beer, a unique
and popular culture of drinking, has played a significant role in showcasing the friendliness
and hospitability of the Vietnamese people to the international community.

In order to attain remarkable business results, the board of directors of HABECO has
made sound and adaptable decisions to develop the company and overcome challenges in
production and business activities. In this essay, we will analyze financial data and provide
a brief evaluation of HABECO's aspects, giving an overview of the company's current
situation.

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HABECO and its financial statements

I. Overview of HABECO and the beverage industry:

The beverage industry (beer, wine, soft drinks) is an economic and technological sector
that has and is making an important contribution to Vietnam's socio-economic
development. Businesses in the industry include manufacturing enterprises, beer, wine, and
drinking water businesses. Every year, the beverage industry accounts for a budget of about
Rs. 60 billion, of which the contributions of big companies such as SABECO, HABECO,
Heineken, Coca-Cola, Pepsi... account for more than 80%. In addition, the Beverage
Industry also creates jobs for hundreds of thousands of direct workers and millions of
indirect workers in the supply chain from packaging, packing, transportation, storage,
wholesale, and retail as well as suppliers of raw materials input for production, meeting the
consumer needs of the market, serving for export, products that are highly competitive
under conditions of integrated economy.

After 130 years of history with more than half a century of restoration and
development, HABECO has become one of the leading enterprises in the Vietnamese
Beverage Industry. The well-known products that make up the HABECO brand such as
Hanoi Beer, Hanói Beer Bottle, Truc Bach Beer, and Hanoi Beer Premium... have won the
belief of consumers for both quality and style, conquering beer lovers in the country and
abroad. With a strong rise in the Vietnamese drinking water industry, HABECO products
are widely distributed not only in the domestic market, but also in foreign markets such as
Taiwan, Korea, the UK, Germany, the USA, Australia, and many other countries around
the world.

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SWOT Analysis

Strength Opportunity

- System channel distribution.

- Potential beverage market.
- Quality products produced,
- International economic integration is and will
consumption and revenue grew
create conditions for joint venture enterprises to
quite high.
expand market share.
- Products are good quality, and
- Opportunity to receive technology transfer and
suitable for customers' tastes.
management experience from foreign businesses.
- Exported to some major
- Stable political environment.
countries.

Weakness Threats

- Fierce competition within the industry.

- Marketing activities are not
diverse and do not focus on brand - Customers have high demands for quality and
promotion. service.

- The distribution system is not - Special consumption tax increased.

effective.
- Human resources do not meet
integration needs.
- Raw material prices increase.
- Beer is a product that the State does not
encourage use.

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To clarify HABECO's growth and competitiveness with other companies, we will

analyze the company's financial statements for 2019, 2020, 2021, and 2022. Based on the
indicators, we'll make an overview and predict some of the risks for the company to grow
further in the future.

II. Horizontal analysis:

1. Company structure:

Most of the company funding is based on equity, with equity funds fluctuating between
66% to 74% throughout the years, followed by short-term liabilities making the bulk of the
company borrowing, taking up the company from 25% to 29% of the company, while long
term liabilities proved to be very little and on a decline by more than half by the end of the
period. It seems that the company preferred to run on equity more, only making short-term
loans when needed, which explains the fluctuation of the short-term liabilities over the
years. Another note to the company equity is the sudden decrease in 2021 of almost 900
billion, although HABECO made some recovery in that department during the following
year.

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The asset structure seems to be leaning more toward current assets, and the trend is
showing itself more and more throughout the years.

2. HABECO's strategy on investment during COVID:

Overall, HABECO's current assets have shown a considerable rise. This increase is
primarily due to investments held to maturity, while cash and cash equivalents are steadily
declining. Cash and cash equivalents have decreased by more than half from 2019 to 2022
while short-term investments have experienced a 1.5 times growth from 2019 to 2020,
which was during the peak of the pandemic in Vietnam. From this, we can conclude that
HABECO's reaction to the pandemic was to put more capital into mostly guaranteed short-
term government bonds or make bank deposits to ensure some profits outside of its
operation in that unstable period.

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Investment property followed a trend of a mild decrease most likely to the deprecation
over the year, while long-term investment was also on a slight decline during the three
years with covid, most likely from some of the investments reaching maturity and became
shorter investments on the balance sheet, this reflects the company couscous approach
during these tough time, not taking risk of making more long term investment to guarantee
their profit. However, in 2022, the situation became brighter as HABECO started raising
its long-term investment again.

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3. The downsizing of the company:

A more worrying fact lies in the decline of the company's fixed assets, a consistent fall
in their asset during the period from 2886 billion to only 1840 billion, a 1000 billion
decrease in four years either due to depreciation or selling off of some assets. The fact
became more worrying when looking at the value of their long-term unfinished asset,
which also went down at the end of the period, this mean that they either have to sell off
their unfinished assets, to finish their asset or depreciation; all of these situations all reflect
on a depressing term of the company’s size of production either being downsized or came
to a halt and suffering from depreciation over the years.

4. HABECO’s income statement:

The company income statement only further supports the company's decline during
most of the period as revenue, sales, COGS, and gross profit all fell during the three years
of the pandemic. While net income showed a spike during 2020, it was due to a sudden
spike in other activities income, which came from a sudden reimbursement of provision,
raising the net income to 660 billion, the highest during the period, if this didn’t happen,
HABECO actual income would reflect the downward trend of all other stat on the income
statement. However, HABECO had shown signs of recovering during 2022 as all their stat

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in the income statement showed a significant increase, almost reaching the number before
the pandemic.

5. HABECO’s main operation amidst COVID times:

Despite the implementation of Decree 100 and covid 19, the company AR trend is a
mild fluctuation followed by a considerable spike in 2022, while the company inventory
seems to be depleted over the year and only made a resurgence in 2022. At a glance, it
might seem that the company is still flourishing, a higher AR and lower inventory meant

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that more products were being sold, but computing the inventory the company made during
the year and a further dive into their income statement tell a different story.

HABECO's Sales revenue went down considerably during the time of COVID-19, with
its sales deduction doubling at the end of the period, combined with the increase in AR
meant that the company is providing more incentives to its customers for the product, not
to expand their market, but mainly due to the declining demand of alcohol beverage in the
Viet Nam region.

However, when taking into consideration the inventory produced during the year,
HABECO seems to be quite responsive to market changes, using incentives to lessen the
blow from Decree 100 as well as reducing the number of products produced during the
peak of COVID in 2021 proved that the company has effective management and a
proactive approach to changes.

III. Ratio analysis:

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1. Liquidity

Liquidity ratios or short-term solvency ratios concern the firm’s ability to pay its bills
over the short run without undue stress by focusing on current assets and current liabilities.
HABECO’s liquidity will be presented by the current ratio, quick ratio and net working
capital to asset ratio from 2019 to 2022 and compared with SABECO’s liquidity.

a. Current ratio

The current ratio measures a company's short-term solvency, or its ability to meet its
short-term financial obligations.

In 2019, HABECO had a current ratio of 1.80, which means that for every 1 VND of
current liabilities, it had VND 1.80 of current assets. The ratio had a slight fluctuation trend
over the given years. It remarkably rose to 2.58 in 2020 but slightly declined to 2.06 in
2021. After that, the year 2022 saw an increase in the ratio to 2.67. This indicated that the
company had a higher proportion of current assets relative to its current liabilities,
suggesting a significant increase in the company's liquidity and ability to meet its short-
term obligations.

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SABECO’s current ratio remains nearly the same, from 3.15 (2020) to 2.92 (2022).
Comparing these two companies, HABECO’s one has a considerably lower ratio during
the given period. However, this gap became narrower in 2022.

Throughout the table, we can see that HABECO and SABECO had a stable ability to
meet their short-term financial obligations over the past 4 years (The current ratio is always
over 1).

b. The quick ratio

The quick ratio, also known as the acid-test ratio, is a more conservative measure of a
company's short-term solvency.

Following the same pattern, in 2019, HABECO had a quick ratio of 1.49, which means
that it had VND 1.49 of liquid assets (excluding inventory) for every VND 1 of current
liabilities. This ratio also had the same trend as the current ratio. It rose to 2.22 in 2020 and
continued to 2.32 in 2022.

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Following the same trend as the current ratio, SABECO’s quick ratio increased in 2020
but decreased in the last two-year period and is always over 1. SABECO had a higher quick
ratio than HABECO.

Compared to HABECO, SABECO had a quick ratio of over two during the period,
which showed that SABECO was able to pay short-term debt immediately. Although
HABECO’s quick ratio was lower than SABECO’s, it still met its short-term financial
obligations (over 1). Besides, the quick ratio and current ratio of SABECO over the period
and of HABECO in 2020 and 2022 were quite high, which may make it hard for the firm
to improve its profitability.

c. The net working capital turnover

The net working capital (NWC) turnover ratio is a measurement of how effectively a
company is utilizing its current assets to generate revenue. A greater NWC turnover ratio
tends to be beneficial since it shows that the business is generating more revenue while
maintaining the equivalent level of net working capital.

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For HABECO, the NWC turnover ratio has decreased significantly from 5.00 in 2019
to 2.71 in 2020. Although it saw a slight growth in the ratio to 3.11 in 2021, the NWC
turnover went down to 2.77 in 2022. This suggests that the company's capability to generate
revenue using its current assets has declined over the years. Overall, the decreasing trend
in the NWC turnover ratio indicates that HABECO needs to improve its utilization of
current assets to generate revenue more efficiently.

SABECO’s NWC turnover had a downward trend from 2.9 (2019) to 1.69 (2021).
However, the ratio increased to 1.98 in 2022.

Comparing the two companies, HABECO’s NWC turnover ratios were considerably
higher than SABECO's over the period. This indicated that HABECO tended to keep more
current assets than current liabilities to ensure its short-term financial obligations.

d. Cash ratio

The cash ratio measures a company's total cash and cash equivalents to its current
liabilities, which evaluates a company's ability to repay its short-term debt with cash or
near-cash resources.

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For HABECO, the cash ratio had a gradual downward trend over the period from 2019
to 2022. It was 0.56 in 2019, which means that the company only has enough cash to pay
off 56% of its short-term debt. It continued to go down and reach 0.28 in 2022.

Comparing HABECO and SABECO, the cash ratios had the same decrease trend.
SABECO’s ratio was a little bit higher than HABECO’s. This can be explained that both
companies had a lower proportion of cash and cash equivalents relative to their current
liabilities.

Throughout the table, we can see the cash ratios of both companies were not enough
to pay short-term debt. This problem can be affected by COVID-19. Therefore, HABECO
should focus on mitigating the issue in the next time.

2. Asset management

Asset management describes how efficiently or intensively a firm uses its assets to
generate sales. We will analyze the asset management of HABECO through inventory
turnover, day’s sales in inventory, receivables turnover, day’s sales in receivables, total
asset turnover and fixed asset turnover.

a. Inventory turnover and the day’s sales in inventory

Inventory turnover is a financial metric that measures the efficiency of a company's

inventory management by determining the number of times it sells and replaces its
inventory over a certain period.

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In the case of HABECO, the company's inventory turnover ratio remained nearly the
same over the period, around 9, and the day’s sales in inventory was about 40 days. In
2019, inventory turnover was 9.53, which means that the average HABECO’s inventory
turnover was 9.53 times and the average number of inventory holding days was
approximately 39 days. Inventory turnover slightly decreased to 8.86 in 2020, but increased
back to the same as the first year in 2022. Because these two indicators are inverse to each
other, the inventory days saw an increase to 41.21 in 2020, then went down to 38.30 in
2022.

When comparing HABECO to SABECO, we can see a significant difference

throughout 4 years. While the inventory turnover ratio of HABECO remained under 10,
SABECO’s index peaked at 15 in 2019 and then showed a decreasing trend in the next 3
years. In 2022, SABECO’s ratio was 12.54, which was 3.01 higher than HABECO’s one.
Besides, the inventory days ratio of SABECO was around 10 days less than HABECO’s.

Overall, inventory turnover and the day’s sales in inventory of HABECO were quite
stable because the cost of goods sold and inventory average had the same decrease trend
over the period. These ratios also show that HABECO manages inventory at a stable level,
while not holding for too long. However, the index of SABECO is much higher than that
of HABECO which shows that SABECO used its inventory more efficiently than
HABECO. To increase inventory turnover, HABECO should focus on improving
productivity and operational efficiency, as well as its investment in the supply and
distribution network.

b. The receivables turnover and day’s sales in receivables

The receivables turnover ratio is a measure of a company's effectiveness in collecting

its accounts receivable.

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For HABECO, this ratio has declined gradually in 2 years from 23.17 in 2019 to 19.64
in 2020 and to 18.23 in 2021 but increased back to 20.69 in 2022. Similar to HABECO’s
trend, SABECO saw a downward trend from 56.81 to 49.82 in the first two years, then it
rose to 51.23 in 2022. This implies that the company had become a little less efficient in
collecting its outstanding receivables over time. Besides, SABECO's ratio was
considerably higher than HABECO’s.

The day's sales in receivables ratio is a financial indicator that measures the number of
days it takes for a company to collect its outstanding receivables. As a result of the
receivables turnover ratio growth, the day's sales in receivables ratio of HABECO
increased from 14.64 days in 2019 to 18.84 days in 2022. Similarly, SABECO had a day's
sales in receivables ratio increasing from 5.48 to 9.37 days between 2019 and 2022. It
signifies that the company is taking longer to collect its outstanding receivables, which
could negatively affect its cash flow and liquidity. Although HABECO's longer short-term
debt collection period will help the company increase competitiveness with its competitors,
the company should still pay attention, because if it is too high, it may encounter the above
problems.

Overall, the decreasing Receivables Turnover ratio and increasing Day's Sales in
Receivables ratio suggest that the company's accounts receivable management may not be
as efficient as it could be. The company may need to review its credit and collections
policies to ensure that it is collecting its accounts receivable promptly and avoiding
potential cash flow problems.

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c. The total asset turnover

The total asset turnover ratio measures a company's efficiency in using its assets to
generate sales. A higher ratio indicates that a company is generating more sales per unit of
assets. The total asset turnover ratio of HABECO was 1.1 in 2019, which means that the
company generated 1.1 VND in sales for every VND invested in assets. However, in 2020,
it declined to 0.96, indicating that the company generated less revenue per unit of assets.
The ratio slightly improved to 0.97 in 2021 and continued to increase to 1.17 in 2022.

This declining trend of total asset turnover in the first three years could suggest that
HABECO was less effective in utilizing its assets to generate sales. It could be due to
various factors such as poor management, decreased demand for its products, or increased
competition, especially COVID-19. This issue had been noticed and mitigated in 2022.

d. The fixed asset turnover

The fixed asset turnover ratio (FAT) is, in general, used by analysts to measure
operating performance. This efficiency ratio compares net sales (income statement) to

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fixed assets (balance sheet) and measures a company's ability to generate net sales from its
fixed-asset investments, namely property, plant, and equipment (PP&E).

HABECO’s ratio had an upward trend, while the opposite was true for SABECO’s
over the period. In 2019, the fixed turnover ratio of HABECO was 3.06, which means that
the company generated 3.06 VND in net sales for every VND invested in fixed assets. After
that, it declined slightly to 2.74 but noticeably grew to 4.17 in 2022. Besides, SABECO's
ratio, reaching 8.19 in 2019, decreased dramatically to 5.69 in 2021. However, it rose back
to 7.9, which was still lower than the figure in 2019.

Comparing the two firms, SABECO’s ratio was significantly higher than HABECO's,
which indicates that SABECO generated more net sales when investing in fixed assets than
HABECO. However, HABECO’s ratio trend had a sign of increasing again in 2022, it also
shows that HABECO is making more efforts to improve greater efficiency in managing
fixed-asset investments.

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3. Debt management:

HABECO 2019 2020 2021 2022

Total Debt Ratio 0.33 0.25 0.32 0.27

Debt-Equity
Ratio 0.50 0.34 0.47 0.36
Debt
manageme
Equity Multiplier 1.50 1.34 1.47 1.36
nt
Times Interest
Earned Ratio 22.54 34.76 32.47 73.35
Cash Coverage
Ratio 37.61 54.89 67.01 122.25

SABECO 2019 2020 2021 2022

Total Debt Ratio 0.26 0.23 0.26 0.29

Debt-Equity
Ratio 0.34 0.29 0.35 0.40
Debt
Equity
manage
Multiplier 1.34 1.29 1.35 1.40
ment
Times Interest
Earned Ratio 179.93 96.98 100.65 150.69
Cash Coverage
Ratio 196.92 106.21 111.76 162.61

Debt management or Financial leverage is the firm’s way to get its debt under control
and meet its obligations through financial planning and budgeting. We will analyze how
effectively HABECO manages its debt via four commonly used measures: Total debt ratio;
Debt to equity ratio; Equity multiplier; and Times interest earned ratio.

a. Total debt ratio, Debt-equity ratio, Equity multiplier

Total debt ratio refers to a financial ratio that measures the extent of a company's
leverage. It can be interpreted as the proportion of a company's assets that are financed by
debt.

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In 2019, the total debt ratio was 0.33, which means nearly a third of the company’s
assets were financed by debt. This decreased to 0.25 in 2020 but then rose to 0.32 in 2021
and slightly fell to 0.27 in 2022. The small decline in the total debt ratio from 0.33 in 2019
to 0.27 in 2022 indicates that the company has been relying a little less on debt financing
and more on equity financing to fund its operations.

Generally, from 2019 to 2022 both firms have this ratio below 0.5, indicating that a
greater portion of their assets is funded by equity. It can be easily seen from the chart that
HABECO’s total debt ratio has a downtrend, and on the contrary, SABECO’s shows an
uptrend. In 2019, HABECO’s proportion of debt to the asset was bigger than SABECO’s,
0.33 and 0.26 respectively. However, until 2022, this ratio of SABECO rose to 0.29 and
became higher than that of HABECO, at 0.27. The reason for the decline of HABECO’s
total debt ratio is that the decreasing amount of their liabilities is much more than that of
their assets.

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The debt-to-equity ratio decreased at the end of the period, showing that HABECO has
been reducing its debt levels relative to its equity. The ratio has varied over the given years.
In 2019, the debt/equity ratio was 0.5, which means that the company had half as much
debt as equity. This ratio decreased to 0.34 in 2020, indicating a smaller reliance on debt
financing. However, in 2021-2022, the ratio decreased sharply showing a significant
reduction in the company's debt relative to equity.

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Following the same pattern, the equity multiplier has decreased mildly from 1.5 in
2019 to 1.36 in 2022, showing that the company has become less reliant on debt to finance
its assets and has increased its reliance on equity financing.

A low and steady equity multiplier can be a sign of financial stability and strength,
indicating that HABECO has a lower level of financial risk and is less vulnerable to
fluctuations in interest rates or other financial challenges. This is because equity financing
is typically considered a more stable source of funding compared to debt financing.

b. Times interest earned ratio

Another financial leverage ratio that is important to calculate for your company is the
times-interest-earned ratio (TIE), also known as the interest coverage ratio. A company's
TIE indicates its ability to pay its debts or, in particular, how many times a company could
cover its immediate interest costs with its pretax earnings before it doesn’t have enough
income to do so.

HABECO's times interest earned (TIE) ratio has fluctuated over the four years, from
22.54 in 2019 to 32.47 in 2021, before growing markedly to 73.35 in 2022. Suffering a
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small loss in 2021, the company's TIE ratio declined marginally in 2020, falling to 32.47,
but then reached a peak at 73.35 in 2022, implying that the company had a much stronger
ability to cover its interest expenses. The TIE ratio spiked up to 73.35 due to the marked
fall in interest expense, from 31 billion VND in 2019 to just about 9 billion VND in 2022.

From the above TIE ratio chart, in four given years, both HABECO and SABECO's
earnings can cover their interest payments more than 20 times over. This is a positive sign,
as it means that the two firms are in a strong financial position and have a low risk of
defaulting on their debt. Although SABECO’s TIE ratio witnessed a mild decrease from
179.93 in 2019 to 150.69 in 2022, it is still far larger than HABECO’s TIE ratio. This is
mostly because SABECO’s EBIT is way beyond HABECO’s EBIT, one is thousands of
billion VND, and the other is just billions of VND.

Looking at the big picture of HABECO and SABECO, from 2019 to 2022, all their
debt management ratios were at a safe amount. This showed that they had their debt in
control amount and also had enough ability for solvency. The financial leverage HBN used
is much more than that of SABECO, however, through the above times interest ratios, it’s
obvious that the performance of HBN using financial leverage is far better than
SABECO’s. Despite having great debt management ratios, both firms should always find
better ways to maximize using financial leverage, and pay attention to changes in the
market as well as attract potential investors.

4. Profitability Ratios:
a. Gross Profit Margin:

Gross Profit Margin is an important indicator when considering the profitability of a

business. This is a factor representing the profitability and competitiveness of the business.
In simpler words, a higher gross profit margin indicates that the business is more efficient
and profitable.

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HABECO's gross profit margin in 2019 was 26.32%. This means that in 2019, with
100 VND of revenue generated, HABECO earned 26.32 VND in gross profit. This ratio
increased slightly to 26.56% in 2020 and then suddenly decreased to 24.40% in 2021. It
can be seen that HABECO’'s sales were impacted by the COVID-19 pandemic, which
caused a downturn in the beer industry while the entire country was under social
quarantine. The decrease in this ratio is also the result of a sharp decline in HABECO's net
sales between 2019 and 2021, amounting to more than 2,000 billion VND. The decline is
mainly due to a decrease in HABECO's sales revenue, while sales deduction has increased
significantly, causing fluctuations in the gross profit margin. In addition, based on
calculated data, HABECO's cost of goods sold has decreased by 12% between 2019 and
2022, from about 6,878 billion VND to 6,085 billion VND, while the difference in gross
profit is not too much. It can be seen that HABECO has done quite well in managing the
cost of goods sold.

In 2022, the reopening of Vietnam's economy has helped beer industry businesses like
HABECO recover strongly after two consecutive years of moderate operations due to the

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pandemic. Gross profit margin this year increased to 27.54%, up 3.14% compared to the
previous year.

For SABECO, in 2020, the company's gross profit margin increased by about 5% from
25.20% to 30.4%. In 2021, it decreased slightly to 28.85%. SABECO's gross profit margin
ratio for 2022 was stated to be 30.79%, which means that the company earned 30.79 VND
in gross profit for every 100 VND of revenue generated. It can be seen that SABECO's
gross profit margin has remained relatively stable over time. Additionally, this ratio has
consistently been higher than the industry average, indicating that the company is profitable
and efficient.

b. Net Profit Margin:

HABECO's net profit margin also fluctuated similarly to its gross profit margin. This
ratio measures how much net income or profit is generated as a percentage of revenue. Net
profit margin indicates the profitability of a business after accounting for all expenses
incurred during the period.

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Net profit margin fluctuates quite clearly, increasing from 5.60% in 2019 to 8.86% in
2020, then decreasing by nearly half in 2021, reaching only 4.66%. For every 100 VND in
revenue, HABECO earned 4.66 VND in profit after tax. The net profit margin in 2021
decreased compared to 2020 because, in 2020, HABECO had other income from the
reversal of payable provision costs of previous years. In 2021, Decree 100 and the
complicated developments of the COVID-19 pandemic continue to have a significant
impact on the decline in HABECO’'s profits.

In 2022, this ratio has increased again to 5.99%, but this is not an impressive figure.
HABECO assesses that 2022 was a year of many changes due to the lingering effects of
the Covid 19 pandemic and the complicated war between Russia and Ukraine leading to
an energy crisis and inflation. High inflation globally has pushed up raw material prices,
especially for imported materials, disrupted supply, logistics supply chains, and goods
circulation. In addition, consumer income has decreased, which has greatly affected the
purchasing power of non-essential products such as beer, wine, and soft drinks.

SABECO's net profit margin is relatively flat, fluctuating between 14.17% and
17.66%. This ratio is equivalent to its gross profit margin, increasing from 14.17% to
17.66% in 2020, decreasing to 14.9% in 2021, and increasing to 15.72% in 2022.

c. Return on assets

Return on assets (ROA) reflects the relationship between profits and the total available
assets of a business. This ratio shows how efficiently a company uses its assets, by showing
how profitable the company is compared to its assets. The higher the ROA index, the more
profit the business earns from its existing assets.

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In 2020, HABECO's focus was not only on promoting sales but also on reducing
operating costs to improve business efficiency. As a result, HABECO's ROA ratio
increased from 6.16% to 8.55% in 2020. However, due to the economic impact of the
pandemic, this ratio decreased by almost half in 2021, down to 4.39%.

HABECO’s revenue for 2022 has increased due to a 14% rise in beer product
consumption during the same period. Additionally, HABECO has raised the selling prices
of its beer products since mid-2022. As a result, the company's ROA ratio has risen once
again to 7.02%. This means that for every 100 units of assets, they generated 7.02 units of
profit in 2022. The company's ROA ratio has increased, indicating successful investments
and profitable assets, which is a positive indicator of its financial performance.

On the other hand, SABECO experienced a decrease in its ROA ratio from 2019 to
2021, after two years of the pandemic. During this time, SABECO's ROA ratio decreased
from 21.77% to 13.58% and rose to 16.93% in 2022. However, this figure is still relatively
acceptable when the company still maintains a ROA ratio above 13%, not reaching
alarming limits.
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d. Return on equity

The ROE ratio measures a company's profitability and capital efficiency, which is
important to investors who want to know the return on their investment. A higher ROE
ratio proves that the company's board of directors effectively uses shareholders' capital, so
this ratio is often an important criterion for considering investment opportunities in a
business's share.

HABECO's ROE ratio increased slightly in 2020, from 10.35% to 12.10%. And then,
in 2021, like other profitability ratios, the company's ROE dropped sharply, to only 6.13%,
which explains that HABECO earned 6.18 VND for every 100 VND of shareholder equity
invested. This large fluctuation can be explained by HABECO's net income, which has
plummeted by more than half, from 660 billion VND to 324 billion VND in 2021. Because
in 2021, Decree 100 and the complicated developments of the COVID-19 pandemic
continue to have a major impact on the decline in the company's profit after tax. This figure

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is about 4% lower than the average figure of the beer and beverage industry at the same
time and the business has not promoted well in bringing value to shareholders.

By 2022, HABECO's ROE has increased by half as much again as compared to the
previous year. For every 100 units of equity, they generated 9.92 units of profit this year.
Therefore, HABECO indicated a strong potential for high returns and significant capital
recovery. It can be seen that HABECO's revenue has gradually stabilized with adaptive
solutions in sales and market development, including promoting consumption on modern
distribution channels to adapt to the new situation such as supermarket channels and E-
commerce.

From 2019 to 2021, SABECO’s ROE decreased from 29.68% to 17.94%. Despite this,
SABECO's ratio are still higher than the industry average, indicating that the company's
management has effectively used shareholders' capital to generate profits that are above
average. Even in 2022, when the pandemic has stabilized, SABECO's revenue has not yet
fully recovered compared to pre-pandemic levels, but the company is still able to maintain
its growth rate. This is evidence of SABECO's capital efficiency and extremely effective
capital use process, making it a worthwhile investment for potential investors.

After analyzing HABECO's financial numbers, it becomes clear that they are less than
impressive. In comparison to the average level of the beverage industry, HABECO's ROA
and ROE ratios are quite low. While the ROA has slightly improved and ROE remains
stable, it indicates that HABECO may have the ability to recover its financial situation.
However, SABECO has utilized its assets and capital more effectively, leading to higher
revenue compared to HABECO. As a result, the revenue gap between the two companies
continues to widen. HABECO should focus on developing the market, improving
competitiveness, and providing customers with high-quality products and excellent service
to achieve customer satisfaction.

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5. Market value

A company's book value is calculated by looking at the company's historical cost, or

accounting value. A firm's market value is determined by its share price in the stock market
and the number of shares it has outstanding

a. Price-to-book ratio (P/B ratio)

The Price to Book Ratio (also called the Market to Book Ratio), is a financial valuation
metric used to evaluate a company’s current market value relative to its book value. In
other words, the ratio is used to compare a business’s net assets that are available to the
sales price of its stock

The price-to-book value of SABECO remained at a high level of 7.5, 6.12, 4.37, 4.5
from 2019 to 2022 whereas HABECO is only 3.42, 3.04, 1.93, 2.04 respectively. It can be
seen that this ratio of HABECO stood at a bad rate in the same period compared to
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SABECO. The COVID-19 pandemic had a significant impact on the decline in both
companies' ratios. In 2021, this ratio decreased by approximately 40% (from 3.04 to 1.93).
However, in 2022 the P/B ratio went back to a higher number. This is a good signal for
better performance in the future.

b. P/E Ratio:

P/E Ratio measures how much investors are willing to pay per dollar of current
earnings, higher PEs are often taken to mean the firm has significant prospects for future
growth.

2019 2020 2021 2022

HABECO 32.44 26.26 44.30 23.04

SABECO 26.72 26.26 25.76 20.38

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In general, HABECO's P/E ratio is always higher than SABECO in 2019, 2020, 2021,
and 2022. This shows that HABECO is expected to grow more in the future and HABECO
is profitable per share higher votes of SABECO.

HABECO's P/E ratio in 2019, 2020, 2021, and 2022 has many changes, increasing or
decreasing. The ratio decreased in 2020 and 2022, the figures given are 26.26 and 23.04,
respectively. However, in 2021, this index increased again and reached 44.03, which shows
that HABECO's stock price may become more expensive compared to its profits. A high
P/E can indicate strong expectations of future growth or a temporary overshoot.

In 2019, 2020, 2021, and 2022, SABECO's P/E ratio decreased from 26.72 to 20.38.

This decrease in P/E value could indicate that SABECO stock becomes more attractive
to investors, and there could be growth in earnings or a decrease in share price.

IV. Summary

It can be seen that HABECO is less effective in utilizing its assets to generate sales in
the three years. It could be due to various factors such as poor management, decreased
demand for its products, or increased competition. It may also indicate that the company
faces challenges in managing its assets efficiently, potentially affecting its profitability and
financial performance. The biggest reason for the sharp decrease of the company’s net sales
in 2020, and 2021 was because of COVID-19. This led to a decrease in gross profit of 477
billion VND, and 283 billion in 2020 and 2021 respectively.

For the above reasons, HABECO should enhance sales by improving product or
service quality, improving customer satisfaction, and increasing marketing strategy. On the
other hand, the company needs to increase the efficiency of using existing assets by
applying effective asset management techniques such as JIT (Just-in-time) or LEAN (Less
Production). Moreover, they need to increase labor productivity by improving production
processes, training employees, or investing in advanced technology equipment. Reducing
total asset value by eliminating unnecessary assets or using them in the production process
more efficiently is also an effective solution for this problem.

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HABECO's gross profit margin in 2019 was 26.32%. This means that in 2019, with
100 VND of revenue generated, HABECO earned 26.32 VND in gross profit. This ratio
increased slightly to 26.56% in 2020 and then suddenly decreased to 24.40% in 2021. This
issue descended from the COVID-19 pandemic, which caused a downturn in the beer
industry while the entire country was under social quarantine. That’s why the company
should have sold its products online through e-commerce platforms and expanded the
product offering to capture more of the audience. To increase profitability, HABECO needs
to reduce waste and have products expire before they are sold, to do so they need to forecast
the ordering strategically.

From the above analysis, it is clear that HABECO has been more and more likely to
pay off current debt obligations without raising external capital and it seems that this is
more because of the company's ability to pay off its current liabilities with its accounts
receivable, instead of cash and inventories. The figures also show that the more money the
business is being occupied, the amount of cash will decrease, reducing the initiative of
businesses in financing working capital in production and businesses may have to borrow
from banks to finance this working capital when it comes to analyzing the efficiency of
asset management. In terms of long-term solvency, the company’s time interest earned
ratio in this period was quite high, which means it could afford to pay additional interest
expenses. In this respect, the business was less risky, and the bank should not have had a
problem accepting its loan. However, profitability ratios showed a less desirable result,
with HABECO's ROE in the last 3 years, showing that HABECO's business was not very
good, and the company had not used capital effectively. The graph shows that SABECO
can pay off current debt obligations without raising external capital. The analysis object of
the report (HABECO) has a lower overall short-term solvency index compared to
SABECO. HABECO has the higher financial leverage ratios. This too much debt can be
dangerous for the company and its investors. However, if HABECO's operations can
generate a higher rate of return than the interest rate on its loans, then the debt may help to
fuel growth. HABECO has an average Profitability Ratio, although it is far behind the

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performance of SABECO. HABECO should make improvements in its use of assets

internally to generate income. The market value ratio of HABECO is at an average level,
generally still behind SABECO. However, the price-earnings ratio of HABECO is very
high, showing that the company has great growth potential. The figures regarding short-
term solvency, long-term solvency, assets management, profitability, and market value of
HABECO are in an acceptable range in comparison with the average industry, not too far
behind but also not too far ahead. Nevertheless, the period of three previous successful
years indicates a downtrend in the figures of benefits and an uptrend in the figures of
drawbacks and if put into consideration, the drawbacks outweighed the benefits, therefore,
buying stock of HABECO is not recommended. Especially for those who are young and
have little money capital, it is unnecessarily risky, and it is recommended they choose
another company’s stocks or choose to invest in another form of investment.

Thanks to street food culture and rapid urbanization, beer consumption in Vietnam is
forecast to reach the highest growth rate in the 2016-2021 period. According to forecasts,
the output of Vietnam's beer industry in the next 5 years will grow 4% -5% per year, and
the value will be higher because high-cost products are gradually becoming more popular.
With a median population of 30 years and strong economic growth, Vietnam has a young
and dynamic consumer class. It is estimated that each year Vietnam has 1 million more
people turning 18 years old, the age at which the law starts drinking alcohol. It can be said
that the beer market in Vietnam still has a lot of potential for HABECO to develop.
HABECO needs to utilize its brand name and brand name to expand its market share
further.

V. Conclusion & Solution

According to the financial statements of Hanoi Beer - Alcohol - Beverage Joint Stock
Corporation (Habeco, code BHN) shows that this enterprise spends hundreds of billions of
VND each year on advertising and promotions.

After the Covid-19 period of decline, in 2022, Habeco's brand awareness campaigns
diffused again with costs skyrocketing to nearly 648 billion VND (up 66% compared to
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2021), but still not equal to before translation (2019). In terms of efficiency, for every
advertising cost spent, Habeco earned nearly 13 dong in revenue, the 2nd lowest level in
the past decade.

Habeco's total assets at the end of 2022 reached VND 7,256 billion, a slight increase
of 2.3% compared to the beginning of the year, mainly due to short-term financial
investments and increased inventory. Specifically, short-term financial investments
increased by more than 21%, to 2,964 billion VND (accounting for nearly 41% of total
assets), mainly deposits with original terms of over 3 months to 12 months. The company's
inventory also increased by 30% to VND 723 billion (accounting for 10% of total assets).

As for capital, liabilities decreased by 14%, to 1,927 billion VND (accounting for
26.5% of total capital), mainly due to other short-term payables, and long-term loans and
financial lease debt decreased by nearly 150%. billion VND down to 96 billion VND.
Equity increased by 10.2% to VND 5,329 billion, mainly due to undistributed after-tax
profits increasing 2.4 times compared to 2021.

To summarize, to develop business, and increase profits and revenue, companies can
pay attention to developing the following strategies:

Growth strategy: Expand joint ventures with domestic or foreign corporations

according to the principle of mutual benefit, taking advantage of existing networks to
increase product exports, especially to new markets. Should use high technology, research
and develop high-end products.

Stable strategy: Expand market development, perfect distribution channel system.

Focus on quality management and product introduction to consumers.

Create conditions for officials and employees to learn and be trained in management
experience skills as well as modern technology.

Decline strategy: Reduce the level of diversification, and narrow distribution channels
and subsidiaries.

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