Corporate finance BBUS - Group report_Hòa Bình construction analysis.

TABLE OF CONTENTS I. Introduction.....................................................................................................................................2 1. Hoa Binh Construction............................................................................................................ 2 1.1. Company background........................................................................................................2 1.2. Hoa Binh's Ticker Symbol and Independent Audit Firm.................................................. 3 2. The strategy of Hoa Binh over 2021-2023.............................................................................. 3 3. Overview of Hoa Binh’s competitors...................................................................................... 4 3.1. Coteccons Construction Joint Stock Company................................................................. 4 3.2. Vietnam Construction And Import-Export Joint Stock Corporation.................................4 II. Analysis of Balance Sheet and Income Statement......................................................................5 1. Balance Sheet............................................................................................................................ 5 1.1. Total assets.........................................................................................................................5 1.2. Total Liabilities..................................................................................................................7 1.3. Owner's Equity................................................................................................................ 10 2. Income Statement................................................................................................................... 11 2.1. Total Revenue..................................................................................................................12 2.2. Cost Of Goods Sold.........................................................................................................12 2.3. Total Expense.................................................................................................................. 13 2.4. Net Income...................................................................................................................... 14 2.5. Earnings per share........................................................................................................... 15 III. Ratios analysis............................................................................................................................ 16 1. Liquidity ratio.........................................................................................................................16 1.1. Current ratio.....................................................................................................................16 1.2. Quick ratio....................................................................................................................... 17 1.3. Cash ratio.........................................................................................................................17 2. Solvency ratio..........................................................................................................................19 3. Profitability ratio.................................................................................................................... 24 3.1. Profit Margin................................................................................................................... 25 3.2. Return on Assets..............................................................................................................25 3.3. Return on Equity..............................................................................................................25 4. Efficiency ratio........................................................................................................................27 4.1. Total-Asset Turnover ratio...............................................................................................27 4.2. Fixed-Asset Turnover...................................................................................................... 28 IV.References....................................................................................................................................30 1 I. Introduction 1. HoaBinhConstruction Hoa Binh Construction Group Joint Stock Company Industry: Construction and Engineering Sector: Industrials Postal address: 235VoThiSau,VoThiSauWard,District3,HCMCity Email: info@hbcg.vn Website: https://hbcg.vn/ 1.1. Company background The predecessor of Hoa Binh Construction Group Joint Stock Company is Hoa Binh Construction Office, which was established in 1987 with a team of five officials and 20 employees, initially focusing on designing and building private housing projects. On December 1, 2000, Hoa Binh Construction & Real Estate Corporation was founded, inheriting the resources of the Hoa Binh Construction Office, and later, in June 2017, the company was renamed Hoa Binh Construction Group Joint Stock Company. The company is among the top 5 largest general contractors in Vietnam, specializing in various construction categories, including complex commercial buildings, housing projects, cultural, medical, and educational projects, industrial buildings, and infrastructure such as the Passenger Terminal T2 Noi Bai International Airport and The Peak Garden… With a market capitalization of 2,587 billion VND and a charter capital of 2,741,332,700,000 VND, the company demonstrates significant financial strength. By the end of 2023, the number of employees had reduced to 2,163. The company's extensive presence spans 49 out of 63 provinces in Vietnam and four countries internationally, with a significant focus on Ho Chi Minh City and its surrounding areas. These figures highlight the company's considerable size and substantial market reach. The company’s majority-owned subsidiaries include Matec Construction Machinery Company Limited (Matec) with 100% capital contribution, Hoa Binh Paint Company Limited (HBP) with 100%, Hoa Binh House Joint Stock Company (HBH) with 99.96%, and Hoa Binh Infrastructure Construction Investment Joint Stock Company (HBI) with 97.97%. 2 1.2. Hoa Binh's Ticker Symbol and Independent Audit Firm The company's shares were officially listed on the Ho Chi Minh Stock Exchange (HOSE) under the ticker symbol HBC on December 27, 2006. Hoa Binh's independent audit firm was Ernst & Young Vietnam Limited (EY) from 2012 to 2022, however in 2023, it engaged AASC Auditing Firm. 1.2.1. Board of Directors The Board of Directors at Hoa Binh Construction Group includes founder and chairman Mr. Le Viet Hai and also the largest shareholder, CEO Mr. Le Van Nam, vice chairman Mr. Le Viet Hieu, and independent board members Ms. Vu Thi Hoa, Mr. Nguyen Tuong Bao, and Ms. Nguyen Thi Luot. This diverse composition provides strategic guidance, operational oversight, and ensures transparency in governance. 1.2.2. Market Overview Overall, most companies have witnessed a decline in performance over the period 2021-2023, including leading companies such as HBC, CC1, and FCN. Some companies have maintained strong growth, such as VCG, SJG, and DPG. The differences in performance results depend on their construction sectors and the fierce competition among businesses operating in the same field. While most residential and industrial construction projects have significantly declined, the majority of infrastructure construction companies have shown more stable performance or only slight decreases. 2. Context Strategy The strategy of Hoa Binh over 2021-2023 2021 2022 2023 The year 2020 presented significant challenges due to the global COVID-19 pandemic's impact on economies worldwide. The construction industry, particularly affected by disruptions in international trade, experienced slowed growth and project activity. This overall industry downturn likely harmed Hoa Binh's operations and profitability in 2020. As 2022 began, the COVID-19 pandemic had somewhat stabilized, but geopolitical tensions still posed significant economic risks worldwide, directly impacting the construction industry. Hoa Binh demonstrated resilience in 2021 by achieving a 1.2% revenue increase compared to 2020. However, the company's overall profitability remained subdued. The global (post-COVID, Ukraine war, rising interest rates) and domestic (high-interest rates, sluggish real estate, slow public funding) environment remained challenging in 2023. Hoa Binh's 2022 performance was marked by a significant net loss and an imbalanced capital structure. Recovery, Stabilization, and Performance Enhancement Breakthrough and International Expansion Restructuring and Stabilization 3 Targets (VND) Revenue: 13,500 billion Net income: 235 billion Revenue: 17,500 billion Net350 income: billion Improve efficiency and cost management through restructuring. - Align financial structure with market trends. - Expand market reach with new contracts and diversified markets. - Embrace digitalization and construction technologies for efficiency and quality. - Plan 3. Solidify Hoa Binh's position as a leading construction firm in Vietnam. Prioritize residential and resort real estate projects to capitalize on growing demand. Expand into the promising industrial and infrastructure sectors. Establish a global presence by pursuing international construction projects. Revenue: 12,500 billion Net income: 125 billion - Prioritize cash flow and debt repayment. Diversify revenue streams with new projects and markets. Optimize workforce and manage receivables. Implement cost-cutting measures. Focus on realistic goals and long-term stability. OverviewofHoaBinh’scompetitors 3.1. CotecconsConstructionJointStockCompany Coteccons Construction Stock Company is a prominent player in Joint the construction industry in Vietnam. Founded in 2004, Coteccons is the largest construction company in Vietnam in terms of scale and financial strength. With a pioneering vision, Coteccons leads in applying technology to develop a green, clean, civilized and transparent construction industry in Vietnam. It is often compared with other major players like Hoa Binh and Vinaconex due to its significant scale and influence in the market. As reported, the company’s revenue in 2023 was 187.922.000.000 VND. 3.2. VietnamConstructionAndImport-ExportJointStockCorporation Vietnam Construction Import-Export Jointhe Stock Corporation established in 1988, is And another major player in Vietnamese construction sector. With a long history and a strong reputation for executing large-scale infrastructure projects, Vinaconex is positioned as one of the top construction firms in Vietnam. Currently ranked 4th among the top 10 construction contractors in the country, it competes closely with industry leaders like Coteccons and Hoa Binh.This competition makes Vinaconex a key player in shaping the construction landscape of Vietnam. As reported, the company’s revenue in 2023 was 396.437.714.817 VND. 4 II. 1. Analysis of Balance Sheet and Income Statement Balance Sheet 1.1. Totalassets 2021 2022 2023 Change between 2021 and 2023 4.4% 3.2% 2.5% -47% Short-term financial investments 0.43% 0.28% 0.10% -78% Current receivables 69.6% 68.4% 69.97% -8% Inventories 14.4% 14.2% 14.9% -5% Other current assets 0.86% 1.11% 0.64% -32% Total Current Assets 90% 87% 88% -10% Non – current receivables 0.5% 2.4% 2.5% 359% Fixed assets 5.8% 6.1% 4.7% -26% Investment properties 0.07% 0.07% 0.06% -12% Long term assets in progress 0.2% 0.34% 0.31% 21% Long-term investments 1.17% 1.16% 2.2% 72% Other long-term assets 2.5% 2.7% 2.1% -23% Total Non-current Assets 10.3% 100% 12.8% 100% 11.8% 100% Cash and cash