MINISTRY OF EDUCATION AND TRAINING

HO CHI MINH OPEN UNIVERSITY

ADVANCED TRAINING DEPARTMENT

----------

CORPORATE FINANCE
VINAMILK

Lecturer: Thach H. Pham (Ph.D)

Students: Nguyễn Hà Nguyễn Ngọc Nguyễn Mai

Đỗ Minh Thư
Phương Hà Khánh Trân

23FL134002 23FL136002 23FL134001 23FL137002

VNM VNM VNM VNM

Ho Chi Minh City, April 13, 2025

Contents
I. Executive Summary ................................................................................................................ 2

II. Business Overview ................................................................................................................ 2

1. Introducing Vinamilk ..................................................................................................... 2

2. The situation of Vietnam’s dairy industry ...................................................................... 6

3. SWOT analysis of Vinamilk .......................................................................................... 7

III. Financial Ratio Analysis ...................................................................................................... 9

IV. Pro-Forma Financial Statements ........................................................................................ 16

V. Risk Assessment .................................................................................................................. 18

JUSTIFYING 2025 GROWTH OF VINAMILK ( THE STORY BEHIND) .......................... 24

I. INTRODUCE: .................................................................................................................. 24

II. FINANCE TRENDS SNAPSHOT (2022-2024): ........................................................... 25

III. REVENUE PROJECTION (2025) ( ASSUMPTION OF REVENUE GROWTH) ..... 28

IV. SCENARIO OF INCREASING DEBT. ........................................................................ 30

V. RAISING EQUITY SCENARIO: .................................................................................. 35

VI. SCENARIOS COMPARISION ..................................................................................... 39

REFERENCE........................................................................................................................... 41

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I. Executive Summary

Vinamilk – Vietnam Dairy Products Joint Stock Company was established in 1976. Until now,
Vinamilk has achieved many notable successes in business activities to become a leader in the
Vietnamese dairy industry. This report will analyse the company’s financial performance and
provide projections for 2025. First, we begin by evaluating the growth of Vinmailk’s financial
health in Vietnam's dairy industry from 2022 to 2024 by calculating key indicators, including
liquidity, profitability, turnover, and leverage ratio. Through the financial statement analysis,
we can prove the strong, healthy profitability, resilience, and sustainable growth of Vinamilk
in 3 years, and from the financial analysis, we will make a growth assumption for 2025. Next,
based on the revenue projection, Vinamilk has more strengths for its development, but it also
has some limitations that require the company to consider a capital-raising strategy. Therefore,
my group decided to build two scenarios, including increasing debt and raising equity. Each
scenario has its advantages and disadvantages. Although the equity financing scenario can
enhance financial stability and reduce risks, it may result in earnings dilution and a decline in
return on equity. Meanwhile, the debt financing scenario offers lower capital costs, increases
business value, and has more outstanding advantages than the equity scenario in stable revenue
and secure cash flow situations.

To sum up, through a comprehensive comparison of two scenarios, our report recommends
prioritizing debt financing.

II. Business Overview

1. Introducing Vinamilk

• Development history
o Vinamilk was established in 1976.
o 1980-1990: The company constantly innovated and improved production
technology to meet domestic market demand.
o 1992: The company officially changed its name to Vietnam Dairy Company, or
Vinamilk, expanding its scale of operations and enhancing brand recognition.
o 2000- 2010: Many factories were built, high-tech dairy farms were developed,
and the domestic market expanded.
o 2010- Present: Vinamilk promoted exports to more than 40 countries, achieving
many achievements in milk processing technology and international markets.
• Business model

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Vinamilk is a corporation that produces and distributes dairy products with the criteria of
sustainable development and expanding domestic and foreign markets.
o Main business products: dairy products such as fresh milk, yogurt, canned
milk, milk drinks, and other dairy products.
o Main customer groups: Vinamilk targets all customers who need to use milk
and dairy products. Break down products suitable for each market segment.
o Distribution system: It owns 14 manufacturing factories, 3 sales branches, and
representative offices in foreign countries such as Thailand and Cambodia.
These things have created a strong distribution system for Vinamilk.
o Marketing strategy: Vinamilk conducts multi-channel advertising with
nationwide coverage, helping to improve brand and product recognition.
• Main products
More than 250 products with product groups such as:
o Liquid milk: Liquid milk includes product lines such as fresh milk, sterilized
milk, and flavoured milk.
o Powdered milk: This includes products offered for each age segment, such as
children, adults, and the elderly.
• Summary of Vinamilk Financial Statement in 2022-2024
o Balance Sheet (billion VND)
Year Total Assets Liabilities Equity
2022 48,482 15,666 32,816
2023 52,673 17,647 35,025
2024 55,049 18,874 36,174
In general, the table experienced an upward trend over 3 years.
• Vinamilk's total assets grew steadily from 48,482 billion VND to 52,673 billion VND
from 2022 to 2023 and continued to increase by 2,376 billion VND to 55,049 billion
VND in 2024. It can show that the business is expanding its operations and investing
in assets.
• Vinamilk's liabilities also increased gradually each year, respectively 1,981 billion
VND from 2022 to 2023, and 1,227 billion VND from 2023 to 2024, showing that the
growth rate of this item tends to decrease.

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• Equity also increased over the years, with growth recorded in the 2022-2023 period at
2,209 billion VND and almost halving in the 2023-2024 period at 2,149 billion VND,
indicating that the business is generating profits and accumulating capital.
o Income Statement
Net Revenue Gross Profit (billion Gross Profit Margin
Year
( billion VND) VND) (%)
2022 59,956 23,897 39.86%
2023 60,368 24,544 40.66%
2024 61,782 25,590 41.42%
• Net revenue tends to increase steadily every year. From 51,956 billion VND in 2022, it
increased steadily to 61,368 billion VND in 2023 and continued to increase in 2024 to
61,782 billion VND. This shows good development in revenue growth, but the growth
rate is not too large.
• Similar to net revenue, gross profit also increased over the years. Gross profit increased
by 1,693 billion VND in 3 years, showing that the company has good control over
production costs.
• The profit margin recorded a stable growth rate over the years, showing the
effectiveness in generating profits from the business's revenue and sales activities.

o Cash Flow Statement (billion VND)

Year Operating Investing Financing

2022 8,827 3,472 -12,360
2023 7,887 -2,988 -4,292
2024 9,685 -3,739 -6,641
• Cash flow from operating activities has fluctuated greatly over the years, with a
decrease in 2023 recording the lowest positive cash flow at 7,887 billion VND and a
recovery in 2024 with 9,685 billion VND.
• Positive cash flow from investing activities is only seen in 2022 at 2,472 billion VND,
and from 2023, investment cash is negative at minus 2,988 billion VND, and negative
cash flow increases in 2024 to minus 3,739 billion VND.
• Cash flow from financing activities is always negative in the period from 2022 to 2024.
It can be seen that the year with the largest negative cash flow is 2022, at minus 12,360

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 billion VND. However, the negative cash flow tends to decrease over the years and is
recorded at the lowest level in 2024 at minus 6,641 billion VND.
o Revenue structure

• Vinamilk company's revenue by region

• Domestic revenue was the largest source of revenue in all three years.
• Revenue will decrease slightly from 2022 to 2023 but still reach nearly 45,000 billion
VND
• Revenue in 2024 is stable and continues to grow.
• 2022 will record the highest export revenue among the three regions.
• Export revenue increases sharply beyond 2022 in 2023. However, it decreases slightly
in 2024 but not significantly.
Year Total Revenue Overseas
Domestic (%) Export (%)
(billion VND) Branch (%)
2022 59,956 84,58 8,06 7,38
2023 60,369 83,85 8,35 7,8
2024 61,824 82,12 9,16 8,6
• The proportion of domestic revenue has gradually decreased over the years from
84.58% to 82.15%, but it still accounts for the majority of total revenue, showing that
Vinamilk still depends heavily on the domestic market.

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• Export revenue tends to increase in proportion from 8.06% in 2022 to 9.16% in 2024.
Showing an effective development strategy in the international market.
• Foreign branches also increased their proportion from 7.38% to 8.60%, reflecting the
steady growth of overseas subsidiaries.

2. The situation of Vietnam’s dairy industry

• Market size and growth rate.

o Market Size
▪ Vietnam's dairy market is a rapidly growing industry that includes many
large dairy companies. According to some reports, the global dairy
market is expected to reach 768.80 billion USD by 2029, with an annual
growth rate (CAGR) of 4.40% from 2024 to 2029.
o Growth Rate
▪ The global dairy market is expected to grow at a CAGR of 4.4% in the
period 2024-2029. In addition, the industry's growth rate in Vietnam is
forecast to reach 9.4% from 2024 to 2032.
• Main Competitors
o Vinamilk's competitors are companies producing and trading milk and other
dairy products that compete directly with Vinamilk. These opponents may be:
▪ TH True Milk: achieved significant success, accounting for about 43%
of the milk market share and reaching the top 3 milk producers in
Vietnam.
▪ Dutch Lady: a milk brand belonging to the multinational dairy
cooperative, Royal FrieslandCampina, has a strong and prominent
position in the international market, with headquarters in 48 countries
in Vietnam. Hoc has 5 headquarters with an area of 650 hectares and 10
production lines, becoming a successful foreign company and taking
the leading position in the industry in a short time.
▪ Nutifood: Vietnamese enterprise operating in the field of nutritional
foods with a 22% market share. In addition, Nutifood was honored to
receive the title of Vietnam's No. 1 children's milk brand from the
Vietnam Dairy Association in 2020.
▪ Abbott Nutrition: It became the second most famous dairy company
in the world and received a lot of recognition when it was present in

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 Vietnam. Abbott builds consumer trust and peace of mind through
exclusive licensing and product development in the United States. In
addition, Abbott has the same customer segment as Vinamilk,
specialising in producing milk lines for children and young people.
• Consumer Trends and Influencing Factors
o Consumption Trends
▪ Consumers are increasingly interested in organic products, without
preservatives and of natural origin. To meet this demand, Vinamilk has
launched product lines such as organic and green farm fresh milk or nut
milk such as Vinamilk Super Nut.
▪ In addition, they focus on the nutritional value of the product, especially
for children and the elderly. That's why Vinamilk has developed product
lines such as powdered milk for children and the elderly.
▪ Sustainable production processes and environmentally friendly
packaging are also major consumer concerns today. Therefore, Vinamilk
has used recycled packaging and invested in dairy farms that meet
international standards.
o Influencing Factors
▪ Economy: Income is a factor that directly affects consumers' shopping
habits. Therefore, Vinamilk's affordable products can reach many
customer segments.
▪ Culture and society: Due to the development of awareness of health
benefits, the habit of consuming milk in Vietnam is increasingly popular,
which has helped Vinamilk promote nutritional products.
▪ Technology: The modernity of technology helps Vinamilk improve
product quality and meet international standards.
▪ Psychology: Vinamilk's longevity and reputation have helped the
business gain customer favour.

3. SWOT analysis of Vinamilk

STRENGTH (S) WEAKNESS (W)

• High brand recognition • Expensive raw materials
• Diverse quality products • Highly competitive domestic market

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 • Stable development of the
international market

OPPORTUNITIES (O) THREATS (T)

• High demand for milk • The trend of imported goods
• Market expansion consumption
• Unstable input raw materials
STRENGTH (S)
• High brand recognition: Due to being a long-standing and reputable dairy brand in
Vietnam, Vinamilk has captured a large market share and is trusted by consumers.
• Diverse quality products: Many types of products, such as fresh milk, yogurt, powdered
milk, and other dairy products, are produced and processed according to strict standards
and modern equipment.
• Stable development of the international market: Dairy products from Vinamilk are not
only well received domestically with a multi-channel distribution system but also
launched in many countries such as the US, France, and Southeast Asian countries.
WEAKNESS (W)
• Expensive raw materials: Vinamilk still depends on foreign raw materials; nearly 70%
of raw materials are imported from New Zealand, America, or Japan.
• Highly competitive domestic market: With the growth of domestic dairy companies
such as Nutifood or TH True Milk, Vinamilk has to face competition in the domestic
market.
OPPORTUNITIES (O)
• High demand for milk: Customers tend to care more about health, leading to an increase
in demand for milk, so the development opportunities of the dairy industry in general
are increasing strongly in Vietnam.
• Market expansion: With the outstanding development of advanced technology and
quality products, Vinamilk has much potential to expand in the international market.
THREATS (T)
• The trend of imported goods consumption: Consumers today tend to favor imported
products. Although Vinamilk has a stable customer base, to reach demanding
customers, it needs to continue to innovate to tap into the subconscious of that customer
base.

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 • Unstable input raw materials: Because most raw materials are imported from abroad,
Vinamilk may have difficulty preparing raw materials. The clearest example is when
the epidemic is complicated, the quantity and speed of raw material transportation are
affected.

III. Financial Ratio Analysis

1. Liquidity ratio:
• Current ratio (2022-2024)
Current assets Current liabilities
Year Current ratio
(VND billion) (VND billion)

2022 31,560 15,309 2.06

2023 35,936 17,139 2.10

2024 37,554 18,460 2.03

▪ Quick ratio (2022-2024)
Current
Current assets Inventory
Year liabilities Current ratio
(VND billion) (VND billion)
(VND billion)
2022 31,560 15,309 5,538 2.06

2023 35,936 17,139 6,128 2.10

2024 37,554 18,460 5,687 2.03

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Following the chart, Vinamilk's current ratio was stable at a high level during 2022 and 2024.
It remained within the range of 2.0 to 2.1 during this period. Similarly, Vinamilk also had a
high quick ratio, which remained at 1.7 over 3 years.
Both current and quick ratios are high, so Vinamilk did not face any financial challenges; they
also had sufficient current assets, such as cash and inventories, to cover their short-term
liabilities.
2. Profitability measures:
• Gross profit margin
Year Gross profit (VND Net revenue Gross profit
billion) (VND billion) margin (%)
2022 23,897 59,956 39.9
2023 24,545 60,369 40.7
2024 25,590 61,783 41.4

Vinamilk’s gross profit margin reached 39.9% in 2022, and two years later, the proportion
slightly rose to 40.7% and 41.4%, respectively. The increase in gross profit margin shows that
the company has positive financial performance, which means that it generates more profits
from business activities in this period. It shows that Vinamilk had a strong indicator of financial
health and presented high cost efficiency and pricing power.
Net profit margin

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 Net profit after tax Net revenue Net profit margin
Year
(VND billion) (VND billion) (%)
2022 8,578 59,956 14.3
2023 9,019 60,369 14.9
2024 9,453 61,783 15.3

Vinamilk reached 14.3% at the net profit margin, and this figure continually increased from
14.9% to 15.3% two years following. In general, Vinamilk witnessed a high percentage in the
net profit margin, which means that the company had strong profitability and spent its capital
effectively to generate more profits. This will be a great opportunity for the growth of the
company in the future.
Return on Assets (ROA)
Net profit after tax Total assets (VND ROA (%)
Year
(VND billion) billion)
2022 8,578 48,483 17.7
2023 9,019 52,673 17.1
2024 9,453 55,049 17.2
Return on Equity (ROE)

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 Net profit after tax Shareholder’s ROA (%)
Year (VND billion) equity (VND
billion)
2022 8,578 32,817 26.1
2023 9,019 35,026 25.8
2024 9,453 36,174 26.1

• In general, the ROA of Vinamilk remained in the range of 17%, which showed that the
company managed and spent its assets effectively in many business activities. Although
Vinamilk faced difficulties in 2023, making the ROA slightly decrease from 17.7% to
17.1%, the company improved asset utilization in the following year, which recovered
to 17.2%.
• Although the ROE of Vinamilk saw a marginal decline from 26.1% to 25.8% during
the two years 2022 and 2023, the figure also maintained a high level, showing that the
company spent its equity efficiently to generate profit. Then, the company recorded a
slight increase to the initial percentage in 2024.
Turnover measures:
Asset turnover ratio

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 Year Net revenue Total assets at Total assets Average Asset
(VND billion) the beginning of at the end of assets (VND turnover
the period (VND period billion) ratio
billion) (VND
billion)
2022 59,956 53,332 48,483 50,908 1.18
2023 60,369 48,483 52,673 50,578 1.19
2024 61,783 52,673 55,049 53,861 1.15
Asset Turnover Ratio

Vinamilk had a marginal rise in asset turnover from 1.18 to 1.19 in the two years 2022 and
2023. The rise in this ratio indicated the operational effectiveness of Vinamilk. It showed that
the company utilized its assets efficiently to generate more revenue. However, in 2024, the
figure decreased to 1.15, that the company may face some difficulties in asset management.
Inventory Turnover
Cost of
Inventory at Inventory at the Inventory
goods sold Average
Year beginning of period end of period turnover
(VND inventory
(VND billion) (VND billion) ratio
billion)

2022 36,059 6,773 5,538 6,156 5.86

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 2023 35,824 5,538 6,128 5,833 6.14

2024 36,192 6,128 5,687 5,908 6.13

The inventory turnover increased from 5.86 in 2022 to 6.14 in 2023, which showed the
efficiency in inventory management. The figure declined marginally to 6.13 in the following
year, but the figure was also at a high level, so it did not affect any negative sides for the
company.
3. Leverage measures
• Debt-to-equity ratio

Short-term Long-term Total debt

Shareholder’s D/E
Year borrowing borrowing (VND
equity (VND billion) ratio
(VND billion) (VND billion) billion)

2022 4,867 66 4,933 32,817 15

2022 8,218 238 8,456 35,026 24.1

2024 9,115 158 9,273 36,174 25.6

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Following the chart, the debt-to-equity ratio increased significantly during the three years from
15% to 25.6%. The rise in this figure showed that Vinamilk gradually raised the debt ratio in
its capital structure for business activities or financial leverage. In general, Vinamilk’s D/E ratio
maintained a stable level. This situation showed that the company was able to manage debt
well and have low financial risk.
Interest coverage ratio
EBIT (VND Interest expense (VND
Year Interest coverage ratio
billion) billion)

2022 10,496 166 63.2

2023 10,968 354 31.0

2024 11,600 279 41.5

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Vinamilk’s interest coverage reached its highest at 63.2 in 2022. By 2023, the ratio noticeably
reduced to 31.0, which indicated the company’s ability in paying interest reduced. However, in
2024, the figure recovered to 41.5, which showed the improvement in the business and financial
conditions. The company controlled its interest expenses better than in 2023, but its financial
performance did not recover as the same as in 2022.
3. Comparison between Vinamilk and Average industry
In this stage, we will compare the financial performance between Vinamilk and Vietnam's
average industry in 2024. Following this stage, we can accurately evaluate Vinamilk's financial
ratio and its position in this dairy market.

IV. Pro-Forma Financial Statements

Growth assumption:
Method Account Assume for 2025

COGS 0,58

Arithmetic mean 2 years Financial income 0,03

Selling expenses 0,22

General and administrative

0,03
expenses

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 Share of profit 0,14
CAGR (2022-2024)
Net Revenue 0,02

Income tax expense - current 0,03

Income tax - deferred -0,001

3-Year Average ratio Interest expenses 0,004

Financial expense 0,01

Result of other activities 0,0004

To assume COGS, financial income, selling expenses, and general and administrative expenses,
we use the Account/Revenue method in three years ( 2022-2024). Specifically, we calculate the
proportion of each account compared to net revenue in historical years to determine the
fluctuation trend.
▪ Account / Net Revenue:
Account
Account ratio = Net Revenue

Then, we calculate the change in year-over-year growth (YoY) of these ratios. Therefore, we
use the arithmetic average of the last two years ( Arithmetic mean 2 years) to smooth data and
increase reliability.
▪ Change YoY:
This method uses the same ratio between 2022 and 2023 to calculate the change YoY
Ratio in 2024−Ratio in 2023
ΔYoY = Ratio in 2023

▪ Arithmetic 2-Year Average

∆YoY in 2023+∆YoY in 2024
Arithmetic 2-Year Average = 2

To forecast the financial statements for 2025, the CAGR formula is applied to calculate the
percentage assumptions for the share of profit and net revenue:
1
Ending value
CAGR = (Beginnig value)(n) − 1

Where:
n: The number of years
To project other factors, we use the account/revenue ratio and then calculate the 3-Year Average
ratio:

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 Ratio in 2022 + Ratio in 2023 + Ratio in 2024
3-Year Average ratio = 3

In conclusion, we can calculate EBIT, EBT, and Net profit after tax depending on the accounts
that we just assumed.
About the retained profits for 2025, we calculate DPR in each year (2022 - 2024) and then use
the average DPR in the 3 years to assume DPR in 2025. Therefore, we project the retained
profits in 2025 based on this formula:
Retained profits 2025 = Retained profits 2024 + Net profit after tax 2025*(1 - DPR 2025)

V. Risk Assessment

Financial IDP (Lof

ratio (2024) Internatio
nal Dairy Industry
Moc Chau
Vinamilk Products average
Milk
Joint (2024)
Stock
Company)
Current ratio 2.03 1.36 5.6 3.0
Liquidity
ratio Quick Ratio 1.73 1.14 5.14 2.67

Gross profit
41.4% 40.8% 29% 37%
margin
Profitability
Net profit margin 15.3% 11% 7.5% 11.3%
ratio
ROA 17.2% 13% 8.2% 12.8%
ROE 26.1% 26% 9.5% 20.5%
Asset turnover
1.15 1.26 1.1 1.17
Turnover ratio
ratio Inventory turnover
6.13 8.42 11.56 8.7
ratio
Leverage Debt-to-equity
25.6% 62% 4.3% 31%
ratio ratio

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 Interest coverage
41.5 26.9 145.5 71.3
ratio
Explain:
• Liquidity ratio: Vinamilk had lower liquidity than the average industry. However,
Vinamilk had a reasonable liquidity ratio and balance between solvency and asset
utilization.
The current ratio of Vinamilk reached 2.03, which was lower than the average industry (2.997).
The main reason for this situation was the high current ratio of Moc Chau Milk (5.6), which is
an increase in the industry average. However, 2.03 was a stable liquidity level in general, so
Vinamilk still ensured good liquidity to solve their debts in a short time.
Similarly, Vinamilk’s quick ratio was 1.73 while the figure for the average industry was over
it, with 2.67. This reflected that Vinamilk may have reserved more inventories than cash, and
Vinamilk decided to optimize its current assets to use them more effectively rather than holding
too much cash.
To sum up, although the liquidity was lower than the average industry, Vinamilk also was at a
safe and effective level, which maintained sufficient assets to cover liabilities.
• Profitability ratio: Vinamilk's profitability ratio was stronger than the industry
average's.
Vinamilk’s gross profit margin reached 41.4%, which was higher than the average industry
(37%). It showed that Vinamilk had a better ability to control cost production than other
competitors.
About the net profit margin, the proportion of Vinamilk (15.3%) was nearly double the average
industry (11.3%) demonstrating the outstanding ability to not only control production costs,
but also optimize operating, financial and tax.
The ROA and the ROE of Vinamilk, with respective figures of 17.2% and 26.1%, are stronger
than the average industry, with 12.8% and 20.5%, respectively. The high of these units shows
that Vinamilk had a better quality than other competitors and the dairy industry in generating
more profit and managing effectively their equity.
To sum up, Vinamilk outperformed the average industry in generating profits, controlling
effective cost and equity, and having a high competitive advantage. This shows that the
company has full potential for future development.
• Turnover ratios: The turnover ratio of Vinamilk was not as high as the average
industry

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The asset turnover ratio of Vinamilk was 1.15, which was lower than the average industry, with
1.17, so Vinamilk did not yet optimally exploit its assets to generate profit. Therefore, Vinamilk
should improve asset performance or optimize asset portfolio.
Moreover, the inventory turnover of Vinamilk stood at 6.13 while the average industry reached
8.7, which shows a lower rate than the average industry. The reason could be that Vinamilk
spent a longer time than IDP (8.42) and Moc Chau Milk (11.56) to sell its inventory, which
affects the company’s finances, such as increasing the cost to preserve and manage products.
Therefore, Vinamilk needs to improve inventory management efficiency to improve cash flow.
To sum up, Vinamilk has limited points in managing effectively its assets and inventories. It
requires the company to bring some solutions to address this issue.
• Leverage ratio: Similarly, Vinamilk's leverage ratio was lower than the average
industry
The debt-to-equity ratio of Vinamilk stood at 25.6%, which was lower than the average
industry, with 30.6%. The low debt-to-equity ratio reduced the financial risk of the company.
Vinamilk could pay less interest on debt than other companies, which were highly indebted,
and helped the company maintain a good profit margin. It shows the company has a safe capital
structure, which reduces financial risk. This is a clear strength indicating financial stability.
In addition, Vinamilk has enough ability to pay debt by the high interest coverage ratio;
however, the ratio is lower than the average industry (41.5 < 71.3). The main reason is that
Moc Chau Milk has a much higher ability to pay interest than Vinamilk. Therefore, the
company may face some challenges because some financial organizations can evaluate that
Vinamilk had a high financial risk, which reduced the chances of borrowing capital with a
preferential interest rate.
To sum up, Vinamilk shows strong financial stability but relatively weaker interest coverage.
1. Market risk:
• Fluctuation in raw milk prices:
Vinamilk has a large dairy farm in many Vietnamese regions, and uses materials from the farm
to manufacture products. Besides that, Vinamilk also depends on imported material. The
company imports powdered milk from foreign countries, so Vinamilk has a variety of products.
However, importing materials from other countries also has risks because imported prices are
affected by many external factors such as the natural conditions, export policies, and changes
in transportation costs.
In 2022, the international market witnessed milk price inflation because of the global food
crisis and the increase in the cost of transportation after the COVID-19 pandemic. Therefore,
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the imported price rose sharply more than before, decreasing Vinamilk’s gross profit, which
led to negative effects on production cost. However, after 2022, the milk price was reduced and
stabilized, improving Vinamilk’s gross profit. That situation contributed to reducing market
risk in this period.
• Competitors: Vinamilk is the oldest brand in the Vietnamese dairy industry, and it has
great advantages in market share, distribution network, and high brand recognition.

Vinamilk TH True Milk Nutifood

Market Highest market share. Focus on the high-end Concentrate on a

share segment niche market

Supply chain Depending on Rely on domestic materials, Rely mostly on

domestic dairy farms and use external materials imported
and imported less. powder milk
materials.

Distribution Nationwide, multi- The distribution is fewer than Strong in

channel channel including Vinamilk (Supermarket, TH pharmacy and
traditional stores, stores), but it owns chain hospital
supermarkets, and stores to help control prices channels.
online. and branding.

Pricing Flexible pricing The price of the product is Flexible pricing,

strategy suitable for all higher than Vinamilk due to especially for
customers its focus on the high-segment. nutritional milk

In general, Vinamilk has a higher competitive advantage than other competitors, but in some
situations, Vinamilk can face challenges if it cannot maintain its current competitive advantage.

• Market shares: Vinamilk has the largest market share compared to other competitors,
showing a low risk. However, Vinamilk may find it difficult to access customers in
niche markets, which only focus on a type of dairy product, such as nut milk or soy
milk. Besides that, competitors, including TH True Milk and NutiFood, are expanding
their market so that Vinamilk can face the risk of losing market shares.

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 • Supply chain: In general, Vinamilk ensures its supply chain, but the company may face
more disadvantages than TH True Milk if the price of imported raw materials increases.
The reason is that TH True Milk only spends on domestic dairy materials, which helps
the company be less exposed to risks from fluctuations in global raw material prices.

• Distribution channel: Although Vinamilk owns a nationwide distribution network, this

also has many potential risks. Managing hundreds of thousands of channels requires
too many operating costs and complex control systems. Vinamilk spends more money
to pay other expenses, including delivery and personnel costs. Moreover, if the expense
increases too much without a rise in revenue, the profits may be reduced.

Pricing: Vinamilk’s product pricing is not too high, which is suitable for all customers.
However, fluctuating materials can lead to a change in product pricing.
2. Financial risk:

2.1 Exchange rate risk

• Vinamilk imports a large amount of raw materials such as powder milk, packaging, and
modern equipment from other countries, so the imported costs will change if the
exchange rate fluctuates. Therefore, we analyze the official exchange rate at the end of
the year in three years, 2022 to 2024:

Year Official exchange rate (1 USD)

2022 23,612

2023 23,866

2024 24,355

• Over three years, the VND/USD exchange rate increased significantly, with 1 USD
rising from 23,612 to 24,355, so the company had to spend more VND to buy the same
amount of USD. This situation led to an increase in the imported costs and made the
operational cost of Vinamilk rise. Therefore, it required the company to increase the
cost of products to avoid the decline in gross profit margin, which negatively affected
Vinamilk’s profitability and revenue.
2.2 Interest rate risk

22
 Year Interest expense (VND billion) Debt-to-equity ratio (%)
2022 166 15
2023 354 24.1
2024 279 25.6
• The D/E ratio of Vinamilk increased from 15% to 25.6% over three years. It showed
that the company borrowed more debt for its business activities. The more borrowing,
the more risk Vinamilk could get.
• In 2023, the D/E ratio increased by 60% from 0.15 to 0.24, showing that Vinamilk
borrowed more capital than in previous years. Besides that, the interest expense surged
by 113% from 166 to 354, which indicated an increase in the Vietnamese interest market
rate. Therefore, Vinamilk is at risk because of not only borrowing more money but also
the increase in market interest rates.
• In 2024, the interest expense decreased slightly from 354 to 279 as Vinamilk
restructured its debt to reduce risk. However, the D/E ratio also continued to increase
to 25.6%, showing that Vinamilk still carried a risk if the interest rate of the Vietnamese
market fluctuated again.
3 Solutions: Market and financial risks negatively affect Vinamilk's business activities.
Therefore, we bring some ideal solutions to reduce these risks for the company in the
future
3.1 Diversify raw material supply: This solution can reduce the risk of raw material
price fluctuation and limit the effect on the exchange rate in imported activity.

• Expanding domestic supply: Vinamilk should focus on its dairy farms in Vietnam.
The company should spend more money to invest in more high-quality technologies,
animal food and cows. This way can reduce the dependence on imported materials and
limit the exchange rate risk.
• Cooperating with more suppliers: Vinamilk should collaborate with more domestic
and international suppliers to limit reliance on a single supply source and avoid
breaking the supply chain if the prices of raw materials fluctuate.
• Using alternative materials: The company should find alternative materials that are
high-quality but have a lower cost.

3.2 Debt management:

23
 • Limit the debt-to-equity ratio: Vinamilk should maintain the D/E ratio at a secure
level, which ensures that it can cover liabilities. The company should limit borrowing
too much capital to invest in unnecessary activities.
• Utilize leverage equity and reinvest profits: Vinamilk should use retained earnings
for reinvestment instead of borrowing more capital. Moreover, the company can
consider spending money from operating cash flow to fund its projects. Through that,
Vinamilk may maintain financial stability and limit dependence on external capital.
• Diversifying funding sources: Vinamilk should borrow capital from various sources.
Besides borrowing from banking, they can issue corporate finance to raise capital from
investors or collaborate with international financial organizations to access lower-cost
capital. This way can help Vinamilk increase access to capital and also reduce financial
risk if a funding source has a problem.

JUSTIFYING 2025 GROWTH OF VINAMILK ( THE STORY BEHIND)

I. INTRODUCE:

According to the base case revenue growth for 2025, thereby identifies the need for
additional investment capital to support Vinamilk's growth. We will build two scenarios
through capital structure adjustment, which are an increase in debt and equity. In addition,
we will compare and analyse the effective level of both scenarios through their financial
indicators.

The analysis part focuses on the period from 2022 to 2025, with the projection for 2025
and using the historical data (2022 to 2025).

II. FINANCE TRENDS SNAPSHOT (2022-2024):

According to the financial report from Vinamilk from 2022 to 2024, the net revenue
consistently grew from 59,956 (2022) to 61,782 billion VND (2024), with the growth rate
at 1,5%. The following table illustrates the summary of key financial indicators for three
years.

24
 Financial Trend summary
2022 2023 2024
indicators

Net Revenue ( VND Steady growth at 1.5% over the

59,956 60,369 61,783
billion) period.

Gross Profit Increase slightly with CAGR at

23,897 24,545 25,590
3.48%

Net Profit Stable growth with CAGR at

8,576 9,019 9,453
4.99%

Total Assets Total assets rose in line with

48,482 52,673 55,049 business expansion, with
CAGR at 6.56%

Total Liabilities Increased but remained at a

15,666 17,647 18,874 manageable level, with CAGR
at 9.76%

Debt-to-Equity Show effective risk

Ratio (D/E) management in the debt of
0.48 0.50 0.52
Vinamilk, with CAGR
at 4.08%

Operating Cash Cash inflow fluctuated but

Flow 8,827 7,987 9,770 remained positive, with CAGR
at 5.21%

1. GROWTH INDICATORS:
Based on the data in the table, the revenue of Vinamilk sustainably went up over the periods,
with the CAGR rate at 1.5%. Meanwhile, the company’s Gross Profit and Net Profit
steadily increased at a CAGR of 3.48% and 4.99%, respectively, reflecting the stability in
operational efficiency and cost management. Furthermore, the CAGR of net profit showed

25
more rapid growth than the figure for revenue, leading to an increase in the net profit margin
of the company. As a result, it could illustrate the efficiency in cost control and effective
price strategies.
Total assets and total liabilities: The CAGR of total assets (2022-2024) at 6.56%, which
was lower than the figure for total liabilities at 9,76%, leading to an increase in the D/E
ratio from 0,48 to 0,52. These trends show business expansion through financial leverage.

2. PROFITABILITY RATIO:
From 2022 to 2024, the Gross Profit Margin of Vinamilk rose from 38,86% to 41,42% at
the end of the period, indicating this company was effective in price control and increased
product prices without negatively impacting sales. Such an advantage contributed to the
highest figure for Vinamilk, compared to that of the general industry at 40,81% and other
competitors. At the same time, ROA and ROE ratios of this company increased steadily to
17,5% and 26,6% in 2024, which were higher than those of the general industry, only
13.39% and 21.1% with respectively. In addition, the financial leverage ratio remained
stable, increasing at around 1,5%, and the amount of debt went up to 9,273 billion in 2024.
Therefore, this company was effectively using leverage to maintain a high level of ROE.

3. LEVERAGE AND CAPITAL STRUCTURE

Despite the total debt of Vinamilk increasing from 4,933 billion (2022) to 9,272 billion
(2024) due to financial leverage used, leading to a rise in the D/E ratio to 25,5% in 2024.
However, such an increase is still less than 50%, maintaining a secure capital structure with
low risk. Meanwhile, the interest coverage ratio was reduced from 63,2 to 41,5 due to the
rise in interest expense to 279.4 billion (2024), which put more financial pressure on the
company as its leverage.

4. CASH FLOW AND LIQUIDITY

Operating cash flow fluctuated from 8,827 billion to 9,770 but it is still positive,
indicating that the company have strong cash flow to support other business activities.
Additionally, the current ratio throughout the period was more than one, thus Vinamilk can
pay its current debt.

5. RATIONALE FOR ASSUMPTION:

These financial trends of Vinamilk demonstrate its resilience and sustainable growth for
2025. Moreover, Vietnam’s dairy industry continues to show growth potential, driven by
rising consumer demand and the ongoing trend of urbanization. This company, with its

26
 well-established market position, plans to maintain its market share through product
innovation and cost optimization. The modest expansion strategy set for 2025 is expected
to drive revenue growth, yet it will also require additional investment in long-term assets
and working capital.

III. REVENUE PROJECTION (2025) ( ASSUMPTION OF REVENUE GROWTH)

1. BASE CASE REVENUE PROJECTION:

INCOME STATEMENT

Figure in VND 31/12/2024 31/12/2025

Net Revenue 61.782.609.528.445 62.716.548.676.634

Cost of Goods Sold (COGS) 36.192.433.205.321 36.259.327.975.088

Gross Profit 25.590.176.323.124 26.457.220.701.546

Financial income 1.585.660.836.067 1.676.205.010.368

Financial expenses 428.238.548.859 534.456.009.111

Interest expense 279.424.561.295 279.424.561.295

Share of profit/(loss) 32.002.663.848 36.593.940.849

Selling expenses 13.357.706.796.806 13.783.115.035.553

General and administration expenses 1.827.916.838.987 1.881.998.076.341

Earning before interest and tax (EBIT) 11.593.977.638.387 11.970.450.531.758

Result of other activities 5.676.102.948 25.734.418.049

EBT 11.599.653.741.335 11.996.184.949.806

Income tax expense - current 2.240.859.169.951 2.115.058.668.036

Income tax - deferred -94.098.418.564 -45.127.892.207

27
 Net profit after tax 9.452.892.989.948 9.926.254.173.978

Dividends paid 8.046.328.463.250 8.046.328.463.250

Retained profits 3.471.224.745.772 4.525.437.974.414

• Operating Performance
In the base scenario, we projected a stable growth at 1.5%, assumption (2025) for Vinamilk
due to the stable financial situation of Vinamilk in the Vietnamese market ( 2022-2024),
based on the positive financial indicators without expansion investments or projects.
According the stable growth, the base net revenue projection for 2025 is estimated at 62,716
billion VND, based on the historical revenue CAGR from 2022 to 2024. In addition, net
profit increased from 9,452 billion to 9,929 billion in 2025, achieving a net profit margin
of 15,83%, increasing by 0,53% compared to the figure for 2024. As the stability in COGS,
the gross profit will rise to 26,457 billion, rising by 3,3%, which is higher than that of
revenue due to the positive sign in management cost of the company, thus leading to an
increase in gross profit margin to 42,19%.
Regarding the projected expense for 2025, there will be a slight increase in COGS to 36,259
billion (2025), with the growth rate at 0,578% through using an arithmetic mean 2-year
method. In terms of other expenses, they will rise slightly, majoring in the amount of
selling expense and general, and general and administrative expense will grow at around
21,97% and 3,2% with respectively, which is adjusted based on current trend. Furthermore,
financial expense is also projected to slightly increase to 534 billion, and there is no change
in the total interest expense in this scenario at 279 billion due to assuming no significant
change in debt and equity structure.

2. FINANCIAL INDICATORS:

Ratios 31/12/2024 31/12/2025

Gross profit margin 41,4 42,19

Profitability Net profit margin 15,3 15,83

Return on Assets 17,2 16,66

28
 Return on Equity 26,1 24,39

Current ratio 2,03 2,03

Liquidity
Quick ratio 1,73 1,73

Debit to Equity 25,6 22,78

Leverage
Interest Coverage 41,50 42,84

Asset turnover 1,15 1,09

Turnover
Inventory turnover 6,13 6,38

Year 2024 2025

Net cash flows from operating activities 9.685.937.539.346 8.800.211.426.090

Net cash flows from investing activities -3.739.092.638.543 -1.084.956.544.649

Net cash flows from financing activities -6.641.260.238.228 -7.764.774.421.807

Net cash flows during the year -694.415.337.425 -49.519.540.366

Based on the above assumptions, the financial projection for 2025 indicates that steady revenue
growth has led to improvements across key financial indicators. Earnings before interest and
tax will be 11,970 billion and 11,996 billion for EBT. Such an increase reflects the sustained
operational efficiency, although it remains moderate due to the pressure from financial costs
and corporate income tax. In terms of other financial indicators, the ROA and ROE ratios of
the company will be projected to slightly reduce to 16,66% and 24,39%, respectively; however,
they are still at a stable level compared to the general industry. In contrast, the D/E ratio of
Vinamilk will be lower than that of the general industry at 22,78%, meaning that this company
is reducing its leverage. Moreover, net cash flows during the year amounted to negative VND
49.5 billion, indicating a modest funding gap that needs to be addressed.

3. OVERALL EVALUATION:

29
 With a revenue CAGR of 1.5% based on historical performance, this projection scenario
still demonstrates stability across the company’s financial indicators. However, the slightly
negative cash flow suggests that the company should consider a capital raising strategy,
which is not only to meet short-term investment needs but also to ensure long-term
sustainable growth. Therefore, such a factor leads to the necessitates of raising capital from
external sources, leading to the consideration of two scenarios in the following sections,
which are increasing debt and increasing equity.

IV. SCENARIO OF INCREASING DEBT.

1. The purposes:

In the base projection of revenue growth, there was a funding gap of 49,5 billion. Therefore,
this scenario is one of the solutions for this problem to fill the gap. Such an increase will
help the company to optimise WACC and increase D/E, contributing to enhancing the
enterprise value of the firm. Furthermore, the company can maintain a flexible reserve of
capital in anticipation of potential economic slowdowns, without the need to raise equity
during challenging market conditions.

2. Assumption:
In this scenario, we choose the D/E target at 30%. The reason for such a decision is that
this ratio is at a stable level in the dairy industry in the Vietnamese market and indicates a
low risk of leverage. Therefore, with the new D/E ratio, we can calculate the new debt for
the company is 12,209 billion, and the amount of debt increasing is 2,930 billion, with the
same amount of equity at 40,679 billion compared to the base projection of revenue growth.
Additionally, based on the average interest rate for long-term and short-term borrowing
from 2022 to 2024 at 3,36%, we use this rate to project the figure for 2025. Thus, the new
interest expense will be 372 billion, rising by 97 billion. This new amount of debt will be
long-term borrowing and used to buy long-term assets, to utilise financial leverage to
enhance profitability and expand operational scale and upgrade production efficiency.

3. Effects on the base projected financial statement:

INCOME STATEMENT (INCREASE DEBT)

Figure in VND 31/12/2024 31/12/2025 31/12/2025

30
 ( increased debt) (old ) profoma

Net Revenue 61.782.609.528.445 62.716.548.676.634 62.716.548.676.634

Cost of Goods Sold

(COGS) 36.192.433.205.321 36.259.327.975.088 36.259.327.975.088

Gross Profit 25.590.176.323.124 26.457.220.701.546 26.457.220.701.546

Financial income 1.585.660.836.067 1.676.205.010.368 1.676.205.010.368

Financial expenses 428.238.548.859 632.278.068.352 534.456.009.111

Interest expense 279.424.561.295 372.887.628.833 279.424.561.295

Share of profit/(loss) 32.002.663.848 36.593.940.849 36.593.940.849

Selling expenses 13.357.706.796.806 13.783.115.035.553 13.783.115.035.553

General and
administration
expenses 1.827.916.838.987 1.881.998.076.341 1.881.998.076.341

Earning before
interest and tax
(EBIT) 11.593.977.638.387 11.872.628.472.517 11.970.450.531.758

Result of other
activities 5.676.102.948 25.734.418.049 25.734.418.049

EBT 11.599.653.741.335 11.800.540.831.326 11.996.184.949.806

Income tax expense -

current 2.240.859.169.951 2.115.058.668.036 2.115.058.668.036

Income tax - deferred -94.098.418.564 -45.127.892.207 -45.127.892.207

Net profit after tax 9.452.892.989.948 9.730.610.055.497 9.926.254.173.978

31
Dividends paid 8.046.328.463.250 8.046.328.463.250 8.046.328.463.250

Retained profits 3.471.224.745.772 4.504.659.681.395 4.525.437.974.414

BALANCE SHEET (INCREASE DEBT)

31/12/2025

Figure in VND 31/12/2024 ( increased debt) 31/12/2025 ( base)

Current Assets 37.553.650.065.098 37.553.650.065.098 37.553.650.065.098

Other current
assets 31.866.809.903.102 31.866.809.903.102 31.866.809.903.102

Inventory 5.686.840.161.996 5.686.840.161.996 5.686.840.161.996

Long-term assets 17.495.411.471.963 24.936.684.384.881 22.020.849.446.377

Total Assets 55.049.061.537.061 62.490.334.449.979 59.574.499.511.475

Current
Liabilities 18.459.546.837.640 18.459.546.837.640 18.459.546.837.640

Short-term
borrowings 9.115.435.107.250 9.115.435.107.250 9.115.435.107.250

Other current
liabilities 9.344.111.730.390 9.344.111.730.390 9.344.111.730.390

Long-term
liabilities 415.111.869.758 3.351.725.101.281 415.111.869.758

Long-term
borrowings 157.903.902.450 3.094.517.133.973 157.903.902.450

32
Other long-term
liabilities 257.207.967.308 257.207.967.308 257.207.967.308

Total Liabilities 18.874.658.707.398 21.811.271.938.921 18.874.658.707.398

Total Equity 36.174.402.829.663 40.679.062.511.058 40.699.840.804.077

• Balance sheet: This rise in the total debts affects the total assets of the company,
increasing to 62,490 billion, majoring from long-term assets at 24,936 billion.
Additionally, the total liability also rises to 21,811 billion, which mainly stems from the
long-term liabilities. The total equity of the company sees a slight reduction from 4,699
in the base projections to 40,679. This is because, increase in interest expense when
borrowing more debt leads to a small decline in retained earnings to 4,504 billion due
to net profit reduction.
• Income statement: Due to an increase in debt of the company, the financial expense
will grow to 632 billion as the amount of new interest expense. Therefore, EBIT and
net profit will reduce to 11,872 billion and 9,730 billion, respectively.

4. Financial indicators:

31/12/2025 31/12/2025
Ratios 31/12/2024
( increase debt) (BASE)

Gross profit margin 41,4 42,19 42,19

Net profit margin 15,3 15,52 15,83

Profitability Return on Assets

17,2 15,57 16,66
(ROA)

Return on Equity
26,1 23,92 24,39
(ROE)

Current ratio 2,03 2,03 2,03

Liquidity
Quick ratio 1,73 1,73 1,73

33
 Debt to Equity (D/E) 25,6 30,02 22,78
Leverage
Interest Coverage 41,50 31,84 42,84

Asset turnover 1,15 1,07 1,09

Turnover Inventory turnover 6,13 6,38 6,38

WACC 8,60% 9,03%

• The table demonstrates the differences between the predicted financial indicators of
Vinamilk from the base projection and an increasing debt scenario for 2025. In general,
there are several changes in the financial indicators of Vinamilk in the scenario of
increasing debt compared to the base projections. The figure for ROA, ROE and WACC
ratios will slightly decline in the latter scenario, while the D/E ratio will increase
through the effect of leverage.
• First, gross profit remained unchanged at 42,19%, demonstrating this change does not
affect gross profit growth, while net profit margin modestly fell from 15,83% to 15,52%
as a result of increasing interest expenses. Regarding ROE and ROA ratios, there is a
decline to 15,75% and 23,92% respectively, but those levels are still stable compared
to the dairy industry. In contrast, as enhancing leverage utilization, the D/E ratio of
Vinamilk will increase from 22,78% to 30%, leading to a reduction of WACC from
9,03% to 8,6%, resulting in an increase in the firm’s value under the discounted cash
flow (DCF) model.
• Meanwhile, the interest coverage ratio will go down to 31,84%, which is still a high
rate of paying interest without the short-term liquidity risk arising. In terms of other
financial indicators, they will remain stable compared to the base projection.

5. Overall evaluation:

Although there are several slight declines in the financial indicators of this scenario, the
impacts remain moderate, indicating that the company still maintains control over its
operations despite the increased use of leverage. Nevertheless, despite the aforementioned
benefits of leverage, Vinamilk must remain vigilant in managing cash flows and market
interest rate risks. Also, maintaining a balance between growth ambition and capital
stability is essential.

34
V. RAISING EQUITY SCENARIO:

1. Purpose:
In the context of positive growth of revenue in the base projection for 2025, a decision to
increase equity is a safe option to ensure the sustainable growth of the company without
risking enhancement. This solution preserves a healthy financial structure and aligns with
Vinamilk’s strategic direction, and avoids risks associated with borrowing costs in an
unstable interest rate environment.

2. Assumption:
In this assumption to choose the suitable amount of equity for the company, we decided to
increase 13.849 billion of equity, rising to 54,549 billion in total equity for 2025 and
keeping total borrowings unchanged. The estimation of new equity issuance is based on the
assumption of 17% D/E and the funding gap of the base projections. The reason for 17%
of D/E is enhancing the financial stability and reducing exposure to interest rate volatility
accompanied by an uncertain interest rate environment, which is expected to remain highly
volatile in the foreseeable future due to ongoing trade tensions. Also, we assume that this
equity increase will be based on the issuance of new shares. According to the new amount
of equity and the par value of Vinamilk stock, we calculated the new number of shares,
which is 7.5 billion shares, rising by 5.4 billion shares compared to the figure for base
projection at 2.09 billion shares.

3. Effects on the base projected financial statement:

BALANCE SHEET

31/12/2025

Figure in VND 31/12/2024 ( INCREASE EQUITY) BASE PROFOMA

Current Assets 37.553.650.065.098 37.553.650.065.098 37.553.650.065.098

Other current
assets 31.866.809.903.102 31.866.809.903.102 31.866.809.903.102

Inventory 5.686.840.161.996 5.686.840.161.996 5.686.840.161.996

35
Long-term assets 17.495.411.471.963 35.870.061.640.535 22.020.849.446.377

Total Assets 55.049.061.537.061 73.423.711.705.633 59.574.499.511.475

CurrentLiabilities 18.459.546.837.640 18.459.546.837.640 18.459.546.837.640

Short-term
borrowings 9.115.435.107.250 9.115.435.107.250 9.115.435.107.250

Other current
liabilities 9.344.111.730.390 9.344.111.730.390 9.344.111.730.390

Long-term
liabilities 415.111.869.758 415.111.869.758 415.111.869.758

Long-term
borrowings 157.903.902.450 157.903.902.450 157.903.902.450

Other long-term
liabilities 257.207.967.308 257.207.967.308 257.207.967.308

Total Liabilities 18.874.658.707.398 18.874.658.707.398 18.874.658.707.398

Total Equity 36.174.402.829.663 54.549.052.998.235 40.699.840.804.077

• Balance sheet: Because of the increase in total equity, the total assets of the firm will
increase to 73,423 billion, mainly rising in the amount of long-term assets at 35,870
billion for this scenario. Moreover, due to an assumption of unchanged debt, leading to
an equal amount in total liabilities at 18,847 billion, compared to the figure for the base
scenario.

INCOME STATEMENT

31/12/2025 31/12/2025
Figure in VND 31/12/2024 (INCREASE EQUITY) (BASE)

Net Revenue 61.782.609.528.445 62.716.548.676.634 62.716.548.676.634

36
Cost of Goods Sold
(COGS) 36.192.433.205.321 36.259.327.975.088 36.259.327.975.088

Gross Profit 25.590.176.323.124 26.457.220.701.546 26.457.220.701.546

Financial income 1.585.660.836.067 1.676.205.010.368 1.676.205.010.368

Financial expenses 428.238.548.859 534.456.009.111 534.456.009.111

Interest expense 279.424.561.295 279.424.561.295 279.424.561.295

Share of profit/(loss) 32.002.663.848 36.593.940.849 36.593.940.849

Selling expenses 13.357.706.796.806 13.783.115.035.553 13.783.115.035.553

General
andadministration
exenses 1.827.916.838.987 1.881.998.076.341 1.881.998.076.341

Earning before interest

and tax (EBIT) 11.593.977.638.387 11.970.450.531.758 11.970.450.531.758

Result of other activities 5.676.102.948 25.734.418.049 25.734.418.049

EBT 11.599.653.741.335 11.996.184.949.806 11.996.184.949.806

Income tax expense -

current 2.240.859.169.951 2.115.058.668.036 2.115.058.668.036

Income tax - deferred -94.098.418.564 -45.127.892.207 -45.127.892.207

Net profit after tax 9.452.892.989.948 9.926.254.173.978 9.926.254.173.978

Dividends paid 8.046.328.463.250 8.046.328.463.250 8.046.328.463.250

Retained profits 3.471.224.745.772 4.525.437.974.414 4.525.437.974.414

Earning per share 4.022 1.316 4.750

37
Outstanding shares 2.089.676.346 7.544.581.646 2.089.676.346

• Income statement: In this situation, there is no change in the interest expense at 279
billion as the remaining debt. Meanwhile, key profit metrics such as EBIT and net profit
remain consistent and show no material variation. However, there are signs of equity
dilution, as evidenced by a notable decline in the EPS (Earnings Per Share) from 4,750
VND to 1,316 VND. This is because, the significant increase in the number of new
outstanding shares to 7,5 billion shares. Regarding other accounts in the income
statement, such an enhancement does not clearly affect this situation, leading to the
remaining unchanged data.

4. Financial indicators:

31/12/2025(
Ratios 31/12/2024 INCREASE BASE
EQUITY)

Gross profit margin 41,4 42,19 42,19

Net profit margin 15,3 15,83 15,83

Profitability
Return on Assets 17,2 13,52 16,66

Return on Equity 26,1 18,20 24,39

Current ratio 2,03 2,03 2,03

Liquidity
Quick ratio 1,73 1,73 1,73

Debit to Equity 25,6 17,00 22,78

Leverage
Interest Coverage 41,50 42,84 42,84

Asset turnover 1,15 0,98 1,09

Turnover Inventory turnover 6,13 6,38 6,38

WACC 9,346895191 9,033111792

38
This table illustrates the comparison of financial indicators of Vinamilk after increasing its total
equity through issuing additional stocks. Overall, ROA, ROE, D/E, and asset turnover ratios
will witness a modest decrease, while the figure for WACC will slightly go up after applying
such an increase.
Regarding the reducing ratios, an increase in total equity leads to a decline to 13,53% and
18,2% in the firm’s ROA and ROE, respectively. However, although gross and net profit
margins remain stable or have slightly improved, asset growth has not been accompanied by a
proportional increase in revenue or profit, leading to a dilution of financial efficiency.
Furthermore, the D/E ratio decreases from 22,7% to 17%, showing the low level of leverage,
which contributes to enhancing financial security while mitigating liquidity and solvency risks.
In contrast, the figure for WACC shows an increase to 9,35% after raising more equity.

5. Overall evaluation:
In the context of a volatile macroeconomic environment driven by geopolitical tensions
and trade wars among major powers, ensuring revenue growth makes equity financing a
prudent strategy. It provides stability and helps mitigate risks associated with fluctuating
market interest rates. Nevertheless, such an increase will lead to a dilution of EPS and erode
the profitability attributable to shareholders and investors. Thus, the company should equip
effective strategies for equity optimisation to ensure the growth of financial indicators in
the following years.

VI. SCENARIOS COMPARISION

31/12/2025 31/12/2025(
BASE
(INCREASE DEBT) INCREASE EQUITY)

42,19 42,19 42,19

15,83 15,52 15,83

Profitability
16,66 15,57 13,52

24,39 23,92 18,20

2,03 2,03 2,03

Liquidity
1,73 1,73 1,73

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 22,78 30,02 17,00
Leverage
42,84 31,84 42,84

1,09 1,07 0,98

Turnover 6,38 6,38 6,38

9,03% 8,60% 9,3%

In evaluating the optimal capital structure for the company, two primary financing scenarios
are considered: increasing debt and increasing equity. Each option presents its pros and cons,
thus, we have to consider the context assumption for the company, which will be stable in the
following years.
From a cost of capital perspective, increasing debt is beneficial as the interest expense may be
less than the cost of equity, especially in a stable interest rate market. In addition, interest
expenses are tax deductible, helping businesses reduce their weighted average cost of capital
(WACC), thereby increasing the value of the business according to the discounted cash flow
model. Also, with stable operating cash flow, businesses can effectively plan periodic debt
repayment, limiting liquidity risks arising from fixed financial obligations.
Regarding financial efficiency, the prudent use of debt can enhance ROE through the leverage
effect in the long term. Moreover, with an Interest Coverage Ratio exceeding 30 times and a
D/E ratio of just 0.3, the company still has substantial financial capacity to utilize debt without
compromising capital safety. While increasing equity maintains the level of safety in the
balance sheet, however, this may result in earnings dilution and a decline in return on equity if
profits do not grow proportionally.
On the other hand, enhancing equity is still an effective option if the firm is in the process of
preparing for an IPO, expanding its shareholder base, or needs to strengthen its transparent
financial image in front of strategic investors. Additionally, without interest expense pressure
enables the company faces external risks when the market condition suddenly changes.
In conclusion, in the context of stable revenue and secured cash flows, we suggest that
Vinamilk should consider prioritising increasing debt to fund growth within the requirements
of strict control of interest rate exposure and leverage levels.

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