I Introduce about: Thanh Cong Textile Garment Investment Trading JSC * Thanh Cong Textile Garment Investment Trading JSC 36 Tay Thanh, Tay Thanh ward, Tan Phu district, Ho Chi Minh city Phone: +84 (8) 381-53962 Fax: +84 (8) 381-52757 E-mail: tcm@thanhcong.net During the 30 years constantly evolving to enrich themselves and contributing to state budget, Thanh Cong Textile Garment Investment Trading JSC overcome the strong waves of Textile enterprises in the country The same the equitization process business, with the desire to give domestic consumers TCM product line represents the high-end cotton has brought pride brand, mark Success in export markets; dynamic outfit TCM, is returning to the field, who love fashion consciousness COMPANY HISTORY + Thanh Cong Textile Garment Investment Trading JSC star as a small private textile company which name “ Tai Thanh Ky Nghe Det” was foundation in 1967 - On Agust, 1976 was taken over by the Government and turned into state –owned enterprise with name Tai Thanh Textile Factory, then turn was renamed Thanh Cong Textile Factory, Thanh Cong Textile Factory and in 2000 was renamed Thanh Cong Textile Garment Investment Trading JSC - 07/2006, conversion into the active form Thanh Cong Textile Garment JSC -10/2007, The Company listed on the Stock Exchange, Ho Chi Minh City - 5/ 2008, Company changed name Thanh Cong Textile Garment Investment Trading JSC - 4/2009 E-land Singapore group becoming strategic partners and participating companies operating BUSINESS - Manufacturing sector and Traditional business: Manufacturing and trading products of spinning, weaving, knitting, dyeing and garment, 1|p a ge - Other field of activity: Investments in securities, real estate, travel, Real Estate, industrial, warehouse, commercial, housing, raw materials import and export, machinery, textiles, Textile-garment industry equipment SPECIFIC + Garments, shoes production + Fiber production + Fabric production + Buying and selling cotton, fiber, Fiber, machinery, equipment, spare parts, accessories materials, supplies, materials, chemicals, dyes, textile packaging, Buying and selling refrigeration equipment, air conditioning, computer, radio - recording, construction materials, transport + Cotton, fiber, fiber production + Buying and selling fabrics, garments, shoes + Machinery and equipment repair + Machinery and equipment rent + Preparation of civil engineering projects and industrial infrastructure of industrial parks, tourist resort + Installation of other building systems + Installation of civil and industrial infrastructure in the tourism industry + Installation of machinery and industrial equipment + Commercial Brokerage, purchasing agent, consignment + Freight transport by road + Construction and repair of civil and industrial infrastructure of industrial parks, tourist resort * Position of company - Company has advantage about closed production line The most major active in the processing and sewing fabric material imports, the TCM has developed an integrated production process from yarn production, weaving, knitting, dyeing and sewing TCM is strength compared with competitors, helping companies control cost and quality of output With the support of strategic partners in the E-land 2|p a ge management, TCM has adopted Balanced ScoreCard model and management system ERP human resources Therefore, TCM helps improve credibility with customers and consumers - High production capacity Compared with the listed companies in the same industry, TCM is unique business to have the ability to meet the needs 100% cotton for your business In addition, TCM is also now capable of manufacturing exports and the industry is the largest High production capacity is the basis for TCM can get large orders and extended customers - Diversification.export market: Consumption market of TCM is quite diverse and not dependent on a single customer or a major market, thereby helping to reduce the risk TCM market volatility and pressure on prices and delivery time from our customers large TCM's main products are T-shirt pants, an outfit so popular is less affected by seasonality and economic cycles, so the company's output is relatively stable compared to some other companies produce items such as jackets or shorts ORGANIZATION STRUCTURE: 3|p a ge PARTNERS CLIENTS: 4|p a ge II Overview about TC1 Tower real estate projects Necessity of the project - Thanh Cong Textile Garment Investment Trading JSC has now leading enterprise in Vietnam in the textile industry The company has large-scale asset the advantages of and equity and closed production lines and is the only company with the ability to provide 100% cotton needs to operate its business Leveraging on the advantages, business operations of the company last year effectively therefore needs to expand the scale of production is a matter of business necessity today May, 27th, 2013, Thanh Cong Textile Garment Investment Trading JSC (TCM) signed a memorandum records on cooperation with E-land Asia Holdings company to develop TC1 Tower real estate projects on 9.898,3 m2 land area located at Tay Thanh ward, Tan Phu distric, Ho Chi Minh city Accordingly, the two sides will establish a joint venture company to directly manage and develop the project consortium of commercial service center located at the 1st floor to the 5th floor, the apartment complex from level to level 14 , with 385 5|p a ge apartments is expected to establish a joint venture to be completed in 2013 and began construction of the project in 2014 As planned, the project will be done by ELand Construction – is unit which has a lot of experience implementing large projects in Korea Perspective of TC1 Towe real estate project: The goal of project - Investment in construction projects will bring business efficiency high, increasing assets and profits for the company At the same time increasing business scale, keeping the leading position of the business sector - Create jobs for over 1,000 local workers, contributing to local economic development 6|p a ge - With this project the company desired customers have experienced the true standard of residential culture and enjoy the happiest time with his family Investment type Investment in new building Investment scale The project realtime: 24 months (Estimate) Area: 9.898 m2 Location: Tay Thach ward, Tan phu distric, Ho Chi Minh city Plan: Residential (Apartments) Progress: Construction procedures stage TC1 Tower is built on has an area of land is 9.898,3m2 located at Tay Thanh ward, Tan phu distric, Ho Chi Minh city This project has been started from 11/2007 the name Thanh Cong Tower and a total investment of over 400 billion with blocks: have apartments block and public block, basement is area supermarkets, parking Investment capital - Investment capital for the project was raised from two sources are retained earnings and issuance of bonds with conversion In that: 150 billion raised from retained earnings 250 billion raised from issuing bonds have conversion Construction time and the project payback period - The construction time of project expected 24 months The project is stage procedure construction Accordingly, the two sides will establish a joint venture company direct management and project development for the purpose of trade and service center combining condominiums Expected that the establishment of the joint venture will be completed in 2013 Stage from the project starting point is on 11/2007 and funded from retained earnings Stage is expected to begin from 3/2014, funded by capital raised from the issuance of conversion bonds The time for finished and put into operation the project is on 3/2015 The project was put into operation and payback period is years after Operating efficiency of project 7|p a ge - By the cost calculating average the project (WACC) and internal rate of the project profitability (IRR), we can evaluate the project performance * The average capital cost + Cost of using and retained earnings: +g = + 5% = 16.03% In that: + D1: expected dividend received last year 2013 + P0: Year-end stock price in 2012 +g: Regular annual dividend expected growth consistent + The cost of borrowed funds by issuing bonds: 15% x 0.75 = 11,25 % (Assuming the cost of issuing bonds before tax is 15%, the tax rate is the corporate income tax 25%) Average capital cost using: x 16.03% + x 11,25% = 16.65% * Profitability ratio internal: Turnover equity entire = Net income / Average Capital In that: Average business capital = 400 billion Turnover equity entire = 1.136 So that: net sales = 2009 * 1.136 = 454.4 billion đồng (số liệu 2012) * Expected net sales growth: Unit: billion Target 1.Net sales First year 490 Second Third Fourth year year year 540 653,4 849,42 Fifth year 1200 (Data is expected on the assumption of the first year of operation revenue growth at a low level and after years of operation, the company will expand the market and growth rate of consumption is higher) * Estimate variable cost: 60% sales (cost basis data on revenue 2012) 8|p a ge * Estimates eepreciation time: ten years (accordance with Circular 203/2009/C -BTC, businesses amortized straight-line method) Net sales from sale goods and services Working capital turnover = Average working capital In that: Net sales: 490 billion Working capital turnover: 2,5 round So that Average working capital : 490: 2.5 = 196 billion Assuming short-term financial investments in equal Lead to short-term assets = working capital = 196 billion  Long-term assets = 204 billion Accounting estimates balance sheet Unit: billion Assets Money Short-term assets 196 Long-term assets 204 Total sum 400 Revenue table - estimates cost Capital Payable debts Equity Capital plus Money 250 150 400 Unit: billion Target First year Second Third year Fourth year Fifth year year 1.Net sales 490 540 653,4 849,42 1200 Variable costs 294 324 392,04 509,65 720 Interest 37,5 37,5 37,5 37,5 37,5 Depreciation 20.4 20.4 20.4 20.4 20.4 Other fixed costs 30 30 30 30 30 Tax before profit 108.1 128,1 173.46 251.87 392.1 9|p a ge Tax after profit 81.075 96,075 130.095 188.901 294.075 The expected cash flows Unit: billion Target First Second Third Fourth Fifth year year year year year II Cash inflows 101.475 116.475 150.475 209.3 314.475 Net cash flow from 101.475 116.475 150.475 209.3 314.475 a.Net sales 490 540 653,4 849,42 1200 b Production costs 432,5 464,9 500,54 618,25 828,5 - The variable costs 294 324 392,04 509,65 720 - Depreciation expenses 20.4 20.4 20.4 20.4 20.4 - Interest 37,5 37,5 37,5 37,5 37,5 - Other fixed costs 30 30 30 30 30 - Tax before profit 108.1 128,1 173.46 251.87 392.1 - Tax after profit 81.075 96,075 130.095 188.901 294.075 101.475 116.475 150.475 209.3 314.475 I Cash outflow 400 Fixed assets 204 Mobile Assets 196 Target business operating Cash flow from received from liquidation Cash flow from working capital recovery III Annual net cash flow (400) + In that: - Interest expense: 15%*250=37.5 (billion) - Amortized on a straight-line depreciation 20.4 (billion / year) 10 | p a g e - The variable costs 60% revenue - Other fixed cost (sales, business management, advertising and marketing costs ) is calculated based on the fee scale which corresponds) Average capital cost: WACC = 16.65% CFo = 400 NPV = 101,475 116 ,475 150,475 209,3 314,475      400 (1  16,65%) (1  16,65%) (1  16,65%) (1  16,65%) (1  16,65%) = 40,98 (billion) >0 Calculate IRR Choose r1 =23 % NPV1 = 43.5 billion Choose r2 = 28% NPV2 = -8.38 billion | NPV1 | IRR = r1 + (r2 – r1) | NPV |  | NPV | = 23% + (28% - 23%) | 43.5 | | 43.5 |  |  8.38 | = 27.2% From the above calculation shows that the internal rate (IRR = 27.2%) is greater cost capital (WACC = 16.65%), the upcoming projects will achieve high efficiency Raising capital from bond issuance is converted - Convertible bonds are bonds that can be converted into common shares of the same issuer under the conditions defined in the issuance corporate bonds are issued and denominated Vietnam - TMC Company is fully qualified in accordance to raise capital through the issuance of convertible bonds As enterprises are allowed bond issuance (corporate form: joint-stock company) There is a minimum uptime of 01 years from the date of official business in operation 11 | p a g e There are reports of the financial year the year of issue audited Results manufacturing operations, business year preceding the year of issue to be profitable There are issuances bond method through organizations or individuals authorized Specifically, the mobilization of investment capital for this project through the issue of convertible bonds as follows: - The purpose bond issuance: raising capital for investment projects TC1 - Industry and business areas of the company: production and sales of traditional products fabric, fiber, weaving, dyeing, garments, textile raw materials - Subjects issued Release for strategic partners - Payment method: one-time payment along with principal amount at maturity - Denomination bonds: 5.000.000 dong - Bond interest rates : 15% - Issue volume : 50.000 bonds - Issue time : 8/1/2014 - Maturities time - Conversion time : 8/1/2017 - Conversion rates : 8/1/2017 : bonds change 100 shares Accordingly TMC firm commitment: Using money from the issuance of bonds for the purpose of commitments with investo Payment in full and timely principal and interest upon maturity bonds To fulfill disclosure obligations and is responsible for the accuracy and truthfulness of the information published To fulfill its commitment to responsible underwriting organizations, issuing agent, paying agent and organizations authorized bond auction Perform financial management mode, accounting reports and statistics according to prescribed of law III Overview about financial position of the business: To assess financial viability of business in project implementation to consider a number indicator about revenue, profit after: 12 | p a g e REVENUE 2010 2011 2012 1st Quarter 419,57 billion 630,76 billion 538,46 billion 2nd Quarter 442,68 billion 576,12 billion 708,48 billion 3rd Quarter 509,23 billion 509,45 billion 520,53 billion 4th Quarter 521,26 billion 478,45 billion 516,04 billion Total 1.892,74 billion 2.194,77 billion 2.283,50 billion The chart: revenue growth over the years PROFIT 2010 2011 2012 2013 1st Quarter 29,17 billion 73,13 billion -13,89 billion 22,63 billion 2nd Quarter 21,40 billion 54,65 billion 14,76 billion - 13 | p a g e 3rd Quarter 44,14 billion 1,90 billion -541,73 triệu - 4th Quarter 72,15 billion -16,72 billion -19,22 billion - Total 166,86 billion 112,95 billion -18,89 billion 22,63 billion The chart: profit growth over the years GROWTH (DATA ON QUARTER 1/2013) Quarter nearest Q.nearly two Four Q One year Three year Revenue 1,42% 7,86% 8,97% 4,04% 29,36% Profit -262,96% 14,96% -32,05% -116,72% 52,93% Basis EPS -260,90% 13,47% -33,38% -117,99% 35,81% diluted EPS -260,90% 13,47% -33,38% -117,99% 35,81% Assets total -1,31% -4,26% -2,71% -4,26% 5,08% 14 | p a g e Thus we can identify the following: Generally, The company's revenue stability over the years, especially the business results of TCM in the first months of 2013 was impressed by the significant growth in profits Gross profit margins through improved strength, the company's profit after Tax increased over the same period last year Previously, in order to ensure the production of raw materials and reduce the risk of price fluctuations, TCM has applied to buy 70% of the cotton futures market and 30% in the futures market However, with large price fluctuations in 2011 has affected the operations of the company, leading to consequences that TCM has the right amount of inventory decision-high cotton prices during the past period Cotton inventories fell much appreciated help margins of 40% fiber products improved from negative revenue len7% With changes in the current stable, we can trust completely on the break in the business results of TCM in the near future In order to expand production and meet domestic demand as well as exports, the company has invested some new washing machines and dyeing machines, expected to complete the installation and put into use in July and May 8/2013 to outsource and reduce production cost savings Besides, the company also plans to expand further production lines in the future to increase the productivity of the garment industry, contributing to revenue growth and profitability for the company A SOME FINANCIAL RATIOS AT PRESENT TIME OF COMPANY Valuation P/E 42,19 P/S 0,30 P/B 1,24 EPS 336,61 Financial Strength Quick payment Current payment 15 | p a g e 0,37 0,99 Debt Total / equity 1,67 Debt Total / Total Assets 0,67 Ability to operate 1,14 Asset total turnover Inventory turnover 3,45 Receivables turnover 9,52 Profit ability 8,98% Gross margin Interest rate from business operating 0,49% EBIT rate 3,07% Net interest rate 0,77% Management Efficiency 0,88% ROA ROE 2,60% ROIC 6,06% Stock prices comparing and market value of the company compared to other firms in the industry: Volume Price Change EVE 1.560 19,30 0,52% GMC 4.190 22,00 0,00% HDM 300 19,20 0,00% NPS 17,60 0,00% 16 | p a g e PTG 4,20 0,00% It can be seen, stock price of TCM has being tends to increase, with the development situation and business results in the past month in 2013, investors can be fully assured and confidence in the feasibility as well as the proceeds derived REFERENCES Eugene F.Bringham, Joel F Houston Florida of University PGSM Documentation for internal circulation Slide lecture of Dr.Nguyen Van Dinh Website: http/cophieu68.vn Share Code of Thanh Cong Textile Garment Investment Trading JSC on HCM trading floor 17 | p a g e ... company desired customers have experienced the true standard of residential culture and enjoy the happiest time with his family Investment type Investment in new building Investment scale The project... service center located at the 1st floor to the 5th floor, the apartment complex from level to level 14 , with 385 5|p a ge apartments is expected to establish a joint venture to be completed... a ge PARTNERS CLIENTS: 4|p a ge II Overview about TC1 Tower real estate projects Necessity of the project - Thanh Cong Textile Garment Investment Trading JSC has now leading enterprise in Vietnam