FA Report Group-4

GROUP ASSIGNMENT COVER SHEET
STUDENT DETAILS
Student name: Nguyễn Huỳnh Đức Student ID number: 31201028913
Student name: Văn Công Đạt Student ID number: 31201028812
Student name: Đinh Vũ Bảo An Student ID number: 31201029101
Student name: Lê Thị Kim Ngân Student ID number: 31201028715
Student name: Nguyễn Lê Duyên Anh Student ID number: 31201028928
Student name: Đoàn Vũ Hào Student ID number: 31201028653
Student name: Nguyễn Thanh Huyền Student ID number: 31201028817
Student name: Phạm Huyền Khanh Student ID number: 31201029129
Student name: Trương Mỹ Hạnh Student ID number: 31201029121
Student name: Hồ Ngọc Tường Vi Student ID number: 31201028797

UNIT AND TUTORIAL DETAILS
Unit name: Financial Accounting Unit number:

Tutorial/Lecture: Lecture Class day and time: Friday 08:00 A.M
Lecturer or Tutor name: Dr. Huynh Thi Ngoc Anh
ASSIGNMENT DETAILS
Title: Group Project Report

December 4,
Length: 28 pages Due date: 2022 Date submitted: December 4, 2022
DECLARATION
I hold a copy of this assignment if the original is lost or damaged.

I hereby certify that no part of this assignment or product has been copied from any other
student’s work or from any other source except where due acknowledgement is made in the
assignment.
I hereby certify that no part of this assignment or product has been submitted by me in
another (previous or current) assessment, except where appropriately referenced, and
with prior permission from the Lecturer / Tutor / Unit Coordinator for this unit.
No part of the assignment/product has been written/ produced for me by any other person
except where collaboration has been authorised by the Lecturer / Tutor /Unit Coordinator
1
concerned.
I am aware that this work may be reproduced and submitted to plagiarism detection software
programs for the purpose of detecting possible plagiarism (which may retain a copy on its
database for future plagiarism checking).
Student’s signature: Huynh Duc

Student’s signature: Cong Dat
Student’s signature: Bao An
Student’s signature: Kim Ngan
Student’s signature: Duyen Anh
Student’s signature: Vu Hao
Student’s signature: Thanh Huyen
Student’s signature: Huyen Khanh
Student’s signature: My Hanh
Student’s signature: Tuong Vi
Note: An examiner or lecturer / tutor has the right to not mark this assignment if the above
declaration has not been signed.
THE VIETNAM DAIRY PRODUCTS

JOINT STOCK COMPANY
2
Financial Accounting
FA-DH46ISB-1
GROUP 4
GROUP PROJECT
ANALYSIS OF CURRENT AND FUTURE PERFORMANCE OF

THE VIETNAM DAIRY PRODUCTS JOINT STOCK COMPANY
PREPARED FOR
Dr. Huỳnh Thị Ngọc Anh
PREPARED BY
Văn Công Đạt
Lê Thị Kim Ngân
Nguyễn Lê Duyên Anh
Nguyễn Thanh Huyền
Phạm Huyền Khanh

JOINT STOCK COMPANY
3
TABLE OF CONTENT
I. Introduction 4
II. PEST Analysis 4
III. SWOT Analysis 5
IV. Ratios calculation for Dupont Analysis 7
(See further in Appendix 7) 7
V. Interpretations 8
A. ROE 8
B. Net Assets Turnover 11
1. Working Capital Cycle 11

2. Fixed asset turnover 13
C. Leverage 14
VI. Limitations 15
VII. Conclusions 15
VIII. References 16
IX. Appendices 23
A. Financial Ratios 25
B. Profitability 25
C. Working Capital Management 25
D. Liquidity 27

JOINT STOCK COMPANY
4
I. Introduction
Vietnam Dairy Products Joint Stock Company (VNM), the leading enterprise in the dairy industry in
Vietnam, was founded in 1976 as a 100% state-owned Southern Coffee Dairy Company with three milk
plants, and has operated as a joint stock corporation since 2003. Producing and distributing dairy products
and other nutritious products is its major line of business. Currently, it owns 17 dairy domestic factories
with over 160,000 cows heads, and 4 abroad subsidiaries (“Vietnam Dairy Products JSC - Corporate
Presentation”, 2022).
II. PEST Analysis
Factors Summary
1. Political tension between China and the US provides export opportunities for Vietnam (See further in
Appendix 1)
2. Free Trade Trade Agreement between Vietnam and Eurasian Economic Union (VN-EAEU) provides
Political
export opportunities for VN business (The Ministry of Industry and Trade, 2016).
3. Reduction in import duty on dairy goods from 2-5% (Government of the Socialist Republic of Vietnam,
2017).
1. Fluctuation in interest rates (See further in Appendix 2)

Inflation in Vietnam is predicted to be high in 2022 and even last to 2023 (Luong, 2022). The rise in global
Economic
commodity prices and the weakening of the Vietnamese dong (VND) against the dollar have sent costs surging
(“Rising inflation poses a challenge to businesses”, 2022).
1. Micronutrient deficiencies in Vietnamese children

Vietnam has a high frequency of stunting and underweight (Le et al., 2019)
Social
2. Increasing Health Consciousness
Vietnamese consumers prioritize healthy food together with necessary products when making purchases during
and after the Covid-19 outbreak (Nam, 2020).

JOINT STOCK COMPANY
5
1. Sterilizing equipment of Vinamilk was imported from Sweden, and all other machines are native to Europe
(“Vinamilk: Annual Report 2018”, 2018)
Technology
2. Production technology: UHT (ultra-high-temperature) processing enables the removal of dangerous bacteria,
yeasts, and molds (“International standard plants: Vinamilk liquid milk”, 2022).
Table 1: PEST Analysis of Vinamilk
III. SWOT Analysis
Factors Summary
Strengths 1. Becomes the leading enterprise in Vietnam’s dairy industry with dominant market
(Source: "Vinamilk's share and solidifies its position as a global brand (See further in Appendix 3).
Annual Report 2021", 2. A strong financial foundation with a steady capital structure and financial autonomy
2022) from high profits.
3. A large system of factories and farms with international standards across Vietnam
4. An effective and stable supply chain and logistics management, as well as an extensive
nationwide distribution system that has been widely expanded over the years
5. Its investments in modernizing and synchronizing machinery and equipment.
6. Strengthened cooperative relationship with an extensive network of internationally-
standardized domestic and global suppliers, partners, and farming households
7. An experienced, proactive, and dedicated management system with a transparent
internal control system.
→ A business strategy focused on sustainable development in various aspects.
Weaknesses High dependence on imported raw materials: 63% of the company's final milk product
(Source: Thi Luc, 2016) demand is estimated to be satisfied by imported milk powder materials.
Opportunities 1. Potential development of dairy demands in Vietnam: Vietnam's per-capita milk

(Sources: Research and consumption is lower than that of other countries in the region, leaving plenty of room for
Markets, 2022; VOV, future growth (See further in Appendix 4).
2019; The Ministry of
Industry and Trade, 2021;

JOINT STOCK COMPANY
6
DPO International, 2021)
Threats 1. The increasingly intense competition in the dairy market, not only from domestic
(Sources: The Ministry of companies but also from international brands (See further in Appendix 5).
Finance, 2007; Saigoneer, 2. The potential risks underlying its export markets
2019; Research and 3. Unstable sources and soaring prices of imported raw materials (See further in Appendix
Markets, 2022) 6).
Table 2: SWOT Analysis of Vinamilk
sustainable development,

JOINT STOCK COMPANY
7
IV. Ratios calculation for Dupont Analysis
(See further in Appendix 7)
Figure 1: Dupont Analysis of Vinamilk and the F&B industry

JOINT STOCK COMPANY
8
V. Interpretations
A. ROE
During the period, ROE decreased steadily and significantly showed a bad signal in the financial health of
the business. This is directly caused by the considerable decline in ROCE of 14% from 2017 to 2021
since the gearing ratio has been relatively stable over the years.
It is noticeable that Vinamilk’s ROCE has fallen significantly year by year in the 2017-2021 period,
which is mainly a result of the decreasing gross profit margin and net profit margin.

JOINT STOCK COMPANY
9
Vinamilk's gross profit margin has had a relatively large decrease, which is mainly because input material
prices continue to remain high due to supply shortages and the impact of the global supply chain crisis
(Khan et al., 2022). Increasing input prices impact the whole industry, particularly the Masan group - a
direct competitor of Vinamilk (Ton, 2021). Besides, the disrupted global supply chain leads to rising
commodity prices and freight rates, which also contributes to the decline of the company’s and industry’s
gross profit margin (Trostle, 2010).
Additionally, in 2021, Vinamilk increased its selling prices to partially reduce the impact of the increase
in the price of milk ingredients on the gross profit margin (The Ministry of Industry and Trade, 2021).
The company was able to increase the selling price thanks to its unfailing innovation and food
premiumization efforts in upgrading its product portfolio along with its prestigious brand name in the
Vietnamese market creating trust in its consumers, thereby joining the niché markets with the introduction
of innovative nutritional products and nut milk in the context of high demands caused by rising health
consciousness during COVID-19 ("Vinamilk's Annual Report 2019", 2020).
It is noticeable that Vinamilk’s gross profit margin has been higher than that of the industry. This is
because the initiatives in domestic supply such as raw milk purchased from the farm, sugar, etc., and
orders purchased in large quantities have enabled the company to ensure the source of high-quality raw
materials with reasonable input prices. Therefore, the decrease in Vinamilk's gross profit margin index in
the 5-year period of 2017-2021 is 4.34%, which is substantially lower than the decline of the entire F&B
industry in Vietnam.
It is forecasted that the price of input milk powder will continue to increase because the problems of
supply shortages and the impact of the disruption of the global supply chain have not been completely
resolved (Weersink et al., 2021). Additionally, FAO indicates that markets for animal feed, energy (gas
and electricity, propane used in farms), and labor have all risen in price (Sands & Westcott, 2011). This
directly affects the output price of milk and can hardly be regulated in a short period. Therefore,

JOINT STOCK COMPANY
10
Vinamilk’s gross profit margin is expected to continue to decline slightly in the following quarters in
2022. However, in the long-term, this ratio can probably see a positive trend thanks to the fact that the
company’s future projects such as Green Farm and Lao - Jargo are expected to go into operations in 2023
and increase its autonomy in input materials by 4% (Ngoc, 2022).
Figure 2: Milk ingredients forecast in 2022

(Source: Trading Economics, 2022)
Simultaneously, the company's net profit margin has been better than the industry’s in general, thanks to
the two strategies of Vinamilk. Firstly, it has reduced promotional costs to offset the high cost of raw milk
prices (Quan, 2022). Secondly, it is strategies of widening scale either in the domestic area or external
market (Appendix 7).
The direct export market and foreign branches both recorded strong and extremely positive net revenue
growth in potential markets such as the Philippines (Ochave, 2021) . In quarter 4 of 2021, the direct export
market recorded a sharp increase of 17.3% in net revenue while foreign branches recorded a sharp
increase of 30% compared to the same quarter of the previous year ("Vinamilk's Annual Report 2021",
2022). Besides, experts forecast that export revenue growth in the next two years will reach 7 and 8.1%
respectively over the same period last year due to the recovery of milk consumption demand in the
Middle Eastern. Therefore, Vinamilk's net revenue in 2 years is forecasted to increase by 3.7% and 4.7%,
respectively (Trang, 2022). Currently, Vinamilk has begun to expand its investments in other fields to
diversify business activities and raise revenue. Specifically, beef production is considered the most
potential segment to boost Vinamilk's double-digit growth from 2023-2024 onwards, with the expected

JOINT STOCK COMPANY
11
revenue from its beef project with the Japanese partner to be 2,000 billion VND in 2023 (Tuong, 2022)
(See further in Appendix 8)
Considering predictive aspects, the gross profit margin and net profit margin of Vinamilk will likely still
decrease in the next quarter in 2022 due to the influence of milk supply and demand in the world market,
which is still fluctuating, and the fact that the phenomenon of supply chain disruption is difficult to fully
recover in a short time (The Ministry of Industry and Trade, 2021). However, it is undeniable that there
are some signals showing the potential for the future steps of Vinamilk although the room for growth is
not completely distinct in the future (Anh, 2022).
B. Net Assets Turnover
Generally, the net asset turnover in the company norm decreased by around 0.4 times over the period,
showing the current situation of operating activities going down due to increased working capital cycle in
days and higher fixed asset turnover.
1. Working Capital Cycle

JOINT STOCK COMPANY
12
In general, the working capital turnover at the end of the 2017-2021 period doubled compared to the
beginning of the period, which is a sign of a worsening capital management strategy resulting from the
higher inventory turnover in days by around 30%. However, the ratio has always been lower than the
industry average over the period and was significantly differentiated during Covid-19 due to three
following reasons.
Firstly, because of the consumers’ high health consciousness during and after Covid-19, Vinamilk is
likely to sell its products rapidly compared to other beverage manufacturing firms in the industry (Nam,
2020).
Secondly, the strict payment policy creates favorable conditions for expanding the business scale by
newly established investment to insure the effectiveness of assets in the future ("Vinamilk's Annual
Report 2021", 2022). Conversely, the manufacturing industry suffered from the common challenges in
receiving back the revenue from the for-customer incentive packages along with shrinking sales during
the pandemic (Wang et al., 2020).
Finally, Vinamilk has been actively preventing slow-sold inventory thanks to updated technology in
inventory management. Specifically, Vinamilk has been well-known for its ERP system managing the
inventory by QR code, helping the company limit the risks of denaturation, quality loss, shortage, and
maintaining the cost of warehousing cost adequately (Nhu, 2021). Vinamilk has an EOQ model and ERP
system used to identify how the production department could actively plan for manufacturing. In 2021,
Vinamilk stored inventory at a rate lower by 9% compared to 2018, which proves its successful active
prevention of slow-sold inventory in the context of limited logistic activities and raw material upward
trend (The Ministry of Industry and Trade, 2021).
It is predicted that the inventory turnover in days will continuously increase in the near future because of
the policy of stockpiling inventory when the supply of goods is broken and cannot be recovered in time
(Nguyen, 2021). However, working capital in days would decrease when the goods supply chain is
cleared and suppliers can regularly supply goods to Vinamilk. In the far future, with the policy of
expanding domestic suppliers, Vinamilk will have a stable working capital in days.

JOINT STOCK COMPANY
13
2. Fixed asset turnover
Generally, Vinamilk’s ratio of fixed assets turnover was similar to that of the industry. The slight
decrease in this ratio from 2017-2019 shows that the company has concentrated on investing in fixed
assets as a respiration for the strategy of expanding the company size (i.e by building and investing in
farms in Lao in 2019), which was expected to generate more product lines in 2022 (Vinamilk, 2021).
Additionally, when Covid-19 occurred, Vinamilk recorded a slight increase in tangible assets thanks to
short-term investments available to use while depreciation increased significantly due to broken
manufacturing ("Vinamilk's Annual Report 2019", 2020). Therefore, fixed assets turnover is expected to
increase in the near future when the previous investments generate revenue faster than the company’s
current investments (See further in Appendix 9).

JOINT STOCK COMPANY
14
C. Leverage
Vinamilk's gearings ratio has been at a very low level around 1 and stably remained even during the
Covid-19 period, showing that Vinamilk's capital structure is mainly obtained from owners' equity for
investments and manufacturing activities; thus demonstrating the outstanding financial capacity of the
company ("Vinamilk's Annual Report 2021", 2022). This trend could be maintained in the future because
of the high market value and the high level of reputation on the credit side of the business (Mai, 2022). A
low leverage ratio prevents exchange rate risk and policy risk. This is evaluated as a good strategy when
the dairy industry has reached the threshold of saturation and there is not much room for growth.
Therefore, Vinamilk's growth momentum in the future will be slow and stable, but will still increase
thanks to the expansion and sustainable development strategy.

JOINT STOCK COMPANY
15
Figure 3: Link between PEST, SWOT, Dupont Analysis, and Vinamilk’s Performance
VI. Limitations
Under VAS, there will be a decrease in lease assets and financial liabilities compared with IFRS, since the
operating lease is treated as an expense, accounting for approximately 5% of short-term prepaid expenses.
However, the specific amount of underestimation could not be identified due to the differences between
VAS and IFRS in calculating right-of-use assets and lease liabilities, and Vinamilk does not publicize that
information. Due to the underestimated value of total assets and non-current liabilities under VAS,
Vinamilk’s financial ratios such as leverage ratio, ROCE, ROA, ROE, etc are higher than when recorded
under IFRS, leading to an over-valuation of the company’s profitability and efficiency (Appendix 10).
The lease assets and financial liabilities do not represent all the differences between VAS and IFRS, but
still significant when they account for over 4% of non-current assets.

JOINT STOCK COMPANY
16
For instance, ROE in 2017 under VAS is 43.05% compared with 36.37% under IFRS. In other words,
Vinamilk’s performance under VAS could be seen as better and more positive than under IFRS because
of the non-recognition of operating leases as assets and liabilities on the balance sheet, which could
potentially mislead investors during their decision-making process. But the differences seem to be
insignificant when considering the trend of the ratios calculated. Under both VAS and IFRS, ROE and
Profitability ratio faced a downward trend in the period 2017-2021, as shown in the chart above.
VII. Conclusions
Vinamilk is healthy and successful compared with its industry, with some concerns over downward trends
in profit margin and net assets turnover. Generally, the firm is under the control of the inside rather than
macro aspects of the market through stable financial capability with a sustainable development strategy in
the long term which is insisted by the leaders. Therefore, the negative impacts of the world market will
not deal a strong blow to Vinamilk in the near future.
The potential for Vinamilk's future steps can be seen in direct export markets and international branches,
both of which experienced tremendous and incredibly good net revenue growth. Notably, in the long
term, Vinamilk continues to seek new growth drivers through beef production.
In conclusion, Vinamilk is likely not to witness any outstanding growth in the near future, but it will still
develop stably in the long term. Investors should consider more because the potential for future
development is not clear.

JOINT STOCK COMPANY
17
VIII. References
Anh, D. (2022). Dairy businesses face the challenge of input materials. Retrieved November 30, 2022,
from https://baotintuc.vn/kinh-te/doanh-nghiep-sua-truoc-thach-thuc-nguyen-lieu-dau-vao-
20220502121413230.htm
Anh, L. (2022). Vinamilk has a 5-year strategic orientation and key investment projects. Retrieved
December 3, 2022, from https://vneconomy.vn/vinamilk-dinh-huong-chien-luoc-5-nam-va-cac-du-
an-dau-tu-trong-diem.htm
DPO International. (2021). Market trends in Vietnam: Health Food. Retrieved November 29, 2022, from
https://dpointernational.com/wp-content/uploads/2022/03/MARKET-TRENDS-IN-VIETNAM-
HEALTH-FOOD.pdf Duc, T. (2022). Vinamilk, the 6th largest milk brand, is valued at $2.814
billion. Retrieved 2022, from https://vietnamagriculture.nongnghiep.vn/vinamilk-the-6th-largest-
milk-brand-is-valued-at-2814-billion-d333379.html
Government of the Socialist Republic of Viet Nam (2017). DECREE ON AMENDMENTS TO

CERTAIN ARTICLES OF THE GOVERNMENT’S DECREE NO. 122/2016/ND-CP DATED
SEPTEMBER 01, 2016 ON EXPORT DUTY SCHEDULE, PREFERENTIAL IMPORT DUTY
SCHEDULE AND LISTS OF COMMODITIES AND THEIR FLAT TAX RATES, COMPOUND
TAX RATES AND OUTSIDE TARIFF QUOTA RATES. Retrieved 2022, from
https://thuvienphapluat.vn/van-ban/Xuat-nhap-khau/Nghi-dinh-125-2017-ND-CP-Bieu-thue-xuat-
khau-bieu-thue-nhap-khau-uu-dai-359509.aspx
Hong, P. (2022). Vinamilk is still leading in many products in the dairy market despite many fluctuations.
Retrieved November 29, 2022, from https://vietnaminsider.vn/vinamilk-is-still-leading-in-many-
products-in-the-dairy-market-despite-many-fluctuations/
IFRS. (2020). IAS 16 — Property, Plant and Equipment. Retrieved from

https://www.iasplus.com/en/standards/ias/ias16
Inouye, A. (2022). China's Dairy Imports Increase to Meet Growing Demand, But U.S.-Origin Products
Face Strong Headwinds (pp. 1-10, Rep. No. CH18067). USDA Foreign Agricultural Service.
International standard plants: Vinamilk liquid milk. (2022). Retrieved 2022, from
https://www.vinamilk.com.vn/sua-tuoi-vinamilk/en/international-standard-plants/
International standard plants: Vinamilk liquid milk. (2022). Retrieved 2022, from
https://www.vinamilk.com.vn/sua-tuoi-vinamilk/en/international-standard-plants/

JOINT STOCK COMPANY
18
Khan, S. A. R., Razzaq, A., Yu, Z., Shah, A., Sharif, A., & Janjua, L. (2022). Disruption in food supply
chain and undernourishment challenges: An empirical study in the context of Asian countries.
Socio-Economic Planning Sciences, 82, 101033. Lack of milk blamed for 'stunted' Vietnamese
children. (2016). VNExpress International. Retrieved 2022, from
https://e.vnexpress.net/news/news/lack-of-milk-blamed-for-stunted-vietnamese-children-
3468578.html
Le, T. T., Le, T. T. D., Do, N. K., Nadezhda, V. S., Andrej, M. G., Nguyen, T. T. T., ... & Duong, T. A.
D. (2019). Ethnic variations in nutritional status among preschool children in Northern Vietnam: a
cross-sectional study. International Journal of Environmental Research and Public Health, 16(21),
4060.
Luong, B. (2022). High inflation is the biggest risk for Vietnam’s economy: Officials. Vietnamnet Global.
Retrieved 2022, from https://vietnamnet.vn/en/high-inflation-is-biggest-risk-for-vietnam-s-
economy-officials-2046390.html
Mai, H. (2022). Vinamilk is the most valuable food brand in Vietnam and the sixth-largest dairy brand in
the world. Retrieved December 3, 2022, from https://ttbc-hcm.gov.vn/vinamilk-la-thuong-hieu-
thuc-pham-co-gia-tri-nhat-viet-nam-va-la-thuong-hieu-sua-lon-thu-6-the-gioi-30685.html
Nam, A. (2020). Pandemic prods Vietnamese consumers toward healthy food and drinks. VNExpress
International. Retrieved 2022, from https://e.vnexpress.net/news/business/pandemic-prods-
vietnamese-consumers-toward-healthy-food-and-drinks-4105866.html
Ngoc, A. (2022). The positive signal is increasingly clear, Vinamilk welcomes the recovery momentum at
the end of 2022 - the beginning of 2023? The National Army. Retrieved 2022, from
https://www.qdnd.vn/kinh-te/tin-tuc/tin-hieu-tich-cuc-ngay-cang-ro-vinamilk-don-da-hoi-phuc-
trong-cuoi-nam-2022-dau-nam-2023-706096
Nguyen, H. (2020). Vietnam’s Milky Way: China okays Vietnamese dairy imports. Vietnam Economic
News. Retrieved 2022, from http://ven.vn/vietnams-milky-way-china-okays-vietnamese-dairy-
imports-41873.html
Nguyen, H. (2021). Vinamilk: Not afraid to challenge! Retrieved December 4, 2022, from
https://special.vietnamplus.vn/2021/06/06/vinamilk-chuyen-minh-tu-su-ung-bien-voi-thach-thuc/

JOINT STOCK COMPANY
19
Nguyen, M. (2022). Vietnam: Dairy and cheese product brands market share. Retrieved November 29,
2022, from https://www.statista.com/statistics/1233461/vietnam-dairy-and-cheese-product-brands-
market-share/
Nguyen, N. M. (2020). Share of children aged between 0 and 14 years in Vietnam from 2000 to 2020.
Retrieved 2022, from https://www.statista.com/statistics/678823/vietnam-children-as-a-percentage-
of-the-population/
Nhu, Q. (2021). With the most "bulky" scale in the dairy industry, how did Vinamilk solve the problem of
circulating 150,000 tons of goods and connecting 10,000 employees during 2 years of Covid?
CafeBiz. Retrieved December 3, 2022, from https://cafebiz.vn/quy-mo-cong-kenh-nhat-nganh-sua-
vinamilk-da-giai-bai-toan-luan-chuyen-150000-tan-hang-va-ket-noi-10000-nhan-su-suot-2-nam-
covid-nhu-the-nao-20210628162957176.chn
Ochave, R. M. (2021). Del Monte-Vinamilk launches new products, targets 10% dairy market share in
Philippines. Vietnam News. Retrieved 2022, from https://vietnamnews.vn/economy/1063180/del-
monte-vinamilk-launches-new-products-targets-10-dairy-market-share-in-philippines.html
Quan, B. (2022). Why has Vinamilk cut advertising money in the past two years? Retrieved March 21,
2022, from https://diendandoanhnghiep.vn/vi-sao-vinamilk-hai-nam-qua-cat-giam-tien-quang-cao-
219352.html
Research and Markets. (2022). Vietnam Dairy Industry Report 2022-2031: Development Environment,
Supply and Demand, Import and Export, Market Competition, Major Brands. Retrieved November
30, 2022, from https://finance.yahoo.com/news/vietnam-dairy-industry-report-2022-
190000101.html
Rising inflation poses a challenge to businesses. (2022). VietnamPlus. Retrieved 2022, from
https://link.gov.vn/j9AhtnD6
Saigoneer. (2019). Vinamilk might open a 2nd Southeast Asia factory in Myanmar. Retrieved November
30, 2022, from https://saigoneer.com/vietnam-news/15619-vinamilk-might-open-2nd-southeast-
asia-factory-in-myanmar
Sands, R., & Westcott, P. (2011). Impacts of Higher Energy Prices on Agriculture and Rural
Economies (Rep.). Retrieved 2022, from United States Department of Agriculture website:
https://www.ers.usda.gov/webdocs/publications/44894/6814_err123_1_.pdf

JOINT STOCK COMPANY
20
The Ministry of Finance (2001). DECISION OF THE MINISTRY OF FINANCE NUMBER

149/2001/QD-BTC DECEMBER 31, 2001 ON THE ISSUANCE AND PUBLICATION OF
FOUR (04) VIETNAM ACCOUNTING STANDARDS (SET 1). Retrieved from
https://thuvienphapluat.vn/van-ban/Ke-toan-Kiem-toan/Quyet-dinh-149-2001-QD-BTC-bon-04-
chuan-muc-ke-toan-Viet-Nam-dot-1-Hang-ton-khoTai-san-co-dinh-huu-hinh-vo-hinh-Doanh-thu-
nhap-khac-48964.aspx
The Ministry of Finance. (2007). Reducing import tax to curb price increase: Will foreign goods have a
chance to "land" in Vietnam? Retrieved November 30, 2022, from
https://mof.gov.vn/webcenter/portal/btcvn/pages_r/l/tin-bo-tai-chinh?dDocName=BTC334569
The Ministry of Finance. (2019). Specific Plans. Retrieved from

https://mof.gov.vn/webcenter/contentattachfile/idcplg?
dID=22842&dDocName=BTC341361&filename=1196517.DOC
The Ministry of Industry and Trade. (2016). Circular No.21/2016/TT-BCT Dated September 20th, 2016
on the Implementation of Rules of Origin in VN-EAEU FTA. Retrieved 2022, from
https://trungtamwto.vn/upload/files/fta/174-da-ky-ket/188-viet-nam---lien-minh-/240-van-ban-
thuc-thi-cua-/21_2016_TT-BCT.pdf
The Ministry of Industry and Trade. (2021). Industrial production faced difficulties, market movements
were complicated due to the Covid-19 pandemic. Retrieved December 3, 2022, from
https://moit.gov.vn/tin-tuc/hoat-dong/san-xuat-cong-nghiep-gap-kho-dien-bien-thi-truong-phuc-
tap-d.html
The Ministry of Industry and Trade. (2021). The government always accompanies and supports
businesses and the people. Retrieved November 30, 2022, from https://moit.gov.vn/tin-tuc/hoat-
dong/chinh-phu-luon-dong-hanh-ho-tr
The Ministry of Industry and Trade. (2021). Vinamilk adjusts milk prices of 62 products. Retrieved
December 24, 2021, from https://moit.gov.vn/tin-tuc/thi-truong-trong-nuoc/vinamilk-dieu-chinh-
gia-sua-cua-62-san-pham.html
The Ministry of Industry and Trade. (2021). Global supply chain disruptions could extend into 2022.
Retrieved August 30, 2022, from https://moit.gov.vn/tin-tuc/phat-trien-cong-nghiep/gian-doan-
chuoi-cung-ung-toan-cau-co-the-keo-dai-sang-nam-2022.html

JOINT STOCK COMPANY
21
Thi Luc, H. T. (2016). Vinamilk’s Supply Chain and the Small Farmers’ Involvement. VNU JOURNAL
OF ECONOMICS AND BUSINESS, 32(5E).
Ton, M. N. (2021). MSN strives to "refresh" Vincommerce (Rep.). Retrieved 2022, from Phu Hung Fund
Management Joint Stock Company website:
https://www.phs.vn/data/research/PDF_Files/analysis_report/en/20210513/MSN--20210513-E.pdf
Trading Economics. (2022). Milk 2022 data. Retrieved December 3, 2022, from
https://tradingeconomics.com/commodity/milk
Trang, M. (2022). Vinamilk: Good financial resources help businesses stand firm against many ups and
downs. The Ministry of Industry and Trade. Retrieved 2022, from
https://thitruongvietnam.vn/doanh-nghiep/vinamilk-nguon-luc-tai-chinh-tot-giup-doanh-nghiep-
dung-vung-truoc-nhieu-song-gio-442282.html
Trostle, R. (2010). Global agricultural supply and demand: factors contributing to the recent increase in
food commodity prices (rev. Diane Publishing.)
Tuong, T. (2022). Growth fulcrum for Vinamilk. The Ministry of Natural Resources and Environment.
Retrieved 2022, from https://baotainguyenmoitruong.vn/diem-tua-tang-truong-cho-vinamilk-
339420.html
Van Horne, J.C. and Wachowicz, J.M. (2008) Fundamentals of Financial Management. 13th Edition,
Financial Times/Prentice Hall, Upper Saddle River, NJ.
Van Nhien, N., Khan, N. C., Ninh, N. X., Van Huan, P., Lam, N. T., Ota, F., ... & Nakaya, Y. (2008).
Micronutrient deficiencies and anemia among preschool children in rural Vietnam. Asia Pacific
Journal of Clinical Nutrition, 17(1), 48-55.
Vietnam. (2015). FREE TRADE AGREEMENT BETWEEN THE SOCIALIST REPUBLIC OF VIET
NAM, OF THE ONE PART, AND THE EURASIAN ECONOMIC UNION AND ITS MEMBER
STATES, OF THE OTHER PART. Retrieved 2022, from https://wtocenter.vn/upload/files/fta/174-
ftas-concluded/188-vietnam---eurasian-/241-full-text/FTA%20VN%20-%20EAEU%20-%20Full
%20text.pdf
Vinamilk: Annual Report 2018 (Rep.). (2018). Retrieved 2022, from

https://www.vinamilk.com.vn/static/uploads/bc_thuong_nien/1553157661-
ea4e37fe1db29419325178dd843588da6e8234bb730198a6aa961d741128712e.pdf

JOINT STOCK COMPANY
22
Vinamilk. (2021). The first 8,000 cows at Vinamilk's farm complex in Laos will give milk in early 2022.
Retrieved December 3, 2022, from https://www.vinamilk.com.vn/vi/tin-tuc-su-kien/2285/dan-bo-8-
000-con-dau-tien-tai-to-hop-trang-trai-cua-vinamilk-tai-lao-se-cho-sua-vao-dau-nam-2022
VN Vinamilk. (2022). Vietnam Dairy Products JSC - Corporate Presentation. Retrieved from Vinamilk:
https://www.vinamilk.com.vn/static/uploads/documents/tldn/20220303-
_Corporate_Presentation.pdf
Vinamilk's Annual Report 2021. (2022). Retrieved from

https://www.vinamilk.com.vn/static/uploads/bc_thuong_nien/1650451537-
6f22ffdd6ecd4ea5cc133b0046bc3085a10648db1369033c5dfe1daed93f04a7.pdf
Vinamilk's Development History. (2021). Retrieved November 29, 2022, from

https://www.vinamilk.com.vn/en/development-history/
VOV. (2019). Vinamilk's dairy products are highly appreciated in the Chinese market. Retrieved
November 30, 2022, from https://vov.gov.vn/san-pham-sua-cua-vinamilk-duoc-danh-gia-cao-tai-
thi-truong-trung-quoc-dtnew-78238
WANG, Q., LIU, C., ZHAO, Y., KITSOS, A., CANNELLA, M., WANG, S., & HAN, L. (2020).
Impacts of the COVID-19 pandemic on the dairy industry: Lessons from China and the United
States and policy implications. Journal of Integrative Agriculture, 19(12), 2903-2915.
doi:10.1016/s2095-3119(20)63443-8
Weersink, A., von Massow, M., Bannon, N., Ifft, J., Maples, J., McEwan, K., ... & Wood, K. (2021).
COVID-19 and the agri-food system in the United States and Canada. Agricultural Systems, 188,
103039.

JOINT STOCK COMPANY
23
IX. Appendices
Appendix 1: As the tension between China and The U.S. becomes severe, China imposes an additional
25 percent of tariff on US-origin dairy products. The restriction has put pressure on China’s dairy
production as the total production cost of fluid milk will rise by 6 percent because of the increase in key
feed ingredients needed to import from the US. With the rising demand for imported dairy products,
China is seeking to import more dairy products from abroad (Inouye, 2022). As a result of effective
efforts by the government, businesses, and farmers, Vietnamese dairy products were officially exported in
2019 for the first time to China, the second-largest dairy consumer in the world (Nguyen, 2020).
Appendix 2: Vietnamese businesses are expected to face headwinds from inflation, tightening monetary
policy, and a growing cost-of-living crisis in many of the country’s export markets. Vu Van Hoa, General
Director of Dutch Technology JSC, an animal feed producer that imports raw materials, said the rise in
global commodity prices and weakening of the Vietnamese dong (VND) against the dollar have sent costs
surging. While supply disruptions may have run their course, local exporters are also suffering from a
slump in global demand as consumers tighten their spending due to high inflation (“Rising inflation poses
a challenge to businesses”, 2022). As a result, Vinamilk’s profitability was reported to be under pressure
due to the inflation of raw material prices given supply chain disruptions ("Vinamilk's Annual Report
2021", 2022). In the short-term, according to the Ministry of Finance (MOF), inflation could be high in
2022 and even last to 2023, which puts pressure on macroeconomic management and may overshadow
the efforts to support people and businesses (Luong, 2022)
Appendix 3: Over a long and solid history of 46 years of establishment, not only Vinamilk has become a
leading enterprise in Vietnam’s dairy industry with a reputable brand image, strong brand recognition,
and high brand value, but it also solidifies its position as a global brand with 57 export markets all over
the world (“Vinamilk’s Development History”, 2021). Particularly, Vinamilk gained a dominant market
share of nearly 50% in liquid milk, yogurt, and condensed milk products in Vietnam in 2019 (Nguyen,
2022), and witnessed an increase in market share of 0.9% in value and a rise of 10.5% in net revenue
from international business by the end of 2021 ("Vinamilk's Annual Report 2021", 2022). Moreover,
according to Kantar Worldpanel report, Vinamilk products are consumed by 99% of households in urban
areas and 90% of households in rural regions in 2021, meaning that at least one Vinamilk product is used
in nine out of ten Vietnamese families (Hong, 2022).
Appendix 4: One of the opportunities for Vinamilk to expand its business activities is the potential
development of dairy demands in Vietnam. According to the Research Report on Vietnam's Dairy

JOINT STOCK COMPANY
24
Industry 2022-2031, compared to Singapore (45 liters) and Thailand (35 liters), Vietnam's per-capita milk
consumption in 2021 was only 28 liters, leaving plenty of room for future growth. By 2030, the analyst
projects that Vietnam would have a 40-liter per capita milk consumption. A large, young, and rapidly
increasing population of about 100 million people as well as the expanding middle class and the fast-
growing economy of the country are the main drivers of consumption (Research and Markets, 2022).
Appendix 5: The increasingly intense competition in the dairy market, not only from domestic companies
(i.e. TH True Milk, Nutifood, etc) but also from international brands (i.e. Nestlé, Dutch Lady, Abbott,
etc), poses the largest threat to Vinamilk’s business development. On the other hand, since joining the
WTO, Vietnamese dairy enterprises are under increasing competitive pressure due to the reduction of tax
on imported dairy products according to Vietnam's tariff reduction policy when implementing the
commitments to preferential tariff treatment in common in the ASEAN Free Trade Area (CEPT/AFTA
commitments) and commitments to the World Trade Organization (WTO) (The Ministry of Finance,
2007). Specifically, Vietnam has various dairy product categories whose tax rates are lower than the 2011
WTO commitments from 1% - 3%, encouraging the entrance of more global companies into the
Vietnamese market (The Ministry of Finance, 2019), which in turn would threaten the position and
market share of Vinamilk as the consumers are offered with a wider range of product options.
Appendix 6: Dairy companies in Vietnam have mostly relied on imported milk powder instead of
domestically manufactured fresh milk as domestic fresh milk production can only satisfy 40-50% of
domestic demand, with the remaining portion primarily dependent on imports (Research and Markets,
2022). This has led to another prominent threat, which is the unstable sources and soaring prices of
imported raw materials. Particularly, cost-push inflation causes the uptrend of raw milk prices to continue
to prevail in 2022 and the first half of 2023. This puts pressure on the gross profit margin of dairy
companies in Vietnam towards the end of the year when raw milk accounts for the largest proportion of
total production materials of dairy manufacturers with over 60% and a storage time of less than 1 year.
Tensions between Russia and Ukraine are also increasing energy prices as well as the need for food
reserves in Europe, causing feed prices to continue to rise. In addition, global beef farms, especially in
Europe and Australia, are raising more cows for meat instead of milk, leading to a decrease in the number
of dairy herds. Also, the announcement of the Chinese government on the health benefits of consuming
dairy products against the harmful effects of the COVID-19 pandemic has supported the continued
growth of milk consumption in China. All of these events have contributed to the creation of a global
wave of scarce supplies and surging prices of raw milk, impending Vinamilk’s business performance and
profitability as a dairy (Anh, 2022).

JOINT STOCK COMPANY
25
Appendix 7: Ratios calculation
A. Financial Ratios
Ratio
Financial Ratios Formula
2017 2018 2019 2020 2021
ROE Profit after Tax/Equity
Company Vinamilk 43.05% 38.85% 35.50% 33.39% 29.66%
Industry Food & Beverage (F&B) 30.39% 28.80% 24.60% 21.78% 23.25%
Gearing Capital Employed/Equity
Company Vinamilk 1.03 1.02 1.02 1.02 1.01
Industry Food & Beverage (F&B) 0.95 0.73 0.75 1.29 1.16
Table 3: Financial ratios of Vinamilk and the F&B industry
B. Profitability
Ratio
Profitability Formula
2017 2018 2019 2020 2021
ROCE Profit after Tax/Capital Employed
Industry Food & Beverage (F&B) 19.33% 17.30% 2.65% 4.57% -7.08%
Net Profit Margin Profit after Tax/Net Sales
Industry Food & Beverage (F&B) 15.90% 15.12% 2.48% 4.28% -7.13%
Gross Profit Margin Gross Profit/Net Sales
Industry Food & Beverage (F&B) 38.94% 37.80% 35.83% 32.61% 28.35%
Net Assets
Net Sales/Capital Employed
Turnover (times)
Table 4: Profitability ratios of Vinamilk and the F&B industry
C. Working Capital Management
Working Capital Formula Ratio

JOINT STOCK COMPANY
26
Management
2017 2018 2019 2020 2021
Accounts Receivable
Net Sales/Accounts Receivable
Turnover (times)
Inventory Turnover
COGS/Inventory
(times)
Accounts Payable
COGS/Accounts Payable
Turnover (times)
Working Capital Ratio
Formula
Management 2017 2018 2019 2020 2021
Accounts Receivable
365/(Net Sales/Accounts Receivable)
Turnover (days)
Inventory Turnover
365/(COGS/Inventory)
(days)
Accounts Payable
365/(COGS/Accounts Payable)
Turnover (days)
Working Capital Cycle
AR Turnover in days + Inventory Turnover in days - AP Turnover in days
(days)
Fixed Assets Turnover
Net Sales/ Fixed Assets
(times)
Industry Food & Beverage (F&B)

JOINT STOCK COMPANY
27
Table 5: Working capital management ratios of Vinamilk and the F&B industry
D. Liquidity
Ratio
Liquidity Formula
2017 2018 2019 2020 2021
Liquidity Ratio Current Assets/Current Liabilities
Quick Ratio (Current Assets - Inventory)/Current Liabilities
Table 6: Liquidity ratios of Vinamilk and the F&B industry
Appendix 8: Vinamilk has started to expand investment in other fields to diversify business activities.
Specifically, the beef business project cooperates with Sojitz - one of Japan's large and fast-growing
multi-industry corporations. In particular, the first phase of the project is expected to come into operation
in 2023 with a capacity of about 30,000 beef cows annually, and an estimated first-year revenue of 2,000
billion VND. According to the assessment, the beef segment will help Vinamilk make good use of its
existing advantages and bring new sources of revenue to the business. This is still considered a potential
segment when it has a stable growth rate but is still quite fragmented and has no market leader. Beef
production is considered the most potential segment to boost Vinamilk's double-digit growth from 2023-
2024 onwards (Tuong, 2022).
Appendix 9:
At the end of November 2021, Vinamilk and its subsidiary Vilico signed a memorandum of
understanding on investment cooperation worth 500 million USD with Sojitz Corporation (Japan). Vilico
and Sojitz have conducted trial farming and selling of beef products in Vietnam and initially built up a
customer network. At the end of December 2021, Vinamilk received the decision to approve the
investment policy of a dairy plant in Hung Yen province with an expected capacity of 400 million liters
per year, this is Vinamilk's largest dairy factory in the Northern region. Not only in Vietnam but Vinamilk
also owns dairy factories in the US (100% stake in Driftwood factory), Cambodia (100% stake in Angkor
Milk factory), New Zealand (22.8% stake in factory), and 1 subsidiary in Poland. In addition, Vinamilk
also invests in developing organic farms in Laos and continues to seek cooperation opportunities in other
countries in the region.

JOINT STOCK COMPANY
28
Appendix 10: Vinamilk’s Ratio Calculation under VAS and IFRS

JOINT STOCK COMPANY

FA Report Group-4

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FA Report Group-4

Uploaded by

Copyright:

Available Formats

GROUP ASSIGNMENT COVER SHEET

Student name: Nguyễn Huỳnh Đức Student ID number: 31201028913

Student name: Văn Công Đạt Student ID number: 31201028812

Student name: Đinh Vũ Bảo An Student ID number: 31201029101

Student name: Lê Thị Kim Ngân Student ID number: 31201028715

Student name: Nguyễn Lê Duyên Anh Student ID number: 31201028928

Student name: Đoàn Vũ Hào Student ID number: 31201028653

Student name: Nguyễn Thanh Huyền Student ID number: 31201028817

Student name: Phạm Huyền Khanh Student ID number: 31201029129

Student name: Trương Mỹ Hạnh Student ID number: 31201029121

Student name: Hồ Ngọc Tường Vi Student ID number: 31201028797

Unit name: Financial Accounting Unit number:

Title: Group Project Report

I hold a copy of this assignment if the original is lost or damaged.

Student’s signature: Huynh Duc

THE VIETNAM DAIRY PRODUCTS

ANALYSIS OF CURRENT AND FUTURE PERFORMANCE OF

THE VIETNAM DAIRY PRODUCTS

II. PEST Analysis 4

III. SWOT Analysis 5

IV. Ratios calculation for Dupont Analysis 7

(See further in Appendix 7) 7

1. Working Capital Cycle 11

THE VIETNAM DAIRY PRODUCTS

II. PEST Analysis

1. Fluctuation in interest rates (See further in Appendix 2)

1. Micronutrient deficiencies in Vietnamese children

THE VIETNAM DAIRY PRODUCTS

Table 1: PEST Analysis of Vinamilk

III. SWOT Analysis

Opportunities 1. Potential development of dairy demands in Vietnam: Vietnam's per-capita milk

THE VIETNAM DAIRY PRODUCTS

DPO International, 2021)

Table 2: SWOT Analysis of Vinamilk

THE VIETNAM DAIRY PRODUCTS

IV. Ratios calculation for Dupont Analysis

(See further in Appendix 7)

Figure 1: Dupont Analysis of Vinamilk and the F&B industry

THE VIETNAM DAIRY PRODUCTS

THE VIETNAM DAIRY PRODUCTS

THE VIETNAM DAIRY PRODUCTS

Figure 2: Milk ingredients forecast in 2022

THE VIETNAM DAIRY PRODUCTS

B. Net Assets Turnover

1. Working Capital Cycle

THE VIETNAM DAIRY PRODUCTS

THE VIETNAM DAIRY PRODUCTS

2. Fixed asset turnover

THE VIETNAM DAIRY PRODUCTS

THE VIETNAM DAIRY PRODUCTS

THE VIETNAM DAIRY PRODUCTS

THE VIETNAM DAIRY PRODUCTS

Government of the Socialist Republic of Viet Nam (2017). DECREE ON AMENDMENTS TO

IFRS. (2020). IAS 16 — Property, Plant and Equipment. Retrieved from

THE VIETNAM DAIRY PRODUCTS

THE VIETNAM DAIRY PRODUCTS

THE VIETNAM DAIRY PRODUCTS

The Ministry of Finance (2001). DECISION OF THE MINISTRY OF FINANCE NUMBER

The Ministry of Finance. (2019). Specific Plans. Retrieved from

THE VIETNAM DAIRY PRODUCTS

Vinamilk: Annual Report 2018 (Rep.). (2018). Retrieved 2022, from

THE VIETNAM DAIRY PRODUCTS