Ha Tien Cement Group conducted a final assignment analyzing the operations and performance of Ha Tien 1 Cement, the leading cement producer in Vietnam. The analysis included a market structure analysis finding Vietnam's cement market to be monopolistically competitive. A ratio and breakeven analysis found Ha Tien 1 to have good operating and asset efficiency. The analysis also identified opportunities for Ha Tien 1 in Vietnam's favorable macroeconomic environment for construction and implications for 2021 including ensuring supply chain stability during COVID-19.
hyundai capital 2023 consolidated financial statements
Ha Tien Cement_Operations and Performance Analysis.pptx
1. 1
Operations and Performance Analysis
HA TIEN CEMENT
GROUP FINAL ASSIGNMENT
ECON 530: MANAGERIAL ECONOMICS
MBA Intake 10
Instructor: Dr. Tran Nguyen Ngoc Anh Thu Group 2: Huynh Huu Quoc
Le Ngoc Long
Tommy Yance Manawan
Hoang Van Tho
Le Hoang Minh Trang
2. 2
Objectives & Reasons
WRIT E SO MET HING HERE
Method & Structure
WRIT E SO MET HING HERE
Apply Managerial Economics knowledge &
tools to the real case
Focus to Market structure – Output decision –
Investment decision – Profitability -
Macroenvironment
Ha Tien 1 is the market leader in cement
industry – an essential of Vietnam economy
Secondary data - Annual Report, Stock Market
Analysis)
Market analysis - Marginal analysis – Break-even
analysis – Financial Ratios – PESTEL Framework
Company & Industry
Overview
1
Operations &
Performance
2
Direction & Policies
3
3. 3
HT1
Kien Luong
Plant
Binh Phuoc
Plant
Long An
Grinding Station
Phu Huu
Grinding Station
Cam Ranh
Grinding Station
Establishment
1964
Equity
5.365 bil. VND
Major products
Cement
Clinker
Capacity
~8 mil. ton/year
Production
7.29 mil. ton
Market share
10.2% (Top 1)
Net revenue
8.839 bil. VND
EBIT
928 bil. VND
COMPANY
BUSINESS
Provinces/Cities
25
Distributors
76
Retail shops
10,000
5. 5
CEMENT INDUSTRY VALUE CHAIN
MARKET & DIRECT IO N
Input Production Distribution Market
Material 50%
Electricity 20%
Labour 10%
Depreciation 15%
Others 5%
Cost structure
Direct sales
Regional distributors
Retail shops
Constructors - Investors - Exporter
Channels
Residential
Industrial
Infrastructure
Segment
6. 6
2019
Total
98 mil. ton
VIETNAM CEMENT INDUSTRY
Consumption
Production Export (11.1%)
3 1 4 52%
11%
5%
32%
Share by consumption
Residential
Infrastructure
Other
Export
Global Ranking
O VERVIEW
7. 7
VIETNAM CEMENT INDUSTRY
MARKET & DIRECT IO N
Highly competitive
68 firms
North excess supply
South shortage supply
Domestic excess supply
Ave growth rate 2010-2019
7.1 – 7.4%
Reduce excess
Environment & Resource Protection
Restrict Investment
Ave growth rate 2020-2030
6.0 - 6.5%
Improve profitability.
Limit export
8. 8
Specification mostly equivalent (National Standard)
Differentiated by branding, advertising
Product
68 Firms
High competition
Number of Firms
Concentration Ratio: 35.6% HHI*: 516 (<1000)
CEMENT MARKET ANALYSIS
IDENTIFICATION
High investment capital
Investment license restricted
Moderate
Products
Firms
Barriers
Entry in LR
Many
Low
differentiation
HHI: Herfindahl-Hirschmann Index Sources: Cement Industry Report – Sep 2020 (FPT Securities)
9. 9
MARKET STRUCTURE BENCHMARK
MAPPING
Significant high barriers
One firm
No close substitute product
High barriers
Few firms
Identical product
Few barriers
Many firms
Identical but differentiated
No barriers
Infinite firms
Homogeneous product
Monopoly Oligopoly Monopolistic
Competition
Perfect
Competition
10. 10
Maximizing Profits
MR = MC
Price Maker
Partial control over price
Branding, Advertisement
Economic Profits
Short Run: Yes
Long Run: No.
CHARACTERISTICS
MO NO PO LIST IC CO MPET IT IO N MARKET
Firm D Curve
Downward sloping
12. 12
RATIO ANALYSIS
WRIT E SO MET HING HERE
Horizontal Analysis
Rise trend 2017 - 2019
Industry Analysis
The best among typical players
Conclusion
Operating efficiency
Asset usage efficiency
Financial leverage
13. 13
BREAK-EVEN POINT
WRIT E SO MET HING HERE
Cost Behavior Analysis
Total Revenue (TR) = 8,839 bil. VND
Total Volume (Q) = 7,29 mil. ton
Total Fixed Cost (TFC) = 2,833. bil. VND
Total Var. Cost (TVC) = 5,101 bil. VND
Unit Price (P) = 1,2 mil. VND/ton
Unit Var. Cost (VC) = 0.7 mil. VND/ton
Profit = TR – TVC – TCF
At break-even, Profit = 0
TR – TVC = TFC
(P – VC) x Q = TFC
Q = TFC / (P – VC) = 5.67 mil. ton
PBE = 1.2 mil. ton
QBE = 5.67 mil. ton
14. 14
MAXIMIZE PROFIT
Refers to a good or
service being offered by a
company.
Refers to a good or
service being offered by a
company.
+50 +173
6.69 6.82 7.29
MR
MC
ATC
Q
P
MR = -2.45Q + 17.72
MC = -2.21Q – 14.42
MR = MC
ATC = -0.11Q + 1.86
6.88
1.1
Qmaxprofit = 6.88 mil. ton
Pmaxprofit = 1.1 mil. VND/ton
15. 15
MAXIMIZE REVENUE
DET ERMINANT S
MR > 0: Sell more by decreasing P
MR < 0: Sell less by increasing P
MR = 0: Revenue maximization
16. 16
Differentiate by advertising,
branding.
Products
Pricing align with elasticity
orientation.
Price
Expand north, central market;
Export;
Locate Grinding close to market;
Sales management system
Distribution Channel
Discount policy for channel partners
Promotion
MAXIMIZE REVENUE
ST RAT EG IES
M&A as full capacity
Improve productivity
ERP implement
Operations
17. 17
VIETNAM MACROENVIRONMENT
PEST LE ANALYSIS
P E S T L E
POLITICAL ECONOMIC SOCIOLOGICAL TECHNOLOGICAL LEGAL ENVIRONMENTAL
Macroenvironment shows favorable to socio-economic growth
Leading to increase in residential – industrial – infrastructure
investment
18. 18
Political stability among countries in
region
Greater openness to global
Liberalize economy
Political Economic Sociological
Strong & consistent economic growth & other
figures
Attractive market
Low labor cost
Newly join CPTPP – EVFTA – RCEP
Increase in FDI & public investment
Working-age population 51%
Increase in demand & ability to own
house
Urbanization trend
P E S
19. 19
Environment-friendly
Energy-saving & recovery
Waste utilization
Digital transformation
Technical standard ASTM – ISO -
TCVN
Technology Legal Environmental
Higher awareness in environment
Include environmental requirements
in licensing investment project
Control & force businesses for better
environmental protection
T L E
Improvement of legislation
Streamline administrative procedure
Better business environment
20. 20
Challenges
WRIT E SO MET HING HERE
Opportunities
WRIT E SO MET HING HERE
Domestic construction demand slightly drop due to some
postpone at earlier outbreak of epidemic
Export interruption
Risk in internal infection may affect to operations
Risk in supply chain interruption
Well-control of Covid-19 in Vietnam
Businesses adapt by new-normal measures
Resume of postpone project
Export accounts for only 4% share of HT1 capacity
Support package from government
21. 21
IMPLICATIONS FOR 2021
WRIT E SO MET HING HERE
- Diversify supply sources avoid interruption
- Better inventory control
- Protection of Covid-19 for staff
- Shutdown decision
Operations & Supply chain
- Ensure the liquidity for payment if shutdown
happen.
Finance
- Interest rate – Electricity tariff – Tax postpone
Utilize govt’s support package
- Demand forecast
- Strengthen competitive advantages
- Diversify and expand market
Market
22. 22
Cement Market
2021 – 2030 demand still high (6-6.5%) but lower than 2011-
2020 (7.1-7.4%)
Highly competitive due to supply excess
Restrict new manufacturing investment by barriers: quantity
- scale - capital – technology
Limit export
Conclusion
WRIT E SO MET HING HERE Historical brand
Economies of scale
Large distribution network
Ha Tien 1
In good position with competitive advantages
Own largest & quality limestones mine
