Xác định giá trị công ty dh lê tiến dũng

ACADEMY OF FINANCE

MASTER TRAINING PROGRAM

UNIVERSITY OF TOULON

INSTITUTE OF BUSINESS ADMINISTRATION

INTERNSHIP REPORTSubject: Business Valuation of Duyen Hai One Member Limited

Company

Lê Tiến Dũng

DEGREE: Master in Corporate Finance and Management Control

Tutor IAE Toulon: Jacques MARTIN

Tutor AOF: Vũ Xuân DũngCompany representative: Duyen Hai One Member Limited Company

Year: 2013-2014

Year: 2013-2014

ACADEMY OF FINANCE





Company

Lê Tiến Dũng




Year: 2013-2014

Year: 2013-2014

ACADEMY OF FINANCE





Company

Lê Tiến Dũng




Year: 2013-2014

Year: 2013-2014

INDEX

ABBREVIATIONS4

I. SIGNIFICANCE OF THE SUBJECT AND INTRODUCTION TO DUYEN HAI COMPANY....1

A. Significance of the subject: Vietnamese Government’s Policy and the equitization process of

State owned enterprises. .............................................................................................................................1

B. Introduction to Duyen Hai one member Limited Company (A State enterprise) ............................3

II. VALUATION METHODS AND APPLICATIONS IN DETERMINING THE VALUE OF DH

COMPANY................................................................................................................................................14

A. Book value (at 31st December 2013)....................................................................................................14

a) Definition and formula 14

b) Advantages and disadvantages 14

c) Application to DH Company 15

B. Valuation methods that rely on cash flow: Discounted cash flow models (DCF) ...........................15

1. Basic principles 15



2. Free cash flow to the firm models (FCFF) 19




3. Valuation with the cost of capital. 28




4. Valuation with dividend discount model (DDM) follow Circular 202/2011/TT-BTC dated 30/12/2011

of Vietnam Ministry of Finance 40




C. Valuation methods that rely on a financial variable: Price multiples .............................................43

1. Basic principles 43



2. Price to earnings ratio (P/E) 45




3. Price to book ratio (P/B) 49




III. CONCLUSION...................................................................................................................................52

1. Determine the reasonable value of DH company ...............................................................................52

2. Proposal to Sate Owned Enterprises Valuation and Equitization Process ......................................53

a. Combining valuation methods: 53

b. Develop database system for market 54

c. Establish risk assessment organizations: 54

d.Independent valuation institutions 55

e. Increase the stake allowed to be sold to investor 55

BIBLIOGRAPHY AND REFERENCES................................................................................................56

APPENDIX I..............................................................................................................................................57

APPENDIX II ............................................................................................................................................73

APPENDIX III ..........................................................................................................................................78

ABBREVIATIONS

FCF Free cash flowg growthLIBOR the London interbank offered rateP/B Price/Book ratioP/E or PER Price/Earning ratioP/S Price/Sales ratioPEG P/E per growth rate ratior Discounted rateRe the return in equity

Rfthe risk-free interest rate in theeconomy

Rmthe expected return on the marketfolio

T TaxTV Terminal valueV Enterprise value

WACCWeighted Average Cost OfCapital

y yield to maturityβ Beta coefficientP Profit

Master in Corporate Finance and Management Control- University of Toulon Vietnam2013-2014

1Business Valuation of Duyen Hai one Member Limited Company – Lê Tiến Dũng [email protected]

BUSINESS VALUATION OF DUYEN HAI ONE MEMBER LIMITED

COMPANY

I. SIGNIFICANCE OF THE SUBJECT AND INTRODUCTION TO DUYEN HAI

COMPANY

A. Significance of the subject: Vietnamese Government’s Policy and the equitization

process of State owned enterprises.

State owned enterprises (SOEs) equitization began in 1992, and since 2001 has been accelerated.

By the end of 2011, Vietnam have equitized nearly 4,000 enterprises. The number of SOEs

dropped from the original 12,000 to 5,655 in 2001. Now, there are only 1,309 enterprises wholly

owned by the State nationwide.

Basically, most SOEs are turning into joint stock companies, attracting more resources from the

society. More importantly, the management of these enterprises has been publicized.

State-owned enterprises equitizedNumber

2000 2112001 2052002 1642003 6212004 8562005 8132006 3592007 1162008 742009 202010 172011 62012 132013 272014 (forecast) 1962015(forecast) 236

Source: Ministry of Finance.



Some data show that in 2011 – 2013 the number of SOEs equitized is very modest. There are

reasons such as the equity market yet to recover. Sluggish demand discourages enterprises to

offer stakes for sale. The decisive factor is the guidance of ministerial and local agencies, State

groups and corporations is not drastic enough.

Another reason is that policies, typically Decree 59/2011/ND-CP, only address some issues,

while others are arising such as corporate value assessment, which requires making land

management schemes that meet the prevalent regulations in order to reorganize and handle

properties in accordance with the Government’s decision, and then submitting to the local

authorities before carrying out corporate value assessment. This is yet to mention review of

liabilities, audit of value assessment results, and financial processing as for enterprises with

capital scale of over VND500 billion active in the fields the insurance, banking, post and

telecommunications, aviation and exploitation of coal, oil, gas and rare minerals, construction.

Administering agencies of the State economic groups and corporations spend much time and run

into many problems when trying to meet such requirements.

This year 2014, the government has expressed strong determination to accelerate the

privatization process, officially referred to as equitization. At a meeting on SOEs equitization in

Hanoi on early February, Prime Minister Nguyen Tan Dung said ministries should consider the

work as a main political task and implement it successfully. Any company leader that shows

“hesitation” during the process needs to be heavily disciplined, Dung said.

,0

100,0

200,0

300,0

400,0

500,0

600,0

700,0

800,0

900,0






















State owned enterprises equitized






















Number



The Government has approved most of the reorganization schemes.

According the reorganization schemes, there are only 1,309 wholly SOEs left. In the period from

now to 2015, 692 enterprises will remain their State wholly-owned status, and 573 will be

equitized.

Of these 573 SOEs, the State will hold dominant stakes of over 75% in 30 enterprises, over 65%

in 45 enterprises, over 50% in 108 enterprises and below 50% or no stake in 391 enterprises,

while 44 enterprises will be dissolved or restructured. Among the companies planned for

equitization this year 2014 are Vietnam Airlines, Vietnam Automobile Industry Corp., Waterway

Transportation Corp, Vietnam National Textile and Garment Group (Vinatex) and the leading

maker of building and construction materials Viglacera Corp.

In order to equitize 573 SOEs by 2015, some 150 enterprises must be equitized every year from

now. It is necessary to timely revise Decree 59 on land, audit, statistics, inventory, financial

processing, and handling redundant laborers.

Valuation is the problem that all the IPOs of state owned enterprises have been facing so far. The

theme of this report is to deal with the problem of evaluating Duyen Hai company, one state

owned enterprise.

B. Introduction to Duyen Hai one member Limited Company (A State enterprise)

Duyen Hai one member limited liability company (abbreviation: Duyen Hai Company) is a

defense business unit, on the basis of merging 6 subsidiaries and Song Hong company which

under 319 Corporation.

Duyen Hai Company was founded inheriting the achievements of companies with rich

experience in constructions and development: Enterprise No. 7, Enterprise No. 19, 359 JSC,

Enterprise No. 487, Van Chanh Enterprise, TK21 Enterprise, Song Hong Company. Most

companies had a history of over 20 years, especially 359 JSC was founded in 25th March 1959.

Throughout the company’s history, the member units greatly contributed to achievements of 319

Company – The labor hero unit in the innovation period – currently known as 319 Corporation,

under Ministry of Defense, and it continues the tradition of the third Military Zone Armed force

which is “enrichment and winning”, positively contributes to the task of boosting defense

economy of the military and the country in the innovation period.



The company has inherited and promoted the achievements of the units based in 9 coastal

provinces, cities, and northern delta – gateway to Hanoi Capital. The company locates in the

strategic economic development triangle of Hanoi, Hai phong, Quang Ninh, which is a favorable

condition for Duyen Hai Company for continuous grow up and “sustainable development”.

Duyen Hai’s member companies have operated many years in the market of northern delta

provinces and other strategic areas. With the competence and credibility, they have gained

confidence from partners in operating areas.

With the strategy of “Sustainable development”, Duyen Hai Company focuses on:

- Improving management and operation capacities.

- Enhancing the quality of the staffs, especially management teams, engineers, technicians

with high skills, gradual specialization for key and traditional business lines.

- Focusing on the following key business line:

1. Investment and trade in real estate.

2. Construction and installation of industrial and civil works, transportation, water

resources, hydropower, electrical network, power stations, and underground works.

3. Survey, detect, disarm bombs, mines, explosives; neutralizing the consequence of the

warfare.

4. Manufacture of construction materials.

5. Trading, import – export of material and equipment.

- Accelerate the appliance of science and technology in production lines, and investment in

comprehensive and modern equipments; ensure timely meet the customer’s demands in

company’s business lines.

- Fulfill the obligations to the State, the Ministry of Defense; implement well social

welfare regulations.

-

HEADQUARTER: 16B Nguyen Thai Hoc, Ha Dong District, Hanoi City.

Tel: 04-33824709; Fax: 04-33820984

Business code: 0105753635

- Company’s organization structure:

o Chairman cum Director: Colonel - Engineer Nguyen The Phang

o Vice Directors

o 8 Departments, Divisions; 15 units; 03 project management units, 02 subsidiaries.



Dependent Units

Branches of Duyen Hai One Member Co., Ltd:

1. Enterprise No. 7

2. Enterprise No. 19



5. Enterprise TK21

6. Van Chanh Enterprise

7. Southern Branch

8. Binh Minh Branch

9. Bach Dang Branch

10. Southest Branch

11. Hanoi Branch

12. Middle Branch

* Project Management Units

1. Project Management Unit No1:

2. Project Management Unit No2:

3. Demining Unit:

4. Apartment Management Unit of 16B Nguyen Thai Hoc:

Subsidiaries

1. Song Hong Two Members Co., Ltd.

2. Duyen Hai Investment and Construction Consulting joint stock company.



CONTROLLERS

DUYEN HAI ONE MEMBERCO., LTD

CHAIRMAN CUM DIRECTOR

VICE DIRECTOR

ORGANIZATION CHARTDUYEN HAI ONE MEMBER CO., LTD. – MILITARY ZONE 3 / MOD

DIRECT MANAGEMENT

1. OFFICE

2. POLITICAL DIVISION

3. HR DIVISION

4. PLANNING - TECHNICALDIVISION

5. ACCOUNTING-FINANCIALDIVISION

6. LOGISTICS DIVISION

7. DEMINING DIVISION

8. PMU1

9. PMU2

10.APARTMENT MANAGEMENTUNIT

INDEPENDENT UNITS

1. ENTERPRISE NO.7

2. ENTERPRISE NO.19

3. ENTERPRISE NO.359

4. ENTERPRISE NO TK21

5. ENTERPRISE NO.487

6. VAN CHANH ENTERPRISE

7. BINH MINH ENTERPRISE

8. BACH DANG ENTERPRISE

9. HANOI BRANCH

10. MIDDLE BRANCH

11. SOUTHEAST BRANCH

12. SOUTH BRANCH

SUBSIDIARIES

INVESTMENT AND CONSTRUCTION CONSULTING .JSC

SONG HONG CO.,LTD



Quality policy

a) Quality policy

“QUALITY DRIVES DUYEN HAI COMPANY FORWARD TO

SUSTAINABLE DEVELOPMENT”

Duyen Hai Company has converged the experience and reputation from 07 member

companies operating construction, industrial manufacture, business, trading, mining, real estate

investment, etc. Throughout its history of building, defending and growing, Duyen Hai member

companies have continuously strived to turn Duyen Hai into a company with enough capability

to conduct large scale projects, satisfy all the requirements of Employers. The company’s goal is

to build Duyen Hai Company brand name to be a reputable brand in the Military, Red River

delta area, and gradually develop the market and spread the brand to different national areas,

regions and other countries.

During its business, Duyen Hai Company always implements:

1. Strictly follow legal regulations, standards of the State, the Ministries, sectors and competent

authorities.

2. Gradually implement training, re-training, and create the best conditions for the staff to

improve their knowledge and skills; attract, recruit staffs satisfying all the requirements of

business.

3. Approach, research and effectively apply new & advanced technologies into the company’s

activities, improve work environments for employees.

4. Understand fully customer’s demands in order to satisfy the customers with company’s

products and services, keep schedule, progress, quality with the most competitive price.

5. Continuously enhance, expand the relationship with both local and foreign partners in every

business sectors.

b) Solutions to implement Quality policy

Ensure the company’s quality policy and the leaders’ commitments to be thorough

understood, performed and maintained by all employee.

1. Regularly keep in touch with the customers to fulfill all their demands.

2. Provide training, re-training, continuously enhance knowledge for all employees to acquire

the professional qualifications and produce excellent results for given tasks; and continuously

improve their performance to be “more professional, more effective”.



3. Offering the best condition for all employees to approach, study, and apply advanced

technological solutions to result more high-quality output.

Human Resources

- Total employees: 2,958.

Regular personnel :899

Of which:

Officers: 66

Enlisted members: 156

Defense workers: 133

Long-term contracted employees: 544

Short – termed employees: 2.059

Qualification:

Bachelor degree and above: 332

College: 56

Vocational school: 147

Others: drivers, equipment & truck drivers, and workers

- Party Organization:

01 central party organizations

07 local party organizations

06 local party cells

44 local dependent party cells

Total party members: 418

Other information:

a. Achievements : During the last years, member companies under Duyen Hai Company

have always fulfilled the tasks assigned by the Central Party Committee of the Military

Forces, Ministry of Defense and the High Command of Military Zone 3. With its

contribution, and achievement, the company’s members have been appraised and given

prestigious awards, such as:

- 07 Victory Medals of first class, second class, and third class.

- 06 Labor Medals of first class, second class and third class.

- 05 Emulation flags of Ministry of Defense

- 08 Emulation flags of Ho Chi Minh Communist Youth Union Central Committee

- 02 Emulation flags of Vietnam General Confederation of Labor

- 02 Emulation flags of the General Department of Politics of Vietnam’s People Army



- 03 Certificates of Merit of Ministry of Construction

- 15 Emulation flags of High Command Military Zone 3

- 15 Certificates of Merit from provincial and city People’s Committees

b. The company always fulfills tax obligations in compliance with the law.

c. Banks providing credits:

Military commercial joint stock bank (MB)

Bank for investment and development of Vietnam (BIDV)

Vietnam bank for agriculture and rural development (Agribank)

Vietnam Joint Stock commercial Bank for Industry and Trade (Vietinbank)

d. Main partners of the company

- 9 provinces under the Military Zone 3

- Central Highland provinces

- Southwest provinces

- Ministry of Transport

- Project Management Units – General Staff

- PMU of East Sea and islands

- Vietnam National Coal – Mineral Industries Holding Corporation Ltd.



Revenue and Financial Statement of the last 5 years:

From audited finance statement of Duyen Hai in Appendix I, we have:

a. Summary of Duyen Hai Balance sheet

Unit: Billion Dong

Year 2008 2009 2010 2011 2012 2013Cash and cashequivalents 85.3 67.1 124.6 48.2 60 93.6Short term investments 0 43.2 0 0 27 0Accounts receivableshort term 273.3 330.6 376.3 240.5 288.2 522.4Inventories 132.4 142.8 170.5 225.9 313.7 386.8Other current assets 19 22.9 39.8 56.7 38.8 42.9

Accounts payable 438.4 546.1 583.7 469 600.7 867.9Short term borrowingsand liabilities 67.9 66.7 111.3 94.8 119 138.8Long term borrowingsand liabilities 5.8 5.4 43.3 18.1 9.8 42.7Debt 73.7 72.1 154.6 112.9 128.8 181.5Equity 34.1 35.5 126.4 150.4 165.8 168

b. Summary of Duyen Hai Income statement

Unit: Billion Dong

Year 2009 2010 2011 2012 2013Revenue 680.6 760.6 722.5 865.7 1065.4

Interest expense 4.8 10.2 14.2 13.4 11.5

Other income 0.4 0.6 1.9 1.7 1.2

EBIT 16 21.7 24.6 25.7 22

Net income before tax 11.2 11.5 10.4 12.3 10.5

Net income after tax (NI) 8.4 8.6 7.8 9.2 7.9

c. Investing activities and Depreciation

Unit : Billion Dong

Year 2009 2010 2011 2012 2013

Purchases and construction of fixedassets and other long term assets

2.5 2.5 3 10.9 9.6

Investments in other entities 0 (2.5) (2.0) (0.5) 0.0

Investments 2.5 0 1 10.4 9.6

Depreciation 3.1 3.7 8.0 8.7 10.4

Note: Capital spending = Purchases and construction of fixed assets and other long-term assets+Investments in other entities



d. Business Efficicency

Unit : Billion Dong

Year 2009 2010 2011 2012 2013Revenue 680.6 760.6 722.5 865.7 1,065.4Total assets 653.7 864.7 732.3 895.3 1,217.4Total liability 618.2 738.3 581.9 729.5 1,049.4Equity 35.5 126.4 150.4 165.8 168.0Gross profit 44.6 58.6 60.5 68.9 80.9Net income 8.4 8.6 7.8 9.2 7.9ROA 1.3% 1.0% 1.1% 1.0% 0.6%ROE 23.7% 6.8% 5.2% 5.6% 4.7%Gross profit to salesratio 6.6% 7.7% 8.4% 8.0% 7.6%Net profit to sales ratio 1.2% 1.1% 1.1% 1.1% 0.7%Liability to equity ratio 1741.4% 584.1% 386.9% 440.0% 624.6%

Like many companies in the construction and real estate sector, Duyen Hai use a large scale of

property in which a much large proportion of debt (2013, debt about sixty times larger than

equity), also a huge inventory. Duyen Hai has to raise funds from shareholders' equity or bank

loans.

Basic financial ratios of the construction industry and real estate sector in Vietnam

P/E 6.61

P/B 0.68

ROA 2.35 %ROE 8.88 %Net profit to sales ratio 2.97 %Liability to equity ratio 323.39 %Sales growth rate 16.63 %

Income growth rate -21.22 %

(Source : www.cafef.vn)

(link: http://s.cafef.vn/chi-so-nganh/3/731-bds-va-xay-dung.chn)

Construction and real estate Index is built up from 89 stocks of construction and real estate

companies on HOSE, using weighting capitalization method (the same way the VN Index). The

Index take the value of the base period is 100 points on 01/09/2011.



The absolute value of the total equity of Duyen Hai at the end of 2013 is 168 billion dong,

while total assets is 1,217.4 billion dong, total debt is 1,049.4 billion, including debt is 181.5

billion. In the last five years, the company produce low profitability rate.

Duyen Hai has potentially huge risks if real estate market continues to be difficult in the next few

years. Assets of businesses can lose liquidity while debt may continue to rise.

Chart 1 Business Efficiency

In below chart : decimal separator(,) ; thousands separator (.)

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5

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II. VALUATION METHODS AND APPLICATIONS IN DETERMINING THE VALUEOF DH COMPANYA. Book value (at 31st December 2013)a) Definition and formulaBook value refers to the total amount a company would be worth if it liquidated its assets and

paid back all its liabilities. Book value can also represent the value of a particular asset on the

company's balance sheet after taking accumulated depreciation into account.

Book value is calculated by taking a company's physical assets (including land, buildings,

computers, etc.) and subtracting out intangible assets (such as patents) and liabilities --

including preferred stock, debt, and accounts payable. The value left after this calculation

represents what the company is intrinsically worth.

Thus, book value is calculated:

Book value = total assets - intangible assets - liabilities

b) Advantages and disadvantagesAdvantages

1. It depicts the current net asset value of the firm. It is the total value of the company's assets

that shareholders would theoretically receive if a company were liquidated. It is easy to

calculate.

2. By being compared to the company's market value, the book value can indicate whether a

stock is under- or overpriced.

Disadvantages

Firstly, difficulty in determining the asset values to use because figures of individual asset may

vary significantly depending on whether it is valued on a going concern or a break-up basis. For

example, asset can be valued using historic, replacement and realizable basis and the accuracy

depends on which one chosen.

Secondly, a company’s balance sheet will not always include all its assets and liabilities; it

may even exclude those assets which are of most importance to generating revenue. A

cursory glance at the published financial statements of law firms set up as LLPs, for example,

provides testament to this. The 2011 financial statements of one ‘magic circle’ firm showed that

it had total assets of around £800 million, of which the largest balances were ‘client and other

receivables’ (i.e. unpaid bills – c. £500 million), ‘cash and cash equivalents’ (c. £100 million)

and ‘property, plant & equipment’ (i.e. office buildings, computers, and perhaps the contents of

wine cellars….c. £110 million). The most important assets of all – its know-how and its



relationships and reputation with current or prospective clients, employees and suppliers –

appear nowhere on the balance sheet. Whilst such an omission may be in accordance with

accounting conventions, users seeking to use financial statements to value companies need to be

aware of this, and recognize the limitations of focusing only on reported asset values.

Referring again to the law firm example, it is not the firm’s offices, whiteboards and artwork

which, in isolation, drive revenues but rather these assets used in combination with the human

element. Allowing for some important exceptions, the critical point to be aware of is this: future

profits/ cash flows, payments of dividends etc, that result from the assets being put into use

by labor, are what usually drives a business’s value; the value is not simply the net of assets

and liabilities. This example demonstrates clearly why the asset-based approach is sometimes

not appropriate for established companies with a significant workforce in place or with

significant intangible assets that are not recognized as assets in the company’s balance sheet.

It is for the above reasons that the asset-based approach will often be most suitable for

companies whose value is largely determined by its tangible assets such as mining companies.

Where a company’s fortunes are strongly dependent on less tangible factors such as customer

relationships, entrepreneurial decision-making, a skilled work force etc, the asset-based approach

may be less useful to determining a business’s value and/ or profitability.

c) Application to DH Company

Equity of DH at Dec 31st 2013 = Assets – Liabilities = VND 168 billion

Assessment: DH has a great scale of equity in book value. Due to nature activities in the field of

construction and real estate, the company has to use huge resources, mainly tangible fixed assets.

B. Valuation methods that rely on cash flow: Discounted cash flow models (DCF)1. Basic principlesa) Definition and formulaThis valuation model was developed since 1990 by the American firm Mc Kinsey, based on

academic work founding of Sharpe, Modigliani and Miller, Gordon and Shapiro, and Markowitz.

This is the essential reference for valuation, due to the future projections and considered

assumptions.

The principle underlying DCF valuation is simple: the value of a company is the present value of

its expected cash flows. We can forecast the cash flow generated by the business in the future,

and the discount these forecasted cash flows back to present at an appropriate rate of return. The

DCF estimate of enterprise value can be represented mathematically as:



Enterprise value = C1 (1 + r) -1 + C2 (1 + r) -2 + C3 (1 + r) -3 + ...

where C1 is the cash flow we expect the company to generate one year from today, C2 is the

expected cash flow in two years, C3 is the expected cash flow in three years, and so on. Our

measure of cash flow is referred to as free cash flow, which defines in the following paragraph.

The variable r represents the discounted rate used to determine the present value of a future cash

flow. It may be regarded as the appropriate rate of return on the business, and is also known as

the hurdle rate, required return, opportunity cost of funds or cost of capital. It is most common to

use annual cash flow and discount rates in a business valuation, but the same approach can be

applied to quarterly or monthly time intervals.

It is not practical to forecast a cash flow stream over an infinite time horizon, so DCF models

generally forecast cash flow over a finite number of years and then estimate a terminal value.

The terminal value is the estimate of the price at which you can sell the business at some future

date. The most common way to estimate a terminal value is to assume that the company will

eventually mature and reach a moderate, steady-state grow rate. We can the compute the

terminal value as the present value of growing perpetuity, which is appropriate for cash flow that

grows forever at a constant rate g. The terminal value (TV) of a growing perpetuity T years in the

future is given by: TVT = [CT (1 + g)] / (r – g), where CT is the cash flow generated in year T, g is

the constant growth rate, and r is the discount rate.

Our formula for the company's enterprise value can now be written as the present value of the

cash flow generated over a future time horizon of T years plus the present value of the terminal

value TVT:

Enterprise value = C1 (1 + r) -1 + C2 (1 + r) -2 + ... + CT (1 + r) -T + TVT (1 + r) -T

The first T years of our forecast horizon typically represent a period of high growth and

transition, after which the company is expected to operate in a constant growth period. The

formula above implies that the value of a business (i. e., the enterprise value) can be estimated as

a present value of the cash flow it is expected to generate over time.

• More on the growth rate

Most DCF models assume that cash flows will eventually growth at a constant rate. If a company

operates in a mature and stable industry, it may already be in a constant growth phase. If this is

the case, the formula for enterprise value simplifies to:

Enterprise value = [FCF0 (1 + g)] / (r – g)

Where FCF0 is the free cash flow generated by the company in the most recent year, g is the

constant growth rate, and r is the discount rate. What is a reasonable estimate for the growth rate

of a mature business? A good stating point is the growth rate of the overall economy. In the



United States, estimates in the range of 3 to 5 percent are common, in Europe it is perhaps less.

In France is about 2.5 %.

Younger companies often experiences high-growth rates for several years before maturing.

When evaluating a high growth business, we need to make an assumption regarding the length of

the high-growth period. How long will it take such as a business or industry to mature and reach

constant growth? Obviously, no one knows for sure. It is typical to use an estimate of between

five and ten years for the high-growth period.

How can we estimate the growth during the high-growth period? One way is to examine the

company's growth rate in recent years. Of course, this raises the question of what we mean the

refer to the company's growth rate. Sales, earnings, cash flow, and other financial characteristics

will all experience different growth rates over time. In the long run, however, everything has to

grow at the same rate, on average. If earnings grow faster than sales, this implies that the

company's profit margin is increasing over time. Although profit margins do indeed change from

one year to the next, they tend to be fairly stable for most companies in the long run, suggesting

that sales and earnings will grow at the same rate. The next table presents suggested guidelines

for the DCF framework based on the type of grow at the same rate.

Type of company High-growth

period

Long-term

growth rate

Stable and mature 0 year 3 %

Moderate growth, with reasonable prospect for

additional products or customers

5 years 5 %

High-growth company in a dynamic industry

characterized by emerging technologies

10 years 7 %

• More on the discount rate

The discount rate is used to determine the present value of future cash flow. Conceptually, it

represents the rate of return that would be required by an investor in the company. The enterprise

value is inversely related o the discount rate: if a higher discount rate is used, the enterprise value

will be lower. Recall that for a stable company, our formula enterprise value is

Enterprise value = [FCF0 (1 + g)] / (r – g)



Consider a stable company that generated $ 10 million in cash flow in the most recent year and is

forecast to grow at 3 % a year forever. At a 10 percent discount rate, the enterprise value would

be $ 10 million 1.03 / (0.10 – 0.03) =, which is $ 147 million.

At 9 %, 10 %, 11 %, we have:

Inverse relation between Discount rate and Enterprise value

Discount

rate

Enterprise

value million

9 % $ 172

10 % $ 147

11 % $ 129

The effect of change in the discount rate is striking. What discount rate should be used to value a

company? This brings us to an important relationship in valuation: the link between risk and

return. Riskier companies should be valued using higher discount rates (15 % at less), and lower

discount rates should be used for stable companies that represent safer investments.

To estimate a discount rate, we can use historical returns on stocks and bonds as a starting point.

The exact values depend on the time period that studied and the industry in which the company

operates, but broad averages are a reasonable approximation. The discount rate applicable for a

specific company depends on how is financed, the mix of stocks and bonds that represents the

company's capital base. The formal term used to refer to the discount rate applicable to a given

company is the cost of capital.

Rather than construct a detailed estimate of cost of capital, we adopt a simple guideline for the

discount rate used in business valuation (Valuation and cost of capital). For a typical business,

we use a discount rate of 10 percent, a value that it close to the average for most companies in

the world. For a high-risk business, we use 15 percent. Most business owners or potential

investors would not describe their industry as low risk. However, if that description is

appropriate, we can use a lower discount rate, such as 8 percent. There is no magic in these

guidelines for discounts rates; they simply represent returns that have been earned historically on

business in different risk categories. Once you understand the basic principles of DCF valuation,

it is quite easy to estimate how much a company is worth using a broad range of discount rates.



Remember that the discount rate has not been greater than your long-term growth rate. If it is

not, then your terminal value estimate, and thus your value estimate today, will be infinite.

b) Advantages and disadvantagesThe main advantage of using of DCF method of valuation is in this soundness. In other words,

a company should be worth the present value of its expected future cash flows. In addition, the

DCF approach requires us to think carefully about the company's future prospects.

The main disadvantage of DCF valuation is the requirement to make assumptions about the

components of free cash flow, the cost of capital, and growth rates. Unreasonable assumptions

lead to unreasonable results. For high-growth companies, most the value today is driven by the

terminal value, which is quite sensitive to our assumed value for the long-term growth rate. In

addition, the discounted cash flow approach requires an understanding of the time value of

money, and the calculation can be somewhat complex for a novice.

Discounted cash flow (DCF) valuation is certainly not easy, and the results depend critically on

the assumptions we make. However, this does not mean that we should not use this method to

value a business. To use the DCF method, we need to forecast the free cash flow that a company

will generate in the future, both in the near term and in the long run. For the long run, we usually

assume that the company will experience a constant growth rate when it matures and reaches

steady state. We also need to determine the appropriate discount rate to value the future cash

flows. Finally, we need to understand the effects of change in our model assumptions on the

underlying value estimate.

2. Free cash flow to the firm models (FCFF)a) Definition and formulaThe discounted free cash flow to the firm model for valuation requires (Rodić & Filipović,

2010):

Project free cash flow to the firm

Calculate discount rate

Discount the projected cash flows

Determine the growth rate

Calculate the residual value of the firm

Discount the residual value of the firm

The value of the debt at the date of the valuation should be deduced from the sum of the

present value of projected cash flows and the present value of the residual so the value of

the equity will be obtained.



The free cash flow to the firm represents a cash flow available to those who provided

shareholders and creditors with the capital necessary for business operations, and after all

necessary investments in net working capital and fixed assets are conducted (Stowe, Robinson,

Pinto, & MeLeavey, 2002). This is also a difference between free cash flow to equity and free

cash flow to the firm and new projected debts. Namely, free cash flow to the firm does not take

cash expenditures for interest and debt into account, whereas they are not neglected in the case of

calculating free cash flow to equity (Damodaran, 2002).

Our formula for free cash flow to the firm (FCFF) is:

FCFF = EBIT (1 – T) + noncash expenses – capital spending – investment in working

capital

The first term in the free cash flow is the company's after-tax operating income and is computed

by multiplying earnings before interest and taxes (EBIT), which is also more commonly known

as Income from operations or Operating income, by 1 minus the company's effective tax rate. We

calculate operating income as revenues minus operating expenses. Since some operating

expenses (most notably depreciation and amortization) are noncash in nature, we add them back

when calculating free cash flow. We subtract the amount of capital spending, since these

investments (such as the purchase of machinery) affect cash flow but are not recorded as

expenses on the income statement. Similarly, we subtract the Investment in working capital.

Increase in accounts receivable or inventory decrease cash flow, but theses are not recorded on

the income statement (recall that the purchase of inventory will eventually get recorded as cost of

goods sold when the associated sale of products is reported). Our definition of free cash flow

represents the cash that the company can pay to all of its security holders (bondholders and

stockholder) on a continuing basis over time. Other references to free cash flow sometimes

distinguish between the terms levered and unlevered free cash flow, or between free cash flow to

equity and free cash flow to the firm. For comparison purposes, our definition above is

interpreted as unlevered free cash flow or free cash flow to the firm. Free cash flow is sometimes

negative, for example for start-up companies that make little in operating income, yet still make

significant capital investments. But in a DCF valuation model, experiencing negative free cash

flow for one or more years does not necessarily present a problem, as long as cash flow

eventually turns positive.



b) Advantages and disadvantagesAs mentioned above in DCF principles:

Advantages

The value of the firm is based on projected future results, rather than assets.

Useful when future results are expected to be different (up or down) from recent history.

Disadvantages

Calculation relies on cash flow and discount rate figure which may be unavailable.

Projections are not guarantees; unforeseen future events can cause income or earnings

projections to be completely invalid. The valuation assumes discount rates, growth rates,

inflation and tax are consistent through the period, which may not be the case.

c) Application to DH CompanyLet's use the financial statements of Duyen Hai, presented in chapter I. For the first element of

the FCFF, we turn to the income statement:

Summary of Duyen Hai Balance sheet

Unit: Billion Dong

Year 2008 2009 2010 2011 2012 2013Cash and cashequivalents 85.3 67.1 124.6 48.2 60 93.6Short term investments 0 43.2 0 0 27 0Accounts receivableshort term 273.3 330.6 376.3 240.5 288.2 522.4Inventories 132.4 142.8 170.5 225.9 313.7 386.8Other current assets 19 22.9 39.8 56.7 38.8 42.9

Accounts payable 438.4 546.1 583.7 469 600.7 867.9Short term borrowingsand liabilities 67.9 66.7 111.3 94.8 119 138.8Long term borrowingsand liabilities 5.8 5.4 43.3 18.1 9.8 42.7Debt 73.7 72.1 154.6 112.9 128.8 181.5Equity 34.1 35.5 126.4 150.4 165.8 168

Summary of Duyen Hai Income statement

Unit: Billion Dong

Year 2009 2010 2011 2012 2013Revenue 680.6 760.6 722.5 865.7 1065.4

Interest expense 4.8 10.2 14.2 13.4 11.5

Other income 0.4 0.6 1.9 1.7 1.2

EBIT 16 21.7 24.6 25.7 22

Net income before tax 11.2 11.5 10.4 12.3 10.5




Investing activities and Depreciation

To identify DH's investing activities, we examine operating activities on the cash flow statement.

The company reported the following items in this category.

Unit : Billion Dong

Year 2009 2010 2011 2012 2013Purchases andconstruction of fixed assetsand other long term assets

2.5 2.5 3 10.9 9.6

Investments in otherentities

0 (2.5) (2.0) (0.5) 0.0

Capital spending 2.5 0 1 10.4 9.6

Depreciation 3.1 3.7 8.0 8.7 10.4

Note: Capital spending = Purchases and construction of fixed assets and other long-termassets +Investments in other entities

Working capital

We excluded financial assets or financial liabilities (cash, short-term investment and short-term

debt) from the NWC calculation. We only calculate the value of assets serving core business

activities of Duyen Hai

Working capital = (Accounts receivable + inventory + other short-term assets) – Accounts

Payable

Year 2008 2009 2010 2011 2012 2013Accounts receivable 273.3 330.6 376.3 240.5 288.2 522.4Inventory 132.4 142.8 170.5 225.9 313.7 386.8Other short-term assets 19 22.9 39.8 56.7 38.8 42.9Accounts Payable 438.4 546.1 583.7 469 600.7 867.9Working capital -13.7 -49.8 2.9 54.1 40 84.2Investment in working capital -36.1 52.7 51.2 -14.1 44.2

Note: The first criterion is whether the reported number, is significant, whether it will have a

material effect in our estimate of the worth of the company. Some miscellaneous items can be

very small relative to other entries, and their inclusion or exclusion will not have a significant

effect on our estimate. The second is whether the items are recurring, whether the company is

likely to encounter the item going forward. Special one-time expenses such as restructuring



charges should be excluded if they are unlikely to occur again in the future. Remember that the

valuation is a forward-looking exercise, and the reason that we care about free cash flow in the

past is that will help us to estimate free cash flow in the future. In this report, I assume that the

earn-out payments (Receipts of loans given, dividends and profit shared) are not likely to be

present in DH future years, so I ignore them.

Free cash flow to the firm

FCFF = EBIT (1 – T) + noncash expenses – capital spending – investment in workingcapital

We can assemble the various components and calculate DH's free cash flow as table below:

Unit: Billion Dong

Year 2009 2010 2011 2012 2013EBIT 16 21.7 24.6 25.7 22EBIT(1-T) 12 16.275 18.45 19.275 16.5Noncash expenses 3.1 3.7 8 8.7 10.4Capital spending 2.5 0 1 10.4 9.6Investment in workingcapital -36.1 52.7 51.2 -14.1 44.2Free cash flow to the firm 48.7 -32.725 -25.75 31.675 -26.9

Compare FCFF and NI

Unit: Billion Dong

Years 2009 2010 2011 2012 2013Net income 8.4 8.6 7.8 9.2 7.9

FCF 48.7 -32.7 -25.8 31.7 -26.9

Chart 2 FCFF – Net income

-40

-30

-20

-10

00

10

20

30

40

50

60

2009











Unit: Billion Dong


Compare FCFF and NI

Unit: Billion Dong

Years 2009 2010 2011 2012 2013Net income 8.4 8.6 7.8 9.2 7.9

FCF 48.7 -32.7 -25.8 31.7 -26.9


2009 2010 2011 2012 2013

Net income

FCF











Unit: Billion Dong


Compare FCFF and NI

Unit: Billion Dong

Years 2009 2010 2011 2012 2013Net income 8.4 8.6 7.8 9.2 7.9

FCF 48.7 -32.7 -25.8 31.7 -26.9


Net income



we can explain negative FCFF as follows: due to the scale of capital (include total liabilities and

equity) was continually increasing to grow business over the last few years (spent too much in

investment) therefore Duyen Hai has generated negative cash flow to the firm although the

company has made profit annually, we can see that on the chart below:

Chart 3 Revenue – Total assets – Equity

Estimate the enterprise value and equity value of Duyen Hai

Unit: Billion Dong

Year 1 2 3 4 5FCFF 48.7 -32.7 -25.8 31.7 -26.9

Duyen Hai has generated a negative FCFF -26.9 billion dong in free cash flow in the most

recent year, also in 2010 and 2011, but in 2009 and 2012 Duyen Hai generated a considerable

positive FCFF, 48.7 and 31.7 billion dong, respectively. We have to forecast the FCFF that

Duyen Hai generates in 2014, reasonably.

We should also remember that if the business has negative free cash flow, it does not completely

mean that this is not a good business. The reason is that the firm may have spent too much in

investment. If this is high potential investments, you can see right after a few years, free cash

flow was negative (-) and then the business has very strong positive cash flow (+). In the last few

years (2009-2013), Duyen Hai has spent too much in investment. Investment in working capital

of Duyen Hai in 2010: VND 52.7 billion, 2011: VND 51.2 billion, 2013: VND 44.2 billion and

this leads to negative cash flow in these years, on the other hand, in 2009 and 2012 Duyen Hai

has a very strong positive cash flow VND 48.7 billion and VND 31.7 billion, respectively.

,00

200,00

400,00

600,00

800,00

1000,00

1200,00

1400,00









Unit: Billion Dong

Year 1 2 3 4 5FCFF 48.7 -32.7 -25.8 31.7 -26.9













,00

200,00

400,00

600,00

800,00

1000,00

1200,00

1400,00

1 2 3 4 5

Revenue

Total assets

Equity









Unit: Billion Dong

Year 1 2 3 4 5FCFF 48.7 -32.7 -25.8 31.7 -26.9













Revenue

Total assets

Equity



The assumption is that in the next year Duyen Hai will not further expand business activities,

not increase total assets and the total debt, so the free cash flow tend to increase in the next year.

Cautiosly, we forecast Duyen Hai will generate a free cash flow of VND 10 billion in 2014.

Four stages of a company’ life cycle:

- The first is the start-up stage, in which the industry of company is in its infancy. Sales are generally low, andearnings are negative because of start-up costs. Cash flows are also negative since the company is makingsignificant investments to put assets in place.

- Next comes the rapid rapid-growth stage, which is characterized by significant growth in sales and profit margin.Earnings are often positive in this stage, but cash flows might still be negative, depending on the company'sinvestment needs. The company enjoys relatively high profit margins and may begin to attract competitors.

- Later, industries enter the maturity stage. By now, growth has slowed, and profit margins may have narrowed as aresult of competition. Cash flows are often positive, as companies generate significant operating cash flow that ismore than adequate to fund their investment needs.

- The final stage is on of decline. In this last stage, sales and profit begin to decrease. Cash flow is still positive aslong as asset requirement are modest. Some companies never reach the stage of decline, but instead operate in aprotracted stage of maturity, maintaining a modest growth rate for a long period of time.

When forecasting financial statements, one of our first tasks is to identify the stage of the life cycle that appropriatefor the given companies. This will drive many of our assumptions. It is useful to consider the age of the industry andthe company, along with the level of competition. The duration of each stage of the life cycle will vary based onindustry and company characteristics. It is also very important to consider the extent to which the company hascreated a sustainable competitive advantage, the ability to earn returns that exceed the cost of capital over andextended period of time. The grater the company's sustainable competitive advantage, the more likely is to be able tomaintain relatively high growth rates and profit margins.

With over 40 years of operation and low rate in ROE and ROA in the last 5 years, we canassume that the life cycle of Duyen Hai in stage 3, maturity stage:

Chart 5 Equity – Net income

,00

20,00

40,00

60,00

80,00

100,00

120,00

140,00

160,00

180,00

1














1 2 3 4 5

Equity Net income ROE














00%

05%

10%

15%

20%

25%

5



Chart 6 Duyen Hai life cycle

The FCFF of company is expected to grow at 3 % per year in the next five year (2014-2018) and

then at 1% in the long term (from 2019 onwards). The company is financed by 181.5 billion

dong in debt with 10.7% interest rate from Military Bank but the interest rates tend to decrease in

next years, so the cost of capital is 10% in the next five year (2014-2018) and then, 8% in the

long term (from 2019 onwards).


We estimate the cash flow that we expect Duyen Hai to generate over the next five years. We do

this by growing the value of VND10 billion by 3 percent per year.

Unit: Billion dong

Year 2014 2015 2016 2017 2018

FCFF 10.0 10.3 10.6 10.9 11.3

Terminal value

We assume that the free cash flow will eventually grow at a constant rate of 1% and cost of

capital at 8% from 2019 onwards. In this case, we use the formula for terminal value:

TV = [FCF0 (1 + g)] / (r – g)

TV 2018= [FCF2018(1 + g)] / (r – g) = (11.3 1.01) / (0.080 – 0.01) = VND 163 billion

Time

Sales

Start-up Rapidgrowth

Maturity

1980 1990 2010



Also, use discount rate 10%, we calculate present value:

PV2013= + + + + +

PV2013=.% + .% + .% + .% + .% + %

PV2013= 40 + 101.2 = VND 141.2 billion

Above, we excluded financial assets or liabilities (cash, short-term investment and short-termdebt) from the NWC calculation. We only calculate the value of assets serving core businessactivities of Duyen Hai. Therefore, to calculate the value of equity, we have to add cash andeliminate short-term debt to the present value:

Equity value2013 = VND 141.2 billion + VND 93.6 billion - VND 138.8 billion = VND 96

billion

Assessment: Equity value of Duyen Hai in FCFF model is much less than the book value because

of short-term debt is too large, despite the great present value and a large amount of cash.

The effects of changing assumptions

Our assumptions regarding a company's financial characteristics and future prospects generally

represent our best guess about what will happen. The result is what we might call the base case

estimate of company value. If we change the growth rate or discount rate, our estimate of the

companies' value will change. It is important to consider the effects of changes in assumptions in

a systematic way by conducting a sensitivity analysis. This allows us to examine how the value

estimate will change if our growth rate, discount rate, or other characteristics change. The choice

of which parameters to vary depends on the situation, but two important variables are the long-

term growth rate and the cost of capital.

One convenient way to present the results of a sensitivity analysis is to construct a table with the

different combinations on the growth rate and cost of capital. The hypothetical case shown in

following table presents an example. The value in each cell represents the enterprise value that

results from each combination of assumptions.



Sensitivity analysis of equity value

Unit: Billion dong

Discount

rate

Long-term growth rates

1 % 2 % 3 %

8 % 96 113.63 138.79

9 % 83 96.66 114.80

10% 73.25 83.93 97.66

From table, we see that we estimate equity value at VND 96 billion in our base case. In FCFF

model, we might also conclude that a reasonable range for the equity value is from VND 73.25

billion to VND 138.79 billion, depending on our assumptions regarding long-term growth and

the cost of capital.

3. Valuation with the cost of capital.a) Definition and formulaThe company's cost of capital plays a very important role in the valuation process. In discounted

cash flow valuation, it determines the present value of future free cash flow. It can also provide

insight regarding risk and the extent to which a company has a sustainable competitive

advantage.

The intuition behind the Cost of Capital

Generally, we can calculate the return on a portfolio of n different assets as:

Portfolio return = (Weight in asset 1) (Return on asset 1) + (Weight in asset 2) (Return

on asset 2)... + (Weight in asset n) (Return on asset n)

Where the weight in each asset are the fraction of our wealth invested in the asset. In essence, the

cost of capital can be viewed as the return on the assets. In essence, the cost of capital can

viewed as the return on a portfolio. It is the weight average return on the assets in the portfolio

which in why we refer its as the weighted average cost of capital WACC. In a corporate setting,

the portfolio is the mix of debt and equity securities, (also known as the capital structure) that a

company uses to finance its operations. The portfolio weights are computed as the fractions of

overall financing represented by each source of capital. We refer to these parameters as capital

structure weights in the cost capital calculation.

The reason that we use the WACC as the discount rate is our DCF valuation that it represents the

return that the company has to earn, on average, to satisfy its contributors of capital, its



bondholders and stockholders. The bondholders are the owners of the company's debt securities.

For a small or medium-sized company, the bondholder may simply be the bank. Larger

companies may have bank loans, commercial papers, or long-term bonds. The stockholders are

the owners of the company, since they have contributed equity capital. On an ongoing basis, the

company has to deliver returns to theses security holders. Bondholders have to be paid interest

and principal over time, and stockholders expect to receive an adequate return on their

investment. How do we determine the level of return that is adequate for the bondholders or

stockholders? Essentially, it depends on risk.

Required returns on debt

A company's cost of debt is the rate that it would have to pay if it went to the credit market today

to take out a new loan. We estimate this cost by analyzing the rates the company is paying on its

currents loans and considering other market conditions For a small to meium-sized company,

this process is fairly straightforward, as the company may have one or two outstanding banks

loans or revolving credit agreements. For larger companies, it get more involved, because they

may have several types of debt in place.

Consider a simpler case: a company with $ 30 million in total debt, $ 10 million in short-term

debt at 6 percent and $ 20 million of long-term debt at 9 percent.

Its cost of debt is 8 percent:

[($ 10 million / $ 30 million) 1.06] + [($ 20 million / $ 30 million) 1.09] = 0.08

When a company borrows, it agrees to pay the lender interest over the life of the loan and repays

the principal amount of the loan (face value) at maturity. For fixed-rate loan, the interest

payments are constant over the life of the loan; floating-rate loans have interest rats that move up

and down over the life of the loan, depending on the movement in the underlying index rate for

the rate. Loans are indexed to LIBOR (the London interbank offered rate) or to EURIBOR

(European interbank offered rate).

The yield to maturity on a bond is the discount rate that sets the present value of the bond's future

cash flows equal to its current market price. Intuitively, the yield represents an approximate

measure of the rate of return earned by bondholders. Riskier bonds carry higher yields. For a

given bond, the coupon payment don't change over its life, but the yield will change because of

two mains factors movements in interest rats in the economy, and changes in risk at the issuing

company. We can measure changes in interest rates from movements in Treasury bonds, and we

can assess change in risk at the company by reviewing its bond rating. Bonds rating, which are

published by agencies such as Standard & Poor's, Moody's or Fitch Ratings, measure the risk in

bonds and in the issuing company. When conditions at a company change for better or worse, the

bond rating should change to reflect the new level of risk. If we have enough information, we



can compute the yield to maturity directly; if not, we can estimate it using bond rating and other

data.

Mathematically, we compute the yield using the following formula:

Price = C (1 + y) -1 + C (1 + y) -2 + C (1 + y) -3 + ... + (C + Principal) (1 + y) -T

Where Price is the current market price of the bond, C is the annual coupon payment, Principal is

the principal amount (face value) of the bond, and y is the yield of maturity. To calculate the

yield, we need to know the bond's market price. This presents a challenge, since most corporate

bonds are not publicly traded, and we do not observe the market price. As a result, we have to

estimate the yield using the company's bond rating and the yields on similarly rated bonds of

others companies.

From this discussion, you can see estimating the cost of debt can become a complex task.

Fortunately, in many cases, we can get a reasonable estimate rather easily. If the overall level of

interest rates has not changed much since a company has issued its debt and its financial health

has remained fairly stable, we can simply use the interest rate paid by the company as the cost of

debt. This rate is discussed in the notes to financial statements for a public company, and if there

a number of debt issues, each will have its own rate. We can take also estimate the cost of debt

on the balance sheet, but this method is reasonable only when the overall amount of debt has not

changed significantly over the year.

Required returns on equity

The cost of equity is the return required by the stockholders to compensate them for the risk in

their investment. We should note at the outset that the cost of equity is a market-based measure

and is not the same as the traditional "return of equity", a concept we discus in our analysis of

financial statements. The return on equity (ROE) is an accounting-based measure of performance

and is calculated by dividing net income by total stockholders' equity on the balance sheet. It has

very little to do with the return that stockholders require when they buy shares in a company.

What level of return do stockholders require when they invest in a software company, a bank, or

a closing retailer? To some extent, it depends on the individual. What we seek to estimate, as the

"cost of equity", is the return required by the average shareholder. There are a number of ways to

estimate this, but we focus on two common methods: the Capital Assets Pricing Model CAPM

and the build-up approach.

• Estimating the cost of equity using the Capital Asset Pricing Model CAPM

The Capital Asset Pricing Model (CAPM) is a model that was developed in academic research in

the 1960s. It likes risk and return by a measure called bêta via the following formula:

RE = RF + β [RM – RF]



where RE is the return in equity, RF is the risk-free interest rate in the economy, β is the

sensitivity of returns on stock to overall market returns, and RM is the expected return on the

market folio.

To use the CAPM to get the cost of equity, we need to estimate the inputs. The risk free interest

rate is the return provided by a riskless security, which is usually estimated by the current yield

on government bonds (for example the 10-years Treasury bonds with a yield o 3 percent). The

term [RM – RF] is the difference between the expected return on a portfolio known as the "market

portfolio" and the risk-free rate; the difference in returns it also known at the market risk

premium. Financial analysts often use the S&P 500 index as a representation of the overall

market, and use historical data over many years to estimate the market risk premium. For

example, we estimate the market risk premium to be 5 %. This means that on average, we expect

the annual return on stock to be 5 percent high than the returns Treasury bonds. If currently

Treasury bonds yielding 3 percent, we expect stocks to provide a return of 8 percent (dividends

and capital gains).

This brings us to beta, our measure of risk. Most investors think of risk as fluctuations in the

value of an investment. The concept of beta is more specific. It measures the extent to which

fluctuations in the returns on a stock are due to the co-movement of the stock with the overall

market. The returns on some stocks are highly sensitive to overall market conditions: these

stocks tend to have high betas. Other stocks, which are sometimes referred to as "defensive

investments", tend to move less strongly with overall market conditions, and have lower betas.

Theoretically, there is not upper limit or lower limit to the value of beta. Betas can be negative,

but negative betas are not commonly found.

• Estimating the cost of equity using the Build-Up Approach

As noted above, the CAPM is a theoretical model based on a number of assumptions. It has been

tested extensively over time and is used by some analysts, but certainly not by all. We now turn

our attention to an alternative method for estimating required return on a stock, the build-up

approach. This method shares one important characteristic with CAPM, that investors require

higher return when they face higher risk. It assumes that the expected return on a stock is equal

to the risk-free rate plus several risk premiums related to various characteristics of the company:

RE = RF + Market premium + Size premium + Industry premium + Liquidity premium

where the premiums represent compensation for additional sources of risk. For example, the size

premium is based on empirical observation that small stocks have historically tended to earn

higher returns than large stocks. An industry premium might represent additional compensation

for risk inherent in stocks in a particular industry, tech stocks for example. A liquidity premium



might be added to rewards investors for holding stocks that do not trade very often. Additional

premiums could be added to compensate for other reasons, such as foreign country risk.

To see how the build-up approach works, assume that we are investing in a relatively illiquid

stock of a small Internet retailer. We have determined that the premium for investing in small

stocks is 2 percent; the industry premium is 1.5 percent. With a 3 percent risk-free rate and a 5

percent market risk premium, our expected return using the build-up approach would be:

RE = 3 % + 5 % + 2 % + 1.5 % = 14.5 %

Doing synthesis and estimating the WACC

After we have estimated the costs and debt and equity, we are ready to estimate the weighted

average cost of capital. Again, think of the company as a portfolio of debt and equity, and the

WACC is the return on this portfolio. We calculate the WACC as the weighted average cost of

debt and equity, using the proportions of financing from each source as the capital structure

weights as follows:

WACC = [(D / V) RD (1 – T)] + [(E / V) RE]

where V is the enterprise value, computed as the sum of the values of debt (D) and equity (E), D

/ V is the ratio of debt to enterprise value, E / V is the ratio of equity to enterprise value, RD is

the cost of debt, RE is the cost of equity, and T is the corporate tax rate.

We can notice that the cost of debts multiplied by (1 – T) in the above equation. We do this

because interest expense is tax deductible, from company's point of view. If the company can

borrow money at 7 percent and pays taxes at a rate of 40 percent, then after-tax cost of debt is

4.2 percent (calculated as 7 % (1 – 0.40]).

• Some keys points related to the estimation of the WACC

Before we proceed with an example, let's remind ourselves of some key points related to the

estimation of the WACC:

1 – We should use the market values of debt and equity when computing the capital structure

weights. For most companies, the book value of debt is a reasonable approximation of market

value. We can obtain the market value of equity (known as the equity market capitalisation) for

public companies. If we are estimating the WACC for a private company, we can multiply the

book value equity by the price-to-book ratio of similar public companies to get an approximation

of the market up value of equity.

2 – The cost of debt is the rate that the company would have to pay on any new borrowing and is

based on current market conditions. We should consider all interest-bearing debt, both-short term

and long-term. For long-term debt, in theory, we should compute the yield to maturity on the

company's existing bonds. If the bonds are not publicly traded, we can estimate the yield using



the company's bond rating. For many financially healthy companies, the interest rate on their

loans is a reasonable approximation of the yield. Since interest expense is tax deductible, it is the

after-tax cost of debt that is relevant.

3 – The cost of equity is the return that the company's stockholders expect to earn on their

investment. It can be estimated with CAPM, the build-up approach, or other methods. Riskier

stocks have higher expected returns. For private companies, use the betas of similar public

companies in the CAPM, or use build-up approach, which does not require an estimate of beta.

Estimating a company's weighted average cost of capital is a critical step in the valuation

process. Since the WACC is the discount rate used in a DCF model, actions that a company can

take to decrease its WACC will increase its value. We can think of the WACC as an overall cost

of financing our company's operations, and lower WACC is associated with cheaper financing.

In addition, the cost of capital can be used internally by the company to establish performance

targets for managers. Companies that earn a return on invested capital greater than their WACC

are creating value; if ROIC is less than the WACC, the company is destroying value. Investors

should seek companies that are growing, with return on invested capital above the cost of capital,

as these companies are more likely to have sustainable competitive advantage over time.

b) Advantages and disadvantagesAdvantages of CAPM model

The CAPM has several advantages over other methods of calculating required return, explaining

why it has remained popular for more than 40 years:

It considers only systematic risk, reflecting a reality in which most investors have

diversified portfolios from which unsystematic risk has been essentially eliminated.

It generates a theoretically-derived relationship between required return and systematic

risk which has been subject to frequent empirical research and testing.

It is generally seen as a much better method of calculating the cost of equity than the

dividend growth model (DGM) in that it explicitly takes into account a company’s level of

systematic risk relative to the stock market as a whole.

It is clearly superior to the WACC in providing discount rates for use in investment

appraisal.

Disadvantages of CAPM model

The CAPM suffers from a number of disadvantages and limitations that should be noted in a

balanced discussion of this important theoretical model.

Assigning values to CAPM variables



In order to use the CAPM, values need to be assigned to the risk-free rate of return, the return on

the market, or the equity risk premium (ERP), and the equity beta.

The yield on short-term Government debt, which is used as a substitute for the risk-free rate of

return, is not fixed but changes on a daily basis according to economic circumstances. A short-

term average value can be used in order to smooth out this volatility.

Finding a value for the ERP is more difficult. The return on a stock market is the sum of the

average capital gain and the average dividend yield. In the short term, a stock market can provide

a negative rather than a positive return if the effect of falling share prices outweighs the dividend

yield. It is therefore usual to use a long-term average value for the ERP, taken from empirical

research, but it has been found that the ERP is not stable over time. In the UK, an ERP value of

between 2% and 5% is currently seen as reasonable. However, uncertainty about the exact ERP

value introduces uncertainty into the calculated value for the required return.

Beta values are now calculated and published regularly for all stock exchange-listed companies.

The problem here is that uncertainty arises in the value of the expected return because the value

of beta is not constant, but changes over time.

Using the CAPM in investment appraisal

Problems can arise when using the CAPM to calculate a project-specific discount rate. For

example, one common difficulty is finding suitable proxy betas, since proxy companies very

rarely undertake only one business activity. The proxy beta for a proposed investment project

must be disentangled from the company’s equity beta. One way to do this is to treat the equity

beta as an average of the betas of several different areas of proxy company activity, weighted by

the relative share of the proxy company market value arising from each activity. However,

information about relative shares of proxy company market value may be quite difficult to

obtain.

A similar difficulty is that the ungearing of proxy company betas uses capital structure

information that may not be readily available. Some companies have complex capital structures

with many different sources of finance. Other companies may have debt that is not traded, or use

complex sources of finance such as convertible bonds. The simplifying assumption that the beta

of debt is zero will also lead to inaccuracy in the calculated value of the project-specific discount

rate.

One disadvantage in using the CAPM in investment appraisal is that the assumption of a single-

period time horizon is at odds with the multi-period nature of investment appraisal. While

CAPM variables can be assumed constant in successive future periods, experience indicates that

this is not true in reality.



Advantages of WACC

The WACC calculation is useful in determining a strong estimate if not an exact cost of capital

leveraging. Ideally, the lower the WACC percent is the better for the company. The WACC

calculation can also serve as a metric to compare against a cost benchmark.

The weighted average cost of capital (WACC) is a metric used in finance to quantify percentage

distribution of cost for more than one non-equal sources of capital. The measurement helps

businesses ensure adequate cash-flow, assists with debt management decisions, and provides a

quantitative value with which to evaluate financial decisions. In essence, the average is

'weighted' based on the proportional amount of each type of capital. WACC can be calculated

using a tax deduction for after tax cost of capital and may include a cost of equity component

which itself can be calculated in more than one way.

The WACC calculation is useful in determining how a company is financed, and what that

capital costs. The WACC calculation serves as an indicator; benchmark and guide to financial

practitioners who is seeking to gain a more accurate understanding of corporate capital structure.

Disadvantages of WACC

Since market price of equity is not generally static, the true cost of capital varies that makes

investor’s expectations vary, so the cost of capital may not be an exact figure.

However, it is also important to note how the numbers in the WACC equation can be somewhat

misleading. For example, if a manager at Company A decides WACC is too high and

consequently pays off a loan using retained earnings, the loan portion of the WACC calculation

will decline assuming no other loans are taken. This could actually increase the cost of capital as

the remaining capital may be in a higher cost equity leveraging. Thus, WACC should not be

considered an operating cost but rather a measure of capital distribution and the cost associated

with that distribution of that funding.

Additionally, if corporate performance, market and economic conditions are favorable the

company's valuation may rise causing WACC to change for the better if shareholders

expectations do not adjust. If loan debt is variable rather than fixed, changes in the interest rate

of such debt can also cause fluctuations in WACC. Henceforth, being aware of the terms,

conditions, context and environment of capital costs is essential in interpreting the result of the

WACC calculation.

c) Application to DH CompanyFrom Summary of Duyen Hai Balance sheet



Unit: Billion Dong

Years 2008 2009 2010 2011 2012 2013Cash and cashequivalents 85.3 67.1 124.6 48.2 60 93.6Short term investments 0 43.2 0 0 27 0Accounts receivableshort term 273.3 330.6 376.3 240.5 288.2 522.4Inventories 132.4 142.8 170.5 225.9 313.7 386.8Other current assets 19 22.9 39.8 56.7 38.8 42.9

Accounts payables 438.4 546.1 583.7 469 600.7 867.9Short term borrowingsand liabilities 67.9 66.7 111.3 94.8 119 138.8Long term borrowingsand liabilities 5.8 5.4 43.3 18.1 9.8 42.7Debt 73.7 72.1 154.6 112.9 128.8 181.5Equity 34.1 35.5 126.4 150.4 165.8 168

Free Risk Interest Rate

We take government bond yields of 5-year term (Source: http://tpcp.mof.gov.vn/)

Beta coefficient

We use data from 89 companies in construction and real estate field which are listed on Viet nam

stock market, source cafef.vn, the most famous site in Vietnam on financial and economic

information. See more detail in Appendix II. Then, we choose the company with the same

business characteristics and scale of capital, as table below:

NoTradingsymbol capitalized P/E P/B Beta

(VNDbillion)

(VND billion) (VND billion) (VND billion)

1 BT6 224.36 14.58 0.5 0.652 C47 152 7.01 0.92 0.273 CCI 143.83 8.41 0.74 0.415 CLG 160.74 5.17 0.78 0.976 CTI 159 21.14 0.9 0.447 DAG 177.38 6.61 0.97 0.628 DHA 137.06 17.64 0.45 19 DIC 150.06 12.62 0.73 1.58



Note: beta coefficient is calculated with the data of 100 trading session

From the data table above, we calculate the average of beta coefficient: β = 0.80

Market Risk Premium

Use the statistics of Market Risk Premium and Risk Free Rate Used for 51 Countries in

2013: A Survey with 6,237 Answers from IESE Business School, See Appendix III for

further information. We chose Thailand, the country located in Southeast Asia and the economic

environment is similar to Vietnam, then we calculate market risk premium of Vietnam.

Market Risk PremiumThailand 7.60%

(Source: http://tpcp.mof.gov.vn/)

Because the liability to equity ratio of Duyên Hai is too much large (over 6 times in 2013),

which increases the level of risk so we should add about 4% to Vietnam market risk premium,

we estimate that risk premium of Duyen Hai is 12%.

10 HMC 201.6 9.51 0.63 0.5713 L10 115.7 4.33 0.63 1.2214 LBM 101.97 7.22 0.82 0.6315 LM8 176.3 4.34 0.91 0.717 PXI 153 7.61 0.48 1.4418 THG 107 7.47 0.69 0.6720 UIC 102.4 3.81 0.58 0.9

Average ofcomparables

9.16 0.72 0.80



Cost of equity:

Re ExplanationCost of equity: Re =Rf +βx(RM – Rf) = 7.2% +0.8 x (12%) = 16.8%Rf: Government bond yields of 5-year term 7.2%β: Correlation of share with stock market 0.8

Market risk premium 12%

Cost of debt

The company is financed by 181.5 billion dong in debt with 10.7% interest rate from Military

Bank but the interest rates tend to decrease in the next years, so the cost of capital is expected at

8% in the long term (from 2019 onwards).

Tax

Corporate income tax is now reduced from 25% to 22% starting from 2014

Use the WACC formula:

WACC = [(D / V) RD (1 – T)] + [(E / V) RE]

V= D + E

D = VND 181.5 billion

E = VND 168 billion

We have:

WACC CalculationE/(D+E) =w(e) 48.1%D/(D+E) =w(d) 51.9%Cost of debt (Rd) 8.0%Income tax (T) 22.0%Cost of debt after tax= Rd*(1-T) 7.8%Bêta coefficient 0.8Market premium 12.0%Cost of equity (Re) 16.8%WACC= Re* w(e)+Rd*(1-T)*w(d) 11.3%

Valuate Duyen Hai with WACC

As previously, The FCFF of company is expected to grow at 3 % annually in the next five year

(2014-2018) and then at 1% in the long term (from 2019 onwards).




We estimate the cash flow that we expect Duyen Hai to generate over the next five years. We do

this by growing the value of VND10 billion by 3 % per year.

Unit: Billion dong

Year 2014 2015 2016 2017 2018

FCFF 10.0 10.3 10.6 10.9 11.3

Terminal value

We assume that the free cash flow will eventually grow at a constant rate of 1% and cost of

capital at 11.3% (WACC) from 2019 onwards. In this case, we use the formula for terminal

value:

TV = [FCF0 (1 + g)] / (r – g)

TV 2018= [FCF2018(1 + g)] / (r – g) = (11.3 1.01) / (0.113 – 0.01) = VND 110.8 billion

Also, use discount rate 10%, we calculate present value:

PV2013= + + + + +

PV2013=.. % + .. % + .. % + .. % + .. % + . %

PV2013= 38.7 + 64.9 = VND 103.6 billion

Above, we excluded financial assets or liabilities (cash, short-term investment and short-termdebt) from the NWC calculation. We only calculate the value of assets serving core businessactivities of Duyen Hai. Therefore, to calculate the value of equity, we have to add cash andeliminate short-term debt to the present value:

Equity value2013 = VND 103.2 billion + VND 93.6 billion - VND 138.8 billion = VND 58.4

billion

Assessment: Equity value of Duyen Hai in FCFF model use WACC is much less than the FCFF

value above because the discount rate (WACC) now is greater. In this case, great cost of equity

reduces the value of the business. That's because Duyen Hai do business in a high-risk field

which are affected heavily by the crisis and recession.



4. Valuation with dividend discount model (DDM) follow Circular 202/2011/TT-BTC dated30/12/2011 of Vietnam Ministry of Financea) Definition and formula

The dividend discount model (DDM) is a method of valuing a company's stock price based on

the theory that its stock is worth the sum of all of its future dividend payments, discounted back

to their present value. In other words, it is used to value stocks based on the net present value of

the future dividends. The equation most widely used is called the Gordon growth model.

The equation for the dividend discount model is:P0 = + + ⋯ =In this model, P represents the present day value of the stock, Div represents the dividends that

are paid out to investors in a given year, and r is the required rate of return that investors expect

given the risk of the investment.

In addition, the value of a company whose dividend is growing at a perpetual constant rate is

shown by the following function, where g is the constant growth rate the company’s dividends

are expected to experience for the duration of the investment:

Constant Growth: P0 = Multi-Stage Dividend Discount Models

To get around the problem posed by unsteady dividends, multi-stage models take the DDM a

step closer to reality by assuming that the company will experience differing growth phases.

Stock analysts build complex forecast models with many phases of differing growth to better

reflect real prospects. For example, a multi-stage DDM may predict that a company will have a

dividend that grows at 5% for seven years, 3% for the following three years and then at 2% in

perpetuity.

However, such an approach brings even more assumptions into the model - although it doesn't

assume that a dividend will grow at a constant rate, it must guess when and by how much a

dividend will change over time..


Dividend discount models attempt to put a valuation on shares, based on forecasts of the

sums to be paid out to investors. This should, in theory, provide a very solid basis to determine

the share’s true value in present terms.

Dividend discount models can be of great use over the short to medium term, making use

of widely available company research over timescales of up to five years.



In stable industries, dividend discount models can still be of value over the longer term if

investors are prepared to make the assumption that current dividend payout policies will remain

in place.

Disadvantages

Standard dividend discount models are of no value in determining the estimated value of

companies that don’t pay dividends. This is typically not a problem in mature industries such as

utilities and food, but the models are generally of less value in industries such as technology and

mobile telecoms, where investors commonly look for share price appreciation rather than high

dividend payments.

The ability of a company to maintain a certain rate of dividend growth over the longer

term can be extremely difficult to forecast accurately. Dividend discount models rely heavily on

the validity of the data inputs, making them of questionable value given the challenges

associated with accurately forecasting growth rates beyond five or so years.

When used for longer-term analysis, the valuations provided by dividend discount

models take no account of the possibility of a deliberate change to a company’s dividend policy.

This can further compromise the usefulness of dividend discount models over the longer term.

c) Application to DH CompanyWith data from the Company's financial year 2009-2013 as follows:

Unit: Billion Dong

Year 2009 2010 2011 2012 2013


State’s capital (excludingbalances of Bonus andwelfare)

35.5 126.4 150.4 165.8 168.0

Predict profit after tax of 6 year in the future:

* The company profit is expected to grow at 3 % per year in the next 6 years.

Profit (P) after tax 2014 = P after tax 2013 x 103% = 7.9 x 103% = 8.14 billion dong

Similar to determine the next year:

P after tax 2015= 8.14 x 103% = 8.38 billion dong







(Expected profit distribution after tax in future years: 50% for dividends, capital increases 30%,

20% financial reserve fund, Bonus and benefits)

Estimate after-tax profits as dividends (estimated at 50%)

D1= 50% x P after tax 2014 = 50% x 8.14 = 4.07 billion dong


D3= 50% x P after tax 2016 = 50% x 8.63 =4.32 billion dong




Estimate state owned capital of the 5 future years (2014-2018)

State Capital 2014 = State Capital 2013 +30% profit after tax in 2014 = 170.44 billion dong





Determine the average of margin on state capital (2014-2018):

R = (R1+R2+R3+R4+R5)/5

R1: Rate of return on capital State 2014 = 8.14/170.44 = 0.0478





R = 0.0492

Determine g index (annual growth rate of dividends):

g = b x R

b: percentage of profit after tax for additional capital.

This case is determined b = 30% of profit after tax

g = 30% x 0.0492 = 0.01476

Determine the discount rate (or required rate of return):as previously, we have:

Re Explanation



Cost of equity: K=Re =Rf +βx(RM – Rf) = 7% +0.8 x (12%) = 16.8%Rf: Government bond yields of 5-year term 7,2%β: Correlation of share with stock market 0.8

Market risk premium 12%

Estimate terminal value of state owned capital in the future 5th year (n = 5)

TV2018 = D2019/(K-g) = 4.72/(0.168 – 0.01476) = VND 30.8 billion

Calculate the value of state owned capital at the time of valuation (12/31/2013):

P0 = + + + + +

Value of state owned capital = 4.07/ (1+0.168)1 + 4.19/ (1+0.168)2+4.32/ (1+0.168)3+ 4.45/(1+0.168)4+4.58/ (1+0.168)5+30.8/ (1+0.168)5 = VND 27.93 billion

Thus the actual value of the state capital in Duyen Hai at 12/31/13 is VND 27.93 billion.

Assessment: Equity value of Duyen Hai in DDM model is much less than the book value and the

both FCFF value because the net income is too low. In DDM method, bad business efficiency

makes enterprise value reduced significantly.

C. Valuation methods that rely on a financial variable: Price multiples1. Basic principlesa) Definition and formulaThe use of price multiple to value companies is very popular. This approach is sometimes

referred as relative valuation methods because it involves estimating the value of a company

relative to other similar companies. Now we describe the approach, practice to Duyen Hai, and

discuss the advantages and disadvantages of price multiple valuation.

The basic concept behind the use of price multiple is quite simple: a company should be

evaluated based on an important fundamental characteristic. Mathematically, this approach is

very straightforward:

Value = Fundamental characteristic Appropriate value of multiple

When we compare this formula o the ones used in discounted cash flow valuation, we quickly

understand why the use of price multiple is so popular. We don't need estimate cash flows,

growth rates, or discount rates. We need to choose the relevant characteristic, determine the

appropriate value of the multiple and compute the product of two. Of course, just because the



formula looks simple doesn't mean that this method can be used to generate useful results with a

quick multiplication; a meaningful price multiple analysis requires considerable effort.

To complete a meaningful valuation exercise with price multiples, we must first select the

fundamental financial characteristic that will serve as focus our four analysis. There are two

main categories of price multiple: those that value the entire company (enterprise multiples) and

those that value just the company's stock (equity multiples). We describe the equity multiples

first, since they are generally more attention.

Equity multiples link the price of company's stock to a characteristic that should be related to

fundamental value. A number of different characteristics are used in practice, but the most

popular by far is the price/earning multiple, also known as the PER or P/R ratio. Commonly used

alternatives include the price/book and price/sales ratio.

After choosing the multiple and constructing the set of comparable companies, we need to

calculate the appropriate value of the multiple. In the simplest case, we will take the average of

the multiple of the comparable firms. In other cases, we might decide to exclude one or more of

the comparables from our analysis, because their multiples appear to be unusual (if their P/E

ratio be very high, if earnings are low or negative, and if the company reported a loss). Instead to

average, we could use the median value of the multiple, which is obtained by sorting the values

from high to low and choosing the one in the middle of the distribution.


Despite these disadvantages, multiples have several advantages.

Usefulness: Valuation is about judgment, and multiples provide a framework for making

value judgments. When used properly, multiples are robust tools that can provide useful

information about relative value.

Simplicity: Their very simplicity and ease of calculation makes multiples an appealing

and user-friendly method of assessing value. Multiples can help the user avoid the potentially

misleading precision of other, more ‘precise’ approaches such as discounted cash flow valuation

or EVA, which can create a false sense of comfort.



Relevance: Multiples focus on the key statistics that other investors use. Since investors

in aggregate move markets, the most commonly used statistics and multiples will have the most

impact.

These factors, and the existence of wide-ranging comparables, help explain the enduring use of

multiples by investors despite the rise of other methods.

Disadvantages

There are a number of criticisms levied against multiples, but in the main these can be

summarized as:

Simplistic: A multiple is a distillation of a great deal of information into a single number

or series of numbers. By combining many value drivers into a point estimate, multiples may

make it difficult to disaggregate the effect of different drivers, such as growth, on value. The

danger is that this encourages simplistic – and possibly erroneous – interpretation.

Static: A multiple represents a snapshot of where a firm is at a point in time, but fails to

capture the dynamic and ever-evolving nature of business and competition.

Difficulties in comparisons: Multiples are primarily used to make comparisons of relative

value. But comparing multiples is an exacting art form, because there are so many reasons that

multiples can differ, not all of which relate to true differences in value. For example, different

accounting policies can result in diverging multiples for otherwise identical operating businesses.

Dependence on correctly valued peers: The use of multiples only reveals patterns in

relative values, not absolute values such as those obtained from discounted cash flow valuations.

If the peer group as a whole is incorrectly valued (such as may happen during a stock market

"bubble") then the resulting multiples will also be misvalued.

Short-term: Multiples are based on historic data or near-term forecasts. Valuations based

on multiples will therefore fail to capture differences in projected performance over the longer

term, and will have difficulty correctly valuing cyclical industries unless somewhat subjective

normalization adjustments’ are made.

2. Price to earnings ratio (P/E)a) Definition and formulaThe price earning ratio is computed as:

P / E = Price per share / Earnings per share



The numerator of P/E ratio is the company's stock price, and the denominator is earnings per

share. If we where valuing a private business that did not have a specified number of shares

outstanding, we could express the P/E ratio as:

P / E = Market value of equity / Net income

Another important distinction that must be made when using price multiples is whether they are

expressed on a trailing basis or forward basis. A trailing multiple use historical data in the

denominator (usually the most recent year), while a forward multiple uses a forecasted value of

the characteristic (usually the coming year). Price multiples for public companies are readily

available on many Web sites. In most cases, these data express the multiple on a trailing basis,

often with the notation "ttm" which stands for "trailing twelve months". The typical trailing P/E

multiple is computed with the current stock price in the numerator and the sum of the four most

recent quarterly values of earnings per share in the denominator.

By comparing price and earnings per share for a company, we can analyze the market's stock

valuation of a company and its shares relative to the income the company is actually generating.

Stocks with higher (or more certain) forecast earnings growth will usually have a higher P/E, and

those expected to have lower (or riskier) earnings growth will usually have a lower P/E.

Investors can use the P/E ratio to compare the value of stocks: if one stock has a P/E twice that

of another stock, all things being equal (especially the earnings growth rate), it is a less attractive

investment. Companies are rarely equal, however, and comparisons between industries,

companies, and time periods may be misleading. P/E ratio in general is useful for comparing

valuation of peer companies in similar sector or group.

Various interpretations of a particular P/E ratio are possible, and the historical table below is just

indicative and cannot be a guide, as current P/E ratios should be compared to current real interest

rates.

P/E Value Interpretation

N/A

A company with no earnings has an undefined P/E ratio. By

convention, companies with losses (negative earnings) are

usually treated as having an undefined P/E ratio, even though a

negative P/E ratio can be mathematically determined.

0–10

Either the stock is undervalued or the company's earnings are

thought to be in decline. Alternatively, current earnings may be

substantially above historic trends or the company may have

profited from selling assets.

10–17 For many companies a P/E ratio in this range may be considered



fair value.

17–25

Either the stock is overvalued or the company's earnings have

increased since the last earnings figure was published. The stock

may also be a growth stock with earnings expected to increase

substantially in the future.

25 +

A company whose shares have a very high P/E may have high

expected future growth in earnings, or this year's earnings may be

considered to be exceptionally low, or the stock may be the

subject of a speculative bubble.

It is usually not enough to look at the P/E ratio of a company and determine its status. Usually,

an analyst will look at a company's P/E ratio compared to the industry the company is in, the

sector the company is in, as well as the overall market (for example the S&P 500 if it is listed in

a US exchange). Sites such as Reuters offer these comparisons in one table. Often, comparisons

will also be made between quarterly and annual data. Only after a comparison with the industry,

sector, and market can an analyst determine whether a P/E ratio is high or low with the above

mentioned distinctions (i.e., undervaluation, over valuation, fair valuation, etc.).

Using discounted cash flow analysis, the impact of earnings growth and inflation can be

evaluated. Using constant historical earnings growth rate of 3.8 and post-war S&P 500 returns of

11 % (including 4 % inflation) as the discount rate, the fair P/E is obtained as 14.42. A stock

growing at 10 % for next five years would have a fair P/E of 18.65.


The PER is popular because of its intuitive appeal. It seems reasonable that a company's value

should be driven by its profits, and companies with higher earnings should be worth more than

les profitable ones. After all, net income represents the bottom line, both figuratively and

literally, and is determined by expenses as well revenues. Although we are indeed interested in

the company's bottom line, the computation of Earning per Share can sometimes present

challenges when we use it in price multiple. The potential problems arise when a company

reports significant non-operating or extraordinary items. These can lead to distortions in the P/E

multiple, and they should be excluded from our analysis. Indeed, many companies report EPS

two ways: one is including all sources of income and expenses, and another excluding

extraordinary items.



Disadvantages

Even in the absence of non-operating or extraordinary items, the application of the P/E ratio can

be challenging. It is not uncommon for companies to occasionally have expenses that exceed

revenues, resulting in a net loss for the year. The resulting PER is negative and therefore not very

useful in valuation. A somewhat similar problem arises when a company makes a very small

profit. When we have a small, but positive, value for net income or EPS in the denominator, the

P/E ratio is very high. For example consider a company with a $ 20 stock price and EPS of 2

cents in the most recent year. Sometimes is the case in the Internet companies). The PER ratio

for this company would be 1,000. Then the return is in 1,000 years. When we encounter a value

that is significantly outside of what we would consider a reasonable change for our data (known

as an outlier statistics), it's generally a good idea to exclude this value from our subsequent

analysis.

c) Application to DH CompanyLet's apply the concept of price multiple valuation to Duyen Hai company. We use data from 89

companies in construction and real estate field which are listed on Vietnam stock market, source

cafef.vn, the most famous site in Vietnam on financial and economic information. See more

detail in Appendix II. Then, we choose the company with the same business characteristics and

scale of capital, as table below:

Unit: Billion dong

NoTradingsymbol capitalized P/E P/B Beta

(VND billion) (VND billion) (VND billion) (VND billion)

1 BT6 224.36 14.58 0.5 0.652 C47 152 7.01 0.92 0.273 CCI 143.83 8.41 0.74 0.414 CLG 160.74 5.17 0.78 0.975 CTI 159 21.14 0.9 0.446 DAG 177.38 6.61 0.97 0.627 DHA 137.06 17.64 0.45 18 DIC 150.06 12.62 0.73 1.589 HMC 201.6 9.51 0.63 0.5710 L10 115.7 4.33 0.63 1.2211 LBM 101.97 7.22 0.82 0.6312 LM8 176.3 4.34 0.91 0.713 PXI 153 7.61 0.48 1.4414 THG 107 7.47 0.69 0.67



Year 2009 2010 2011 2012 2013

Net income (VND billion) 8.4 8.6 7.8 9.2 7.9

Average of net income in (NI) the last five years: VND 8.385 billion

Vale of Duyen Hai Equity2013 = 8.38 x 9.16 = VND 76.8 billion

Assessment: Equity value of Duyen Hai in P/E is much less than the book value because the

company have generated low profit over the last years.

3. Price to book ratio (P/B)a) Definition and formulaIn addition to the P/E ratio, another multiple used to value companies is the price/book ratio.

This multiple is computed as:

P / B = Price per share / Book value per share

The numerator of P/B ratio is the company's stock price, and the denominator is a book value per

share. We can express the P/B ratio as:

15 UIC 102.4 3.81 0.58 0.9Average ofcomparbles

9.16 0.72 0.80

BT6, 14.58

C47, 7.01CCI, 8.41

CLG, 5.17

CTI, 21.14

DAG, 6.61

DHA, 17.64

DIC, 12.62

HMC, 9.51

L10, 4.33

LBM, 7.22LM8, 4.34

PXI, 7.61THG, 7.47

UIC, 3.81

Average, 9.16

0

5

10

15

20

25

0 2 4 6 8 10 12 14 16 18

P/E

P/E Value



P / B = Market value of equity / Book value of equity

where the book value of equity is often reported as Total stockholder's equity on the balance

sheet. The intuition behind the use of Price/book multiples is that a company's balance sheet

should convey useful information about value. Recall that the basic equation that governs the

balance sheet is:

Assets = Liabilities + Equity

and we can rearrange the above expression to reflect the value of a company's equity:

Equity = Assets – Liabilities

As a result, if the balance sheet provides useful estimates of a company's assets and liabilities,

then it also provides a useful estimate of a company's equity. Recall that the value reported on a

balance sheet represents the book value of assets and liabilities. The book value is the amount

that results from the application of accounting principles, and generally represents the historical

cost. In practise, the market value of an asset or liability is different from book value. This means

that the ratio of market value to book value can be greater or less than one. For most financially

healthy companies, the price/book multiple is greater than one.

b) Advantages and disadvantagesAdvantages of P/BV

Book value is a cumulative amount that is usually positive even the P/E multiple is

negative because of negative earnings. Ergo P/BV can be used when P/E can not

Book value is more stable than EPS, so it may be more useful than P/E when EPS is

volatile

For marked to market firm assets, P/BV is more useful the P/E multiple

Sometimes P/BV is useful in valuing companies that are expected to go out of business

Disadvantages of P/BV

First disadvantage shall come to mind through the asset value. Values of intangibles are

not captured in assets, such as the brand value of Coca-Cola, or the human capital of service

companies.

P/BV is misleading when there are significant differences in the asset intensity of

production methods among the firms

Differences in accounting methods, such as US GAAP and IFRS can lead to different

asset values. That makes the comparison harder

Inflation and technological change can cause the book and market value of assets to

differ significantly. so book value is not an accurate measure of the value of shareholders

investments



c) Application to DH Company

Book value of Duyen Hai (equity value) at the end of 2013: VND 168 billion

Value of Duyên Hai Equity2013 = 168x0.72 = VND 120.1 billion

Assessment: Equity value of Duyen Hai in P/B method is much less than the book value because

construction and real estate are affected heavily by the crisis and recession. Most companies in

the industry are unprofitable; inefficient that makes value on the stock market fall seriously.

BT6, 0.5

C47, 0.92

CCI, 0.74CLG, 0.78

CTI, 0.9DAG, 0.97

DHA, 0.45

DIC, 0.73

HMC, 0.63L10, 0.63

LBM, 0.82

LM8, 0.91

PXI, 0.48

THG, 0.69UIC, 0.58

Average, 0.72

0

0,2

0,4

0,6

0,8

1

1,2

0 2 4 6 8 10 12 14 16 18

P/B

P/B Value



III. CONCLUSION

1. Determine the reasonable value of DH company

As circular 202/2011/TT-BTC dated 30/12/2011 of Ministry of Finance, article 24.

Selections, using results of valuation of business:

“Valuation results follow the discounted cash flow method or other methods must be compared

with the results of the enterprise valuation method of assets at the same time to select the

following principles: Price corporate governance and disclosure are determined not to be less

than the value determined in accordance with enterprise asset method.”

In this case, Duyen Hai equity value at least = book value = VND 168 billion

However, from calculations based on different methods, we see that the range for the equity

value is from VND 27.93 billion to VND 168.0 billion; we choose the average value of the six

methods

Duyen Hai Equity value = (168.0 +96+76.8+120.1+58.4+27.93)/6= VND 91.2 billion

Method Duyên Hải valueBook value 168.0FCFF 96Price Multiple P/E 76.8Price MultipleP/B 120.1Cost of capital 58.4DDM 27.93Average 91.2

Chart 7 Duyen Hai value

Book value, 168

FCFF, 96Price Multiple

P/E, 77

PriceMultipleP/B,

120

Cost of capital,58

DDM , 28

Average, 91

0

20

40

60

80

100

120

140

160

180

0 2 4 6 8

Duyên Hải value

Duyên Hải value



2. Proposal to Sate Owned Enterprises Valuation and Equitization Process

with the promulgation of

1. Decree 59/2011/ND- dated 18/7/2011 of the Government on the transfer of enterprises with

100% state capital to the Corporation.

2. Decree 189/2013/ND-CP, amending and supplementing a number of articles of Decree No.

59/2011/ND-CP on business transfer (DN) 100% state capital into joint stock companies (JSC)

3. Circular 196/2011/TT-BTC, guiding first-time share sales and management, use of proceeds

from the equitization of enterprises with 100% state capital transformed into a joint stock

company

4. Circular 202/2011/TT-BTC, Circular of the Ministry of Finance guiding the handling of

financial and valuation of business enterprises are making 100% state capital to the Corporation

under the provisions Decree 59/2011/ND-CP of the Government dated 18/7/2011

The system of legal documents on business valuation in Vietnam was relatively complete and

comprehensive to meet the needs and solve the problems that arise in practice in the equitization

of state-owned enterprises in Vietnam

However, I would like to propose some basic solutions to contribute to remove some obstacles in

business valuation, for the purpose of accelerating the equitization of State enterprises in

Vietnam.

a. Combining valuation methods:Do not have an absolute method for determining the exact value of every business, and by the

fact that hardly a business that can fully meet the conditions of a particular application of the

method to a solution good way to limit errors in determining the combination of methods to

determine the value of a business.

In order to more accurately determine the actual value of the business at the time of privatization,

it is necessary to apply the method to simultaneously express a range of floor - ceiling of the

business to the investors have a more objective perspective on business before deciding to invest.

During floor, ceiling, and now investors may indicate a most reasonable price, accurately reflect

the value of the business and the level of investment risk.

Applying the methods and price floors, ceiling, combined with the method of public auction

through the company and head of securities transactions and ensure information transparency



auction money brings the maximum benefit for businesses as well as encourage investors to

participate. This move will contribute to accelerate the equitization.

b. Develop database system for marketEstablish mandatory reporting system and database storage reporting and valuation methods

applied to the valuation of the company. This database is an invaluable material in the synthesis

and analysis to make the discount rate assumption and the assumption of the DCF method, is the

present temporary difficulties in applying the DCF method. The database also enables the

application of various methods such as the price comparison method, the method's coefficients

are the popular methods in the development of financial markets.

In addition to providing market information will help universal knowledge of the company and

the stock material to investors. Investors are encouraged to participate by playing the stock has

more practical information to help them reduce risk in the investment process

Create a mechanism to increase the valuation fee for the company applying the DCF method...

e.g. application fee if applied to control other DCF method, or is entitled to a percentage of the

value businesses after completion of equitization. Report valuation perfect DCF method requires

more laborious, but in return will help the company attract more capital. Especially in the near

future, there are many foreign investors participate in the stock market when the institutional rate

of 49% was not removed.

Publicity and transparency before, during and after equitization to attract investors from all

economic sectors, population strata are the basic principles of the market mechanism, in

accordance with international practices.

c. Establish risk assessment organizations:In this context, we have not been risk surcharge when investing in shares in economic sectors in

Vietnam, it is very difficult to determine the rate of return demanded by investors. To develop

Vietnam's stock market into a market of international stature, especially in the context of

integration and participation trends of growing businesses equitization of many different

industries, we must establish a specialized research organization and build a database system for

markets including economic data each sector and region, the development of individual risks in

business and industry Vietnam's economy in general. The company is known as the credit rating

organizations. Organizations established credit rating system database storage business

valuation. The database is an invaluable material in the synthesis and analysis to provide the risk

factor and a discount rate of resolving the current difficulties of applying the DCF method. The



database also enables the application of other methods such as price comparison, human factor -

is the common approach in the development of financial markets.

d.Independent valuation institutionsThe equitization process has been slowing down since 2008, after a period of gearing up. A lot of

IPO (initial public offering) either have failed, or have been delayed, since the offered prices

were much higher than the expected prices. It is because the enterprises equitized recently have

big scale, which makes it more difficult to valuate enterprises and solve relating problems.

Regarding the IPOs, valuation is the problem that all the IPOs of state owned enterprises have

been facing so far. Though the enterprise assessment has been carried out through consulting or

by independent institutions, the persons who make final decisions are the issuers. In many cases,

the decision makers are the government agencies which represent the enterprises’ owner – the

state. And problems arise in many cases.

Sellers always like to see state enterprises’ assets highly valuated, while government agencies

are always afraid of selling state’s assets cheaply. The solution is that the valuation should be

undertaken by one or a group of independent valuation institutions who have understand the

market well.

e. Increase the stake allowed to be sold to investorThe equitization process will be successful only when the equity allowed to be sold to investors

increases. The state still wants to hold large stake in many equitized enterprises to control their

businesses. It makes the firms become less attractive to investors. Many investors do not want to

buy stakes in firms in which they cannot participate in making decisions. This is one of reasons

for the slow equitization process over the past three years. Investors have noticed the

government’s ongoing consideration of higher foreign ownership limits, from the current 49

percent to 60 percent in non-banking businesses.

Sectors such as garment, cement and construction material are not strategic and sensitive ones, as

they do not hold national secrets relating to science and technology or national defense. The

government should consider allowing investors to buy more stake because it would help

businesses attract more capital, improve their business management and make them more

competitive.



BIBLIOGRAPHY AND REFERENCES

1. Business valuation, Jonathan Berk and Peter DeMarzo 3rd edition 2013.

2. Decree 59/2011/ND- dated 18/7/2011 of the Government on the transfer of enterprises with

100% state capital to the Corporation.

3.Decree 189/2013/ND-CP, amending and supplementing a number of articles of Decree No.

59/2011/ND-CP on business transfer (DN) 100% state capital into joint stock companies (JSC )

4.Circular 196/2011/TT-BTC, guiding first-time share sales and management, use of proceeds

from the equitization of enterprises with 100% state capital transformed into a joint stock

company

5. Circular 202/2011/TT-BTC, Circular of the Ministry of Finance guiding the handling of

financial and valuation of business enterprises are making 100% state capital to the Corporation

under the provisions Decree 59/2011/ND-CP of the Government dated 18/7/2011

6. Resolution No. 15/NQ-CP dated 06.03.2014: Some solutions accelerate equitization of state

divestment in business

7. Enterprises Law 2013.

8. Webpage: www.cafef.vn (specialized financial information and economy, Vietnam)

9. Webpage: www.economy.com.vn (site of the Vietnam Economic Times)

10. The web page: www.mof.gov.vn (site of the Ministry of Finance)

12. www.tpcp.mof.gov.vn/ website (government bonds)

13.www.netcoag.com/archivos/pablo_fernandez_mrp2013.pdf



APPENDIX IDUYEN HAI ONE MEMBER LIMITED LIABILITY COMPANY

No. 16B Nguyen Thai Hoc, Yet Kieu, Ha Dong, Ha Noi CityFinancial Statements for the fiscal years 2009, 2010, 2011

STATEMENT OF BUSINESS RESULTSYears 2009, 2010, 2011

Unit: VND

CRITERIA Code 2009 2010 20111. Revenue from goods soldand services provided 01 680,624,003,633 760,568,205,381 722,501,434,5082. Less sales deductions 02 751,880,387 168,348,295 1,255,927,0543. Net revenue from goodssold and services provided 10 679,872,123,246 760,399,857,086 721,245,507,4544. Cost of sales 11 635,286,018,496 701,763,618,684 660,798,300,2555. Gross profit from goodssold and services provided 20 44,586,104,750 58,636,238,402 60,447,207,1996. Financial income 21 2,307,330,883 2,684,515,877 1,517,755,0257. Financial expenses 22 4,817,383,117 10,193,223,202 14,160,056,699In Which: Interest expense 23 4,817,383,117 10,193,223,202 14,160,056,6998. Selling expenses 24 5,094,089,200 5,609,855,233 3,862,247,9279. Enterprise administrationexpenses 25 26,249,404,306 34,609,181,405 35,368,459,59210. Net operating income 30 10,732,559,010 10,908,494,439 8,574,198,00611. Other revenue 31 5,705,502,213 2,589,126,652 5,552,026,09212. Other expenses 32 5,280,415,586 1,993,922,313 3,696,753,22813. Other income 40 425,086,627 595,204,339 1,855,272,86414. Net income before tax 50 11,157,645,637 11,503,698,778 10,429,470,87015. Income tax expense-current 51 2,789,411,409 2,875,924,695 2,604,632,65216. Income tax expense-deferred 5217. Net income after tax 60 8,368,234,228 8,627,774,083 7,824,838,21818. Share-based interest 70

Attestation of Auditingcompany Made on 15 April 2012

Made on 15 April 2012 Director

Asco Auditing Company Ltd

Senior LieutenantColonel Nguyen The

PhangGeneral Director Nguyen

Thanh Khiet (signed and sealed)(signed and sealed)



DUYEN HAI ONE MEMBER LIMITED LIABILITY COMPANYNo. 16B Nguyen Thai Hoc, Yet Kieu, Ha Dong, Ha Noi City

Financial Statements for the fiscal years 2009, 2010, 2011

BALANCE SHEETYears 2009, 2010, 2011

Unit: VND

ASSETS Code 2009 2010 2011A. Current assets 100 606,548,029,798 711,168,135,986 571,248,584,929I. Cash and cashequivalents 110 67,102,855,872 124,635,971,553 48,202,345,2701. Cash 111 67,102,855,872 124,635,971,553 48,202,345,2702. Cash equivalents 112II. Short-term investments 120 43,241,012,9001. Short-term investments 121 43,241,012,9002. Provision for short-terminvestments (*) 129III. Accounts receivable-short-term 130 330,551,241,864 376,326,943,761 240,534,769,3561. Accounts receivable-trade 131 117,969,401,556 168,267,094,033 157,555,234,0222. Prepayments to suppliers 132 21,738,330,730 24,736,353,143 18,629,092,2323. Intra-company receivables 133 128,405,936,191 128,297,284,165 18,567,445,9104. Excess of contract work-in-progress over progressbillings 1345. Other receivables 135 62,747,573,387 55,026,212,420 45,782,997,1926. Allowance for doubtfuldebts 139 (310,000,000)IV. Inventories 140 142,793,340,785 170,453,490,112 225,850,572,1341. Inventories 141 142,793,340,785 170,453,490,112 225,850,572,1342. Allowance for inventories 149V. Other current assets 150 22,859,578,377 39,751,730,560 56,660,898,1691. Short-term prepayments 151 1,483,133,188 3,499,879,531 15,352,313,2402. Deductible value added tax 152 236,035,198 2,300,964,830 4,295,464,0833. Taxes and otherreceivables from StateTreasury 154 587,626,036 2,580,485,6694. Deal of bond purchase 1575. Other current assets 158 20,552,783,955 31,370,400,530 37,013,120,846

B. Long-term assets 200 47,235,721,482 153,511,556,392 161,114,572,624I. Accounts receivable-long-term 210 5,776,328,799 4,792,264,3991. Accounts receivable-trade 211 5,776,328,799 4,792,264,3992. Operating capital given tobranches 2123. Intra-company receivables 2134. Other receivables 2185. Allowance for doubtfuldebts 219II. Fixed assets 220 45,440,061,393 145,368,271,494 151,361,400,4421. Tangible fixed assets 221 29,737,046,357 35,536,229,923 40,737,219,605- Cost 222 101,113,541,657 110,408,042,896 115,639,545,594- Accumulated depreciation 223 (71,376,495,300) (74,871,812,973) (74,902,325,989)2. Finance lease tangiblefixed assets 224- Cost 225



- Accumulated depreciation 2263. Intangible fixed assets 227 12,000,000- Cost 228 12,000,000 12,000,000- Accumulated depreciation 229 (12,000,000)4. Construction in progress 230 15,691,015,036 109,832,041,571 110,624,180,837III. Investment property 240- Cost 241- Accumulated depreciation 242IV. Long-term investments 250 500,000,000 500,000,0001. Investments in sub-company 2512. Investments in associates,joint-ventures 2523. Other long-terminvestments 258 500,000,000 500,000,0004. Allowance for diminutionin the value of long-terminvestments (*) 259V. Other long-term assets 260 1,795,660,089 1,866,956,099 4,460,907,7831. Long-term prepayments 261 1,182,033,669 752,268,637 103,116,8282. Deferred tax assets 2623. Other long-term assets 268 613,626,420 1,114,687,462 4,357,790,955TOTAL ASSETS 270 653,783,751,280 864,679,692,387 732,363,157,553

RESOURCES Code 31/12/2009 31/12/2010 31/12/2011A. LIABILITIES 300 618,249,387,382 738,278,718,651 581,972,884,041I. Current liabilities 310 612,838,276,566 694,978,606,033 563,898,817,3161. Short-term borrowings andliabilities 311 66,714,660,963 111,270,517,808 94,830,577,8652. Accounts payable-trade 312 98,899,374,378 192,267,891,721 171,082,354,5923. Advances from customers 313 162,652,364,714 219,244,169,385 177,628,609,4324. Taxes payable to StateTreasury 314 14,732,803,898 12,968,400,768 7,087,574,1985. Payables to employees 315 4,558,768,076 4,143,302,608 7,375,893,6646. Accrued expenses 316 416,270,413 105,069,000 70,167,4577. Intra-company payable 317 62,657,329,968 65,878,592,330 27,440,774,0088. Excess of progress billingsover contract work-in-progress 3189. Other payables 319 202,206,704,156 87,063,904,195 76,880,791,03710. Provisions 32011. Bonus, welfare fund 323 2,036,758,218 1,502,075,12612. Deal of bond purchase 327II. Long-term borrowingsand liabilities 330 5,411,110,816 43,300,112,618 18,074,066,7251. Accounts payable-trade 331 139,948,0002. Intra-company payables 332 35,350,250,1453. Other long-term liabilities 3334. Long-term borrowings andliabilities 334 3,397,339,393 6,427,863,170 16,930,562,5665. Deferred tax liabilities 3356. Provision for severanceallowance 336 1,873,823,423 1,521,999,303 1,143,504,1597. Provisions 3378. Undone revenue 3389. Fund of science, 339



technology development

B-EQUITY 400 35,534,363,898 126,400,973,727 150,390,273,512I. Equity 410 34,220,718,708 40,249,326,605 133,160,647,6941. Contributed capital 411 29,283,446,905 33,354,485,901 126,750,940,7482. Capital surplus 4123. Other capital 4134. Treasury shares 4145. Differences upon assetrevaluation 4156. Foreign exchangedifferences 4167. Investment anddevelopment funds 417 983,967,571 1,160,236,787 1,396,798,6138. Financial reserves 18 4,071,172,350 4,734,603,917 5,012,908,3339. Other equity funds 419 33,421,09210. Retained profits 420 (151,289,210)11. Resources of basicconstruction investment 421 1,000,000,00012. Enterprise support fund 422II. Financing and otherfunds 430 1,313,645,190 86,151,647,122 17,229,625,8181. Financing 432 1,313,645,1902. Fixed asset financing 433 86,151,647,122 17,229,625,818TOTAL EQUITY 440 653,783,751,280 864,679,692,378 732,363,157,553











STATEMENT OF BUSINESS RESULTSYears 2011, 2012, 2013

Unit: VND

CRITERIA Code 2011 2012 20131. Revenue from goods soldand services provided 01 722,501,434,508 865,730,800,547 1,065,414,968,6432. Less sales deductions 02 1,255,927,054 4,351,244,159 5,100,856,2923. Net revenue from goodssold and services provided 10 721,245,507,454 861,379,556,388 1,060,314,112,3514. Cost of sales 11 660,798,300,255 792,491,764,478 979,446,574,2385. Gross profit from goodssold and services provided 20 60,447,207,199 68,887,791,910 80,867,538,1136. Financial income 21 1,517,755,025 1,523,075,741 1,170,058,3667. Financial expenses 22 14,160,056,699 13,400,611,642 11,453,428,761In Which: Interest expense 23 14,160,056,699 13,376,255,536 11,453,428,7618. Selling expenses 24 3,862,247,927 4,907,105,955 1,574,400,2419. Enterprise administrationexpenses 25 35,368,459,592 41,432,588,267 59,698,428,97710. Net operating income 30 8,574,198,006 10,670,561,787 9,311,338,50011. Other revenue 31 5,552,026,092 4,388,698,077 6,427,558,44412. Other expenses 32 3,696,753,228 2,718,544,285 5,213,993,70913. Other income 40 1,855,272,864 1,670,153,792 1,213,564,73514. Net income before tax 50 10,429,470,870 12,340,715,579 10,524,903,23515. Income tax expense-current 51 2,604,632,652 3,085,178,895 2,631,225,80916. Income tax expense-deferred 5217. Net income after tax 60 7,824,838,218 9,255,536,684 7,893,677,42618. Share-based interest 70











BALANCE SHEET

Years 2011, 2012, 2013Unit: VND

ASSETS Code 2011 2012 2013A. Current assets 100 571,248,584,929 727,744,814,481 1,045,704,599,094I. Cash and cash equivalents 110 48,202,345,270 60,003,695,094 93,638,938,7931. Cash 111 48,202,345,270 60,003,695,094 93,638,938,7932. Cash equivalents 112II. Short-term investments 120 27,000,000,0001. Short-term investments 121 27,000,000,0002. Provision for short-terminvestments (*) 129III. Accounts receivable-short-term 130 240,534,769,356 288,174,762,090 522,398,693,7391. Accounts receivable-trade 131 157,555,234,022 167,255,201,423 288,111,603,9992. Prepayments to suppliers 132 18,629,092,232 19,141,098,966 24,506,774,4473. Intra-company receivables 133 18,567,445,910 48,658,432,132 153,317,686,7674. Excess of contract work-in-progress over progressbillings 1345. Other receivables 135 45,782,997,192 53,120,029,569 56,462,628,5266. Allowance for doubtfuldebts 139IV. Inventories 140 225,850,572,134 313,727,934,500 386,779,061,9661. Inventories 141 225,850,572,134 313,727,934,500 386,779,061,9662. Allowance for inventories 149V. Other current assets 150 56,660,898,169 38,838,422,797 42,887,904,5961. Short-term prepayments 151 15,352,313,240 12,534,649,591 14,400,499,0142. Deductible value added tax 152 4,295,464,083 13,613,725,000 12,262,018,2583. Taxes and other receivablesfrom State Treasury 154 1,034,037,495 35,048,9224. Deal of bond purchase 1575. Other current assets 158 37,013,120,846 11,656,010,711 16,190,338,402

B. Long-term assets 200 161,114,572,624 167,479,538,928 171,796,406,042I. Accounts receivable-long-term 210 4,792,264,3991. Accounts receivable-trade 211 4,792,264,3992. Operating capital given tobranches 2123. Intra-company receivables 2134. Other receivables 2185. Allowance for doubtfuldebts 219II. Fixed assets 220 151,361,400,442 164,551,480,865 166,457,466,8331. Tangible fixed assets 221 40,737,219,605 72,138,119,480 165,587,735,173- Cost 222 115,639,545,594 151,553,871,348 244,780,254,970- Accumulated depreciation 223 (74,902,325,989) (79,415,751,868) (79,192,519,797)2. Finance lease tangible fixedassets 224- Cost 225



- Accumulated depreciation 2263. Intangible fixed assets 227- Cost 228- Accumulated depreciation 2294. Construction in progress 230 110,624,180,837 92,413,361,385 869,731,660III. Investment property 240- Cost 241- Accumulated depreciation 242IV. Long-term investments 250 500,000,000 1,136,856,099 1,136,856,0991. Investments in sub-company 251 1,136,856,0992. Investments in associates,joint-ventures 2523. Other long-terminvestments 258 500,000,0004. Allowance for diminutionin the value of long-terminvestments (*) 259V. Other long-term assets 260 4,460,907,783 1,791,201,964 4,202,083,1101. Long-term prepayments 261 103,116,828 735,665,301 3,159,045,1802. Deferred tax assets 2623. Other long-term assets 268 4,357,790,955 1,055,536,663 1,043,037,930TOTAL ASSETS 270 732,363,157,553 895,224,353,409 1,217,501,005,136

RESOURCES Code 31/12/2011 31/12/2012 31/12/2013A. LIABILITIES 300 581,972,884,041 729,444,048,631 1,049,418,082,298I. Current liabilities 310 563,898,817,316 719,668,274,257 1,006,711,718,9251. Short-term borrowings andliabilities 311 94,830,577,865 119,010,355,960 138,838,551,9882. Accounts payable-trade 312 171,082,354,592 272,540,754,104 379,937,572,6833. Advances from customers 313 177,628,609,432 193,033,896,394 187,507,195,5314. Taxes payable to StateTreasury 314 7,087,574,198 8,316,480,953 9,906,292,9705. Payables to employees 315 7,375,893,664 16,809,316,107 22,213,401,9406. Accrued expenses 316 70,167,457 2,901,712,352 5,868,028,2517. Intra-company payable 317 27,440,774,008 64,507,142,608 88,248,118,8858. Excess of progress billingsover contract work-in-progress 3189. Other payables 319 76,880,791,037 40,839,334,401 168,079,908,98410. Provisions 32011. Bonus, welfare fund 323 1,502,075,126 1,709,281,873 6,112,647,69312. Deal of bond purchase 327II. Long-term borrowingsand liabilities 330 18,074,066,725 9,775,774,374 42,706,363,3731. Accounts payable-trade 331 757,816,808 637,417,8072. Intra-company payables 332 35,000,000,0003. Other long-term liabilities 3334. Long-term borrowings andliabilities 334 16,930,562,566 9,017,957,566 7,068,945,5665. Deferred tax liabilities 3356. Provision for severanceallowance 336 1,143,504,1597. Provisions 3378. Undone revenue 338



9. Fund of science,technology development 339B-EQUITY 400 150,390,273,512 165,780,304,778 168,082,922,838I. Equity 410 133,160,647,694 154,634,312,525 156,936,930,5851. Contributed capital 411 126,750,940,748 146,147,305,023 148,280,549,1592. Capital surplus 4123. Other capital 4134. Treasury shares 4145. Differences upon assetrevaluation 4156. Foreign exchangedifferences 4167. Investment anddevelopment funds 417 1,396,798,613 2,542,310,992 8,656,381,4268. Financial reserves 18 5,012,908,333 5,944,696,5109. Other equity funds 41910. Retained profits 42011. Resources of basicconstruction investment 42112. Enterprise support fund 422II. Financing and otherfunds 430 17,229,625,818 11,145,992,253 11,145,992,2531. Financing 4322. Fixed asset financing 433 17,229,625,818 11,145,992,253 11,145,992,253TOTAL EQUITY 440 732,363,157,553 895,224,353,409 1,217,501,005,136



Asco Auditing Company LtdSenior Lieutenant Colonel

Nguyen The PhangGeneral Director Nguyen





Financial Statements for the fiscal years 2010

CASH FLOWS STATEMENT(Direct method)

Unit: VND

ITEMS Code NoteCurrent

year/period Previous year/period

I.Cash flows from operatingactivities

1.Gains from sales of goods andservice provisions

and other gains 01 1,074,546,438,984 856,146,833,7542. Payments to suppliers 02 (480,561,375,519) (353,613,350,619)

3. Payments to employees 03 (65,933,541,964) (40,304,182,648)

4.Loan interests alreadypaid 04 (9,147,280,249) (4,048,716,896)

5.Payments for corporateincome tax 05 (267,726,413) (2,759,996)

6. Other gains 06 176,669,141,165 92,598,266,618

7. Other disbursements 07 (575,016,333,677) (477,677,574,614)Net cash flows from operatingactivities 20 120,289,322,327 73,098,515,599

II.Cash flows from investingactivities

1.Purchases and construction offixed assets and

other long-term assets 21 (2,459,653,837) (2,459,197,058)

2.Gains from disposal andliquidation of fixed assetsand other long-termassets 22 0 0

3.Loans given and purchases ofdebt instruments

of other entities 23 258,872,954 (5,000,000,000)

4.Recovery of loan given anddisposals ofdebt instruments of otherentities 24 0

5.Investments in otherentities 25 (500,000,000) 0

6.Withdrawals of investments inother entities 26 3,000,000,000 0

7.Receipts of loans given, dividendsand profit shared 27 498,249,543 615,357,783Net cash flows from investingactivities 30 797,468,660 (6,843,839,275)





III.Cash flows from financingactivities

1.Gains from stock issuance and capitalcontributions

from shareholders 31 0 0

2.Repayments of capitalcontributions to owners andre-purchases of stocks alreadyissued 32 0 0

3.Short-term and long-term loansreceived 33 109,158,175,520 77,928,003,069

4.Loan principal amountsrepaid 34 (174,017,104,786) (155,363,440,316)

5.Payments for financial leaseholdassets 35 0 0

6.Dividends and profit shared to theowners 36 0 0Net cash flows from financingactivities 40 (64,858,929,266) (77,435,437,247)

Net cash flows duringthe period 50 56,227,861,721 (11,180,760,923)

Beginning cash and cashequivalents 60 VI.1 68,408,109,832 78,283,616,795

Effects of fluctuations in foreignexchange rates 61 0 0

Ending cash and cashequivalents 70 VI.1 124,635,971,553 67,102,855,872

Attestation of Auditingcompany

Made on 15 April2011


Asco Auditing CompanyLtd


PhangGeneral Director

Nguyen Thanh Khiet (signed and sealed)

(signed and sealed)






Unit: VND


year/periodPrevious

year/period

I. Cash flows from operating activities

1.Gains from sales of goods and serviceprovisions

and other gains 01 972,723,658,645 1,074,546,438,9842. Payments to suppliers 02 (552,125,030,702) (480,561,375,519)


4. Loan interests already paid 04 (14,720,407,754) (9,147,280,249)

5.Payments for corporate incometax 05 (251,306,749) (267,726,413)

6. Other gains 06 90,512,568,714 176,669,141,165

7. Other disbursements 07 (412,506,134,481) (575,016,333,677)

Net cash flows from operating activities 20 14,389,657,297 120,289,322,327

II. Cash flows from investing activities1. Purchases and construction of fixed assets and


2.Gains from disposal and liquidation of fixedassets

and other long-term assets 22 0 0

3. Loans given and purchases of debt instruments

of other entities 23 155,399,773 258,872,954

4. Recovery of loan given and disposals of

debt instruments of other entities 24 0

5. Investments in other entities 25 0 (500,000,000)

6. Withdrawals of investments in other entities 26 2,000,550,000 3,000,000,000

7.Receipts of loans given, dividends and profitshared 27 915,446,296 498,249,543

Net cash flows from investing activities 30 60,332,333 797,468,660




year/periodPrevious

year/period

III. Cash flows from financing activities


from shareholders 31 152,540,441 0

2.Repayments of capital contributions to ownersand

re-purchases of stocks already issued 32 0 0

3. Short-term and long-term loans received 33 107,007,504,350 109,158,175,520

4. Loan principal amounts repaid 34 (198,043,660,704) (174,017,104,786)

5. Payments for financial leasehold assets 35 0 0

6. Dividends and profit shared to the owners 36 0 0

Net cash flows from financing activities 40 (90,883,615,913) (64,858,929,266)

Net cash flows during the period 50 (76,433,626,283) 56,227,861,721

Beginning cash and cash equivalents 60 VI.1 124,635,971,553 68,408,109,832

Effects of fluctuations in foreign exchangerates 61 0 0


Attestation of Auditing companyMade on 15 April

2012



Senior LieutenantColonel Nguyen

The PhangGeneral Director Nguyen Thanh

Khiet(signed and

sealed)

(signed and sealed)






Unit: VND



I.Cash flows from operatingactivities

1.Gains from sales of goods andservice provisions

and other gains 01 861,225,522,560 972,723,658,6452. Payments to suppliers 02 (567,429,438,656) (552,125,030,702)


4.Loan interests alreadypaid 04 (15,183,333,986) (14,720,407,754)

5.Payments for corporateincome tax 05 (9,921,347,305) (251,306,749)

6. Other gains 06 212,969,996,302 90,512,568,714

7. Other disbursements 07 (339,014,778,781) (412,506,134,481)Net cash flows from operatingactivities 20 63,791,069,494 14,389,657,297

II.Cash flows from investingactivities

1.Purchases and construction of fixedassets and


2.Gains from disposal andliquidation of fixed assetsand other long-termassets 22 0 0

3.Loans given and purchases of debtinstruments

of other entities 23 0 155,399,773

4.Recovery of loan given anddisposals ofdebt instruments of otherentities 24 0 0

5.Investments in otherentities 25 0 0

6.Withdrawals of investments inother entities 26 500,000,000 2,000,550,000

7.Receipts of loans given, dividendsand profit shared 27 1,679,261,986 915,446,296Net cash flows from investingactivities 30 (8,725,053,600) 60,332,333





III.Cash flows from financingactivities

1.Gains from stock issuance andcapital contributions

from shareholders 31 13,850,917,945 152,540,441

2.Repayments of capitalcontributions to owners andre-purchases of stocks alreadyissued 32 0 0

3.Short-term and long-term loansreceived 33 139,387,532,900 107,007,504,350

4.Loan principal amountsrepaid 34 (196,503,116,915) (198,043,660,704)

5.Payments for financial leaseholdassets 35 0 0

6.Dividends and profit shared to theowners 36 0 0Net cash flows from financingactivities 40 (43,264,666,070) (90,883,615,913)

Net cash flows duringthe period 50 11,801,349,824 (76,433,626,283)

Beginning cash and cashequivalents 60 VI.1 48,202,345,270 124,635,971,553

Effects of fluctuations in foreignexchange rates 61 0 0


Attestation of Auditingcompany

Made on 15 April2013


Asco Auditing CompanyLtd


The PhangGeneral Director Nguyen

Thanh Khiet (signed and sealed)

(signed and sealed)






Unit: VND


year/periodPrevious

year/period

I. Cash flows from operating activities

1.Gains from sales of goods and serviceprovisions

and other gains 01 1,026,777,367,966 861,225,522,5602. Payments to suppliers 02 (810,160,547,025) (567,429,438,656)


4. Loan interests already paid 04 (10,271,356,512) (15,183,333,986)

5.Payments for corporate incometax 05 (322,084,333) (9,921,347,305)

6. Other gains 06 187,096,062,432 212,969,996,302

7. Other disbursements 07 (274,028,083,444) (339,014,778,781)

Net cash flows from operating activities 20 462,538,919 63,791,069,494

II. Cash flows from investing activities1. Purchases and construction of fixed assets and


2.Gains from disposal and liquidation of fixedassets

and other long-term assets 22 0 0

3. Loans given and purchases of debt instruments

of other entities 23 0 0

4. Recovery of loan given and disposals of

debt instruments of other entities 24 0 0

5. Investments in other entities 25 0 0

6. Withdrawals of investments in other entities 26 0 500,000,000

7.Receipts of loans given, dividends and profitshared 27 1,016,542,495 1,679,261,986

Net cash flows from investing activities 30 (8,606,479,248) (8,725,053,600)




year/periodPrevious

year/period

III. Cash flows from financing activities


from shareholders 31 4,000,000,000 13,850,917,945

2.Repayments of capital contributions to ownersand

re-purchases of stocks already issued 32 0 0

3. Short-term and long-term loans received 33 241,714,671,479 139,387,532,900

4. Loan principal amounts repaid 34 (203,935,487,451) (196,503,116,915)

5. Payments for financial leasehold assets 35 0 0

6. Dividends and profit shared to the owners 36 0 0

Net cash flows from financing activities 40 41,779,184,028 (43,264,666,070)

Net cash flows during the period 50 33,635,243,699 11,801,349,824

Beginning cash and cash equivalents 60 VI.1 60,003,695,094 48,202,345,270

Effects of fluctuations in foreign exchangerates 61 0 0


Attestation of Auditing companyMade on 15 April

2014




The PhangGeneral Director Nguyen Thanh

Khiet(signed and

sealed)

(signed and sealed)

Unit: VND

Depreciation2009 2010 2011 2012 2013

3,089,410,569 3,666,762,558 7,957,785,879 8,753,100,336 10,425,142,989

Master in Corporate Finance and Management Control- University of ToulonVietnam2013-2014

73

APPENDIX IILIST OF CODES IN REAL ESTATE AND CONSTRUCTION

No Code Capitalization P/E P/B Beta(billion Dong)

1 ACC 320 10,41 1,56 0,632 ALP 808,43 -4 0,46 0,543 ASM 462,53 23,6 0,65 1,64

4 BCE 306 6,12 0,82 1,04

5 BCI 1.401,98 13,16 0,79 1,09

6 BMP 3.069,80 8,18 1,96 1,017 BT6 224,36 14,58 0,5 0,65

8 C21 374,06 11,38 0,72 0,77

9 C47 152 7,01 0,92 0,2710 CCI 143,83 8,41 0,74 0,41

11 CCL 127,5 75,44 0,46 1,29

12 CDC 97,23 25,92 0,39 1,51

13 CIG 47,04 18,21 0,39 1,11

14 CLG 160,74 5,17 0,78 0,97

15 CTD 2.591,20 9,32 1,12 0,8616 CTI 159 21,14 0,9 0,4417 CYC 45,23 4,45 0,39 0,3718 D2D 237,61 5,59 0,69 0,7719 DAG 177,38 6,61 0,97 0,6220 DCT 78,95 -0,63 0,43 0,6821 DHA 137,06 17,64 0,45 1

22 DIC 150,06 12,62 0,73 1,58

23 DIG 2.402,33 44,84 1,01 1,33

24 DLG 557,96 15,99 0,68 1,68

25 DRH 57,96 -38,28 0,32 1,3

26 DTA 39 -5,07 0,39 0,4927 DXG 1.088,08 8,15 1,25 1,5828 DXV 42,57 7,87 0,41 1,45

29 FLC 1.667,09 6,56 0,91 1,42


74

30 HAS 46,8 12,49 0,3 0,77

31 HBC 776,03 19,41 0,82 1,46

32 HDC 624,27 23,64 1,1 0,39

33 HDG 1.542,54 14,76 2,1 1,24

34 HMC 201,6 9,51 0,63 0,5735 HQC 639 18,75 0,67 1,47

36 HT1 4.387,74 831,33 1,33 1,5

37 HU1 75 11,07 0,47 0,51

38 HU3 91 6,65 0,57 0,87

39 HVX 187,81 -12,47 0,47 0,35

40 IJC 3.427,43 20,73 1,13 1,63

41 ITA 5.744,05 80,48 0,74 1,44

42 ITC 521,71 -1,75 0,35 1,37

43 KAC 228 168,39 0,93 0,08

44 KBC 4.209,41 23,11 1,04 1,49

45 KDH 1.230 -4,91 1,18 0,5846 KHA 242,6 7,53 0,81 0,9447 KSB 455,4 5,3 0,96 0,9

48 L10 115,7 4,33 0,63 1,22

49 LBM 101,97 7,22 0,82 0,63

50 LCG 382,5 -1,73 0,48 1,53

51 LGL 89,98 -2,11 0,31 1,28

52 LHG 255,61 -12,09 0,42 0,62

53 LM8 176,3 4,34 0,91 0,7

54 MCG 338,33 -2,02 0,63 1,75

55 MDG 54,72 29,41 0,3 1,1656 NAV 44,8 11,09 0,46 0,5

57 NBB 843,02 15,85 0,64 1,44


75

58 NNC 435,86 5,58 2,48 0,57

59 NTL 872,16 9,32 1,06 1,54

60 NVN 31,97 -0,76 0,35 0,12

61 NVT 588,25 21,12 0,69 1,46

62 OGC 3.270 48,12 1,02 1,6

63 PDR 1.562,40 497,93 1,09 -0,0864 PPI 134,87 40,25 0,5 1,1265 PTL 306,48 -2,04 0,36 1,13

66 PXI 153 7,61 0,48 1,44

67 PXL 330 -38,1 0,39 1,71

68 PXS 895 7,9 1,39 1,43

69 PXT 73,34 -5 0,45 1,26

70 QCG 1.144,03 154,93 0,49 1,2

71 REE 6.641,22 5,28 1,33 1,34

72 SAM 1.164,11 11,47 0,47 1,5373 SC5 389,6 6,62 1,14 0,34

74 SJS 1.871,89 31,65 1,17 0,96

75 SMC 274,46 -17,24 0,49 0,676 SZL 274,68 7,74 0,57 0,8177 TCR 244,94 -18,68 0,42 0,39

78 TDC 950 7,09 0,8 1,43

79 TDH 580,95 15,34 0,43 1,15

80 THG 107 7,47 0,69 0,67

81 TIX 484,8 6,88 0,92 0,68

82 TV1 317,55 7,87 1,08 0,32

83 UDC 197,82 1055,56 0,54 1,42

84 UIC 102,4 3,81 0,58 0,9

85 VIC 58.572,75 5,06 3,77 0,81


76

86 VNE 366,52 65,12 0,54 1,65

87 VNI 37,21 -3,97 0,39 0,57

88 VPH 250,73 22,61 0,46 1,61

89 VRC 77,06 47,62 0,45 1,33

Note: Note: beta coefficient is calculated with the data of 100 trading session

Source: CafeF.vn; http://s.cafef.vn/chi-so-nganh/3/731-bds-va-xay-dung.chn


77


78

Pablo Fernandez, JavierAguirreamalloa and Pablo LinaresIESE Business School June 26, 2013

Market Risk Premium and Risk Free Rateused for 51 countries in 2013: a surveywith 6,237 answers

APPENDIX IIIMarket Risk Premium (MRP), Risk Free Rate (RF) and K(Required return toequity: RF + MRP) used for 51 countries in 2013 used for 51 countries in 2013

Ke RF MRP

n Aver.

St.Dev.

max

min

Aver.

St.Dev.

max

min

Aver.

St.Dev.

max

minUSA 239

48.0%

2.0%

18.0%

3.0%

2.4%

1.0%

6.0%

0.1%

5.7%

1.6%

15.8%

2.5%Spain 80

410.4%

2.1%

20.0%

5.7%

4.4%

0.9%

6.0%

0.5%

6.0%

1.7%

15.0%

3.0%Germany 34

37.5%

1.8%

20.4%

4.0%

1.9%

0.6%

6.5%

0.1%

5.5%

1.7%

18.0%

1.6%United

Kingdom247

7.9%

1.7%

13.1%

4.8%

2.4%

1.0%

7.0%

0.2%

5.5%

1.4%

11.0%

2.0%Italy 20

510.0%

1.6%

16.5%

7.0%

4.4%

0.6%

8.0%

1.5%

5.7%

1.5%

12.0%

3.0%France 13

48.1%

1.9%

14.0%

3.8%

2.0%

1.0%

5.0%

0.1%

6.1%

1.6%

12.0%

3.0%Switzerland 11

36.9%

1.5%

13.3%

4.3%

1.3%

0.3%

3.0%

0.6%

5.6%

1.5%

12.0%

3.0%Brazil 11

212.4%

3.4%

19.3%

5.0%

5.9%

2.4%

10.1%

3.0%

6.5%

2.1%

12.0%

1.6%Canada 11

07.4%

1.4%

14.2%

4.0%

2.0%

0.5%

5.0%

1.0%

5.4%

1.3%

12.0%

3.0%China 9

511.5%

2.4%

18.0%

7.0%

3.8%

0.6%

6.0%

1.7%

7.7%

2.3%

14.0%

3.0%Portugal 5

211.2%

2.4%

17.2%

5.7%

5.1%

0.8%

5.7%

2.7%

6.1%

2.3%

12.0%

2.5%Norway 5

18.4%

2.1%

14.0%

4.5%

2.4%

1.2%

5.0%

0.1%

6.0%

1.8%

12.0%

3.0%Greece 5

016.8%

3.8%

29.0%

10.8%

9.6%

1.3%

10.0%

1.8%

7.3%

4.1%

20.8%

3.0%Sweden 5

08.3%

2.1%

14.0%

4.5%

2.3%

1.2%

5.0%

0.1%

6.0%

1.7%

12.0%

3.0%Belgium 4

88.5%

2.1%

14.0%

4.5%

2.4%

1.2%

5.0%

0.1%

6.1%

1.8%

12.0%

3.0%Austria 4

78.3%

2.2%

14.0%

4.5%

2.3%

1.2%

5.0%

0.1%

6.0%

1.9%

12.0%

3.0%Japan 2

87.6%

2.6%

12.0%

3.8%

1.1%

0.8%

4.0%

0.2%

6.6%

2.7%

11.2%

2.0%Mexico 2

411.2%

2.6%

16.1%

5.1%

4.9%

1.2%

7.4%

2.5%

6.7%

2.4%

13.6%

1.1%Argentina 2

019.4%

6.3%

35.0%

13.5%

8.7%

2.8%

12.5%

1.0%

10.6%

8.1%

34.0%

4.0%Russia 1

813.4%

3.8%

25.0%

9.5%

5.6%

1.4%

7.5%

3.0%

7.3%

4.1%

20.0%

1.0%Australia 1

710.2%

4.9%

28.5%

6.0%

3.3%

0.6%

5.0%

2.0%

6.8%

4.9%

25.0%

3.0%Chile 1

79.8%

2.6%

15.0%

4.3%

4.8%

2.6%

14.0%

3.0%

5.0%

2.2%

8.0%

1.0%Malaysia 1

311.6%

1.7%

15.0%

10.0%

4.0%

1.1%

6.0%

2.5%

7.6%

1.3%

10.0%

5.5%India 1

215.4%

3.7%

20.9%

7.5%

6.9%

1.3%

8.5%

4.0%

8.5%

2.9%

13.4%

3.0%Poland 1

210.2%

0.9%

11.5%

9.0%

3.9%

0.4%

4.5%

3.4%

6.3%

1.0%

7.3%

5.0%Colombia 1

113.1%

3.8%

18.0%

5.5%

4.6%

0.7%

5.7%

3.2%

8.4%

3.4%

13.0%

1.2%Korea(South

)11

10.2%

2.0%

13.3%

6.6%

3.1%

0.6%

5.0%

2.6%

7.0%

1.8%

10.0%

4.0%Lituania 1

111.6%

1.5%

14.7%

9.2%

3.6%

0.2%

3.7%

3.0%

8.0%

1.6%

11.0%

5.5%Hong Kong 9 8.8

%2.8%

13.5%

4.2%

1.3%

1.2%

4.5%

0.3%

7.4%

2.7%

12.5%

3.6%Indonesia 9 13.7

%1.2%

15.3%

11.5%

5.9%

0.5%

7.0%

5.5%

7.8%

1.4%

9.5%

5.5%Netherlands 9 8.0

%1.3%

10.7%

6.5%

2.0%

0.8%

4.0%

1.5%

6.0%

1.3%

8.9%

4.6%Peru 9 11.2

%3.6%

15.2%

5.0%

4.7%

2.0%

6.8%

1.3%

6.5%

2.1%

8.4%

2.0%Singapore 9 7.2

%1.3%

9.0%

4.5%

2.2%

1.3%

5.2%

1.0%

5.0%

1.7%

6.0%

1.3%Czech

Republic8 8.1

%1.2%

9.5%

6.0%

1.7%

0.5%

2.6%

1.0%

6.5%

1.1%

8.0%

5.0%New Zealand 8 8.9

%1.7%

11.2%

5.5%

3.5%

0.6%

5.0%

3.0%

5.4%

1.8%

7.5%

2.5%Finland 7 8.5

%1.2%

10.3%

7.3%

1.7%

0.4%

2.5%

1.5%

6.8%

1.2%

8.7%

5.8%Ireland 7 9.5

%3.4%

12.9%

6.0%

3.3%

0.3%

3.5%

2.6%

6.2%

3.3%

9.4%

2.7%Taiwan 7 8.6

%1.9%

13.0%

7.5%

1.3%

0.7%

2.0%

0.0%

6.7%

2.0%

11.0%

4.0%Bulgaria 6 10.9

%1.2%

12.0%

8.8%

2.9%

0.4%

3.1%

2.2%

8.0%

0.9%

9.0%

6.6%Denmark 6 8.0

%0.9%

9.1%

7.3%

1.6%

0.1%

1.7%

1.5%

6.4%

0.8%

7.4%

5.8%Hungary 6 12.7

%2.4%

14.5%

8.5%

4.6%

2.0%

6.0%

0.5%

8.2%

1.6%

9.4%

5.5%Israel 6 9.7

%1.8%

11.0%

6.5%

3.3%

0.9%

4.0%

1.5%

6.4%

1.1%

7.1%

5.0%South Africa 6 13.2

%1.5%

14.5%

11.1%

6.4%

0.6%

7.3%

5.6%

6.8%

1.4%

8.1%

5.0%Bolivia 5 13.9

%1.9%

16.0%

11.2%

3.3%

2.7%

7.0%

0.7%

10.6%

1.7%

12.1%

8.0%Egypt 5 21.9

%1.1%

23.0%

20.5%

12.7%

0.8%

14.0%

12.0%

9.2%

1.2%

11.0%

8.0%Pakistan 5 26.9

%2.1%

28.4%

24.0%

10.9%

1.6%

12.1%

9.0%

16.0%

0.6%

16.3%

15.0%Romania 5 12.9

%1.1%

13.7%

11.5%

4.8%

0.6%

5.5%

3.8%

8.1%

1.2%

8.8%

6.0%Slovenia 5 12.9

%2.2%

14.4%

9.5%

5.6%

0.9%

6.0%

4.0%

7.4%

1.5%

8.4%

5.5%Thailand 5 11.3

%0.2%

11.5%

11.0%

3.7%

0.6%

4.5%

3.3%

7.6%

0.6%

8.1%

7.0%Turkey 5 14.4

%3.6%

17.0%

8.0%

6.1%

0.7%

7.0%

5.0%

8.2%

2.9%

10.0%

3.0%Venezuela 5 19.2

%3.6%

21.9%

15.0%

8.1%

3.0%

10.1%

3.2%

11.2%

1.8%

12.5%

8.0%

Xác định giá trị công ty dh lê tiến dũng

Economy & Finance

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