TRƯỜNG ĐẠI HỌC DUY TÂN

VIỆN ĐÀO TẠO QUỐC TẾ

TEAM PROJECT OF X10

CLASS: PSU FIN302 DIS
TEACHER: LƯU THỊ THU HƯƠNG
TOPIC: HOA PHAT GROUP

MEMBERS: PHẠM THỊ KIỀU THÚY (LEADER)

TRƯƠNG THỊ TRANG
ĐINH THỊ THU HÀ
LÊ HOÀNG TRUNG
LÊ TRẦN Ý NHI
NGÔ UYÊN NHI
Contents:
-Basic information
-Development orientation
-Chapter 1: Overview of Hoa Phat Group
1.1: Foundation and Development of Hoa Phat Group
1.2: Structure of Hoa Phat Group
1.3: Products and Services
1.4: SWOT
-Chapter 2: Financial analysis
2.1: Balance sheet
2.2: Income statement
2.3: Liquidity ratio
2.4: Assets management ratio
2.5: Debt management ratio
2.6: Profitability ratio
2.7: Market value
-Chapter 3: Current & Optimal capital structure
-Chapter 4: Credit policy
4.1: Loans receivable - long-term
4.2: Accounts receivable from customers short - term, loans receivable and other short - term
and long - term receivables
 BASIC INFORMATION
-Transaction name: Hoa Phat Group Joint Stock Company
-Business Registration Certificate No.: 0900189284
-Authorized capital: VND 33,132,826,590,000
-Head office: Pho Noi A Industrial Zone, Giai Pham Commune, Yen My District,
Hung Yen Province, Vietnam
-Website: www.hoaphat.com.vn
-Stock ticker: HPG
-Stock exchange: HOSE
-Initial offering date: 15/11/2007
-Key staff: Trình Đình Long (chairman of the board)

DEVELOPMENT ORIENTATION
Hoa Phat will be honored in the Top 50 largest steel enterprises with over VND
100,000 billion in annual revenue.
- Vision: To become an industrial manufacturer with a leading product quality as
its steel production being its core business sector
- Mission: To provide leading products, contribute to improved life quality and
gain customers’ trust
- Position: Hoa Phat – Vietnamese brand, global standard.
- Core Values: The core value of Hoa Phat Group is the philosophy of Harmony for
Joint Development. This is reflected in the relationship among the employees,
between the Group and its partners, agents, shareholders and the social community,
ensuring the harmony of interests of stakeholders on the same boat, towards
sustainable development. Especially, Hoa Phat Group has built a long-term,
sustainable and trusting partnership with the sales agents who have been with the
Group since the beginning of its establishment.
 Chapter 1: OVERVIEW OF HOA PHAT GROUP
1.1: Foundation and Development of Hoa Phat Group:
Hoa Phat is a leading industrial manufacturer in Vietnam.
-8/1992: Establishing Hoa Phat Equipment Accessories Co., Ltd, (now Hoa Phat
Metal Producing Co., Ltd) - the first company that bore brand of Hoa Phat
-11/1995: Establishing Hoa Phat Furniture JSC
-8/1996: Establishing Hoa Phat Steel Pipe Co., Ltd
-2000: Establishing Hoa Phat Steel JSC, now Hoa Phat Hung Yen Steel Co., Ltd.
-7/2001: Hoa Phat Refrigeration Engineering Co., Ltd.
-9/2001: Hoa Phat Urban Development and Construction JSC.
-2004: Established Hoa Phat Trading Co., Ltd.
-1/2007: Reorganizing as a group with Hoa Phat Group Joint Stock Company
being the Parent Company of its subsidiaries.
-8/2007: Establishing Hoa Phat Hai Duong Steel JSC to initiate the Hoa Phat Steel
Integrated Complex in Kinh Mon District, Hai Duong Province.
-15/11/2007: Listing HPG shares on the Vietnam Stock Exchange.
-6/2009: An Thong Mineral Investment JSC became a member of Hoa Phat Group.
-12/2009: Finishing the first phase of Hoa Phat Steel Integrated Complex in Hai
Duong.
-1/2011: Structuring of operation model of the Parent Company by separating the
steel production and trading sector
-8/2012: 20th anniversary of Hoa Phat development, Third Class Labour Order
awarded by the President.
-10/2013: Finishing the second phase of the Hoa Phat Hai Duong Steel Integrated
Complex, raising the total capacity of Hoa Phat to 1.15 million tons per year.
-3/2015: Hoa Phat Hung Yen Feeds Co., Ltd was officially launched, marking a
new step in the Group’s development history by investing the agricultural sector.
-2/2016: Establishing Hoa Phat Agriculture Development JSC, which manages and
coordinates the operations of all subsidiaries in the agriculture sector (including
feed and breeding).
-2/2016: Finishing the third phase of Hoa Phat Steel Integrated Complex in Hai
Duong, raising the total capacity of Hoa Phat to 2 million tons per year.
-4/2016: Establishing Hoa Phat Steel Sheet Co., Ltd, implementing the project of
prepainted hot dipped galvanized steel sheet, galvanized steel sheet and galvalum
steel sheet with the capacity of 400,000 tons per year.
-2/2017: Establishing Hoa Phat Dung Quat Steel JSC, initiating Hoa Phat Dung
Quat Steel Integrated Complex in Quang Ngai Province with the capacity of 4
million tons per year and the total investment of VND 52,000 billion, marking a
turning point in Hoa Phat Group’s development.
-20/8/2017: is a very special milestone because Hoa Phat Group officially
celebrates 25 years of construction and development. On this occasion, the group
also had many welcoming activities such as a cultural show called "Shining talent",
football prizes, photo contests...
-4/2018: Hoa Phat Steel Co., Ltd. officially provides the market with high quality
color coated steel sheet products.
- Quarter III/2018: Hoa Phat Steel Pipe Co., Ltd decided to invest in the
construction and installation of a large steel pipe production line at the factory in
Hung Yen.
-10/2018: For the first time, the consumption volume of Construction Steel reached
a record of 250,000 tons.
-9/2019: Hoa Phat Equipment Parts Co., Ltd officially changed the company's
name to Hoa Phat Metal Fabrication Co., Ltd.
-11/2019: Hoa Phat Steel first hit 300,000 tons in November, steel market share
exceeded 26%.
-2019: The first two blast furnaces of the Hoa Phat Dung Quat Steel Integrated
Complex Project were officially put into operation, bringing the total construction
steel output of Hoa Phat to 4.4 million tons per year.
-11/2020: Hoa Phat Group has officially launched its commercial hot-rolled coil
onto the market, which helps optimized Hoa Phat’s steel ecosystem.
-12/2020: Hoa Phat Group restructured its operating model with establishment of
Corporations in charge of the Group’s business sector. Accordingly, 04
Corporations under the Group have been established, including: Iron and Steel,
Steel Products, Agriculture and Real Estate.
-1/2021: The blast furnace No. 4 - Hoa Phat Dung Quat Steel Integrated
Complex was put into operation, marking completion of the entire project, and
bringing Hoa Phat’s total crude steel output to 8 million tons/year.
-9/2021: The Group decided to establish Hoa Phat Household Appliances
Corporation with the following fields of activity: Investing, manufacturing and
trading in electrical appliances - household appliances.

1.2 Organization Structure:

Board of management:
- Chairman of the board of management: Mr. Tran Dinh Long
- Vice chairman of the board of management: Mr. Doan Gia Cuong, Mr. Nguyen
Tuan Manh, Mr. Tran Tuan Duong
- Members of the board of management: Mr. Hoang Quang Viet, Mr. Nguyen
Ngoc Quang, Mr. Nguyen Việt Thắng

Supervisory board:
- Supervisory board: Mrs. Bui Thi Hai Van
- Members of the Supervisory board: Ms. Ngo Lan Anh, Ms. Le Minh Thuy, Ms.
Thai Thi Loc

Board of directors:
- Board of directors: Mr. Nguyen Viet Thang
- Deputy Board of directors: Ms. Nguyen Thi Thao Nguyen

Organization Structure:
Operating model:
1.3: Products and Services:
-The Group operates in 05 fields: Iron and Steel - Steel Products - Agriculture -
Real Estate - Home Appliances.
- Iron and steel with strategic products of hot-rolled coil (HRC) and construction
steel
- Steel products include: Steel pipes, galvanized steel, wire-drawn steel, pre-
stressed steel
- Hoa Phat has been involved in the field of high-tech and biosafety agriculture
since mid-2015 with the areas of animal feed production, pig farming, cow farming
and poultry farming
- Hoa Phat's real estate business includes real estate in industrial zones and urban
areas. Some big projects of Hoa Phat such as NORTH NOI URBAN AREA -
HUNG YEN, MANDARIN GARDEN HOANG MINH GIAM....
- Hoa Phat Refrigeration was established in 2001, owns 20 years of experience in
manufacturing Refrigerator, Freezer, Refrigerator branded Hoa Phat, Funiki. The
company's entire production and assembly lines and equipment are imported from
famous brands in the world, modern and fully automated, ensuring stable and
durable product quality.
- Steel production is the core business, accounting for 90% of the Group's revenue
and profit. With a capacity of 8 million tons of crude steel/year, Hoa Phat is the
largest steel producer in Southeast Asia.
- With 4 large factory chains including: Hoa Phat Hai Duong Iron and Steel
Complex, Hoa Phat Dung Quat 1 Iron and Steel Complex, Hung Yen Steel Rolling
Factory, Hoa Phat Dung Quat 2 Iron and Steel Complex (under construction). in
the expected period). Currently, Hoa Phat is holding the No. 1 position in terms of
scale in the country in terms of steel production.
- In addition to leading the domestic market share, Hoa Phat Steel has exported to
14 countries around the world such as the US, China, Canada, Australia, Japan,
Korea, Cambodia, Malaysia, ...

1.4: SWOT:
Strength:
-Is 1 in the key industry of the country, the number 1 selling brand in the market
-Sales and brand network covering the whole country
-High profit, low labor cost, rich ore source
-Having a deep-water port, it is convenient to import ore and produce and the cost
of water transportation is much cheaper than by road
Weakness:
-Inadequate focus on functions that bring the highest added value
-Limited capital is mainly borrowed, depending on the world billet price
-Consumption is low compared to domestic and imported supply while the world
economy and real estate industry freeze
-The technology is still backward, the production activity is still low
Opportunities:
-Steel market has good growth prospects
-Steel price increase
-Not much affected by the menstrual cycle
-Growth prospects and great potential.
Threats:
-Subject to competition from China's imported steel.
-Steel industry still faces overcapacity.
-Inflation rate increased
-Foreign exchange rate risk
-Legal barriers when exporting
-Shipping fee increased due to petrol price
-Prices of raw materials fluctuate

Chapter 2: FINANCIAL ANALYSIS

2.1: Balance sheet:
2.2: Income statement:
2.3: Liquidity ratio:
Liquidity ratios, which give an idea of the firm’s ability to pay off debts that
are maturing within a year. Two of the most commonly used liquidity ratios
are discussed:

-Current Ratio: It indicates the extent to which current liabilities are covered by
those assets expected to be converted to cash in the near future.
From 2019 to 2020, the current ratio decreased from 1.13 to 1.09, showing a
decrease in the company's debt repayment ability.=>Bad
From 2020 to 2021, the current ratio will increase from 1.09 to 1.28, showing an
increase in the company's debt repayment capacity.=>Good
The table shows that the current ratios are all greater than 1. This is a good sign for
the company, showing that the company is more likely to repay all its debts.
Neither too high nor too low. => shows that the business is using assets quite
effectively.=> Good
-Quick Ratio: shows how much capital a business has in cash and cash equivalents
to pay off a short-term debt
The quick ratio over the years increased from 2019 to 2021: 0.41; 0.59; 0.71.
Although the indexes are all less than 1, the ability to repay short-term debts is
low, but they have increased over the years, showing that this is a good sign.

Compared with HSG:

- Current Ratio: Has good liquidity with total assets greater than short-term
liabilities, an increase compared to 2020 but compared to rival HSG, this ratio is
still lower and needs improvement in the future.=> Bad
- Quick Ratio: this ratio of HPG increases year by year and increases in 2021 with
a rate of 0.71, nearly reaching 1, and compared to HSG, this business only reaches
0.35, HPG is more than twice as high as HSG. => Good

Compared with industry:

- Current Ratio: HPG's current ratio is 1.28. This figure shows that it is still at a
safe level because it is above 1, but compared to the industry index, it is still lower
and needs to be improved next year. => BAD
- Quick Ratio: HPG's quick ratio in 2021 is 0.71 higher than the industry index.
shows better ability to repay short-term debt. => GOOD

Chart Title
1.40

1.20

1.00

0.80

0.60

0.40

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2021 2020 2019

Current Ratio Quick Ratio

2.4: Assets management ratio

Asset management ratios, which give an idea of how efficiently the firm is using
its assets.
*Inventory turnover ratio:
- Inventory turnover ratio represents the average number of inventory turnovers in
a period. If this index is high, it means that the business is selling fast, and the
inventory is not much.
- It can be seen that the inventory turnover ratio of 2021 (3.58) increases compared
to 2020 (3.47), 2019(3.33). So, this is good news for the company because the
ability to turnover inventory of HPG increases through each year or the
management of inventory of the company improves each year.=> Good
*Accounts Receivable Turnover Ratio:
The large receivables turnover ratio shows that the ability to collect debts from
customers is good, and shows that the company has quality business partners who
are able to pay debts quickly.
-From 2019 to 2020, the receivable turnover ratio decreased from 18.16 to 14.90,
lead to a decrease in the ability to collect debts => Bad
-From 2020 to 2021, the receivable turnover ratio increase from 14.90 to 19.69,
lead to a increase in the ability to collect debts => Good
*Days sales outstanding (DSO) (Days)
This is an metric that is calculated as the average number of days it takes a
company to collect money from a sale after a sale has been made. If this ratio is
low, it means that the company only needs a few days to collect the money owed
by customers. If this ratio is high, it means that the company mainly sells on credit
to customers, the debt period is longer. So:
-From 2019 to 2020, the days sales outstanding increase from 20.10 to 24.49,
=>Bad
-From 2020 to 2021, the days sales outstanding decreased from 24.49 to 18.54,
=>Good
*Fixed Asset Turnover Ratio:
This index helps to evaluate the efficiency of using fixed assets of the business.
The higher this index, the higher the efficiency in using fixed assets of the
enterprise.
-From 2019 to 2020, the fixed asset turnover ratio decreased from 2.07 to 1.39,
shows that the firm has not effectively used its plant and equipment => Bad
-From 2020 to 2021, the fixed asset turnover ratio increased from 1.39 to 2.18
shows that the firm has effectively used fixed asset => Good
*Total Assets Turnover Ratio:
Used to evaluate the efficiency of the company's use of assets. Through this
coefficient, we can know how much revenue each dollar of assets generates. Total
asset turnover ratio increases gradually over the years in the period of 2019 - 2021
(0.64; 0.69; 0,85) showing the better the enterprise's efficiency in using. The higher
the total asset turnover ratio, the more effective the company's assets are used in
production and business activities.

Compared with HSG:

- Inventory Turnover: is an important indicator in the inventory management
process. The higher this index, the better for businesses that demonstrate good
sales and high consumer demand for products. And HPG still tries to grow this
ratio from 2019 to 2021, with signs of increase but not significant and compared to
HSG, HPG is nearly twice lower. => Bad
-Accounts Receivable Turnover: The higher the receivables turnover ratio, the
more effective the collection of receivables and debts from customers. And for
HPG, this coefficient will be in 2021 (19.69), but compared to HSG (21.22), it is
always lower and needs to be improved. => Bad
-Days sales outstanding (DSO): A low DSO means that the company only needs a
few days to collect the money owed by customers. If this ratio is high, it means
that the company mainly sells on credit to customers, the debt period is longer.
Compared to HSG (17.20), we can see that in 2021 HPG (18.54) has increased
gradually. => Bad
- Fixed Asset Turnover: The higher this index, the higher the efficiency in using
fixed assets of the enterprise and vice versa. For HPG, this coefficient in 2021 is
2.18 , however compared to HSG ( it is always lower, needs improvement. => Bad
-Fixed Asset Turnover: The higher this index, the higher the efficiency in using
fixed assets of the enterprise and vice versa. For HPG, this coefficient in 2021 is
2.18, however compared to HSG(8.87) (which is always lower) needs
improvement. => Bad
-Total Asset Turnover: The higher the total asset turnover ratio, the more effective
the company's assets are used in production and business activities. For HPG, this
coefficient in 2021 is 0.85 but not significant when compared with HSG(2.48), if
compared, HSG is three times higher than HPG. => Bad

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2.5: Debt management ratio

Debt management ratio: A set of ratios that measure how effectively a firm
manages its debt.

*Total Debt to Total Assets :

The ratio of total debt to total capital; it measures the percentage of the firm’s
capital provided by debt holders.
The higher the TD/TA ratio, the more leveraged the company and, therefore, the
greater the financial risk.
-Through the above table, we can see that over the years, the TD/TA ratio is lower
than 1, showing that the company has a low leverage ratio, the company's assets
come from equity and profit. => The business has high sustainability and few
debts.=> Good
-The TD/TA ratio is average and tends to increase/decrease slightly from year to
year. The enterprise has adjusted debts, the leverage ratio is at an average level not
exceeding, ensuring at an optimal level. Business should continue to maintain.
*Times Interest Earned:
A measure of the firm’s ability to meet its annual interest payments
-The enterprise has a relatively high interest payment ratio and has steadily
increased year by year. It shows that the business is operating and using loans
effectively, controlling interest expenses, thereby generating profits from
production and business activities.
-The rate of decrease is quite high from 2019 to 2020 due to the impact of the
Covid-19 epidemic, but from 2020 to 2021, the interest payment rate increases
sharply (increasing by nearly 48%) => The business develops strongly and stably.
determined

Compared with HSG:

*Total Debt to Total Assets :
The ratio of total debt to total assets of HPG (0.49) is smaller than that of HSG
(0.51). Shows that HPG is more optimal, financial risk is lower.=> Good
*Times Interest Earned:
TIE of HPG(15.67) is lower than HSG(15.69) => Bad .Need to improve and
overcome HSG. But there is not much difference and both are larger than 1, so this
shows that profit before tax and interest is higher than interest expense. The
company is profitable, and has a good financial position
 Chart Title
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16.00
14.00
12.00
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8.00
6.00
4.00
2.00
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2021 2020 2019

Total Debt to Total Assets Times Interest Earned

Series3

2.6: Profitability ratio

Profitability Ratios: A group of ratios that show the combined effects of liquidity,
asset management, and debt on operating results.

*Operating margin
- HPG's operating profit margin is 15.51% in 2019 and will increase 26.24% in
2021. Compared to the industry as a whole, the operating profit margin is about 6
times higher. This is a good sign for the company because it shows the fact that
COGS and operating expenses are well controlled.=> Good

*Profit margin
- Like operating profit margin, HPG's profit margin also increased from 11.72% in
2019 to 22.88% in 2021. Profit margin increased profit margin shows that the
business is maximizing optimize costs.
- Profit from business activities of HPG is always high compared to other
enterprises in the industry. Due to the rapid increase in steel prices from 2019 to
2021, HPG's revenue and profit will grow strongly. This shows HPG's solid
position in the domestic steel market and consumers' trust in the company.
=> Good

*Return on total assets

- HPG's ROA ratio is 7.45% in 2019 and will increase to 19.37% in 2021. This
shows that HPG's ability to bring profit from total assets is very strong. .
- Compared to many enterprises in the same industry in Vietnam, this is an
impressive return on assets. This shows that the company has used its assets very
well to bring profits to the company.
=> Good

*Return on common equity

- HPG's ROE increased from 15.86% in 2019 to 38.03% in 2020. ROE increase
over the years proves that the company effectively uses shareholders' capital,
which means that the company has been balanced satisfactorily. balance between
shareholder capital and borrowed capital to exploit its competitive advantages in
the process of raising capital, expanding business scale.
- Compared with the general coefficient of the whole industry and listed companies
on Vietnam's stock market, HPG's profitability is very good and tends to grow
sustainably.
=> Good

*Basic Earning Power

-Has continuously increased over the years. The higher the value of the indicator,
the higher the basic profitability of the asset, the higher the business efficiency
=> Good

*Return on Invested Capital(ROIC):

HPG's ROIC rate has increased year-over-year at 10.13% in 2019 and increased to
32.95% in 2021. HPG's ROIC is almost twice as high as the industry. Businesses
with high ROIC create stronger and longer-term shareholder value. The higher the
ROIC, the better the capital efficiency. Usually, the higher the ROIC, the (show)
the business' ability to allocate capital more efficiently.
=> Good
*Comment
The profitability that HPG shows in the period of 2019-2021 is very good on all
indicators and shows a strong and sustainable growth trend.

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2021 2020 2019

2.7: Market value

Market Value Ratios: Ratios that relate the firm’s stock price to its earnings and
book value per share.
*EPS (earnings per share) is the determining factor in share value.
- In 2019: EPS is 2745
- In 2020: EPS is 4076
- In 2021: EPS is 7718
*P/E:
The ratio of the price per share to earnings per share; shows the dollar amount
investors will pay for $1 of current earnings
P/E increase year over year from 2019 to 2021: (4.74; 4.91; 6.22 )
If the P/E ratio is high, it means that investors expect a high rate of dividend
growth in the future; stocks have low risk so investors are satisfied with low
market capitalization rate; predicts the company has a medium growth rate and will
pay a high dividend
The current P/E of 6.22 is lower than the industry average of 6.42
*Market/Book: The ratio of a stock’s market price to its book value.
-M/B increase year over year from 2019 to 2021: (0.75; 1.12; 2.37)
-The current M/B of 2.37 is higher than the industry average of 2.17
*EV/EBITDA: The ratio of a firm’s enterprise value relative to its EBITDA. Over
the years it has a decreasing index
=> HPG is a stable, low-risk investment channel, suitable for long-term
investment.
 Chart Title
25,000

20,000

15,000

10,000

5,000

-
EPS P/E Book value per share Market/book ratio EV/EBITDA

2021 2020 2019

Chapter 3: CURRENT & OPTIMAL CAPITAL STRUCTURE

 Chapter 4: CREDIT POLICY
4.1: Loans receivable - long-term:

(*) These long-term loans receivable represents loans granted to individuals for
investment in breeding facilities, infrastructure and premises to meet the
requirements of the Group. Accordingly, loan principals and interests will be offset
with the breeding facilities rental over the lease term. After the end of the lease
term, the Group is required to transfer the leased properties after the individuals
have fully repaid principals and paid interests incurred.
(i) The loan was unsecured.
(ii) The loan was secured over the land use right certificate of the landowner for
the land lot of 43 m² in La Tien Hamlet, Nguyen Hoa Commune, Phu Cu District,
Hung Yen Province

4.2: Accounts receivable from customers short - term , loans receivable and
other short - term and long - term receivables:

The Group's exposure to credit risk is influenced mainly by the individual

characteristics of each customer. In response to the risk, the Board of Directors of
the Company and its subsidiaries has established a credit policy under which each
new customer is analysed individually for creditworthiness before the Group's
standard payment and delivery terms and conditions are offered. Credit purchase
limit is established for each customer, which represents the maximum open amount
without requiring approval from the Board of Directors of the Company and its
subsidiaries. The limit is reviewed annually. No collateral is collected from the
customers.

Based on historic default rates, the Board of Directors believes that apart from the
amount provided for as per below, no further allowance for doubtful debts is
necessary in respect of the outstanding trade and other receivables at the reporting
date.

The aging of trade and other receivables not impaired at the year end is as follows:
Movements in the allowance for doubtful debts during the year were as follows: