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Transcript of Vinamilk
European public debts fall deeply into the tumble. In Vietnam GDP Growth: 4.73%
Industrial Output: 4.36% lower than GDP Growth.
September's CPI increased by 2.2%
Pessimistic context toward consumer goods firms. Industry Analysis Increasing demand
Low technology Customers Various types of customers.
Domestic milk consumption has risen to 40% in 2011.
Product orientation: Customers prefer foreign, high quality products. Suppliers In Moc Chau & Ba Vi only.
TH True Milk has giant farm with 45000 imported cows.
The price of domestic & imported milk has risen to 18% Competitors Dairy is not a traditional industry in Vietnam
Foreign firms: Abbott, Mead Johnson, Knapen, etc
New entrant: TH True Milk Labor Lack of management experience.
Poor collecting system, lack of preservation, restoring equipments.
Inconsistent policy. The Case of Vinamilk Overview Background Vinamilk is the leading dairy producer in Vietnam.
It is selected as "Famous Brand"
The company has developed the widest distribution network in Vietnam.
Products portfolio: milk and milk powder, yoghurt and drinking yoghurt, cheese, etc. A Glance At The Share (Ticker: VNM) Overall trend of price: go up
2010 - 2011: gradual increase
2012: price impressively climbed up
On 14 November 2012: 132000VND/share
Vinamilk still has a stable and high return stock price Profitability Asset Management Trend Generally decrease What the ratios tell The company’s ability to use its asset to promote sales has reduced.
Ineffective inventory management and poor sales.
Vinamlik does not meet timely collection of imparted credit. Liquidity Comparison among industries Consumer goods firms have the highest liquidity ratios. Current ratio Current ratio of Vinamilk is high.
Inventories cover for about 40% of its current assets => fairly typical. Quick ratio Vinamilk’s quick ratio is significantly lower than the industry’s. Reformulated
Balance Sheet Capitalization leverage and financial leverage FLEV decreases & NOA/CSE increases over the 3 years => Vinamilk has concentrated more on its main industry.
The company is reducing its financial assets holding. Operating liability leverage Downward trend.
The firm reduces using short-term debts in its operation. Return on net operating asset Downward trend.
Big change in NOA.
By reducing debts in operating and invest more in fixed assets and other operating assets, RNOA of VNM has decreased. Generally downward trend =>Vinamilk has problems in creating profits ??? The Du Pont identity Asset & equity increase significantly.
Various costs increased in 2011 => profit margin went down.
Sales still increased over 3 periods, despite economics downturn.
Profit margin in 2012 is good
=> The firm has stable development. Conclusion Vinamilk has stable & highly returned stocks.
Profitability is still affected by the whole economy situation.
High price (>120000VND/share) =>investors tend to buy more high-quality and safe stocks to protect their investments. However, Vinamilk is still a good stock to invest in Vietnam stock market References "Financial Statement Analysis and Security Valuation", third edition - Stephen H. Penman.
"Fundamentals of Corporate Finance", ninth edition - Ross, Westerfield, Jordan.
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