Taya Vietnam Wire and Cable JSC

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:

1. Wire and cable 600V/1000V.

2. XLPE 600V/1000V power cable.
3. Medium and high voltage cables from 1 KV to 35 KV.
4. Armored power cables of steel, steel, and aluminum.
5. Single and twisted bare copper wire.
6. Control cable.
7. Types of flexible wires, capacitive wires in automobiles.
8. PEW solenoid wire.
9. UEW magnetic wire.

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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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

II/ FINANCIAL STATEMENT ANALYSIS

1. METHODOLOGY AND DATA

Table 1: Financial Data (in billion VND)

TAYA Wire & Cable Co., Ltd

Comparative Balance Sheet

2020 2019 2018 2017 2016

SHORT-TERM ASSETS 787,112 795,560 707,566 768,010 608,401

Short-term financial assets 117,460 63,600     40,800

Inventory 233,835 305,493 247,164 312,651 178,598

LONG-TERM ASSETS 105,081 118,446 103,691 108,880 108,968
Fixed assets 102,445 105,793 96,479 97,470 95,704

Long-term financial investment   4,700      

TOTAL ASSETS 892,193 914,006 811,257 876,890 717,368

LIABILITIES MUST PAY 414,427 434,910 365,215 409,370 283,215
EQUITY 477,766 479,096 446,042 467,52 434,153
TOTAL FUNDING 892,193 914,006 811,257 876,890 717,368

Table 2: Financial Data (in billion VND)

TAYA Wire & Cable Co., Ltd

Comparative Income Statement
2020 2019 2018 2017 2016
Revenue from sales of goods
1,657,383 1,882,760 1,786,362 1,556,965 1,291,314
and provision of services
Cost of goods sold 1,493,702 1,689,754 1,644,977 1,415,645 1,179,056
Gross profit on sales and service
163,681 192,999 141,375 141,300 111,974
provision
Net profit from operating
88,107 108,963 77,601 85,684 61,835
activities
Total accounting profit before
87,823 108,690 77,662 87,335 61,118
tax
Profit after corporate income
71,504 88,970 63,181 71,428 48,799
tax
Profit after tax of shareholders
71,504 88,970 63,181 71,428 48,799
of the parent company

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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.

2. DISCUSSION AND ANALYSIS

2.1 LIQUIDITY RATIOS
Table 3: Liquidity Ratios of TAYA Company (%)

Year/Ratio 2020 2019 2018 2017 2016

Current Ratio 1,9 1,83 1,94 1,88 2,15
Cash Ratio 0,32 0,30 0,42 0,42 0,68
Quick Ratio 1,34 1,13 1,26 1,11 1,19

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.

2.2 CURRENT RATIO

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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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.

2.3 CASH RATIO

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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2.4 QUICK RATIO

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.

III/ FINANCIAL BENCHMARKING ANALYSIS

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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1. METHODOLOGY AND DATA

TAYA - Wire & Cable Co., Ltd CADIVI - Vietnam Power Cable JSC
  2020 2019 2018 2017 2016 2020 2019 2018 2017 2016
Profit
after
3.70% 4.30% 4.70% 3.50% 4.60% 3.00% 3.70% 5.40% 4.60% 4.70%
tax/Net
revenue
EPS 2330 2900 2060 2330 1590 13660 17140 13940 11320 8310
P/E ratio 14.97% 18.57% 14.16% 15.28% 11.24% 22.38% 30.89% 27.29% 25.46% 31.99%
Profit
before
tax/Total 6.10% 8.00% 9.70% 7.80% 8.20% 5.30% 7.00% 12.20% 11.50% 11%
assets
(ROA)
Profit
after
13.70% 15.00% 18.60% 14.20% 15.30% 22.40% 22.40% 30.90% 27.30% 25.50%
tax/Equity
(ROE)
Table 4: Market indicator analysis for the purpose of financial benchmarking

EPS (Earnings per Share)

18000
16000 P/E Ratio
14000
12000 35.00%
30.00%
10000
25.00%
8000 20.00%
6000 15.00%
4000 10.00%
2000 5.00%
0 0.00%
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

TAYA CADIVI
TAYA CADIVI

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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

Table 5: Market indicators analysis

2. DISCUSSION AND ANALYSIS

If learning, motivation and improvement are to be the result of benchmarking, it requires that
the causes for the performance gap are the focus of attention. [CITATION BAn95 \l
1066 ].
As a part for financial benchmarking purposes, we analyzed market indicators of TAYA and
CADIVI (Table 5) and came to various conclusions. Specifically, it is clear that the financial
market strongly values CADIVI, despite the fact that it changed its dividend policy and
reduced total shareholder return. A considerable percentage of earnings was kept by the
company, which is projected to contribute to its future growth and share value increase,
accordingly (which had shown in the years that followed).

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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performances cannot be considered an entirely reliable conclusion. After reviewing results

over the next few years, a more informed decision can be taken.

IV/ FINANCIAL DECISION

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.

  2020 2019 2018 2017 2016

Debt Ratio (L/A) 46.45% 47.58%  45.02% 46.68% 39.48% 
Equity Ratio (E/A) 53.55% 52.42% 54.98% 53.32% 60.52% 
Debt to Equity ratio 86.74% 90.77% 81.88% 87.55% 65.23%
Table 6: Financial leverage indicators

2. INVESTMENT AND DIVIDEND DECISION

Looking at the data of debt ratio (table 6), all of the ratios from 2016 to 2020 are less than
50%, which means that the assets of the business are financed mainly by equity. In theory,
the lower this coefficient, the less likely enterprises are to suffer financial troubles because
they are less reliant on debt to support their operations.

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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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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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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References
Andersen, B., & Pettersen, P. (1995). Benchmarking Handbook. London: Chapman
and Hall.

Other online soures:

https://cafef.vn/

https://vietstock.vn/

https://www.cophieu68.vn/

https://tinnhanhchungkhoan.vn/

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