Group 1 Financial Report

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[Group 1] Financial Report
Financial Reporting (Trường Đại học Ngoại thương)
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FOREIGN TRADE UNIVERSITY

FACULTY OF BUSINESS ENGLISH
--------***--------
FINANCIAL REPORT
Major: Business English
FINANCIAL STATEMENT AND MANAGEMENT
ANALYSIS OF VINHOMES JOINT STOCK COMPANY
OVER THE PERIOD OF 2018 TO 2020
Group :1
Group Name : ICE BEARS
Class : TAN410 (1.1/2021).3
Intake : K57
Instructor : Le Thanh Thuy, M.A.
Hanoi, October 2021

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GROUP MEMBERS
1. Bá Thị Vân Anh 1817710004

2. Nguyễn Lê Phương Anh 1817710007
3. Phạm Thị Nguyệt 1817710121
4. Lường Thị Quỳnh Linh 1817710084
5. Nguyễn Thị Hồng Hằng 1817710054
6. Nguyễn Thị Huyền 1817710073
7. Ka Như Quỳnh 1817710173
8. Mai Duy Linh 1817710085

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TABLE OF CONTENTS
LIST OF FIGURES
LIST OF TABLES
INTRODUCTION .....................................................................................................1
CHAPTER 1: GENERAL INFORMATION ABOUT VINHOMES JOINT
STOCK COMPANY .................................................................................................2
1.1. An introduction to Vinhomes JSC .............................................................2
1.2. Shares and Shareholders information .......................................................4
1.3. Organizational structure: ...........................................................................6
1.4. Products and Services .................................................................................8
CHAPTER 2: MARKET ANALYSIS.....................................................................9
2.1. The market in general ....................................................................................9
2.1.1. Demand for real estate ..............................................................................9
2.1.2. Supply for real estate .................................................................................9
2.1.3. Market growth rate ..................................................................................10
2.2. The industry ..................................................................................................10
2.2.1 Strengths ...................................................................................................10
2.2.2 Weaknesses ...............................................................................................11
2.2.3 Opportunities ............................................................................................11
2.2.4 Threats ......................................................................................................12
CHAPTER 3: CONSOLIDATED FINANCIAL STATEMENT .......................13
CHAPTER 4: TREND ANALYSIS AND INDUSTRY COMPARISION.........14
CHAPTER 5: DEVELOPMENT STRATEGY ...................................................23
5.1. Finding new directions of profit optimization ...........................................23
5.2. Improving financial ratios ...........................................................................23
CONCLUSION ........................................................................................................25
REFERENCES
APPENDIXES

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LIST OF FIGURES
Figure 1.1: Stock movement chart in 2020 of Vinhomes

Figure 1.2: Vinhomes JSC’s organizational structure
Figure 4.1: Vinhomes JSC Three-years Trend in ROE
Figure 4.2. Vinhomes JSC Three-years Trend in ROA
Figure 4.3: Vinhomes JSC Three-years Trend in Current Ratio
Figure 4.4: Vinhomes JSC Three-years Trend in Quick Ratio
Figure 4.5: Vinhomes JSC Three-years Trend in Debt to Total Asset Ratio
Figure 4.6: Vinhomes JSC Three-years Trend in Debt to Total Equity Ratio
Figure 4.7: Vinhomes JSC Three-years Trend in Inventory Turnover Ratio
Figure 4.8: Vinhomes JSC Three-years Trend in Total Asset Turnover Ratio
LIST OF TABLES
Table 4.1: Three-year Profitability Ratio Analysis for Vinhomes JSC

Table 4.2: Three-year Liquidity Ratio Analysis for Vinhomes JSC
Table 4.3: Three-year Debt Ratio Analysis for Vinhomes JSC
Table 4.4: Three-year Asset Activity Ratio Analysis for Vinhomes JSC

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INTRODUCTION
Real estate plays an important role in Vietnam’s economy through its spread
to other development of economic industries such as construction, manufacturing,
tourism, finance & banking, construction materials, interior, and exterior furniture.
After a slowdown stage (2011-2012), Vietnam’s real estate market has flourished in
recent years, with continued economic growth leading to a surge in property prices.
The country’s real estate market proved resilient during the pandemic, with both the
industrial and residential sectors leading the pack. On to Vietnam’s housing market,
which has also seen unprecedented growth in recent years. While demand from
foreign investors is one of the factors pushing the market, the majority of the growth
comes from Vietnamese citizens (in any new apartment development, foreigners are
only allowed to own up to 30% of the total units). As such, the country’s economic
progress coupled with a rapidly expanding middle class is the primary demand driver
for the expanding housing market, with few signs pointing to a slowdown anytime
soon.
Vinhomes Joint Stock Company (Vinhomes JSC) is a dominant Vietnam-
based company operating in the residential real estate industry. The company is
involved in the construction and management of residential, office, and commercial
buildings. Its products include houses, apartments, villas, as well as offices for sale,
lease, and for rent. Vinhomes has ranked the No 1 in Vietnam’s residential market
with a 46% market share, according to the Vinhomes JSC 1Q2019 financial report.
This entire report has done based on the financial analysis of Vinhomes JSC to
understand its financial position throughout the year 2018 to 2020. The fundamental
purpose of this report is to gain some proficient knowledge about ratio analysis
through which how the company is performing within the industry could be
understood. Data has been mainly collected through Vinhomes JSC’s data source.
Concerning entire factors, this report is mainly supported by recommendations,
which could be helpful for stakeholders of this company.

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CHAPTER 1: GENERAL INFORMATION ABOUT VINHOMES

JOINT STOCK COMPANY
1.1. An introduction to Vinhomes JSC
Vinhomes is the No. 1 real estate development, trading, and management
company in Vietnam, founded in 2002 and headquartered in Hanoi, Vietnam.
Founded as a subsidiary of Vingroup, the company spun off in 2018 and 10% of
shares were sold in an IPO. After the first day of trading, the company was already
the second-largest public company in Vietnam, behind parent company Vingroup.
Vinhomes develops property in 40 cities across Vietnam and owns 16,000
hectares of land in Vietnam, according to Vinhomes annual report 2020.
1.1.1. History
In 2002, Vincom Joint-stock Company was established, formerly Vingroup
Joint-stock Company, the parent company of Vinhomes.
In 2008, BIDV-PP Urban Joint-stock Company was established – the
precursor of Vinhomes – with an initial registered charter capital of VND 300 billion.
In 2009, its name was changed to Hanoi Southern City Development Joint-
stock Company.
In 2011, it became a publicly listed company and attained the Decision on
accepting registration for stock trading at the Hanoi Stock Exchange (UPCOM), with
the stock code NHN Commenced the construction of Vinhomes Times City – a luxury
urban complex project (Hanoi) with more than 12,000 apartments.
In 2013, Vinhomes Royal City (Hanoi) – a high-end urban complex with more
than 5,000 apartments was put into operation.
In 2014, Vinhomes Riverside (Hanoi) – a 183,5-hectare luxury urban project
– was put into operation.
In 2015, Vinhomes Times City was put into operation, adopting Singaporean
eco-friendly architectural style.

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In 2018, its name was changed to Vinhomes Joint-stock Company. The

company introduced the world-class mega-city model and opened Vinhomes Ocean
Park and Vinhomes Smart City for sale.
In 2019, it re-planned product lines into branded lines including Vinhomes
Diamond, Vinhomes Ruby, Vinhomes Sapphire, and upgraded VinCity projects into
Vinhomes-branded smart projects.
In 2020, the company launched the online real estate trading floor Vinhomes
Online and established Vinhomes Industrial Park Development Investment Joint
Stock Company.
1.1.2. Mission
By 2021, Vinhomes’s biggest vision is to be a world-class enterprise.
Specifically, they are striving to become the No.1 real estate development and
management company in Vietnam, recognized for its superior scale, execution speed,
and service quality, leading the market to sustainable growth.
1.1.3. Vision
To meet its vision, Vinhomes has particular missions along the way. It is to
pioneer an ideal living experience in Vietnam’s urban locations, featuring
professionally planned residential complexes in harmony with nature, integrated
facilities and a green environment, together forming a new lifestyle for the
Vietnamese people. Vinhomes also nurtures its communities and develops a modern,
lively and gracious environment, so that its residents will enjoy an excellent quality
of life.
1.1.4. Core Values
Vinhomes strives to uphold 6 core values:
 CREDIBILITY: Vinhomes vigorously protects its Credibility as one would
protect one’s honor. The company is fully prepared to execute its plan and spares
no effort in meeting its goal.

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 INTEGRITY: As a foundation of our company, Integrity demands that we remain

in full compliance with all applicable laws and ethical standards. It follows that
we must always put the interests of our customers first.
 CREATIVITY: Vinhomes’s management believes that Creativity is what enables
the company to deliver its philosophy, which is expressed as “Dare To Think,
Dare To Do”. This philosophy encourages all employees to learn new skills.
 SPEED: The company considers Speed of execution and efficiency in operation
to be critical to our success. Among the practices that follow our emphasis on
speed are. “Fast To Decide, Fast To Invest, Fast To Deploy, Fast To Sell, Fast To
Change and Fast To Adapt.”
 QUALITY: The place of quality in Vinhomes’s operations is expressed as “Best
in People, Best in Products and Services, Best in Quality of Life, and Best in
Commitment to Society.”
 COMPASSION: The company respects the interests of all its stakeholders.
Employees are Vinhomes’s most important resource. The company will continue
to promote harmony among the interests of all stakeholders by emphasizing
fairness, integrity, unity, and strength.
1.2. Shares and Shareholders information
1.2.1. Shares information
Vinhomes Joint-stock company was officially listed on Ho Chi Minh Stock
Exchange (HOSE) on 17 May, 2018. Vinhomes stock (VHM) is a stock in the real
estate industry group with the largest market capitalization in Vietnam's stock market
and is on the VN30 list of leading stocks in terms of market capitalization and
liquidity.
Market capitalization on December 31, 2020, is 294,412. The number of
shares redeemed on December 31, 2020, is 60,000,000. The number of shares
outstanding on December 31, 2020, is 3,289,513,918. The number of shares freely
transferable is 3,289,513,918. The number of shares restricted from being transferred
is 0.

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Figure 1.1 is the stock movement chart in 2020 of Vinhomes:
Figure 1.1: Stock movement chart in 2020 of Vinhomes

(source: Vinhomes’s annual report)
In the first quarter of 2020, Vietnam's stock market witnessed the VN-Index
continuously decreasing due to the heavy influence of the global Covid-19 epidemic.
Thanks to the timely and effective measures of the Government, Vietnam has
succeeded in controlling the epidemic. In 2020, Vietnam is one of the countries with
the lowest number of infections and deaths from Covid-19 in the world and also one
of the rare economies with positive GDP growth. This is positively reflected through
the recovery of the stock market and Vinhomes shares from the second quarter
onwards.
As of December 31, 2020, VHM's share price reached VND 89,500/share, up
63% and 6% respectively compared to the end of March and December 31, 2019.

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1.2.2. Shareholders’ information

As of 2020, ownership of insiders are listed below:
 Management Board:
+ Mrs. Nguyen Dieu Linh – President.
+ Mr. Pham Nhat Vuong – Member.
+ Mrs. Pham Thieu Hoa – Member of MB cum General Director.
+ Mrs. Cao Thi Ha An – Member.
+ Mr. Tran Kien Cuong – Member.
+ Mr. Varun Kapur – Independent Member.
+ Mr. Mueen Uddeen – Independent Member.
+ Mr. Hoang D. Quan – Independent Member.
+ Mrs. Ashish Jaiprakash Shastry – Member.
+ Mrs. Pham Thieu Hoa – General Director.
+ Mrs. Nguyen Thu Hang – Permanent Deputy General Director.
+ Mr. Douglas John Farrell – Deputy General Director.
 Board of Directors:
+ Mr. Nguyen Duc Quang – Deputy General Director.
+ Mr. Pham Van Khuong – Deputy General Director.
+ Mr. Nguyen Vu Hung – Deputy General Director.
+ Mrs. Mai Thu Thuy – Deputy General Director.
+ Mr. Pham Khoi Nguyen – Head of Supervisory Board.
 Supervisory Board:
+ Mrs. Doan Thi Thu Mai – Member of Supervisory Board.
+ Mrs. Le Thi Duyen – Member of Supervisory Board
1.3. Organizational structure:
Vinhomes considers transparency and efficiency as the guidelines for its
corporate governance model. The Board of Directors is also well aware of how these
criteria ensure benefits for shareholders and sustainable development for the
Company.

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Figure 1.2 shows the organizational structure in Vinhomes JSC.
Figure 1.2: Vinhomes JSC’s organizational structure.

(source: Vinhomes JSC)
The Board of Directors of the Company consists of one General Director, one
Permanent Deputy General Director, and five Deputy General Directors. The General
Director is appointed by the Board of Directors. The Deputy General Directors are
appointed by the Board of Directors at the proposal of the General Director.
The Supervisory Board is a functional agency independent of the Management
and the Board of Directors. The Supervisory Board is elected by the General Meeting

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of Shareholders, on behalf of the General Meeting of Shareholders, supervises all

production and business activities of the Company.
The Board of Supervisors of the Company consists of three members with a
term of 5 years. The current term is from 2018 to 2023.
The Management Board of the Company has nine members. The maximum
term of each member is five years. Chairman of the Board elected by the Board of
Directors.
Other than that, there are 8 other small divisions responsible for 8 activities,
which are Project Development Division, Construction Division, Sales and
Marketing Division, Industrial Real Estate Division, Customer Service Division,
Operations Division, Inspection, Safety, Security, and Fire Prevention Division, and
Administrative & Support Division.
1.4. Products and Services
Vinhomes is the largest enterprise in Vietnam in the field of residential real
estate development and transfer. The company is currently developing and selling
mid- and high-end real estate products in Vietnam. Vinhomes' projects are large-scale
urban areas with synchronously developed infrastructure with a diverse system of
utilities and services, making the most of the Vinhomes ecosystem.
Moreover, the company provides synchronously high-quality services in all
Vinhomes urban areas such as 24/7 customer service center, reception, security, etc.
Real estate management services also ensure to maintain the urban area according to
five-star quality standards, protect and increase the value of customers' properties.
Vinhomes owns 27 urban areas in 7 provinces and cities across the country, more
than 84,000 apartments, villas, townhouses, serving more than 262,000 residents.
In addition, Vinhomes also exploits and manages a system of serviced
apartments and 5-star villas under the brand name Vinhomes Serviced Residences, as
well as exploits and manages a system of high-class offices for lease in urban areas,
contributing helping customers exploit Vinhomes real estate in the best way through
participating in the Company's investment programs with higher profitability.

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CHAPTER 2: MARKET ANALYSIS

2.1. The market in general
2.1.1. Demand for real estate
The real estate market has fluctuated in the three-year time period. The market
has had periods of decline, crisis, freezing, and then strong recovery in which demand
for real estate also follows certain fluctuations. Specifically, in the 2017-2018 period,
Vietnam was experiencing economic growth leading to the high demand for both
industrial real estates and land plots with a "fever" of lands in these years. However,
since the outbreak of the pandemic in Vietnam in 2019, demand for real estate has
dropped sharply in some segments, especially the resort and hotel real estate segment.
Although the demand for rent in the epidemic situation has decreased, the demand
for people's housing is still growing. Moreover, according to economic experts,
Vietnam is one of the countries with a relatively fast urbanization rate. If people's
income level is increasing, the demand for the real estate industry will be greater.
In another aspect, the real estate market still recorded bright spots from the
segment of land for home gardens, farms, and suburban resorts, coming from the
wave of "leaving the city to go home" when the epidemic appeared.
2.1.2. Supply for real estate
In 2018, the real estate market experienced a sudden increase in supply.
According to the Vietnam Real Estate Brokers Association, the number of apartments
successfully traded in 2018 in Hanoi reached 27,595 products, an increase of 132.8%
compared to 2017 (20,776 products). The number of real estate products transacted
was 3.3 times higher than in 2017, reaching 3,106 products.
In the first six months of 2019, there was a decrease in supply and number of
transactions in the real estate market, mainly in Hanoi and Ho Chi Minh. In terms of
condotel real estate products, in the second quarter of 2019, only more than 5,000
new products were introduced to the market, successful transactions were only close
to 1,400 products. The reason is that the new supply is limited, the implementation
of project procedures is slow, the condotel products currently have relatively high

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prices, which also affect the transaction volume and there are not many policies to
facilitate the development of these product lines.
In 2020, the real estate market has faced a shortage of supply. The main reason
is due to the limited land fund for housing development in big cities, the high financial
cost of land, and the long time for project licensing. The market also showed a
decrease in the supply of housing projects and products, especially in the social and
affordable housing segments.
2.1.3. Market growth rate
With its growth, in 2019, the total amount of FDI registered in Vietnam
reached 38 billion USD, up 7.2% compared to 2018. The processing and
manufacturing industry has the largest amount of registered capital, accounting for
64, 6%, second is the real estate business, accounting for 10.2%. In 2020, the real
estate industry grew by contributed 4.42% of the country's GDP in which the
highlight is the industrial real estate segment and the residential segment - the real
estate in the provinces adjacent to big cities such as Hanoi and Ho Chi Minh. The
outlook for the Vietnamese residential real estate market is steady mainly due to rapid
urbanization growth, new development for the construction/projects and the future
value of real estate although the Covid-19 pandemic has had negative effects on the
growth rate of the whole economy and the real estate industry as well.
2.2. The industry
To have a big picture about the real estate industry in Vietnamese, the authors
use the SWOT (strengths, weaknesses, opportunities and threats) model to analysis
the industry:
2.2.1 Strengths
2.2.1.1 Value Multiplies Overtime
A real estate investment is an example of an asset where the value of a
customer's investment grows over time. If the property is connected to a new housing
society, a major road, or a railway line, its value increases dramatically. In addition,

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when the real estate industry grows, it not only benefits itself but also creates spillover
effects on the national economy.
2.2.1.2 Less Risky Investment
Unlike other investments such as bonds and stocks, investors can risk losing
practically all of their money if the stock does not rise in value. On the other hand,
because real estate is one of the safest investments, many individuals opt to invest in
it. Its value does not appear out of nowhere, and the buyer would lose everything if it
did. Even if its value decreases, the owner can still use the property for other reasons
such as rents, crops, structures, and so on. Investors probably might not become
bankrupt in this circumstance, as is the case with bond and stock investments.
2.2.2 Weaknesses
2.2.2.1 High land prices
Land prices in some localities have been pushed up too high. This is faster
than the rate of economic development and urban infrastructure has created virtual
prices. This phenomenon led to consequences: state agencies adjusted the land tax,
people demanded an increase in compensation for site clearance, leading to a decline
in urban development investment activities. Virtual prices cause investors to leave
the market, depleting local economic development and the real estate market.
2.2.2.2 Not Liquid Asset
While cash is a liquid asset that may be used to purchase anything from
anybody and anyplace, the real estate property isn't a liquid asset when it’s usually
hard to sell it to make it liquid in order to make the desired purchases. When it comes
to liquidating the real estate asset, the market may not always offer it at the desired
rate. Therefore, in the event of an emergency, the real estate owners must sell assets
at a lesser price.
2.2.3 Opportunities
2.2.3.1 Vietnamese’s high need for real estate.
The Vietnamese need for residential apartments of the Vietnamese people is
literally high. The first opportunity for businesses is the needs of the Vietnamese

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people. It is the fact that Vietnam always shows the need for housing in its cities,
especially the big cities like Da Nang, Ha Noi, or Ho Chi Minh.
Besides, Vietnam's urbanization process is also taking place at a high speed.
According to the Vietnamese government, the rapid increase of the urban population
in the country leads to Vietnam having to build about 100 million m2 of new housing
to meet the needs of urban residents every month.
2.2.3.2 The increase in Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) inflows to the real estate sector continued to
increases sharply and substantially. The attention of the state and the private sector in
investing in new infrastructure is also expected to create momentum for the market
to develop stability. According to a report from the Ministry of Planning and
Investment, the real estate business market production accounted for more than 10%
of total registered investment capital (nearly $4 billion US). This may indicate that
investors, especially foreign investors, are promoting long-term investment activities
in the real estate market in recent years.
2.2.4 Threats
2.2.4.1 Cumbersome legal process
Legal documents related to the real estate market have not been
synchronized. The legal adjustments in the real estate market, from construction
investment, transactions to management, and use of real estate are completed very
slowly and overlapping. Besides, there are many problems arising from self-
sufficiency or inadequacies in the policy mechanism that have not been timely added.
This can be considered as one of the reasons for the delayed housing papers and
directly affected the effectiveness of real estate projects.
2.2.4.2 A shortage of capital
Real estate businesses face difficulties for real estate in accessing capital. From
1/1/2020, the bank's credit activities for real estate business in Vietnam have been
tightened through 22/2019 / TT-NHNN, replacing Circular 36. Specifically, real
estate loans will be tightened (short-term and medium-term loans will be reduced

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from 45% to 40%), interest rates will continue to rise (mobilizing interest rates will
be nearly 9 %) and the risk factor for real estate loans increased from 150% to 200%.
This not only affects the real estate market in Vietnam but also directly influences
real estate investors and businesses.
CHAPTER 3: CONSOLIDATED FINANCIAL STATEMENT

(Note: The purpose of this part is for readers verifying the accuracy of Vinhomes
JSC’s financial statements in three years from 2018 to 2020 and making a
comparison to the ratios analyzed in the next part. However, in order to avoid making
a lengthy report and ensure the purpose, the authors move the consolidated financial
statements to the Appendix to follow.)

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CHAPTER 4: TREND ANALYSIS AND INDUSTRY COMPARISION

This chapter shows a complete ratio analysis of Vinhomes JSC which
combines both trend analysis and industry comparisons. It shows all the key financial
ratios for Vinhomes from 2018 to 2012, along with the industry averages for those
ratios. (The industry averages are labeled IND in the table.)
The first category is profitability ratio which measures how the firm’s returns
compare with its sales, asset investments, and equity. Stockholders and managers will
be the person who have a special interest in the ratio.
Table 4.1 shows five ratios in profitability of Vinhomes from 2018 to 2020:
Table 4.1: Three-year Profitability Ratio Analysis for Vinhomes JSC
(unit: %)
Profitability Ratios 2018 2019 2020 Trend

Gross profit margin VHM 25.70% 52.89% 36.01% up down
IND 38.40% 42.15% 40.04% up down
Operating profit margin VHM 19.70% 44.97% 29.44% up down
IND 27.1% 30.88% 21.47% up down
Net profit margin VHM 36.94% 42.12% 38.23% up down
IND 27.83% 31.48% 33.01% up
Return on Assets VHM 16.71% 13.72% 13.26% down up
IND 10.40% 8.41% 4.76% down

Return on Equity VHM 56.98% 43.79% 38.58% down
IND 33.59% 26.84% 15.77% down

(source: calculated by the authors)
Firstly, in 2018 and 2019, Vinhomes JSC had positive net income. This gave
a positive value to the net profit margin, return on assets, and return on equity each
of these years (because net income is the numerator for each ratio).

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Vinhomes JSC had a lower gross profit margin than the industry norm for
that three-year time period except for 2019. It also had a higher net profit margin
than the industry norm for that three-year time period though it itself had a slight
decrease from 2019 to 2020. In terms of operating profit margin, there is a strong
growth between 2018 and 2019 but it decreases by 15.54% in 2020. On the other
hand, it's much higher than the industry norm. During 2020, management through its
ordinary activities produced 13.26c in profit before tax for every dollar invested in
resources, compared with 13.72c in 2019 and 16.71c in 2018. The decrease in rates
is significant and results from decreased profit with an increased investment base.
The return on equity (ROE) figures paints a telling story over this three-year
period. From 2018 to 2020, Vinhomes JSC had a much higher return on equity than
the average firm in its industry. A business with a stable ROE at a high level can be
seen as a sign that capital is being used efficiently.
Figure 4.1 show the trend of return on equity in three years:
Figure 4.1: Vinhomes JSC Three-years Trend in ROE

(source: compiled by the authors)
A company's assets are made up of borrowed capital and equity. Both these
sources of capital are used to finance the operations of the company. The efficiency

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of converting investment capital into profit is shown by Return on Assets (ROA).

The higher ROA, the better because company makes more money on less investment.
Figure 4.2 shows the trend of return on assets in three years:
Figure 4.2. Vinhomes JSC Three-years Trend in ROA

Generally, Vinhomes JSC takes the large market share, as a result, the ratios
(ROA, ROE) decrease, though, it has higher ratios than the average firm. Therefore,
company need to bring out the proper policies to improve those. Table 4.2 show
liquidity ratios of Vinhomes JSC in 2018-2020:
Table 4.2: Three-year Liquidity Ratio Analysis for Vinhomes JSC

(unit: %)
Liquidity Ratios 2018 2019 2020 Trend

Current ratio VHM 2.13 1.15 0.99 down
IND 1.71 2.43 2.17 up down
Quick ratio VHM 1.27 0.65 0.57 down
IND 1.15 0.93 0.78 down
(source: caculated by the authors)

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Next, we examine the liquidity ratios. In general, the current ratio, 2.13 in
2018, has been falling each year through 2019 and 2020, when it is 1.15 and 0.99.
The ratio result shows that Vinhomes has $0.99 of current assets for every dollar of
current liabilities, indicating that Vinhomes could pay all its short-term debts by
liquidating a current asset. The industry norm for the current ratio was below the
value of Vinhomes JSC but going on through the years, it is necessary for Vinhomes
to make a change to highlight its current ratios. The higher this ratio, the greater the
debt repayment capacity of the business. If this coefficient is less than 1, the enterprise
may not be able to fulfill its debt repayment obligation when it is due.
Figure 4.3 shows the trend of current ratio in three years:
Figure 4.3: Vinhomes JSC Three-years Trend in Current Ratio

The quick ratio stayed near the industry norm throughout this period. This
means that when inventory is subtracted from total current assets, Vinhomes JSC’s
liquidity goes down. This lower ratio may indicate that, in an emergency, the entity
would be unable to meet its immediate obligations. Again, however, 2020’s value
(0.57 for Vinhomes versus 0.78 for the industry norm) suggests that management
should watch liquidity in the coming years.

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Figure 4.4 shows the trend of quick ratio in three years from 2018 to 2020:
Figure 4.4: Vinhomes JSC Three-years Trend in Quick Ratio

The next ratio is debt ratio – an important ratio when analyzing the financial
position of the firm to assess the relative size of a firm’s debt load and the firm’s
ability to pay off the debt with three primary ratios: the debt to total assets, debt to
equity, and times interest earned ratios. Table 4.3 show debt ratios of Vinhomes
JSC in 2018-2020:
Table 4.3: Three-year Debt Ratio Analysis for Vinhomes JSC

(unit: %)
Debt Ratios 2018 2019 2020 Trend

Debt to Total Assets VHM 0.27 0.13 0.12 down
IND 0.29 0.24 0.24 down
Debt to equity ratio VHM 0.66 0.41 0.28 down
IND 0.84 0.43 0.82 down up

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Vinhomes had a low debt load in three years. The debt to total asset ratio
was consistently above 12 percent, whereas the industry norm for this ratio was 24
percent in the period. A low debt reduces the changes in the return on equity ratio
values. On the other hand, a low debt also implied the ability to raise capital for the
company was limited, it seems to be difficult to collect capital for the future project.
Figure 4.5 shows the trend of debt to total asset ratio in three –years:
Figure 4.5: Vinhomes JSC Three-years Trend in Debt to Total Asset Ratio
Next, we see the debt-to-equity ratio helps investors have an overview of the
financial strength and financial structure of the business. Normally, if this ratio is
greater than 1, it means that the assets of the business are financed mainly by debt,
otherwise, the assets of the business are financed mainly by equity.
Figure 4.6 shows the trend of debt to to equity ratio from 2018 to 2020:

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Figure 4.6: Vinhomes JSC Three-years Trend in Debt to Total Equity Ratio
In principle, the smaller this ratio, which means that liabilities account for a
small percentage of total assets or total capital, the less difficult the business will be
in finance. The larger this coefficient, the greater the probability that the business will
have difficulty paying debts or go bankrupt when the bank interest rates are high.
However, the use of debt also has an advantage, that is, the interest expense will be
deducted from corporate income tax. Table 4.4 show asset activity ratios of Vinhomes
JSC in 2018-2020:
Table 4.4: Three-year Assets Activity Ratio Analysis for Vinhomes JSC
(unit: %)
Assets Activity Ratios 2018 2019 2020 Trend

Inventory Turnover VHM 1.07 0.50 0.89 down up
IND 0.63 0.39 0.36 down

Total asset turnover VHM 0.45 0.33 0.35 down up
IND 0.35 0.27 0.17 down


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Inventories are in the group of projects with legal problems, being stopped
from implementation, unable to produce products, increasing the cost burden,
increasing loan interest. From a more positive perspective, when the investor's
capacity is reformed, the financial situation of the enterprise is improved, the legal
problems are removed along with the new government coming into operation, which
will accelerate the speed of investment projects. Figure 4.7 shows the trend of
inventory turnover ratio in three years from 2018 to 2020:
Figure 4.7: Vinhomes JSC Three-years Trend in Inventory Turnover Ratio

The inventory turnover ratio is inversely proportional to the company's

inventory. The fluctuations suggest that Vinhomes did not match its inventory to its
demand for products. The numbers suggest that Vinhomes’ managers should have
studied its inventory control policies to look for ways to match demand and inventory
more closely. The increased inventory of real estate will become a burden for
businesses in particular and for the economy in general. That’s because the low and
decreasing coefficient over the years shows that the inventory increases over the
years, leading to an increase in the risk of the business.

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Next, we see the trend of inventory turnover ratio in three years from 2018 to
2020 in Figure 4.8:
Figure 4.8: Vinhomes JSC Three-years Trend in Total Asset Turnover Ratio
The total asset turnover ratio was consistently just above the industry norm.
This helped the return on assets ratio during the years when net income was positive,
as described earlier. Although this ratio from 2018 to 2019 was decreased by 12%, it
had a slight increase in 2020, which implied the good management of Vinhomes.
In conclusion, from trend analysis and industry comparison above, we see that
Vinhomes Joint Stock Company has had a great financial capacity with the
interpretation from profitability ratios, liquidity ratios, debt ratios and asset activities
ratios. However, there are still ratios showing negative signals for the company’s
financial health such as ROA, ROE, liquidity ratio and inventory turnover that need
to develop plans to improve in the next chapter.

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CHAPTER 5: DEVELOPMENT STRATEGY

In this chapter, the authors will make some recommendations based on the
above analyses, mainly on limited ratios at Vinhomes JSC to help the company keep
its good financial position.
5.1. Finding new directions of profit optimization
Vinhomes has had a great financial health in general and profitability ratio in
particular when it hold the largest market share in the real estate. However, because
2020 is a particularly difficult year for the world economy in general and Vietnam's
economy in particular due to the negative impact of the Covid-19 epidemic,
Vinhomes Joint Stock Company should quickly implement new business plans to
boost its profit unless the company want to be stuck in the economic recession.
Firstly, Vinhomes can carry out real estate project handover and serviced
apartment for rent and office for rent in Hanoi and Ho Chi Minh. Some real estates
provides apartment for resident to both support government and boost revenue in the
pandemic.
Besides, Vinhomes can participate in investment cooperation and business
development of real estate projects with the parent company Vingroup or its
subsidiaries to take shared profits. It is a good way to keep stable growth. Vinhomes
also should find a direction to diversify business activities such as secondary business
activities and interaction channels to reach more customer groups to shorten the gap
between buyer and seller as middlemen.
In addition, the company can consider accelerating the implementation of
industrial real estate projects – a new project of Vinhomes which has the first project
launched in Hai Phong to take advantage of opportunities from favorable
macroeconomic conditions and the growing trend of foreign direct investment (FDI)
in Vietnam in general and industrial production in particular.
5.2. Improving financial ratios
Through the analysis in the Chapter 4, we see that though the ratios show a
positive outlook about the company’s financial health, it remains ratios that needs to

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be improved in the near future to ensure financial position of the company and also
extend credibility to investors, common stakeholders when they use it to determine
the capital investment.
The first ratio is return on equity. Generally, investors prefer the company that
have steadily high ROE because it indicates that the company can do good things
with the cash and assets it holds but Vinhomes’s trend in three-years has decreased.
In order to improve the ratio, the company should change either one of two part in
ROE which is net income and shareholders’equity. Vinhomes can raise profits by
implementing new ways in the previous part while not necessarily having to sell more
houses, especially when the demand is low in this pandemic.
Other typical way to raise ROE and also help improve the ROA and inventory
turnover ratio is to reduce inventory. Vinhomes should avoid hold more inventory
than it tend to use because it need to have additional maintenance expenses which
reduce net income and make shareholders’ equity higher. For ROA, inventory counts
as an asset for ROA calculations. The company reduces inventory cost by managing
the levels of inventory to reflect sales expectations. Excessive inventory can raise
assets cost without producing more income.
The next ratios is liquidity ratio which includes current ratio and quick ratio.
Vinhome’s two ratio is low (less than 1) in 2019-2020 so it might affect to decision
of banks and other financial institutions to extend loans to the company. The current
ratio depends on both current assets and current liability. Vinhomes should pay off
current liabilities as often and as early as possible to decrease the level of current
liabilities and therefore, improve the current ratio. Besides, Vinhomes should list
unproductive fixed assets and sell off to increase cash level. The two ways also apply
for improving quick ratio as the quick ratio is quite similar to the current ratio. Also,
when the quick ratio relates to the inventory, Vinhomes should make a faster
conversion of inventory into debtors and cash because the quick assets would rise
resulting in an improvement in the quick ratio.

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CONCLUSION
Among a variety of competitors in the real estate field, Vinhomes JSC has
maintained a stable and strong stand in the last few years and proudly to be regarded
as the leading real estate brand in Vietnam. Vinhomes Smart City, an urban complex
developed by Vinhomes in Hanoi, has won the Mixed Use Development and
Sustainable Residential Development categories at the 2021 Asia Pacific Property
Awards (APPA). It is the first Vietnamese real estate project to grab the title in the
sustainable residential development category. With the award, Vinhomes Smart City
will proudly represent the region at the 2021 International Property Awards (IPA).
Thanks to professional operating and financial management and appropriate
strategies, Vinhomes has witnessed satisfying growth which can be seen in its
published financial statements. In the last 3 years, financial ratios of Vinhomes have
recorded positive figures which assured itself to have good financial health. Though
there were ups and downs, it cannot be denied that Vinhomes has fixed the situations
so well to bring more optimistic results.
In response to our financial analysis of Vinhomes in this report, some
development strategies for Vinhomes are recommended, that is focusing on
maintaining stable revenue as the economy as the whole is affected by Covid 19
pandemic. All industries are more or less affected and real estate in Vietnam is no
exception. Some other possible plans for Vinhomes might be participating in
investment cooperation and real estate project business development with the parent
firm Vingroup or its subsidiaries in order to share earnings or diversify business
activities like secondary business activities and interaction channels in order to close
the gap between buyer and seller as middlemen. In this particularly sensitive
pandemic situation, one of the most vital financial management tasks is to extend
credit, which investors, lenders, and other stakeholders can use to determine and
improve their capital investment capacity. With strong financial management,
Vinhomes is believed to stand a high chance of overcoming this difficult social
context.

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REFERENCES
English documents
Statista 2020, GDP contribution of the real estate sector in Vietnam from 2015 to
2020, Statista, viewed 14 Sep 2021,
<https://www.statista.com/statistics/1047758/vietnam-gdp-contribution-of-real-
estate-sector/>
Vinhomes Joint Stock Company 2018, Vinhomes consolidated financial statement
2018, Vinhomes, viewed 12 Sep 2021, <https://ir.vinhomes.vn/wp-
content/uploads/2019/03/2018_Audited-consolidated-financial-statements.pdf>
2019, Vinhomes, viewed 12 Sep 2021, < https://ir.vinhomes.vn/wp-
content/uploads/2020/03/191231_VHM_BCTC-Hop-nhat-2019-Kiem-toan_tieng-
Anh.pdf>
2020, Vinhomes, viewed 12 Sep 2021, < https://ir.vinhomes.vn/wp-
content/uploads/2021/03/VHM-31.12.20-BCTC-hop-nhat-tieng-Anh.pdf>
Q22021, Vinhomes, viewed 15 Sep 2021, https://ir.vinhomes.vn/wp-
content/uploads/2021/08/BCTC-hop-nhat-ban-nien-2021-soat-xet-Tieng-Anh.pdf
Vinhomes Joint Stock Company 2020, Vinhomes annual report 2020, Vinhomes,
viewed 18 Sep 2021, < https://ir.vinhomes.vn/en/report/2020-annual-
report/attachment/vinhomes-annual-report-2020-2/>
Vietnam Credit 2020, Vietnam Real Estate Industry Report 2020, Vietnam Credit,
viewed 20 Sep 2021, < https://vietnamcredit.com.vn/news/vietnam-real-estate-
industry-report-2020_14421>
Vietnamese documents
Công ty Cổ phần Vinhomes 2021, Về Vinhomes, Vinhomes, viewed 13 Sep 2021,
https://vinhomes.vn/vi/vinhomes
Trading View 2020, VHM Biểu đồ chứng khoán, Trading View, viewed 10 Sep
2021, < https://vn.tradingview.com/symbols/HOSE-VHM/>
Vinhomes City 2021, Đại hội cổ đông Vinhomes 2021: Những nội dung quan trọng,
Vinhomes City, viewed 20 Sep 2021, https://vinhomecitys.com/dai-hoi-co-dong-
vinhomes-2021-nhung-noi-dung-quan-trong/

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APPENDIXES
Appendix 1a: Financial statements of Vinhomes Joint Stock Company
(Vinhomes JSC) in 2018

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(source: Vinhomes consolidated financial statement 2018)

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Appendix 1b: Financial statements of Vinhomes Joint Stock Company


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Appendix 1c: Financial statements of Vinhomes Joint Stock Company


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[Group 1] Financial Report

Financial Reporting (Trường Đại học Ngoại thương)

Studocu is not sponsored or endorsed by any college or university

FOREIGN TRADE UNIVERSITY

Hanoi, October 2021

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1. Bá Thị Vân Anh 1817710004

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Figure 1.1: Stock movement chart in 2020 of Vinhomes

Table 4.1: Three-year Profitability Ratio Analysis for Vinhomes JSC

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CHAPTER 1: GENERAL INFORMATION ABOUT VINHOMES

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In 2018, its name was changed to Vinhomes Joint-stock Company. The

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 INTEGRITY: As a foundation of our company, Integrity demands that we remain

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Figure 1.1 is the stock movement chart in 2020 of Vinhomes:

Figure 1.1: Stock movement chart in 2020 of Vinhomes

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1.2.2. Shareholders’ information

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Figure 1.2 shows the organizational structure in Vinhomes JSC.

Figure 1.2: Vinhomes JSC’s organizational structure.

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of Shareholders, on behalf of the General Meeting of Shareholders, supervises all

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CHAPTER 2: MARKET ANALYSIS

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CHAPTER 3: CONSOLIDATED FINANCIAL STATEMENT

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CHAPTER 4: TREND ANALYSIS AND INDUSTRY COMPARISION

Profitability Ratios 2018 2019 2020 Trend

IND 38.40% 42.15% 40.04% up down

Operating profit margin VHM 19.70% 44.97% 29.44% up down

IND 27.1% 30.88% 21.47% up down

Net profit margin VHM 36.94% 42.12% 38.23% up down

IND 27.83% 31.48% 33.01% up

Return on Assets VHM 16.71% 13.72% 13.26% down up

IND 10.40% 8.41% 4.76% down

IND 33.59% 26.84% 15.77% down

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Figure 4.1 show the trend of return on equity in three years:

Figure 4.1: Vinhomes JSC Three-years Trend in ROE

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of converting investment capital into profit is shown by Return on Assets (ROA).

Figure 4.2 shows the trend of return on assets in three years:

Figure 4.2. Vinhomes JSC Three-years Trend in ROA

Table 4.2: Three-year Liquidity Ratio Analysis for Vinhomes JSC

Liquidity Ratios 2018 2019 2020 Trend

IND 1.71 2.43 2.17 up down

Quick ratio VHM 1.27 0.65 0.57 down

IND 1.15 0.93 0.78 down

(source: caculated by the authors)

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Figure 4.3 shows the trend of current ratio in three years: