University of Economics – University of Da Nang
Teacher:
Class: 45K01.2
Group MMM:
Nguyễn Thị Minh Hà
Phan Thị Kim Hiếu
Đặng Trần Anh Thư
Bạch Ngọc Bảo Trân
A. THE OVERVIEW OF VIETNAM DAIRY PRODUCTS JOINT STOCK
COMPANY (VINAMILK)
I. Vinamilk – Company background and core businesses:
I.1.
Company background and the process of development:
About the company’s mission and vision (According to the Annual Report 2019):
- Mission: “To deliver the valuable nutrition to community with our respect, love and
responsibility.”
- Vision: “To become a world grade brand in food and beverage industry, where people
put all their trust in nutrientand health products.”
According to the official website of Nikkei
Asia – Asia's No.1 Economic Magazine, Vinamilk,
also known by the name Vietnam Dairy Product,
“is the largest food processor and deals in a wide
variety of dairy products”1. In the year 2020,
considering the milk market alone, Vinamilk
represented 43.3% of the total Vietnam’s milk
Image I.1.1. The chart of Vietnam's milk markets
consumption.
shares in 2020
Vinamilk increases not only in the size of the
company, but also the value of Vinamilk’s brand. In 2020, inspite of suffering from the
major Vietnam economic crisis due to the COVID-19 pandemic, the value’s brand of
Vinamilk was continually increasing, higher than $200 million compared to 2019, reaching
over $2.4 billion. No other nutrion companies in Vietnam but Vinamilk was in the ranking
of the “50 best listed companies” and “50 most valuable brands” in 2020 – the two most
prestigious rankings of Forbes Vietnam, based on the global Forbes’ criteria. The presence
in both rankings is the strengest evidence for Vinamilk's leading position in brand name
and business performance2.
1
https://asia.nikkei.com/Companies/Vietnam-Dairy-Products-Corp
2
https://vietnamnews.vn/economy/770843/vinamilk-brand-valued-at-24-billion-forbes-vietnam.html
Chart I.1.1. The Vinamilk brand's value from 2016 to 2020
To obtain today's achievements, Vinamilk has undergone a 45-year journey of
innovation and development3:
- 1976: Vinamilk was established on August 20, on the
basis of three dairy factories from the old regime:
+ Thong Nhat Dairy Factory (formerly known as
Foremost factory).
+ Truong Tho Dairy Factory (formerly known as
Cosuvina factory).
+ Dielac Powdered Milk Factory (formerly known as Image I.1.2. Vinamilk firstly was established
in 1976
Nestlé factory (Swiss);
- 1978: Renamed as The United Enterprises of Milk Coffee and Cookies and Candies I;
- 1989: Dielac Powdered Milk Factory came into operation;
- 1991: The "white revolution" started the development of fresh
milk material zone. For
Image I.1.3. Vinamilk firstly was established
the first time, UHT milk products and yoghurt were launched in the Vietnam
in 1976 market;
- March 1992: The United Enterprises of Milk Coffee Cookies and Candies I was
formally renamed as Vietnam Dairy Company;
- 1994: Built the Hanoi Dairy Factory;
- 2003: Built the Can Tho Dairy Factory;
- November 2003: Changed to the joint stock company
and officially renamed as Vietnam Dairy Products Joint
Stock Company (Vinamilk);
Image I.1.4. Hanoi Dairy Factory
- 2004: Vinamilk inaugurated Nghe An Dairy Factory.
- January 19, 2006: Vinamilk's stock was listed on HOSE;
- September 2010: Vinamilk was the fisrt Vietnamese
Image I.1.5. Hanoi Dairy Factory
company honoured by Forbes Asia for its "Top 200 Best
Under A Million" in Asia
- June 2012: Da Nang Dairy Factory came into operation;
- 2013: Vinamilk constructed dairy farm in Ha Tinh
province.
- 2015:
Image I.1.6. The Inauguration Ceremony of
Angkormilk dairy factory in Cambodia
3
https://www.vcbs.com.vn/en/Research/Company?stocksymbol=VNM
Image I.1.7. The Inauguration Ceremony of
Angkormilk dairy factory in Cambodia
-
-
-
-
+ Inauguration of Angkormilk dairy factory which was invested by Vinamilk – the
first and one-of-its-kind dairy plant in Cambodia as of this moment
+ Vinamilk acquired 100% stake in Driftwood Dairy Holding and officially
introduced condensed milk and creamer under Driftwood brandname to US market.
2016: Contributed capital as 18% of APIS Joint Stock Company to expand and
develop Vinamilk's value chains of products and established a representative office
in Thailand;
2017: Inauguration of the first European Organic
dairy farm in Dalat, Vietnam;
2018: Vinamilk is in the Top 200 companies
with the best revenue of over 1 billion Asia
Pacific (Best over a billion), increase the charter
capital to 17,416,877,930,000 VND;
2019: Acquired 75% shares of GTNFoods Joint
Stock Company, through which VNM can
participate in management and operation of Moc
Chau Milk Joint Stock Company;
October 26, 2020: Increased the charter capital
to 20,899,554,450,000 VND; standed still in the
Image I.1.8. Vinamilk's 2020 triumphs
top of Vietnam dairy product company
I.2. Core businesses:
Image I.1.9. Vinamilk's 2020 triumphs
The principal activities of the Vinamilk are to manufacturing, marketing, wholesale trading
and retail distribution of dairy products, such as condensed milk, powdered milk, fresh milk,
soya milk, yogurts, ice-cream, cheese, fruit juice, coffee, non-alcoholic beverages, and other
products derived from milk. The Company also provides packaging and logistics services,
beside technical support to farming and breeding processes.
Vinamilk's condensed milk and ice-cream
Vinamilk's energy drinks and beverages
Vinamilk's Baby creal products
Vinamilk's drinking yoghurt
According to VNS, for attesting its leadning role in the domestic market, Vinamilk has
taken steps to build a foothold for Vietnam’s dairy brand in the world market by trading
promotion activities and exports in many countries such as China, South Korea, Japan and
Southeast Asian nations. Vinamilk has exported products to 54 countries and territories with
a total turnover of more than $2.2 billion4.
Vinamilk was rewarded for Asian Export Awards 2019. Moreover, Vinamilk was the only
Vietnamese dairy company to receive the Asian Export Awards 2019 – in the category of
large enterprises. More specifically, Vinamilk’s condensed milk product was honored by the
Organizing Committee in the category of Processed Foods. “This is a big leap of Vinamilk in
bringing “Vietnamese milk” to the global market”5.
II. Dairy product processing industry in Viet Nam:
II.1. The theory of Competitive environment:
According to “Principles of marketing”, 17th edition by Philip Kotler, a competitive
environment is where different businesses compete with each other by using various
marketing channels, promotional strategies, pricing methods, etc. Companies should follow
the regulations within this system. It includes four types of environments, or can also be
known as 4 types of markets:
● Pure competition: the market consists of many buyers and sellers trading in a uniform
commodity, no single buyer or seller has much effect on the going market price.
● Monopolistic competition: there are many manufacturers but they produce different
products although they might serve the same purpose.
● Oligopolistic competition: In this market model, there’s a small number of businesses,
usually two or more. It’s considered stable as companies don't compete but collude to
obtain high market returns. Firms set and keep prices high together or under the
leadership of one particular company
● Pure monopoly: the market is dominated by one seller. This manufacturer doesn’t face
any competition and the product doesn’t have any substitutes
→ Given the characteristics of the dairy product industry in Vietnam, it can be classified
as a monopolistic competition market, in which companies try to develop differentiated offers
for different customer segments and, in addition to price, freely use branding, advertising, and
personal selling to differentiate their offers.
II.2. The position of food processing industry, especially dairy product processing industry
in the Vietnamese economy:
a) Overview:
In 1920, the French introduced foreign dairy cows to Vietnam and that was the first
time the locals learned about cow milk. “Longevity and Dutch Lady” products were initially
4
https://vietnamnews.vn/economy/770843/vinamilk-brand-valued-at-24-billion-forbes-vietnam.html
https://www.vinamilk.com.vn/static/uploads/bc_thuong_nien/1585291614e5df6f54f1b460c71648e3b3974c13d41721e
d54aaef4e256def7956f8cc7d38.pdf
5
traded in Saigon in 1924, making them the pioneer
in the long-standing dairy business. It was the
foundation for the Vietnamese dairy business’
growth.
An Euromonitor report in 2020 pointed out
that the total size of Vietnam's dairy market in 2019
has reached over 60,000 billion VND.
In 2020, many industries, particularly FastMoving Consumer Goods (FMCG) ones, have Chart: Size of Vietnam dairy market
struggled due to COVID-19 pandemic. Consumers cut back on a variety of expenses as a
result of increased employment and a lower consumer’s confidence index. The dairy business,
on the other hand, only suffered a minor loss in market value, according to SSI Research.
Milk consumption accounts for 12 percent of FMCG consumption in Vietnam in the first half
of 2020, pointed out by Nielsen data, which is unchanged from 20196.
b) Three major categories of dairy products:
Drinking milk, cheese, and yogurt are the three categories of dairy products which may be
divided into. Fluid milk, flavored milk drinks, flavored powder drinks, and powder milk are all
included in the "drinking milk" category. Vietnam's drinking milk sales were expected to rise from
$1.2 billion to $2.3 billion between 2013 and 2018.
The category "Cheese" includes both processed and natural
cheese (only use natural ingredients and let the cheese naturally age).
Cheese consumption is very low when compared to "drinking milk"
(sale value of $51 million in 2013, anticipated to be $98 million in
2018).
Drinking Yogurt and Spoonable Yogurt are both included in
the category "Yogurt." The value of yogurt sales in Vietnam in 2013
was $333 million.. TH Food Chains JSC and International Dairy JSC are two more well-known
players (IDP)7.
c) Consumers’ purchasing behaviors:
Vietnamese consumers have raised their purchases of dairy products gradually because
of their high income and nutritional knowledge awareness.
Chart Reasons to consume dairy product
6
http://b-company.jp/dairy-industry-of-vietnam-chances-for-foreign-players/
7http://bcompany.jp/dairyproductsen/?fbclid=IwAR3fsDzYidIMBldmHcaimutz1S3f4AQ95k8X3A9swpfBceIaI7TUeWOjoKc
The results of BEAN Study's "Reasons to consume dairy products" survey in 11/2020,
which included 399 respondents, demonstrates that dairy products play a critical role in
Vietnamese life, with 100% of respondents stating that they have consumed milk and other
dairy products in the previous three months. Milk was consumed on a daily basis by 64% of
respondents, while other dairy products were consumed on a weekly basis by 55% of
respondents. As the Covid pandemic still exists, people begin to look for products that will
help them stay healthy, and milk has always been an excellent immune system booster.
Demand for dairy goods rose during the COVID-19 pandemic, especially yogurt, according
to Ho Chi Minh Securities Corporation. In addition to people’s habits and the convenience of
the product , 87.5% of BEAN Survey respondents picked dairy products because "it's good
for health," 42% for "nutritious," and 32% for "safe to use."8
It is predicted that in 2050, each Vietnamese will consume 34 kilos of milk and related
products per year, resulting in a market size of 3,800 tons of dairy goods when multiplied by
the entire population of 112 million people.9
II.3. The position of Vinamilk in Vietnam:
According to Nielsen Vietnam, Vinamilk has
retained the No. 1 position in the Vietnamese liquid
milk market for three years in a row, while also
leading in other important sectors such as baby
powder, sipping yogurt, and sweetened condensed Chart: Top 15 milk brand in terms of awareness and usage
milk. Vinamilk has a network of 13 high-end
manufacturing facilities around the country which
meet the strictest international requirements and produce the main product lines of the dairy
industry. There are two main features to explain why Vinamilk dominates the dairy industry
in Vietnam.10
The first feature is that Vinamilk has emphasized on
technology and developed large-scale and full range of
products. The system of 13 factories help Vinamilk in the
development of more than 250 different dairy products
belonging to 13 different categories, such as condensed
milk, liquid milk, powdered milk, yogurt, ice cream and soft
drinks. Vietnam Vinamilk Dairy Factory and Vietnam
Powdered Milk Factory are two well-known names of
Vinamilk "super factory". The Vietnam Vinamilk Dairy Factory, commonly known as "mega
factories," is capable of producing 800 million litres of milk per year (about 2.2 million litres
per day). Meanwhile, Vinamilk's Vietnam Powdered Milk Factory has a daily capacity of
more than 160 tons, allowing it to satisfy the needs of domestic and export market demands.
11
8
9
http://b-company.jp/dairy-industry-of-vietnam-chances-for-foreign-players/
http://b-company.jp/dairy-products-en/?fbclid=IwAR3fsDzYidIMBldmHcaimutz1S3f4AQ95k8X3A9swpfBceIaI7TUeWOjoKc
10
https://vietnamnews.vn/brand-info/943612/a-network-of-13-modern-dairy-factories-%E2%80%93-decisive-factorfor-vinamilk-to-lead-dairy-market-in-vietnam.html
11
https://vietnamnews.vn/brand-info/943612/a-network-of-13-modern-dairy-factories-%E2%80%93-decisive-factorfor-vinamilk-to-lead-dairy-market-in-vietnam.html
The fourth industrial revolution is the second feature
that has driven Vinamilk to the forefront. As a result of this
revolution, all Vinamilk factories now have sophisticated
lines to make a variety of products such as yogurt, drinking
yogurt, ice cream, fruit juice and condensed milk. Tien Son
Dairy Factory in the north, Da Nang Dairy Factory in the
center coastal area, and Can Tho Dairy Factory in the
southwest are among those factories. The standout feature
of Vinamilk's factories, however, is not only their capacity and efficiency, but also the way
4.0 technology is applied to meet many standards such as ISO 9001, FSSC 22000, and ISO
17025, as well as particularly special certifications including Halal, European Organic, FDA
(US) and Chinese standards, serving the domestic markets and preparing for worldwide
business growth.12
In conclusion, Vinamilk's system of 13 factories linked to 13 dairy farms around
Vietnam, as well as its distribution network, has given the company a significant advantage
in the supply chain and has been a deciding element in Vinamilk's dominance of the
Vietnamese dairy market.
II.4. Key competitors of Vinamilk:
According to Statista's chart of “Market share of leading dairy and cheese product brands
in Vietnam in 2019”, Vinamilk has a very large market share compared to other dairy firms,
accounting for over half of the dairy market. Despite being impacted by the Covid-19
pandemic, which resulted in a minor loss in market share, Vinamilk maintained its position
as Vietnam's market leader.
However, according to the Development Plan of Vietnam's milk processing industry in
2020, Vietnam's dairy industry only meets about 35% of domestic demand, so it is still an
industry with great potential for development. The liquid milk market is attended by a series
of large enterprises and these businesses are constantly launching new products to redistribute
the market share.13
FrieslandCampina, whose major brand in Vietnam is
Dutch Lady, is in second position on the list. Despite having
a market share of nearly half that of Vinamilk, this brand has
established itself as a player in Vietnam's dairy sector, with
18.5% of the market.
In the meantime, TH Food Chain JSC (TH) has emerged
as a new but powerful rival. Since its first establishment in
2009, TH has grown to include 190 official locations throughout the globe 14. TH has taken
numerous developmental stages as a result of its focus on new product lines. Only 5 years
after the initial product introduction, TH now controls the largest dairy herd in Vietnam, with
12
https://vietnamnews.vn/brand-info/943612/a-network-of-13-modern-dairy-factories-%E2%80%93-decisive-factorfor-vinamilk-to-lead-dairy-market-in-vietnam.html
13
https://bnews.vn/trien-vong-cho-nganh-sua-viet-nam/142632.html
14http://bcompany.jp/dairyproductsen/?fbclid=IwAR3fsDzYidIMBldmHcaimutz1S3f4AQ95k8X3A9swpfBceIaI7TUeWOjoKc
a size of up to 45,000 cows. With up to 8,100 hectares of farmland located in Nghe An. Other
well-known players are Nestlé, International Dairy JSC (IDP),...15
The dairy market in Vietnam is expected to be highly dynamic in the future years, with
all actively changing and innovating stakeholders. Consumers will increase their habit of
consuming dairy products. This is an excellent opportunity for dairy companies to gain a
market share in Vietnam's dairy industry. The number of vendors is increasing as more
international companies (New Zealand, Australia, Japan, and so on) enter the market.
Distribution channels have been significantly improved, particularly with the growth of ecommerce.16
In summary, the greater opportunity will belong to firms which have been fully equipped
with potential resources to take advantage of opportunities. However, pioneering businesses,
such as Vinamilk, will have an advantage over competitors in the industry as Vinamilk owns
a system of international-standard dairy plants and launches high-end product lines which
meet market demand. Furthermore, in order to expand its market, Vinamilk must investigate
and assess their competitors in order to develop and implement the most effective marketing
strategies for increasing its market share.
III. Identify Vinamilk’s strategies to generate returns in the context of economic and
industry conditions:
III.1. Focusing on the domestic market of Viet Nam:
As mentioned above, Vinamilk has made various remarkable achievements during its 45
years of adventure. In order to maintain these outstanding performances and continue to
develop its brand, Vinamilk has employed several tactics to generate more and more returns.
This company started with 3 factories which was developed into milk production in 1976:
Thong Nhat, Truong Tho, Dielac. At that time, the economy of Viet Nam faced many
difficulties, equipment and technology were old, and there was no source of foreign currency
to import raw materials, so enterprises were completely passive in production. “Factories run
less than 1/20 of their capacity, producing only a few thousand cans of milk per month”17.
Right from this very beginning, Vinamilk has focused on building and developing a product
distribution system.
In spite of those difficulties, Vinamilk’s leaders actively entered into joint ventures with
trading enterprises with strong foreign currencies, like Seaprodex. Simultaneously, the
company launched Ong Tho condensed milk brand. This is a high-end product line, sold at
Cosevina and Imexco stores to export on the spot for foreign currency to import raw materials.
As a result, from the initial few hundred million VND, the company raised its own capital to
20 billion VND in 1987, increasing output and revenue exceeding the plan18.
15
https://yeuladay.com/doi-thu-canh-tranh-cua-vinamilk/
16http://b-company.jp/dairy-products-en/?fbclid=IwAR3fsDzYidIMBldmHcaimutz1S3f4AQ95k8X3A9swpfBceIaI7TUeWOjoKc
17
18
http://doanhnong.vn/hanh-trinh-40-nam-cua-nhung-lon-sua-dac-nhan-hieu-ong-tho/
https://www.vinamilk.com.vn/vi/tin-tuc-su-kien/1272/vinamilk-40-nam-vuon-cao-viet-nam
Vinamilk’s
Facility
Milk
In addition to this, Vinamilk has kept abreast of
Viet Nam domestic market by focusing on product
diversification. In 2013, there are 2 super factories
with a total investment of nearly 5000 billion VND
in Binh Duong with the capacity of 800 million liters
of milk annually, according to Vinamilk. Besides
this, there are many other factories producing
yogurt, cheese, ice cream, etc on account of
imported cows from Australia, the U.S and New Zealand. At the moment, Vinamilk has more
than 200 products that satisfy our domestic consumers’ needs.
The company has also cooperated with the National Institute of Nutrition, which has helped
consumers have more belief in the products produced by Vinamilk. In addition, the
application of an appropriate pricing strategy helps to increase the competitiveness of
products. As a result, Vinamilk’s dominated the domestic market of food processing in Viet
Nam, especially dairy products section – with consolidated net revenue of nearly 60.000
billion VND in 2021.
Vinamilk’s Annual report 2020
III.2. Reaching out to the world:
In 1997, Vinamilk exported its first batch of Dielac powdered milk products to the Middle
East. In just a short time, consumers regconized this product and the name Dielac was wellknown that it became a generic term for all powdered milk products on the market 19.
According to Vinamilk’s CEO Mai Kieu Lien, at that time, no one thought that Viet Nam
could export infant formula because Viet Nam used to have to import powdered milk. It was
the first successful step for the company to penetrate into other foreign markets.
19
http://bizhub.vn/corporate-news/prestige-an-intangible-asset-promoting-vinamilks-exports_318528.html
With the motto of taking quality - price service as success factors in international
business, Vinamilk spends many years
researching the market and consumption
habits to improve the quality in each product,
maintaining the trust of partners and
customers. For instance, in the Middle East
and Africa region, Vinamilk develops more
nutritional powder products flavored with
date palms, which are very popular and loved
by people in this region.
In 2010, Vinamilk invested in Miraka
Limited (New Zealand) with 19,3% capital – this was the first international M&A business
of the milk industry in Viet Nam. At the present, Vinamilk has 5 subsidiaries and many joint
ventures in the U.S, Australia, Laos, Campuchia, etc.
By the year of 2019, foreign markets witnessed the rise of products exported from
Vinamilk. It successfully exported Organic fresh milk products to Singapore, a market that
was considered as “the most difficult market” in Southeast Asia in terms of import standards,
regulations and tastes of consumers20. Despite being operated under strict requirements
complying with Covid-19 epidemic prevention and social isolation regulations, Vinamilk was
able to sign an USD 20 million milk export contract at Gulfood Dubai expo in 202021.
Therefore, this was an opportunity for Vinamilk to increase export sales in China,
simultaneously taking Vietnam to the top 5 largest dairy exporters of condensed milk to China
in volume terms.
As the leading dairy company in terms of market
share in Viet Nam, Vinamilk has continuously invested
in expanding international business activities to boost
growth. Up to now, Vinamilk has exported products to 53
countries and territories. With many outstanding
achievements on international business, Vinamilk won
the Asian Export Award in 2019. Its revenue from export
activities increases steadily and it is looking forward to
growing more in the future.
III.3. Challenges in the Covid-19 pandemic:
According to the General Statistics Office, GDP of
2020 hit a growth rate of 2.91% despite being the lowest growth rate in the period 2011-2020,
in the context of Covid-19 pandemic negatively affecting all socio-economic fields, this is a
great success of Vietnam as it was in the world’s top highest growth rates. Moreover, the
FMCG sector recorded a 7% decrease in value and a 6% decrease in the dairy industry alone
(AC Nielsen). Although there were lots of complex problems for Vinamilk to solve in this
period, this company still found new ways to adapt and develop.
20
https://vietnamnews.vn/brandinfo/908607/vinamilk-exports-fresh-milk-with-birds-net-to-singapore.html
https://www.vinamilk.com.vn/en/news-events/2069/overcoming-covid-19-pandemic-vinamilk-exports-sweetendcondensed-milk-to-china
21
Vinamilk took advantage of opportunities in export markets, as well as quickly launched
in areas with broken supply chains. In addition, the policy of "shoulder to shoulder" with
partners and share difficulties, thereby, Vinamilk's export sales and new orders continuously
increased in areas affected by Covid-19. Vinamilk has completed the system of risk
calculation before purchasing raw materials for new products. In addition, traceability and
quality assessment of raw materials are vastly improved through date-of-manufacture control
at suppliers. Building sustainable partnerships with suppliers, the company has successfully
reached agreements with most suppliers on improving payment procedures.
Vinamilk also takes part in a number of social activities to promote its sustainability and
responsibility. Despite the hard conditions during the pandemic, Vinamilk continues to
support Vietnamese Government and the society to overcome problems together:

“Stand tall Viet Nam” Milk Fund donated milk
directly to children across the country.

"One million plants for Viet Nam" Fund gained
Global CSR Award and Top 10 Best Environmental
Activities in 2020.

The School Dairy Program brings optimal
nutrition for the development of school-age children.

Supporting COVID-19 relief and prevention
measures by the Government and the community by
donating a total of nearly 40 billion VND to front-line social
workers. In addition, 12.5 billion VND was dedicated to
nutritional care for disadvantaged children affected by
COVID-19.
Moreover, Vinamilk has put an effort to do research, upgrade latest products’ packaging,
etc as well as advertise its projects on popular multiform channels: TV, social media,
supermarkets, convenience stores, etc. Vinamilk's brand value has been highly valued by
official organisations for many consecutive years. In 2020, Forbes Vietnam announced the
brand value of Vinamilk at US$2.4 billion, an increase of $200 million year-on-year22.
IV. Vinamilk’s key assets and liabilities: The company has three key assets and liabilities:
farms, factories and retail stores.
IV.1. Farms:
The Dairy Development Division (DDD) of VINAMILK
has the fuction of mangaing and developing the raw-milk
materials that satisfy the strict standard of Vietnam as well as
Global for supplying to the firm’s dairy production. Currently,
VINAMILK is managing 4 subsidiary companies, including
Vietnam Dairy Cow One-Member Company Limited
("Vietnam Dairy Cow") (holding 100% of charter capital),
Thong Nhat Thanh Hoa Dairy Cow One-Member Company
22
https://vietnamnews.vn/economy/816138/vinamilk-vows-to-continue-developing-national-brand-on-worldmarket.html
Limited ("Thong Nhat Thanh Hoa Dairy Cow ") (holding 100% of charter capital), Lao-Jagro
evelopment XiengKhouang Company Limited ("Lao-Jagro") (holding 80.29% of charter
capital) and Moc Chau Dairy Cattle Breeding JSC ("Moc Chau Milk") (indirect holding 51%
of voting rights); with 13 farms are operating and total cow heads of 13200023.
a) Vietnam Dairy Cow One-Member Company Limited (VINACOW):
Vietnam Dairy Cow One-Member Company Limited
(VINACOW) is one of two subsidiary companies under
the management of VINAMILK. Within more than ten
years of setting up and development, the company has
provided a system of professional dairy farms with global
standard, high quality products of raw materials for
VINAMILK’s production.
Established in 2006, with the charter capital of 1,820
A VINACOW farm
billion VND, VINACOW now has 10 operating farms, from
the first dairy farm in Tuyen Quang to the newest farm, Tay Ninh Dairy Resort. Moreover,
the Organic farm has been qualified with EU organic standards by Control Union
Certifications (Netherland) and the Tay Ninh Dairy Resort has been awarded as “The biggest
single dairy farm in Vietnam”.
Tay Ninh Dairy Resort:
Tay Ninh Dairy Resort is the newest dairy farm
under the management of VINACOW. Officially
established in March 27th 2019, the farm was
included in the Global G.A.P Standard Farm
System. At the Inauguration Ceremony, the farm
was awarded as The biggest single dairy farm
The Inauguration Ceremony of Tay Ninh Dairy Resort
in Vietnam by DeLaval (Sweeden).
With a total investment of over 1.200 billion
VND (equivalent to 50 million USD), the farm is built with a total area of 685 ha, a breeding
scale of over 8.000 cows and calves. To achieve breeding efficiency based on the Global
G.A.P standard, VINAMILK designs an artificial lake system including 9 lakes and an
automatic cooling system inside the cattle, with an area of 50 ha of grass field and corns,
which creates a suitable living environment for the livestock.
In addition, Tay Ninh Dairy Resort is the volunteer of using technology in the whole
breeding process to ensure cows' and calves' health, which can produce high-quality raw milk
efficiently.
- Managing ration system: Food for the livestock is created using specific formulas.
The information is stored on cloud computing and can be adjusted anytime.
- Managing livestock' health: Each cow has a modern microchip to track its behavior
and health condition using an internal network. The information is sent to the server
so the manager can provide suitable solutions for every cow.
23
Vinamilk annual report 2019
-
Jelly Juno Robot: The robot in charge of stirring the food for cows. It also can play
classical music to boost the eating behavior of the livestock.
Currently, the farm provides 100.000 liters of raw milk every day, equivalent to about
40.000.000 liters of raw milk every year. With the operation of Tay Ninh Dairy Resort, the
total amount of raw milk provides to the firm's dairy production reaches 1 million liters per
day24.
b) Lao - Jagro Development XiengKhouang Company Limited:
Lao – Jargo Company was established in 2015, is a joint-stock company with investors
from Laos and Japan. The main objective is to develop a breeding farm and grow organic
products of Japanese origin on the Xiengkhouang Plateau.
In July 2018, VINAMILK announced that it officially holds a 51% stake in Lao-Jagro
and created a new turning point with the development of the Organic dairy farm complex
project. On May 24th, 2019, VINAMILK officially announced the establishment of Lao Jagro Development XiengKhouang Company Limited and started Phase 1 of the Dairy resort
complex project with a total area of 500 ha and a total breeding scale of 24.000 cows, using
120 million USD as the initial investment. Phase 2 of the project was invested to increase the
number of cows, up to 100.000 cows on a total area of 15.000 – 20.000 ha. The farm also uses
the most modern technology from Japan in the whole breeding process and applies the Global
standard to produce the best raw milk products for the dairy production. 25
IV.2. Factories:
VINAMILK currently has 15 factories in operating, including a factory in Cambodia and
one in the USA, which makes the firm become the biggest dairy production in Vietnam in
2020.
The VINAMILK dairy factories are equipped
with modern dairy production lines implied stateof-the-art technology, completely closed
production process from raw materials to final
products. The operating system is based on Tetra
Plant Master Automation, which is an integration
that allows the entire plant to be connected from
raw materials to completed products. People can
then control every operation in the factory, as well
as monitor and control quality in real time. The
State-of-the-art technology
Tetra Plant Master system also delivers all of the
required data to assist the company improve its production and operations on a constant
basis.26
24
https://www.vinamilk.com.vn/en/improvements-innovation/vietnam-dairy-cow-one-member-company-limited
https://nhandan.vn/chuyen-lam-an/resort-bo-sua-xiengkhouang-366119
26
https://www.vinamilk.com.vn/en/improvement-innovation/new-production-technologies
25
Mega Factory:
Mega Factory
Mega Factory is Vinamilk's 15th milk factory
located in Binh Duong. Initially, the plant will cover a
20 ha area and process 400 million litres of milk each
year. In the second phase, the processing capacity were
raised by 800 million litres by 2015. A 5,000m2
earthquake-resistant and fully automated warehouse is
included in the plant. From the feedstock input through
the end product storage, the flow in the facility is managed by a central computing system.27
IV.3. Retail stores:
a) Domestic market:
At present, VINAMILK has 3 main branches in Ha Noi, Da Nang, Can Tho and one
headquarter in Ho Chi Minh city. The number of "Giấc mơ sữa Việt" stores until 2020 reached
456 stores. The e-commerce channel has also been improved in order to diversify distribution
channels and improve the purchasing experience. Moreover, in the same year, the firm had a
nationwide distribution network of approximately 200 distributors, with over 240,000 points
of sale in traditional channels and 7,800 points of sale in non-traditional channels, which is
continuing to grow.28
b) Foreign markets:
Vinamilk's products are now sold in over 40 countries throughout the world, including
Southeast Asia, the Middle East, Africa, and other regions.29
VINAMILK’s export markets
V. Sources of income:
Like other competitors in the business market, Vinamilk has built up stable capital sources
to maintain and develop the company over the years.
V.1. Sales revenues:
As mentioned above, Vinamilk has a wide variety of dairy products and they create steady
cash flow for the company. Vinamilk uses a part of this to invest in infrastructure and
technology. According to Vinamilk's 2020 report, this enterprise has completed the plan to
invest in machinery and equipment in the period 2017-2021. The production capacity of key
product lines has increased by 60%-80% compared to 2016 thanks to the continuous
expansion of scale, installation of more lines and increased productivity of the system of 13
27
https://www.foodprocessing-technology.com/projects/vinamilk-vietnam-milk-facility-binh-duong-province/
VINAMILK’s annual report 2020
29
https://www.vinamilk.com.vn/en/distribution/export-market
28
factories. Vinamilk also applies 4.0 technology, which includes many standards such as ISO
9001, FSSC 22000, ISO 17025. The biggest factories owned by Vinamilk are estimated with
the value of 4.000 billion VND30.
V.2. Stocks:
In 2003, the company changed to a joint stock company and officially changed its name
to Vietnam Dairy Products Joint Stock Company. After that, a big event appeared in 2006:
Vinamilk's shares were officially traded on the floor HOSE (stock code VNM). By creating a
strong brand image in the domestic market, its shares always attract lots of investors, even
from foreign ones. Among the shareholders are the enterprises that hold largest parts of the
structure. The top 5 in 2020 can be listed in the picture below:
Top 5 Shareholders of Vinamilk in 2020
The meeting of shareholders will be hold anually to summarize the overall activities and
decide new council for the future. The dividend will be divided for the shareholders according
to profit after tax. The above total dividend of the fiscal year 2020 is VND 7,871 billion VND,
equivalent to 4,500 VND/share and the dividend rate is 71% of profit after tax distributed to
shareholders of the parent company. This dividend level demonstrates the company's
commitment to investors and shareholders in maintaining a high cash dividend policy31.
V.3. Investments:
Vinamilk as well invest in subsidiaries in other countries like: Angkormilk in Cambodia,
Driftwood in the U.S, Vinamilk Europe Spótka Z Organiczona Odpowiedzialnoscia in
Poland, etc. The major purpose is to import milk as well as promote and distribute milk and
dairy products in the local markets.
Vinamilk also takes part in the cooperation with other enterprises. In 2020, Kido Group –
a Vietnamese packaged food producer – officially announced a new resolution approving the
establishment of a joint venture with Vinamilk. The total initial investment of the joint venture
is estimated to be around 400 billion VND ($17.4 million), with Kido holding 49% and
Vinamilk 51%.
30
https://nguoichannuoi.vn/vinamilk-dau-tu-sieu-nha-may-sua-hien-dai-nhat-the-gioi-nd2897.html
https://nhandan.vn/chungkhoan/dai-hoi-co-dong-vinamilk-2021-luon-kiem-tim-co-hoi-dau-tu-trong-va-ngoai-nuoc643769/
31
B. CALCULATING FINANCIAL RATIOS RELATED TO VINAMILK
I. Liquidity ratio:
I.1. Current ratio:
- The current ratio is a liquidity ratio that assesses a company's capacity to pay short-term or
one-year obligations. It explains to investors and analysts how a firm might use current assets
on its balance sheet to pay off current debt and other obligations.
- The current ratio formula: Current ratio =
Year
Current assets
(billion VND)
Current liabilities
(billion VND)
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕𝒔
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Current ratio
(times)
2016
18,674
6,457
2.89
2017
20,307
10,196
1.99
2018
20,560
10,640
1.93
2019
24,722
14,969
1.65
2020
29,666
14,785
2.01
Meaning of Current ratio
In 2016, VINAMILK has 2.89
billion VND in current asset for
every 1 billion VND in current
liabilities.
In 2017, VINAMILK has 1.99
billion VND in current asset for
every 1 billion VND in current
liabilities.
In 2018, VINAMILK has 1.93
billion VND in current asset for
every 1 billion VND in current
liabilities.
In 2019, VINAMILK has 1.65
billion VND in current asset for
every 1 billion VND in current
liabilities.
In 2020, VINAMILK has 2.01
billion VND in current asset for
every 1 billion VND in current
liabilities.
Figure 1 VINAMILK's current ratio in 2016 – 2020
VINAMILK'S CURRENT RATIO IN 2016 - 2020
35 000
3,50
30 000
3,00
25 000
2,50
20 000
2,00
15 000
1,50
10 000
1,00
5 000
0,50
0
0,00
2016
2017
Current assets (billion VND)
2018
2019
2020
Current liabilities (billion VND)
Current ratio (times)
A corporation with a current ratio of less than 1 may not have enough cash on hand to
cover all of its short-term commitments if they were all due at the same time, but a current
ratio larger than 1 suggests that the company has enough cash to stay solvent in the short term.
As can be seen on the table and the chart, both current assets and current liabilities share
the same upward trend over the five – year period. Looking at the current assets, there was an
insignificant change from 2017 to 2018, which the figure only increased a small amount from
20.307 to 20.560, however, it rose steadily til the end of 2020. Same goes with the figure of
the company’s current liabilities but there was only a small difference compared to its current
assets. It was able to notice that the figure had no change at all at the last two years.
On the other hand, although VINAMILK's current ratio in the five years witnesses a
moderate decrease, all of the figures are above 1, which means the company has maintained
its good condition in solving short – term solvency. From 2016 to 2019, the current ratio of
the firm steadily went down, from 2.89 to 1.65. After 3 years of falling, the figure increased
to 2.01 at the end of 2020.
I.2. Quick ratio:
-
The quick ratio is an indicator of a company’s short-term liquidity position and
measures a company’s ability to meet its short-term obligations with its most liquid
assets.
-
The quick ratio formula: Quick ratio =
Current assets
Year
(billion VND)
2016
2017
2018
2019
2020
18,674
20,307
20,560
24,722
29.666
Current liabilities
(billion VND)
6,457
10,196
10,640
14,969
14.785
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕𝒔−𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Inventory
(billion
VND)
4,538
4,041
5,538
4,996
4.953
Quick ratio
(times)
Meaning of Quick ratio
2.19
In 2016, Vinamilk had
2.19 billion VND of
current assets to cover
each 1 billion VND of its
current liabilities.
1.60
In 2017, Vinamilk had
1.60 billion VND of
current assets to cover
each 1 billion VND of its
current liabilities.
1.41
In 2018, Vinamilk had
1.41 billion VND of
current assets to cover
each 1 billion VND of its
current liabilities.
1.32
In 2019, Vinamilk had
1.32 billion VND of
current assets to cover
each 1 billion VND of its
current liabilities.
1,67
In 2020, Vinamilk had
1,67 billion VND of
current assets to cover
each 1 billion VND of its
current liabilities.
Figure 2 VINAMILK's quick ratio in 2016 -2020
VINAMILK'S QUICK RATIO IN 2016 - 2020
35 000
2,50
30 000
2,00
25 000
20 000
1,50
15 000
1,00
10 000
0,50
5 000
0
0,00
2016
2017
2018
2019
2020
Current assets (billion VND)
Current liabilities (billion VND)
Inventory (billion VND)
Quick ratio (times)
Compared with the upward trend of the current assets and current liabilities, the figure of
the firm’s inventory was stable. There was no change at all in the number of the company’s
inventory over 5 years.
Although VINAMILK's quick ratio has decreased somewhat over the last five years, all
of the statistics are above 1, indicating that the firm has maintained its good position in
resolving instant payment. The firm's quick ratio decreased significantly from 2.19 to 1.32
between 2016 and 2019. After dropping for three years, the number rose to 1.67 at the end of
2020.
Comments on Vinamilk’s liquidity ratios:
- According to the statistics above, it is clear that VINAMILK’s ability on the firm’s
solving short – term debt obligations was maintained it’s good shape.
- VINAMILK has successfully maintained the value of cash capital at a high level with
effective and flexible capital management policies, ensuring payment of fees for
production business and investment projects according to the regulations plan. The firm
should continue to apply recent policies for further development.
II. Capital structure ratios:
II.1. Total debt ratio:
- The total debt ratio takes into account all debts of all maturities to all creditors.
- Total debt ratio formula: Total debt ratio =
Year
Total assets
(billion VND)
Total equity
(bilion VND)
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕𝒔−𝑻𝒐𝒕𝒂𝒍 𝒆𝒒𝒊𝒕𝒚
Total debt
ratio (%)
2016
29,379
22,406
23.73
2017
34,667
23,873
31.14
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕𝒔
Meaning of Total debt ratio
In 2016, 23.73% of the total assets of
the enterprise were being funded by
debt.
In 2017, 31.14% of the total assets of
the enterprise were being funded by
debt.
2018
2019
2020
In 2018, 29.69% of the total assets of
the enterprise were being funded by
37,366
26,271
29.69
debt.
In 2019, 33.49% of the total assets of
the enterprise were being funded by
44,700
29,731
33.49
debt.
In 2020, 30.53% of the total assets of
the enterprise were being funded by
48,432
33,647
30.53
debt.
Figure 3 VINAMILK's total debt ratio in 2016 – 2020
VINAMILK's total debt ratio in 2016 2020
60 000
40,00
30,00
40 000
20,00
20 000
10,00
0
0,00
2016
2017
2018
Total assets (billion VND)
2019
2020
Total equity (billion VND)
Total debt ratio (%)
As seen in the table and graphic, both total assets and total equity have increased during
the last five years. Both figures steadily went up and and there was no specific change through
the time.
There was an increasing trend in Vinamilk’s total debt ratio from 2016 to 2020. It can be
noticed that there was a slight decrease from 2017 to 2018 that the percentage fall from
31,14% to 29,69%. Same with the last two years, the figure decreased from 33,49% to
30,53%. Despite the changes, the figure of the firm was under 100%, which means that
Vinamilk has more assets than debt.
II.2. Debt/equity ratio and Equity multiplier:
-
Debt/equity ratio formula: Debt/ equity ratio =
Equity multiplier formula: Equity multiplier =
𝑻𝒐𝒕𝒂𝒍 𝒅𝒆𝒃𝒕
𝑻𝒐𝒕𝒂𝒍 𝒆𝒒𝒖𝒊𝒕𝒚
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕
𝑻𝒐𝒕𝒂𝒍 𝒆𝒒𝒖𝒊𝒕𝒚
Year
Total
assets
(billion
VND)
Total
debt
(billion
VND)
Total
equity
(billion
VND)
Debt/equity
ratio (times)
Equity
multiplier
(tines)
2016
29,379
6,973
22,406
0.31
1.31
2017
34,667
10,794
23,873
0.45
1.45
Meaning of Debt/equity
ratio and Equity
multiplier
In 2016, VINAMILK has
the ability to be financially
self-sufficient.
In 2017, VINAMILK has
the ability to be financially
self-sufficient.
2018
37,366
11,095
26,271
0.42
1.42
2019
44,700
14,969
29,731
0.50
1.50
2020
48,432
14,785
33,647
0.44
1.44
In 2018, VINAMILK has
the ability to be financially
self-sufficient.
In 2019, VINAMILK has
the ability to be financially
self-sufficient.
In 2020, VINAMILK has
the ability to be financially
self-sufficient.
Figure 4 VINAMILK's debt/equity ratio and equity multiplier in 2016 – 2020
Vinamilk's debt/equity ratio and equity multiplier in
2016 - 2020
60 000
1,60
1,40
50 000
1,20
40 000
1,00
30 000
0,80
0,60
20 000
0,40
10 000
0,20
0
0,00
2016
2017
2018
2019
Total assets (billion VND)
Total debt (billion VND)
Debt/equity ratio (times)
Equity multiplier (tines)
2020
Total equity (billion VND)
As stated before, both total assets and total equity went up during last five years. Sharing
the same trend, the figure of total debt also increased steadily over the five-year period.
The overall debt/equity ratio and equity miultiplier of Vinamilk grew, as seen in the
graph. Despite slight fluctuations from year to year, the firm's figure was no more than one,
showing that Vinamilk's assets were mostly funded through its investment.
II.3. Net interest cover ratio:
- Net interest cover measures how well a company has its interest obligations covered.
- Net interest cover formula: Net interest cover ratio =
𝑬𝑩𝑰𝑻
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒆𝒙𝒙𝒑𝒆𝒏𝒔𝒆𝒔
Year
EBIT (billion
VND)
Interest expense
(billion VND)
Net interest
cover (times)
Meaning of Net
interest cover
2016
11,284
102
110.63
In 2016, the interest bill is
covered 110.63 times over.
2017
12,258
87
140.90
In 2017, the interest bill is
covered 140.90 times over.
2018
12,103
118
102.57
In 2018, the interest bill is
covered 102.57 times over.
2019
12,905
187
69,.1
In 2019, the interest bill is
covered 69.01 times over.
2020
13,662
309
44.21
In 2020, the interest bill is
covered 44.21 times over.
Figure 5 VINAMILK's net interest cover ratio in 2016 - 2020
VINAMILK's net interest cover ratio in 2016 - 2020
16 000
160,00
14 000
140,00
12 000
120,00
10 000
100,00
8 000
80,00
6 000
60,00
4 000
40,00
2 000
20,00
0
0,00
2016
2017
EBIT
2018
Interest expense
2019
2020
Net interest cover
As can be seen from the graph, the figure of EBIT and interest expenses of the firm
steadily increased from 2016 to 2020. Looking at the figure of EBIT, there was a slight
decrease from 2017 to 2018, which the number fell from 12,258 to 12,103. The figure
continued to increase until the end of the period. The figure of interest expenses was too small
compared with the firm’s EBIT, but it can be noticed that the figure also increased over the
period.
On the other hand, the net interest cover ratio experienced an unpredictable change in
five years. From 2016 to 2017, the ratio increased rapidly and reached the number of 140.90
by the end of 2017. After that, the figure dramatically went down, reaching 44.21 at the year
2020. However, with an impressive net interest cover ratio, Vinamilk did its good job at
generating cash from its operation EBIT to meet its interest obligations.
II.4. Debt to gross cash flow ratio
- It is a basic measure of the firm’s ability to generate cash from operations, and it is
frequently used as a measure of cash flow available to meet financial obligations.
- Debt to gross cash flow ratio =
Year
Interest bearing debt
(billion VND)
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕−𝒃𝒆𝒂𝒓𝒊𝒏𝒈 𝒅𝒆𝒃𝒕
𝑵𝒆𝒕 𝒑𝒓𝒐𝒇𝒊𝒕 𝒂𝒇𝒕𝒆𝒓 𝒕𝒂𝒙+𝑫𝒆𝒑𝒓𝒆𝒄𝒊𝒂𝒕𝒊𝒐𝒏
Net profit
after tax
(billion VND)
Debt to
Depreciation
gross cash
(billion
flow ratio
VND)
(times)
2016
6,973
9,364
1,191
0.66
2017
10,794
10,278
1,300
0.93
Meaning of Debt to
gross cash flow ratio
In 2016, Vinamilk was
be able to solve its
financial responsibilities.
In 2017, Vinamilk was
be able to solve its
financial responsibilities.
2018
11,095
10,206
1,627
0.94
2019
14,969
10,554
1,948
1.20
2020
14,785
11,236
2,209
1.10
In 2018, Vinamilk was
be able to solve its
financial responsibilities.
In 2019, Vinamilk was
be able to solve its
financial responsibilities.
In 2020, Vinamilk was
be able to solve its
financial responsibilities.
Figure 6 VINAMILK's debt to gross cash flow ratio in 2016 - 2020
VINAMILK's debt to gross cash flow raio in
2016 - 2020
20 000
1,40
1,20
1,00
0,80
0,60
0,40
0,20
0,00
15 000
10 000
5 000
0
2016
2017
2018
2019
2020
Interest - bearing debt
Net profit after tax
Depreciation
Debt to gross cash flow
It is clear that all four figures in the chart share the same upward trend during last five
years.
The firm’s interest – bearing debt increased moderately over five years. From 2016 to 2017,
the figure went up significantly, from 6,973 to 10,794. After a year staying stable, the figure
increased substaintially, reaching 14,969 at 2019. Beside, the figures of net profit after tax
and depreciation did not have any changes at all over five years.
In addition, the debt to gross cash flow ratio also witnessed the same trend with three other
figures. After going up for a year, the ratio almost stayed unchange by the end of 2018, and
then continued to rise till the end of the period. Despite the changes, with the calculated ratio,
the company still maintained its ability to solve its financial responsibilities.
Comment on Vinamilk’s capital structure ratios:
- According to statistics above, it can be seen that VINAMILK maintained its good
ability in meeting long – term obligations.
- Although the COVID – 19 pandemic affected the business, the company still be able
to maintained a policy for management and new investment of long-term assets as to ensure
high effectiveness in asset management and suitability for future growth, avoiding waste and
loss of assets.
- Strengths:
 Vinamilk is a well – known big scale company in the dairy product industry Vietnam.
 The company has a wide range of products, such as milk, ice cream, and so on. The
company also tries to develop new product every 2 years.
- Weaknesses:
Because of the effect of the COVID – 19 pandemic, the company may not sell enough
products to earn enough cash to meet its long term obligations.
- Solution: Continue to focus on developing the firm’s dairy products, expanding the
product range and maintain the policy for management and investment for long – term assets.
III. Turnover ratios:
III.1. Inventory turnover and Days’ sales in Inventory:
𝐂𝐨𝐬𝐭 𝐨𝐟 𝐠𝐨𝐨𝐝𝐬 𝐬𝐨𝐥𝐝
-
Inventory turnover =
-
Day’s sale in Inventory =
Year
2016
2017
2018
2019
2020
Cost of
goods sold
(billion
VND)
24,458
26,806
27,950
29,745
31,967
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐢𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐢𝐞𝐬
𝟑𝟔𝟓
Average
inventories
(billion
VND)
4,166
4,271
4,773
5,254
4,944
(times)
𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲 𝐭𝐮𝐫𝐧𝐨𝐯𝐞𝐫
(days)
Inventory
turnover
(times)
Meaning of
Inventory
turnover
5.87
In 2016, Vinamilk
sold off or turned
over the entire
inventory 5.9 times
6.28
In 2017, Vinamilk
sold off or turned
over the entire
inventory 6.3 times
5.86
In 2018, Vinamilk
sold off or turned
over the entire
inventory 5.9 times
5.66
In 2019, Vinamilk
sold off or turned
over the entire
inventory 5.7 times
6.47
In 2020, Vinamilk
sold off or turned
over the entire
inventory 6.5 times
Days'
sales in
inventory
(days)
Meaning of Days'
sales in inventory
62
In 2016, inventory
sat 62 days on
average before it
was sold
58
In 2017, inventory
sat 58 days on
average before it
was sold
62
In 2018, inventory
sat 62 days on
average before it
was sold
64
In 2019, inventory
sat 64 days on
average before it
was sold
56
In 2020, inventory
sat 56 days on
average before it
was sold
The chart illustrates the ability to manage inventory of Vinamilk through two ratios which
both show how fast they can sell product: Inventory turnover and Day’s sale in inventory. If
the inventory turnover ratio increases, the days to sell products in 1 time will have a downward
trend. When compared to 2016, the inventory turnover ratio grew slightly in 2017 from 5.87
times to 6.28 times. This ratio fell considerably over the next two years, to 5.86 times in 2018
caused by an increase in inventory reserves at the end of the year to prepare for the production
plan in 2019, and 5.66 times in 2019. This might indicate that the firm did not organize
inventory consumption efficiently in comparison to previous years. However, Vinamilk
maintained a constant level because there was no new slow-moving inventory and the
inventory management policy remained relatively stable. In 2020, the inventory turnover ratio
rose and was stabilized at 6.47 times.
8,00
80
6,00
60
4,00
40
2,00
20
0,00
Day's sales
Inventory turnover
Vinamilk's Inventory turnover and the
Day's sale in inventory turnover
0
2016
2017
2018
2019
2020
inventory turnover (times)
Days' sales in inventory (days)
III.2. Receivables turnover and Day’s sale in receivables:
- Receivables turnover =
𝐒𝐚𝐥𝐞𝐬
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐫𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞𝐬
𝟑𝟔𝟓
- Day’s sale in Receivables =
Year
2016
2017
2018
2019
2020
Sales
(billion
VND)
46,794
51,041
52,561
56,318
59,636
Average
receivable
(billion
VND)
2,197
2,902
3,497
3,427
3,824
(times)
𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞𝐬 𝐭𝐮𝐫𝐧𝐨𝐯𝐞𝐫
Receivables
turnover
(times)
16.86
13.69
11.39
12.32
12.31
(days)
Meaning
In 2016, Vinamilk
collected its
outstanding credit
accounts and reloaned
the money 21.3 times
In 2017, Vinamilk
collected its
outstanding credit
accounts and reloaned
the money 17.6 times
In 2018, Vinamilk
collected its
outstanding credit
accounts and reloaned
the money 15 times
In 2019, Vinamilk
collected its
outstanding credit
accounts and reloaned
the money 16.4 times
In 2020, Vinamilk
collected its
outstanding credit
accounts and reloaned
the money 15.6 times
Days' sales
in
receivables
(days)
Meaning
22
In 2016, on average,
Vinamilk collected
on its credit sales in
17 days
27
In 2017, on average,
Vinamilk collected
on its credit sales in
21 days
32
In 2018, on average,
Vinamilk collected
on its credit sales in
24 days
30
In 2019, on average,
Vinamilk collected
on its credit sales in
22 days
30
In 2020, on average,
Vinamilk collected
on its credit sales in
23 days
Day's sale
Receivables turnover
The chart illustrates Vinamilk's efficiency
Vinamilk's Receivables turnover and
in granting credit to their customers and
Day's sale
ability to collect short-term debt through two
20,00
40
ratios which both show how fast we collect
15,00
30
on those sales: Receivables turnover and
10,00
20
Day's sale in receivable. If the receivables
5,00
10
turnover increases, the days to collect those
0,00
0
accounts will have a downward trend. In
2016
2017
2018
2019
2020
general, Vinamilk's receivables turnover is
Receivables turnover (time)
falling. In 2016, receivable turnover was
Days' sales in receivables (days)
pretty high at 16.86 times with 22 days for
each time collecting its credit sales. However, in the next two years, this ratio underwent considerable
decline down to 13.69 times and 11.39 times respectively. This receivables ratio slightly grew to
12.32 times in 2019 and stayed stable in the following year.
III.3. Fixed asset turnover:
Fixed asset turnover =
𝐒𝐚𝐥𝐞𝐬
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐧𝐨𝐧−𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐚𝐬𝐬𝐞𝐭
Year
Sale
(billion
VND)
Average
Non-current
asset (billion
VND)
Fixed asset
turnover
(times)
2016
46,794
8,268
5.66
2017
51,041
9,465
5.39
2018
52,561
11,987
4.38
2019
56,318
14,129
3.99
2020
59,636
14,373
4.15
(times)
Meaning
In 2016, for every VND in fixed assets,
Vinamilk generated VND 5.66 in sales.
In 2017, for every VND in fixed assets,
Vinamilk generated VND 5.39 in sales.
In 2018, for every VND in fixed assets,
Vinamilk generated VND 4.38 in sales.
In 2019, for every VND in fixed assets,
Vinamilk generated VND 3.99 in sales.
In 2020, for every VND in fixed assets,
Vinamilk generated VND 4.15 in sales.
The line chart shows that Vinamilk's
Vinamilk's fixed asset turnover
fixed asset turnover was on the decline
5,66
5,39
6,00
through the years. In 2016, fixed asset 80 000
4,38
4,15
5,00
3,99
turnover stood at the highest level, with 1 60 000
4,00
VND in fixed assets and could generate 5.66 40 000
3,00
VND in sale. In the next two years,
2,00
20 000
1,00
Vinamilk only generated respectively 5.39
0
0,00
VND and 4.38 VND in their sales with 1
2016
2017
2018
2019
2020
VND in fixed assets. This ratio increased to
Sale (billion VND)
3.99 times in the following year and slightly
Average Non current asset (billion VND)
increased to 4.15 times in 2020. The fall in
Fixed asset turnover (time)
fixed asset turnover ratio may imply that
Vinamilk focused on their fixed asset and invested into it in the future to increase
manufacturing size, especially to invest outside the country boundary.
III.4. Total asset turnover:
Total asset turnover =
Year
Sale (billion
VND)
𝐒𝐚𝐥𝐞𝐬
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐭𝐨𝐭𝐚𝐥 𝐚𝐬𝐬𝐞𝐭
Average Total
asset (billion
VND)
(times)
Total asset
turnover (times)
2016
46,794
28,428
1.65
2017
51,041
32,023
1.59
2018
52,561
36,017
1.46
2019
56,318
41,033
1.37
2020
59,636
46,566
1.28
Meaning
In 2016, for every 1 VND in assets,
Vinamilk generated 1.65 VND in
sales.
In 2017, for every VND in assets,
Vinamilk generated VND 1.59 in
sales.
In 2018, for every VND in assets,
Vinamilk generated 1.46 VND in
sales.
In 2017, for every VND in assets,
Vinamilk generated 1.37 VND in
sales.
In 2020, for every VND in assets,
Vinamilk generated 1.28 VND in
sales.
This line chart illustrates total asset turnover
Vinamilk's total asset turnover
of Vinamilk experienced a slight decline
1,80
through the 5-year period. Total asset ratio in 70 000 1,65 1,59
1,46
1,60
1,37
2016 and 2017 were around 1.6 times. In the 60 000
1,28
1,40
next three years, the ratio of each year fell by 50 000
1,20
40
000
1,00
around 0.1 times compared to the previous year
0,80
and in 2020, the total asset turnover is 1.3 30 000
0,60
times. Although this ratio decreases, it may not 20 000
0,40
0,20
show that Vinamilk's business performance is 10 000
0
0,00
not efficient. It can be seen that, over the years,
2016
2017
2018
2019
2020
the sales still increased to 59,723 billion VND
Sale (billion VND)
in 2020, up 5.9% over the same period last year
Average Total asset (billion VND)
and the value of total assets increased sharply
Total asset turnover (time)
in the period from 2017-2020.
Comments on four Vinamilk’s turnover ratios:
Generally, all of the turnover ratios experienced a downward trend in the 5-year period;
except for the minor fluctuation in the middle period in Inventory and Receivables turnover.
This trend, however, does not imply that company management is ineffective. There are
several explanations for the consistency in company performance.
- The first one is the effective inventory management policy – ERP system32. With this
system, Vinamilk has a Logistics module. This has created a seamless chain from order
processing to inventory settlement. Moreover, ERP has helped Vinamilk reduce risks, as
well as avoid the problem of overloading goods or not being able to supply the demand
in time.
32
https://bocdau.com/quan-ly-hang-ton-kho-cua-vinamilk/
- The second reason is about the debt policy33. In mid November 2017, Vinamilk changed
its debt policy towards domestic customers which was extending the payment time for
customers to facilitate higher sales. Vinamilk recognizes that this policy modification
benefits the company and that receivables policies are effectively managed, resulting in
a competitive advantage in the local market.
- The third explanation is that, in the period 2017-2021, Vinamilk has implemented a plan
to invest in short-term and long-term assets. Vinamilk is a money generator thanks to its
effective cost management policy34. Additionally, the company has invested in
machinery and equipment and invested in new farms in subsidiaries to ensure the stability
of raw milk supply. Vinamilk has also made international investments, but its profitability
remains low. Moreover, Vinamilk also expanded its scale, merged with GTNFoods Joint
Stock Company and recorded net revenue of 12,122 billion VND.
Therefore, despite the falling in the turnover ratio, the sales of Vinamilk kept increasing
considerably through the period 2016-2020. This is an implication that the company's
business performance is efficient.
Solution:
Vinamilk should continue to promote present company management policies (inventory
management policy - ERP system, debt policy, etc.) while also improving their efficacy.
In terms of the changing debt policy for domestic customers, Vinamilk should
continue maintaining it for customers to increase their business scale; nevertheless, it is also
important to closely control credit policies in order to avoid generating more bad debts.
Moreover, Vinamilk should increase efficiency in mergers and overseas expansion to
achieve better business results in the coming years.
IV. Profitability ratio:
IV.1.Profit margin: Profit margin =
Net income
Sales (billion
Year
(billion
VND)
VND)
33
𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆
𝑺𝒂𝒍𝒆𝒔
Profit
margin
(%)
2016
9,350
46,965
19.91
2017
10,296
51,135
20.13
2018
10,227
52,629
19.43
2019
10,581
56,400
18.76
2020
11,099
59,723
18.58
x 100 (%)
Meaning
VNM generated 19.91 cents in profit for
every VND in sales
VNM generated 20.13 cents in profit for
every VND in sales
VNM generated 19.43 cents in profit for
every VND in sales
VNM generated 18.76 cents in profit for
every VND in sales
VNM generated 18.58 cents in profit for
every VND in sales
https://www.vinamilk.com.vn/static/uploads/article/152206504732b1b4e5de1437d42e844f5cdf151aae617e1ec5c94e4d89888d8f3f3f8c5d7b.pdf
34
https://shinhansec.com.vn/uploads/equity/Vinamilk_Initiation_VN_20210407.pdf?fbclid=IwAR1o0hbTcF7EWbYHihdK0KOQzaNBv7TldjQYuGepRN10IsYxS6VY2kdww0
Overall, there was a decrease in the profit
margin ratio of Vinamilk corporation. The
proportion of return on sales started at 19.91%
in 2016, after which it witnessed a slightly
increase to 20.13% in the year after, before
gradually decreased to 18.58% at the ending of
the period. In compare with 2016, each VND in
sales of Vinamilk in 2021 generated less profits,
which meant for the down grade of effective in
cost management.
70 000
19,91
20,13
19,43
18,76
18,58
20,00
60 000
15,00
50 000
40 000
10,00
30 000
20 000
5,00
10 000
-
0,00
2016
2017
2018
2019
2020
Net income (biliion VND)
Sales (billion VND)
Profit margin (%)
IV.2. Return of Assets: ROA =
𝑵𝒆𝒕 𝒊𝒏𝒄𝒐𝒎𝒆
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
Year
Net income
(billion VND)
2016
9,350
Total Assets
(billion
VND)
29,379
2017
10,296
34,667
2018
10,227
37,366
2019
10,581
44,700
2020
11,099
48,432
x 100 (%)
Return of
Meaning
Assets
(ROA) (%)
31.83
VNM
generates
cents of profit per VND of asset
29.70
VNM
generates
cents of profit per VND of asset
27.37
VNM
generates
cents of profit per VND of asset
23.67
VNM
generates
cents of profit per VND of asset
22.92
VNM
generates
cents of profit per VND of asset
The chart illustrates how much the proportion of
return on assets of VNM between 2016 and 2020.
Overall, there was a gradually decline in this ratio.
Starting at 31.83% in 2016, the VNM's ROA ratio of
witnessed a drop, 29.70%, 27.37% and 23.67% in
2017, 2018, and 2019 respectively, before ending the
period at 22.92% in 2020. This phenomena
described that Vinamilk exploiate its assets not
really exploited effectively.
60 000
31,83 29,70
31.83
29.70
27.37
23.67
22.92
27,37
30,00
23,67 22,92
50 000
40 000
20,00
30 000
15,00
20 000
10,00
10 000
5,00
-
2016
2017
2018
2019
2020
Net income (Billion VND)
Total Assets (Billion VND)
Return of Assets (ROA) (%)
IV.3. Return of Equity: ROE =
𝑵𝒆𝒕 𝒊𝒏𝒄𝒐𝒎𝒆
𝑻𝒐𝒕𝒂𝒍 𝑬𝒒𝒖𝒊𝒕𝒚
x 100 (%)
Year
Net income
(billion VND)
Total Equity
(billion VND)
Return on
equity (ROE)
(%)
2016
9,350
22,406
41.73
25,00
Meaning
VNM generates 41.73
cents of profit per VND of Equity
2017
10,296
23,873
43.13
VNM generates 43.13
cents of profit per VND of Equity
2018
10,227
26,271
38.93
VNM generates 38.93
cents of profit per VND of Equity
2019
10,581
29,731 1
35.59
VNM generates 35.59
cents of profit per VND of Equity
2020
11,099
33,647
32.99
VNM generates 32.99
cents of profit per VND of Equity
There was an overall decline in the proportion of
profit generated by using equity of VNM between 2016
and 2020. The figure was 41.73% in 2016, with a
subsequent rise in 2017 and final decreased from
43.13% to 32.99% in 2020. VNM’s expenditure,
through the years, seem to go up. Meanwhile, the
money that VNM got from using equity was likely to
stood still in this period, that brought such a obviously
drop of ROE ratio, which also mean that VNM’s equity
was not used efficiently through the examined period.
35 000
41,73
43,13
45,00
38,93
35,59
30 000
32,99
25 000
40,00
35,00
30,00
20 000
25,00
15 000
20,00
15,00
10 000
10,00
5 000
5,00
-
2016
2017
2018
2019
2020
Net income (Billion VND)
Total Equity (Billion VND)
Return on equity (ROE) (%)
IV.4. Return on Investment: ROI =
𝑬𝑩𝑰𝑻
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
x 100 (%)
Year
Profit
before tax
(billion
VND)
Interest
Expense
(billion
VND)
EBIT
(billion
VND)
Total
Assets
(billion
VND)
Return on
Investment
(%)
2016
11,238
46.50
11,284
29,379
38.41
2017
12,229
29.44
12,258
34,667
35.36
2018
12,052
51.37
12,103
37,366
32.39
2019
12,796
108.82
12,905
44,700
28.87
2020
13,519
143.82
13,662
48,432
28.21
Meaning
VNM generates 38.41
cents of profit per VND of
Investment Capital
VNM generates 35.36
cents of profit per VND of
Investment Capital
VNM generates 32.39
cents of profit per VND of
Investment Capital
VNM generates 28.87
cents of profit per VND of
Investment Capital
VNM generates 28.21
cents of profit per VND of
Investment Capital
Through this chart, the ROI ratio of VNM was seem to decrease from the year 2016 to 2020.
In the begining of the period, it was at a peak of 38.41% in 2016, then gradually dropped in
the years after. Observely, the total assets figures witnessed a moderately increase year by
year, while the EBIT generated nearly remained stable, which resulted in a decline of ROI
ratio. In a quick view, VNM’s management team might
not fully take advangtage of shareholders' money for
profitable investments to increase assets for
shareholders.
50 000
45 000
40 000
35 000
30 000
25 000
20 000
15 000
10 000
5 000
0
38,41
35,36
40,00
32,39
28,87
28,21
35,00
30,00
25,00
20,00
15,00
10,00
5,00
-
2016
2017
2018
EBIT (Billion VND)
2019
2020
Total Assets (Billion VND)
Return on Investment (%)
Comment on Vinamilk’s profitability ratio:
Overall, all of VNM’s profitability ratios
Costs structure of VNM
experienced a downward trend between 2016 to 2020.
There were many reasons that caused a decline in these
15%
ratios. Firstly, in the examined period, the price of milk
12%
50%
powder, raw materials,... witnessed some fluctuations.
23%
Because milk powder, raw materials,....prices covered
about 50% of VNM's costs structure, such a small
Milk powder, raw materials,...
change in them could lead to a big affect on how much
Package,…
VNM spent on producing milk.
Salarieadditives and by-productss,…
+ 2016 - 2017: The milk powder's price hit a trough
Other (depreciation, salaries,…)
of $2457/MT, the lowest in 10 years, which leaded to an
increase in the profit margin.
+ 2018-2019: The milk/milk powder's price grew again, reached at $3150/MT.
Observely, the profit margin decreased slightly to 18.76
+ In 2020, despite the price of milk powder dropped because of the COVID-19, the
VNM's ROS continued to decline. The reason for this phenomena is the company has to pay
rent (factories, retail stores,...), salaries for employees, while the main comsumers for milk
such as schools, hotels, restaurants,... had to temporarily close because of the COVID
epidemic.
Moreover, the ROA and ROE ratios of VNM dropped because VNM is in the process of
investing and developing raw materials (projects in Laos), acquiring dairy enterprises
(GTNfoods and Moc Chau Milk) has not been effective.
Strengths:
ROA of companies in dairy
industry (%)
ROI of companies in dairy
industries (%)
35,00
25,00
15,00
5,00
-5,00
2018
VNM
2019
IDP
2020
HNM
KIDO
40,00
30,00
20,00
10,00
(10,00)
(20,00)
2018
VNM
2019
IDP
2020
HNM
KDC
ROE of companies in dairy
industry (%)
Profit margin of companies in
dairy industry (%)
25,00
20,00
2018
2019
20,00
2020
15,00
(80,00)
10,00
5,00
(180,00)
0,00
(280,00)
-5,00
VNM
IDP
HNM
KDC
2018
VNM
2019
IDP
2020
HNM
KDC
Note: VNM – Vinamilk, IDP: International Dairy Products Corporation; HNM: Hanoi Milk
Corporation; KDC: KIDO Group
35
Although Vinamilk's profitability ratio is
declining in the 2016-20 period, the company
still maintains its leading position in the dairy
industry thanks to the following strategies:
- Promote deep penetration and coverage of
rural areas
- Expanding the premium product portfolio
- Increasing business scale through M&A
activities.
Proposed Solutions:
- Vinamilk should take into consider to take advantage of the increase in Vietnamese’s
favourite of using premium milk product to enhance and expand premium product portfolio,
thereby capturing more market share from rivals in urban areas which are already highly
competitive. Moreover, Vinamilk can transfer part of the increase in raw milk costs (milk
powder, raw materials, …) to the higher prices of premium products, which helps to ensure
stable gross profit margin for the company.
- Actively increase domestic and foreign M&A deals, to break out of the saturated orbit of
Vietnam's dairy industry and prevent potential competiors from trying to entry to the dairy
market.
V. Market share ratios:
V.1. Price/earning ratio:
- Price/earning ratio =
𝑷𝒓𝒊𝒄𝒆 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆
𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆
- Earnings per share (EPS) =
Year
35
Earning
per
share
(EPS)
𝑷𝒓𝒐𝒇𝒊𝒕 𝒂𝒕𝒕𝒓𝒊𝒃𝒖𝒕𝒂𝒃𝒍𝒆 𝒕𝒐 𝒐𝒓𝒅𝒊𝒏𝒂𝒓𝒚 𝒔𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓𝒔
Meaning of EPS
𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒐𝒓𝒅𝒊𝒏𝒂𝒓𝒚 𝒔𝒉𝒂𝒓𝒆𝒔𝒊𝒏 𝒊𝒔𝒔𝒖𝒆
Price per
share (VND)
(at 31/12)
Vinamilk_Initiation_VN_20210407.pdf (shinhansec.com.vn)
Price/earning
ratio (P/E)
(times)
Meaning of P/E
2016
5,830
2017
6,360
2018
5,300
2019
5,480
2020
4,770
The basic earning
per share of
Vinamilk was 5830
VND in 2016
The basic earning
per share of
Vinamilk was 6360
VND in 2017
The basic earning
per share of
Vinamilk was 5300
VND in 2018
The basic earning
per share of
Vinamilk was 5480
VND in 2019
The basic earning
per share of
Vinamilk was 4770
VND in 2020
125,578
21.54
Vinamilk shares sold for
21.54 times earnings in
2016
208,608
32.80
Vinamilk shares sold for
32.80 times earnings in
2017
119,900
22.62
Vinamilk shares sold for
22.62 times earnings in
2018
116,500
21.26
Vinamilk shares sold for
21.26 times earnings in
2019
22.81
Vinamilk shares sold for
22.81 times earnings in
2020
108,800
VND
The bar chart illustrates the fluctuations
7 000
35,00
of Vinamilk's EPS from 2016 to 2020. In
6 000
30,00
2016, the number of earning investors could
5 000
25,00
4 000
20,00
receive per share was 5,830 VND. After one
3 000
15,00
year, this figure peaked at over 6,000 VND
2 000
10,00
during the period. Then the EPS decreased
1 000
5,00
slightly in 2018 with the number of 5,300
0,00
2016
2017
2018
2019
2020
VND, which remained stable a year later.
Year
However, there was a downward trend in
Earning per share (EPS)
2020 and it reached the figure of 4,770 VND.
The line chart demonstrates the change of
price/earning ratio of Vinamilk from 2016 to 2020. The figure started with 21.54 in 2016,
which then rose dramatically to over 32 in 2017. After that, this ratio fell down to 22.62 in
2018. In addition to this, this ratio experienced a slight fluctuation from 2019 to 2020, with
the number of about 22. Overall, Vinamilk was considered to have significant prospect for
future growth by the investors.
V.2. Market - to - book ratio: Market - to - book ratio =
𝑴𝒂𝒓𝒌𝒆𝒕 𝒗𝒂𝒍𝒖𝒆 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆
𝑩𝒐𝒐𝒌 𝒗𝒂𝒍𝒖𝒆 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆
Year
Market value
per share
(VND) (at
31/12)
Book value
per share
(VND)
Market-to-book
ratio (times)
2016
125,578
9,999
12.56
Market value of Vinamilk’s investments
was 12.56 times their costs in 2016
2017
208,608
9,996
20.87
Market value of Vinamilk’s investments
was 20.87 times their costs in 2017
Meaning
2018
119,900
9,996
12.00
Market value of Vinamilk’s investments
was 12.00 times their costs in 2018
2019
116,500
10,002
11.65
Market value of Vinamilk’s investments
was 11.65 times their costs in 2019
2020
108,800
10,001
10.88
Market value of Vinamilk’s investments
was 10.88 times their costs in 2020
The line chart shows the alteration of
Market-to-book ratio and market
market-to-book ratio from 2016 to 2020. This
value per share of VNM
chart nearly had the same trend as the 2 charts 250000
25,00
above. The ratio started with 12.56 in 2016, 200000
20,00
which then increased sharply to 20.87 in 2017. 150000
15,00
After that, this ratio fell down to 12 in 2018. 100000
10,00
Furthermore, this ratio remained unchanged in
50000
5,00
the next two years, with the number of about 11.
0
0,00
2016 2017 2018 2019 2020
As we can see in the bar chart, Vinamilk's
share had a high market price in 2016 with more
Market value per share (VND) (at 31/12)
than 120.000VND. It then peaked at
Year
208,608VND in the next year and significantly
Market-to-book ratio (times)
decreased to 120,000VND in 2018. After that
this number fluctuated around 110,000VND for the next two-year-period.
In conclusion, high market-to-book ratio during the latest 6-year-period presented that
Vinamilk was assessed hugely by the investors and this company is able to have enormous
profit in the future.
Comments about the market share ratio: In conclusion, the EPS, P/E and marketto-book ratio of Vinamilk fluctuated during the latest five-year-period. Main reasons can be
listed here:
- A great beginning:
In 2016, Vinamilk had an overwhelming market share in the country. Listed at the
beginning of 2006 with 159 million shares, after 10 years Vinamilk has multiplied 10 times
its capital size to 1,451 million shares. Besides this, Vinamilk also satisfied its investors with
constant earning per share annually. One year later, Vinamilk had a remarkable achievement
with the price per share reaching over 200.000VND for the first time, which lead to the
significant rise of both EPS and P/E ratio in 2017.
- The minor decline of market share and new way of marketing:
2018 witnessed the slow down rate of Vinamilk and investors believed that the domestic
milk market shows signs of saturation as wall as fierce competition from potential and
reputable dairy companies in the world. Beside the reasons listed in the profitability ratios,
there are another expainations here. The development of E-commerce blasted the company
with a brand new way to do marketing. At that time Vinamilk was not able to advertise its
products fast on online channels, which affected the profit in 2018.
- Challenges from global pandemic:
At the end of 2019, Covid-19 appeared in China and then it created serious problems
across the globe in just a short time. The income of Vietnamese people was influenced heavily
and they tended to cut down on shopping - including dairy products. Responding to that
budget tightening, Vinamilk initiated the segments of new products like: Organic Gold, Bird's
Nest, etc that emphasize the importance of healthy consumption. In addition, Vinamilk
concentrated on specific markets in other countries such as the U.S, Japan, China, etc to look
for new oppotunities. Due to these efforts, Vinamilk stayed in a good position on HOSE in
2020 with the P/E of 22.81.
 Strengths:
- Vinamilk is a well-known company in the dairy products market and it has created
sustainable values to ensure the smooth operation in both domestic and foreign markets.
Vinamilk's P/E ratio has always remained at a high level for the past 5 years and it is also
higher than the market average.
- According to the good EPS of Vinamilk, investors are likely to prefer spending in
Vinamilk's shares to other companies in the same section.
 Weaknesses:
- The domestic dairy products market is relatively saturated, while the foreign ones
already have major competitors with high-quality products. -> it's hard to sell more sharesDue to Covid-19, investor seems to be more careful with the company because of the
challenges in this pandemic - which is forecasted to last for the next few years.
 Solutions:
- Keep the high pace of market share and attract more attention from investors to reduce the
impact of competitors.
- Research and development in foreign markets should be done effectively to grow novel
market shares in international business, especially with the high-quality products.
- Join more M&A activities to create good cooperation and compete better in the market.
TABLE OF MEMBERS – PHÂN CÔNG CÔNG VIỆC