CF Final Report 123

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CF Final Report 123
Behavioural Finance (Western Sydney University)
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STUDENT DETAILS
Student Student ID
name: Nguyễn Thu Hiền number: B1111913111
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name: Ngô Thiện Huy number: B1111925032
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name: Nguyễn Cao Đăng Khoa number: B1111914264
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name: Trần Xuân Hiếu number: B1112016467
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name: Võ Quỳnh Lam number: B1112015094
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UNIT AND TUTORIAL DETAILS
Unit
Unit name: Corporate Finance number: CB-T221WSB-2
Tutorial/Lectur Thursday 8:00 AM –
e: Class day and time: 11:00 AM
Lecturer or Tutor
name: Vo Hong Duc
ASSIGNMENT DETAILS
Title: CORPORATE FINANCE Group Assignment 1 _ Financial Analysis

Length Due Date
: date: 14-08-2021 submitted: 14-08-2021
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TABLE OF CONTENTS
I. INTRODUCTION
II. BALANCE SHEET
2.1. The amount of total assets
2.2. The amount of current assets
2.3. The amount of non-current assets
2.3.The amount of total liabilities
2.4. The amount of owner’s equity
III. INCOME STATEMENT
3.1. Total Operating Revenue
3.2. Cost of goods sold
3.3. Total expenses before tax
3.4. Non-operating Gains and Loses
3.5. Earning Per Shares (EPS)
IV. RATIO ANALYSIS
4.1. Liquidity Ratios
4.1a. Current Ratio
4.1b. Quick Ratio
4.1c. Cash Ratio
4.2. Efficiency Ratios
4.2a. Inventory Turnover
4.2b. Days’ Sales in Inventory
4.2c. Receivables Turnover
4.2d. Days’ Sales in Receivables
4.2e. Total Asset Turnover
4.3. Long-term Solvency Ratios
4.4. Profitability Ratios
4.5. Market Value Measure
V. CONCLUSION
VI. REFERENCE LIST

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I. INTRODUCTION
Hoa Phat Group Joint Stock Company (Stock code: HPG) is a leading industrial
production group, which operates in 04 fields: Iron and steel (construction steel, hot
rolled coil) - Steel products (including steel pipes, galvanized steel, wire drawing,
prestressed steel) - Agriculture - Real estate produce, but mainly steel-producing for
domestic and foreign companies, accounting for over 80% of the Group's revenue and
profit. They were established in August 1992 and launched an IPO on Ho Chi Minh Stock
Exchange (HOSE) on 15 Nov 2007. Starting from a company specializing in trading
construction machines from August 1992, Hoa Phat in turn expanded into the fields of
Furniture (1995), Steel Pipe (1996), Construction Steel (2000), Electrical Refrigeration
(2001), Real Estate (2001). In the official website of Hoa Phat, it stated that the company.
With a capacity of over 8 million tons of steel of all kinds, they currently are the largest
construction steel and steel pipe manufacturer in Vietnam with a market share of 32.5%
and 31.7%, respectively, and their profit after tax in 2020 was more than 13000 billion
VND. Currently, the company is located at Pho Noi A Industrial Park - Giai Pham
Commune - Yen My District - Hung Yen Province, their website can be accessed through
www.hoaphat.com.vn. Currently, the person who holds the most shares and is the
chairman of HPG's board of directors is Mr. Tran Dinh Long. Furthermore, Hoa Phat
Group has 11 member companies with 25,424 employees, operating nationwide and 1
office in Singapore. Hoa Phat’s Chief Executive Officer and Vice-director now are
Mr.Tran Tan Duong and Mr.Nguyen Viet Thang, Mrs.Nguyen Thi Thao Nguyen, up to
now, thanks to their experienced leadership, the company keeps transforming every day
and promising to develop sustainably in the future. By successfully applying the latest
technology in the production lines at the factory, Hoa Phat has exported its products into
many regions, including Asia, America, Oceania, and so on. Their majority-owned
subsidiaries can include:
- HOA PHAT HAI DUONG STEEL JOINT STOCK COMPANY – Located in Hai
Duong Province, Vietnam

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- HOA PHAT DUNG QUAT STEEL JOINT STOCK COMPANY – Located in Quang
Ngai Province, Vietnam
- HOA PHAT STEEL PIPE COMPANY LIMITED – Located in Ha Noi Capital, Vietnam
- HOA PHAT AGRICULTURE DEVELOPMENT JOINT STOCK COMPANY –
Located in Hung Yen Province, Vietnam
This paper focuses not only on Hoa Phat’s main financial statement, but also on
examining additional elements of the balance sheet, income statement, and other
contexts. The primary portion of this report will incorporate in particular, the figures of
Hoa Phat’s sales, balance sheet, and statement of revenues for the last three years. The
rest is about the contrast between Hoa Phat and its rivals in terms of sales and ratio
research.
II. Analysis of profit/loss and balance sheet
131,511
2.1. Total Assets
101,776
78,223 74,764
Figure 1. Asset Structure HPG
71,339
52,914 56,747 2018-2020
30,436
25,308 From 2018 to 2020, Hoa Phat
Group showed a sequential
2018 2019 2020
Current Assets (Billion VND) Non-current Assets (Billion VND) increase in total assets. In 2019,
Total Assets (Billion VND)
total assets increased 1.30 times
compared to 2018 (from 78,223 billion VND to 101,776 billion VND). In 2020, total
assets were 131,511 billion VND, increasing 1.29 times compared to 2019.
2020
2018 2019
74 10 5 15
24
15 5
12
46 14
56 13
64
11
2.2. Current Assets

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Figure 2. Proportion of Current Assets HPG 2018-2020
Figure 3. Proportion of Current Assets HSG 2018-2020

The size of current assets had a great fluctuation, especially in 2020, it roughly doubled
in comparison to 2019 (from 30,436 billion VND to 56,747 billion VND). Among the
items of current assets, cash and cash equivalents always accounted for more than 10%,
with the greatest reaching 24% in 2020. Although cash accounted for three-quarters of
this item in 2018, cash equivalents rose significantly in the following years, eventually
accounting for 85% in 2020. Because the steel manufacturing industry requires a lot of
capital expenditures and investments in equipment, production lines, and production
materials, Hoa Phat Group must keep a sufficient amount of cash and cash equivalents on
hand for a longer period of time, as their cash flow may not be as fast as companies in
other industries. Despite the proportion of all items changed over years, inventories still
showed an upward tendency (from 14,115 billion VND to 26,286 billion VND, increasing
1.86 times in 2020 compared to 2018) and made up around a half of current assets. The
first reason came from the seasonal factor in steel consumption as well as COVID-19
pandemic, which creates low demand and social isolation, affecting buidling operations.
The second reason was from Hoa Phat's desire to promote the development of a new
distribution system in the Southern region. However, when it came to expanding
inventory of products and materials, there were always two sides. If the market went
smoothly, the steel business would make a big profit; on the contrary, if the steel price
went down, the business would take a big risk. In comparison to Hoa Phat Group, current
assets Hoa Sen Group decreased slightly from 10,799 billion VND to 9,022 billion VND
in the period 2018-2020. In which, the same as Hoa Phat Group, inventories of Hoa Sen
Group took a large proportion in current assets (above 60% over the years) and did not

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show a significant change. However, cash and cash equivalents made up just a modest
percentage of the total, at 5%, 4%, and 6% respectively.
2.3 Non-current Assets
Figure 4. Proportion of Non-current Assets HPG 2018-2020
Figure 5. Proportion of Non-current Assets HSG 2018-2020

It is explicitly observed that non-current assets rose moderately until 2019 (from 52,914
billion VND to 71,336 billion VND) and then had a slight increase in 2020 (increasing
3,425 billion VND). Fixed assets, which accounted for 87.7% of non-current assets in
2020, rose 5.13 times in comparison to 2018. Non-current in progress, on the other hand,
showed a significant reduction from 38,107 billion VND to 6,247 billion VND,
accounting for only 8% of total non-current assets in 2020. To clarify these shifts, they
were the results of the Hoa Phat Dung Quat Iron and Steel Production Complex Project,
which has been underway since 2017 (Hòa Phát, 2019). Industrial and urban real estate
are two of Hoa Phat's real estate fields. The value of investment properties increased
dramatically between 2018 and 2020 (from 179 billion VND to 564 billion VND);
especially, 2019 was a year in which Hoa Phat had significant growth despite the fact that

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the real estate market was experiencing difficulties. Hoa Phat has concentrated its
resources in the Pho Noi A, Hoa Mac, and Yen My II Industrial Parks, attracting a slew of
domestic and foreign investors, including 25 investors that leased 432,000m2 of land in
2019 (Hoa Phat, 2020).
In contrast to Hoa Phat Group, Hoa Sen Group's non-current assets decreased year by
year (from 10,455 billion VND to 8,734 billion VND). In which, fixed assets always
accounted for well over three quarters in total non-current assets (78%, 88%, and 87%
respectively). Moreover, the proportion of non-current in progress made up a small
fraction, which means that Hoa Sen Group did not have many exceptional long-term
investment projects over three years.
2.4. Liabilities
Figure 6. Proportion of Current Liabilities HPG 2018-2020

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Figure 7. Proportion of Non-current Liabilities HPG 2018-2020

From 2018 to 2020, current liabilities always accounted for at least half of the total
liabilities of Hoa Phat Group. In 2018, Hoa Phat recorded the value of 22,636 billion
VND, and they were expected to increase in the following two years. Current liabilities
reached VND 26,984 billion in 2019, an increase of 1.19 times over 2018; and then
continued to rise in 2020, reaching 51,975 billion VND, an increase of 1.93 times over
2019. In which, short-term borrowings were the largest proportion of current liabilities
(51%, 62%, 71% respectively each year). Furthermore, Hoa Phat's non-current liabilities
has had certain fluctuations in the past three years. They rose by 1.8 times in 2019
compared to 2018; however, they dropped by 0.75 times in 2020 in comparison to 2019.
In particular, long-term borrowings made up well over three quarters in all three years,
and contributed for 85% of non-current liabilities in 2020. As the firm has invested
substantially in the Hoa Phat Dung Quat Iron and Steel Production Complex Project and
was preparing for a large-scale production cycle, it was acceptable for Hoa Phat's total
current and non-current liabilities to have increased rapidly during the last three years.
2.5. Owner’s Equity

Capital
CapitalStructure
Structure--HPG
HSG
Figure 8. Capital
24 32 37
45
52 47
Structure HPG and

76 68
53
63
55 HSG 2018-2020
48
2018
2018 2019
2019 2020
2020
Liability
Liability Owners'Equity
Owners' Equity

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Figure 9. Proportion of Owner’s Equity HPG 2018-2020

From 2018 to 2020, owner's equity decreased slightly while liabilities increased and
became a greater component of the capital structure. In 2018, the proportion of owner’s
equity was 52%, in 2019 it decreased to 47% and by 2020, it was presented only 45%.
For the past three years, owner's capital always accounted for the highest percentage of
owner's equity, which was consistently above 50%. Moreover, in 2019, owner’s capital
rose by 6,371 billion VND, equivalent to an increase of 1.3 times compared to 2018. By
2020, it continued to grow by 1.2 times from 27,610 billion VND to 33,132 billion VND.
Such an increase occurred as in 2018, Hoa Phat Group issued 2.123 million shares and by
2020, the total number of issued shares grew to 3.313 million shares (Cổ phiếu 68). In
comparison, according to the figure 8, Hoa Sen recorded a growth in equity (from 24% to
37%) and a drop in liabilities (from 76% to 63%), indicating that HSG was proactive in
managing its liabilities, as well as the owner's capacity to pay them and improved
financial performance. Overall, the capital structure remained relatively steady
throughout years, demonstrating that Hoa Phat Group's financial policies and capabilities
are consistently prudent and rigorously controlled, resulting in superior performance than
Hoa Sen Group.
III. Income statement
3.1. Total Operating Revenue
It can be seen that the total operating revenue of Hoa Phat Group continuously increased
from 2018-2020, especially the revenue increased sharply in 2020. Hoa Phat Group's

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operating revenue increased from 56,580 billion VND to 91,279 billion VND. In 2018,
the whole Group achieved 56,580 billion VND in sales revenue, up 21% compared to
2017. Revenue growth in 2018 mainly came from steel production and trading, revenue
from this industry group always accounted for over 80% of the Group's total revenue. In
2019, the Group achieved a revenue of 64,678 billion VND, an increase of 14%
compared to 2018. The steel segment is still the main segment contributing 80% of the
total revenue of the Group. 2020 continues to be a challenging year for Vietnam's steel
industry. In addition to the shock named Covid-19, the falling steel price reduced the
industry's profit margin. Under such circumstances, Hoa Phat Group has recorded many
brilliant achievements in different fields. Saigon Thuong Tin Bank Securities Joint Stock
Company (SBS) believes that Hoa Phat Group will benefit from promoting public
investment. Due to the COVID-19 pandemic, the Government is stepping up public
investment to support the economy, through infrastructure projects during the second half
of 2020. The Group's revenue reached 91,279 billion VND, up 41% respectively over the
same period in 2019. Steel production (including construction steel, hot rolled coil, steel
pipe, color coated steel sheet, prestressed steel...) continues to play a leading role and
affirms as the core business of the Group.
In contrast to Hoa Phat Group, Hoa Sen Group's revenue continuously decreased in 3
years from 2018 to 2020 and especially fell sharply in 2019. HSG had a total operating
revenue in 2018 of 34,441 billion VND, nearly 1.6 times lower than that of Hoa Phat
Group. times compared to HPG in the same period. The following year, Hoa Sen Group's
revenue decreased by 18.6% compared to 2018, its revenue was 28,035 billion VND. In
2020, this figure continued to decrease by 1.8% to 27,531 billion VND. This comparison
shows that Hoa Phat Group has reached the stature of a mature corporation and holds a
large market share while keeping a long distance from its competitors in generating stable
revenue.
3.2. Cost of goods sold

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The cost of goods sold by Hoa Phat Group in the period 2018-2020 still tends to increase,
especially in 2020. In 2018, the cost of goods sold by HPG is 44,166 billion VND. Cost
of goods sold in 2019 was 52,473 billion VND, which increased by 18.8% compared to
2018 in the same period. The 35.7% increase in 2020 can be attributed to HPG's
significant revenue increase and fluctuations in raw material prices. In contrast to Hoa
Phat Group, the cost of goods sold by Hoa Sen Group continued to decline sharply. In the
period 2018-2020, this number has decreased by 24.8% from 30.464 billion VND to
22,903 billion VND. Especially in 2020, the cost of goods sold of HPG is 3.1 times
higher than that of HSG in the same period.
3.3. Total expenses before tax
Total pre-tax expenses of Hoa Phat Group in the period 2018-2020 still tend to increase
from 1,893 to 4,933 billion VND. In 2018, the total expenses before tax were at around
1,893 billion VND. In 2019, this number increased to 33.4% compared to 2018 in the
same period, meaning the total expenses in 2019 were about 2,526 billion VND. By
2020, the total expenses increased significantly to 4,933 billion VND, an increase of
nearly 95.2% compared to 2019. The increase may be due to the influence of high sales
revenue. For Hoa Sen Group, the total expense before tax tends to be more stable. In
2018, the total expenses before tax were 3,683 billion VND, 1.9 times higher than HPG
in the same period. In 2019, this number decreased slightly to about 3,023 billion VND
and increased slightly in 2020 with 3,326 billion VND. However, in 2020, the total
expenses of HPG were about 1.4 times higher than that of HSG in the same period.
Through that, we can see the strong development and prosperity of Hoa Phat Group.
3.4. Non-operating Gains and Loses

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Non-operating gains and losses of Hoa Phat Group in 2018 were minus 1 billion.
However, in 2019 and 2020, this number was increase significantly to more than 60 times
compared to 2018. This increase comes from liquidation of fixed assets, construction in
progress, income from selling electricity, water and providing services, compensation
received from other units and other incomes. Particularly, compensation received from
other partners increased more than 2 times from 25 billion VND to 51 billion VND
compared with 2019 because of the impact of Covid 19 epidemic, causing their partners
to be seriously affected. In 2018, the statistics can be explained by the high cost of such
activities. Opposed to HPG, HSG - one of Hoa Phat Group's competitors experienced
totally different results in this data. In 2019, their non-operating gains and losses of Hoa
Sen Group were increased from 54 billion VND to 223 billion VND, which is more than
4 times compared to 2018. However, these numbers dramatically diminish to minus 3
billion VND in 2020, due to the losses of liquidation fixed assets income and Profit from
low-cost purchase income. This can be advantageous for Hoa Phat group in this number
when their non-operating activities also include income from selling electricity, water and
providing services which is necessary and unaffected by the Covid 19 epidemic activities.
3.5. Earning Per Shares (EPS)

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The EPS of Hoa Phat Group in 2018 is 4,037 VND/share. In 2019, this figure of Hoa
Phat decreased to 2,726 VND/share, down 1.5 times compared to 2018. This decrease in
shares comes from the impact of the Covid19 epidemic, causing all industries to be
affected seriously. However, in 2020, Hoa Phat Group's EPS has increased again, at
VND3,826/share, an increase of 1.4 times compared to 2019. Similar to HPG, HSG also
experienced a similar change. In 2018, the EPS of Hoa Sen Group reached 1,090
VND/share, 3.7 times lower than HPG's share at the same time. Also affected by the
epidemic in 2019, HSG's EPS dropped sharply, to only 820 VND/share. However, HSG's
EPS has increased strongly again with 2,492 VND/share, 3 times higher than in 2019, but
this EPS value is still nearly 0.6 times lower than HPG in the same period. This can be an
optimistic signal for Hoa Phat Group shareholders when the EPS of Hoa Phat Group
stock has grown again.
IV.RATIO ANALYSIS
4.1. Liquidity Ratios
According to Investopedia, Liquidity ratios are a type of financial statistic that assesses a
debtor's capacity to repay existing debt commitments without raising external cash.
Liquidity ratios use indicators such as the current ratio, quick ratio, and operational cash
flow ratio to assess a company's capacity to meet debt obligations and margin of safety.
We will use 3 formulas to calculate all liquidity ratios within HPG. They are:
- Current Ratio = Current Asset/ Current Liability
- Quick Ratio = (Current Asset-Inventory)/ Current Liability
- Cash Ratio = Cash/ Current Liability
4.1a. Current Ratio
The current ratio is a liquidity ratio that evaluates a company's capacity to pay short-term
or one-year debts. It illustrates to investors and analysts how a business may optimize its
current assets on its balance sheet to pay down its current debt and other payables. If the
current ratio is low, particularly lower than 1, it indicates the business's weak ability to
repay its obligations, which is an indication of possible financial troubles that the
enterprise may experience in repaying its debts. According to Vietstock statistics, HSG's
current ratio is considerably lower than HPG's in all three years. HPG’s ratio has
remained over 1 constantly throughout the years, which is a good sign of the ability to
pay off debts without the risk of bankruptcy. HPG’s ratio only decreases very slightly
throughout the years.

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(Figures are taken from Vietstock Finance on HPG and HSG)
4.1b. Quick Ratio
The quick ratio is a measure of a company's capacity to fulfill its short-term liabilities
using its most liquid assets and is an indicative of its short-term liquidity situation.
According to Vietstock data, the quick ratio of HSG in 2018 and 2019 is still quite low
when compared to HPG. HSG's growth rate in 2020 is greater than in previous years, but
it is still low.Meanwhile, HPG has a slight decline in 2019, dropping from 0.49 to 0.4.
However, HPG has managed to grow their quick ratio once again in 2020, rising to 0.58.
4.1c. Cash Ratio
The cash ratio is a liquidity indicator that compares a company's total cash and cash
equivalents to its current obligations. The statistic determines a company's capacity to
repay short-term debt using cash or near-cash resources, such as easily marketable
securities. If this number is < 0.5, it typically implies that the company is having trouble

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paying its obligations, and to settle the loan, the company may have to liquidate items
and assets quickly. According to Vietstock statistics, HSG's cash ratio is too low in
comparison to HPG. This demonstrates that HSG is having trouble paying obligations,
and to settle the loan, HSG may have to liquidate products and assets quickly.As a result,
HSG must find a fair solution to the issue to avoid a significant impact on production and
business operations. The same can be said for HPG. They’ve only reached about 0.3 in
2020. However, we can see that HPG experienced a much larger growth than HSG.
4.2. Efficiency Ratios
As said by Investopedia once again, the efficiency ratio is commonly used to assess how
well a firm uses its assets and liabilities internally. An efficiency ratio can be used to
determine the turnover of receivables, the repayment of debts, the amount and use of
equity, and the overall utilization of inventories and equipment. This ratio may also be
used to measure and assess commercial and investment bank performance. The formulas
we will use to calculate these ratios are:
- Inventory Turnover= COGS/ Inventory
- Days’ Sales in Inventory= 365/ Inventory Turn
- Receivables Turnover= Sales/ Account Receivables
- Days’ Sales in Receivables= 365/ Receivables Turnover
- Total Asset Turnover= Sales/ Total Assets

4.2a. Inventory Turnover

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Inventory turnover is a financial statistic that shows how many times a company's
inventory is sold and replaced within a particular period. The days in the period may then
be divided by the inventory turnover formula to determine how long it takes to sell the
goods on hand. If the inventory turnover ratio is higher, it implies that there are fewer
inventories. The faster the firm sells, the less cash is placed in inventory/cost, and vice
versa. Based on the statistics shown above, we can observe that HSG's inventory is more
than that of HPG, indicating that:HSG has introduced the product to the appropriate
target customers. As a result, they have successfully developed a marketing strategy to
reach the correct target customers and enhanced promotions. This will significantly boost
the Inventory Turnover metric. In contrast, HPG has possibly failed to do any of the
above, as shown by their steadily declining ratio, going from 3.42 down to 3.12.
(Source: Vietstock Finance on HPG and HSG)
4.2b. Days’ Sales in Inventory
The days sales of inventory (DSI) is a financial statistic that reflects the average
number of days it takes for a firm to shift its inventory, including work-in-process
products, into sales. According to the statistics in the table above, HPG's average
inventory days are greater than HSG's average inventory days. This demonstrates that
HSG's inventory management is superior to HPG's, or that HSG has a successful policy
of reaching out to target consumers. HPG’s ratio had an increase from 2018 to 2019, then
mostly stayed the same in 2020

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4.2c. Receivables Turnover
The receivables turnover ratio is an accounting metric used to assess a company's ability
to recover accounts receivable, or debts borrowed by customers or clients. This ratio
assesses how successfully a firm uses and manages the credit it offers to consumers, as
well as the speed with which that short-term debt is collected or paid. A high receivables
turnover ratio demonstrates the capacity to recover receivables and debts from customers
successfully. A high receivables turnover ratio might also indicate that a company is
running largely on cash. Based on the data shown above, we can conclude that HPG's
receivables turnover ratio is high. It decreases only a little bit from 2018 to 2019, then
increases again in 2020. This demonstrates that HPG handles receivables properly. HSG's
receivables turnover ratio is lower than HPG's, indicating that the business has a

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somewhat higher capital misappropriation, or a big unpaid debt, or a threat to the

enterprise's liquidity.
4.2d. Days’ Sales in Receivables
Days’ sales outstanding, also called Days Sales in Receivables, is a measure of how long
it takes a firm to receive payment for a transaction. It is frequently calculated on a
monthly, quarterly, or yearly basis. Based on the data given, we can see that HSG has
higher data compared to HPG throughout all three years. This shows that HSG
encounters more problem in collecting payment as opposed to HPG.
4.2e. Total Asset Turnover
The (total) asset turnover ratio compares the value of a company's sales or revenues to its
assets. The asset turnover ratio may be used to determine how efficiently a firm uses its
assets to produce income. According to the data presented above, HSG's asset turnover
ratio is significantly greater than HPG's. In 2018, it was a difference of 0.76. In 2019, it
was 0.75. Lastly in 2020, it was 0.8. This demonstrates that HSG makes excellent use of
its resources. HPG should learn to better manage its assets to gain more income. HPG’s
ratio decreases slightly in 2019 then increases only a little bit in 2020.

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4.3. Long-term Solvency Ratios
It is important to know how effectively as well as sustainably the company or firm may
operate by considering the long-term solvency ratios. These ratios sometimes called
leverage ratios measure the ability of the firm to perform its obligations or pay the bills in
the long-run. In particular, the total debt ratio is the one that investors pay the most
attention about. This ratio is defined as:
An ideal total debt ratio that attracts investors will range from 0.3 to 0.6 (Sean,2021).
And the following chart illustrates the total debt ratio of Hoa Phat Group JSC (HPG) and
Hoa Sen Group JSC
It is clear to state that although the total debt ratio increased in the period of 2018-2020
(0.4807 grew to 0.5305 then rose slightly to 0.5497), it was still in the ideal and healthy

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range for investors and shareholders. The reason for this ratio’s extension was the
investment for a new project and led to debt solution (Chi, 2020). In contrast, despite
HSG’ s total debt-ratio decreasing over the years, it was still relatively high compared to
the ideal range and could be considered quite risky. For these reasons, it might partly
explain why HPG is more attractive than HSG. In his Equity Research for Steel industry,
Nguyen (2019) supposed that investors should focus on HPG.
Besides the total debt ratio, there are other ratios of HPG belonging to long-term
solvency ratios that are significant for investors to evaluate. The following table will
show these ratios of Hoa Phat Group:
Year
2018 2019 2020
Ratio
Debt-Equity (Total Debt Interest Total Equity) (%) 92.56 112.98 122.07
Times Interest Earned (EBIT Interest) (times) 19.65 10.71 8.01
Cash Coverage 23.74 13.29 10.06
(EBIT + Depreciation + Amortization Interest) (times)
In general, these ratios developed in the negative way as a result of acquiring more debt
for the new project which has been mentioned above.
4.4. Profitability Ratios
Next, investors as well as shareholders will evaluate the degree of efficiency the company
or firm operates. Specifically, these ratios indicate how effectively the firm uses its assets
and runs its operations. Two common profitability ratios can be mentioned are Return on
Asset (ROA) and Return on Equity (ROE). Return on Asset measures the level of the
firm that can generate profit from total assets:
Meanwhile, Return on Equity reflects the ability of a firm to earn return on shareholders’
investment and can be expressed as:
The next two figures show these two ratios of HPG’s holding company and HSG JSC in
period of 2018-2020:

lOMoARcPSD|19024967
Overall, the ROA ratio of HPG decreased slightly in this period. In particular, it dropped
by 3.54% to 7.54% in 2019 then went up to 10.27% in 2020. This problem was caused by
debt solution and operation as well as the new project initially entered into stability and
development. Despite the decline, this ratio of HPG was much higher compared with
HSG. This happened similarly when looking at the ROE ratio of 2 firms. For a healthy
and attractive firm, the ideal Return on Equity ratio would be from 15% - 20% (Steve,
2019). As we can see, ROE of HPG was always in this range, while HSG was not able to
do that. This reinforces the reasons why HPG is a desirable participant in the steel
market.
Additionally, one more considerable profitability ratio of HPG, which had the similar
fluctuation as ROA or ROE, is profit margin. This ratio can be expressed as:
4.5. Market Value Measure

In market value measure, the most considerable ratio that investors will look at and pay
attention to is P/E ratio. This ratio will reflect the relationship between the price of one
stock on the market and the earnings per share of its business. In other words, it means
the amount of money spent for 1 dollar of profit. And the P/E ratio of HPG can be
expressed as
Year 2018 2019 2020

P/E ratio 7.67 8.62 10.78
It can be commented that this ratio of HPG always increased year by year. This is one of
the things investors will be attracted to and by that becoming one of the HPG’s
shareholders.
Data for computing ratios
HPG (VND) 2018 2019 2020
Total Asset 78.223.007.670.925 101.776.030.099.90 131.511.434.388.837

lOMoARcPSD|19024967
0
Total Debt 37.600.057.830.115 53.989.393.956.205 72.291.648.082.726
Total Equity 40.622.949.840.810 47.786.636.143.695 59.219.786.306.111
Sales 56.580.423.695.083 64.677.906.575.644 91.279.041.771.826
Depreciation 2.195.032.823.866 2.397.517.270.225 4.483.963.533.244
Amortization 11.338.915.090 19.004.762.459 18.958.496.377
Interest expense 539.861.243.640 936.710.218.359 2.191.680.923.417
EBT 10.071.072.872.302 9.096.662.123.386 15.356.966.791.701
Net income 8.600.550.706.227 7.578.248.236.229 13.506.164.056.907
V. Conclusion
The period 2018-2020 was a time of upheaval for the steel industry, along with the
emergence of the COVID-19 pandemic that had a significant influence on this industry.
Despite the fact that a few steel businesses went bankrupt and many others were
struggling, Hoa Phat Group nevertheless managed to achive a number of remarkable
accomplishments, in which especially profit after tax exceeded 50% of the plan (Hòa
Phát, 2021). However, along with the growth of business results, Hoa Phat is also
carrying large liabilities as liabilities always accounts for a substantial proportion of total
assets. The amount of debt may not stop when Hoa Phat planned to expand Dung Quat 2
project with an expected investment capital of 85,000 billion VND (Dũng, 2021). In
conclusion, Hoa Phat Group should have appropriate financial strategies in place to boost
production and company efficiency as well as profits, in order to pay off its massive
debts.
VI. Preferences List
Cổ phiếu 68. Retrieved from: https://www.cophieu68.vn/eventschedule_detail.php?

id=hpg
Dũng, Đ. (2021). BNEWS. Hoà Phát sẽ đầu tư 85.000 tỷ đồng xây dựng dự án Dung
Quất 2. Retrieved from: https://bnews.vn/hoa-phat-se-dau-tu-85-000-ty-dong-xay-dung-
du-an-dung-quat-2/193337.html

lOMoARcPSD|19024967
Fernando, J. (2021, April 7). Current Ratio. Investopedia.

https://www.investopedia.com/terms/c/currentratio.asp
Fernando, J. (2021, April 9). Inventory Turnover. Investopedia.

https://www.investopedia.com/terms/i/inventoryturnover.asp
Fiorillo, S. (2019, August 14). Return on Assets (ROA): Definition, Calculation, and
Examples. Retrieved July 30, 2021, from https://www.thestreet.com/personal-
finance/education/what-is-return-on-assets-15055810
Hayes, A. (2021, July 4). Asset Turnover Ratio. Investopedia.

https://www.investopedia.com/terms/a/assetturnover.asp
Hayes, A. (2021, March 22). Why You Should Use Days Sales of Inventory – DSI.
Investopedia. https://www.investopedia.com/terms/d/days-sales-inventory-dsi.asp
Hayes, A. (2021, March 31). What Everyone Needs to Know About Liquidity Ratios.
Investopedia. https://www.investopedia.com/terms/l/liquidityratios.asp
Hòa Phát. (2019). Công Ty CP Thép Hòa Phát Dung Quất. Retrieved from:
https://www.hoaphat.com.vn/cong-ty-thanh-vien/cong-ty-co-phan-thep-hoa-phat-dung-
quat.html
Hòa Phát. (2020). Báo cáo thường niên HPG 2019. Retrieved from:
https://file.hoaphat.com.vn/hoaphat-com-vn/2020/04/bao-cao-thuong-nien-hpg-2019.pdf
Hòa Phát. (2021). Báo cáo thường niên HPG 2020. Retrieved from:
https://file.hoaphat.com.vn/hoaphat-com-vn/2021/04/bctn-2020-online.pdf

lOMoARcPSD|19024967
Kenton, W. (2021, April 12). Understanding the Cash Ratio. Investopedia.

https://www.investopedia.com/terms/c/cash-ratio.asp
Kenton, W. (2021, June 25). Understanding Days Sales Outstanding. Investopedia.

https://www.investopedia.com/terms/d/dso.asp
Kenton, W. (2021, May 7). Efficiency Ratio. Investopedia.

https://www.investopedia.com/terms/e/efficiencyratio.asp
Murphy, C. B. (2021, April 7). Why the Receivables Turnover Ratio Matters.
Investopedia. https://www.investopedia.com/terms/r/receivableturnoverratio.asp
Nguyễn Bảo, T. (2019, June). Equity Research: Steel Industry [Slides]. Retrieved from
https://mbs.com.vn/media/3eidjkeu/bc-nganh-thep-june-2019.pdf
Ross, S. (2021, May 22). What Is a Good Debt Ratio? Retrieved July 30, 2021, from
https://www.investopedia.com/ask/answers/021215/what-good-debt-ratio-and-what-bad-
debt-ratio.asp
Ross, S. (2021, May 22). What Is a Good Debt Ratio? Retrieved July 30, 2021, from
https://www.investopedia.com/ask/answers/021215/what-good-debt-ratio-and-what-bad-
debt-ratio.asp
Seth, S. (2021, March 31). Quick Ratio. Investopedia.

https://www.investopedia.com/terms/q/quickratio.asp
Tập đoàn Hòa Phát - HPG Group. HoaPhat. (n.d.). Retrieved July 30, 2021, from
https://www.hoaphat.com.vn./.

lOMoARcPSD|19024967
Tín, C. (2020, November 19). Hòa Phát: Nợ tăng cùng lợi nhuận. Retrieved August 3,
2021, from https://tinnhanhchungkhoan.vn/hoa-phat-no-tang-cung-loi-nhuan-
post255467.html

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CF Final Report 123

Behavioural Finance (Western Sydney University)

Studocu is not sponsored or endorsed by any college or university

SCHOOL OF WESTERN SYDNEY UNIVERSITY

Title: CORPORATE FINANCE Group Assignment 1 _ Financial Analysis

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LINK YOUTUBE : https://youtu.be/LcdzkItxO34

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2.2. Current Assets

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Figure 2. Proportion of Current Assets HPG 2018-2020

Figure 3. Proportion of Current Assets HSG 2018-2020

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Figure 4. Proportion of Non-current Assets HPG 2018-2020

Figure 5. Proportion of Non-current Assets HSG 2018-2020

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Figure 6. Proportion of Current Liabilities HPG 2018-2020

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Figure 7. Proportion of Non-current Liabilities HPG 2018-2020

2.5. Owner’s Equity

Structure HPG and

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Figure 9. Proportion of Owner’s Equity HPG 2018-2020

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(Figures are taken from Vietstock Finance on HPG and HSG)

4.1b. Quick Ratio

(Figures are taken from Vietstock Finance on HPG and HSG)

4.1c. Cash Ratio

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(Figures are taken from Vietstock Finance on HPG and HSG)

4.2. Efficiency Ratios

- Inventory Turnover= COGS/ Inventory

- Days’ Sales in Inventory= 365/ Inventory Turn

- Receivables Turnover= Sales/ Account Receivables

- Days’ Sales in Receivables= 365/ Receivables Turnover

- Total Asset Turnover= Sales/ Total Assets

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(Source: Vietstock Finance on HPG and HSG)

4.2b. Days’ Sales in Inventory

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(Figures are taken from Vietstock Finance on HPG and HSG)

4.2c. Receivables Turnover

(Figures are taken from Vietstock Finance on HPG and HSG)

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somewhat higher capital misappropriation, or a big unpaid debt, or a threat to the

4.2d. Days’ Sales in Receivables

(Figures are taken from Vietstock Finance on HPG and HSG)

4.2e. Total Asset Turnover

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(Figures are taken from Vietstock Finance on HPG and HSG)

4.3. Long-term Solvency Ratios

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4.5. Market Value Measure

Year 2018 2019 2020