Bibica Corporation Case

An overview of Bibica Corporation.

Name: BIEN HOA CONFECTIONERY CORPORATION

Transaction name: BIBICA

Stock code: BBC

Headquaters: Bien Hoa I industrial park, Bien Hoa city, Dong Nai province.

Tel: (84-61) 836576. 836240

Fax: (84-61) 836950

Email: bibica@hcm.vnn.vn

Website: www.bibica.com.vn

Tax code: 360036974

Bibica Corporation is one of the leading confectionery companies in Viet Nam. It has been considered to be "Manufacturer of Vietnamese high quality products" for eleven years by local consumers. The equipments are always being modernized. Most of them are imported from well-known manufacturer in Europe to ensure that our products are always delicious and able to meet all strictly requirements on food of other countries. Bibica has been exported their products to: The United State, Japan, Singapore, Philippines, Taiwan, South Africa, Cambodia...

Bibica currently have a very good market share in Viet Nam. However, it is clear that food and beverage market has become very competitive recently. As a result of this, Bibica are making efforts to find out new market with high potential and try to break into them in order to meet the target turnover.

Our purpose is to figure out not only strength but also weakness of the company by doing some analyses in financial view. Moreover, from the data collected, we can predict the development trend in the future.

To get the best result, we use such methods to deal with the information as:

+ SWOT analyses

+ Financial analyses

+ Ratio analyses

+ Trend analyses

+ Dupont analyses

We hope to give all of you the true picture of Bibica Corporation through this assignment. In addition, we can also acquire experience in financial statement analyses, and consolidate our knowledge in corporate finance.

1. Macroeconomic analysis during 2005-2011

Despite the natural catastrophes that we underwent in the period of 2005-2007, Vietnam's economy attained significant achievements. However, while the global crisis starting from the US real estate sector has cracked the world of developed countries since 2008, we also received two shocking blow, which effects have remain ever since.

2005-2007: This period was noted for several disasters that stroke down the country: droughts in the first half of the years 2005 and 2006, tropical storms, tornados, and especially the bird flu and 'food and mouth disease' that did not only affect agriculture, but also confectionery and other industrial activities. However, the statistical data of this period showed an outstanding advance in the economy. The GDP growth rate of 2005 and 2007 was 8.44 and 8.46 respectively, which are the 2 highest among 11 years from 2000 to 2011. The registered FDI flow into Vietnam also increased dramatically, from 6,839.8million USD in 2005 to 21,347.8 million in 2007. The CPI rate was at good numbers, around 7% to 8%. The exchange rate (VND/USD) fluctuated little, as well as the interest rate, which stayed around 9.24%-9.48%. The main problems of the economy was, the high and volatile gold price, the shortage of electricity and the increase in food price due to bird flu and mouth and foot disease.

2008-2011: The year 2008 is the begin of a economy volatile sequence. For the first time, the interest rate climbed to 12%, then jumped to 14% in next years and has only decreased recently due to the government's intervention. The GDI growth rate saw a great reduction, especially in 2009, when it lowered to 5,32%. CPI data reach a peak of over 22% in 2009 and in 2011, it was 18,58%. The gold price continued to volatile due to speculation as well as the unstable of internal and external economies. VNIndex also fluctuated greatly in 2008 and 2009. Sovereign debt rose from about 34% in 2007 to 67% in 2010. This trend can be seen in registered FDI, which reached the peak in 2008, but then sharply decreased.

It can be attributed to the fact that, Vietnam was under the effect of 2 crises: one was the global crisis that has been continuing since 2008, while the other was the crisis of fuel and other raw materials.

2. Industry analysis

In recent years, with the development of the economy and the increase in population size with the young structure, confectionary market is one of the sectors with high growth and stability in Vietnam. The total market value in 2009 was estimated at 7,673 billion -an increase by 5.43% compared to 2008. This is the lowest growth rate since 2005 due to the impact of the global financial crisis. However, the recovery of the following the economic crisis had a positive impact on consumer demand candy. According to BMI's report on industry of food and beverage, sales growth of biscuit-candy market (including chocolate) during the period 2010-2014 is estimated at 8-10%.

Vietnamese biscuit-candy industry has the following characteristics:

First: Raw material inputs of the biscuit-candy industry, including wheat flour, sugar, milk, eggs and other materials. In particular, wheat flour has to be imported (almost all), sugar (a part of demand) , flavors and some kind of additives, which are large