ĐẠI HỌC UEH

TRƯỜNG KINH DOANH UEH

KHOA TÀI CHÍNH
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BÀI TIỂU LUẬN

BỘ MÔN: ĐẦU TƯ TÀI CHÍNH

Giảng viên hướng dẫn: Phùng Đức Nam

Khoá: 46
Mã lớp học phần: 22C1FIN50502905
Nhóm sinh viên thực hiện – MSSV:
1. Trần Vũ Bảo – 31201022085
2. Nguyễn Phan Huỳnh Phúc Hậu – 31201022215
3. Nguyễn Trần Thu Hiền – 31201022216
4. Nguyễn Võ Trọng Hoàng – 31201022240
5. Phạm Quỳnh Hương – 31201025161

TP. Hồ Chí Minh, ngày 10, tháng 10, năm 2022

1. OVERVIEW OF PHR

1.1. Information:

PHUOC HOA RUBBER JOINT STOCK COMPANY

Address: Phuoc Hoa Village- Phu Giao District - Binh Duong Province
Tel.: (84) 2743 657 106 - (84) 2743 657 113
Fax: (84) 2743 657 110
Website: www.phr.vn; www.phuruco.vn
Email: phuochoarubber@phr.vn

1.2. Business field: Trading in rubber

1.3. Company Basic Information

Phuoc Hoa Rubber Joint Stock Company is one of the units with a large area in the rubber
industry in Vietnam, located in the rubber-growing area, the central position of the
Southeast rubber region, far from Ho Chi Minh City. 65km is very convenient in terms of
traffic.

The company has 3 rubber processing factories, total designed capacity: 27,000 tons/year,
including:
1. Bo La processing factory: 6,000 tons/year.
+ 1 rubber nuggets preliminary processing line: 6,000 tons/year.
2. Latex processing factory: 3,000 tons/year.
3. Paris Crab Processing Factory: 18,000 tons/year.
+ 2 preliminary processing lines of latex nuggets: 12,000 tons/year.
+ 1 processing line of mixed latex: 6,000 tons/year.

1.4 Achievements Corporate Achievements:

- The title of Labor Hero during the renovation period - 2006.
- Medal of Independence class III - 2005.
- Second-class Labor Medal - Company Party Committee - Year 2013
- Labor Medals, grades I, II, III - 1998, 1994, 1986.
- Class III Labor Medal for War Invalids and Martyrs' work - 1997
- 8 times received the Government's Emulation Flag - In 1991, 1992, 1997, 1998, 2002,
2003, 2004, 2010.
- National Quality Gold Award - 2013
- National Quality Silver Award 2009, 2010
- 8 main products meet the standard "Vietnamese agricultural and forestry products with
high quality and commercial prestige" in 2007 awarded by the Ministry of Agriculture
and Rural Development.
- Award "Enterprise Integration and Development" in 2008.
Phuoc Hoa Rubber Joint Stock Company is constantly developing. The position and
reputation of the Company is confirmed. The company actively transforms the economic
structure and promotes investment in diversifying industries, diversifying products,
diversifying owners in order to sustainably maintain economic growth and build a
reputable brand name. credit in domestic and foreign markets.

1.5 Operating activity

 Planting rubber trees.

 Exploiting and processing rubber latex.
 Trading in rubber
 Purchasing latex raw materials.
 Retailing petrol.
 Buying and selling rubber wood.
 Processing rubber wood.
 Construction and repair of bridges and roads, traffic works and residential areas.
 Construction of civil, industrial.
 Investment, construction and business of technical infrastructure of industrial
parks.
 Real estate business. Business development of houses and industrial park services.
 Financial investment.

1.6 Competitive position

Phuoc Hoa Rubber Joint Stock Company is managing a total cultivation area of
14,131.97ha with a garden productivity of 2 tons/ha. The company has 3 rubber
processing factories, modern technology, actual processing capacity of about 30,000
tons/year, products of high and stable quality, increasingly meeting domestic and
international markets. economic. From the actual requirements of the market, the
company's units have had many initiatives, improved equipment and machinery,
rationalized production to improve product quality, created more product structure, helped
increase the taste of products. PHR brand position in domestic and foreign markets.

Export market:
+ Asia: China, Japan, Korea, Taiwan, Singapore, India...

+ Europe: Belgium, Czech Republic, England, France, Germany,

Greece, Italy, Ireland, NewTherland, Russian, Spain, Sweden,
Turkey...
+ Americas: United State, Argentina, Brazil, Canada, Mexico...
+ Australia.

As a unit of preliminary processing of natural rubber under the Vietnam Rubber Industry
Group, with an average annual output of about 30,000 tons. Phuoc Hoa Rubber Joint
Stock Company always strives to become an efficient and quality production and business
unit, satisfying the requirements of customers and ensuring high management and use of
forest resources. sustainable rubber.
From January 2021 up to now, the market price movement of PHR stock has tended to
slow down, still fluctuating around the level of around 80,000 VND/share and the next
trend has not yet been clearly determined.

Looking for the source of the "other profit" quite large as above of Phuoc Hoa Rubber, it
can be seen that this amount mainly comes from the company collecting compensation
and damage support when handing over the land for the project. VSIP III Industrial Park.

The income from land conversion can partly bring instant profit for Phuoc Hoa Rubber,
however, this also means that the rubber land fund of the enterprise is tending to shrink
gradually. In addition to the converted land for VSIP III Project, Phuoc Hoa Rubber is
also continuing to convert many other lands for projects outside the rubber industry.

Specifically, this enterprise is completing legal documents to expand Tan Binh Industrial
Park 1,055 ha (phase 2); as the investor of 2 industrial - urban - service zones, namely Hoi
Nghia (715 ha), Binh My (1,002 ha) and Tan Lap I Industrial Park (2021.62 ha).

The current move shows that Phuoc Hoa Rubber is placing great expectations on its non-
core business, while its main business, rubber, tends to decline in the first period of 2022.
Therefore, the conversion of land use purpose from rubber plantation to land for other
purposes may also cause this company to be careful in preparing legal procedures.

1.7. Analysis Of Business Environment (SWOT)

1.7.1 Strength
 PHR is one of the biggest rubber manufacturing companies in Vietnam, ranking
among the top 5 with a total of around 21,500 hectares of rubber plantations in
Binh Duong, Dak Lak, and Cambodia. The company produced 10.649,48 tons of
mining in 2021, bought 15.190,51 tons, and used 35.115,74 tons. In light of
increased rubber prices, a Cambodian rubber plantation started to record profits
this year, which is anticipated to increase the supply of rubber for PHR.
 Benefits of developing property into an industrial park include: PHR now has 33%
of the shares in Nam Tan Uyen Industrial Park, which has 229 hectares of rental
land and a 100% occupancy rate, and 80% of the shares in Tan Binh Industrial
Park, which has 245 ha of leased area. PHR recently transferred 346 ha and 691 ha
of land for the projects Nam Tan Uyen phase 2 (compensation 865 billion,
recorded 456 billion), and VSIP3 (successfully ended the agreement period), which
will take place in the 2020–2021 timeframe. having a sizable land bank of up to
15,000 acres in Binh Duong, development plan 5,000 ha of rubber plantation land
will be removed as part of the company's expansion between 2020 and 2025, and
the remaining 10,000 ha will be used for new projects, including 6,000 ha for the
development of urban, industrial, and service areas. This is the foundation for PHR
to gain more from the development trend of the province with a lot of capital from
FDI drawn.
  Healthy financial situation: Cash reached 65 billion, net short-term investment
reached 1897.9 billion. Liabilities decreased with total short-term and long-term
loans accounting for only a small part of total assets; Cash flow from production
and business activities has been positive for 5 consecutive years and maintained
this year, continuing to ensure PHR's development ability.
1.7.2 Weakness
 PHR not only no longer benefits from the sharp increase in rubber prices, but also
delays the implementation of industrial park projects due to legal issues.
 Phuoc Hoa Rubber Joint Stock Company's (PHR) revenue fell by close to 50%
over the same time, while its profit after taxes fell by roughly a third. The
management explained that the decline in latex consumption, which resulted in a
decline in revenue of semi-finished goods in the second quarter compared to the
same period last year, was the primary cause of the profit decline.
 PHR is slowly losing its advantage from the main business field: The demand for
industrial development is increasing, causing the area of rubber plantation to
shrink. It is known that PHR is one of the major natural rubber companies.
Currently, this enterprise has more than 15,900 hectares of land fund in Binh
Duong province and 7,664 hectares of rubber plantations in Cambodia. However,
according to the 2021-2025 plan, the rubber harvesting area of PHR in Vietnam
will be reduced to only 5,000 hectares, which means that 10,000
 hectares of natural rubber will be converted to use, of which about 50% is used for
industrial development. Therefore, the main business of PHR will no longer be the
main demand in the revenue of this business. Therefore, the competitive position
of the company in the industry is decreasing.
1.7.3 Opportunity
 Crude oil prices rise as a result of economic growth and the umbrella market also
recovers. The natural rubber business in general and PHR stand to benefit greatly
from the opportunities the world will present.
 The prospect of the rubber segment is optimistic when the demand from the market
increases again, the price of rubber is on the way to recovering
 PHR will begin recording income from industrial parks through joint venture
companies in 2024 (VSIP 3 and NTC), helping the business to achieve
considerable profit growth from leasing VSIP 3 industrial park (1,000 ha) and Nam
Tan Uyen 3 industrial park (351 ha).
 According to the Association of Natural Rubber Producing Countries (ANRPC),
the world is short of about 93,000 tons of natural rubber. This organization
forecasts that the global rubber industry outlook in the second half of the year is
still relatively positive. The selling price will continue to remain at a high level
because of the supply deficit, high anchor oil prices leading to an increase in the
price of synthetic rubber and increased demand from the health care and
automobile manufacturing sectors.
1.7.4 Threat
 Although the rubber market has the prospect of growth again, there are still many
fluctuations. Rubber prices are highly dependent on market factors while the
demand for rubber imports from major markets decreases.
  Inflation in major markets such as the US and Europe caused these countries to
continuously adjust interest rates. This makes the rubber import and export
activities of enterprises affected, and also affects the consumption of goods in the
markets.
 While gradually losing the advantage of the main industry, the company still has
potential risks, such as (1) complicated procedures in changing land use purpose
from rubber plantation to industrial park development, (2 ) the process of applying
for a new industrial park license from the Government may be prolonged.
 Financial income decreased 28% to 10.7 billion VND, financial expenses increased
48% to 1.6 billion VND. Selling expenses increased by 35.7% to 4.4 billion VND,
while general and administrative expenses decreased by nearly 10% to 11.4 billion
VND.
 It is known that in the first 6 months of the year, although net profit from business
activities decreased by 22.7% over the same period, corresponding to a decrease of
41.9 billion VND to 142.6 billion VND, profit after tax still increased by 108.5%
to 353.87 billion. The main reason was that during the period, the Company
recorded other income of 293.7 billion VND (an increase of 279.2 billion VND
over the same period).

2. CURRENT FINANCIAL SITUATION

Phuoc Hoa Rubber Joint Stock Company (HoSE: PHR) has just announced its
financial statements for the second quarter of 2022 with net revenue of 239 billion VND,
down 32% compared to the same period in 2021.

Financial income decreased 28% to 10.7 billion VND, financial expenses increased 48%
to 1.6 billion VND. Selling expenses increased by 35.7% to 4.4 billion VND, while
general and administrative expenses decreased by nearly 10% to 11.4 billion VND.
It is known that in the first 6 months of the year, although net profit from business
activities decreased by 22.7% over the same period, corresponding to a decrease of 41.9
billion VND to 142.6 billion VND, profit after tax still increased by 108.5% to 353.87
billion. The main reason was that during the period, the Company recorded other income
of 293.7 billion VND (an increase of 279.2 billion VND over the same period).

Q2
Targets
2022 2021
1. Gross revenue from goods sold and services 238.947.748.687 349.318.379.669
rendered
2. Revenue deduction 0 0
3. Net revenue from goods sold and services 238.947.748.687 349.318.379.669
rendered
4. Cost of sales 222.204.833.292 316.991.257.250
 5. Gross profit from goods sold and services 16.742.915.395 32.327.122.419
rendered
6. Financial income 10.732.878.385 14.884.134.412
7. Financial expenses 1.637.859.839 1.108.316.211
 In which : Interest expense 1.610.332.395 1.006.697.774
8. Selling expenses 4.434.860.901 3.266.203.540
9. General and administration expenses 11.384.245.775 12.622.332.343
10. Operating profit 10.018.827.265 30.214.404.737
11. Other income 878.793.906 16.400.031.964
12. Other expenses 63.272.727 523.417.389
13. Other profit 815.521.179 15.876.614.575
14. Accounting profit before tax 10.834.348.444 46.091.019.312
15. Current corporate income tax expense 2.047.223.610 9.330.471.852
16. Deferred corporate tax income 0 0
17. Net profit after corporate income tax 8.787.124.834 36.760.547.460

According to the notes to the financial statements, in the first quarter of 2022, the
Company recorded the collection of compensation for the implementation of the industrial
park project of VND 289.4 billion compared to the same period not recorded, this is
compensation and support. compensation for damage when handing over land to
implement VSIP 3 Industrial Park Project. Thus, in the second quarter of 2022, the
Company no longer recorded compensation for the sudden industrial park project as in the
first quarter of 2022.

As a result, in the second quarter of 2022, Phuoc Hoa Rubber made a profit of 8.8 billion
VND, down 76% compared to the same period in 2021.
Accumulated in the first 6 months, PHR recorded net revenue of 541.6 billion VND,
down 8%, profit after tax reached 248.8 billion VND, up 329% (4 times) over the same
period in 2021.

Some basic financial indicators (The last 4 years)

Ratios 2018 2019 2020 2021

 ROA 13.39 8,22 17,46 7,6
ROE 24,65 17,02 36,6 14,87
EPS 5,854 3,320 7,985 3,524
P/E 5,71 11,51 7,89 20,23

-We can see that the ROS index of Phuoc Hoa Rubber Joint Stock Company over the past
4 years (2018-2021) fluctuates over the years. However, the ROS index at 4 years is
>10%, showing that the company is operating strongly.
-According to international standards, a ROA value greater than 7.5% is good. We see
that in all 4 years, this index has maintained above 7.5%. Especially in 2020, this index
increased the highest (19.46%), proving that the capital efficiency of this enterprise is
good.
In short, PHR has average ROA and ROE ratios, which proves that the company's
business is doing quite well.
a) Risk analysis
- Risks from delayed approval of industrial park projects: In the context that the existing
industrial parks have high occupancy rates, while the rubber segment is inefficient due to
the low price of latex for many years, in recent years, Phuoc Hoa Rubber has planned to
convert about 4,000 ha of rubber plantation land to industrial park land.
- However, for this year's business results, the company's profit may be affected by the
slow progress of approving projects, because land compensation is still the main driver of
profit for the Company.
- The selling price of natural rubber is often unstable due to a close positive relationship
with crude oil price.
- Due to the characteristics of the industry, activities are heavily influenced by natural
conditions: weather,...;
b) Prospects 2022 - 2023
Natural rubber : Despite the gradual reopening of the global economy and high oil
prices, the export price of natural rubber only increased by 4% year-on-year in the first 6
months due to limited demand from China as the country still maintains social distancing
measures. China will increase tire production after social distancing measures are lifted,
supporting natural rubber prices. However, with the sharp correction of oil prices shortly,
the price of natural rubber may only increase at a low single-digit rate in the last 6 months
of 2022 and 2023.
Industrial area : In the first 6 months of 2022, PHR did not record new rental revenue.
PHR expects to record new rental income (5 hectares at $115/m2) in the fourth quarter of
2022. For 2023, PHR forecasts revenue to grow by 18% same period last year to 261
billion VND , assuming a new lease of 6 hectares at $125/m2 (up 9% same period
lastyear). PHR expects to book land compensation income of 691 billion VND in 2022
and 207 billion VND in 2023. In the first half of 2022, the company recorded 289 billion
VND, so the remaining 401 billion VND may be received in the fourth quarter of 2022.
This will be the main growth driver for PHR in 2022. Income from the liquidation of trees
rubber is set at 30 billion VND (up 30% same period last year ) in 2022 and 30 billion
VND in 2023.
In 2022, Phuoc Hoa Rubber aims to reach 2,252 billion VND in total revenue from the
parent company, and a pre-tax profit of 898 billion VND. The selling price of the army-
facing rubber goods is 39.45 million VND/ton. Minimum dividend paid in 2022 in cash at
40% /value.
The cost of capital Ri is calculated according to the following formula:
Ri = Rf + β x Risk premium
In there:
- Rf: Risk-free rate
- Beta: Beta is a measure of the volatility of a stock relative to the general market.
• Risk premium = Rm – Rf. A risk premium is a bonus when you invest in stocks (high
risk), compared to holding other assets (low risk). Rm: Required market return
For PHR shares:
- Rf is considered the T-bill interest rate.
- Beta is estimated by PHR and VNIDEX stock returns
- Rm is the average profit of VNIDEX
We get:
Ta được:
Rf 3.33%
Beta (PHR, 1.212865312
VNI)
Rm yearly 12.73%

Rs= Ri = Rf + β x Risk premium = 14.73%

3. Estimate capitalization rate using the CAPM model

The Capital Asset Pricing Model (CAPM) is a model that shows the relationship between
the expected return of an asset, and the risk of the asset itself.
The output of the CAPM model will be the required rate of return of an asset (cost of
equity – Ri).
The cost of capital Ri is calculated according to the following formula:
Ri = Rf + β x Risk premium
In there:
- Rf: Risk-free rate
- Beta: Beta is a measure of the volatility of a stock relative to the general market.
• Risk premium = Rm – Rf. A risk premium is a bonus when you invest in stocks (high
risk), compared to holding other assets (low risk). Rm: Required market return
For PHR shares:
- Rf is considered the T-bill interest rate.
- Beta is estimated by PHR and VNIDEX stock returns
- Rm is the average profit of VNIDEX
We get:
Ta được:
Rf 3.33%
Beta (PHR, 1.212865312
VNI)
Rm yearly 12.73%

Rs= Ri = Rf + β x Risk premium = 14.73%

4. PHR's stock valuation

4.1 Valuation of stocks using the DDM method
We have PHR's EPS in 2021 of VND is 3079/share and dividend in 2021 to be paid at
VND 2500/share. We assume that dividends paid out over the next 5 years will steadily
increase by 10% per year. By 2027, dividends have been showing signs of growth with a
steady dividend growth rate with stable dividend payouts with 2021's figures. We predict
a 2027's ROE to be a two-year average of 2020 and 2021 is 27%. Therefore, the long-run
growth rate of the dividend is:
g = ROE*( 1- 25003071) = 5.09%

With the above prediction, we have the table of dividends paid from 2022 to 2027 below:
Real Forecast
202 202
Year 2022 2024 2025 2026 2027
1 3
250 302
Dividend 0 2750 3327.5 3660.25 4026.275 4428.9
5
We have Ri found in CAPM with Ri = 14.73% . Therefore, to estimate the intrinsic value
of PHR in 2022, we have the following formula:

P = D2028k-g =D2027*(1+ g)k-g = 48,244.44

2027

Vo=D20231+k+D2024(1+k)2+D2025(1+k)3+D2026(1+k)4+D2027+P2027(1+k)5=36,44
VND
Valuation of shares using the P/E method
We forecast PHR's EPS in 2022 to be 5415. Present value of PHR is VND 46,450. Basic
earnings per share are forecasted at 2750 VND/share.
P/E = Price/EPS = 8.6
Price per share = P/E * 2750 = 23,579 VND
Consider companies in the same rubber industry that are considered to have shares that
are widely traded with the same rate of return, risk, and growth as PHR.

Table 5: P/E ratios of rubber companies in early 2022

Market capitalization (billion
Name Stocks P/E
VND)
Ben Thanh Rubber Joint Stock
1 BRC 144,787,463 8.7
Company
Southern Rubber Industry Joint
2 CSM 1,554,388,875 46.9
Stock Company
Da Nang Rubber Joint Stock
3 DRC 2,904,479,283 10.7
Company
Golden Rubber Joint Stock
4 SRC 488,344,300 10.1
Company
Dong Phu Rubber Joint Stock
5 DPR 2,257,500,000 4.7
Company
Tan Bien Rubber Joint Stock
6 RTB 3652,242,597,500 6.6
Company
Hoa Binh Rubber Joint Stock
7 HRC 1,839,582,960 80.1
Company
Tay Ninh Rubber Joint Stock
8 TRC 1,010,840,045 10.5
Company
Thong Nhat Rubber Joint Stock
9 TNC 1,222,375,000 19
Company
Ba Ria Rubber Joint Stock
10 BRR 2,576,249,957 13.6
Company

Take P/E as the weighted average and weighted as market capitalization. Calculate
industry P/E = 14.8
So, according to the P/E method, the value of HPG shares in 2022 is VND 46,450.
Summarizing all valuation methods, we take the weighted average price to make the final
conclusion about the value of PHR stock:
Valuation Weight
Price (VND)
method (%)
DDM 36.404 25 9.101
P/E 23.579 25 5,894
Target price 14.995
So, after analyzing PHR stock and using different valuation models, we have determined
the target price of PHR is: VND 14,995 as of October 7, 2022. At this moment: The
market price of PHR is: 46,450 VND. Target price is nearly 32% lower than market price,
SELL recommendation for PHR stock of Phuoc Hoa Rubber Joint Stock Company.

REFERENCES:

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