TABLE OF CONTENT

TABLE OF CONTENTS ………………………................................................……...1

I. Introduction .................................................................................................…….1
II:Assets structure ………………………………………………………………………2
III. Resource structure…………………………………………………………………..5
1. Financial autonomy………………………………………………………….5
2.Financial balance……………………………………………………………..6
3.Income Statement…………………………………………………………….7
IV. Evaluation of the performance and value of the company……………...…...8
1. Analysis of financial statements...........................................................9
1.1. Financial ratio calculation ..................................................................9
1.2. Ratio trend analysis ............................................................................9
a. Liquidity ..................................................................................................10
b. Assets management ..............................................................................11
c.Debt Management....................................................................................14
d. Profitability .............................................................................................15
e. Market value............................................................................................18
1.3. Dupont calculation and performance ...............................................20
V. Company's Cash Flow Analysis……………………………………………………22
VI. Conclusion…………………………………………………………………………….23
VII. Referent……………………………………………………………………………….24

I. Introduction

Due to the outbreak of Covid19, the entire economy in the whole world is going down, but in
Vietnam, the dairy industry even develops and is not significantly affected. Experts in the
dairy industry said that in the future, the dairy industry is still considered a potential because
the consumption of milk per capita in Vietnam is still low. According to Vietnam Feed
Association – VFA research, demand for raw fresh milk increased by about 61%, from 500
million liters (2010) to 805 million liters (2015). As a populous country with a high population
growth rate of 1.2% per year, the dairy market in Vietnam has great potential. The GDP
growth rate of 6-8% / year, per capita income increasing 14.2% / year, combined with the
trend of improving the health and stature of the Vietnamese people makes the demand for
products. Milk always keeps a high growth rate. In 2010, on average, each Vietnamese
consumed about 15 liters of milk/year. It is forecasted that by 2020, this figure will nearly
double to 28 liters of milk/year/person. During the development of the dairy industry in recent
years, many corporations and companies have jumped in and out, some of them have had
considerable successes such as TH True Milk, Dutch Lady, Nestle, NutiFood, and so on.
However, the corporation focused on this project, which was honored in the top 200 of best
revenue listed companies of over 1 billion in the Asia Pacific in 2019 (Forbes Asia), is
Vietnam Dairy Products Joint Stock Company (VNM). Developing for at least 40 years,
Vinamilk increasingly asserted its position in the market. Their price of shares and financial
reports have been published in the official exchange market.

Generally, Vietnam Dairy Products Joint Stock Company (VNM) is consistently determined to
be a grade brand in the food and beverage industry with a large number of domestic and
international customers who are served a variety of nutrient and health products. Established
on August 20, 1976, VNM is a well–known corporation focusing on milk, probiotics, yogurt,
ice cream, soft drinks, coffee, and other products derived from milk. Vinamilk has a system
of factories not only in domestic but also in international nations. Spreading from Thanh Hoa,
Nghe an, Da Nang, Tuyen Quang, Ha Tinh, Lam Dong to Myanmar, Thai Lan, New Zealand,
and 20 other countries, Vinamilk is increasingly becoming a solid brand name in the market.
Moreover, VNM was awarded many noble medals by the Government and besides, this
corporation also expands to invest in activities such as the inauguration of the dairy farm,
construction of many new technologies, installed advanced equipment and modern
machines in all of its factories.

To achieve today's successes, the mentorship of Boards of Directors and the Chief executive
officer is indispensable. Chairwoman of Vinamilk currently is Le Thi Bang Tam with 6 years in
this position, with 9 other members: Mai Kieu Lien, Michael Chye Hin Fah, Lee Meng Tat, Le
Thanh Liem, Do Le Hung, Dang Thi Thu Ha, Alain Xavier Cany, Nguyen Thi Tham, Nguyen
Ba Duong, and Michael Chye Hin Fah since 2015. Ms. Tam and Ms. Lien are insiders while
the others are outsiders, and Ms.Lien has had the most number of shares, 0.26% when the
others have had the number of shares smaller than 0.05%. The rest of the capital
contribution belongs to the State and other businesses: State Capital Investment
Corporation (SCIC) was found to be 36%, whereas F&N Dairy Investments Pte Ltd
accounted for 17.69%.

II.Assets structure

2019 2020 2016 2017 2018

Criteri
a
Amou Prop Amoun Pro Amo Propor Amo Prop Amo Prop
nt ortio t por unt tion unt ortio unt ortio
n tio n n
n

Current 19,828 50,3 23,931, 55, 17,80 63.30% 19,00 58.4 18.38 59.93
assets ,85 % 776,66 6% 1,341 2,943 5% 4.643 %
5,240, 4,071 ,382, ,39 .763.
231 408 5,528 869

Cash 957,16 2,4% 464,70 1,0 485,3 1.73% 733,0 2.25 325.8 0.99
and 2,717, 5,252,7 8% 58,84 03,53 % 00.85 %
Cash 036 66 3,1 9,943 2.295
equival
ent

Short 11,100 28,1 15,100, 35, 10,36 36.87% 32.3 9.615 29.25
 term ,023,4 % 000,00 1% 8,523 10,51 4% .000. %
financi 88,016 0,000 ,488, 5,000 831.8
al 016 ,831, 49
invest 849
ments

Short 3,809, 9,6% 4,464,2 10, 2,707 9.63% 4,177 12.8 4.599 13.99
term 794,00 57,444, 3% ,207, ,896, 5% .091. %
accou 2,288 861 940,1 085,3 958.4
nts 96 00 83
receiv
able

Invent 3,876, 9,8% 3,856,5 8,9 4,098 14.57% 3,447 10.6 3.687 11.21
ories 560,75 53,157, % ,729, ,759, 1% .556. %
1,360 650 148,4 304,2 623.4
22 61 25

Other 85,314 0.2% 46,260, 0,1 146,5 0.52% 129,2 0.40 157.1 0.47
curren ,281,5 808,79 % 21,96 83,63 % 93.49 %
t 31 4 2,622 5,175 7.817
assets

19,586 49,6 19,084, 44, 10,32 36.70% 13,50 41.5 14.48 44.06
,255,4 % 600,24 3% 1,862 6,629 5% 6.159 %
Non-cu 55,000 6,322 ,962, ,942, .817.
rrent 386 142 302
assets

Long 6,742, 0,01 5,754,1 0,0 15,12 0.05% 43,38 0.13 86.05 0.26
term 857,59 7% 96,695 1% 6,638 1,778 % 9.258 %
accoun 5 ,176 ,324 .441
ts
receiva
ble

Fixed 8,729, 22,1 7,638,1 17, 5,790 20.59% 6,578 20.2 6.500 19.77
assets 549,34 4% 05,002, 7% ,522, ,193, 3% .424. %
7,732 753 519,0 561,0 988.4
72 54 59
 Long 10,220 25,9 10,726, 24, 3,616 12.68% 5,358 16.4 5.995 18.24
term ,035,0 % 805,86 9% ,419, ,856, 8% .790. %
financi 50,693 0,481 284,2 346,1 787.2
al 78 87 64
invest
ments

Other 410,95 1,04 481,93 1,1 334,5 1.19% 460,3 1.42 439.3 1.33
non-cu 8,877, % 0,963,5 % 90,66 19,98 % 14.01 %
rrent 100 18 2,507 4,483 2.402
assets

Total 39,415 100 43,016, 10 28,12 100% 32,50 100 32.87 100%
assets ,110,6 % 376,91 0% 3,204 9,573 % 0.803
95,231 0,393 ,344, ,337, .581.
794 670 171

2016: Expanding four more potential markets in Africa

2017: Cu Chi Raw Milk Center went under operation. Invested in the sugar industry by
acquiring 65% share capital of Vietnam Sugar JSC (formerly known as Khanh Hoa Sugar
JSC) and 25% share capital of Asia Coconut Processing JSC.
Cash: in 2017, cash significantly increased because thanks to good business results,
the Company always maintained a high level of cash and managed this cash flow in an
effective and safe way. The risk management policy was set up to ensure that term deposits
were always at optimal levels of safety and flexibility in order to meet the Company's
capital needs at all times.
In 2020, cash significantly increased because thanks to good business results, the
Company always maintained a high level of cash and managed this cash flow in an effective
and safe way. The risk management policy was set up to ensure that term deposits were
always at optimal levels of safety and flexibility in order to meet the Company's
capital needs at all times.
Accounts receivable: accounted for 12.85% of total assets. No significant bad debts
were incurred during the year. The Company maintained a good policy on receivables
management. The amount of accounts receivable in 2017 increases nearly double
compared to the previous year. That is because since mid-November 2017, the
Company has changed its credit policy for domestic customers, in which the credit period
was increased to support sales better. This change led to an increase in receivables from
customers.
Inventories: There was a significant decrease in the proportion of inventories in 2017
compared to the previous year. Because in 2017, The "Just in time" procurement strategy
has been applied together with the optimization of inventory management and warehouse
planning at the subordinate units that have brought about remarkable results in the
Company’s inventory control, compared to the previous year.
Receivables: account for 10.3% of total assets. During the year, there were no significant
bad debts. The company maintains a good policy of managing receivables. Receivables in
2020 are close to the previous years . The company has changed its credit policy for
domestic customers, including increasing the credit term to better support sales.
Inventory: There was a significant decrease in the proportion of inventories in 2020
compared to the previous year. Because in 2020, The "Just in time" procurement strategy
has been applied together with the optimization of inventory management and warehouse
planning at the subordinate units that have brought about remarkable results in the
Company’s inventory control, compared to the previous year.

III. Resource structure

1. Financial autonomy

2019 2020 2017 2016 2018

Total 12,870,779,4 12,911,012,29 9,213,216,73 6,329,270,2 7,248,131,7

liabilities 80,737 1,043 6,722 61,772 90,835

Total 39,415,110,6 43,016,376,91 32,509,573,3 28,123,204, 32,870,803,

assets 95,231 0,393 37,670 344,794 581,171

Total 32,65% 30% 28% 23% 22.05%

liabilities/To
tal assets
(Debt ratio)

Owner 26,554,331,2 30,105,364,61 23,296,356,6 21,793,934, 25,622,671,

equity 14,494 9,350 00,948 083,022 790,336

Total 39,415,110,6 43,016,376,91 32,509,573,3 28,123,204, 32,870,803,

assets 95,231 0,393 37,670 344,794 581,171

Owner 67,34% 70% 72% 77% 77,94%

equity/Total
assets
(Self-funde
d ratio)

The debt ratio reflects the level of debt use of the company. In 2020, this ratio is 30%, which
means 30% of the company's asset value is financed from debt. The debt ratio of Vinamilk
gradually increases over the years (from 32,65% to 33,07% )over the past three years),
but still quite low compared to the industry average (Milk industry’s debt ratio is
68.98%.). Company uses less debt to finance its assets. This has the positive side of the
ability to financial autonomy and the ability to borrow a high debt in the future. However,
the downside is that the company does not take advantage of financial leverage and
loses the opportunity to save the tax from the use of debt. Healthy financial structure
brings significant advantages for the Company in implementing M&A deals on a large
scale.
Debt ratio tends to increase erratically over the years due to the appearance of many big
competitors such as TH True Milk, Nutifood ... and dozens of brands of liquid milk imported
from abroad in recent years. And also due to the problem of the COVID-19 pandemic. This
competitive pressure forced Vinamilk to increase investment further to maintain a dominant
position in the market. Vinamilk has very good cash flow generated from stable business
activities and high profit growth. This is the foundation for flexibly implementing business
strategies, putting pressure on all competitors. Market forces show that only foreign
competitors can threaten Vinamilk's position.
Vinamilk's owner’s equity increased significantly because the company implemented a
bonus share issuance policy for existing shareholders at the ratio of 5: 1, meaning each
shareholder who owns 5 shares will receive 1 additional issue share. In general, a high
permanent capital ratio indicates the greater the stability of the funding.

2.Financial balance

Figures 2019 2020 2018 2017 2016

(1) Current 19,828,85 23,931,776, 18.384.643.76 19,002,943,39 17,801,341,38

assets 5,240,231 664,071 3.869 5,528 2,408

(2) Current 12,870,77 12,911,012, 7,248,131,790 9,111,522,890 6,233,534,218

liabilities 9,480,737 291,043 ,835 ,254 ,272

3) Net 32,699,63 36,842,789, 25,632,776,00 11,567,807,16 9,891,420,505

working 5,000,000 000,000 0,000 4,136 ,274
capital =
(1)+(2)

(4) 3,876,560, 3,856,553,1 3.687.556.623 4,098,729,148 3,447,759,304

Inventories 751,360 57,650 .425 ,422 ,261

(5)Short-ter 3,809,794, 4,464,257,4 4.599.091.958 2,702,207,940 4,177,896,085

m 002,288 44,861 .483 ,196 ,300
receivables

(6)Short-ter 7,995,679, 5,950,476,3 6,058,929,800 5,033,534,218 9,111,522,890

m account 500,000 00,000 ,000 ,272 ,254
payable
(not
including
bank
loans) =
(7)-(8)

(7)Short-ter 12,870,77 12,911,012, 7,248,131,790 6,233,534,218 9,111,522,890

m account 9,480,737 291,043 ,835 ,272 ,254
payable
 (8) 6,960,536,0 1,189,202,000 1,200,000,000 0
Short-term 4,875,100, 00,000 ,000 ,000
borrowings 000,000
and
finance
lease
liabilities

(9) Net 2,370,334,3 2,227,718,800 1,767,402,870 (1,485,867,50

working (30932474 00,000 ,000 ,346 0,693)
capital 6352)
required =
(4)+(5)-(6)

(10) Net 33,008,96 34,472,455, 23,405,057,00 9,800,404,293 11,377,288,00

fund = 0,000 000,000 0,000 ,790 5,967
(3)-(9)

Short-term trade payables fluctuate unequally with depreciation from year to

year.
The company has sufficient capital to finance current assets. Positive net
funds represent a safe financial balance because the business does not have to
borrow to cover the shortfall in net working capital needs, so there is no difficulty in
making short-term payments.

3.Income Statement

2016 2017 2018 2019 2020

Revenue 43,932,164,8 51,134,899,7 43,392,164,8 56,400,229,7 51,591,632,8

from g&s 92,426 65,079 92,426 26,717 36,823

Revenue 123,038,511, 93,823,879,9 123,038,511, 82,106,963,9 59,640,693,1

deductions 216 70 216 73 05

Net revenue 43,809,126,3 51,041,075,8 43,809,126,3 56,318,122,7 51,531,992,1

81,210 85,109 81,210 62,744 43,718

Cost of 22,522,706,1 26,806,931,0 22,522,706,1 29,745,906,1 26,120,319,2

sales 21,326 66,476 21,326 12,117 80,754

Gross profit 21,286,420,2 24,234,144,8 21,286,420,2 26,572,216,6 25,411,672,8

59,884 18,633 59,884 50,627 62,964
 Net 10,953,787,9 12,226,418,1 10,953,787,9 12,797,090,1 12,963,255,4
operating 32,596 87,645 32,596 15,372 45,031
profit

Results of 113,148,702, 2,527,196,49 113,148,702, (1,380,476,8 32,846,798,6

other 009 1 009 15) 62
activities

Accounting 11,066,936,6 12,228,945,3 11,066,936,6 12,795,709,6 12,996,255,4

profit 34,605 84,136 34,605 38,557 45,031
before tax

Income tax 1,831,036,76 1,967,066,70 1,831,036,76 2,238,365,79 32,846,798,6

expense - 5,405 5,229 5,405 6,113 62
current

Income (9,470,625,4 (16,295,874, (9,470,625,4 3,011,961,55 12,996,102,2

tax(benefit)/ 38) 259) 38) 3 48,353
expense-
deferred

Net profit 9,245,370,49 10,278,174,5 9,245,370,49 10,554,331,8 10,728,728,1

after tax 4,638 53,166 4,638 880,891 48,728

The table represents The Company’s 2016, 2017, 2018, 2019 and 2020 income
statement.
We can see that the company's Net Revenue has a large proportion, but this
proportion is constantly changing, showing that
the company has checked for better input cost optimization and
The company's operating expenses are more and more stable, the company has the
ability to control these expenses well. Income of enterprises after tax in 2017 increased from
9,245,370,494,638 VND to 10,278,174,553,166 VND but there was a slight decrease in
2018 to 9,245,370,494,638 VND. In the remaining two years, there was an incremental
development.

IV. Evaluation of the performance and value of the company

* Analysis of financial statement

1.1.Financial ratio calculation

 1.2.Ratio trend analysis

From 2016 to 2020, Vinamilk had witnessed some positive changes that
affected the operation. In this part, we will use trend analysis and
comparative analysis over the ratios calculated in the previous part and
assess the effectiveness of the business.
 a. Liquidity:

*Current:

The current ratio is a liquidity ratio that measures a company's ability to

pay short-term obligations or those due within one year. It can be clearly
seen that from the year 2016-2019, the current ratio for VNM was
decreasing by 1.35. At the same time, the company had a lower current
ratio compared to the industry average, this fact makes us question
whether the management was using its assets efficiently since this
number represents a higher risk of distress for the investors and the
lower probability to satisfy its current debt and other payables.
*Quick:

The quick ratio measures the dollar amount of liquid assets available
against the dollar amount of current liabilities of a company. We can
understand that a company that has a quick ratio higher than 1 can
instantly get rid of its current liabilities. For instance, a quick ratio of 1.74
of VNM in 2020 indicates that the company has $1.74 of liquid assets
available to cover each $1 of its current liabilities. Though compared to
the average of the industry which equals 2.03 calculated in the previous
part, it seems like the company had not operated as productively as
other firms in the dairy industry.

b. Assets management:

*Inventory turnover:

Inventory turnover measures how fast the company sells its inventory.
By the end of 2020, the average inventory turnover ratio of Vinamilk was
6.47 which is slightly higher than the industry average - 6.43. This
number implies that the company had strong sales which was illustrated
by an image of a balanced scale between having enough in-stock
product and not having to reorder too frequently.

*Days sales outstanding:

DSO is measured to show how many sales a company has made over a
specific period of time. It suggests how efficient the company's collection
department is and the extent to which the company is maintaining
customer satisfaction. VNM's DSO is easily seen to be above the
average of its peers, which means it takes a long time for the company
to recover money after sales. However, for business operations, it is
most beneficial for the company to recover outstanding debts as quickly
as possible. So, it can be observed that there appears to be a good
operational management system.

*Fixed assets turnover:

The fixed asset ratio is used as a component to deplete depreciation. A

higher fixed asset turnover ratio indicates that a company has effectively
used investments in fixed assets to generate sales. Compared to the
peer average, VNM had slightly lower from 2016 to 2019 but then rose
again to reach near the average peer in 2020.
 *Total assets turnover:

The asset turnover ratio can be measured by a metric that can show the
investor how efficiently which company uses its assets to produce
revenue compared to other firms in the same industry. Despite the
decline in the four-year period, we found that Vinamilk still tries to
maintain the average ratio above the industry which is 1.27.

c. Debt management:

*Total debt to total assets:

Total debt to total asset is a ratio used to visualize how financially stable
a company is. Despite the fact this ratio of VNM has been increasing
from 2016 but the company still manages to keep it under the peer
average. So, we can conclude that investing in Vinamilk is not as risky
as in other firms.
 *Times interest earned:

Interest accrued is used to show a firm's ability to meet its debt

obligations based on its present income. By dividing EBIT by the total
cost of the loan, we can be sure that the company can afford to pay off
its debts and it is worthwhile for investors to continue pouring money into
the business. Despite a given down-slope graph, we can see that the
company is effectively managing its operations for sustained growth.

d. Profitability:

*Operating profit margin:

By dividing operating income over total revenue, this metric expresses

how the company generates its profit on a per-sale basis after
considering variable costs except any interest or taxes (EBIT). In the
VNM case, the operating profit margin had slightly fallen off from 2016 to
2020 by 1.05. Though, using the average in the dairy industry in 2020
(20.94%), Vinamilk can still be considered as a strong firm in maximizing
its operations and reap profit.
*Profit margin:

By calculating the profit margin, we can compute the percentage figure

that indicates how many cents of profit the business has generated for
each dollar of sale. In Vinamilk’s case in 2020, the business announced
that it had a 19% profit margin (higher than industry average - 17.54%)
during the last quarter and it means that it had a net income of $0.19 for
each dollar of sales generated. And since a higher operating margin is
preferred meaning lower accounting costs, Vinamilk seems to manage
the business efficiently.

*Return on assets:
This ratio indicates the effectiveness of using assets to generate
revenues. Since it is computed by net income over total assets,
generally, the higher rate of return, the more effective the firm converts
the money it invests into net income. Even though there was a small
decline over the five year period, compared to the average ROA of the
industry, which is 0.27, according to Investing.com report in 2020,
Vinamilk’s ROA can still be considered as high rate and earned more
money on less investment.

*Basic earning power:

As it is relatively close to Operating Income, BEP formula includes
non-operating income (such as dividends paid on the stock a company
holds) so the metric can show a wider view and more accurate
comparison between the firms in the same industry. So, for investors,
they tend to look at BEP over Operating Income while comparing the
companies. Despite the lower extraction from the asset to generate profit
over the time, Vinamilk’s BEP can be considered as a potential
investment since its BEP is 3.14% higher than its peers’ average which
is 29.19%.
*Return on equity:

ROE is used to measure the profitability of a corporation in relation to

stockholders’ equity. By using the result calculated by dividing net
income by shareholders' equity. The best practice to use ROE is to
compare the number with the industry average which is 28.88% and it
can be clearly seen that VNM’s ROE is higher than the industry
averages up to 8.27%. A normal ROE could be 10% or less than the
industry average so the disparity between these ratios is acceptable.

e. Market value:

*Price/ Earnings
By using price earnings ratios (P/E ratio), we can measure how many
times the earnings per share (EPS) have been covered by the current
market price of an ordinary share. It is computed by dividing the current
market price of an ordinary share by earnings per share. Through figure
3, we can conclude that VNM is a potential company since companies
with a high P/E ratio are often considered to be growth stocks. Though in
late 2019, we witnessed a fall in P/E which can be explained by the
existence of the Covid-19 Pandemic.

*Market/ Book

In the four-year from 2016 to 2020, there had been a massive fluctuation
in the dairy industry. We understand that a book-to-market ratio below 1
means that investors are willing to pay more for a company than its net
assets are worth. The company’s manager can see this as a good sign
since this could show that the company has healthy future profit
projections and investors are expected to pay for that future possibility.

1.3.Dupont calculation and performance

Specifically, we have the Dupont equation, which shows the return on

equity rate can be estimated through the profit margin, total asset
turnover, and the equity multiplier. Moreover, it also presents the
relationships between asset management, debt management, and
profitability ratios.

𝑅𝑂𝐸 = 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒/𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 × 𝑎𝑠𝑠𝑒𝑡𝑠/𝑒𝑞𝑢𝑖𝑡𝑦 (Return on Assets x Equity

Multiplier)
𝑅𝑂𝐸 = 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 / 𝑠𝑎𝑙𝑒𝑠 × 𝑠𝑎𝑙𝑒𝑠 / 𝑎𝑠𝑠𝑒𝑡𝑠 × 𝑎𝑠𝑠𝑒𝑡𝑠 / 𝑒𝑞𝑢𝑖𝑡𝑦 (Profit Margin x
Total Assets Turnover x Equity Multiplier)

In terms of Dupont, based on the data obtained from the table above,
most of Vinamilk's indices have tended to decrease over the past 5
years. However, the Equity Multiplier index has always shown signs of
increasing over 5 years, with a fluctuation between 1.3 and 1.5. First, for
the company, Profit Margin, Return on Equity, and Return on Assets
indexes are all lower after 5 years, proving that Vinamilk cannot make
more profits. Which is a bad sign for the company, and they need to
improve these metrics to attract more investors for future projects. In
addition, Total Assets Turnover has also decreased in the past 5 years,
meaning that the company has lower liquidity and increased liquidity risk
each year. These may lead to a narrowing number of investors that take
risks, and the company will find it tough to raise capital in the future if
this situation continues. In contrast, the Equity Multiplier ratio tends to
increase gradually over the past 5 years, proving that Vinamilk's loan
amount has increased year by year. However, since Vinamilk is the
principal supplier of dairy products, this loan could be intended to
expand the market of the company's products (ex: beyond Vietnam's
borders). Then, it could be a good sign of large-scale expansion,
accompanied by the growth potential of the company - this can be
considered as a good sign for the company. Second, when comparing
Vinamilk's Dupont indices with the dairy industry average, all indices
including Profit Margin, Return on Equity, Return on Assets, and
Vinamilk's Total Assets Turnover are higher than the industry average. It
is not difficult to understand why Vinamilk, despite its gradual decrease
in profit margins over the years, is still higher than the dairy industry in
general. With the best milk quality in Vietnam, nationwide coverage,
along the largest scale of milk production in the country, and modern
milk production lines, Vinamilk has successfully become the company
with the most market share in the dairy industry. Vinamilk's product
consumption is always at the top and generates the highest revenue in
the industry. Besides, Vinamilk's development strategy is one of the
factors that help the company always maintain net income at the leading
position of the industry. Intending to become one of the 30 largest dairy
companies in the world, Vinamilk always makes its products more
plentiful and diversified. As a result, the company can expand its market
and increase its revenue, making it more profitable than its peers.
V. Company's Cash Flow Analysis

Free cash flow and the growth rate of free cash flow
With the formula to calculate the free cash flow:

FCF = (EBIT(1-T) + Depreciation and amortization) - (Capital

expenditures + Change in NOWC)
We came up with the results for the Vinamilk company as below.

From the free cash flow of five years as above, we now can show the
growth rate of the free cash flow as the first part of estimated the value
of the firm.

As the results, the average growth rate of free cash flows for four periods
will be: Average growth rate = [(27.86%) + (-21.58%) + (20.01%) +
(-12.31%)] /4 = 3.49% As the chart above showed, the growth rate of
free cash flows of Vinamilk company experienced a great decrease from
2016 to 2018, specifically 49.44%. After that, the company moved
upward sharply in the period 2018 – 2019 at 21.01%. However, in the
previous period, the growth rate of FCF fell significantly with a decline of
32.32%. It is clear that Vinamilk has had an uneven growth rate in FCF
in the last 5 years. Nevertheless, the average of the free cash flows for
the four periods of the company is a positive level of FCF, which
indicates that the firm is generating more than enough cash to finance its
current investment in fixed assets and working capital. With such high
brand recognition today, we assume that Vinamilk will grow at a high rate
of 27.86% in the first phase from 2021 to 2023; then, the growth rate
was stable at 3.49% (according to the average growth rate we calculated
above).

In the next 2021, Vinamilk plans to focus on investment to expand the

scale.
Specifically, the project of high-tech dairy farm combined with ecotourism
in Moc Chau-Son La,
or the project to welcome more than 2,000 purebred dairy cows from the
US to Vinamilk's farms
to increase production and improve quality. Therefore, some advice for
Vinamilk financial
managers is that, for future projects, the company should mobilize more
equity instead of
borrowing from banks. Since Vinamilk always has two sources of
domestic and foreign loans, the
interest expense of the company will be relatively large, so the increase
in equity will help the
companies reduce a part of costs and at the same time. also makes the
rate of return increase and
decrease the equity ratio, the return on equity will also increase,
enriching the pockets of
shareholders following the target that all companies aim to.

VI. Conclusion
All in all, Vinamilk is considered the leading company in the dairy
industry in Vietnam. It has a high intrinsic value of shares as well as high
market value because Vinamilk is striving to build a variety of products
and promote it to enhance the value of the brand. So far, the company is
doing very well but still cannot avoid making difficult choices even when
everything is calculated and evaluated. Therefore, the entity needs to
limit the potential risk by reducing costs, focusing more on the value of
the item to build customer confidence, and then creating a sustainable
development firm.
VII. Referent

Abbott. (2016). Annual report Abbott 2016. Retrieved from

https://www.abbottinvestor.com/static-files/2b48c3bd-ac20-480d-a657-09
4cd9a6943f

Abbott. (2020). Annual report Abbott. Retrieved from

https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_
ABT_2020.pdf

CafeF. (edited 2020). Công ty Cổ phần Sữa Việt Nam (HOSE).

Retrieved from
http://s.cafef.vn/hose/VNM-cong-ty-co-phan-sua-viet-nam.chn

Mộc Châu Milk. (2016). Annual report 2016 MC Milk. Retrieved from
https://www.mcmilk.com.vn/wp-content/uploads/2020/06/M%E1%BB%9
9cCh%C3%A2u-Milk_BCTC-ki%E1%BB%83m-to%C3%A1n-n%C4%83
m2017_K%C3%BD-s%E1%BB%91.pdf

Vinamilk. (2016-2020). Financial statements. Retrieved from

https://www.vinamilk.com.vn/en/investor-relations/financial-reports

Scribd. (n.d). SWOT Analysis of Vinamilk. Retrieved from

https://www.scribd.com/document/139364902/SWOT-analysis-of-Vinamil
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