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Dissertation submitted in partial fulfillment of the

UWE . κri,v
Bristol England

Requirement for the MSc in Finance

FINANCE DISSERTATION ON

A COMPANY ANALYSIS AND VALUATION
NAME OF STUDENT: NGO MINH NGOC
ID No: 17047725
Intake 1

Supervisor: Assoc Prof. Dr. Do Thi Kim Hao

September 2018


ACKNOWLEDGEMENTS
During one intensive full-time year drowning in University of West of England
environment. Over all, I have achieved profoundly valuable knowledge about Banking
systems and Finance status in Vietnam and many developed countries. Therefore,
working in Agribank Lao Cai Branch, it was a great chance for learning, practicing and
developing professional skills.
In order to finish this thesis, I am deeply grateful to all those who have given ideas,
valuable comments, as well as their support during three months of the internship.

First and foremost, I would like to express my deepest gratitude and special thanks to
my supervisor, Assoc. Prof. Dr. Do Thi Kim Hao, for her careful and precious guidance,
necessary advices.
Besides, it will definitely be my shortage if I do not send my truly thanks to all my
lectures at UWE-BAV, whose provide me with the best learning conditions, teaching
methods which not only develop my dissertation but also lay the foundation for my
career.
Moreover, I am greatly indebted to Ms. Nguyen Thi Huong - Manager of Corporate
Clients Department. She was my direct supervisor in Agribank Lao Cai Branch, who in
spite of being extraordinary busy with her duties, took time out to hear, guide and keep
me on the correct path during the training.
Last but not least, I convey my sincere thanks to my family, friends who are always
by my side with the best support helping me complete the dissertation as well.


TABLE OF CONTENTS
CHAPTER 1. INTRODUCTION........................................................................................................7
1.1. The background...................................................................................................................... 7
1.2. The objectives.......................................................................................................................... 8
1.3. The methodology..................................................................................................................... 8
1.4. The methods............................................................................................................................ 8
1.5. An overview............................................................................................................................. 8
CHAPTER 2. MACROECONOMIC ANALYSIS...........................................................................10
2.1. World economy..................................................................................................................... 10
2.2. Vietnam economy.................................................................................................................. 11
2.2.1. PEST analysis..................................................................................................................12
2.2.2. Financial analysis...........................................................................................................14
2.2.3. Summary about Vietnam economy.................................................................................16
CHAPTER 3. INDUSTRIAL ANALYSIS.........................................................................................17
3.1. The global aviation industry outlook................................................................................... 17

3.2. The Vietnam aviation industry outlook............................................................................... 18
CHAPTER 4. Vietjet Joint Stock Company..................................................................................... 21
4.1. Business description.............................................................................................................. 22
4.2. SWOT analysis......................................................................................................................22
4.2.1. Strengthens......................................................................................................................22
4.2.2. Weakness.........................................................................................................................25
4.2.3. Opportunities...................................................................................................................27
4.2.4. Threats.............................................................................................................................29
4.3. Ratios analysis.......................................................................................................................30
4.3.1. Profitability ratios............................................................................................................30
4.3.2. Gearing ratios..................................................................................................................31
4.3.3. Investment ratios.............................................................................................................32
4.4. Valuation................................................................................................................................ 32
CHAPTER 5. AIRPORTS CORPORATION OF VIETNAM (ACV - up COM)..........................34
5.1. Business description.............................................................................................................. 35
5.2. SWOT analysis......................................................................................................................36
5.2.1. Strengths..........................................................................................................................36
5.2.2. Weakness..........................................................................................................................36
5.2.3. Opportunities...................................................................................................................36
5.2.4. Threats.............................................................................................................................36
5.3. Ratios analysis........................................................................................................................37
5.3.1. Profitability ratios............................................................................................................37


5.3.2. Gearing ratios..................................................................................................................38
5.3.3. Investment ratios.............................................................................................................38
5.4. Valuation................................................................................................................................ 38
CHAPTER 6. Vietnam Airlines Corporation(HVN- upCOM)....................................................... 41
6.1. Business description.............................................................................................................. 42
6.2. SWOT analysis......................................................................................................................43

6.2.1. Strengths..........................................................................................................................43
6.2.2. Weakness.........................................................................................................................43
6.2.3. Opportunities...................................................................................................................43
6.2.4. Threats.............................................................................................................................43
6.3. Ratios analysis.......................................................................................................................43
6.3.1. Profitability ratios............................................................................................................43
6.3.2. Gearing ratios..................................................................................................................44
6.3.2. Investment ratios.............................................................................................................45
6.4. Decision investor................................................................................................................... 45
CHAPTER 7. General aviation services company (AST -HOSE)................................................. 46
7.1. Business description.............................................................................................................. 47
7.2. SWOT analysis......................................................................................................................47
7.2.1. Strengths..........................................................................................................................47
7.2.2. Weakness..........................................................................................................................47
7.2.3. Opportunities...................................................................................................................48
7.2.4. Threats.............................................................................................................................48
7.3. Financial analysis..................................................................................................................48
7.3.1. Profitability ratios............................................................................................................48
7.2.2. Investment ratios.............................................................................................................49
7.3. Valuation................................................................................................................................ 49
CHAPTER 8. Compare four companies inVietnamaviationindustry............................................ 51
CHAPTER 9. CONCLUSTION................................................................................................................. 58
REFERENCES................................................................................................................................... 59
APPENDIX......................................................................................................................................... 61


LIST
LIST
OF TABLES
OF ABBREVIATIONS

AND FIGURES
Figure 1. Global growth continues.................................................................................................................10
Figure 2. Vietnam GDP growth rate from 2013 to 2018...............................................................................14
Figure 3. GDP per capital of ASEAN countries from 2017 to 2022 and the CAGR of GDP per capital
2017- 2022......................................................................................................................................................15

N

Figure 4.

Vietnam inflation rate from Jan 2017 to Jul 2018.................................................................16

Figure 5.

Chart of market share of domestic passenger carriage in Vietnam 2011-2016.....................19

Figure 6.

CASK operating cost index and fuel surcharges (USD cents): 2013 - first half of 2017.....24

Figure 7.

the chart of number of tourists and the growth of tourists from 2009 to 2017 in Vietnam....28

Figure 8.

The profitability ratios of Vietjet JSC 2015 - 2017................................................................31

Figure 9.


Gearing ratio of VJC 2017- 2018 ..........................................................................................31

Figure 10.

The Investment ratios of Vietjet JSC....................................................................................32

Figure 11.

Compare between VJC with other enterprises in the world................................................33

Figure 12.

The profitability ratios of ACV (2015-2018).......................................................................37

Figure 13.

Investment ratios of ACV 2014-2017..................................................................................38

Figure 14.

Compare between ACV with other enterprises in the world...............................................39

Figure 15.

Domestic aviation market share from 2015 to 2017............................................................42

Figure 16.

The profitability ratios of HVN from 2016 to 2019............................................................44


Figure 17.

Gearing ratios of HVN from 2014-2017..............................................................................44

Figure 18.

The investment ratios of HVN from 2015 - 2017................................................................45

Figure 19.

The profitability ratios of AST from 2016 to 2019..............................................................48

Figure 20.

Investment ratios of AST 2016-2018F.................................................................................49

Figure 21.

Compare between enterprises in the aviation industry........................................................50

Figure 22.

Sensitivity analysis...............................................................................................................50

Figure 23.

Key data in main enterprises in aviation industry................................................................51

Figure 24.


EV/EBITDA 2017................................................................................................................52

Figure 25.

Comparing the P / B and ROE indexes of the nationalaviation industry (04/2018)...........54

Figure 26.

Comparing P / B and ROE indexes for national airports(04/2018).....................................54

Figure 27.

ROA and ROE of aviation businesses 2015-2017...............................................................55

Figure 28.

ROE and Dupont Aerospace Analysis 2016-2017...............................................................57

Figure 29.

Asset Situation of enterprises...............................................................................................61

Figure 30.

Capital structure of aviation enterprises 2016-2017............................................................62

ASEA

Association of Southeast Asian Nations


CAGR

CPI

Compound annual growth rate
Consumer Price Index

EBITA

Earnings before interest and taxes and amortization


EBITD

Earnings before Interest, Taxes, Depreciation, and Amortization

GDP

Gross Domestic Product

IMF
OECD

International Monetary Fund
Organisation for Economic Co-operation and Development

OPEC
SMEs

Operational Expenditures

Small and Medium Enterprises

SOEs
WTO

State Owned Enterprises
World Trade Organization

A



1.1.

CHAPTER 1. INTRODUCTION
The background

"Asian airlines and their increasing passenger numbers are driving global aviation
markets. We envisage that APAC will account for up to half of total annual increase in
air traffic by 2020," Shukor Yusof, an aviation expert at Endau Analytics, told DW.
Vietnam's two fundamental transporters - Vietnam Airlines and Vietjet - are additionally
performing admirably regarding development and course extension. "Vietnam has a
youthful, lively populace and this is driving the avionics division locally and
provincially," said Yusof. The quantity of air travelers going on local aircrafts is
evaluated at 21.8 million, up multi year-on-year. On the household advertise, four local
aircrafts including Vietnam Airlines, VietJet Air, Jetstar Pacific Airlines and VASCO
are working 52 residential air courses associating Hanoi, Danang and HCMC with 18
nearby air terminals.
In addition, Vietnam's aviation segment positions the fifth among ASEAN nations.
The area served in excess of 94 million travelers including 13 million remote travelers,

an expansion of 16 percent contrasted with 2016, more than twofold that of Asia. In any
case, household traveler development backed off to 13 percent in 2017 from 25 percent
in 2016. Among now and 2020, traveler transportation is required to ascend by 16
percent, and from 2020 to 2030, by 8 percent. Merchandise transportation will
increment by around 18 percent until 2020, and 12 percent somewhere in the range of
2020 and 2030.
In conclusion, Vietnam, at present one of the world's quickest developing aeronautics
market will be the fifth quickest developing business sector by 2035, as indicated by the
International Air Transport Association. Therefore, Vietnam currently has seven
aviation companies, including Vietjet Joint Stock Company (VJC), Airports Corporation
of Vietnam (ACV), Vietnam Airlines Corporation (HVN) and General aviation services
company (AST).

The research will focus on these four that analyze financial ratios, competitiveness
and development indicators in order to find a safe and efficient company for investment.


1.2.

The objectives

This study refers to a macroeconomic analysis, industry analysis and a company
analysis on four enterprise including Vietjet JSC (VJC), Airports Corporation of
Vietnam (ACV), Vietnam Airlines Corporation (HVN) and General aviation services
company (AST) in Vietnam aviation’s industry. Therefore, a definitive motivation
behind which is to give sound and all around examined speculation proposals. In
addition, the dissertation gives a glimpse of the aviation market in Vietnam and analyze
major competitive factors in the industry. At the same time analyzes the main economic
indicators of the four companies through financial statements. Finally, making
investment recommendations to investors should invest in any company to achieve the

highest return.
1.3.
The methodology
When study the Macroeconomic, using the PEST model to study the major factor
indicators, such as real GDP (nominal GDP), CPI Vietnam inflation. Besides, when
analyzing the industry, focus on the factors that influence the development of the
industry, the competition in the market as well as the trends of consumers in recent years
affect how the fashion market (SWOT analysis method). Finally, about company
analysis and valuation, based on financial statements, economic indicators, industry
analysts' analysis, and stock market performance of the four companies. Therefore, the
research uses a top-down analysis method from the macroeconomic to each company in
this industry.
1.4.
The methods
The ratio analysis in this study focused on some methods such as profitability ratio,
gearing ratio and investment ratio, EV/EBITDA. From there, the study extracted the
analytical data so that the private investors can have a panoramic view of these
companies.
1.5.
An overview
The study will focus on three main areas, the first is the study of the world aviation
industry. History of development, services and activities typical in developed countries
as well as emerging countries. In addition, learn about the industry in Vietnam, markets,


competitors, the ability of companies. The final section is a detailed study of the major
Vietnamese aviation companies, namely Vietjet Joint Stock Company, Airports
Corporation of Vietnam, Vietnam Airlines Corporation and General aviation services
company. To get the most out of each company's performance, investors should evaluate
how the company's stock looks. At the same time there are predictions for the future of

the business.


CHAPTER 2. MACROECONOMIC ANALYSIS
2.1. World economy
The global economy enhanced in 2017 and will achieve an eight-year high one year
from now as indicated by the Organization for Economic Co-task and Development. Be
that as it may, needs private venture to support development into 2019. The association
bumped up its gauge to 3.6 percent during the current year from 3.5 percent in its last
figure to achieve 3.7 percent in 2018.

Catherine Mann, OECD Chief Economist, says a few elements added to the enhanced
economy. “First there has been a continued monetary policy” she explains. “But perhaps
some people don’t know that actually there is quite a bit of fiscal stimulus in the system
and that is added to the growth. The third element is that trade has recovered and it’s
moving along quite smartly right now.”

Figure 1. Global growth continues
With its most grounded development in 10 years, the euro region was additionally
observed outpacing other major created economies this year and was up on past figures.
The OECD conjectures development of 2.4 percent for 2017 dropping to 2.1 percent in
2018. Be that as it may, Brexit implies Britain is passing up worldwide development.
The OECD's 2017 development estimate of 1.5 percent makes Britain the weakest
economy in the G7. Moreover, development in emerging market sector and creating
economies in general is anticipated to fortify to 4.5 percent in 2018, preceding achieving
4.7 percent in 2019 as the recovery in commodity exporters matures and ware costs
level off after the current year's expansion.


2.2. Vietnam economy

Vietnam's economic performance in 2017 has been versatile, reflecting hearty fare
situated assembling, solid household request and slow bounce back of farming. GDP
growth is assessed at 6.8 percent in 2017 - the quickest extension in the previous ten
years. The uptick in development mirrors a solid bounce back of the agribusiness area,
rising worldwide and residential interest that helped assembling and exchange,
combined with vigorous remote speculation inflows.
Moreover, Vietnam's medium term monetary standpoint stays positive. Development
and macroeconomic soundness are required to be managed over the medium term.
Development is anticipated to balance out around 6.5 percent, with some possibility to
amaze on the upside in the short run, particularly if the worldwide recuperation stays
unblemished. While expansion is anticipated to stay direct on account of a generous
worldwide value condition, solid wage development may at last lift center swelling.
Outer adjusts are anticipated to profit by hearty fares and FDI inflows. On the monetary
front, the mix of shortfall decrease and divestment from SOEs is relied upon to contain
open obligation over the medium term.
On the other hand, Vietnam is encountering quick statistic and social change. After
years of growth, Vietnam's populace come to around 95 million out of 2017 (up from
around 60 million out of 1986) and is relied upon to extend to 120 million preceding
following off around 2050. At present, 70 percent of the populace is under 35 years old,
with a future of near 73 years. However, the populace is quickly maturing. There is a
rising working class—right now representing 13 percent of the populace, however
anticipated that would achieve 26 percent by 2026.
In the course of the most recent thirty years, the arrangement of fundamental
administrations has essentially moved forward. Vietnam is today an essentially more
taught and solid society than twenty years back, and these characteristics are
evenhandedly dispersed. Inclusion and learning results are high and evenhandedly
accomplished in grade school—confirm by amazingly high scores in the Program for
International Student Assessment (PISA), where the execution of Vietnamese
understudies surpasses that of numerous OECD nations. From 1993 to 2012, baby and
under-five death rates were decreased from 33 to 19 and 45 to 24 for every thousand



births individually. Hindering likewise fundamentally diminished over a similar period,
from 61 to 23 percent, and future during childbirth has expanded from 71 to 76 years.
In addition, access to family unit foundation has enhanced drastically. In 2016, 99
percent of the populace utilized power as their principle wellspring of lighting, up from
14 percent in 1993. In rustic territories, in 2016, 77 percent of the populace approached
sanitation offices—contrasted with 36 percent in 1993. Country access to clean water
has likewise enhanced, up from 17 percent in 1993 to 70 percent in 2016. Access to
these administrations in urban territories is over 95 percent.
In 2015, female-headed family units in Vietnam were more averse to be poor than
male-headed families and essential and junior optional school net enrolment rates are
basically equivalent for young men and young ladies. There are more female
understudies going to class than male at the upper optional and tertiary training levels.
From 1990 to 2015, the maternal death rate tumbled from 233 to 58.3 passing for every
100,000 live births and baby mortality dropped from 44 passing for each 1000 live
births to 15—with no distinction among kid and young lady babies. Ladies' monetary
strengthening has additionally consistently enhanced in Vietnam over the previous
decade. Ladies' work compel investment rate is inside 10 percent of that of men, which
is a littler hole than that found in most different nations. Likewise, there has been an
upward pattern in the offer of ladies in wage work, for the most part determined by
expanded business open doors for ladies in outside claimed trade arranged processing
plants. All things considered, a few holes hold on—especially relating to ladies' entrance
to abnormal state authority positions and ladies ethnic minorities. There is likewise a
noteworthy irregularity in the sex proportion during childbirth.
2.2.1.
PEST analysis
2.2.1.1.
Political analysis
Vietnam is embracing a blended economy government still assumes a major job in

arranging and overseeing and numerous nations don't perceive the market economy for
Vietnam yet even its WTO' bond since January 2006. The endorsed official records of
the eleventh National Party Congress plainly stipulate that Vietnam keeps on applying
the market economy with communist introduction, and the State Owned Enterprises


(SOEs) still assume the unequivocal jobs of Vietnam' economy. This may break the
empowering BE and make dangers to private SMEs.
2.2.1.2.
Economics analysis
Vietnam keeps up a steady and high monetary development (7% in normal for the
most recent decade). Neighborhood ventures are looking up to challenges in access to
costly credit and money related administration because of high expansion (9-11%), high
financing costs of sparing (13-17%/year), and to cash depreciation (three times in 2010).
2.2.1.3.
Social analysis
Vietnam has a youthful populace with 46% of populace are in working age and
around 1 million new contestants in the process of childbirth advertise every year,
except by and large efficiency remained to a great degree low and is just three-fifths the
ASEAN normal or around one-tenth the level in Singapore [4] . Vietnam is the main
nation in Asia to enter Top 5 of the 2009 Happy Planet Index (HPI), reported by the
New Economics Foundation (NFF) in July 2009. Vietnamese people groups are
exceptionally hopeful to their future on account of stable political administration, peace
and financial development.
2.2.1.4.
Technology analysis
For this factor, control lack is presently exceptionally current with expanding request;
web is generally open with sensible value; fake and impersonation, particularly in
programming items, are far reaching in Vietnam.
Besides, another factors are legal and environment factor that played a rule with

Vietnam economy in general. For Legal factor, Vietnam has accessible Enterprise Law,
Investment Law and other worldwide and provincial understandings (WTO, ASEAN,
APEC), in principle, all sort of undertakings (SOEs, private endeavors, joint endeavors)
need to play the amusement with similar standards, however by and by, the execution of
Laws is a genuine test because of low quality of human asset in broad daylight
administration and defilement issues (116/178 positioned nations). Last but not least,
Vietnam has a long seaside outskirt (2500km) and is considered as a standout amongst
the most helpless nations because of catastrophic event dangers, environmental change
and ocean level ascent. Undertakings in Vietnam need to consider the ecological
elements to their business arranging and working procedures. Vietnamese people groups


don't endure effectively to business hones that damage to condition. For instance, the
Vedan Vietnam Limited JSC, an entirely Taiwanese-contributed firm needs to pay a
"staggering expense" for its contamination to Thi Vai River, the Coop Mart
Supermarket System and retailers declined to offer Vedan' items, special exercises urge
the customers to state NO with Vedan and the organization is looking to liquidation in
2007-2009.
2.2.2. Financial analysis
2.2.2.1.
GDP growth
Vietnam's GDP developed by 6.79 percent year-on-year in the second quarter of
2018, contrasted and a 6.28 percent development in a similar time of the earlier year.
Gross domestic product Growth Rate in Vietnam found the middle value of 6.26 percent
from 2000 until 2018, achieving an unequaled high of 8.46 percent in the final quarter of
2007 and a record low of 3.14 percent in the principal quarter of 2009.

VlETNAfA GDP GROWTH RATE
B


SOURCE:

TRADINGECONC*ICS.CO* GENERAL STATISTICS OFFICEOF VIETNAM

Figure 2. Vietnam GDP growth rate from 2013 to 2018.
Vietnam is a developing economy in the Southeast Asia. As of late, the country has
been ascending as a main farming exporter and an appealing outside venture goal.
Vietnam's key items are: rice, cashew nuts, dark pepper, espresso, tea, fishery items and
elastic. Assembling, data innovation and cutting edge enterprises establish a quickly
developing piece of the economy. Vietnam is likewise one of the biggest oil makers in
the district. This page gives the most recent revealed an incentive to - Vietnam GDP
Growth Rate - in addition to past discharges, chronicled high and low, here and now


conjecture and long haul forecast, financial timetable, study accord and news. Vietnam
GDP Growth Rate - real information, verifiable outline and date-book of discharges was keep going refreshed on September of 2018.
In addition, Vietnam's aviation industry has the same correlation with GDP growth.
Greater per capita income growth will stimulate higher air travel demand. According to
IMF data (October 2017), Vietnam's GDP per capita is relatively low compared to the
region, only equal to one fifth of Malaysia and one third of Thailand. However,
Vietnam's per capita GDP is projected to grow at an average annual rate of 7.6% and is
among the fastest growing economies in Southeast Asia for 2017-2022. As a result,
Vietnam's aviation industry is expected to continue to grow thanks to improved living
standards.

GDP per capita of ASEAN countries 2017-2022

CAGR of GDP per capita between 2017 and 2022

Source: IMF, FPTS Reports


Figure 3. GDP per capital of ASEAN countries from 2017 to 2022 and the CAGR of
GDP per capital 2017- 2022
2.2.2.2.
Inflation rate
Vietnam's CPI facilitated to a three-month low of 3.98 percent year-on-year in
August 2018, beneath 4.46 percent in the earlier month. Swelling impeded for:
nourishment (3.56 percent versus 3.78 percent in July); lodging and development
materials (3.73 percent versus 4.23 percent), and transport (8.67 percent versus 10.84
percent). Interim, costs climbed quicker for both piece of clothing, footwear, cap (1.53
percent versus 1.52 percent) and family unit machines and merchandise (1.25 percent
from 1.18 percent). Yearly center swelling, which prohibits unpredictable things,
expanded to 1.54 percent from 1.41 percent in July. On a month to month premise,
customer costs went up 0.45 percent, following a 0.09 percent fall in July. Expansion


Rate in Vietnam found the middle value of 6.41 percent from 1996 until 2018, achieving
an unsurpassed high of 28.24 percent in August of 2008 and a record low of - 2.60
percent in July of 2000.

VlETNAtA INFLATION RATE

SOURCE:

TRADINGECONOMCS.COM GENERAL STATtSTCS OFFCE OF VIETNAM.

Figure 4. Vietnam inflation rate from Jan 2017 to Jul 2018
In Vietnam, the most essential classes in the shopper value list are sustenance and
nourishment and drink administrations (36.12 percent of aggregate weight), lodging and
development materials (15.73 percent), transport (9.37 percent), family unit apparatuses

(7.1 percent) and garments and footwear (6.37 percent). The record likewise
incorporates: instruction (6 percent), wellbeing (5 percent), culture, diversion and
tourism (4.29 percent), drinks and tobacco (3.59 percent), different merchandise and
enterprises (3.3 percent) and posts and telecoms (2.89 percent). This page gives the most
recent detailed an incentive to - Vietnam Inflation Rate - in addition to past discharges,
chronicled high and low, here and now estimate and long haul expectation, monetary
date-book, study accord and news. Vietnam Inflation Rate - genuine information,
recorded diagram and schedule of discharges - was keep going refreshed on September
of 2018.
2.2.3. Summary about Vietnam economy
GDP in Vietnam is required to be 7.10 percent before the finish of this quarter, as
indicated by Trading Economics worldwide large scale models and examiners desires.
Looking forward, we gauge GDP Growth Rate in Vietnam to remain at 6.10 out of a


year time. In the long haul, the Vietnam GDP Growth Rate is anticipated to slant around
6.50 percent in 2020, as indicated by our econometric models.
CHAPTER 3. INDUSTRIAL ANALYSIS
3.1. The global aviation industry outlook
The aviation industry includes a series of services from air freight, airports to aviation
aids. In particular, air transport plays the most important role in the value chain; For air
transportation, the airport and auxiliary services will benefit. If air transport is the
backbone of the industry, airports are responsible for providing infrastructure for most
of the other business segments in the value chain, connect each country's aviation
system with other modes of transportation.

>

World air transport industry


First, the world's air transport market is quite concentrated, with only two regions in
Asia Pacific and Europe accounting for 59% of the passenger transport market and 64%
of the freight market share. Second, the world passenger and air cargo industry is
currently in a new phase of growth after the slow growth of 2000-2004. According to
IATA statistics, the rotational passenger volume (RPK) and global transport (RTK)
output for the period 2012-2017 will be 7.0% and 4.3% per year, respectively. , higher
than the 2-4% per year period 1985-2005. The main driver of growth in the next phase
came from the low-cost segment (LCC). The market share of LCC enterprises increased
sharply from 15.7% in 2006 to 25.5% in 2016. Meanwhile, with the trend of
"outsourcing" from developed countries, demand for air cargo is increasing. Air
transport mainly carries high value items such as electronics, machinery parts, fashion
goods, fragile goods, chemicals... Global aviation goods market is quite fragmented by
the policy supports the domestic airlines of the countries. Asia-Pacific and Asia-Pacific
regional air routes are the two largest air routes in the world. Last, forecast for the period
2017-2036, the passenger and air cargo industry will grow at an average rate of 4.7%
per year and 4.2% per year, with the main driver coming from the Asia Pacific region.

>

World Airport Industry

Airport requires large investment capital and is the premise for the socio-economic
development of a country, so often associated with the policy of socio-economic
development plan, the field of activity the condition and must be approved by the State


management agency of that country. On the other hand, the growth dynamics of airport
services are linked to the growth of the air transport industry. Customers of airports are
airlines, service charges at airports are collected directly or indirectly through airlines.
As a result, the revenue of airports often fluctuates in line with the volume of passengers

as well as the flow of goods and passengers. The service charges of the airports are
usually in the price bracket and the rates prescribed by the management agency. The
operation of the airport is based on the exploitation of the natural business advantages of
the property, so the main costs are fixed costs, easy to control and forecast. Moreover,
the passenger and cargo market of the airports is quite concentrated with the proportion
of passengers and cargo through the 20 largest airports in the world respectively
accounted for 18% of total passengers and 45% of total cargo. Asia Pacific is the region
with the most developed aviation industry in the world as it is also the region with the
most developed air transport.
3.2. The Vietnam aviation industry outlook
Firstly, Vietnam passenger air transport market is currently dominated by four
airlines: Vietnam Airlines, Vietjet Air, Jetstar Pacific and VASCO. In particular,
Vietnam Airlines owns 68.85% ownership and 51.00% stake in Jetstar and VASCO.
Therefore, it can be said that Vietnam air transport market is the "confrontation"
between Vietnam Airlines and Vietjet Air. There are also two airlines representing two
different modes of transportation: traditional and low cost airlines, between the state and
private management model.
Secondly, air cargo transport accounts for about 25% of Vietnam's export and import
value. There are 55 foreign airlines and 4 domestic airlines operating in Vietnam. Of
these, four Vietnamese airlines make up the absolute share of domestic routes thanks to
government protectionism. The international routes, dominated by foreign firms with
82% market share. The major international air cargo routes in Vietnam are Asia Pacific,
the EU and North America.
Third, Vietnam's air transport industry is still in the process of development and is
expected to grow strongly in the future, based on the following dynamics: (1) the
recovery of the world aviation industry, (2) Vietnam is located in a dynamic aviation
area, (3) fast-growing tourism and investment; and (4) improved living standards.


Fourth, according to IATA forecasts, Vietnam is the fifth fastest growing market in

terms of annual sales in the period 2015-2035, with a CAGR of 6.7% per annum, higher
than 3.9 % / year in the world and 4.6% / year in the Asia Pacific region.
Fifth, the aviation industry and aviation services in Vietnam are also in the process of
development, benefiting from the growth of the air transport industry. ACV (Up Com
Vietnam Airlines Corporation) is now the only company operating and operating 21
active airports stretching from the North to South of Vietnam. However, the challenge
now is the expansion of capacity and the construction of new airports to reduce the load
for two major airports are Tan Son Nhat and Noi Bai.
As such, Vietnam's aviation market is currently dominated by four airlines: Vietnam
Airlines, Vietjet Air, Jetstar and VASCO. In particular, Vietnam Airlines owns 68.85%
at Jetstar and 51.00% stake in VASCO. Therefore, it can be said that Vietnam air
transport market is the confrontation between Vietnam Airlines and Vietjet Air. There
are also two airlines representing two different modes of transportation: traditional and
low cost airlines, between the state and private management model. From 2011 up to
now, Vietjet Air has continuously increased its market share, causing the market share
of Vietnam Airlines to decline sharply. According to statistics from CAPA, in 2016, the
market share of Vietnam Airlines is 42%, down from 69% in 2011. In contrast, Vietjet's
market share increased to 42% in 2016 - equal to Vietnam Airlines, in In 2011, Vietjet is
not present in the market share of Vietnam aviation.
Source: IMF. FPTS Renorts

201 6,
2θi^s

14%......2%

42%
46%

2θT4[

2ŨÌỊ'
2 01 ⅛
2011
∣0% ị 10% I 20% I 30%

15%

42%
1%

37%

13% : 2%

ị 56%
63%

30%

14%

2%

20%

15%.......2% 8%

69%

6%


17%

75%

40% I 50%

1

60% Ị 70% I 80%

90%

100%

■___H-VieinamAidities.......L*J.eJstac.P.acifιc..J......JiVAS-GO.................W-VjetjelAir._______Ait-Mekaog._________

Figure 5. Chart of market share of domestic passenger carriage in Vietnam 20112016


According to the latest data from CAPA, Vietnam Airlines' market share in 2017 has
increased to 44%, from 42% in 2016. Vietjet Air has maintained a market share of 42%
in 2016.
To sum up, Vietnam
Airlines 4.
and
VietJet JOINT
Air are
operating
52 international flights to

CHAPTER
VIETJET
STOCK
COMPANY
30
cities in 17 countries
and territories. In addition, there are more than 50 foreign
RECOMMENDATION:
NEUTRAL
airlines operating regularly 71 flights from 22 countries and territories to Vietnam.
VJC share price fluctuation (2/2017 - 9/2018)
Taking into account the total market share of Vietnam passenger carriage, Vietjet has
increased its market share from 11% in 2013 to 27% in 2016, gradually gaining market
share from Vietnam. Airlines and international airlines. Meanwhile, Vietnam Airlines
still accounts for a large share of passenger carriage in the market, with 40% in 2016,
down from 51% in 2015. This shows that Vietnam aviation industry is in a very
competitive stage.

Transactions
Recent price (VND/Share)

173.000

Highest price 52w
Lowest

229.400

price 52w


85.714
Listed Share

451.343.2
8
451.343.24
8
850.227 1

Share in market

Volumes in 3months
Foreign ownership

25,3%

Charter capital

4.513

Market capitalization

Von nóa tnɪ trương (tý VNO)

Factors

2015

2016


1162

!)

14.81
R
t
e

PiE

9
.
7
2
5
4
.
5
5
.
9

ROA (%)

ROE (It)

ROS (tɪɪi

GOS(Si)


9.59

10
.63

81.061

2017

:

15.78

23.41

nte

12.9;

12.44

16.02

52.72

47.8Í

9.08


11.9E

14.19

15.4Í

76.4

66.⅛

82
CAR (%)

.17


The business results for 2017 grew
strongly thanks to increased passenger
traffic and the highest sales of aircraft in
history. Passenger transport increased 21.8%
YoY, reaching 17.1 million thanks to Vietjet
opened 21 more international routes and a
domestic route. In addition, in 2017 the
company sold and leased 17 aircraft - the
highest in history. These two factors
contributed 53.8% YoY and 42.3% y / y
respectively to 103.3% YoY and 5.074
billion dong respectively.
The dividend payout in 2017 includes:
(1) cash dividend of VND 1,000 / share, exdividend date is 5/9/2018 and payment date

is May 25, 20% shares will be made in 2018
with the execution time decided by the
Board.
I highly appreciate the competitive
advantage and business prospects of Vietjet
in the next 2-3 years, based on: (1)
Vietnam's growth in aviation is still high; (2)
Advantages in cost management of VJC; (3)
reasonable growth strategy and (4)
experienced management team in the
industry.
With these advantages, VJC is one of our
favorite aviation stocks. However, owing to
the specific nature of the aviation industry,
Vietjet also faces a number of business risks.
In addition, VJC shares are currently traded
significantly higher than peers. From a
prudent point of view, I view NEUTRAL for
VJC shares at the moment.
Investment risk: (1) risk of economic
recession and disease; (2) fluctuation risk of
triple oil price - exchange rate - interest rate;
(3) Increased competition; (4) Excess risk
with large number of aircraft ordered; (5)
Dilution risk of shares; (6) Risk of airport
services depends on ACV (Upcom Airport
Corporation).


4.1. Business description

In 2017 continues to be a successful year of Vietjet with strong business results thanks
to increasing passenger volume. During the year, VJC has operated in 82 routes,
including 38 inbound routes (up 1 route compared to 2016) and 44 international routes
(up 21 routes compared to 2016). Turnover in 2017 increased 53.8% YoY, reaching
42.303 billion. Inside:
First of all, revenue from passenger transportation continued to grow due to increased
passenger traffic and new international routes. In 2017, passenger car sales increased by
38.5% YoY to VND16,854 billion (accounted for 39.8% of total sales) with the main
growth driver coming from: Passenger volume increased 21.8% YoY, reaching 17.1
million. In particular, international passenger traffic increased 91% YoY, reaching 4.8
million arrivals and domestic arrivals increased 12% YoY, reaching 12.3 million. In
2017, Vietjet opens 21 more international routes (up 91% yoy) and one domestic flight.
Moreover, the load factor remained at 88% although the total number of seats was
increased. Increased flight frequency (operating hours - block hours - maintained at a
high rate of 13.8 hours / aircraft / day) will help total flight in 2017 increase 17.0% YoY,
reaching 98.805 trip.
Second, the revenue from auxiliary activities increased sharply thanks to the expansion
of international routes. Additional revenue in 2017 reached 5,477 billion dong (up 12.9%
of total sales), up 54.2% YoY on the back of a 22% increase in passengers and an
average per-passenger average revenue increase of 26% YoY, reaching $ 14.3 per
passenger. We find that the average per capita turnover of international passengers tends
to be higher than that of domestic passengers due to the longer flight time, the passengers
will tend to use more services such as food, water Drink and carry more luggage.
4.2.
SWOT analysis
4.2.1.
Strengthens
•

Vietnam - one of the fastest growing markets in the world



CASK

Not include meterials

6/2016

6/2017

2013

2014

2015

5.30

5.04

4.14

3.81

3.39

2.57

2.48


2.42

2.43

2.25

First, according
to smaller
CAPA, than
the moment
Vietjet
entered
the market
is extremely
perfect.
market,
which was
the current
market
in Vietnam"
CAPA
acknowledged.
In
"The company
has been
as Vietnam
is on the market
path of share
economic
2017,

Vietjet holds
less operating
than 10%asofsoon
Vietnam's
international
and growth,
27% of
with
a
GDP
growth
of
at
least
5%
every
year
since
Vietjet's
launch,
and
more
than
6% an
in
Vietnam's total market. Vietnam Airlines still has a larger market share because it has
2015 and 2016.
", reported
CAPA.abroad. However, Vietjet is beginning to focus more on
advantage

over Vietjet
on flights
expanding
its international
share,
andrise
in of
themiddle
future, class
it could
overwhelm
Vietnam
Second, improving
incomesmarket
and the
rapid
in Vietnam
have
made
Airlines even in this segment.
aviation travel, with many people, within reach. This demand is rising as the price of
•airplanes
Low costis lower now, just as the price of passenger cars or trains on most domestic
routes.
According
to CAPA,
Vietjet
is one of
the of
lowest

in Asia
thesystem,
world.
Third, Vietnam,
a long
and narrow
piece
land cost
withairlines
high speed
andand
lowinrail
In
the
first
half
of
2017,
the
maximum
operating
cost
(CASK)
index
reached
only
4 US
made moving between cities even more difficult. People are, therefore, ready to switch
Cents.
from passenger and train to cheap domestic flights.

Fourth, since Vietjet launched, Vietnam has become one of the fastest growing
markets in Asia and in the world. The domestic market has grown from 12 million
passengers in 2012 to 18 million passengers by 2016. The average growth rate has
reached an astonishing number, exceeding 30% annually.
Last reason, Vietjet does not have to attract the familiar passengers of other airlines.
The company, taking advantage of Vietnam's booming market, focuses on new customer
segments, less on the fly by offering cheap airfares. Since 2012, Vietjet has accounted for
about 70% of the growth of civil aviation in the domestic market.
• Vietjet has quickly gained a significant market share

In a short time, Vietjet from a startup company has become a market leader. In 2016,
the number of passengers traveling on Vietjet flights is almost equivalent to Vietnam
Airlines. Both airlines account for about 42% of the domestic market. "For a mediumsize domestic market (more than 20 million passengers), which accounts for a large share
of market share in just five years, is a remarkable achievement." In a similar-sized
market, the Philippines, It took more than a decade for LCC Cebu Pacific to overtake
Philippine Airlines. Even AirAsia needed six years to take over Malaysia's domestic