Name: Nguyễn Nam Truờng – HS173120

Class: Mkt1718

I. Introduction about Refrigeration Electrical Engineering Corporation

Công ty cổ phần điện cơ điện lạnh/ Refrigeration Electrical Engineering
Corporation
Hose: REE

Position
REE Group of Companies includes:
• REE M&E Company is the leading M&E contractor in Vietnam;
• REE Electric Appliances Company specializes in air-conditioning systems
under the Reetech brand;
• REE Property is the manager of office buildings for lease developed by REE;
• REE Land Company, VIID, and SaigonRes operating in the field of real estate
project development;
• Electrical and water infrastructure with investments in power plants and clean
water plants.

Market share
Due to the characteristics of the M&E sector and Ree's market segment are
large-sized buildings, the likelihood of competition from external competitors is
low. REE has always been a company of interest to domestic and foreign
organizations, REE holding rate has always been high and up to now, the room
for foreign investors has been filled with 49%. Currently, REE M&E is the leading
contractor in Vietnam and accounts for 30% of the country's market share.

Main business lines

As a leading company in the industry with many years in the market, REE's
current operating foundation is said to be different from 4 segments:
(1) M&E construction services core),
(2) electrical appliances under the Reetech brand name,
(3) office leasing, and
(4) utilities in electricity and water. The own idle cash flow of thousands of billion
dongs, stable stocks, and steady annual dividend rate make REE always a safe
investment choice.

Key project
In the new development, in the face of the rise of renewable energy, REE also
joined in. Recognizing REEPRO, a subsidiary of Reetech operating in the field of
roof solar project construction, has been profitable since the first year of
operation.
 As a new investment trend, and efficiency recorded from REEPRO, from 2020,
REE aims to become a leading company in renewable energy production in
Vietnam, with the goal after 5 years of reaching more than 1,000 MW of
renewable energy. creating designed capacity in terms of equity ratio (currently
515 MW).

Competitors
REE's rival, Searefico Refrigeration Industry Joint Stock Company (SRF), is
second only to REE in the M&E segment, perhaps because REE today has
dispersed investment into many areas without being too focused on the segment.
refrigeration mechanics.
II. Financial statement analysis

1. Financial data of the last 3 years.

1.1 Balance Sheet

  2018 2019 2020

Short-term assets 5.987.684.470.133 5.999.047.688.457 6.008.633.765.955
Cash and cash equivalents 1.865.096.744.967 1.539.577.051.904 651.668.665.185
Short-term investments 1.138.925.962.847 1.221.295.628.590 1.328.559.221.660
Short-term receivables 1.965.707.145.074 2.137.973.891.941 3.082.281.525.922
Inventories 969.073.762.968 987.203.880.889 807.507.044.477
Other current assets 48.880.854.277 112.997.235.133 138.617.308.711
Long-term assets 9.511.978.637.491 13.623.717.107.259 14.521.819.968.981
Long-term receivables 33.557.936.547 38.930.286.119 50.818.488.683
Fixed assets 445.423.380.673 1.859.029.456.603 2.584. 784.885.734
Investment properties 1.602.831.205.980 1.856.448.851.637 1.773.066.914.071
Long-term assets in progress 153.222.968.061 67.744.027.165 275.954.512.618
Long-term investments 6.992.207.022.164 9.214.040.662.876 9.287.154.637.597
Other long-term assets 284.736.124.066 587.523.822.859 550.040.530.278
Total assets 15.499.663.107.624 19.622.764.795.716 20.530.453.734.936
Liabilities 5.571.294.773.978 8.521.096.256.250 8.317.804.815.307
Short-term liabilities 3.056.518.124.052 3.268.741.496.154 3.443.435.067.856
Long-term liabilities 2.514.776.649.926 5.252.354.760.096 4.874.369.747.451
Owner’s equity 9.928.368.333.646 11.101.668.539.466 12.212.648.919.629
Total liabilities and owners' equity 15.499.663.107.624 19.622.764.795.716 20.530.453.734.936
 1.2 Income Statement.

2018 2019 2020

Revenues from sales and services 5.104.605.853.407 4.896.700.913.533 5.644.088.890.450
rendered
Accounts must be subtracted from -3.950.856.432 -6.869.088.157 -4.336.164.483
sales
Net revenues from sales and 5.100.654.996.975 4.889.831.825.376 5.639.752.725.967
services rendered
Cost of goods sold and service -3.872.581.352.224 -3.643.618.854.408 -4.033.887.057.177
provision
Gross revenues from sales and 1.228.073.644.751 1.246.212.970.968 1.605.865.668.790
services rendered
Financial income 303.525.295.129 441.971.991.367 221.805.860.261
Financial expenses -111.471.248.186 -385.656.317.468 -474.525.519.610
Selling expenses -98.584.137.794 -78.371.474.365 -82.735.361.072
General administration expenses -214.709.679.120 -221.581.896.835 -283.713.770.081
Net profits from operating activities 2.105.657.869.033 1.909.681.072.333 1.901 .472.471 .574
Other income 21.940.218.216 25.841.108.227 28.781 .973.202
Other expenses -9.585.017.305 -15.312.182.806 -6.668.972.268
Other profits 12.355.200.911 10.528.925.421 22.113.000.934
Total net profit before tax 2.118.013.069.944 1.920.209.997.754 1.923.585.472.508
Current corporate income tax -226.730.110.093 -213.396.134.022 -205.948.240.596
expenses
Deferred corporate income tax -6.524.321.167 13.110.506.884 -4.135.453.010
expenses
Profits after enterprise income tax 1.884.758.638.684 1.719.924.370.616 1.713.501.778.902
Basic earnings per share 5.754 5.286 5.251
Diluted earnings per share 5.754 5.286 5.251

2.1 Analysis for Balance sheet.

In the years 2018-2020 REE's total asset revenue increases. The year 2018-
2019 is the year with the strongest increase (4,123,101,688,000), an increase of
26.6% in 2019-2020 increase (907,688,939,220).

In the years 2018-2020 SRF's total asset sales increased. In 2018-2019, the
highest increase (325,632,735,321) increased by 16.88% and in 2019-2020 only
increased (49,734,303,231).

Based on the above data, we can see that REE has surpassed SRF a lot in
terms of total assets and growth rate.

A-Short-term assets

Cash and cash equivalents

The year 2018-2019 was reduced (325,519,693,063) due to some weather

problems and in 2019-2020 also decreased (887,908,386,719) due to REE's
promotion of renewable energy technology help increase equity.

Short-term investment

From 2018 to 2019 increased (82,369,665,743) and 2019-2020 increased

(107,263,593,070). Due to financial investment in Quang Ninh Thermal Power
Joint Stock Company and Mang Canh Joint Stock Company has raised the
value.

Short-term receivables

In 2019-2020 increased sharply (944,307,633,981) at 44.16% because money

was collected from short-term receivables from customers and construction
contracts.

Inventory

In 2018-2019, a slight increase (18,130,117,921) is about 1.87%. And in 2019-

2020, because inventories and purchased goods are being processed, the
number of inventories plummeted (179 696,836,412) -18.20%

B- Long-term assets

Long-term receivables
Sharp increase in 2019-2020 (11,888,202,564) up 30.53%
Fixed assets
REE
The sharp increase in 2019-2020 increased (725,755,429,131) increased by 39%
in 2019 due to the purchase of subsidiaries (architectural houses, machinery,
equipment, office equipment)
SRF
2019-2020 increases (173,834,845,352) 179.94% growth
As we can see, REE is higher than SRF.Since REE dominates most of the
market, SRF is still growing and has a high percentage of growth.
Investment properties
2018-2019 increased (253,617,645,657) increased by 15.82% and 2019-2020
decreased -4.49%
Long-term assets in progress
2018-2019 has been fully built (85,478,940,896) for the cost of installing a solar
power system on the factory and the remaining office project cost for lease
(67,744,027,165)
2019-2020 construction is over (208.210.485.453) for wind power projects.
Long-term investments
2018-2019 increased (2,221,833,640,712) increased by 31.77% due to
investment in associated companies, capital contribution to other units ...

2.2. Analysis for Income Statement.

Revenues from sales and services rendered

2018-2019 revenue decrease in electricity and refrigeration, office leasing as
affected by weather and market volatility decreased (207,904,939,874)
corresponding to 4.07%
2019- 2020 revenue will increase again (747,387,976,917) equivalent to 15.26%
due to the increase in revenue from refrigeration and electricity and water and
electricity infrastructure.

Cost of goods sold and service provision

2018-2019 decreased (228,962,497,816) due to the cost of mechanical and
electrical engineering.
2019-2020 increase (390,268,202,769) at the rate of 10.71% due to the
increasing demand for products, so the COGS will also increase.

Net revenues from sales and services rendered

(Revenues from sales and services rendered - Accounts must be subtracted from
sales)
2018-2020 increased (539,097,728,992).
Business results with net revenue of VND 4,896 billion. Running in 2019
decreased compared to 2018: (-4.13%) due to reduction in revenue from M & E
and electrical infrastructure, water (M&E was declined by 14.0% compared to the
same the period only reached VND 974 billion) and the real estate segment only
reached VND 284 billion in 2019 due to the real estate market without clear
recovery signs.
Electricity and water infrastructure revenue increases by 15.33%

Gross revenue from sales and services rendered

(Net revenues from sales and services rendered) in
2019-2020 increase (359,652,697,822) increase in the level of 28.85% This
figure shows the great efforts of businesses nowadays with a high level of
competition and inflation. Companies need to promote their business plans to be
more effective.

General administration account

2019-2020 increased costs (62,131,873,246) increased at a rate of 28% in staff
costs increased, goodwill allocation increased and bad debts increased.

Net profits from operating activities

(Gross revenues from sales and services rendered + Financial income - Financial
account + Interest in an associate - Selling account - General administration
account)
2018-2019 decreased (195,976,796,700) at a ratio (-9.3%) due to a decrease in
the cost of sales as the weather conditions are not favorable

Current corporate income tax expenses

2019-2020 decreased (7447893426) equivalent (-3.49%)

III. Ratios analysis

 Current ratio: This indicator measures the ability to secure short-term liabilities
from short-term assets such as cash and cash equivalents, and revenues. In
2018, this ratio is 1.96, in 2019, down to 1.84 and continues to decrease in 2020
at 1.74.
Current Ratio = Current Assets/Current Liabilities

Fast liquidity ratio: This shows how much of a dollar must be paid right away to
pay off short-term debt. The rapid ratio of corporate liquidity in 2018 is 1.64 to
2019 is 1.53 and in 2020 it will decrease to 1.51. This shows that the amount of
money the business does not guarantee the payment of debts.
Quick Ratio = ( Current assets – Inventory)/Current Liabilities

Inventory turnover: inventory performance coefficient evaluating the efficiency

of a business's warehouse management. Inventory turnover indicator shows the
average number of inventory cycles in a period to generate revenue and how
many days of an enterprise's average inventories. In 2018, this ratio was 3.07, in
2019, it increased by 3.73 and increased sharply in 2020 at 4.50. In 2018, the
average inventory spun 3.07 rounds in the period to generate revenue. In 2019-
2020, an increase in inventory turnover shows faster sales, a decrease in the
backlog.
Inventory Turnover = Cost of goods sold/Average Inventory

SRF
  2018 2019 2020
Current ratio 1.21 1.13 1.08
Fast liquidity ratio 0.96 0.89 0.87
Inventory turnover 5.87 5.16 4.54

IV. Dupont analysis.

ROA: Indicate how many dongs of profit of the business on average for every
100 dongs of profit for shareholders. In 3 years, ROA decreased in 2018 to
11.98% VND in 2019-2020, decreased by 9.33%-8.11%, respectively,
decreasing over the years, proving ineffective management and use of assets, a
large investment in enterprises.

ROE: This shows how much profit on average for every 100 dongs of equity of
the business. The larger this index, the greater the profitability of equity. ROE
also decreased gradually year by year, in 2016 this index reached the highest
level in 3 years (2018-2020) at 19.16% in 2019-2020 at 15.59%-13.97%
respectively. We find that over the past 3 years, the profitability of equity is not
 high, and business efficiency is low. Enterprises need to stabilize equity sources
and loans to improve the performance of the owner. But this ROE is also very
high compared to other companies.

In 2019, REE increased financial leverage from 1.61 to 1.76 to invest in assets
as assets increased by more than 23%. However, due to the company's revenue
and profit reduced by the profit margin.

The main factors driving ROE are profitability, operational efficiency, and amount
of leverage (debt).

SRF

  2018 2019 2020

ROA 4.92 3.71 2.01
ROE 16.6 13.00 7.45

V. Statement of Cash flows.

1. REE's net cash flow from operating activities in 3 years (2018-2020) surged 
In 2018 at (90,244,160,290) to 2019 has increased significantly
(319,175,024,284) and in 2020 increased significantly to the point
(612,823,527,533). 
Net cash flow from operating activities of the company mainly comes from profit
(loss) from operating activities before working capital. 
- In 2018: (1,025,859,185,385) 
- In 2019: (1,132,953,224,692) 
- In 2020: (1,625,725,019.601) 
Demonstrates that business activities bring high profits. 

2. REE's net cash flow from investing activities is greatly deducted. 

- In 2018: (-220,264,699,692) 
- In 2019: (-1,629,723,182,670) 
- In 2020: (-826,705,509,901)
Shows that REE procures and builds fixed assets (2018-2020) Shows that the
company is expanding its business in the near future.

3. Cash Flow from Financing Activities

- In 2018: (-402.565.623.834)
- In 2019: (985.081.266.248)
- In 2020: (-674.006.718.824)
Net cash flow from financial activities is negative (<0) because REE has paid off
debt and paid interest to owners or returned a portion of contributed capital to
owners.

VI. Conclusion

Through the COVID-19 pandemic, through the losses from climate change, it is
time to focus on protecting the environment.
Our resources are running out, namely the energy problem. Electricity is in short
supply. In the past 3 years, we have thrived in renewable energy, in
telecommunications technology. However, it is necessary to look back at building
development strategies. Coal and oil are gradually running out. Therefore,
attention should be paid to offshore wind power to achieve high productivity and
reduce environmental pollution.

In 2021, REE targets revenue growth of 24.5%, to VND 6,933.7 billion, and profit
after tax of 8.7% to VND 1,769 billion.
In terms of each business segment, REE M&E aims to achieve VND 4,309 billion
in revenue and over VND 275 billion in profit after tax, up 24% and 21.9%
respectively compared to 2020.

Source:
https://finance.vietstock.vn/SRF/tai-chinh.htm?tab=CSTC.