Group IV

VINASUN’S ENTRY TO CAMBODIA

BUSINESS PLAN

1. INTRODUCTION

2. COMPANY

DESCRIPTION

3. MARKET

ANALYSIS

4. MARKETING/

SALES STRATEGY

5. R&D

6. STAFFING

& OPERATIONS

7. FINANCIAL

ANALYSIS

8. SOCIAL

BENEFITS

Part I. Introduction

1.Overview of taxi industry

2.Main objectives 3.Contents

4. Data 5. Limitations 6. Methods

1. Overview of taxi industry

Vietnam’s taxi transportation sector in Ho Chi Minh City has grown at an impressive 16% (CAGR) in terms of cab numbers

• Company profile, external scanning and its market position

• Financial analysis • SWOT analysis • Two potential projects

3. Contents

2. Main objectives

We collect the data from financial statements of Vinasun in the years:

2008, 2009, 2010, 2011 and 2012

4. Data 4. Data

5. Limitations • Some date is difficult to find or count, inadequate and not well-

proportioned.

• Vinasun Corporation also does business on many other sectors

6. Methods • Financial analysis

solvency, stability, liquidity and profitability • SWOT analysis

strengths, weaknesses, opportunities, threats

Part II. Company Description

• Company profile • External scanning

1. Company profile

A. History

• Established in June 15, 1995 • Initial charter capital of 300 million VND • Taxi business into operation since Jan 27, 2003 • One of the 2 leaders in HCMC (50%), Binh Duong

(60%) and Dong Nai (50%) • Officially listed on the Hose in Mar, 2008

Charter capital of VND 170 billion. • Around 2,845 taxi at the end of December 2009

• Taxi transportation with the brand-name Taxi Vinasun

• Travel, air travel with the brand-name Vinasun Travel

• Restaurants, food and beverage • Real estate

2. External scanning

A. HCMC’s Taxi Industry

• 16% CAGR in terms of cab

numbers, from 6,000 in 2005 to 12,550 as of May 2010.

• Expected to maintain an average growth rate of 10% annually 2010 - 2015

In terms of revenue per day,

VND 1.32m per day per

cab, 26% higher than Mai Linh’s VND 1.05m

CAGR Compound Annual

Growth Rate

B. Supply and demand of VN market

Supply In HCMC, taxis are a second means of public transportation after bus. May 2010, 36 enterprises and cooperatives 12,550 registered taxis transporting 400,000 passengers per day. 2,000-3,000 illegal taxis

Generally, Vietnam’s roads are poor. Despite new highway construction, 13.5% of the road network is considered to be in good condition

Demand • rising petrol prices

• unavoidable traffic jams

• environmental pollution

• Solid position in the market: • 42%-market-share position in HCM, • 60% market share in Dong Nai and • 60% market share in Binh Duong • Top two sector players

(Mai Linh taxi is the main competitor of Vinasun) • The company plans to have around 1,000 new cabs per

year for the next three years

C. Market position

D. Major competitors

Over 10,000 registered taxis and around 2,000 unlicensed

ones in HCMC.

VNS has more than 4,000 vehicles, 8000 employees and around 1,500 pick-up points in

Ho Chi Minh City, Binh Duong and Dong Nai

1. Target Market 2. Total Market

Valuation 3. Market Trends

Part III. Market Analysis

4. Profile of Competitors 5. Competitive Advantage 6. Benefits to Clients

1. Target Market

1. Target Market

- Capital city

- Total area: 678.46 km2

- Population: 1,501,725 (2012)

- Density: 2213/km2

- Gender Ratio Male: 47%, Female: 53%

- GDP per capita (PPP): 2400USD (2012)

- Investment ៖ ¾ of industrial investments in the whole country

- Transportation ៖ ¾ of the whole country - Tourism ៖ 950,000 people/year

- Airport: Phnom Penh International Airport

950,000/Year

Market segmentation

The old: over 50 The children: under 18

Adults: 18-50

47%

53%

2. Total Market Valuation

3. Target Company revenue

USD 1,250,000 million per year

Approximately over 2 million people to serve

So

many

But

very

few

4. Market trend

High real income per capita

Large number of tourist annually

An international airport

Taxi is to be more popular in daily life

in Phnom Penh

5. Profile of Competitors

Premium Luxury Taxi 8% Chettra

taxi

(14%) Engligh and Khmer

speaking drivers

Vichet

taxi

(9%) 24 hours service

everyday

35%

Others

Low price, High quality 23%

Standard taxi 14%

6. Competitive Advantage

Reasonable

Competitive

and

Accurately calculated

PRICE

New technologies or systems

Qualified drivers

7. Benefits to Clients

Part IV. Marketing/ Sales strategies

1. Product and marketing strategy

2. Sales and distribution network

3. Pricing 4. Communications

Economic Development

Dominance of Tourism Industry

Faster and more reliable transportation services

Limited routes, slow and inconvenient

buses and tuk-tuks

Product and Marketing Strategies

Priority: International and domestic tourists

• Nearly 1 million foreign visitors/year

• Financially capable

• High demand

Current taxi brands: • Unprofessional • Discourteous

• Premium quality at medium price

• Innovative and forward thinking

• Emphasis on customer service

• Value proposition lies in promptness

Positioning

Target market

Competition

Implementation

• Implement meter system

• Diversify payment methods

• Zoned taxi dispatch system

1. First come/first served system of dispatching

2. Speed up the entire system

• Purchase hot pick-up spots: 1. International airport, hotels, restaurants, bars and tourist

attraction sights

• Training costs reduced through apprenticeship programs

• Monthly inspection of vehicles

Sales and Distribution

Direct • Convenience for customers is the key point • Utilize three more sales channels including online sales via website,

shop-at-home television shows and mail order catalogs

Indirect Sales agents Revenue sharing partners

Pricing Category Quantity Cost/unit Total

Salary

Taxi drivers 50 VND 5 million

Supporting Staff 20 VND 3 million

Administrators 3 VND 3 million

Security 2 VND 2 million

Maintenance & Insurance

VND 100 million

Petrol VND 50 million/

month

Total Investment

VND 50 billion

Cost-plus Pricing

Value-based Pricing

Public Taxi Motorcycle Trailers/Remorks/T

uk-tuks Metered Taxi Unmetered Taxi

Characteristics

Global Taxi, Trans-choice Taxi and Taxi Association offer on-call 24/7 taxi service

and are generally available only on-call

More common are unmarked, unmetered taxis, usually Camry, which can be

arranged through hotels or travel agents

Prices vary depending on the number of passengers and where you pick up the Tuktuk.

Pricing

Starts at 4000 Riel (1 USD) for 2

kilometers. Then 400 Riel (0.1 USD) per 200 meters

Usually cost 25-35 USD per day and

a minimum of 4-5 USD for short trips

Cost around 2-4 USD for short trips and 13-15 USD for the whole day around

the city centre

3000Riel (0.75 USD) for the first 2 kilometers, then 300 Riel (0.075 USD) per 200 meters

Public relations Charity

Employee encouragement Entertainment and social PR

Advertising Newspapers, outdoor banners and

the Internet

Promotion Affiliate marketing

Direct mailings Facebook and TripAdvisor promotion

Offline promotion Personal contact with customers Long-term relationship with firms and companies on regular and low-price basis

Part V. Research and Development

1. Technology Roadmap 2. Research and Development 3. Technical Partners 4. IP, Patents, Copyrights, Brands

• Year 2014: Buying whole new cabs

• Maintenance: Each year

• Repairs: if necessary

• Replacement: Each 5 years if any cars is not up to standard

• Remote instruction and notification: Through switchboard

Technology Roadmap

Research and Development

• Build a customer-care deparment (quality-control) that shall be in direct

contact with customers to solve any complaints, reflections or other

problems.

• Carry out market research by online surveys, direct questionnaires and

interviews each year to know the assessment of customers.

• After 5 operating years, we are to expand our services to rent cars for private

travel

IP, Patents, Copyrights, Brands

Technical Partners Cam Auto Repair - Car Repair and

Maintenance - Garage services

No. 220, St. 122, 12156 Phom Penh,

Cambodia

Part VI. Staffing and Operation

1. Management (including Board) Organization Chart

2. Staffing

1. Training Plans 2. Operations

1. Management (including Board) Organisation Chart

Board of Directors

(Vietnam)

HR

Department

Marketing

Department

Finance Department

Customer Care

Department

General Director

(Cambodia)

2. Staffing

50 Qualified drivers: - English & Khmer speaking

- Male

- Standard driving license

- Morality

- No previous conviction

- Good-looking

- Physically and mentally healthy

20 Officers answering

phonecalls from customers

3 Experienced accountants

2 Marketing

experts

• A short-term English course for Cambodian employees

• Customer relationship: How to treat customers the best

• Problem solving: real-life problems and circumstances and

give instructions

Training Plans One month before launching services on

the market

Operations

• Headquarter: Vietnam

• Office: Phnom Penh,

Cambodia

• Equipment: Metered

cars, telephones,

computers, printers, etc.

• Infrastructure: Office

buildings in Phnom

Penh

Part VII. Financial Analysis

Current financial situation

1. Financial structure: Liability and Equity

2. Liquidity ratios 3. Asset Turn Over

ratios

4. Debt ratios 5. Profitability ratios 6. Market value ratios

1. Debt-to-Equity ratio (H1) Liabilities Equity H1

2008 408,164,216,027 532,683,294,969 0.77

2009 597,556,474,847 712,058,985,725 0.84

2010 906,539,072,128 819,573,429,619 1.11

2011 924,224,759,679 855,867,573,557 1.08

2012 841,833,361,734 936,132,304,116 0.90

2013 858,197,948,769 1,153,446,987,822 0.74

H1 indicates the level of financial autonomy of a firm

0.74 in 2013 represents a decreased dependence on long term debts of Vinasun

healthier financial position lower H1

2. Liquidity ratios

tells us whether the current assets are enough to settle current liabilities

Current Assets Current liabilities H2

2008 61,445,995,800 67,640,359,737 0.91

2009 136,190,333,628 48,772,140,953 2.79

2010 188,049,791,229 186,200,213,895 1.01

2011 206,499,021,517 170,878,700,632 1.21

2012 203,883,317,462 177,606,715,087 1.15

2013 406,857,514,505 763,038,173,771 0.53

Current ratio (H2)

2008 – 2012, Vinasun is in safe and sound functioning

2013, problems in meeting demand on payments of short term loans

the approximate amount of time that it takes for a

business to

receive payments

owed, in terms of receivables, from

its customers and clients

A, Average collection period (H3)

3. Asset Turn Over ratios

Account receivable Average sales per day H3

2008 218,324,859,596 5,725,049,577 38.14

2009 3,732,896,540 519,889,752 7.18

2010 347,991,712,382 7,616,069,856 45.70

2011 398,956,980,610 8,448,659,059 47.22

Account receivable Average sales per day H3

2008 17,554,001,550 2,268,930,811 7.737

2009 22,518,738,652 2,927,678,397 7.692

2010 46,227,623,796 4,497,295,174 10.279

2011 49,394,473,998 6,231,035,476 7.927

2012 55,503,477,827 7,433,728,605 7.466

2013 162,963,097,759 8,652,219,178 18.835

Vinasun Corporation

Mai Linh Group

=> Average collection period of Vinasun is relatively low in comparison with Mai Linh

Total Asset Turnover (H4)

Vinasun is generating more and more sales from its assets

0.88 0.82

0.26

1.32 1.52 1.57

0

0.5

1

1.5

2

2008 2009 2010 2011 2012 2013

Total assets turnover

H4

4. Debt ratios

Time interest earned ratio (H5)

EBIT Interest Expense H5

2008 114.640.169.386 36.584.694.169 3,13

2009 180.322.817.526 36.502.111.477 4,94

2010 321.133.080.699 80.383.133.473 4,00

2011 302.729.363.506 124.736.616.068 2,43

2012 316.889.928.463 112.890.048.568 2,81

2013 368,005,756,609 65,959,185,078 5.58

the ratio is always higher than 2.00, which means that the firm’s ability to pay off its cost of capital is very

HIGH

0.06 0.08

0.1 0.07

0.09 0.11

0

0.05

0.1

0.15

ROA (VNS)

H6

0.0276

0.0085 0.0131

0.0361

0.00

0.01

0.02

0.03

0.04

2008 2009 2010 2011

ROA (MAI LINH)

ROA

5. Profitability Ratios

ROA (Return to Asset) (H6)

Earning to Share (H7)

-50.00%

0.00%

50.00%

100.00%

2009 2010 2011 2012 2013

% EPS growth(VNS)

% EPS growth

-63.31%

27.94%

197.32%

-100%

0%

100%

200%

300%

2009 2010 2011

% EPS growth (MAI LINH)

% EPSgrowth

6. Market value ratios

A, P/E ratio (Price to earnings ratio) (H8)

7

5

6.7 5.9

0

2

4

6

8

2009 2010 2011 2012

P/E ratio

P/E ratio

the P/E ratio in 2009 was 7, then fluctuated around 6 for the rest of

time, which is relatively high and generally a good sign for

stock holders, especially when considering the effect of global economic crisis in the present

B, M/B multiples (Market to book ratio) (H9)

0.973536036 1.154455446

1.388985849

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2009 2010 2011

M/B multiples

M/B multiples

M/B ratio >1, so evaluation process of Vinasun is fairly accurate and updated

Project Cambodia

Assumptions:

The area of Phnom

Penh: 376km2

(ten times smaller than that of

Hanoi (3345 km2)).

50 new cabs

The salvage value : 𝟏

𝟓 of the value of the initial investment

in the tenth year

The estimated revenue in year 1:

VND 25 billion

Working capital: 15 billion VND

Growth rate:

40% in the revenue in the first 3 years

Part VIII. Social Benefits

Access to a variety of community facilities and services

Impulse of the tourism industry

THANK YOU FOR YOUR ATTENTION!

IF YOU HAVE ANY QUESTIONS, PLEASE FEEL FREE TO ASK!