THEORITICAL BACKGROUND
BSD’S HNANCIAL ANALYSIS
Introduction
Trading name: Saigon Alcohol Beer and Beverages Corporation (Sabeco)
Saigon Beer - Alcohol - Beverage Corporation, along with its subsidiaries, is a prominent producer and seller of a wide range of products in Vietnam, including beer, alcoholic and non-alcoholic beverages, and canned foods The company also specializes in the production of carton packaging, yeast malts, mineral water, and bottled pure water, while engaging in the import and export of related raw materials Additionally, Saigon Beer provides various services such as real estate, hotel management, logistics, transportation, and food-processing machinery, alongside the installation and maintenance of mechanical systems and equipment.
In 1875, Victor Larue, a Frenchman in Indochina, founded a small brewery in Saigon, which would become the precursor to Saigon Beer By 1910, this brewery had evolved into a full-scale manufacturing facility, producing not only beer but also soft drinks and ice.
1927, the factory was officially incorporated into the System BGI of France, and in
1977 was controlled by the South Brewery Company After that, It was renamed to Sai Gon Beer Factory, then moving to new development.
On May 17, 1977, the Minister of Food issued decision No 845/LTTP, allowing the Foodstuff Southern Wine Company to take over and manage the BGI factory Consequently, on June 1, 1977, the factory was officially renamed Sai Gon Beer Factory.
In October 1985, the Sai Gon Beer Factory made history by launching the first canned beer in Vietnam, marking the birth of beer 333 Initially, the factory produced two products: the 610ml Larue bottle and the 330ml 333 beer bottle Today, Sai Gon Beer offers a diverse range, including Saigon Beer Lager, Saigon Beer Export, Beer 333, and Saigon Beer Special.
In February 1992, the Sai Gon Beer Factory launched a new beer extraction line with a capacity of 30,000 bottles per hour, marking a significant upgrade in production efficiency This modernization also included the transition from wooden safes to plastic tanks, allowing for a wider variety of products Additionally, the factory introduced a new 450ml bottle, replacing the previous 500ml size.
1993: Sai Gon Beer Factory became Sai Gon Beer Company after the merger of Sai Gon Ice Factory and Beer Alcohol Factory.
1996: The birth of Saigon Export beer.
August 1996: The new product of Saigon export bottle with capacity of 355ml was bom.
In 1999, Saigon Beer Company researched the launch of Sai Gon Special Beer.
In 2003, the Saigon Beer - Alcohol - Beverage Corporation (Sabeco) was established, evolving from the original Saigon Beer Company This corporation encompasses several key members, including Binh Tay Liquor Company, Chuông Duong Beverage Company, Phu Tho Glass Factory, and a service and trading company focused on beer.
In 2007-2008, the company underwent an IPO, significantly transforming its operational model through the equitization process, and has since maintained a charter capital of VND 6,412,811,860,000 without any increase Operating as a joint stock company, Saigon Beer - Alcohol - Beverage Corporation was honored with the title of Labor Hero of the Doi Moi period in 2008 and officially inaugurated the Sai Gon - Cu Chi Beer Factory, recognized as the most modern brewery in Southeast Asia.
2010: Sabeco reached the consumption of 1 billion liters of beer.
2015: Sabeco celebrates the 140th anniversary of its íồrmation and development. 2016: Oííicially listed on Ho Chi Minh Stock Exchange.
Explore 28 diverse export markets globally, including regions such as West Africa, Laos, and major European countries like France, the Netherlands, Germany, Sweden, and Switzerland Additionally, key markets in Asia, including Korea, Taiwan, Japan, and China, play a significant role, alongside North American opportunities in the USA The list also highlights markets in Australia, New Zealand, Russia, Denmark, and Panama, showcasing a broad spectrum of international trade possibilities.
Thailand, Philippines, Chile, Singapore, Canada, Spain, Cambodia, Malaysia
2.2 Subsidiary company: Sai Gon-Dong Xuan Beer & Wine Joint Stock Company
• Full name: SAIGON BEER JOINT STOCK COMPANY - DONG XUAN
• International transaction name: Sai Gon- Dong Xuan Beer Joint Stock
• Shareholder structure as at 31 December 2015
Shareholder Structure Common Shares Proportion
Binh Tay Wine joint stock company 1,500,000,000 5%
• The company has two manufacturing plants:
+ Main office: Sai Gon - Dong Xuan alcoholic factory in Thanh Ba, Phu Tho
+ Facility 2: Sai Gon - Me Linh Brewery
Address: Km 9 - Thang Long - Noi Bai, Quang Minh town, Me Linh district, Hanoi Tel: 84-04 8840392 - Fax: 84-04.8865188
• Website: http://www saigondongxuan.com.vn
Saigon Beer - Alcohol - Dong Xuan Joint Stock Company is one of the largest beer and wine companies in our country Saigon Beer- Liquor Joint Stock Company- Dong
Established on September 15, 1965, in Thanh Ba, Phu Tho, Saigon Beer - Liquor Joint Stock Company has experienced over 40 years of steady growth and development The company has successfully navigated the market economy while embracing the trends of globalization and integration.
The formation and development of Sai Gon - Dong Xuan Wine Joint Stock Company can be summarized as follows:
During this period, the company successfully expanded its product line to include lemon, orange, pineapple, and apricot The Board of Directors took bold steps to modernize technology, leading to a significant milestone in 1985 when alcohol production reached 329,225 liters with an impressive alcohol content of 96.5 degrees.
Due to changes in the State management mechanism, the factory struggled to adapt, leading to continuous losses and the threat of bankruptcy, resulting in mandatory leave for workers and reduced wages for those who remained In response, the provincial People's Committee and Department of Industry convened multiple meetings to address these challenges The factory's board of directors took decisive action by enhancing staff capabilities and implementing innovative solutions Gradually, the product was improved with new designs that aligned with consumer preferences Since 1991, the factory's business situation has flourished, marking the beginning of a new phase for the enterprise.
In 1994, according to Decision No 54 / 'QDUB of Vinh Phu People's Committee, the enterprise was renamed Dong Xuan Liquor Company By 1995, interest had reached 156,515,806 VND.
The company has made a significant advancement by successfully overcoming past losses and achieving impressive profits In a bold move, the board of directors has invested in a state-of-the-art German beer production line located in the Km9 - North Thang Long area, covering 15,630 square meters This investment led to the launch of the company's first high-quality product in 1997.
At present, the company has two factories:
- Alcohol, Sai Gon - Dong Xuan wine factory in Thanh Ba - Phu Tho, specializing in producing ethanol 1.5-million-liter alcohol, 3 million liters Alcohol for life and export.
The Sai Gon Me Linh Beer Factory, located in Me Linh - Vinh Phuc, boasts an impressive annual production capacity of 30 million liters of beer Its products are enjoyed by both domestic and international consumers, highlighting the factory's significant presence in the beverage market.
On January 19, 2007, the People's Committee of Phu Tho Province issued Decision No 113/QD-UBND, facilitating the transfer of state capital from Sai Gon Beer Joint Stock Company to Dong Nai Beer Corporation, which is managed by Saigon Beverages As a result, the company officially became a member of the Saigon Beer Alcohol Beverage Corporation.
To enhance market performance, the company prioritizes the preservation of its brand identity for Henninger beer, Mebeco beer, and Dong Xuan wine It employs targeted strategies to explore new markets while nurturing and expanding its current customer base Additionally, the company focuses on professional marketing initiatives to elevate brand visibility through mass media and trade fairs, both domestically and internationally.
Initially the company has achieved some remarkable achievements:
- 12/14 Products of the company have won gold medals in the domestic and intemational fairs.
- Gold Cup for Public Health in 2001.
- Golden Globe Made in Vietnam 2002, Golden Globe Made in Vietnam 2004.
- Winning Golden Lotus Cup and portraiture of Thai Thai Grapefruit at Exempo Fair for Export and Consumption 2004.
- Vietnam Quality Award 2005, 2006, 2007 by Ministry of Science and Technology.
CHALLENGE OPPORTUNITIES AND SOLUTIONS
Domestic and international contexts
Vietnam is emerging as one of the most attractive consumer markets globally, driven by rising average incomes and increasing consumer demand As Vietnamese consumers prioritize quality, they are setting higher standards that intensify competition among both domestic and foreign manufacturers In 2016, Vietnam's beer consumption reached 3.8 billion liters, establishing the country as the leading beer consumer in ASEAN and the third largest in Asia On average, each Vietnamese person consumes about 41 liters of beer annually, contributing to a consistent growth of 5 to 10% in the beer industry over the past decade.
Vietnam's beer market has evolved significantly, facing fierce competition not only from foreign brands but also from domestic brewers This heightened rivalry has led to a surge in the launch of innovative canned and bottled beer products, featuring eye-catching and modern designs As a result, the quality of Vietnamese beer has improved, with rigorous taste inspections implemented to meet customer satisfaction and rapidly increase market share.
The Vietnam beer market is primarily led by domestic brands like Hanoi Beer from Habeco and Saigon Beer from Sabeco However, this landscape is poised for change as major breweries announce plans to expand their production capacity to better meet growing market demands.
Anheuser-Busch InBev inaugurated a Budweiser brewery in Binh Duong Province in 2015, initially with a capacity of 50 million liters, which has recently been expanded to 100 million liters per year, highlighting the strong growth of Vietnam's alcoholic beverage sector Recognizing Vietnam as the most crucial market in Southeast Asia, Sapporo has also made significant investments in the region, increasing its brewery capacity in Long An province from 40 million liters to 100 million liters annually, alongside robust advertising efforts for its Sapporo beer brand.
In the past five years, competition in Vietnam's beer industry has intensified, with numerous domestic breweries facing challenges from major international brewers from Germany, Belgium, Japan, and Thailand These foreign companies employ flexible advertising and marketing strategies, including distributor discounts, which local brewers struggle to match While domestic breweries maintain a strong market presence by investing in expansion and diversifying their product offerings, they must enhance their branding and distribution systems from the outset and ensure their products meet traditional taste standards Despite a favorable inclination among Vietnamese consumers towards local products, domestic beer companies must improve packaging, quality, and pricing to remain competitive in the long run.
Sabeco aims to boost its domestic beer market share from 40% to 50% and raise production from 1.7 billion liters to 2 billion liters by leveraging its integration into ThaiBev's retail network With a robust infrastructure of 10 regional trading companies and approximately 1,200 first-level dealers, Sabeco's ambitious goals are well within reach.
Leveraging the robust investment and business strategy from ThaiBev, Sabeco is poised to strengthen its market position against competitors Furthermore, with over 20 breweries across the country, Sabeco is strategically expanding its presence in the Southern market while gradually penetrating the Central and Northern regions.
Sabeco employs a closed production process for its metal packaging, which enhances efficiency and quality This robust platform positions Sabeco to gradually dominate the Vietnamese beer market, effectively competing against both domestic and international rivals.
Vietnam's vibrant street food culture is driving a significant rise in beer consumption, making it an attractive market for foreign corporations To capitalize on this trend, these companies are strategically acquiring domestic breweries with large production capacities and established distribution networks This approach has become a focal point for major beer brands looking to establish a strong presence in Vietnam in recent years.
To enhance competitiveness in the brewing industry, domestic enterprises must adopt innovative strategies, focusing on equipment investment, technology advancements, and quality improvements, along with revamping labels and packaging Additionally, supportive state policies are essential for Vietnamese brewers to thrive in a competitive market Companies should prioritize brand development and maintain their reputation while being proactive and responsive to market changes, ultimately improving their production and business operations.
Industry 4.0 introduces what has been called the “smart factory,” in which Cyber - physical Systems monitor the physical processes of the factory and make decentralized decisions The physical Systems become Internet of Things, communicating and cooperating both with each other and with humans in real time via the wireless web.
For a factory or System to be considered Industry 4.0, it must include:
Interoperability — machines, devices, sensors and people that connect and communicate with one another.
Information transparency — the Systems create a Virtual copy of the physical world through sensor data in order to contextualize information.
Technical assistance encompasses the capability of systems to aid humans in decision-making and problem-solving, as well as to support them in tasks that may be overly complex or hazardous.
Decentralized decision-making — the ability of cyber-physical Systems to make simple decisions on their own and become as autonomous as possible.
Improving health and safety in hazardous work environments can significantly enhance worker well-being By utilizing data throughout the manufacturing and delivery processes, supply chains can be more effectively managed Implementing computer control systems can lead to greater reliability and consistency in productivity and output As a result, businesses may experience increased revenues, expanded market share, and higher profits.
Vietnamese brewers face significant challenges due to limited investment in modern machinery and insufficient production capacity to meet customer demand Additionally, there is a widespread lack of experience and skilled manpower necessary for developing and implementing advanced systems This situation is compounded by a general reluctance among stakeholders and investors to commit to new technologies, posing a considerable hurdle for the country's beer manufacturers.
DRAWBACK
The revenue growth rate significantly outpaces the growth rate of profit targets, highlighting the need for businesses to focus not only on scaling operations but also on effective cost management By addressing expenses and avoiding excessive backlog, companies can enhance their capital efficiency and ensure better investment outcomes.
BSD's short-term solvency ratios have declined compared to the previous year, yet the company maintains no overdue debts, ensuring its capacity to meet short-term obligations To enhance its financial stability, BSD should implement a prudent cash reserve policy, effectively manage short-term debt, and regularly monitor and compare its debt levels Without a strong ability to meet immediate payment obligations, BSD may face challenges in settling debts and building trust with suppliers.
The company's Return on Equity (ROE) does not reflect its inherent advantages and resources Although the firm benefits from imported inputs from its parent company, allowing it to concentrate on production, the overall performance remains disappointingly low and average.
SOLUTIONS
3.2.1 Establish a specialized unit in charge of íinance of BSD.
- Currently, BSD only has accounting department and Chief accountant takes responsibility for tĩnancial activities.
To ensure compliance with regulations and enhance the efficiency of production and business activities, it is essential to establish internal financial controls across all departments Regular implementation and monitoring of these controls will facilitate timely identification and resolution of operational issues within the company.
3.2.2 Good relationship with commercial banks
Establishing a trustworthy relationship with commercial banks, credit institutions, and customers is essential for securing favorable loan conditions and lower interest rates By leveraging capital effectively, companies can optimize their funding sources through strategic partnerships and subsidiaries where they hold significant shares.
3.2.3 Improve production efficiency of the company Revise adjusting cost items, cutting down unreasonable costs.
- The business owner should review existing operations and develop a strategic plan with longer-term goals for the business Goals include: tĩnancial metrics and staff performance hurdles.
After establishing the goals, it is essential for the business owner to convene a meeting with all staff members to discuss these objectives and gather their insights on the necessary processes and policies to reach them effectively.
Business owners and senior staff should create an implementation plan that effectively measures and monitors policies and procedures, ensuring that outcomes align with the organization's overall objectives.
To effectively manage your business accounts, it is crucial to ensure that your staff is well-trained in both internal procedures and financial software Invest in training for your team to enhance their understanding of processes and to utilize technology efficiently, particularly if you rely on general office staff instead of seasoned accounting professionals Additionally, creating a comprehensive process manual can serve as a valuable reference, especially during the recruitment of new employees.
Batch processing invoices and data entry enhances efficiency by allowing you to consolidate tasks into set batches, rather than handling each item as it arrives Establish clear submission deadlines for employees to ensure timely and accurate reporting, which is crucial for tax purposes Staying compliant with HMRC deadlines is essential, as missed deadlines can incur costs, making consistency in output a priority for your operations.
To enhance efficiency and save time, it’s essential to adopt modern accounting technology, as outdated software and poorly maintained systems can significantly hinder productivity Investing in a purpose-built accounting solution will streamline processes and ultimately prove cost-effective, given the remarkable advancements in accounting technology in recent years.
To foster a culture of collaboration within your organization, it's essential that all departments understand the importance of working together rather than in isolation Utilize effective communication tools, such as an intranet system or regular meetings, to promote teamwork and ensure that collaboration is embedded in your company's core values Additionally, ensure that your software programs are integrated and communicating effectively, just like your physical staff, to streamline processes and enhance overall productivity.
Outsourcing BSD's accounting can lead to significant time and cost savings for businesses By hiring a part-time bookkeeper, engaging an accounting firm, or utilizing the services of a freelance financial manager or director, companies can efficiently manage their financial tasks while focusing on core operations.
To sustainably increase cash flow, companies should focus on three key activities: cash generated from operating activities, cash from investing activities, and managing financial expenses Currently, it is crucial for businesses to prioritize raising funds through production to enhance their financial stability.
An enterprise may utilize loans or debt to address capital shortages while aiming to enhance return on equity (ROE) or earnings per share (EPS), although this approach also elevates financial risk.
BEP: Economic Retum on Assets
D / E: Debt ratio on equity r: loan interest rate
The formula indicates that Return on Equity (ROE) is influenced by the Break-Even Point (BEP), loan interest rates, and the debt-to-equity ratio Consequently, when BEP exceeds the interest rate (r), firms that utilize more loans can achieve a higher ROE, as financial leverage enhances the return on equity.
In my analysis, the comparison may be insufficient due to the differing capital and asset policies, as well as variations in cash flow and debt management strategies, between the two companies, resulting in distinct financial indicators.
- https://www.stockbiz.vn/Stocks/BSD/Ratios.aspx
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Balance Sheets and Income Statements of BSD over 2013, 2014, 2015 and 2016
Profit/Loss of investments in associates and joint ventures
Proíit after tax for shareholders of the parent company 13,586 13,510 9,284
BALANCE SHEET Year2014 Year2015 Year2016
Total owner's equity and liabilities 183,609