FOREIGN TRADE UNIVERSITY

FALCUTY OF INTERNATIONAL EDUCATION

GROUP REPORT
Subject: Introduction to Finance
Topic: Financial Analysis of Kido Corporation 

                                              Group members: Phạm Châu Anh

                                                    Nguyễn Hoàng Sơn

                                                   Nguyễn Thị Lan Chi

                                            Hoàng Quốc Việt

                                              Class: F-UON-

M3A                                  
                                        Professor: Bùi Thị Hiền
 Hanoi, December 27th 2021

TABLE OF CONTENTS
I. BUSINESS DESCRIPTION
I.1 Basic information
I.2 History and development of Kido Corp
I.3 Position in the industry
I.4 Development strategy

II. INDUSTRY ANALYSIS

II.1 Total capacity and market potential
II.2 Market share structure of Vietnam confectionery industry
II.3 General assessment of Vietnam's confectionery industry in 2020-2021

III. COMPANY ANALYSIS

III.1 Customers
III.1.1 Price pressure
III.1.2 Quality pressure

III.2 Suppliers
III.2.1 Pressure on the quality of raw materials
III.2.2 Price
III.2.3 Delivery schedule
III.2.4 Number of suppliers

III.3 Current competitors

III.3.1 Always create price pressure
III.3.2 Product quality
III.3.3 Change in market size

III.4 SWOT Analysis

IV. FINANCIAL ANALYSIS

IV.1 Ratio analysis
IV.2 Inventory turnover analysis
IV.3 Debt ratio analysis
IV.4 ROA and ROE
IV.5 Balance sheet analysis

V. ASSESSMENT AND RECOMMENDATIONS

VI. RISKS
VII. APPENDIX

VIII. REFERENCES

I. BUSINESS DESCRIPTION

1.1 Basic information

Company name: Kido Group Joint Stock Company (KDC: HOSE)
Address: 138-142 Hai Ba Trung, Ward. Da Kao, District 1, City. HCM.
Business License: 403001184
Tax code: 0302705302
Website: www.kdc.vn
Logo:

1.2 History and development of Kido Corporation

Kinh Do Corporation, formerly known as Construction and Processing Co., Ltd Kinh
Do Food, was established in 1993 under Decision No. 216 GP-UB dated 27/02/1993
issued by Chairman of Ho Chi Minh City People's Committee and Business License
No. 048307 Economic Arbitration Ho Chi Minh City was issued on 02/03/1993. After
20 years of establishment and development. Since then, Kinh Do has become a system
of companies in the food industry including confectionery, beverage, ice cream and
dairy products.

After a long development, Kinh Do products have become

more popular to the customer. From everyday confectionery products to giving gifts on
Holidays - New Year to products of Ice cream, Milk or products from milk and
expansion into essential foods, Kinh Do have become one of the famous and dynamic
companies in Vietnam.
During the past 20 years, Kinh Do Group has always strived to change consumer tastes
by creating a series of new products with unique flavours for Vietnamese consumers.
This improvement is made for the product lines of Mooncakes, AFC, Korento, Cozy,
Solite…taking the lead in changing tastes is an important part of a growth strategy
growth, helping Kinh Do Group gain a leading position in the market with a wide
range of products.

1.3 Position in the industry.

Since it was established in 1993 with the name Kinh Do Construction and Food
Processing Co., Ltd. The company has always maintained its position as the leading
confectionery manufacturer and distributor in Vietnam. Experiencing many changes
and development from 1993 to 2015. Just like the period of 2015, the company has
officially stepped out of the confectionery industry and entered the "Food & Spices"
market. This has brought great success with the main product lines: Ice cream, Milk &
dairy products, cooking oil condiments, instant noodles. Up to now, KIDO company
has made many acquisitions and mergers, which in itself contributes to increasing the
company's position in the field they are pursuing.

1.4 Development Strategy

Kido uses mergers and acquisitions (M&A) strategies to expand and strengthen the
company's position relative to its competitors in the industry in order to fulfil the
commitment - not only develop the company to become a leading company in Vietnam
in this field but it is also competitive in Southeast Asia, as well as bringing better
quality and more profitable products to serve people's daily life. In July 2015, after
acquiring Kinh Do Binh Duong confectionery company, the US Mondelēz
International Group officially entered the Vietnamese market and changed its name to
Mondelez Kinh Do Vietnam ("Mondelez Kinh Do").

II. INDUSTRY ANALYSIS

The confectionery industry is known as one of the industries with high and stable
growth rates in Vietnam. The role of the confectionery industry is increasingly
confirmed when it holds a large proportion in the food industry (increasing from 20%
to 40% in the past 10 years).

Currently, Vietnam has about 30 large-scale manufacturing enterprises, about 1,000

small production facilities and several companies that import confectionery from
foreign countries.

II.1 Total capacity and market potential.

In recent years, Vietnam's confectionery industry has had a fairly stable growth rate
with an average growth of 8-10/year. Total confectionery production of Vietnam in
2020 is expected to reach more than 200,000 tons and the revenue is estimated at more
than 40,000 billion VND and output showed signs of slowing down due to the impact
of the Covid-19 epidemic.
The Vietnamese confectionery industry in recent years is assessed to have slowed
down growth. Recently, the growth rate of this industry reached about 8-10%, instead
of 15-20% in the past period 2010-2015. However, in the eyes of foreign investors, the
market is 97 million VND Vietnam's population is still attractive because compared to
the average growth rate of the bakery industry
Confectionery in the world is about 1.5% and Southeast Asia alone is 3% (according to
Vietinbank securities company), the growth rate of Vietnamese confectionery is still
high.

II.2 Market share structure of Vietnam's confectionery industry

Currently, Vietnam's confectionery market share falls mainly to large domestic
companies such as. (Kinh Do, Huu Nghi, Hai Ha, Pham Nguyen, Hai Chau...) and
foreign manufacturing companies in Vietnam such as (Mayora, Mondelez, Orion,
Nabati...). The revenue of Vietnam's confectionery industry is estimated to reach more
than 40 trillion in 2020 with products estimated at more than 200,000 tons.

III.3 General assessment of Vietnam's confectionery industry in 2020-2021

Although the market is very large, the current leading company Kinhdo-Mondelez is
only accounting for 20% market share. The next unit is Bibica, Huu Nghi, which
accounts for about 14-15%, or the total distance from customers with brand names in
Vietnam is only 42%. The rest are companies foreign and import and other small
production. Biscuits, cookies, crackers are valued at 7000 billion VND, accounting for
40%-42% of the confectionery group. In the structure of the Vietnamese confectionery
industry, each company has its strengths. Kinh Do Mondelez is very strong in biscuits,
crackers, and bread, while Huu Nghi is more inclined to bread and cookies, Hai Ha is
more inclined to candy, Bibica is more inclined to cake and snacks belongs to Orion.

III. COMPANY ANALYSIS

Basically, a business will be affected by the size of current and potential product or
service needs, desired benefits, tastes, and ability to pay. Businesses are often
interested in this information to guide consumption.
III.1 Customers
III.1.1: Price pressure
Life is getting more and more developed, people have more and more choices in
purchasing goods and food...with limited income, consumers always tend to want to
buy cheap but good quality.

III.1.2 Quality pressure

According to the survey results of market research company Customer Insights, Kinh
Do is the only enterprise in the confectionery industry that is interested and loved by
consumers. However, the pressure to change the choice for other products will always
exist if Kinh Do does not continue to create the best products and services for
consumers.

III.2 Suppliers
III.2.1. Pressure on the quality of raw materials
Suppliers can assert their power by threatening to raise prices or reduce the quality of
products and services provided. The objects businesses need to pay attention to are:
suppliers of raw materials, equipment and supplies; financial providers – banking
credit institutions; labour sources.

III.2.2. Price
Kinh Do uses domestic and imported raw materials. Kinh Do tend to buy goods in
large quantities, so the bargaining power is high.

III.2.3. Delivery schedule

Kinh Do Company signed a contract with the supplier very closely, so the delivery
schedule was always guaranteed and the company also did a good job in planning the
use of raw materials. Therefore, the company is always proactive to ensure raw
materials for production.

III.2.4 Number of suppliers:

Kinh Do's raw material suppliers can be divided into many product groups
- Flour group: Flour supplier Binh Dong, Dai Phong
- Sugar group: Bien Hoa Sugar Factory, Juna Sugar, Bonborn Sugar, Phu Yen Sugar
Factory...
- Dairy group: used from abroad through direct import and through distributors or
agents in Vietnam.
- Group of flavourings, chemical additives: mainly used from abroad through
representative offices or distributors.
 -About packaging: Kinh Do mainly uses domestic packaging. The main suppliers of
Kinh Do for packaging are Visinpack (paper packaging), Tan Tien (plastic packaging),
My Chau (tin packaging).

III.3 Current competitors

Currently, in the confectionery industry, there are many manufacturers with different
production and business scales and diverse and rich confectionery products.

III.3.1 Always create price pressure

When there are many competitors producing the same product, enterprises always face
pressure to reduce the selling price of their products to improve their competitiveness.
Promotion policies are also a headache for business managers.

III.3.2 Product quality

In the confectionery industry, there are many companies involved, how can Kinh Do's
products stand firm and develop in the market? Price is an important issue, but the quality
of the product is much more important. The quality of Kinh Do confectionery products is
increasingly focused on and must always ensure food hygiene and safety requirements.

III.3.3 Change in market size

It can be affirmed that Kinh Do's current level of competition in the Vietnamese market
is quite good. However, no one can claim that this competitiveness is absolute. Here are
some manufacturers that can compete with Kinh Do: Bien Hoa Confectionery Joint Stock
Company (Bibica), Quang Ngai Confectionery Company, Vinabico Company, etc.

III.4 SWOT Analysis

Strengths Weaknesses

1. Being the leading enterprise favoured 1. The machine can't take full advantage
by consumers. of its capacity.

2. Established early with a wide 2. Low inventory turnover (0%)

distribution system.
3. Management according to nepotism.
3. Modern technology in the industry.

4. Focus on technology development.

5. Huge capital and financial resources.

6. High-efficiency management
method.

7. Good price and quality.

Opportunities
1. GDP has grown steadily.
GDP is consistently high in the area.
Per capita income increased over
periods.
2. Large population. This is a lucrative
market in the future.
3. The demand for quality and
nutritious confectionery products is
increasing day by day.
4. Deep and wide integration, so the
large world market is
welcome Vietnam.
Threats
1. Competitors both inside the nation and
abroad are increasing.
2. The national economy is still heavily
affected by the world economy.
Generally, it is vulnerable.
3. Unpredictable fluctuations in the stock
market. Especially the speculative
phenomenon.
4. Inflation, interest rates and exchange
rates fluctuate strongly.  Creating
difficulties for enterprises to expand
investment.

5. Stable political institution.

IV. FINANCIAL ANALYSIS

IV.1 Solvency Analysis

Criteria Formula 2018 2019 2020

Liquidity Ratio Current assets - current liability 2.02 1.83 1.44

Average Industry 1.65 1.52 1.47
Ratio
Quick ratio Current assets - inventories)/Current 1.57 1.49 1.12
liability
 2.5
Liquidity
2

Percentage (%)
1.5

a) 1

0.5

0
2018 2019 2020

Liquid ratio:
The liquidity ratio shows how many VNDs of Kido's current liabilities are available
to pay off.
The fact that the company always maintains its debt solvency at a higher level than its
industry average in 2 years 2018, 2019. Specifically, it is nearly 1.2 times higher than
its competitors, the highest is 122% in 2018. However, this index decreased
significantly in the next year to only 98%.
b) Quick ratio:
The quick ratio is the ratio of current assets minus the value of inventories divided
by the value of current liabilities. This ratio shows how many VND of Kido's short-
term debt in each VND of high liquidity short-term assets can be mobilized
immediately for payment.
Normally, the quick ratio accounts for about 70% of the working capital ratio.
Especially in 2019, the quick ratio of Kido increased to 81.4 % (= 1.49/1.83). This
result comes from the company's development of distribution channels, expansion of
the frozen food market, and an increase in the segment of high-end oil products. Those
impacts have changed the structure of the company's assets.

IV.2. Operating Effectiveness Analysis

Inventories Turnover

Year 2018 2019 2020

7.98
Inventory Turnover Ratio 4.5 6.96
 Inventory Turnover Ratio
9

Percentage (%)
8
7
6
5
4
3
2
1
0
2018 2019 2020

Inventory turnover is the rate at which inventory stock is sold, or used, and
replaced. The inventory turnover ratio is calculated by dividing the cost of goods by
average inventory for the same period. Thus, the lower the inventory turnover, the
better for the company. The figure in 2018 was 4.5 before the significant rise of
inventory in 2019 and 2020 which are 6.96 and 7.98 respectively, equal to the
percentage of increase which are 148.6% in 2019 and 114% in 2020. Besides, the
figure has shown that the company had trouble in converting to sales revenue.

IV.3 Debt Ratio Analysis:

a) TD/TA:

Formula 2018 2019 2020

Debt Ratio Total Liabilities/ Total Assets 0.33 0.31 0.37

DE Ratio Total Liabilities/Owners’ Equity 0.49 0.46 0.6

Debt-ratio
0.7
0.6
0.6
0.49
0.5 0.46
Percentage (%)

0.4 0.37
0.33 0.31
0.3

0.2

0.1

0
2018 2019 2020

Debt Ratio DE Ratio

 _ TD/TA Ratio measures how much debt is used to finance total assets and shows
what percentage of total capital is debt. The curve of the company's debt to TD/TA
ratio shows the increasing trend of this ratio over the years. The peak was in 2020,
this rate was 37% - this shows that the use of loans is quite effective to expand the
scale of solving slow-moving projects. However, if this index is continuously rising,
there is a risk of unsecured solvency.

_ Debt-to-equity (DE Ratio) ratio indicates the level of risk associated with how
the company's capital structure is set up and operated. The debt-to-equity (D/E) ratio
is calculated by dividing a company's total liabilities by its shareholders' equity. The
debt-to-equity (D/E) ratio is calculated by dividing a company's total liabilities by its
owners' equity. Regarding the graph of DE Ratio, the V-Shape line was created by
the fluctuation of figures. The figure in 2019 went down to 0.46 but rose significantly
in 2020 to 0.6. Usually, if this ratio is greater than 1, it means that the company's
assets are financed mainly by debt, otherwise, the company's assets are financed
mainly by equity. In general, the smaller this ratio, which means that liabilities
account for a small percentage of total assets or total capital, the less difficult the
company is in finance. The higher this ratio, the greater the possibility that the
company will have difficulty paying its debts or go bankrupt. Therefore, in 2020
when the figure was about 0.6 (equal to 130% compared to 2019 60% of owners’
equity was debts), Kido struggled in solving the company’s finances and paying
debts.
 b) ROA (Return on Assets) and ROE (Return on Equity)

Formula 2018 2019 2020

ROA(%) Net Income/ Total Assets 1% 1% 2%

ROE(%) Net income/ Owners’ Equity 1% 2% 4%

 ROE and ROA
5%

Percentage (%)
4%

3%

2%

1%

0%
2018 2019 2020

ROA(%) ROE(%)

a) ROA (Return on Assets)

ROA (Return on Assets) measures the profitability per VND of a company's assets.
One of the criteria to evaluate a company's financial capacity according to
international standards, the ROA must reach at least 7.5%, has an increasing trend
and maintains at least 3 years. If the firm can achieve these criteria, the company will
be considered as a high-quality company.
With regards to the analysis results, the ROA of Kido has risen by 2 times in 2020 to
2%. However, this result was still under the acceptable standard of 7.5%. This shows
that Kido had negative problems in their business and had not truly used the
company's assets effectively.

b) ROE (Return on Equity)

ROE (Return on Equity ) measures the profitability per VND of common stock.
One of the criteria to evaluate the company's financial capacity according to
international standards, is that the ROE index must reach at least 15%, has an
increasing trend and maintains at least 3 years. If the firm can achieve these criteria,
the company will be considered as a high-quality company.

Looking at the analysis results, it can be seen that Kido's ROE has a growth from
1%(2018) to 2% in 2020 but it cannot guarantee that the company will maintain and
increase it to above 7.5% for at least 3 years after that. Regarding the previous figures
in the past, the Kido’s ROE was unstable (from 2016 to 2015. 2018 is 19%, 6%, 2%
respectively). Compared to an acceptable minimum of 15%.

IV.4. Balance sheet analysis

Ratio (%)
 Content 2018 2019 2020

Total asset 100% 100% 100%

Current assets 42.61 41.17 44.36

Cash Equivalent 5.15 4.40 8.92

Short-term investment 16.62 5.01 5.57

Short-term trade receivable 4.15 5.27 4.71

Current accounts receivable 7.53 22.83 18.85

Long-term receivable 0.74 0.51 0.46

Inventories 9.56 7.61 9.81

Other current assets 3.76 1.32 1.20

non-current assets 57.39 58.83 55.64

Fixed assets 23.42 23.90 21.67

Investment properties 0.04 0.04 0.04

Long-term investment 28.52 31.14 30.40

Other non-term assets 4.44 3.09 2.62

Goodwill  28.89 1.98 1.66

Total liability and owner’s equity 100% 100% 100%

Liability  33.20 31.65 37.65

Current liability 21.07 22.50 30.81

non-current liability 12.13 9.15 6.84

Owners’ equity 66.80 68.35 62.35

Share capital 20.51 21.51 22.65

Non-controlling interest 18.36 18.96 16.00

Short-term assets
From 2015 to 2018, the company changed its asset structure in the direction of
gradually reducing the proportion of short-term assets and gradually increasing the
proportion of long-term assets, proving that the enterprise is expanding its production
scale. However, in the period of 2018-2020, the company maintains its asset structure
to continue to develop the company. In 2018 the company invested more in long-
term assets than short-term assets, accounting for 42.61% of total assets, while in
2019 and 2020 accounted for 21.17% and 44.36% respectively.

Short-term financial investments

Kinh Do's short-term financial investments suddenly dropped sharply in 2019 (from
16.62% in 2018 to 5.01%% in 2019) and then increased slightly in 2020 (5.57%). In
2019, the company sharply reduced short-term investment to focus on long-term
investment as strategic.

Cash and cash equivalent

Cash and cash equivalent tend to decrease in the period 2018 to 2019. However, by
2020, this item has witnessed a rapid increase, increasing by 202% compared to
2019. This is related affected by Covid-19 because the company wants to retain cash
and cash equivalents to increase liquidity. However, holding cash too much will
reduce the company's ability to invest.

Inventories
Inventory accounts for a small proportion of total assets. However, inventory
accounts for a relatively small proportion of total assets, although Kinh Do's products
are mostly seasonal and have a short shelf life, the percentage of inventory has
 increased slightly in recent years. recently (from 7.61% in 2019 to 9.91% in 2020).
Therefore, the company has not really used capital effectively.

Fixed asset
The proportion of fixed assets decreased slightly in the period 2018-2020, from
23.42% to 21.67%. This shows that the company is gradually narrowing its
production and business activities.

Liabilities
The ratio of liabilities was high and tends to increase from 2018 to 2020.
Specifically, in 2018, this ratio accounts for 33.20% and increased to 37.76% in
2020. The proportion of owners’ equity over 3 years of Kido is higher than liabilities
in total capital. The ratio of liabilities to total capital increased gradually over 3 years
but it is still under control, showing that the company is having smart business
policies. Capital used for production and business activities is mainly owned by
owners' equity.

V. ASSESSMENT AND RECOMMENDATIONS

In general, the ratios are higher than the industry average. However, these indicators
have tended to decrease in recent years. The company needs to pay attention to this to
always ensure its solvency before bad situations happen, to avoid losing confidence
from investors and creditors of the company (Quick ratio).

With the analysis results, we see that Kido's ROE has a growth rate of 4% in 2020
but is below the average of 15% (from 2018 to 2020 respectively 1%, 2%, 4%). This
shows that Kido is facing a business problem that is not very satisfactory, and has not
really used shareholders' capital effectively. That is also one of the reasons why Kido's
stock price is always unstable and slow to grow (precisely: the highest KDC stock
price over the years from 2018 to 2020 is 45,400VND, 24,450VND, 37,500VND
respectively). From there, investors should consider whether to hold long-term shares
of the company or not because it is not worthy of long-term value stocks like its
competitors such as Vinamilk, Saigon Beer-Alcohol-Beverage JSC, etc.

Furthermore, Kido's ROA has a double growth rate of 2% in 2020 but it is unlikely
to maintain for at least 3 years and surpass the 7.5% threshold after that (In the past,
Kido's ROA from 2016 to 2018 was 13%, 4%, 1%, respectively). Compared to the
acceptable minimum of 7.5%. This shows that Kinh Do is having a bad business
problem, has not really used the company's assets effectively.

Through analyzing the company's financial statement over the years, the figures
show that KDC's profitability is unstable, seasonal, and dependent on many seasonal
products such as: Moon cake, but compared to other listed companies in the same
industry, the profitability of the Company is relatively attractive. In terms of scale of
operation, compared to listed companies operating in the same confectionery industry,
KDC shows a remarkable advantage in both market share and investment capital.
However, it is also important to pay attention to fierce competitors such as Huu Nghi
Joint Stock Company (Hanoi) which has won the leading position in Kinh Do's
industrial bread market.

Based on the analysis of financial indicators such as liquidity ratio, liquidity ratio,
activity ratio showing inventory turnover, TD/TA, DE of KDC, the Kido corporation
has an advantage over the company. outperform the competition and the industry
average.

VI. RISKS
In the beginning, Kido Corp cooperated with Saigon Vewong, which is
responsible for outsourcing production to produce ‘Dai gia dinh” instant noodles. The
company also chose to participate in the oil market through the acquisition and control
of Vocarimex. As a result, the lack of power in the procession of products leads to the
failure of maximum control over the cost and quality of the products. This point proves
that Kido Corp will lose its initiative in business, resulting in more precarious profit
margins.

Currency risk directly results from the difference in the source of foreign currency
payments for input materials while the company does not have the corresponding
foreign currency earnings. To the best of Kido’s ability, the firm hedges all foreign
currency import contracts by forwarding rate contracts to fix the cost of imports when
converted to VND. Kido also limits foreign currency loans, and when borrowing, Kido
makes sure to hedge against exchange rate and interest rate fluctuations. Changes in
regional and global financial markets can significantly impact interest rates, leading to
risks affecting profitability, liquidity, and profitability.

Moreover, Kido might face difficulties in control and coordination. Since the
company's new business activities are mainly co-production and business control
through acquisitions, the company must do the main activity to control and coordinate
activities accordingly with the firm's growth strategy. However, production partners
and shareholders do not always act as Kido wants; the strategy may be slow to be
implemented, causing the company to miss business opportunities.

Additionally, Kido might also face many risks such as ineffective advertising,
strategic implementation costs higher than expected, fierce resistance from
competitors, etc. A significant competitor like Kido, which has a large source of
resources, abundant financial resources when entering the market, might cause market
supply to increase beyond demand, leading to lower prices and lower profit margins,
affecting the expected profit of enterprises.
 VII. APPENDIX

Content
2020 2019 2018

Sales  101,7% 104.2% 101.47%

Less deductions -1.7% 1.71% -1.47%

Net revenue 100% 100% 100%

Cost of goods sold -78.7% -79.36% -82.98&

Gross profit 21.2% 23.1% 17.02%

Financial income 0.97% 1.92% 3.02%

Financial expenses -1.72% -2.27% -2.35%

Interest expenses -1.48% -2.18% -2.04%

Selling expenses -12.5% -15.9% -13.81%

Administrative Expenses -5.06% -6.67% -5.42%

Net operating profit 4.9% 3.6% 2.19%

Sundry income 0.15% 0.54% 0.22%

Other profits 0.09% 0.35% 0.13%

Earnings before interest and taxes 4.99% 4.03% 2.32%

(EBIT)

Current profit tax  -1.02% -1.4% -0.20%

Deferred Income Tax -0.009% -0.31% -0.18%

Net profit after taxes 3.96% 2.94% 1.94%

Minority shareholder interest 23.7% 32.1% 1.43%

Profit after tax of shareholders of 2.44% 0.83% 0.51%

parent company

VIII.REFERENCES
https://www.kdc.vn/files/documents/20190516%20-%20KDC%20-%20AR
%202018%20-%20VN%20(up%20web%20final).pdf

https://www.kdc.vn/files/documents/20210601_KDC_AR_2020_VN
%20(Website).pdf

https://www.kdc.vn/files/documents/KDC_AR%202019%20VN.pdf

https://nhipsongdoanhnghiep.cuocsongantoan.vn/doanh-nghiep/kido-quy-iv-loi-
nhuan-sut-manh-ca-nam-2019-tang-hon-35-3533359.html

https://www.stockbiz.vn/Stocks/KDC/LookupQuote.aspx?Date=05/03/2019