Financial Statement &

Management Report of
Hoa Phat Group Joint
Stock Company
Presented by: FINEAS Team
 OUTLINE

01 General information

02 Market analysis

03 Financial analysis

04 Development strategy
 01
General
Information
Company overview

August 1992 2007 29 years developing

Hoa Phat Hoa Phat Group Joint The leading industrial
Construction Machine Stock Company manufacturing group in
and Equipment Vietnam
Trading Company
Company overview

Vision Mission Core value

Becoming an Providing leading The philosophy of

industrial products which Harmony for Joint
manufacturer with contributes to improving Development
top quality in which the quality of life and
steel is the core area gaining the trust of
customers
Awards
Shares and shareholders information
Hoa Phat Group Joint Stock Company was officially listed on the Ho Chi
Minh’s Stock Exchange (HOSE) in November 2007

Stock sticker Financial year Independent

on HOSE ended auditor
HPG 31/12 KPMG
Shares and shareholders information
Total shares: 3,313,282,659
Corporate structure
Corporate structure
Products and Services
 02
Market
Analysis
Global steel market

2020
2019
2018 - The steel industry around the world

- Steel production growth grappled with the effects of the

A period of relative growth for turned negative in all regions, COVID-19 outbreak

the global steel industry with with the exception of Asia and - Steel production declined drastically

high demand and levels of the Middle East but unevenly across the globe

production - The global steel demand - Steel use in China expanded while it

declined as a result of the contracted in the rest of the world

ongoing slump in Europe’s => The demand-supply dynamics in

manufacturing sector the world steel market are strongly

influenced by China and its economy
Vietnam Steel Market
● 2018 - 2019:
Vietnam steel industry (esp exports)
generally achieved good growth despite
the increasing wave of trade
protectionism
● 2020:
- One of the few countries with growing
steel production and consumption in the
COVID-19 pandemic context
- The leading position of Southeast Asia in
steel production
- No.14 in the top 50 largest crude steel
manufacturing countries globally
- No 6 among the world's largest steel
importers
Vietnam Steel Price

The high growth rate and The domestic steel prices

concentration with large Vietnam’s steel market remained at high levels but
enterprises holding the has high stability were quite stable in general
majority of the market share
Steel Demand Forecast

Global steel demand is expected to continue

Global Steel Demand growing, but growth rates will moderate in
tandem with a slowing global economy.

In the next 3 years, Vietnam’s steel demand is

projected to continue showing stable growth
Vietnam Steel
Demand because the Vietnamese economy is growing
rapidly and the government is actively investing in
the construction of infrastructure and housing.
Vietnam Steel Industry

Opportunities Challenges
- The EVFTA Agreement has - Many steel companies have to
supported the export of many accelerate their innovation and
groups of products to the EU investment in technology
market, in which iron is one of
the items with special interest. - In recent years, Vietnamese steel
products have been continuously
- The Ministry of Industry and involved in trade remedy lawsuits
Trade proposes to build a in export markets.
Vietnamese-brand steel
manufacturer. - The supply of the world economy
increased while the amount of raw
- Vietnam also has a great material for steel production of
opportunity to attract foreign enterprises is mainly imported.
direct investment (FDI).
 03
Financial
Analysis
● Trend analysis
● Industry comparison
Trend Analysis
 Profitability Ratios

→ The sudden increase in the price of input materials in 2019

caused the company's profit to be negatively affected.
 ROA - ROE Ratios

→ The increase in fixed assets and capital had a significant

impact on the company's ROA and ROE.
 Liquidity Ratios

● The current ratio slightly increased in 2019 and then decreased in 2020.
● The trend of quick ratio in 2019 was down and then went up in 2020.
=> In general, Hoa Phat’s ability to pay short-term liabilities was still quite good.
Inventory Turnover Ratio

2018 2019 2020

Cost of goods sold 44.165.626.148.685 64.677.906.575.644 91.279.041.771.826

Average Inventories 12.913.925.774.469 20.663.867.915.541 29.256.103.131.995

Inventory turnover 3,42 3,13 3,12

Inventory accounted for:

● 56% of current asset on December 31, 2018
● 64% of current asset on December 31, 2019
● 46% of current asset on December 31, 2020
Inventory Turnover Ratio

Inventory turnover ratio tended to

decrease significantly from 2018 to 2019
and almost remained the same until
2020.

The inventory management efficiency

tended to go down in the period of
2018-2019 and the sales activities in 2020
came back to control in 2020.
Total Asset Turnover Ratio

2018 2019 2020

Sales 56.580.424 64.677.907 91.279.042

Net Sales 55.836.458 63.658.193 90.118.503

Average Assets 65.622.595 89.999.518 116.643.732

Total Asset Turnover 0.85 0.71 0.77

Hoa Phat's Average Total Asset had a

sudden increase of 27.1% in 2019
compared to that in 2018, while Net
Revenue only increased by 12.3%

In 2020, the ratio recovered again and

reached 0.77, up 6% from the previous year
Total Asset Turnover Ratio

The Total Asset Turnover ratio in the period

of 2018 - 2020 also has similar
developments as the Profitability Ratio.

The recovery of Total Asset Turnover in just

1 year has shown that the decision of Hoa
Phat to invest in fixed assets, specifically
Dung Quat Complex, is correct and the
company is gradually improving its
efficiency in asset management
activities.
 Debt Ratios

Both the debt to total assets and the debt to equity ratio had a tendency
to rise significantly from 2018 to 2020 because the company needed
funds to invest in the construction of Dung Quat iron and steel complex
and other projects to scale up business
 Debt Ratios
2018 2019 2020

Short-term Debt 11.494.717 16.837.653 36.798.465

Long-term Debt 12.810.996 19.842.099 17.343.247

Total Debt 24.305.714 36.679.752 54.141.713

Asset 78.223.007 101.776.030 131.511.434

Equity 40.622.949 47.786.636 59.219.786

● Debt had a tendency to increase over the period, along

with the increase in equity, which helps maintain the debt
to equity at a safe and stable level
● In 2020, short-term debt increased significantly by more
than 100% due to Hoa Phat’s treasury activities.
Debt Ratios

Times interest earned tended to decrease in the

period from 2018 to 2020
 Debt Ratios

2018 2019 2020

Interest Expense 539.861 936.710 2.191.680

EBIT 10.610.934 10.033.372 17.548.647

Times interest earned 19.65 10.71 8

Hoa Phat recorded a sharp increase in interest expenses in 2019 and 2020.
It is because the entire Dung Quat iron and steel complex came into operation.
According to accounting principles, the interest expense at that time was no
longer capitalized, but recognized as a financial expense in Income Statement
 Industry
Comparison
Profitability Ratios
2018 2019 2020
Profitability Ratios
HPG Industry HPG Industry HPG Industry

Gross profit margin 20.90% 10.11% 17.57% 8.77% 20.98% 4.41%

Operating profit
9.00% 6.50% 15.76% 5.78% 19.47% 3.67%
margin

Net profit margin 15.40% 4.41% 11.90% 3.67% 14.99% 5.82%

ROE 23.48% 10.16% 17.03% 9.20% 25.14% 17.00%

ROA 13.06% 4.61% 8.36% 3.89% 11.53% 6.95%

Profitability Ratios

● Although Hoa Phat's financial ratios were relatively fluctuating in 2019-2020,

the firm kept them at a higher level than the industry average.
● Hoa Phat employed stringent cost management and took advantage of the
closed production process from upstream
● In 2020, the whole industry's ROE and ROA improved dramatically, and Hoa
Phat outperformed other enterprises
Liquidity Ratios - Current Ratio
2018 2019 2020
HPG 1.12 1.13 1.09

HSG 0.85 0.84 1

NKG 1.05 1.02 1.1
VGS 1.28 1.29 1.4

Industry 1.08 1.07 1.15

● The industry norm was below the value Hoa Phat had in 2018 and
2019, showing that HPG had a comparatively high liquidity position.
● In 2020, Hoa Phat’s current ratio was lower than the industry average
due to production recovery in the general steel market and Hoa
Phat’s treasury activities.
Liquidity Ratios - Quick Ratio

2018 2019 2020

HPG 0.49 0.41 0.59
HSG 0.33 0.32 0.39
NKG 0.43 0.43 0.52
VGS 0.8 0.89 0.9

Industry 0.51 0.51 0.6

The quick ratio of HPG stayed near the industry norm

throughout the period from 2018 to 2020, showing that
Hoa Phat’s liquidity looked steady.
Inventory Turnover Ratio
2018 2019 2020

HPG 3.42 3.13 3.12

HSG 3.94 4.45 4.55
NKG 4.31 4.72 4.31
VGS 13.31 16.61 14.54
Industry 6.25 7.23 6.63
Comparison 54.72% 43.29% 47.05%

Inventory turnover ratio remains at a quite low level (the average is 6.7 times in
the last 3 years)
The ratio has two sides and is different in every industry. Therefore, Hoa Phat's
average inventory turnover ratio in 3 years which is at 3.2 shows that it is stable,
its inventory management is always monitored and operated effectively.
Total Asset Turnover Ratio
2018 2019 2020

HPG 0.85 0.71 0.77

HSG 1.61 1.46 1.57

NKG 1.62 1.50 1.46

VGS 4.39 4.30 3.85

Industry 2.12 1.99 1.91

Hoa Phat Total Asset Turnover is low because Total Asset is higher than other companies,
mainly because of Dung Quat Complex.

In principle, the fact that Hoa Phat's Total Asset Turnover ratio is lower than the industry
average partly shows that the enterprise has not really used its assets effectively. However,
this is not a concern because the event only happened in the short term.
Debt Ratios
2018 2019 2020

Debt to Debt to Debt to Debt to Debt to Debt to

Total Assets Equity Total Assets Equity Total Assets Equity

HPG 31% 60% 36% 77% 41% 91%

HSG 64% 278% 56% 177% 46% 124%

NKG 54% 148% 38% 103% 39% 94%

VGS 33% 74% 37% 94% 23% 53%

Industry 46% 140% 42% 113% 37% 91%

In the period of 2018-2019, the debt ratios of HPG were consistently lower than the industry
norm. In contrast, in 2020, Hoa Phat’s debt to asset ratio is lower than the industry norm and its
debt to equity is equal to the industry average.
 04
Development
Strategy
 1 2 3
Well–managed inventory, Be cautious with the serious Investing digital technology
keeping track of the price of change of the Covid-19 in business administration
raw material pandemic in 2021
SOLUTIONS
● Launch a new technological system called BRAVO to manage

Well - managed inventory more effectively

inventory ● Exporting steel and having other ways to prevent steel from natural
effects will be the most priority of Hoa Phat in 2021

● Remains to produce the average number of products

● Consider investing in other fields to gain profit such as medical

equipment, vaccines…
Be cautious with
Covid 19 ● Focus on exporting our products to foreign markets such as America,
Japan, China…, which countries can control the pandemic.

● Raising the average academic level of our employees in terms of

knowledge and skills

Investing in ● Management software: BRAVO

technology ● Hoa Phat Dung Quat Steel Integrated Complex
THANKS
FOR
LISTENING