Group 6 K15405

Introduction

Mobile World Investment Corporation operates under two distribution formats: the
“thegioididong” which means Mobile World, and “dienmay” which means Consumer
Electronics. With more than 1100 THE GIOI DI DONG stores , 500 DIEN MAY
XANH in the all 63 cities and provinces of Viet Nam and over 50 BACH HOA XANH
store in Ho Chi Minh City. By the end of 2016, VUIVUI.COM was created with the
mission of providing consumers with a safe, reliable and convenient online shopping
experience and competitive prices with nearly 40,000 diverse and varied products.

The Company through the years has been able to differentiate itself by offering a
superior customer experience thanks to our employees’ constant efforts to put the
customer satisfaction in the first place.

Our websites www.thegioididong.com and www.dienmayxanh.com have been

designed to enable a friendly and easy experience to meet the more diverse customer’s
needs.

Industry Analysis

1. Rivalry among Existing Firms

In market share of branded mobile phone chain

stores in 2015 accounted for 30% market
thegioididong section, followed by FPT 10%, 20%
other chains, other retail stores accounted for 40%.

Market overview, modern retail chains in Vietnam

only reached 25% compared to 33% - 60% in other
countries in the region. This proves that the residual
retail investment market share in Vietnam is still
very large. This is a big piece of cake that will attract foreign capital.

Competition from rivals greatly influences the MWG.

2. Threat of New Entrants

The fact that the electronics retailers are taking part in Vietnam's market share has led
to some resilient growth in Mobile World Investment. The Idieas, Ecoteck chain stores
appear, creating a new wave in consumer demand. High profitability in the retail
industry is always attractive to potential competitors.

Pioneering in retail technology: retailing on the laptop market expanding into the
products of phones, tablets, laptops, accessories, sim cards, scratch cards ...

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It is said that the most important factor that slows the penetration of foreign retailers is
the ENT (Economic Need Test).

The new subscriber does not affect too many MWGs, but somehow shows that the
potential for a reduction in sales revenue if not having an effective development
strategy

3. Threat of Substitute Products

MWG is in the best position to gain market share in consumer electronics and
consumer electronics market in Vietnam, MWG is also selling online.

General characteristics of the store Thegioididong.com and Dienmayxanh shop are the
electronic items business, the essential products, the characteristics of all of them are
human needs, almost no substitute products. minus buy and sell online.

The threat of substitute products is negligible.

4. Bargaining Supplier’ s Power

Providers will have preferential policies with MWG when they find that MWG is
distributing their products well.

High-end manufacturers such as Apple and Sam Sung are trying to find intermediaries.
By selling products directly, providing reliable after-sales services to establish brand
loyalty. brand. Just as they are gradually able to dominate, simply because their partner
does not have many options to replace that provider.

Vendors have considerable strength in the market and significantly affect the MWG.

5. Buyer ’s Power

Vietnamese consumers, in general, are very sensitive. They will look at the price
difference on the market of each business when selected. The development of the
internet age with the rise of all classes in Vietnam has recently spurred demand for
quality products and after-sales services, so to create a sales policy to attract
customers. Aviation is only a problem for the MWG but also for the industry.

The buyer's MWG buyer power is quite large.

Differentiation Strategy

High quality and brand image are key success factors for a large retail company.
MWG distinguishes itself by offering a unique product that makes a difference in

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creating the brand image of the company that provides high-tech digital products in
Vietnam of international stature. Having created credibility and built up trust with
customers. In addition, the expansion of the distribution network covers all provinces
and cities, making TGD more and more close to consumers.

Marketing strategy with the active support of diversity: Beside business activities,
MWG constantly creates super promotions to customers, programs to exchange
products, security. products for customers.

SWOT Analysis

Strengths Weakness

+ The system of infrastructure, equipment + The growth of MWG can be reborn due
and modern technology to continuous market share expansion.

+ Wide supply chain, biggest market + The price of old version good will be
share, reputable brand reduce for sold

Oppportunities Threats

+ The potential growth of the industry + Faced with the risk of control by
because trends of consumer technology foreign business
direction of Vietnam is increasing
+ Risk of current exchange rate when
import goods

+ The speed growth of competitive

entrants

Accounting Analysis

1. Identify Key Accounting Policies

MWG operates two retail chains, Thegioididong.com and Dienmayxanh.com, which

have maintained a stable and steady growth over the past few years, maintaining their
position as the No. 1 electronics retailer in Vietnam. Diversify the products to serve
customers throughout the country with high quality service, guaranteed and many
customer care policies (warranty, repair, ...)

Mainly in the accounting policy of the MWG is inventory because this is a company
specializing in selling a variety of goods to avoid loss. The Company had to develop
and implement appropriate and rigorous accounting policies for regular and stronger

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monitoring to help control and manage the actual situation of the goods as well as
prices.

2. Assess Accounting Flexibility

The Company uses straight-line amortization method over its estimated useful life.
This makes it easier for the company to calculate, but the depreciation calculation will
not be accurate for the benefit of the carrying amount again.

When setting up inventory discounting, the company sorts out products by different
methods of calculation, but when calculating the total cost will be inaccurate because
of different calculation methods.

The Company has not specified the policy for applying the provisions for
contingencies and bad debts. Expenditures such as research, maketing, training costs
have a specific cost. The majority of MWGs focus on increasing sales at chain stores
and managing inventory. Managers come up with solutions to mistakenly control
shopkeepers.

Managers and employees have sales pressure at their stores so they promote better
customer care policies than their competitors. In the company's financial statements,
the bonus is quite high for revenue targets.

3. Evaluate Accounting Strategy

MWG recognizes revenue and expenses on Accrual Accounting. The company’s

accounting strategies remaining consistent and unchanged. This indicates that there is
not a substantial amount of manipulation in reports to inflate revenues or deflate
expenses.

Inventories are stated at the lower of cost and net realizable value. Cost is determined
on the straight-line basis over the estimated useful life of the asset. The method of
regular declaration should reflect the correct inventory.

4. Evaluate the Quality of Disclosure

MWG is encouraged to disclose the most judgmental estimates and accounting

policies they used. The company also discloses The Management Discussion and
Analysis section of the annual report is fairly adequate, including an explanation of
many of the largest research and development expenses, capital, lease commitment
and cost element incurred during the period.

MWG announces forecasts for 2017 business results. The prospects for the future are
good although earnings may grow slower. Continuing to evaluate the qualities.

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Revenue was 4% higher than forecasted at 66,773 billion VND (+ 43% ) while profit
after tax was almost equal to forecast of 2,011 billion VND (+ 40%).

5. Identify Potential Red Flags

MWG uses depreciation policies in accordance with the circular, but not necessarily in
accordance with actual use of the MWG. During the year, MWG increased sales and
inventory of demand for assets, especially transportation. Although fixed assets
increased as depreciation increased in proportion. The depreciation policy of MWG
does not accurately reflect the asset life cycle. Therefore, the profit of the MWG is
hidden.

Inventory: MWG applies nominal and weighted average method. But use inventory
controls with FIFO for each type of inventory. In addition, MWG controls very closely
the goods of the ERP system. In 2017, the financial report showed inventory increased
1.3 times, compared with 2016 but shipments fell 3.5 times. Too much inventory has
led to a reduction in inventories next year based on MWG products. Therefore, it does
not reflect the actual sales to the customer. Because the discount of the goods will be
collected from the suppliers. But MWG is expanding its stores, increasing inventories
is understandable because of the increase in MWGs for suppliers.

Revenue increased 1.5 times, and inventories increased 1.3 times but receivables from
suppliers increased 1.9 times. Thanks to the price protection policy of the supplier.
Adding multiple MWGs can set a new costume to increase AR. In addition, the scale
of the increase should buy more and quickly pay off the short-term loans, so MWG
collected commercial discounts. It is possible that the AR factor increases from the
supplier is reasonable for the current situation of the MWG.

R & D: MWG is developing a green supermarket chain strategy and shopping site
VUIVUI.COM. MWG is very focused on R & D.

Consolidate financial statements of all wholly owned subsidiaries. This helps users
with an overview of the financial situation of the company, but it also cause ambiguity
about the profits and losses of subsidiaries.

6. Undo Accounting Distortions

After careful consideration of the financial statements, financial statements and

analysis of accounting policies, the accounting data of the MWG is reasonable;
Information is subject to Circular 200/2014 / TT-BTC and not distorted accounting.
There are no signs of exaggeration or misunderstanding of any part of the Financial
Statement.

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MWG is audited by Ernst & Young Viet Nam Ltd. The results of the audit indicate
that the financial statements and the accounting policies of MWG accurately and
reasonably reflect the financial position of the company.

Financial Analysis

1. Longitudinal analysis

2016 % 2017 %
Current Asset 12.288.142.407.269 82.72 18.862.861.306.281 82.65
Non- current Asset 2.566.120.825.722 17.28 3.959.802.908.939 17.35
Total 14.854.263.232.991 100 22.822.664.215.220 100
Equity 3.841.357.726.363 25.86 5.908.916.335.215 25.89
Short-term 11.012.905.506.628 74.14 15.713.814.885.175 68.85
Liabilities
Long- term - - 1.199.932.994.830 5.26
Liabilities
Total 14.854.263.232.991 100 22.822.664.215.220 100

Because MWG is a company in the retail industry, Asset now has a share in Total
Asset, especially Inventory. In 2017, there was a significant expansion of the MWG
with the increase in Current asset, especially Cash and Cash Equivalents, which hold 3
times more money than last year. In addition, they also invest in non-current assets,
buy more and perform maintenance to improve the efficiency of these machines. The
ratio of two years to the asset does not change much.

On the other hand, the shareholding ratio has changed insignificantly from 2016,
suggesting that the MWG is still developing resources to dominate the market while
reducing its current debt ratio. In 2017 there will be the appearance of future debt.

2. Horizontal analysis

2017 2016 % changes

Inventory 12.050.162.650.982 9.370.731.749.778 + 28.60
Trade Receivables 2.765.847.815.554 1.410.642.874.572 + 96.07
Cash and cash 3.410.983.351.393 996.983.462.012 +242.13
equivalent
Trade payables 7.395.705.168.000 4.700.083.323.026 + 57.35
Taxation 137.421.612.285 152.824.005.918 - 11.21
Short- term 5.603.505.990.526 4.788.991.746.757 + 17.01
borrowings

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In general, 2017 is expected to grow but not significantly in comparison with 2016,
which is a stable stage of the retail chain of the company. It is noteworthy that the
money and cash equivalents that the company now holds three times, the high bar
count is also the advantage and disadvantage of the company in the future.
Payments from high providers, the company needs a solution to pay these debts. As
well as receivables doubled over last year, the company needs to recover those debts.

3. Analysis ratios

Industry
2015 2016 2017
Median
Analysis of Return Profitability
ROE 23.0% 54.1% 49.9% 45.3%
ROA 11.7% 20.3% 14.1% 11.6%
ROI 7.9% 43.5% 43.0% 36.0%
Gross Profit Margin 17.3% 15.5% 16.2% 16.8%
Net Profit Margin 7.9% 4.3% 3.5% 3.3%
Operating Profit Margin 8.8% 5.4% 4.5% 4.2%
Analysis of Efficiency
Total Asset Turnover 1.44 4.73 4.03 3.52
Fixed Assets Turnover 9.24 39.42 29.55 23.60
Analysis of Working Capital
Inventory Turnover 8.4 6 5.2 5.2
Receivable Turnover 11.7 60.7 45.3 30.6
Day outstanding in acc. receivables 31.2 6 8.1 12.0
Day payables outstanding 27.0 25.3 32.5 40.0
Liquidity Ratios
Current Ratio 1.37 1.29 1.12 1.20
Quick Ratio 1.17 0.26 0.26 0.43
Cash Cycle ( Days) 53.9 41.9 45.5 43.0
Solvency Ratios
Debt to Equity 0.42 0.83 1.25 1.15
Asset/Equity ratio 2.69 2.93 3.87 3.86
Long-term debt to equity 15.0% 0.0% 0.0% 9.4%
Times interest earned 2.8 36.0 17.8 12.8

a) Analysis of Return

Compared to the industry average ROA of 11.7%, MWG's ROA 2017 is 11.6%, a
reasonable margin indicates that asset utilization to generate pre-tax revenue is quite

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effective compared to Competitors of the same industry. Compared to the 2015-2016,

it can be shown that in 2017 enterprises have a large amount of total assets, leading to
a much lower ROA in 2015, but it is somewhat Reflecting the use of total assets to
generate revenue in 2017 is less effective than in previous years.

The ROE of the MWG is two times higher than the industry average (23%) and ranges
from 45.3% in 2017, suggesting that the company uses equity capital effectively.
Enterprises have balanced harmony between shareholders' capital and borrowed
capital to exploit competitive advantages in the process of capital mobilization and
expansion. The high ROE, the MWG stock is extremely attractive to investors for
several years.

b) Profitability Analysis

Gross Profit Margin: stable, approximately 16% in years, shows no signs of abnormal
selling price as well as revenue. stable operation, no signs of fraud or errors.

Net Profit Margin. After deducting tax expense, the net income of the business falls to
about 3 to 4% of net sales. This ratio is only half of the industry average, suggesting
that if net income is to be generous, the net revenue generated on total assets must be
large enough to offset net income. industry average.

Operating Profit Margin. The industry average depreciation level is about 2.3% of net
sales, while the MWG is approximately 0.9%. It shows that enterprises use less than
other companies at depreciation expense, meaning the use The long-term assets in
generating net revenue.

c) Analysis of Efficiency

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The average total asset turnover over the three years from 2015 to 2017 is 2.84 times
higher than the industry average, which means that the company's assets are used in
the most efficient production and business activities. fruit.

Fixed asset turnover, although this ratio has fallen over the years and in 2017 is 23.6
but much higher than the industry average of 9.24.

d) Analysis of Working Capital

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Group 6 K15405

The Inventory Turnover Ratio of 2017 is 5.2 times that of 2016 but lower than 2015.
This factor is lower than industry average, showing long-term inventory before being
sold; Specifically 2017 is 71 days and 2015 is 61.2 days.

Receivable turnover, the company's index fell from 60.7 in 2015 to 30.6 in 2017.
However, it is many times higher than the industry average of 11.7.

Day payables outstanding, compared to the industry average of 27, the company has a
higher ratio and increases over the years from 32.5 in 2016 to 40 in 2017. The high
pay conversion period means that the company has Good deal with suppliers and have
the ability to stretch the payment time to the seller.

e) Liquidity Ratios

Quick Ratio, compared to 2016, the Quick Ratio index is in excess of 0.08 in 2017.
2017 has a sector average exceeding 0.03, which is not a concern of the MWG but in
the future MWG should promote to the fast pay of the company.

The current MWG's current payout ratio in 2017 is significantly higher than 2016 at
1.17. Compared to the industry average, 2017 is 1.20, while the industry average is
1.37, 2.0 - 3.0 is the best, but 2017 MWG is 2.0, this indicator is low. Difficult to
implement the obligations of the company.

Cash ratio: Through the data, the 2017 cash index is 2.5, which is lower than 2016,
reaching 43.0, far behind the average of 53.9, which is worrying for the MWG.

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f) Solvency Ratios

Debt / Equity Ratio: relatively high compared to industry average 0.42. This means
that the company usually approves debts to pay for its operations, resulting in unstable
income because the company pays the interest. If the company has too much debt, it
will have to pay the cost. The interest is higher than the profit it brings.

Asset / equity ratio is much higher than the industry average of 2.69. This indicates
that the company has borrowed heavily to maintain the firm's effective use of the loan
portfolio. borrow this.

Long-term debt / equity ratio: 0% for two years 2015,2016; and in 2017: 9.4 is lower
than the industry average of 15% indicating that the company is primarily a short-term
loan.

g) Analysis of Leverage

2015 2016 2017

Leverage 2.93 3.87 3.86

The high leverage of the MWG will cause high interest rate risks next year. Growth
model is not sustainable. Compared to 2017, there is a slight decrease, but high
leverage has reduced the cost of capital.

Conclusion

The Board of Directors will submit its business plan for 2018 with an expected
revenue of VND 86,390 billion, up 30% 2017 and expected net profit of VND 2,603
billion, up 18% 2017. With the business policies and strategies of the company can see
the MWG has been on track with the specific goals and plans and best suited to the
interests of the company. That is the annual increase in profits, the expansion of the
market segment. Specifically, Mobile World Investment Joint Stock Co (coded MWG)
released a summary report on its business results in January 2018 with sales of VND
7,861 billion, fulfilling 9% of the full year target (86,390 billion VND) and achieved a
growth rate of 15% over the same period of 2017. After-tax profit reached VND 300
billion, fulfilling 12% of profit target set for the whole year. The mobile phone market
posted a net profit of 938 billion dong, fulfilling 9 percent of sales and 119 percent
growth over the same period. Can see, in the future MWG will develop further.

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