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Transcript of FINANCE PREZI
AND STRATEGIC PLANNING OF
VINACONEX JOINT STOCK CORPORATION
design by Dóri Sirály for Prezi
FINANCIAL ANALYSIS OF VINACONEX (VCG)
1, Vu Thu Huong
2, Nguyen Hong Anh
3, Nguyen Hong Hanh
4, Dinh Thu Trang
5, Nghiem Thuy Linh
6, Nguyen Thuy Hang
FACTORS INFLUENCING THE DEVELOPMENT OF VINACONEX CORPORATION (VCG)
ANALYSIS OF FINANCIAL PERFORMANCE OF VINACONEX (VCG)
OVERVIEW OF VINACONEX JOINT STOCK CORPORATION (VCG)
THE PROCESS OF FORMATION AND DEVELOPMENT
Oversea Services and Construction Company changed its name to Vietnam Construction, Import - Export Corporation, which operated in the field of import - export, and labor export.
Vietnam Construction and Import - Export Corporation was established on the Model of Corporation 90
the Corporation officially entered the operation under the joint stock company model with its name: VINACONEX Vietnam Construction and Import - Export Joint Stock Corporation
VINACONEX's share (code VCG) listed on the Hanoi Stock Exchange.
VINACONEX Vietnam Construction and Import - Export Joint Stock Corporation successfully published shares, increasing its charter capital to 3,000 billion
Vietnam Construction and Import - Export Joint stock Corporation successfully increased its charter capital to 4,417 billion.
GENERAL SITUATION OF BUSINESS ACTIVITY
Vinaconex Corporation focuses on many fields
Some main Fields and Activities:
Real Estate operation
Previously, the real estate fields were primarily prioritized investment
Now and in the future, the Corporation redirects and focus on construction activitie as a strategic key activity
3. General financial situation
Total asset value of VINACONEX tend to decrease from 2009 ( 16,712 billion VND ) to the end of June 2013 (13,202 billion VND)
VINACONEX still has to bear large debts
Profit after tax continuously declined over the years, culmination was in 2012, VINACONEX lost 646 billion VND because of huge financial costs
The capital sources mobilization also encounters many difficulties due to high borrowing costs, business activity inefficiencies
Promote the process of divestments in subsidiaries
1. Industrial Situation of Corporation
VINACONEX Corporation is operating in a variety of business sectors:
Real estate business
Other business fields: Import-export business; commercial business; tourism business; hospitality; educational business; ....
2. Shareholder's Relation in the Corporation
VINACONEX Corporation is currently a joint stock company with investment capital is taken from both domestic and abroad sources
During the recent years, the re-structuring of finance and the issue of capital withdrawal to restructure investment categories have resulted in the fluctuated collection of shares and stocks of the Corporation.
1. Partners and product – service supply market:
VINACONEX has been becoming a well-known and trustworthy brand to many international partners.
International relation operation of VINACONEX is currently focusing on the following primary sectors:
Real estate investment and business: Commercial Real Estate Services CBRE, ...
Work construction and installation: Sumitomo Group, Taisei Group (Japan), LG Construction Group, ...
Architecture consultancy:Architectural Consulting Group 70 of the Hawaii
Financial investment: BNP Paribas; China Eximbank; JBIC; ...
Industrial manufacture: Kawasaki Heavy Industries; China Heavy Machinery Company, Shanghai Electric Group
Import – export business : a lot of partners from the EU, the U.S., Australia, Japan, Italy, China, etc.
Labor export: Korea Federation of Small and Medium Business;
DongAn Consortium Construction Corporation of Korea
Internal competitors in the industry
Direct competitors: Vietnam Housing and Urban Development Corporation, Song Da Urban and Industrial Zone Development and Investment Joint Stock Company, Saigon Real Estate Corporation, Hoang Anh Gia Lai Corporation, ...
- For the construction and installation sector: PetroVietnam Construction Joint Stock Company.
- For the construction sector: Cotec Construction Joint Stock Company
- For real estate sector: Saigon Real Estate Company
3. Influences from State, domestic and foreign markets to the financial decision of the Company
Influence of the State to the Corporation’s financial decision:
The level of scientific and technological development
Political and international cooperation situations
Characteristics and changes in socio-cultural
Influence of the domestic market to the Corporation’s financial decision:
The pressure of supplier
The pressure of buyers
Influence of the foreign market to the Corporation’s financial decision
Trade policies of the countries
1. Economy environment
2. Technology environment
3. Socio-cultural environment
4. Demographic environment
5. Political and legal environment
6. Global environment
Analysis of macro-environment
Policies and legal system of the government
Administration and operation and administrative model
Take advantage of business scale
Gross revenue increased and maintained its stableness in the period of 2008 – 2011 and then decreased in 2012. Similar trend growth happened with net profit after tax of the Corporation from 2008 to 2012
In the years from 2008 – 2012, the total assets of the Corporation had constantly fluctuations.
This also explains the reason why:
Net profit margin
= (net profit after tax) / (Sales)
falled dramatically through years.
Net profit margin was firmly during 2008 – 2010
Decreased from 2011 and became negative in 2012 (-14.6%)
VCG suffered losses in 2012
Some projects did not bring the equivalent profit; become the bulk of losses for the Corporation.
Financial investment loss was too much.
Reserve of bad debts for sub-enterprises and lost investment projects.
(revenue over equity) had a tendency of reduction through years and had negative value in 2012 (-12.83%). This indicates that 2012 was the year when the Corporation suffered huge business loss, causing major financial risks to shareholders.
reduced through years from 71.62% in 2011 to 61.96% in 2012 which improved the financial situation of the Corporation
Rise in Charter capital; Rise in Share of Capital
Account payable decreased that demonstrated the effort of the Corporation to re-structure debt amount, increasing the
from 1.03 (2011) to 1.25 (2012), while liquidity ratio of 2011 previously reduced compared to which of 2010 (1.1)
was larger than 1, presenting that the Corporation has sufficient ability to repay short term debts.
Time Interest Earned
ratio of the Corporation tended to reduce through years, from 9.99 in 2008 to -0.65 in 2012
FINANCIAL LEVERAGE RATIOS
The debt repayment of the Corporation was low, indicating a reduction in economic operation, high financial risk, potentially resulting in loss of solvency and bankruptcy.
Decision to withdrawal to re-structure the investment porfolio
On the basis of analysis of financial statement and financial ratios of Vinaconex Corporation during the period from 2008 to 2012, it is indicated that the financial performance of the Corporation has significantly changed. Despite the Corporation developed stably during the initial stage, huge losses have been witnessed and recorded during the recent 2 years. It can be acknowledge clearly that Vinaconex Corporation may further integrates themselves into this “marsh”
FUTURE DEVELOPMENT ORIENTATION FOR VINAVONEX CORPORATION
- VCG Is a reputable agency in construction and real estate sector
- VCG has many member agencies operating in support sectors for the main business sector
- VCG is the first State-owned enterprise to pilot to privatize which has been succeeded
- VCG has dynamic, intelligent, high-skilled, enthusiastic staff
- Take sufficient care to technological science.
- Determine re-structure the organization after privatization
- VCG has a fairy large scale and operate in a number of different business fields
- The projects performed by the Corporation usually have long deployment time
- Re-structuring procedures have not been implemented as planned due to a lot of objective reasons and subjective reasons
- Suffer pressure in capital; difficulties in paying annual dividend that projects are being deployed.
- Solutions to manage, operate, control debts, exploit cash flow sufficiently is limited
- Management of investment categories is weak
- Over the difficulties in short term, medium term and long term, demand on construction and real estate remains very high for a developing country like Vietnam
- After privatization, the Joint Stock Corporation can increase equity more easily through issuance of shares and bonds to the public to create the capital source for implementation of major scale projects in the future.
- World economy has signs of recovery will open up the opportunities for foreign investors to find (back) cooperation chances with Vietnam
- Some international enterprises have deployed the projects in the interest of VINACONEX
- World is witnessing unexpected changes and fluctuations in economy and political situations
- Changes in macro-policies of the State in association with construction and real estate business sectors
- Unstable gold and foreign currency markets will have an influence to foreign currency loan potential of VINACONEX
- Some M&A affairs in the banking sector may influence loan potential of VINACONEX
- Increased risk reserve requirement from audit agency for some investment porfolios.
- Some member agencies of VINACONEX have not performed as well as expected will be listed in the withdrawal list of the Corporation. This is breaking
the initial re-structuring model
PROJECT 1: INFRASTRUCTURE FIELD
The name of project: Investment and Construction Thanh Hoa – Quang Binh Highway
Total Investment: approximate 163 Million Dollar
Investor Company: Vietnam Construction and Import-Export Joint Stock Corporation
Factors Analysis for Investment project
Financial benefits and
PROJECT 2: CONTRUCTION TRADE
AND SERVICES FIELD
Project: Paradise Village Resort and Spa
Scheme Company: VINACONEX R&D and Group 70/Pacmar Corporation (United State of America)
Location: "Bai Dai" Beach, Van Don District
Total investment capital: 150 billion USD
Resonable Factor For Project Investment Decision
1. Objective elements
The ancient and rich of historical land.
Focusing on developing Van Don to become an international economic zone.
2. Financial Assessment:
- Total Investment: $150 million
- Opportunity cost: $22.452.000
- Lifetime of investment: 15 years
- Tax Credit: 15%
- Expected Revenue in first year: $ 25 million
- Tax rate on Income: 15$
- Var. Expenses as % of Revenue: 35%
- Initial Investment in Working Capital: $15 million
- Salvage Value at the end of project: $50 million
- Slavage fraction at end: 100%
Planned initial investment is about 150,000,000 USD with calculated discount rate used is approximately 11.36%. According to accounted result, NPV is strong positive with 290,811,213 USD. It means that it’s potential project to invest effectively.
IRR is nearly 12.18% bigger than discount rate used about 0.82%. It induces that the return on the project is higher than the opportunity cost of capital.
ROC is calculated about 22,64%
This Project promises to bring significant Income for VINACONEX
Risk Factors of investment
- Financing Dicisions
- The first one is risk in construction
- Cost of renting land
- The position of project compare to other skycraper
- Qualification of resort
On September 27, 1988: Oversea Services and Construction Company, the predecessor of Vietnam Construction and Import-Export Joint Stock Corporation was established
Micro - Environment
2. Projects investment and implementation status:
Projects concentrate on 2 high proportion and profitable fields:
Construction activity: Splendora; Cho Mo trade center; Tourism Complex Gia Cat;....
Real estate activity: Lot N05 Trung Hoa, Nhan Chinh; Urban area Cai Gia; ...
THANK YOU FOR LISTENING !
1. The Characteristics of Business Activity
TRANG TIEN PLAZA
CAT BA AMATINA RESORT