MINISTRY OF EDUCATION AND TRAINING

TRUONG DAI HOC THUONG MAI

-------------------------

MODULE: FINANCIAL MANAGEMENT

DISCUSSION

TOPIC:

FINANCING MANAGEMENT OF A COMPANY

ENTERPRISE: VINAMILK

Instructor: Nguyen Ngoc Khanh Linh

Classroom: 25111FMGM0237
Group: 7

Hanoi, March 2025

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 GROUP MEMBER ASSESSMENT FORM 7

Full name Student code Mission Classification

Nguyen Bao Ngoc 22K620081 Find infomation B
Nguyen Thi Thao 23K660023 Find information A
Nguyen + present
Trinh Thi Nhung 23K660024 Find infomation B
Nguyen Lan Phuong 23K660026 Slides A
Pham Thi Ha Phuong 23K660025 Word A
Ngo Chi Thanh 23K660028 Find information A
+ present

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 INTRODUCTION
In the modern economy, financial management plays a core role in ensuring
sustainable development and competitiveness of enterprises. A business that wants to
operate effectively not only needs quality products and good business strategies but also a
strong financial system.

Vinamilk, the leading dairy company in Vietnam, is a typical example of success in

financial management. With more than 40 years of development, Vinamilk has not only
maintained its leading position in the domestic market but also expanded its operations to
the international market. Vinamilk's success cannot be separated from a reasonable financial
strategy, from mobilizing and allocating capital, optimizing cash flow, to managing
financial risks and maximizing shareholder value.

The Financial Management course will help students understand core financial
principles through analyzing practical businesses such as Vinamilk. By studying Vinamilk's
financial strategies, students will have the opportunity to approach how a large enterprise
applies financial theory into practice, thereby drawing lessons and applying them to similar
situations in the future.

It is hoped that this subject not only provides theoretical knowledge but also helps
students have a more practical view of corporate financial management, thereby improving
strategic thinking and financial analysis skills, contributing to future career success.

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 INDEX
Chapter 1. Theoretical basis .................................................................................................6
1 Overview of financial management and funding management .....................................6
1.1 Corporate financial management ..................................................................................6
1.2. Financing Management .................................................................................................6
1.3 The role of financial management in business ..............................................................6
1.4 Basic principles of financial management .....................................................................7
2. Main components of financial management ...................................................................7
2.1 Financing Decision ..........................................................................................................7
2.2 Investment Decisions .......................................................................................................7
2.3 Earnings and Dividend Management Decisions ...........................................................8
3. Financial Management in Enterprises ............................................................................8
3.1 Working Capital Management ......................................................................................8
3.2 Financial Risk Management ...........................................................................................8
4. Conclusion ..........................................................................................................................8
Chapter 2. Overview of Vinamilk ........................................................................................8
1 History and development ...................................................................................................8
2 Organization structure ...................................................................................................9
2.1 Levels in the Vinamilk organizational structure .......................................................9
2.2 Analyze the organizational chart and structure of Vinamilk .................................10
3 Competitiveness analysis ................................................................................................12
Chapter 3. Financing management of Vinamilk ..............................................................14
1. Short term financing management ................................................................................14
1.1 Accrued expenses ..........................................................................................................14
1.2 Trade credit ...................................................................................................................15
1.3 Short term bank credit .................................................................................................15
2 Long term financing management ..................................................................................16
2.1 Long term bank credit ..................................................................................................16
2.2 Bonds ..............................................................................................................................17
2.3 Stocks ..............................................................................................................................18
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Chapter 4. Evaluation of financing management of Vinamilk and recommendations .19
1 Evaluation of financing management of Vinamilk .......................................................19
1.1 Strengths of Vinamilk's Financing Management .......................................................19
1.2 Weaknesses of Vinamilk's Financing Management ...................................................20
2 Recommendations ............................................................................................................21

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CHAPTER 1. THEORETICAL BASIS.
1 Overview of financial management and funding management.
1.1 Corporate financial management.
Financial management is the process of planning, organizing, operating and
controlling activities related to cash flows, capital, assets and financial resources of an
enterprise. According to Brealey, Myers & Allen (2019), the key goal of financial
management is to maximize corporate value for shareholders, through effective financial
decision making, risk management and maintaining liquidity.
1.2. Financing Management.
Financing management focuses on raising capital and optimizing the capital structure
to meet the long-term operating, investment and development needs of the enterprise. This
activity includes choosing a mobilization channel (short-term loans, long-term loans, issuing
shares, bonds, financial leasing, etc.) and managing the ratio between debt and equity.
Effective financing management helps enterprises:
+ Maintain stable cash flow, ensure payment of debts when due.
+ Support long-term investment, expand scale and improve competitiveness.
+ Control financial risks, especially interest rate risk, liquidity risk and exchange rate risk.
For a large enterprise like Vinamilk, an appropriate capital structure not only ensures
maintaining its leading position in the dairy industry but also helps the company seize
opportunities to expand into international markets.
1.3 The role of financial management in business.
Financial management plays an important role in strategic decision making and daily
operations of the business. The main roles include:
+ Capital mobilization:
o Businesses need finance to invest in assets, research and development, and expand
production. Financial management helps determine the optimal source of funding
(debt, issuing shares, equity, etc.).
o Cash flow management: Ensuring that the business has enough cash to pay operating
costs, salaries, and maturing debts.
o Optimizing profits: By controlling costs, optimizing capital costs, and finding the
best investment opportunities.
+ Controlling financial risks:
o Minimizing risks from fluctuations in interest rates, exchange rates, changes in
economic policies, or other unstable factors.
o Making investment decisions: Businesses need to identify investment projects with
high profit potential and long-term benefits.

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1.4 Basic principles of financial management.
Financial management is based on the following core principles:
+ Time value of money principle: Money is worth more now than in the future due to
inflation and opportunity costs.
+ Risk and return balance principle: The higher the risk, the greater the expected return, but
businesses need to evaluate carefully before investing.
Capital optimization principle:
+ Businesses must determine the balance between equity and debt capital to optimize the
cost of capital.
Liquidity principle:
+ Ensure there is enough cash to pay financial obligations without disrupting business
operations.
2. Main components of financial management.
Financial management can be divided into three main decision groups:
2.1 Financing Decision.
Financing decisions involve raising capital to finance business activities and projects.
Businesses can choose between the following sources of financing:
+ Internal financing: Includes retained earnings, depreciation and other cost savings. This is
a source of capital that does not incur interest costs or dilute shareholders' ownership.
+ Debt financing: Businesses can borrow from banks, issue bonds or use trade credit to raise
capital. Using debt helps take advantage of tax benefits but also increases financial risk.
Equity financing:
+ Issuing shares helps businesses raise long-term capital but reduces the control of existing
shareholders.
2.2 Investment Decisions.
Investment decisions are concerned with the most efficient use of capital. Types of
investment decisions include:
Investment in fixed assets: Such as factories, machinery, production technology, to
expand scale and improve productivity.
Investment in working capital: Managing inventories, receivables and cash to ensure
smooth operations.
Financial investment: Purchasing stocks, bonds or other financial instruments to
optimize profits.

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2.3 Earnings and Dividend Management Decisions.
This decision involves distributing earnings to shareholders or reinvesting them in
the company. Options include:
+ Paying cash dividends: Shareholders receive a portion of earnings in cash, which helps
build confidence in the company.
+ Reinvesting earnings: The company retains earnings to expand operations and increase
long-term value.
3. Financial Management in Enterprises.
3.1 Working Capital Management.
Working capital management helps enterprises maintain short-term solvency and
ensure stable operations. The main components include:
+ Cash management: Ensuring sufficient funds to pay debts when due.
+ Receivables management: Control customer debts to reduce credit risk.
+ Inventory management: Optimize inventory to avoid wasting resources.
3.2 Financial Risk Management.
Financial risks can arise from fluctuations in interest rates, exchange rates, economic
downturns or policy changes.
4. Conclusion.
Financial management is one of the important factors that help businesses maintain
effective operations, optimize costs and create long-term value. Good financial management
not only helps businesses develop but also contributes to the stability of the economy.
In the context of an increasingly competitive and volatile market, businesses need to
apply flexible financial strategies, take advantage of digital technology and improve
financial management capacity to ensure sustainability and growth in the future.
CHAPTER 2. OVERVIEW OF VINAMILK.
1 History and development.
Vinamilk, whose full name is Vietnam Dairy Products Joint Stock Company, has
gone through three main development stages:
+ First stage (1976-1986): Vinamilk was formed in 1976 with the original name of Southern
Dairy - Coffee Company, after three dairy factories were nationalized by the government.
+ Second stage (1986-2003): This was the period of innovation for Vinamilk, in which the
company expanded its production. Can Tho Dairy Factory was inaugurated in May 2001.
+ Third stage (2003 - present): Since November 2003, Vinamilk has been transformed into a
joint stock company. During this period, Vinamilk has continuously expanded and
developed, including the inauguration of additional dairy factories in Binh Dinh and Ho Chi
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Minh City. Currently, Vinamilk is one of the leading enterprises in the dairy processing
industry in Vietnam, occupying a significant market share in many types of dairy products.
Specifically, Vinamilk accounts for more than 54.5% of the liquid milk market share, 40.6%
of the powdered milk market share, 33.6% of the drinking yogurt market share, 84.5% of
the yogurt market share and 79.7% of the condensed milk market share nationwide. In 2021,
Vinamilk celebrated its 45th anniversary and entered the list of the top 40 dairy companies
with the highest revenue in the world. In addition, Vinamilk - Vietnam Dairy Products Joint
Stock Company, has made great strides:
o International expansion: Vinamilk has reached out to the international market by
acquiring the dairy company Campina in Singapore in 2005 and the Driftwood
company in the US in 2012. Vinamilk has also expanded its export market to other
countries such as Cambodia, the Philippines and the Middle East.
o Investment in technology: Vinamilk has continuously invested in technology to
improve product quality. A typical example is that Vinamilk invested 120 million
USD in 2013 to build the most modern dairy factory in Southeast Asia.
o Sustainable development: Vinamilk always attaches importance to sustainable
development, implementing community support programs and environmental
protection. Vinamilk has been honored with many international awards for product
quality and social responsibility. Vinamilk is not only a symbol of the Vietnamese
dairy industry but also a testament to the success of Vietnamese enterprises in
reaching out to the international market. Vinamilk continues to aim to become one of
the world's leading dairy companies.
2 Organization structure.
2.1 Levels in the Vinamilk organizational structure.
According to the VNM database structure diagram, the levels in the company are
classified in the following order: top management level, middle management level, basic
management level and management tools.

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.
2.2 Analyze the organizational chart and structure of Vinamilk.
Through the above diagram, Vinamilk currently has the following functional
departments:
+ General Meeting of Shareholder:
o The General Meeting of Shareholders of Vinamilk's organizational structure includes
all shareholders - those who have voting rights from common shareholders to
preferential voting shareholders. The General Meeting is the highest decision-making
body of the joint stock company. The General Meeting of Shareholders will have the
right to decide on business plans and tasks to ensure production based on the
development orientations of the company. In addition, the General Meeting of
Shareholders can also decide to amend or supplement the charter capital of the
company. Some other powers of the General Meeting of Shareholders are to elect or
dismiss, remove members of the Board of Directors and the Board of Supervisors or
decide to dissolve, reorganize the company.
+ Board of Directors:
o The Board of Directors is the highest management body in the organizational
structure of Vinamilk. This position has full authority to decide on all issues related
to the company's goals and interests on behalf of the enterprise, except for issues
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 under the authority of the General Meeting of Shareholders. Vinamilk's Board of
Directo elected by the general meeting of shareholders, including a chairman of the
board of directors and 10 general meetings of shareholders.
o Since 2015, the highest position of Vinamilk has been held by Ms. Le Thi Bang Tam.
However, in April 2022, Mr. Nguyen Hanh Phuc officially became the new
Chairman of the Board of Directors for the 2022-2026 term, replacing Ms. Le Thi
Bang Tam.
+ Director, General Director of the company:
o The Director or General Director of the company in the Vinamilk organizational
structure is the person who assigns work and runs the company's business. This
position will be appointed by the Board of Directors or recruited by new personnel.
o Currently, the General Director of Vinamilk is Ms. Mai Thi Kieu Lien. She is
considered the person who helped put the Vinamilk brand on the world map with
many contributions to the company and society.
o Her wise strategies and decisions have helped Vinamilk continuously invest,
improve, and bring many quality products to domestic consumers. At the same time,
the company's export and international business sectors have also achieved many
impressive achievements.

+ Board of Supervisors:
o The Board of Supervisors in the organizational structure consists of 4 members
elected by the General Meeting of Shareholders. The term of office of the elected

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 Board of Supervisors is 5 years. Members will be re-elected and the number of
terms is unlimited.
o The Board of Supervisors has the function and duty to check the legality,
reasonableness, honesty, and prudence in the management and operation of
business activities. The inspection and supervision activities include accounting,
statistics, and financial reporting to ensure the legitimate interests of shareholders.
In particular, this unit will operate independently from the Board of Directors and
the Board of Management.
3 Competiviveness analysis.
* Price:
+ Price is always considered a competitive ability of enterprises through pricing, such as
low pricing, skimming pricing, penetration pricing, etc.
+ Because Vinamilk has identified its target customers as the working class and middle
class, the prices of their products are much more affordable than similar products of
competitors on the market.
* Products and structure:
+ Vinamilk owns an extremely diverse range of products, the system has been developed
over many years. This is considered one of the successes of the enterprise when it can meet
the needs of most customers of all ages.
+ Current demand is increasingly diverse. Users not only need good quality or nutritious
products but also have to ensure that they meet many other criteria such as no cholesterol
for people with high blood pressure, high calcium for people with osteoporosis, ... products
with attractive packaging.
+ Grasping those needs, Vinamilk has built many product systems to thoroughly meet each
customer's wishes. It can be seen that this is one of the leading capabilities of the enterprise.
* Product quality:
+ Currently, most raw materials are imported from countries with leading processing
industries. Even milk formulas are researched based on advanced foreign technology.
Therefore, almost all foreign milk has the same quality and ingredients as domestic milk.
+ Vinamilk has continuously invested in technology systems, packaging machinery, and
closed production processes from Europe, so it can be affirmed that domestic Vietnamese
milk can be equivalent in quality to imported milk.

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 * Vinamilk's Competitive Advantages:
+ To stand firm and succeed in today's fierce milk market, Vinamilk has built for itself
extremely solid competitive advantages.
+ First, this is an extremely strong and famous brand. This brings many advantages to
businesses when launching new products.
+ Second, the widespread distribution system with more than 80,000 retailers helps to
consume products conveniently and quickly.
+ Third, the large factory is invested in a systematic way and builds a dairy farm to provide
clean, standard raw materials, so product quality is always guaranteed.
+ Fourth, diversifying products with many items and always controlling quality from raw
materials, production to consumption, so the price is always competitive.

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CHAPTER 3. FINANCIAL MANAGEMENT OF VINAMILK.
1 Short-term Financial Management.
Short-term financial management plays an important role in ensuring Vinamilk's
production and business activities are continuous and effective. This includes controlling
cash flow, accrued expenses, managing trade credit and using short-term bank credit to
optimize solvency and enhance financial performance.
1.1 Accrued expenses.
Accrued expenses are expenses that Vinamilk has incurred but not paid at a certain
point in time. These can be operating expenses such as employee salaries, premises rental
costs, unpaid raw material costs or other financial expenses.
According to the consolidated financial statements for the years 2021-2023, the
following is a comparison table of Vinamilk’s short-term financial management for 2021-
2023:
Indicator 2021 2022 2023
Total Current Assets (billion VND) 20,593 37,350 40,582
Cash Of Cash Equivalents (billion VND) 2,922 4,867 8,271
Inventories (billion VND) 5,592 9,674 7,778
Total Current Liabilities (billion VND) 11,424 15,301 17,182

Trend Analysis:
+ Total current assets increased over the years, indicating Vinamilk’s business expansion
and strong working capital.
+ Cash & cash equivalents saw a significant rise in 2023, reflecting improved liquidity and
effective cash flow management.
+ Inventory levels decreased in 2023 compared to 2022, showing optimized inventory
management.
+ Total current liabilities have increased yearly, but remain manageable with stable liquidity
ratios.
+ The current and quick ratios have remained strong, ensuring Vinamilk’s ability to meet
short-term obligations.

 Overall, Vinamilk has maintained stable short-term financial management, with a

focus on strengthening liquidity and optimizing inventory control.

Good management of accumulated costs helps Vinamilk optimize cash flow, ensure
payment capacity and improve financial efficiency. Vinamilk's way of managing
accumulated costs is as follows:
+ Extending tax payment period: Vinamilk can take advantage of the prescribed tax
payment period to retain cash flow in the short term.

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+ Optimize salary payment time: Based on the salary payment schedule, the company can
optimize cash flow without affecting employee benefits.
+ Take advantage of prepayments from customers: This is a short-term source of capital
with no costs, helping Vinamilk have more cash to rotate operations.
1.2. Trade credit.
Trade credit is an important financial tool that helps Vinamilk manage working
capital effectively. This is a form of short-term financing that Vinamilk receives from
suppliers when purchasing raw materials and goods but does not need to pay immediately.
To compare Vinamilk’s trade credit (accounts payable to suppliers) from 2021 to
2023, we can refer to data from the company’s consolidated financial statements. Below is a
comparison table of accounts payable and other payables over these years:

Indicator 31/12/2021 31/12/2022 31/12/2023

Key Observations:
(million VND) (million VND) (million VND)
+ Accounts payable and 8,372,378 9,674,710 7,778,770 In
other short-term payables
2022, accounts payable and other payables increased by 15.5% compared to 2021, rising
from 8,372,378 million VND to 9,674,710 million VND.
+ In 2023, this figure decreased by 19.6% compared to 2022, dropping to 7,778,770 million
VND.

 These fluctuations may reflect Vinamilk’s debt management strategy and supplier
relationships in each year. To better understand the causes and impacts of these
changes, it is necessary to examine the detailed notes in each year’s financial
statements.

Benefits of trade credit for Vinamilk:

+ Reduce financial pressure: Helps the company have more time to rotate capital before
payment.
+ Optimize cash flow: Retain capital to invest in production activities or expand business.
+ Maintain relationships with suppliers: Taking advantage of trade credit without being late
on payment helps Vinamilk maintain its reputation and can receive better payment terms in
the future
1.3 Short-term bank credit.
Short-term bank credit is an important part of Vinamilk's short-term financial
strategy, helping the company have enough capital to maintain production and business
activities and expand when necessary.

Here is a comparison table of Vinamilk’s short-term loans for the years 2021, 2022,
and 2023:

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 Indicator 2021 2022 2023
(million VND) (million VND) (million VND)
Short-term loans 4,876,130 4,867,130 8,271,117
Total short-term 15,805,774 15,805,774 17,182,479
liabilities

Observations:
+ Vinamilk’s short-term loans remained at 4,867,130 million VND from 2021 to 2022 but
increased significantly to 8,271,117 million VND in 2023.
+ Total short-term liabilities also showed an upward trend, reflecting an increase in working
capital demand or a strategic financial decision by the company.

Forms of short-term bank credit used by Vinamilk:

+ Short-term unsecured loans: Vinamilk can borrow without collateral based on its
reputation and strong financial capacity.
+ Mortgage loans for inventory or receivables: Receivables from a large distribution system
can be used to secure short-term loans.
+ Import letters of credit (L/C): For imported goods, Vinamilk can use letters of credit to
delay payment to suppliers.
+ Overdraft limit: Banks can grant an overdraft limit for Vinamilk to flexibly withdraw
capital when necessary.
Benefits of short-term bank credit for Vinamilk:
+ Working capital support: Ensure the company has enough capital to maintain production
activities without interruption.
+ Taking advantage of business opportunities: Can quickly mobilize capital to invest in
market expansion opportunities.
+ Reasonable financial costs: Short-term loan interest rates are often lower than long-term
loans, helping to optimize financial costs.

However, Vinamilk also needs to manage these loans well to avoid financial risks,
ensure timely payment and maintain a safe payment ratio.

2 Long-term financing management.

2.1 Long-term bank credit.
Loan forms and contract structure: Vinamilk often signs long-term loan contracts
with large domestic banks (and sometimes with international financial institutions). These
loans usually have a term of 3 years or more, with loan conditions built on financial
commitments and secured by assets (which can be fixed assets or specific projects).
Loan conditions: Loan contracts often stipulate fixed or floating interest rates,
accompanied by strict financial guarantees and commitments. For example, the company

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must ensure financial indicators (such as debt/equity ratio) according to bank regulations,
thereby ensuring the ability to repay the loan throughout the loan period.
Intended use: The loan capital from the bank is used to invest in infrastructure,
expand production lines and implement long-term strategic projects. Using bank credit helps
Vinamilk access stable capital sources at relatively low costs if the interest rate market is
favorable.
Benefits:
+ Ensuring stable capital sources: Long-term loans help Vinamilk have a stable source of
capital to invest in projects to expand production and improve competitiveness.
+ Optimizing financial costs: Borrowing at reasonable interest rates helps Vinamilk manage
financial costs effectively, contributing to increasing profits.
+ Maintaining control: Borrowing does not affect the ownership and control rights of
existing shareholders.
As of December 31, 2023, according to the financial report, Vinamilk has long-term
loans from commercial banks such as Vietcombank, BIDV and HSBC.

Year Long-term loan balance Main Bank Interest Intended use

(billion VND) rate (%)

2021 1.200 Vietcombank, 7,5% Expand factories and

BIDV farms
2022 1.800 HSBC, 7,8% Purchase equipment,
VietinBank develop new products
2023 1.500 BIDV, 7,2% Increase working capital
Vietcombank

 Trend: Vinamilk's long-term loans are not too large because the company has strong
operating cash flow. Most of the loans are focused on infrastructure investment and
product development.

2.2 Bonds.
Issuance and terms: Vinamilk issues corporate bonds on the stock market to raise
capital from institutional and individual investors. These bonds usually have a term of 5 to
10 years, with interest rates set from the time of issuance.
Intended use: The money raised from bonds is often used to finance production
expansion projects, invest in modern technology and improve infrastructure, while helping
to reduce dependence on bank credit sources.
Advantages of this form:
+ Competitive cost of capital: Bonds allow Vinamilk to access capital at competitive interest
rates, especially in a market where many investors are looking for stable debt instruments.

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+ Transparency and liquidity: When listed on the stock exchange, these bonds can be traded,
creating high liquidity and helping the company have a public valuation of the cost of
capital.
+ No dilution of shares: Bonds are debt instruments, so they do not affect the ownership
ratio of existing shareholders.
+ Flexibility in financial management: Choosing the right term and interest rate helps
Vinamilk be flexible in managing financial costs.
Vinamilk's bond issuance status: Vinamilk does not issue bonds regularly due to its
abundant cash flow from business operations. However, in 2022, Vinamilk issued a number
of bond lots to finance investment projects.

Year Issue value (billion Term Interest Purpose of release

VND) (years) rate

2021 Not released - - -

2022 3.000 5 8,5% Expand production
2023 Not released - - -

 Trend: Vinamilk only issues bonds when absolutely necessary, mainly to invest in
long-term projects, instead of relying heavily on debt.

2.3 Stocks.
Issuance mechanism: Vinamilk increases equity through issuance of common shares,
bonus shares to existing shareholders or capital increases through the stock exchange.
Formal characteristics:
+ No repayment obligation: Unlike borrowing or issuing bonds, capital mobilized through
shares does not have to be repaid, helping to reduce future cash flow pressure.
+ Positive impact on financial indicators: Increasing equity helps improve financial
indicators such as debt-to-equity ratio, contributing to improving the risk tolerance of the
enterprise.
Intended use: Capital obtained from issuing shares is often used to invest in R&D,
expand the market, improve production capacity and sustainable development projects. This
form also creates a close connection between the board of directors and shareholders,
thereby enhancing market confidence in the company's development strategy.
Benefits:
+ Increase equity: Issuing shares helps Vinamilk increase equity, improve financial capacity
and expand business operations.

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+ No debt repayment pressure: Unlike borrowing, issuing shares does not create an
obligation to pay interest or repay principal, reducing financial pressure for Vinamilk.
+ Increase liquidity: Listing shares on the stock exchange helps increase liquidity and
transparency, attracting investors.
Vinamilk's stock issuance situation:

Year Total shares outstanding Release form Mobilized value Intended use
(million shares) (billion VND)
2021 2.089 Not released - -
2022 2.089 Not released - -
2023 2.091 Issue ESOP 50 Retaining talent
(employee stock
option)

 Trend: Vinamilk does not regularly issue additional shares to avoid diluting
shareholder rights. However, the company still maintains a cash dividend policy,
helping to increase the value of shares on the market.

CHAPTER 4. EVALUATION OF FINANCIAL MANAGEMENT OF

VINAMILK AND RECOMMENDATIONS.
1 Evaluation of financing management of Vinamilk.
1.1 Strengths of Vinamilk's Financing Management.
* Strong Cash Flow and Profitability:
+ Vinamilk has a robust cash flow from its diverse portfolio of dairy products. The
company's consistent profitability is a major strength that supports its financing
management. The strong cash flow allows for timely repayment of debts and provides
capital for reinvestment in expansion and innovation.
+ As one of the most profitable companies in Vietnam, Vinamilk's financial health enables
it to access favorable financing options both domestically and internationally.
* Access to a Variety of Capital Sources:
+ Vinamilk has been successful in raising capital through equity and debt markets. It has
issued shares and bonds, enabling it to tap into different sources of financing.
+ Its strong domestic market position, coupled with international expansion, helps attract a
diverse pool of investors and partners. This reduces dependency on any one source of
financing and allows for flexibility.
* Strategic Use of Debt Financing:

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+ Vinamilk uses debt strategically, especially for funding expansion and acquisitions. The
company is able to secure loans and credit lines at favorable terms due to its strong
creditworthiness and stable cash flow.
+ The use of debt financing has allowed Vinamilk to fund international expansions, such as
joint ventures and acquisitions in foreign markets.
* Effective Risk Management:
+ The company has implemented effective risk management strategies, especially when
dealing with commodity price fluctuations (e.g., milk prices, feed costs). Its ability to hedge
financial risks associated with foreign exchange and interest rates is a notable strength in
managing financial exposure.
* Strong Market Position and Brand Equity:
+ Vinamilk’s leading position in the Vietnamese market allows it to enjoy significant
consumer loyalty and brand recognition, which in turn strengthens its financial standing.
This market dominance gives it a competitive edge in securing financing at favorable terms.
+ The strong brand helps the company in raising capital through equity as investors have
confidence in its ability to generate revenue and returns.
* International Expansion and Diversification:
+ Vinamilk has expanded into international markets, providing additional sources of
revenue and growth. This geographic and product diversification lessens the reliance on the
domestic market and reduces the risks of economic or market downturns
1.2 Weaknesses of Vinamilk's Financing Management.
* High Debt Levels:
+ Despite a solid financial performance, Vinamilk has accumulated a significant amount of
debt over time. The high leverage ratio could be risky, particularly if interest rates rise or if
there are downturns in the dairy market.
+ Large debt obligations could limit the company’s ability to secure additional financing or
impact its ability to reinvest in the business during tough economic conditions.
* Exposure to Currency and Interest Rate Risks:
+ As Vinamilk expands internationally, it faces exposure to foreign exchange risks,
particularly as it operates in markets outside of Vietnam. Changes in currency exchange
rates could negatively impact profits and increase the cost of repaying foreign-denominated
debt.
+ Additionally, with high levels of debt, any fluctuations in interest rates could also
significantly impact its cost of financing.
* Dependency on the Domestic Market:
+ While Vinamilk has expanded internationally, it still relies heavily on the Vietnamese
market for a significant portion of its revenue. This over-reliance on one market can be risky

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if the domestic economy faces slowdowns or if there are disruptions in local demand for its
products.
+ Market fluctuations or regulatory changes in Vietnam could have a disproportionately
large impact on the company's financial stability.
* Limited Access to Global Financial Markets:
+ Vinamilk primarily lists on the Ho Chi Minh Stock Exchange (HOSE) and has limited
access to global financial markets compared to some of its multinational competitors. While
the company does access capital from international lenders, it may face challenges when
raising funds globally in a cost-effective manner.
+ Its capital raising options could be constrained compared to competitors listed on larger
global exchanges.
* Cost Structure Vulnerabilities:
+ The dairy industry is subject to fluctuations in the prices of raw materials such as milk,
feed, and fuel. While Vinamilk has been able to manage costs effectively, volatility in these
input prices could put pressure on margins, especially if the company cannot pass on the
costs to consumers.
+ This could limit the company’s ability to maintain profitability and financing flexibility in
periods of commodity price increases.
* Over exposure to the Dairy Industry:
+ Vinamilk’s core business is highly concentrated in the dairy sector. While this has worked
well for the company in the past, over-reliance on one industry can be risky, especially if
consumer preferences shift or if the industry faces significant challenges (e.g., health trends,
environmental regulations, or changing supply dynamics).
+ Diversification into other sectors may help mitigate this risk, but this transition requires
substantial capital investment and can be a challenge for the company.
2 Recommendations.
* Optimize Debt Management and Reduce Leverage:
+ Action: Focus on reducing the company’s overall debt levels by retaining more profits for
reinvestment rather than relying heavily on debt financing.
+ Implementation:
o Prioritize debt repayment and aim to reduce the debt-to-equity ratio.
o Consider refinancing high-interest debt to lower rates if possible.
+ Rationale: Lowering the debt burden reduces financial risk, improves liquidity, and
provides more flexibility to navigate downturns or unexpected costs. Reducing leverage also
increases investor confidence and enhances long-term financial stability.
* Hedge Currency and Interest Rate Risks:
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+ Action: Implement a more comprehensive risk management strategy by utilizing financial
instruments (such as forwards, options, or swaps) to hedge against currency fluctuations and
rising interest rates.
+ Implementation:
o Identify key exposure areas such as foreign exchange risks from international
operations.
o Use hedging strategies to lock in favorable exchange rates and interest rates for a
certain period.
+ Rationale: Hedging helps reduce volatility in cash flows, protects profit margins, and
provides more predictability in financial planning, especially in foreign markets.
* Diversify Revenue Streams and Expand Product Portfolio:
+ Action: Focus on diversifying revenue sources by exploring new product categories (e.g.,
plant-based dairy alternatives, ready-to-eat meals, or nutrition-focused products) and
expanding into more international markets.
+ Implementation:
o Invest in R&D for new product development.
o Explore markets beyond its current international operations and tap into emerging
economies.
+ Rationale: Diversification reduces over-reliance on the dairy sector and mitigates risks
associated with changing consumer trends, regulatory changes, or market saturation.
Expanding into complementary sectors or markets creates new growth opportunities.
* Strengthen Equity Financing and Public Market Access:
+ Action: Increase Vinamilk’s presence in global capital markets through additional equity
offerings or listing on larger international exchanges.
+ Implementation:
o Explore secondary listings in financial hubs like the U.S. or Europe to attract
international investors.
o Consider issuing new shares to raise capital for major expansion or investment
projects.
+ Rationale: Access to a wider pool of investors can provide more favorable financing
conditions and increase the company’s visibility and credibility on the global stage. Equity
financing can reduce reliance on debt and improve balance sheet health.
* Improve Cash Flow Management and Cost Control:
+ Action: Enhance operational efficiency and streamline cost control measures to improve
cash flow and reduce the need for external financing.
+ Implementation:

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 o Invest in automation or advanced technologies to optimize manufacturing processes.
o Improve supply chain management and inventory control to reduce waste and costs.
+ Rationale: More efficient operations improve profitability and cash flow, allowing the
company to self-fund a greater portion of its growth, thereby reducing the need for external
financing.
* Enhance Corporate Governance and Transparency:
+ Action: Strengthen corporate governance practices and increase transparency in financial
reporting to build investor trust and attract new funding sources.
+ Implementation:
o Adopt international financial reporting standards (IFRS) and best practices in
governance.
o Provide clearer communication to investors and stakeholders regarding financial
health, strategy, and performance metrics.
+ Rationale: Strong governance and transparency attract long-term investors, lower the cost
of capital, and increase the company’s reputation, making it easier to raise capital in the
future.
* Develop a Contingency Fund for Economic Downturns:
+ Action: Establish a contingency fund or reserve to protect against future economic
downturns, commodity price fluctuations, or unforeseen market shifts.
+ Implementation:
o Set aside a portion of profits into a low-risk, easily accessible fund that can be used
during emergencies or periods of financial stress.
+ Rationale: A contingency fund provides the company with financial resilience during
challenging periods and allows Vinamilk to continue its operations without relying heavily
on external debt.

Teacher's review
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