Rubber - TVSIfiles.tvsi.com.vn:8080/INDUSTRY/C/22_Caosu_Nhua... · and May, aggregate global rubber...

Source: HOSE & HASTC

Vietnam’s economy overview

… 2

Rubber market overview

… 3

Excutive summary

… 3

Vietnam Rubber Industry

… 4

Porter’s Five Forces Analysis

… 5

Development Forecast

… 6

Annex

… 7

Sec t or R ep or tSec t or R ep or tSec t or R ep or t

Listed companies

Symbol Price (VND1,000)

(17/10/2008)

DPR 52,000

DRC 28,500

HRC 36,700

TNC 12,400

TRC 43,400

October, 2008October, 2008October, 2008

RubberRubberRubber

Head Office

152 Thuy khue Str.,

Tay Ho Dist., Hanoi

Tel: (04) 7280921

Fax: (04) 7280920

Ho Chi Minh Branch

193 Tran Hung Dao

Str., No. 1 Dist

Tel: (08) 8386868

Fax: (08) 9207542

Website:

www.tvsi.com.vn

Email:

[email protected]

Research & Investment Dept.

Source: HOSE & HASTC

Trailing EPS

Symbol At the end of Q2

2008

DPR 5,380

DRC 5,814

HRC 6,802

TNC 2,245

TRC 6,104

Prime Minister Nguyen Tan Dung said Vietnam's economy can still achieve a 7% growth tar-

get this year despite financial turmoil in the U.S., according to a government statement re-

leased Thursday. Dung, who met with senior government officials Wednesday, said Viet-

nam's economy is robust enough to weather a global financial crisis. Vietnam's financial sec-

tor, under pressure from high inflation and a fall in property prices, has been stabilized be-

cause "the authorities have strengthened monitoring of the operations of banks, investment

funds and credit organizations," Dung said. State Bank of Vietnam Governor Nguyen Van

Giau said during the meeting that no local banks will collapse and public savings are guaran-

teed and safe. "The national forex reserves, which rose more than $1 billion recently, won't

be hurt by any bankruptcy in the U.S.," he said.

Government officials at the prime minister's meeting said the economy would need to grow

8% in the fourth quarter for the full year target to be achieved. The economy grew 6.5% in

the first nine months of 2008, slowing from 8.2% a year earlier, putting the full year target

in doubt. Vietnam has tightened monetary policy and cut state expenditure to slow growth

and quell double-digit inflation. The growth target for 2008 was slashed to 7% from 8.5%-

9% earlier this year.

Credit Suisse said in a report it expects Vietnam to gradually ease its tight monetary policy

in the next couple of quarters because inflation, though still elevated, appears to have

peaked. Growth in credit is likely to be kickstarted in 2009 and the government could boost

public expenditure "which seems to have borne the brunt of the austerity controls in the

first half," the bank said.

Hanoi-based economists said Vietnam could emerge mostly unscathed from a global slow-

down because small and medium-sized businesses, which make up about 40% of the econ-

omy, are still relatively isolated from the outside world. "Certainly we are facing problems ...

but Vietnam's economy can somehow maintain its stability because we have a very flexible

and thriving sector of small and medium enterprises," said Vuong Quan Hoang, director of

consulting firm InvestVietnam. Ho Chi Minh Stock Exchange executive Le Hai Tra said there

may be some upside for the stock market, which has fallen 50% so far this year. "I expect

market to recover because many blue-chip companies are still strong and profitable this

year".

Sources: asset.vn/Dow Jones

Main indicators of the first 9 months of the year 2008

(compare with the same period of the year 2007)

GDP +6.52%

Agriculture, Forestry and Fishery +5.4%

Fishery products +10.3%

Industrial products +16.0%

Total export turnover +39.0%

Total import turnover +48.3%

Retails and Social Services +30.1%

Foreign visitors +5.9%

September Consumer Prices (compare with September 2007) +22.76%

Sources: General Statistics Office

Rubber

Sector Report

2 Research & Investment Dept.

VIETNAM’S ECONOMY OVERVIEW

Executive summary

Global rubber consumption stalled towards the end of the first half of 2008, mainly reflect-

ing the weakening economic conditions in the mature markets. However, continuing eco-

nomic growth in the emerging markets (albeit at a slower pace than was seen at the begin-

ning of the year) prevented any significant decline in global consumption. Between March

and May, aggregate global rubber consumption remained at around 23.1 million tonnes

while the growth rate to May 2008 has declined from 6.3% to 4.9%. Global natural rubber

(NR) consumption increased from 9.4 million tonnes in May 2007 to 9.8 million tonnes in

May 2008, an increase of 4.7%, while synthetic rubber (SR) consumption increased by 5.1%

over the same period, from 12.6 to 13.2 million tonnes.

Total NR and SR production reached 23.4 million tonnes in the year to May 2008. However,

production growth has slowed, with the growth rate averaging 3.4% over the first five

months of 2008, compared to 6.7% in the same period of last year. The major growth in

rubber supply has until recently come from SR; however, production growth has slowed in

recent months, even in Asia. NR production in Thailand and Malaysia declined in the year to

May due to early wintering and adverse weather conditions, while that of Indonesia and

most other Asian producers increased. While production growth may have slowed, actual NR

output levels remain relatively high for most of the major producing countries.

With NR output rising, the global NR deficit narrowed to 8,000 tonnes in the year to May

2008 from 83,000 tonnes in 2007. However, given the gloomy outlook for the world econ-

omy, a slowdown in consumption may still result in a market surplus later in the year. In

the SR market, stronger growth in demand compared to supply has reduced the level of

global SR stocks.

Despite slowing demand, NR prices largely tracked rising crude oil prices during the second

and third quarters of 2008.

The near-term outlook is bearish however with physical prices expected to reflect the sharp

decline seen in futures prices at the end of the third quarter.

The price of light crude fell by 28.9% since early July and 9 September as the market began

to concentrate upon the bearish aspects of the market. Tropical storms Edouard and Ike and

the conflict in Georgia had only a negligible impact upon prices. The sharp retreat in the

crude oil price has not, surprisingly, fed through to the prices of butadiene, the supply of

which continues to be tight as a result of scarce feedstock crude C4 availability. However,

SR prices increased at a significantly reduced rate in the third quarter as compared to that

of the monomer price increase.

The growth in global demand for vehicles suddenly reversed and headed into an accelerated

and steep negative growth for two months to June. The overall negative drive came from

the commercial vehicles sector, while the suddenness of the event was largely a reflection of

the downturn in Europe. This demand side trouble was partially reflected on the supply side,

which also suffered from a sudden downturn. The biggest concern, however, was the equally

sudden and sharp deceleration in demand for vehicles in Asia, averaging 12.3% for the first

four months of 2008, but only 1.5% over May-July.

The Tyre Sector Trends chapter has been revamped, now using Normal Production data for

the majority of countries covered in the chapter. The need for timely release of data was

behind the decision to make the change. Normal Production refers to the output that equals

to net trade and local consumption. The data are still presented in the same format as be-

fore.


Rubber

Sector Report

RUBBER INDUSTRY OVERVIEW

The latest data on export volumes of selected latex general rubber products from the five

leading exporters suggests that the overall downward trend the industry found itself in ap-

pears to have eased somewhat during the second quarter of 2008. Bottoming outs by Thai-

land, especially in the medical and surgical gloves sector, and the other pharmaceutical

goods sector are behind the changed diagnosis of the overall trend of the industry in the

past three months.

Global economic growth decelerated to 4.5% in the first quarter of 2008 according to the

International Monetary Fund (IMF), while latest economic data from around the world sug-

gest that a further deceleration should also be expected in the second quarter. The slow-

down is not confined to the developed economies, but is also affecting the emerging market

countries that have, so far, been able to absorb some of the loss of momentum from the

mature economies. The outlook for this and the next full year’s growth prospects, however,

is much better than first thought by the IMF; the only caveat to the latest results is that fur-

ther deceleration must be endured in the second half of this year. (Source: International

Rubber Study Group)

Vietnam Rubber Industry

According to the database of the General Statistics Office, total export rubber output in Sep-

tember is about 80,000 tons, reach a value of USD230,000 and the total export in the first 9

months of Y2008 is 459,000 tons, get the value of USD1.256 bn. Although the total export

rubber output decreases 8% in volume but it increases 34% in value turnover compared

with the same period last year. The average price of SVR 3L (FOB) in September is 2,866

USD/ton, dropped a value of 110 USD/ton but still higher than the same period last year,

about 40%. In the first 9 months of Y2008, the rubber industry contributed 2.58% of the

total export turnover with a value of about USD48.6 bn. The contribution in Y2007 is 2.48%.

In Y2008, rubber industry continues to exceed the total export value of USD1 bn (since

Y2006).

The estimated growth rate of the industry is 4% in Y2008, a modest number in comparision

with many main export products. However based on the export rubber output in Y2007

(decreased 3% compared with the year plan), it is not easy to achieve this plan.

While the demand of rubber on the world has been raising strongly in Y2007, there’s a de-

crease in output of many top rubber processing countries. In Thailand, total output dropped

3% to 3 million tons due to heavy rain and the decrease of rubber plantation square. In In-

donesia, the same situation happened … In Vietnam, rubber processing and exporting have

a strong growth rate in recent years. Vietnam is in top 4 countries by rubber exporting,

behind Thailand, Indonesia and Malaysia. According to the Vietnam Rubber Association, rub-

ber companies have to do their best efforts to reach the total export volume of about

760,000 tons in Y2007, the failure in comparision with the plan number of 780,000 tons.

Although the total domestic output in this year still get the volume of 600,000 tons, increase

in comparision with the total volume in Y2006 of 553,500 tons, but the total import from

neighbouring countries has been decreased due to the lack of the supply. Vietnam exports

80% of total domestic rubber crude, the rest has to import from Thailand, Cambodia and

Indonesia for re-exporting. Todays, Vietnam have exported rubber production to over 40

countries on the global with the biggest is China (to hold 65% of total export output), the

next are Singapore, South Korea, Taiwan, Germany and USA … Since 1995, the total annual

natural rubber export to China has been increased and there has been a drastic increase

since 2005 due to the demand of China (about 1.7 mil tons/year) exceeds its supply. This

year, China’s demand increases 40% over last year so in the future, Vietnam is still the one

of biggest exporting countries to China.


Rubber

Sector Report

However, most of total export output focus on rubber crude so the total export value is still

low. Besides, a weakness of Vietnam’s rubber industry is the lack of famous brand name on

the global market so we have to sell at a lower price level than many countries. In 2008,

the Ministry of Industry and Trade set the plan for the rubber industry as follows: 4%

growth rate in total export output and 12.4% in export turnover.


Rubber

Sector Report

Natural rubber demand - supply Synthetic rubber demand - supply

Source: The International Rubber Study Group

PORTER’S FIVE FORCES ANALYSIS

The threat of entry

The harvesting capacity is depend on two factors: the harvesting capacity of workers

and the variety of rubber tree.

The material input is rubber so the industry requires a huge plantation square or a sta-

ble resource.

The power of buyers

The total export has a share of 80% of total output.

Most of Vitnam’s export products is natural rubber, with about 60% of them is natural

rubber (technical criterion) and natural rubber in original forrm. It causes the low ex-

port value.

Vietnam now export rubber to over 40 countries and territories with the biggest market

is China (with a share of 64% total export output), the next are Singapore, South

Korrea, Taiwwan, Germany, USA …

The exploited output of Vietnam is less than many countries such as Thailand, Indone-

sia, … so the domestic companies can not take the initiative in price.

The power of suppliers

80% of machines and equipments is backward, 20% of them is medium and weak. The

high technology has not been applied yet.

Most of the companies in the industry has their owned material input. Besides, they

also purchase the material from farmers.

The material input deepends on the weather.

The threat of substitutes

The synthetic rubber products now have been used widely as the alternate of natural

rubber products.

The main material input to produce synthetic rubber is oil so now the demand of natu-

ral rubber is high due to the increase of oil price.

Competitive revalry

Vietnam has about 25 companies that have the plantation more than 1000 ha, the

largest is Dong Nai rubber company with a square of 38,000 ha and a share of 7.5% of

the total industry output. Most of companies in the industry is member of Vietnam Rub-

ber Group (VRG) and 90% of total industry output comes from VRG.

High competition from many big rubber export countries such as Thailand, Indonesia,

Malaysia, Brazil, China …


Rubber

Sector Report

DEVELOPMENT FORECAST

Demand

According to the report of the International Rubber Study Group, the average rubber

consumption growth rate is about 2.3%/year. In which, the Synthetic rubber has a

share of 58.3% and the rest is natural rubber, 41.7%. During this period, the con-

sumption growth rate of China and India is about 7%/year. The increase of the crude

oil price has also impacted to the synthetic rubber price, an alternate product for natu-

ral rubber.

The demand of the domestic market is low, most of the rubber production import is

only for re-exporting.

Supply

According to the Food and Organization of the United Nations (FAO), the total natural

rubber output is estimated to achieve the value of 7.9 mil tons/year in 2010. The rub-

ber processing growth rate should be 1.3% per year during the period 2001 - 2010

(the output during 1998 - 2000 is 6.8 mil tons/year).

As the forecast of FAO, Asia will be the biggest natural rubber producer with total out-

put of 6.8 mil tons/year, get a share of 85% of total global natural rubber output. Thai-

land will be the biggest rubber processing countries in 2010 with total estimated output

of 2.2 mil tons/year. The next is Indonesia with the estimation of 2.05 mil tons in

2010. Africa will raise its total output about 0.5 mil tons/year and the estimated growth

rate should be 2.2% during 2001 - 2010. Latin America is estimated to have the

growth rate of 5%/year. In which, Brazil will be the biggest rubber processing country

in this region due to many advantages such as weather, land and labor cost .


Rubber

Sector Report

Dong Phu Rubber Joint Stock Company Symbol: DPR Floor: HOSE

Chartered capital: VND 400 bn Current price: VND 52,000 Total listed volume: 40,000,000 Trailing EPS: VND 5,380 P/E: 9.7 P/B: 3.6 Beta: 1

Z-Score: 4.6

Dong Phu Rubber Joint Stock Company (DORUCO) was owned by the Michelin Tyre Company of France and it was then known as Thuan Loi rubber plantation. It was established in the period of June 1927 and re-

established on May 21, 1981. Now DORUCO is a mem-ber of Vietnam Rubber Group (VRG), was established on April 04, 1993 according to Decision No: 184/NN-TC/QÑ

of Ministry of Agriculture and Food Processing Industry (now it have become to Ministry of Agriculture and Rural Development) and have been changed into Joint Stock Company since the early of 2007. The plantation ex-

tends to a total of over 9,000 hectare; 8,000 hectare is under commercial period with over 14,000 tons produc-tion per year.

The products of Dong Phu Rubber Joint Stock Company have been produced follow ISO 9001:2000 was certified by QMS organization (Australia) and QUACERT (Vietnam). Further, the Quality Department has been

acknowledged as laboratory which process under ISO/

IEC 17025:2004 by VILAS.

About the Company

Planted square: HA 9,000 Square under commercial period: HA 8,000 Total production output per year: Ton 14,000 Capacity: 2.04 tons/ha

Plantation: 6 Processing factory: 2 Main export market: EU, US, China, …

SWOT Analysis

Strength Huge planted square

Having the advantage of land (basalt soil, black soil)

Taking 5.57% of total industry’s outputs

Extending plantation plans in Laos and Cambodia

Weakness The square under commercial period is being nar-

rowed The main product is latex rubber

Opportunity The rubber industry has a fast growth

The demand of rubber production is rising

The natural rubber price is being higher

Threat The output is exported primarily to China market

(80% of total export) while the price in this market is unstable

Many countries have extended their rubber planta-

tion square and it has more competition in near fu-ture

Depend on the weather

Y2007 is a successfully year for the Company, the

total revenue is VND 703 bn and achieved 137% of the year plan with an increase of 16.89% over the Y2006. The profit after taxes is VND230 bn, increase

54% over the Y2006.

Activities situation

Sources: the Company’s website

In Y2007, the current ratio and the quick ratio are

1.05 and 0.97. Although these ratios are low but there are an increase in compared with the Y2006. They show that the company’s liquidity has been improved.

The Total liabilities/Equity ratio is 0.7, reduced dras-

tically over the Y2006 (2.59). It due to the decrease

of total liabilities from VND1,220 bn to VND465.47

bn and it also show that the company is less de-pended on debt.

ROA and ROE are 20.31% and 34.46% in Y2007

Financial situation


Rubber

Sector Report

Da Nang Rubber Joint Stock Company Symbol: DRC Floor: HOSE

Chartered capital: VND 130.39 bn Current price: VND 28,500 Total listed volume: 15,384,624 Trailing EPS: VND 5,814 P/E: 4.9 P/B: 1.8 Beta: 0.8

Z-Score: 1.7

Established in compliance with the Decision No 320/QD/TCNSDT on 26/05/1993 of Ministry of Industry. On 10/10/2005, according to the Decision No 321/QD – TBCN of the Minister of Ministry of Industry, Da Nang

Rubber Company changed for Da Nang Rubber Joint Stock Company. Since on 01/01/2006, Da Nang Rubber Joint Stock Company has officially been in progress with

the charter capital of 49 billion VND. The main business of the Company: Produce, trade, ex-port and import rubber products and materials and de-vices for the rubber industry, produce and install the

rubber industry equipments, trade the general commer-cial services. Before equitization, the Company was the member unit of Vietnam chemicals Company with over 30 years in establishment and development .

About the Company

From 2007, the Company will invest in improving the

particular tyre production capacity to meet the need for the coal industry, ports, the transportation indus-try, irrigation and export to other countries such as Asia, Australia, Northern America, South Africa,…. The Company intends to increase the particular tyre

capacity up to 8000 tyre per year in 2008 from 3000

per year. The Company will learn about the foreign partners to

cooperate to produce the lorry, bus tyre with Radial technology. In 2007, the Company will find the part-ner and in 2008 will build the factory to produce this kind of tyre with the capacity of from 1,000,000 to 1,500,000 tyre per year.

In 2007, the Company will join the club of the reve-

nue of 1000 billion VND per year, the export revenue

up to 6 million USD.

SWOT Analysis

Strength DRC tyres and tubes are processed under the im-

ported automatic equipment with European ad-vanced technology.

DRC tyres with great prestige and the largest market

share in Vietnam have been exported to many for-eign countries.

DRC tyres with the advances retreading equipment

of Japan and Malaysia.

Weakness The competitive ability with the foreign markets is

still limited Lack of high quality staffs



Joining WTO is a big chance for the Company to ex-

tend the market.

Threat The fluctuation of the material input price

More competition in near future after Vietnam join-

ing WTO.

Y2007 is a successfully year for the Company, the

total revenue is VND 1,170 bn, an increase of 26.35% over the Y2006. The profit after taxes is VND71 bn, increase 29.09% over the Y2006.


In Y2007, the current ratio and the quick ratio are

1.67 and 0.75. They show that the company’s liquid-ity needs to be improved.

The Total liabilities/Equity ratio is 1.8, reduced over

the Y2006 (2.59). It also show that the company is less depended on debt and has a better capital structure.

ROA and ROE are 12% and 34% in Y2007

Financial situation

Business strategy


Rubber

Sector Report

Hoa Binh Rubber Joint Stock Company Symbol: HRC Floor: HOSE


Z-Score: 21.4

HoaBinh Rubber Joint-stock Company was established under the Decision No.5360/QĐ-TCCB dated 05 Decem-ber, 2003 issued by The Ministry of Agricultural & Rural Development of transforming The HoaBinh Rubber State

-run Farm and The HoaBinh Rubber Processing Factory – a State-owner part of BaRia Rubber Company- into a joint-stock company. HORUCO is the first unit of Viet-

Nam Rubber General Company to carry on the privatiza-tion of a rubber farm in combination with a factory. Our company now has more than 5,000 ha of rubber tree and a processing factory with the capacity of more than

6,000 tons/year. Every year, HORUCO produces an av-erage of 8,000 tons latex; purchases; processes thou-sands tons of rubber of local farmers and other local co-operatives. The quality of product is always the top care of HORUCO. Therefore, technical process and products are always controlled under the Quality Management

System ISO 9001:2000. With an orderly and highly pro-fessional managerial system, HORUCO is well prepared

to doing business with every domestic and foreign inves-tors.

About the Company


Plantation: 6 Processing factory: 1 Main export market: China, Taiwan,

EU…

SWOT Analysis

Strength The natural land is suitable to plant rubber

The processing factory is stable in quantity and qual-

ity Extending plantation plans in Laos and Cambodia

Weakness The square under commercial period is difficult to

extend The rubber tree land is reduced due to the out of

date in use Opportunity The rubber industry has a fast growth



Many long-term contracts have been signed

Threat More than 50% of total export is for export so the

Company is impacted by the exchange rate Depend on the demand of China and India


In Y2007, the total revenue is VND 132 bn with an

decrease of 6.8% over the Y2006 due to the storm

no 9. The profit after taxes in Q2 2008 is VND16 bn, decrease 40% over the same period of Y2007. Total profit after taxes in the first 6 months in Y2008 de-crease 27.25% over the same period in Y2007 with

a value of VND44 bn.


Sources: the Company’s website

The current ratio and the quick ratio are both more

than 2 and increase regularly over years. They show that the company’s liquidity is very good.

The Debt ratio is reduced over years shows that the

Company’s solvency has been improved. The Total liabilities/Equity is 0.08 at the end of Q2 2008 due to total liabilities has been reduced to VND24 bn from

VND67 bn. ROA and ROE are 33% and 39% in Y2007

Financial situation


Rubber

Sector Report

Thong Nhat Rubber Joint Stock Company Symbol: TNC Floor: HOSE


Z-Score: 3.98

Thong Nhat Rubber Joint Stock Company is a Vietnam-based Company engaged in the manufacture of rubber products and rubber plantation operations. Through its farms and factories, the Company principally plants rub-

ber trees as well as manufactures and processes latex, Standardized Vietnamese Rubber (SVR) 3L, SVR5, and Ribbed Smoked Sheet (RSS). In addition, it trades agri-

cultural products such as cashew nuts, maniocs, as well as cotton and rubber wood. As of December 31, 2007, sales from rubber products contributed to 49.69% of total revenue. The Company’s main business are: Grow-

ing rubber trees; Exploiting, processing, trading and ex-porting latex; Processing farm produce; Trading farm produce; Processing animal feeds; Clearing construction sites; Building civil, industrial, traffic and irrigation pro-jects; Exploiting building materials and minerals; Trad-ing scraps; metalwares, automotive parts, motorcycle

parts, chemicals, fertilizers, farm produce and rub-ber;Forwarding goods; Others ...

About the Company

Planted square: HA 1,600 Square under commercial period: n/a Total production output per year: Ton 2,500 Capacity: 1.6 tons/ha

Plantation: 1 Processing factory: 1 Main export market: China, Singapore

…

SWOT Analysis

Strength The BOM and staffs have deeply experience


ity The materials has been improved in quality


extend The financial potential is limited





Threat Depend on the weather

The rubber tree land is reduced due to the out of

date in use


increase of 61.17% over the Y2006. The profit after taxes in 2007 is VND33 bn, increase 17.86% over the Y2006.


Sources: the Company’s prospectus

The current ratio and the quick ratio are both more

than 2 (2.39 and 2.24). They show that the com-pany’s liquidity is very good.


Company’s solvency has been improved. The Total liabilities/Equity is 0.27 at the end of Y2007.


Financial situation


Rubber

Sector Report

Tay Ninh Rubber Joint Stock Company Symbol: TRC Floor: HOSE

Chartered capital: VND 300 bn Current price: VND 43,400 Total listed volume: 30,000,000 Trailing EPS: VND 6,104 P/E: 7.1 P/B: 2.9 Beta: 1.2

Z-Score: 6.9

Tay Ninh Rubber Joint Stock Company, formerly Tay Ninh Rubber Company, is a Tayninh-based company en-gaged in the rubber sector. The Company manufactures, processes rubber products; plants rubber trees; pro-

duces chemicals, fertilizers used in the rubber manufac-turing industry. In addition, it also trades agricultural products; offers construction services of transportation

works, irrigation works and others; and is involved in business of real estates. The Company is a subsidiary of Vietnam Rubber Group. The Company’s main business are: Growing, exploiting, processing and selling rubber

materials and products; Trading chemicals and fertilizers for rubber cultivation; Wholesaling; Reclaiming land and repairing roads and bridges; Building civil and industrial works; Processing rubber timbers and manufacturing pallets and household products; Trading petroleum, oil and lubricants; Processing farm produce; Providing ca-

tering services; General trading; Studying and designing traffic works; Building irrigation works; Trading land and

houses; Building traffic, sports, water supply and drain-age, wastewater treatment, electric works.

About the Company


Plantation: n/a Processing factory: n/a Main export market: China, Singapore

…

SWOT Analysis

Strength The BOM and staffs have deeply experience


ity The materials has been improved in quality


extend Opportunity The rubber industry has a fast growth




Threat


The rubber tree land is reduced due to the out of

date in use


increase of 4.96% over the Y2006. The profit after

taxes in 2007 is VND177 bn, increase 23.78% over the Y2006.


Sources: the Company’s prospectus

The current ratio and the quick ratio are 1.31 and

1.24. They show that the company’s liquidity is nor-mal and needs to be improved.


Company’s solvency has been improved. The Total liabilities/Equity is 0.73 at the end of Y2007.


Financial situation


Rubber

Sector Report

Item DPR DRC HRC TNC TRC

Total assets 972,178,990 662,026,676 348,524,952 276,024,306 638,991,446

Current assets 254,120,002 511,398,921 135,879,217 133,646,930 215,067,565

Cash 38,097,654 22,004,153 10,783,619 7,606,649 86,836,705

Short-term investment 64,032,513 0 83,500,000 10,000,000 25,800,000

Account receivable 91,196,762 179,135,614 13,514,831 20,472,959 39,916,927

Inventories 49,623,090 299,851,349 26,700,087 88,935,496 41,072,129

Others 11,169,983 10,407,805 1,380,681 6,631,825 21,441,805

Long-term assets 718,058,988 150,627,755 212,645,735 142,377,377 423,923,881

Long-term account receivable 0 0 110,100 0 0

Fixed assets 529,873,220 146,954,280 80,585,831 106,546,847 300,506,525

Tangible fixed asset 411,497,635 143,383,988 58,977,083 87,116,157 262,281,983

Historical cost 582,802,339 530,920,811 99,468,785 123,882,489 420,659,312

Depreciation 171,304,704 387,536,823 40,491,702 36,766,332 158,377,330

Leased assets 0 0 0 0 0

Historical cost 0 0 0 0 0

Depreciation 0 0 0 0 0

Intangible fixed assets 0 791,639 1,456,081 0 0

Historical cost 0 791,639 1,517,998 0 0

Depreciation 0 0 61,917 0 0

Construction in progress 118,375,585 2,778,653 20,152,667 19,430,690 38,224,542

Property investment 0 0 0 0 0

Historical cost 0 0 0 0 0

Depreciation 0 0 0 0 0

Long-term finance investment 147,325,306 716,296 130,696,846 27,721,176 87,902,837

Advance expenses 38,280,851

Others 2,579,611 2,957,179 1,252,958 8,109,353 35,514,519

Capital sources 972,178,990 662,026,676 348,524,952 276,024,306 638,991,446

Total liabilities 346,840,230 457,131,123 24,588,780 50,794,062 190,804,742

Current liabilities 297,188,440 347,183,073 21,100,947 50,477,227 150,612,266

Long-term liabilities 49,651,789 109,948,049 3,487,833 316,835 40,192,476

Others 0 0 0 0 0

Shareholders’ equity 625,338,760 204,895,553 323,936,171 225,230,244 448,186,704

Equity 581,141,042 202,148,879 314,777,971 222,841,609 438,042,424

Chartered capital 400,000,000 130,385,520 172,609,760 192,500,000 300,000,000

Surplus capital 0 3,281,000 2,372,608

Retained earnings 90,466,786 39,049,717 102,399,413 13,406,511 65,701,822

Funds 44,197,719 2,746,674 9,158,200 2,388,635 10,144,280

Construction fund 0

Others 43,773,097 2,746,674 9,158,200 10,144,280

Minority shareholders profit

Sales 95,854,205 396,213,197 49,289,197 34,589,005 99,802,795

Net sales 95,854,205 388,669,520 49,289,197 34,589,005 99,802,795

Cost of goods sold 47,052,705 347,277,415 20,413,872 28,192,741 57,946,999

Gross profit 48,801,500 41,392,105 28,875,325 6,396,264 41,855,796

Finance activities income 2,316,006 548,594 4,041,413 933,367 3,086,874

Finance activities expenses 11,816,226 12,979,605 18,829,604 0 1,501,571

Interest expenses 1,281,585 9,552,133 7,486 0 1,234,199

Selling expenses 1,688,858 9,680,230 846,828 170,190 728,964

General & administrative expenses 6,282,926 5,146,379 2,162,073 2,052,165 3,259,058

Operating profit 31,329,495 14,134,485 11,078,233 5,107,276 39,453,078

Extraordinary income 22,621,418 616,944 7,381,265 2,068,815 3,835,781

Extraordinary expenses 7,570,175 74,547 1,564,813 700,564 3,835,781

Extraordinary profit 15,051,243 542,397 5,816,451 1,368,252 0

Net Profit before taxes 46,380,738 14,676,882 16,894,685 6,475,527 39,453,078

Corporate income tax 0 0 0 0 0

Net Profit after taxes 46,380,738 14,676,882 16,894,685 6,475,527 39,453,078

Minority shareholders profit 0 0 0 0 0

Net profit for the year 46,380,738 14,676,882 16,894,685 6,475,527 39,453,078

Sources: Company’s Reports


Rubber

Sector Report

Sources: Company’s Reports

Item DPR DRC HRC TNC TRC

Liquidity

Current ratio 0.855 1.473 6.439 2.648 1.428

Quick ratio 0.688 0.609 5.174 0.886 1.155

Asset performance

Inventory turnover 0.948 1.158 0.765 0.317 1.411

Average collection period (days) 342.508 165.922 98.710 213.081 143.985

Cash/Sales 0.397 0.057 0.219 0.220 0.870

Fixed assets turnover 0.181 2.645 0.612 0.325 0.332

Total assets turnover 0.099 0.587 0.141 0.125 0.156

Working capital/Sales -0.449 0.423 2.329 2.405 0.646

Working capital (minus cash)/Sales -0.847 0.366 2.110 2.185 -0.224

Total liabilities/Sales 3.618 1.176 0.499 1.469 1.912

Capital structure and solvency

Z-Score Altman 4.006 1.668 19.524 3.634 6.482

Debt ratio 35.68% 69.05% 7.06% 18.40% 29.86%

Return on investment capital

ROA 4.77% 2.22% 4.85% 2.35% 6.17%

ROE 7.42% 7.16% 5.22% 2.88% 8.80%

Profitability

Profit after taxes/Sales 0.484 0.038 0.343 0.187 0.395

Gross profit/Sales 0.509 0.106 0.586 0.185 0.419

EBIT/Sales 0.607 0.071 0.725 0.187 0.410

EPS (Q2-2008) 1.160 1.126 0.979 0.336 1.315

Trailing EPS Basic 5.380 5.814 6.802 2.245 6.104

Trailing EPS Adjusted 5.380 5.814 6.817 2.245 6.104

Book value 14.529 15.504 18.236 11.576 14.601

P/E (current) 9.665 4.902 5.395 5.524 7.110

P/B (current) 3.579 1.838 2.012 1.071 2.972

Price (10/17/2008) 52.0 28.5 36.7 12.4 43.4

Price (cuối quý 2) 52.5 32.9 43.3 13.2 62.0

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