Financial Analysis: Taya Vietnam Electric Wire and Cable Joint Stock Company
Financial Analysis: Taya Vietnam Electric Wire and Cable Joint Stock Company
FINANCIAL ANALYSIS
Taya Vietnam Electric Wire and Cable
Joint Stock Company
Name: Nguyen Ngoc Lan Anh
ID: 16095
Instructor: Dr. Trinh Quoc Dat
The Vietnamese German University
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Taya Vietnam Wire and Cable JSC
Table of Content
I/ INTRODUCTION..............................................................................................................................................3
II/ FINANCIAL STATEMENT ANALYSIS................................................................................................................4
1. METHODOLOGY AND DATA...................................................................................................................4
2. DISCUSSION AND ANALYSIS...................................................................................................................5
2.1 LIQUIDITY RATIOS.........................................................................................................................5
2.2 CURRENT RATIO.............................................................................................................................5
2.3 CASH RATIO.....................................................................................................................................6
2.4 QUICK RATIO...................................................................................................................................7
III/ FINANCIAL BENCHMARKING ANALYSIS........................................................................................................7
1. METHODOLOGY AND DATA...................................................................................................................8
2. DISCUSSION AND ANALYSIS...................................................................................................................9
IV/ FINANCIAL DECISION.................................................................................................................................10
1. CAPITAL STRUCTURE............................................................................................................................10
2. INVESTMENT AND DIVIDEND DECISION..............................................................................................10
V/ CONCLUSION..............................................................................................................................................11
References.......................................................................................................................................................12
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Taya Vietnam Wire and Cable JSC
I/ INTRODUCTION
TAYA Wire & Cable Co., Ltd. was established in 1955. After more than 50 years of
operation and continuous development, TAYA has become a major player in Taiwan's
power cable industry. In 1994, with the rapid economic growth, the Vietnamese
government's opening-up policy and investment promotion, TAYA decided to choose here
for investment. The project was implemented and completed in 1955. In July 1955, TAYA
(Vietnam) Company officially started production and consumption with the approval of the
state.
The policy of long-term development is to meet the huge demand for electric wires and
cables in the rapidly developing Vietnamese economy. Currently, products manufactured by
TAYA Company (Vietnam) include:
In 2005, the Company was allowed by the State Securities Commission to convert into a
Joint Stock Company and officially listed and traded at the Ho Chi Minh City Stock
Exchange on February 15, 2006. TYA is a common stock with a market capitalization of up
to 48.31 billion dong and a volume of 4,831,228 shares. On February 15th, during the initial
public offering (IPO) on the stock market, 68,200 TYA shares were traded at the matching
price of 34,000 dong/share (rather than the predicted 29,100 dong). 3.4 times the face value
of the original.
In Q3.2021, although financial revenue decreased and production costs in the period
remained basically unchanged, the result after deducting TYA expenses after tax profit was
nearly VND 35 billion, 3.3 times higher than Q2. 2020 – This is also the highest quarterly
profit in TYA's history.
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Taya Vietnam Wire and Cable JSC
The performance of the company, therefore, is possibly potential for many investors. We
will go further with the financial data to have a deep understanding of both financial
situation anf potential growth of TAYA.
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Taya Vietnam Wire and Cable JSC
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Taya Vietnam Wire and Cable JSC
In Table 1 and 2, all TAYA’s data is collected through cophieu68.com. The data is used to
determine the ratio through calculation formulas. These ratios were only measured in the
past 5 years of analyzing the company’s financial activities. This compares the performance
of the company and the weaknesses they should focus on.
Liquidity ratio analysis provides companies with a position on how to effectively fulfill their
short-term obligations. This ratio usually determines whether the company can pay its
liabilities at any given point in time. In this section, we will analyze the three components-
current ratio, cash ratio and quick ratio, and evaluate the position of TAYA.
Current Ratio
2.2
2.1
2
1.9
1.8
1.7
1.6
2016 2017 2018 2019 2020
Current Ratio
The current ratio is a parameter that evaluates a company's ability to meet its short-term debt
and unforeseen cash needs. This is obtained by dividing current assets and current liabilities.
Judging from the 5-year report, the company's current ratio is high, which means that it is in
a strong position to meet unpredictable cash demand. The highest figure was achieved in
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Taya Vietnam Wire and Cable JSC
2016, which means that TAYA is able to fulfill 95% of its short-term debt. The current ratio
in 2020 is 189.93%, up from 182.93% in 2019, indicating that the company's ability to
mobilize working capital to pay short-term debt is stronger in 2020 than in 2019. At the
same time, the company's short-term assets are plentiful, and current assets' potential to
convert into cash is relatively high, at around VND 531.6 billion (accounts receivables are
around 297.8 billion dong: Inventory (about 233.8 billion dong) will not put the company at
risk of insolvency.
Cash Ratio
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2016 2017 2018 2019 2020
Cash Ratio
Another significant part of analyzing a firm's ability to satisfy its short-term obligations is
the cash ratio. In this regard, the cash ratio assesses a company's ability to cover short-term
obligations using cash and cash equivalents. This is a more stringent criterion since it
stresses the firm's ability to meet short-term demands with its most liquid assets, such as
cash and cash equivalents. The cash ratio structure of TAYA Company had a downward
trend during the last 5 years. With a cash ratio of nearly 0,7, 2016 was the year with the
highest cash ratio. By contrast, in 2019, the lowest value (0,3 only) indicates that the
company is not doing well. The corporation, on the other hand, took a more targeted strategy
in 2020 and raised its efficiency by 0,1%.
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Taya Vietnam Wire and Cable JSC
Quick Ratio
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2016 2017 2018 2019 2020
Quick Ratio
The quick ratio measures how quickly cash and other current assets can be converted to cash
and used to pay a company's short-term obligations. The lowest ratio was reported in 2017,
implying that the company could only meet around 1.1% of its short-term obligations using
cash and current assets. The company's rapid solvency is ideal, with a quick ratio of 133.50
percent in 2020, up from l12,68 percent in 2019. Money and cash equivalents are plentiful,
indicating that the company's quick solvency is ideal. In 2020, the company was in the best
possible position to convert cash and current assets into cash and meet its financial demands.
This demonstrates TAYA's good trajectory, indicating that it can effectively manage its
liquidity at any point during the next year while also meeting other company responsibilities.
The process of financial benchmarking based on secondary data analysis is discussed in this
paper using the example of two electric cable companies (TAYA - Wire & Cable Co., Ltd
and CADIVI – Vietnam Power Cable JSC) operating on the market of Vietnam. This article
aims to analyze the achievements of a more successful competitor, that is, "best practices",
to identify its performance sources and performance, and to point out the possibility of using
benchmarking technology in the process of improving company performance. The
application of the acquired knowledge in strategic and operational decision-making.
Considering their financial results in the period 2016-2020, we wanted to show how TAYA
can learn and improve its performance in the near future, benchmarking with CADIVI as the
“best practice”.
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Taya Vietnam Wire and Cable JSC
TAYA CADIVI
TAYA CADIVI
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Taya Vietnam Wire and Cable JSC
Return
Returnon
onAssets
Equity- -ROA
ROE
35.00%
14.00%
30.00%
12.00%
25.00%
10.00%
20.00%
8.00%
15.00%
6.00%
10.00%
4.00%
5.00%
2.00%
0.00%
0.00%
2016
2016 2017
2017 2018
2018 2019
2019 2020
2020
TAYA
TAYA CADIVI
CADIVI
On the other hand, TAYA’s dividend policy in the whole analyzed period consisted of
retain-ing the whole earnings, without payment of dividends. The ROE in 2020 is 13.7%
lower than the 15% in 2019, indicating a drop in profit growth from the previous year. When
we have in mind the TAYA’s ownership structure at the time, where there were few
dominant shareholders who finally became the sole owners of TAYA thanks to the
institution of compulsory share purchase, it is clear that one cannot rely on market
information when assessing TAYA’s performance.
The results of our analysis clearly show that TAYA must take action in multiple areas to
achieve the performance level of benchmarking leaders. TAYA approaching CADIVI's 2020
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Taya Vietnam Wire and Cable JSC
1. CAPITAL STRUCTURE
The financial structure of an enterprise is a combination of using debt capital and equity in a
certain proportion to finance operations, production and business activities of enterprises.
[ CITATION Bre05 \l 1066 ]. Previous studies have used financial leverage indicators
such as the equity ratio, debt ratio, and debt-to-equity ratio to examine and measure the
financial structure of businesses.
When it comes to the debt-to-equity ratio, the greater this number is, the more essential the
source of credit (liabilities) is in the operation of the company. From 2016 to 2020, the debt
to equity ratios (table 6) are below 1, indicating that equity accounts for a greater proportion
of assets than debt.
According to Tin nhanh chung khoan news, in 2020, the Company will pay a cash dividend
at the rate of 17.5%, equivalent to a shareholder owning 1 share will receive VND 1,750. In
2021, shareholders had an opinion on raising the dividend to 19%. However, the Company
affirmed that raising dividends is difficult, because the prices of input materials such as
copper and PVC resins are at a high level, requiring a source of liquidity. In addition, the
Company still has to continue with the plan to import modern machinery and equipment that
requires abundant working capital to meet payment needs. Only 20 billion dong of
undistributed profit is not enough, even the company needs to borrow more capital from the
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Taya Vietnam Wire and Cable JSC
bank. In case the Company has a large profit in 2021, the Company will pay a higher
dividend to shareholders.
As a result, every business decision has a monetary impact, and any decision that involves
the use of funds is termed a financial decision. Capital structure decisions are not entirely
based on the optimal debt/total assets ratio, but are based on the priority of capital use in the
following order: internal financing (especially the use of retained earnings), followed by
debt, and finally the issuance of stocks. The theory is based on the information asymmetry
between managers, investors and creditors. Therefore, the overall functioning of synergistic
benefits and opportunities to collaborate is still lacking, and it is unclear which is the best
solution to operate most effectively.
V/ CONCLUSION
In the past four years, despite fluctuations in financial statements and the overall economy,
TAYA has achieved efficiency in all operations. The profitability results show how the
company has made progress. In 2020, the company's ability to mobilize liquid funds to repay
short-term debt is stronger than in 2019. At the same time, the company has ample short-
term assets and has a greater potential for liquidity to be realized.
Discussing about financial benchmarking, I chose another electric cable company to analyse
its "best practices". The result shows that TAYA approaching CADIVI's 2020 performances
cannot be considered an entirely reliable conclusion. After reviewing results over the next
few years, a more informed decision can be taken. One of TAYA's next challenges is
undoubtedly the extremely high short-term operating and financial liabilities, which will
mature in 2021. In other words, TAYA should be particularly inclined to cash flow
management in order to maintain liquidity and maintain the normal flow of business
activities. Among other things, efforts must be made to realise accumulated accounts
receivable. However, we must note that in this case, the objectivity of TAYA's performance
analysis is subject to some restrictions, because of the recent changes in status that have had
a significant impact on the financial statements. In terms of financial records, that is, when
actually evaluating entities involved in status changes, especially when related entities are
involved, experience tells us that such situations need to be very cautious.
The data in the structural indicator table shows that the possibility of investment and
dividend decisions is almost possible. However, the theory is based on the information
asymmetry between managers, investors, and creditors. Therefore, the overall operation of
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Taya Vietnam Wire and Cable JSC
synergy and collaboration opportunities is still lacking, and it is not clear which is the best
solution for the most effective operation.
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Taya Vietnam Wire and Cable JSC
References
Andersen, B., & Pettersen, P. (1995). Benchmarking Handbook. London: Chapman
and Hall.
https://cafef.vn/
https://vietstock.vn/
https://www.cophieu68.vn/
https://tinnhanhchungkhoan.vn/
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Taya Vietnam Wire and Cable JSC
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