Project investment MDF manufacture of SAHABAK JSC CHAPTER I.OVERVIEW OF PROJECT : OBJECTIVES, PRODUCTS, MARKET I LEGAL DOCUMENTS The legal documents of project II PROJECT OBJECTIVES Vietnam's economy is growing strongly, driving demand for investment in building infrastructure for the country is also increasing The craze of building materials including artificial boards, especially MDF still occur every year, as the demand is huge Although manufacturing industry of our country based panels have the remarkable developments in statistics but a large MDF still has to import large quantities each year Through market research shows that our country's annual import MDF from Malaysia, Thailand, China, Indonesia, New Zealand Etc The project SAHABAK Corporation founded with the goal of: Building MDF manufacturing plant with advanced prices reasonable for the industrialization and modernization of the country Page 1 / 29 Creating materials for interior decoration industry, instead of natural wood, contributing to reduce deforestation Creating valuable goods, contributing to local economic development, creating jobs for local workers III PRODUCTS AND TARGET MARKET OF PROJECT 1 Main products of project and purpose of using MDF (Medium Density Board) of wood artificially high mechanical strength, large size, suitable for furniture production technology in the interior tropical climates Fibreboard is widely used in many fields of manufacturing furniture, interior decoration and construction MDF is produced through the process of shredded wood fibers pressed, crushed and mixed glue, the proportion of 520-850kg/m3, depending on quality requirements, raw material, thickness On the market there are 3 main types: plain, water-resistant, melamine plain MDF is the most common type, often using veneer, paint or PU coating Also waterproof MDF belong plain MDF category, water-resistant adhesive is mixed in the production process, often used in areas where exposure to water or high humidity such as doors, indoor furniture, melamine kitchen cabinets MDF: MDF sides are coated with melamine to create beauty, moisture and scratches 2 Specification of products Dimensions: (W x L): 1,220 x 2,440 mm Thickness: From 9 → 22 mm Product was achieved by Vietnam standards and European standards (Euro MDF Board (EMB) Standard, 1995, the Third Edition) The standards board E1, E2, CARB 3  Segment market of products: The project's main client is the furniture manufacturing business, especially companies need high-quality MDF, consistent standards for the production of furniture exports Client projects include importers MDF in regional markets such as Japan, Korea, India Page 2 / 29 IV   ESTIMATED   PRESENT   MARKET   SIZE   AND   FORECAST   FUTURE DEMAND  1 Domestic Market Assessment: 2013 According to statistical data, in 6/2013 on imports of MDF Vietnam reached 34 thousand m3, valued at $ 9.1 million, down 16.2% in volume and 24.5% in value compared the previous month Overall, in the first 6 months of 2013, imports of MDF in Vietnam reached 193.4 thousand m3, valued at USD 55.1 million, down 24.8% in volume and 32.6% in value compared the same period in 2012 Prices of imported MDF Vietnam average 6 months USD/m3 at 285.2, down 32.92 USD/m3 compared to the same period in 2012 Through data analysis above shows that the demand for MDF in the domestic market is huge and keeps growing Moreover, the ability to meet the needs of the business market in the country is not enough SAHABAK Company firmly believes that the company's products will have a place in the market Firstly, the market is so large that domestic firms do not produce enough Second, the company's products superior in quality, have increased resistance to moisture and fire through the application of state–of–the–art technology, the most advanced available today 2 Analysis of competition of domestic: : a) MDF GERUCO Quangtri Company Capacity: 70,000 m3 Lines and equipment purchased by the German group Metso supply, installation and technology transfer The average selling price in 2007: 245 USD/m3 b) MDF Kim Tin Factory Capacity: 160,000 m3 Equipment lines: China 50% active power c) Vina Eco Board Co (VECO) Capacity: 250,000 m3 Lines of Dieffenbacher from Germany, 80% active power Page 3 / 29 d) Ý Mỹ JSC MDF Capacity: 120,000 m3 Lines: Dieffenbacher Germany, is preparing production There's also a number of other plants are also in the process of implementing the project as forestry company in May in Nghe An, Hoa Binh Tan An Factory Page 4 / 29 CHAPTER II TECHNOLOGY AND PRODUCTION PROCESS: I SUMMARY CHART PROCESS TECHNOLOGY:  Page 5 / 29 Layout of technology II CAPACITY OF LINE: Page 6 / 29 The total line capacity of 360 m3/day (108,000 m3 per year with 300 working days) and are perfect for the game with the thickness of 16mm, operating 3 shifts / day (7.5 hours per shift) , with a minimum operating time of the day is 22.5 hours Capacity of lines depends on the thickness of each product, and is calculated as follows Thickness Final board (mm) Rough boar (mm) 9,0 10,0 12,0 16,0 19,0 22,0 10,9 11,9 13,9 18,1 21,1 24,2 Density kg/m3 780 – 820 770 – 810 760 – 800 740 – 780 735 – 765 720 - 760 Capacity m3/day 300 330 350 360 320 300 III EQUIPMENT LIST: (Summary of Main categories) Amount No 1 2 3 4 5 6 7 Name of Equipments Wood chip preparing systems Wood fiber prepare systems Mat former system Hot press system Cutting and Sanding systems Energy Center Systems Adhesive Metering system Auxiliary system: dust, compressed air, ( USD) 954,457 8,766,820 5,407,075 9,514,958 1,586,531 2,044,863 634,613 pumping, transporting, storage tanks, 8 electrical cabinets Total 6,419,459 35,328,775 V THE TOTAL VALUE OF EQUIPMENTS : (Reference: Quotation equipment supplier Dieffenbacher) The total value of equipment: 35,328,775 USD EXCHANGE RATE : 21.200 VNĐ/USD The total value of equipment in VND : 748,970,030 ( x1000) (a) IV SPECIFICATION OF MATERIALS, ENERGY: 1 Main Material: Page 7 / 29 CHAPTER I Specification timber: Type of wood: Log timber Density: 650 to 1.000 kg/m3 Moisture contents: 60% Minimum - Maximum 100% Dimensions: Length: 1,000 mm Minimum - Maximum 3.000 mm Diameter: Min 40 mm - 160 mm Maximum Other conditions: No mixed metal, stones and other impurities CHAPTER II Supplier: Factory is expected to put in Thanh Binh Industrial Zone, Cho Moi District, Bac Kan province, bordering the province of Thai Nguyen, Cao Bang, Tuyen Quang, this is an area of planted forest area (acacia leaf eucalyptus ) of the country's largest Plant material is located in the active material advantage and transportation costs of raw materials 2 Resin and Additives: CHAPTER I Resin : Using liquid urea-formaldehyde glue In the first phase, the plant using UF glue of of domestic suppliers Second phase will invest in plant production system to actively glue CHAPTER II Additives: Using Ammonium sulfate (sulfate Anmoni) (NH4) 22SO4 decomposition in water CHAPTER III Hexamethylen Tetramine and/or Urea: Chemical buffering agent to decompose in water quality depends on the speakers using glue and pH levels in the water Chemical formula of hexamethylen Tetramine: (CH2) 6N4 Page 8 / 29 CHAPTER IV Paraffin: Wax special, maximum oil rate of 3% CHAPTER V Supplier: The resins and additives mentioned above are the chemical companies in Vietnam to import the timber industry to serve 3 Energy : CHAPTER I Electricity : 380/200 V/ 50 (+/-1) Hz Electrical power is provided by the zone and ensure the electrical requirements for the project To maintain continuity of operation of the project, the investor is also fitted with backup generators CHAPTER II Water: Pressure: 2x105 Pa, Water quality: pH 6.5 - 8.5 Water provides water use by industrial parks have satisfactory properties of the chain 4 Consumption raw materials, energy projects: For ease of calculation, the project needs energy, material thickness of projects with the most commonly used product is 16mm, and 760 kg/m3, 360 m3/day Capacity of factory Equivalent to approximately 108,000 m3 (approximately 300 working days) Equivalent to approximately 82,080,000 kg / year (760 kg/m3) Based on standard material consumption, energy suppliers, consumption is calculated as follows: Materials Logs Urea formaldehyde Ammonium Chloride Chemical buffer Paraffin Electricity Water Energy Consumption Total consumption For 1m3 product For 108,000 m3 product 760 110 3 3 15 350 1 1,520,000 kg kg kg kg kg kW M3 Kcal 82,080 8,360 228 228 1,140 37,800,000 108,000 164,160 Tons Tons Tons Tons Tons KW M3 Megacal Page 9 / 29 VI FACTORY BUILDING SOLUTIONS 5  Locations description: Factory will be built in Thanh Binh Industrial Park located in Cho Moi District, Bac Kan Province This location is very convenient in terms of road, 130km from Hanoi and located close to Highway 3, Factory will be built according to the approved design requirements to ensure the needs of MDF factory moderns; will meet the requirements of environmental, scenic, and aesthetic Area of 80,000 m2 will be used 6 Construction of main sections No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Sections Main workshop Warehouse Outdoor warehouse Office Cantin, worker campus Auxiliary Zone Garage Transformer stations Security house Water supply tower Protect Fence Area for loading goods Tree and grass mat Main Power and lighting Water supplier and drain Communications systems UNIT Q’TY U.PRICE AMOUNTS m2 m2 m2 m2 m2 m2 m2 m2 m2 m2 m m2 m2 Set Set Set 20,000 5,000 3,000 1,600 500 400 150 25 50 1 1200 1,000 10,000 1 1 1 3,500 2,500 1,000 4,500 4,000 2,500 2,000 3,000 1,800 150,000 2,500 1,300 250 4,000,000 3,500,000 1,500,000 70,000,000 12,500,000 3,000,000 7,200,000 2,000,000 1,000,000 300,000 75,000 90,000 150,000 3,000,000 1,300,000 2,500,000 4,000,000 3,500,000 1,500,000 Lightning protection + 17 Firefighting Cost of survey, design and Set 1 2,000,000 2,000,000 18 evaluation Total 1 3,423,450 3,423,450 117,538,450 Total construction cost (b) The company will build the plant in accordance with standards, including the main items of the approved design Page 10 / 29 9 Calculate working capital: Pursuant to the the cost of production and the annual production plan, calculate the demand for working capital and working capital minimum amount necessary to ensure the company's operations are not hampered as demand for reserves follows: ITEMS Materials stock (1 month) Spare part stock (2 months) Products in stock (1 months total cost) Backup receivables ( 4% sales ) Cash (1 month payroll) Total AMOUNT X 1000 VND 10,345,500 2,747,520 26,280,961.63 12,821,760 2,111,541 54,307,282 Total working capital for the project is necessary calculations : 54,307,282 10 Total Capitals Investment Content A Fixed capital B Working capital C Total Amount (x1000 VND) 882,915,838 54,307,282 937,223,120 II CAPITAL RESOURCE  TABLE OF CAPITAL RESOURCE No 1 2 3 Capital resource Amout Fixed Capital 882,915,838 Loan 750,478,462 Equity 132,437,376 Working capital 54,307,282 Loan 0 Equity 54,307,282 Total capital 937,223,120 Ratio 85% 15% 100% 0% Equity: - Fixed capital: 132,437,376 (x1000 VND) accounts for 15% of fixed capital - Working capital: 54,307,282 (x1000 VND) accounts for 15% of working capital Page 15 / 29 Loan: Loans Vietnam Development Bank and commercial banks with the Bank's guarantee development, Tenor 8 years, Total VNĐ 750,478,462 (x1000 VND), of which: - Bank loans growth rate 6.9% / year: loan 529,749,503 (x1000 VND), 60% of fixed capital - Loans from commercial banks at an interest rate of 10.5% / year: loan 220,728,959 (x1000 VND), 25% of fixed capital Page 16 / 29 DEBT REPAYMENT PLANNING TABLE: Unit (x1000 VNĐ) Year Value initial Loans in the period - % Per Total Fixed Capital Interest rates Payment Original debt Interest Value end of period Year 0 - % Per Total Fixed Capital Interest rates Payment Original debt Interest Value end of period Total original debt Total interest Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 529,749,503 463,530,815 397,312,127 331,093,439 264,874,751 198,656,064 132,437,376 66,218,688 102,771,404 66,218,688 36,552,716 463,530,815 98,202,314 66,218,688 31,983,626 397,312,127 93,633,225 66,218,688 27,414,537 331,093,439 89,064,135 66,218,688 22,845,447 264,874,751 84,495,046 66,218,688 18,276,358 198,656,064 79,925,956 66,218,688 13,707,268 132,437,376 75,356,867 66,218,688 9,138,179 66,218,688 70,787,777 66,218,688 4,569,089 (0) 220,728,960 193,137,840 165,546,720 137,955,600 110,364,480 82,773,360 55,182,240 27,591,120 - - - - - - - - 50,767,661 27,591,120 23,176,541 193,137,840 93,809,808 59,729,256 47,870,593 27,591,120 20,279,473 165,546,720 93,809,808 52,263,099 44,973,525 27,591,120 17,382,406 137,955,600 93,809,808 44,796,942 42,076,458 27,591,120 14,485,338 110,364,480 93,809,808 37,330,785 39,179,390 27,591,120 11,588,270 82,773,360 93,809,808 29,864,628 36,282,323 27,591,120 8,691,203 55,182,240 93,809,808 22,398,471 33,385,255 27,591,120 5,794,135 27,591,120 93,809,808 14,932,314 30,488,188 27,591,120 2,897,068 93,809,808 7,466,157 529,749,502 60% 6.9% 0 0 529,749,502 Value initial Loans in the period Year 1 220,728,959 50 25% 10.50% 0 0 220,728,959 Page 17 / 29 III FINANCIAL CALCULATE TABLE 1 Planned revenue  Reference price and the price of imported, MDF Quang Tri, MDF Gia Lai in the past 6 years, can determine the average price over the year as follows: 2007: From 220-230 USD/m3 2008: From 230-250 USD/m3 2009: From 260-280 USD/m3 2010: From 270-290 USD/m3 2011: From 290-320 USD/m3 2012: From 295-320 USD/m3 From early 2013 until now with the impact of global economic recession, the average price decreased MDF (15%) compared with the same period in 2012 MDF average import price from 280-295 USD/m3 Unless the inflation rate, product price assumptions carefully project is 280 USD/m3 (as in the case of economic slowdown lasts), exchange rate 21,200 VND/USD, equivalent to 5,936, 000 VND/m3 The average occupancy rate of the plant is 108,000 m3 By carefully, assuming the project is only running 50% capacity in the first year, and 20% more capacity for the next year Table 5 of revenue for the first year of operation: Year Capacity forecast (m3) Performance (%) Price (x1000 VNĐ/m3) Revenue (x1000 VNĐ) 1 54,000 50% 5,936 320,544,000 2 3 75,600 97,200 70% 90% 5,936 5,936 448,761,600 576,979,200 4 108,000 100% 5,936 641,088,000 5 108,000 100% 5,936 641,088,000 2 Planed cost of Production : a) Material Cost: Material, Fuel Unit Consumption for 108,000 m3 products Unit price Amount Log Ton 82,080 900 73,872,000 Urea formaldehyde Ton 8,360 7,600 63,536,000 Ammonium Chloride Ton 228 12,000 2,736,000 Chemical buffer Ton 228 12,000 2,736,000 Page 18 / 29 Paraffin Ton 1,140 22,000 25,080,000 Electricity KW 37,800,000 1.680 63,504,000 Water M3 108,000 4 432,000 Fuel Mega Cal 164,160 100 16,416,000 Total material, fuel cost for 108.000 m3 products 248,312,000 Total material, fuel cost for 1 m3 products 2,299.19 b) Table of material and fuel cost: Year 1 Output (m3) Price x1000 VNĐ/m3 Amounts (x1000 VNĐ) Year 2 Year 3 Year 4 Year 5 54,000 75,600 97,200 108,000 108,000 2,299 2,299 2,299 2,299 2,299 173,818,400 223,480,800 124,156,000 248,312,000 248,312,000 c) Payroll, Training cost Monthly wages (refer to table HR needs): total monthly salary in year 1 is 1,450,400 (x1000 VND) Salary increases above is consistent with the expansion of business over the years However, growth rates are in line with the growth of production and wage costs are lower in cost estimates Assertions such salary increases are possible and acceptable According to estimates, the wage bill increased by 10% / year Calculating payroll Annual Fund the annual salary is 13 times the salary of the month This represents the minimum salary demands required in the development of human resources: Salary expenses in year 1 = 1,450,400 x 13 = 18,855,200 (thousand) Insurance + 1 year = 18,855,200 x 19% = 3,582,488 (thousand) Cost of annual training: training cost depends on the business of the Company and expected market development Estimated cost of training as follows: Training costs in the country: 60% of monthly salary fund: 1,450,400 x 60% = 870,240 (thousand VND) The cost of training abroad: 40% of monthly salary fund 1,450,400 x 40% = 580 160 (thousand VND)- Page 19 / 29 Table of salary and training cost: Unit: (x1000 VND) Insurance Year 1 1,450,400 18,855,200 3,582,488 Year 2 1,595,440 20,740,720 3,940,737 Year 3 1,754,984 22,814,792 4,334,810 Year 4 1,930,482 25,096,271 4,768,292 Year 5 2,123,531 27,605,898 5,245,121 Training cost - Domestic - Aboard Total 870,240 580,160 25,338,488 957,264 638,176 27,872,337 1,052,990 701,994 30,659,570 1,158,289 772,193 33,725,528 1,274,118 849,412 37,098,080 Monthly salary Annual salary d) Other cost Output (m3) remaining value(x1000 VND) Revenue (x1000 VND) Spare part: USD 1,2 / m3 (X1000 VND) Maintenance costs, equipment maintenance, plant = 2% Remaining value Packaging cost: $US 2,2 / m3 (x1000 VND) Marketing, delivery cost, 10% sale first year, 7% for 2nd year and 5% for next year) Insurance factory remaining value 0,4% Year 1 Year 2 54,000 75,600 772,012,609 661,109,380 320,544,000 448,761,600 Year 3 Year 4 Year 5 97,200 108,000 108,000 550,206,151 439,302,922 329,087,193 576,979,200 641,088,000 641,088,000 1,373,760 1,923,264 2,472,768 2,747,520 2,747,520 15,440,252 13,222,188 11,004,123 8,786,058 6,581,744 2,518,560 3,525,984 4,533,408 5,037,120 5,037,120 32,054,400 31,413,312 28,848,960 32,054,400 32,054,400 3,088,050 2,644,438 2,200,825 1,757,212 1,316,349 Other cost: 1% the total cost including the cost of travel, telephone, reception, stationery etc… Page 20 / 29 Total cost of production: (Unit: x1000 VND) YEAR 1 Cost of Material, fuel Salary, training cost Spare part cost Maintenance cost Packaging cost Marketing and delivery cost Insurance factory Depreciation Interest Land rent Infrastructure IP cost Other 1% Total 2 3 4 5 6 7 124,146,000 173,804,400 223,462,800 248,292,000 248,292,000 248,292,000 248,292,000 25,338,488 27,872,337 30,659,570 33,725,528 37,098,080 40,807,888 44,888,677 1,373,760 1,923,264 2,472,768 2,747,520 2,747,520 2,747,520 2,747,520 15,440,252 13,222,188 11,004,123 8,786,058 6,581,744 4,387,829 2,193,915 2,518,560 3,525,984 4,533,408 5,037,120 5,037,120 5,037,120 5,037,120 32,054,400 31,413,312 28,848,960 32,054,400 32,054,400 32,054,400 32,054,400 3,088,050 2,644,438 2,200,825 1,757,212 1,316,349 877,566 438,783 110,903,229 110,903,229 110,903,229 110,903,229 110,215,729 109,695,729 109,695,729 59,729,256 52,263,099 44,796,942 37,330,785 29,864,628 22,398,471 14,932,314 339,200 339,200 339,200 339,200 339,200 339,200 339,200 169,600 169,600 169,600 169,600 169,600 169,600 169,600 3,751,008 4,180,811 4,593,914 4,811,427 4,737,164 4,668,073 4,607,893 378,851,804 422,261,861 463,985,339 485,954,079 478,453,534 471,475,397 465,397,150 Page 21 / 29 8 248,292,000 49,377,544 2,747,520 5,037,120 32,054,400 109,695,729 7,466,157 339,200 169,600 4,551,793 459,731,063 3 Estimated profit and loss: The company's net profit is depreciation and repayment priority The financial ratio that the business will become more efficient, because in the later stage the business has achieved stability, reducing indirect costs, increase production and reduce interest costs Investment projects in the "List of preferential investment fields" as follows: Corporate Income Tax: free 03 years and 50% of the tax for the next 05 years Unit (x1000 VNĐ) YEAR Total revenue Total cost Income tax Profit after tax 1 320,544,000 378,851,804 (58,307,804) 2 448,761,600 422,261,861 26,499,739 3 576,979,200 463,985,339 112,993,861 4 641,088,000 485,954,079 19,391,740 135,742,181 5 641,088,000 478,453,534 20,329,308 142,305,158 6 641,088,000 471,475,397 21,201,575 148,411,028 7 641,088,000 465,397,150 21,961,356 153,729,494 8 641,088,000 459,731,063 22,669,617 158,687,320 Income gross Mandatory reserve fund Benefits and bonus fund (58,307,804) (58,307,804) 26,499,739 132,499 132,499 264,997 25,969,744 112,993,861 564,969 564,969 1,129,939 110,733,984 155,133,921 678,711 678,711 1,357,422 133,027,337 162,634,466 711,526 711,526 1,423,052 139,459,055 169,612,603 742,055 742,055 1,484,110 145,442,807 175,690,850 768,647 768,647 1,537,295 150,654,904 181,356,937 793,437 793,437 1,586,873 155,513,573 24% 16% 82% 25% 17% 85% Business Development fund Retained Earnings Financial ratio Return on Sale (ROS) Return on Assets Return on Equity -18% -6% -31% 6% 3% 14% 20% 12% 61% 21% 14% 73% Page 22 / 29 22% 15% 76% 23% 16% 79% 4 Project cash flow and financial indicator 1 NO I 1 2 2 3 4 CASH FROM OPERATION TOTAL INCOME : CASH FROM SALES TOTAL OUT - 320,544,000 448,761,600 576,979,200 641,088,000 Expenses goods sold - 378,851,804 422,261,861 463,985,339 485,954,079 - (58,307,804) 26,499,739 112,993,861 155,133,921 - - - - - NET CASH OPERATION FLOW II CASH FROM INVESTMENT 1 TOTAL INCOME FROM 5 641,088,00 0 478,453,53 4 162,634,46 6 - 6 641,088,000 471,475,397 169,612,603 - 7 641,088,00 0 465,397,15 0 175,690,85 181,356,93 0 7 - - TOTAL OUT 882,915,838 - 54,307,282 - (937,223,120) LOAN Shareholder Working capital NET CASH INVESTMENT 1 459,731,06 3 54,307,282 Fixed assets III 641,088,00 0 Received from working capital 2 8 FLOW FROM - - - - - - - - - - - - - - 54,307,282 750,478,462 - - - - - - - - 132,437,376 - - - - - - - CASH FROM FINANCING TOTAL INCOME Depreciation 110,903,229 110,903,229 110,903,229 110,903,229 Page 23 / 29 110,215,72 9 109,695,729 109,695,72 9 109,695,72 9 2 TOTAL OUT Original debts - 93,809,808 93,809,808 93,809,808 93,809,808 93,809,808 93,809,808 93,809,808 93,809,808 Income tax - - - - 19,391,740 20,329,308 21,201,575 21,961,356 22,669,617 Cash FLOW from financing 882,915,838 17,093,421 17,093,421 17,093,421 (2,298,319) (3,923,387) (5,315,654) (6,075,435) (6,783,696) IV CASH ON BEGINNING of period (54,307,282) (54,307,282) (95,521,665) 78,158,777 230,994,380 389,705,459 554,002,408 723,617,823 V CASH ON ENDING of period (54,307,282) (95,521,665) (51,928,505) 230,994,380 389,705,459 554,002,408 723,617,823 952,498,346 (51,928,505 ) 78,158,777 Page 24 / 29 IV CALCULATION OF EFFECTIVE RATIOS 1 Average cost of capital and inflation consideration Average cost of financial resources used: Weigh/total Capital from shareholder Loan - Long term VDP - Long term Cost Cost/total 19.93% 14.00% 2.79% 6,90% 56.52% 6.90% 3.90% 10,50% 23.55% 10.50% 2.47% Average cost of capital 100,00% 9.16% Capital raised from shareholders discounted at the cost of capital is 15% / year The cost is consistent with common opportunity cost in Vietnam Cost of long-term loans discounted at the interest rate of the bank respectively 6.9% / year and 10.5% / year Average cost of capital is calculated using the weighted average formula However, in analyzing financial performance - economics of the project will use a discount factor of K = 14% The difference of 14% - 9:16% = 4.84% to compensate for factors of exchange rate movements and inflation 2 Net Present Value of Project, Year Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Capital Net return -937,223,120 -95,521,665 -51,928,505 78,158,777 230,994,380 389,705,459 554,002,408 723,617,823 952,498,346 Discount factor NPV 14% 1,089,355,108 0.877192982 (83,790,934) 0.769467528 (39,957,298) 0.674971516 52,754,948 0.592080277 136,767,217 0.519368664 202,400,804 0.455586548 252,396,044 0.399637323 289,184,689 0.350559055 333,906,920 We observe that NPV and IRR of the project is very high that investment is very effective 3 Payback period with discounted: PV Net Accumulative Net Income income Discount Acc PV Net PV Caital rate Capital + Dep +Dep income + Dep (882,915,838 (54,307,282 (54,307,282 14% ) (882,915,838) ) ) (54,307,282) (95,521,665 (83,790,934 0.8772 ) ) (138,098,216) (51,928,505 (39,957,298 0.7695 ) ) (178,055,515) 0.6750 78,158,777 52,754,948 (125,300,566) 0.5921 230,994,380 136,767,217 11,466,650 0.5194 389,705,459 202,400,804 213,867,454 0.4556 554,002,408 252,396,044 466,263,498 0.3996 723,617,823 289,184,689 755,448,188 0.3506 952,498,346 333,906,920 1,089,355,108 Year Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Payback period is calculated discount: 7 years and 4.5 months after the start up capital for large projects, the payback period is acceptable 4 Internal rate of return IRR: IRR of the project: 69.068% We observe that the NPV and IRR of the project is very high that investors effectively 5 The breakeven point theory Year 1 2 3 4 5 6 7 8 Revenue Total cost Fixed costs 320,544,000 448,761,600 576,979,200 641,088,000 641,088,000 641,088,000 641,088,000 641,088,000 378,851,804 422,261,861 463,985,339 485,954,079 478,453,534 471,475,397 465,397,150 459,731,063 177,980,344 170,500,376 163,003,710 155,311,452 146,642,670 138,148,639 130,183,519 122,222,479 Variable costs 200,871,460 251,761,485 300,981,629 330,642,626 331,810,864 333,326,757 335,213,632 337,508,584 V EVALUATION OF SAFETY FINANCIAL 1 SENSITIVITY ANALYSIS OF THE PROJECT Sales of breakeven point 476,721,990 388,395,822 340,762,964 320,727,306 303,969,627 287,773,191 272,854,153 258,104,998 Levels operating breakeven 149% 87% 59% 50% 47% 45% 43% 40% With selling price is constant USD/m3 210, cost of raw materials, fuels change from + / -10%: Production cost Cost of products NPV (x1000 VND) (x1000 VND/m3) Increase 10% 2,529.1 738,407,985 Increase 5% 2,414.1 913,881,546 Normally 2,299.2 1,089,355,108 Reduce 5% 2,184.2 1,264,828,670 Reduce 10% 2,069.3 1,440,302,231 With constant production costs, price changes + / - 10% Sale Price Price (X1000 VND/m3) Increase 10% 6,530 Increase 5% 6,233 Normally 5,936 Reduce 5% 5,639 Reduce 10% 5,342 In the most favorable conditions: IRR 52.495% 60.825% 69,068% 77.280% 85.501% NPV (x1000 VND) IRR 1,952,909,949 1,531,409,828 1,089,355,108 688,409,586 266,909,465 108.517% 88.968% 69,068% 49.920% 28.959% Product selling prices increased: 10% Costs of raw material decreased by 10% NPV = 2,303,857,072 (thousand VND) IRR = 125,412% In the most adverse conditions: Selling price decreased by: 10% Production costs increased: 10% NPV = - 84,037,658 (x1000 VND) IRR = 8,796% This case is very unlikely to happen, because the price of raw materials such as wood, glue and MDF increased the price increase CHAPTER V ANALYSIS OF SOCIO-ECONOMIC ENVIRONMENT I SOCIO­ECONOMIC BENEFITS In addition to financial performance, the project will bring social and economic performance are as follows: Employment and income of workers: The project created about 350 permanent employees with total annual income over 15 billion Earnings are expected to increase 10% per year The project also brings thousands income for households in the area planted materials, contribute to improving the plantation her life Contributions to the state budget Vietnam: The following table reflects the financial resources of the state every year from this project, over the revenues in accordance with the laws of Vietnam: Year Total revenue Income tax Export tax VAT Land rent cost 1 2 3 4 5 320,544,000 448,761,600 576,979,200 641,088,000 19,391,740 641,088,000 20,329,308 32,054,400 339,200 44,876,160 339,200 57,697,920 339,200 64,108,800 339,200 Total paid into 32,393,600 the state budget 45,215,360 58,037,120 64,108,800 339,200 64,448,000 64,448,000 II ANALYSIS FOR ENVIRONMENTAL IMPACT Projects using technology produce dry use a little water, no water discharge during production environment The project has a vacuum system; dust collection reused wood dust should not pollute the surrounding environment The system makes use of chemical binders should not be sealed periodic discharge of chemicals into the environment around them Production systems using modern technologies of the Republic of Germany and Europe should ensure that noise levels allowed in the factory and cannot affect the surrounding area in an industrial zone Within the scope of the exercise, we do not analyze and calculate carefully safeguards the environmental impacts of the project CHAPTER VI CONCLUSIONS AND RECOMMENDATIONS In recent years, natural wood resource is increasingly scarce because of indiscriminate logging and forestry in combating deforestation While the demand for wood for construction, interior decoration is very large Utilizing material from plantation to produce high quality products that cater to consumer demand and exports should be a very developed This project is highly feasible in the strategic development of the social economy in Bac Can province, aims to accelerate the pace of growth in industrial production value Contribute to the implementation of economic policy in the direction of industrialization and modernization of the province From these benefits, the Company realized investment SAHABAK this project is effective and necessary SAHABAK Company submits BAC KAN PPC Management Board of Industrial Parks, the departments of Bac Kan province, and Vietnam Development Bank - BAC KAN Branch consider project to be conducted soon ========== III REFERENCE 1 Dr.Nguyễn Văn Định (2013) – 2 Eugene F.Brigham and Joel F Houston (2004) – Fundamentals of Financial Management – 10th Edition –Thomson South-Western 3 Richard A Brealey, Stewart C Myers, Alan J Marcus (2003) ­ Fundamentals of Corporate Finance -Third Edition 4 Home page Sahabak : http://sahabak.com 5 Home page DIEFFENBACHER GMBH : www.dieffenbacher.com ... market there are main types: plain, water-resistant, melamine plain MDF is the most common type, often using veneer, paint or PU coating Also waterproof MDF belong plain MDF category, water-resistant... where exposure to water or high humidity such as doors, indoor furniture, melamine kitchen cabinets MDF: MDF sides are coated with melamine to create beauty, moisture and scratches Specification of products... business, especially companies need high-quality MDF, consistent standards for the production of furniture exports Client projects include importers MDF in regional markets such as Japan, Korea,