BANKING ACADEMY FACULTY OF FINANCE ------------------- GRADUATION THESIS Title: AN ENHANCEMENT TO FINANCIAL CAPACITY OF RONGVIET SECURITIES CORPORATION LECTURER : ASSOC. PROF PHAM TIEN DAT STUDENT : NGUYEN THI QUYNH TRANG CLASS : K19CLC-TCA STUDENT ID : 19A4020884 FACULTY : CORPORATE FINANCE Hanoi, 2020 DECLARATIONS These followings are declared by the author: All contents in this graduation’s thesis is the end result of my own work. The materials utilized in this thesis have been given in the bibliography and references to ALL sources be printed, electronic or personal. I give my approval for the submission of this graduation’s thesis on the e- Learning at Banking Academy under the form of an entire electronic copy or sections of this study, which might offer students opportunities to have access to past graduations’ thesis as useful examples.
It is also my agreement that this study would be available for no longer than five years on the library of Banking Academy, which requires those students using this research as an example to be capable of printing off copies or download. However, the authorship would remain anonymous. I confirm that my graduation’s thesis was submitted to a plagiarism detection service, which results in its storage in a database and compared against work submitted from other Schools or from other institutions using this service. The result of detecting a degree of similarities between contents within this service will be reported back to my supervision who has the right to execute further investigation.
As a result, disciplinary actions might be taken if any instances of plagiarism were detected. Sign: Date: i ACKNOWLEDGMENT I am so grateful and give sincere thanks to many people giving support me in the process of completing my graduation’s thesis. First of all, I am extremely indebted to demonstrate my honest depreciation to Assoc. Pham Tien Dat who spent lots of time and huge effort on discussing, assisting and suggesting valuable advice to me so that this research was kept on the right track.
Secondly, I would like to express my gratefulness to Rongviet Securities Corporation for offering me a golden opportunity to do my internship in the professional department and challenging but friendly working environment. Then I can acquire a lot of valuable experiences, broaden my horizon and serve my target which is the personal development in the long term. Thirdly, I would like to express my great appreciation to the leaders and staff in Rongviet Securities Corporation in general and in the Financial Advisory Department in particular for their support, assistance and encouragement so that I can complete my graduation’s thesis smoothly. Last but not least, I also sent my deep indebtedness to my family who always express their support as well as encourage my spirit to let me undertake this journey.
Thank you! ii ABSTRACT This research aims to study about “An enhancement to financial capacity of Rongviet Securities Corporation”. Therefore, this study has pivotal objectives of systematizing theoretical background about securities companies’ financial capacity; analyzing and assessing VDSC’s financial capacity in the period of 2017-2019 and then recommending solutions to enhance financial capacity in the period of 2020-2025. Qualitative research method is applied with secondary data which are collected from financial statements, annual reports and other financial materials. These data and material will be collected in the period of 2017-2019 to reflect VDSC’s financial capacity.
Final findings demonstrated that the Company gained achievements on business operation such as raising larger charter capital, utilizing leverage as tax shield, maintaining positive CAR, improving constantly information technology system. However, it also witness their difficulties in preserving positive results in business activities, coping with sharp decreases in their profitability. A large proportion of debt in capital might cause financial burden on their interest payment. Besides, some of their activities ratios raised questions on their ability of exploiting assets to generate revenue.
After analyzing carefully both objective and subjective reasons for these drawbacks such as the erratic volatility of economy, the instability of investor’s psychology, an ineffectiveness of risk and expenses management…, necessary measures would be submitted both the Company and authorities to improve their reputation, competitiveness and then financial capacity. iii CONTENT DECLARATIONS. VII LIST OF TABLES. IX LIST OF FIGURES.
Motivation of the study. Materials and methods. Subject and scope of the study. Structure of the study.
3 CHAPTER I: THEORETICAL BACKGROUND AND LITERATURE REVIEW ON FINANCIAL CAPACITY OF THE SECURITIES COMPANY. OVERVIEW OF THE SECURITIES COMPANY. Definition and characteristics of the securities company. Basic performances of the securities company.
The roles of the securities company. FINANCIAL CAPACITY OF THE SECURITIES COMPANY. Definition of the financial capacity. The necessity for the financial capacity improvement of the securities company.
Assessment criteria to financial capacity of the securites company. Literature review about financial capacity. 21 CONCLUSION OF CHAPTER I:. 32 CHAPTER II: AN ANALYSIS OF FINANCIAL CAPACITY OF RONGVIET SECURITIES CORPORATION BETWEEN 2017 AND 2019.
OVERVIEW OF RONGVIET SECURITIES CORPORATION. About Rongviet Securities Corporation. Organization structure and Business activities in Rongviet Securities Corporation. An overview of Rongviet Securities Corporation’s business situation.
THE ANALYSIS OF FINANCIAL CAPACITY IN RONGVIET SECURITIES CORPORATION BETWEEN 2017 AND 2019. CONCLUSIONS ON RONGVIET SECURITIES CORPORATION’S FINANCIAL CAPACITY. The reasons for drawbacks. 74 CONCLUSION OF CHAPTER II.
79 CHAPTER III: RECOMMENDATIONS TO AN ENHACEMENT TO FINANCIAL CAPACITY OF RONGVIET SECURITIES CORPORATION. THE DEVELOPMENT ORIENTATION OF VIETNAM’S THE SECURITIES MARKET IN THE PERIOD OF 2020 – 2030. Highlights of current economic situation in 2020. The development orientation of Vietnam’s the securities market in the period of 2020 – 2025.
RONGVIET SECURITIES CORPORATION’S DEVELOPMENT ORIENTATION IN THE PERIOD OF 2020 – 2025. The development targets in 2020. Rongviet Securities Corporation’s development orientation in the period of 2020 – 2025. RECOMMENDATIONS TO AN ENHANCEMENT OF VDSC’S FINANCIAL CAPACITY.
Enhancing profitability through restructuring revenue from business activities. Enhancing the quality of human resources. Expanding operating scale through enhancing charter capital. RECOMMENDATIONS FOR STATE SECURITIES COMMITTEE AND AUTHORITIES.
94 CONCLUSION OF CHAPTER III. 98 CONCLUSION OF THE STUDY. LIST OF APPENDICES. vi ABBREVIATIONS Abbreviated name Full name VDSC Rongviet Securities Corporation HOSE Ho Chi Minh Stock Exchange HNX Hanoi Stock Exchange SSC State Security Committee VSD Vietnam Securities Depository MOF Ministry of Finance SEC Securities and Exchange Commission CFTC Commodity Futures Trading Commission FPTS FPT Securities Joint Stock Company IVS Vietnam Investment Securities Company PHS Phu Hung Securities Corporation Mirae Asset Mirae Asset Finance Limited Company (Việt Nam) MBKE Maybank Kim Eng Securities Joint Stcok Company SSI SSI Securities Corporation VPS VPS Securities Joint Stock Company HSC Ho Chi Minh City Securities Corporation VNDS VNDIRECT Securities Corporation AGRISECO Agribank Securities Corporation SHS Saigon – Hanoi Securities Joint Stock Company KIS Vietnam KIS Vietnam Securities Corporation KBSV KB Securities Vietnam Joint Stock Company VCSC Viet Capital Securities Joint Stock Company ACBS ACB Securities Limited Company FED Federal Reserve System BoD The Board of Directors vii JSC Joint Stock Company Eximbank Vietnam Export Import Commercial Joint - Stock Bank SATRA Satra Trading Group Viet Long Securities Investment Fund Management VLMF Corporation SMEs Small and Medium Enterprises viii LIST OF TABLES Table 2.1: VDSC’s overview of business performance between 2017 and 2019 .2: VDSC’s revenue structure between 2017 and 2019 .3: VDSC’s structure of capital from 2017 to 2019 .4: VDSC’s capital structure ratios between 2017 and 2019 .5: VDSC’s capital adequacy ratio between 2017 and 2019 .6: VDSC’s essential items in balance sheet between 2017 and 2019 .7: VDSC’s proportion of main items in total assets between 2017 and 2019 .8: VDSC’s activities ratios between 2017 and 2019 .9: VDSC’s profitability ratios between 2017 and 2019 .10: VDSC’s liquidity ratios between 2017 and 2019.
60 ix LIST OF FIGURES Figure 2.1: VDSC’s organization structure .2: VDSC’s process of charter capital mobilization between 2007 and 2018 .3: The number of employees in VDSC between 2013 and 2019 .4: VDSC’s structure of employees’ qualifications .5: VDSC’s structure of employees’ age .6: VDSC’s expenses structure in 2018 .7: VDSC’s expenses structure in 2019. Motivation of the study The securities market has appeared in the world for centuries as an effective promotional channel. Its existence made substantial contributions to the operation and prosperity of global economy. With outstanding functions such as an allocation of capital, the State’s powerful instrument in implementing the macroeconomic policies, stimulation of the habits of savings and investment, a tool of corporations’ business operation assessment…, the stock market is considered as a form of high-level development of production and circulation of special goods – the ownership of capital.
Getting insights into its substantial importance, Vietnam’s the stock market was officially born in 1998 with establishment of two securities trading centers in Hanoi and Ho Chi Minh cities, which broadened brilliant horizon to the development of financial market in particular and the prosperity of the economy in general in Vietnam. With an intensive integration degree of Vietnam into the global economy, Vietnam’ s the stock market provided securities companies with golden opportunities as well as challenges. In particular, they had more favorable condition to acquire valuable experiences, take advantage of advanced technology and diversify products and services from developed countries in the world. On the other hand, their challenges were not only gaining a sustainable growth in their business activities but also boosting their competitiveness before massive assimilation of foreign securities companies.
In reality, it was proved that an abrupt appearance and then dispersal of Vietnamese securities companies had been a prevailing phenomenon of which root cause was an iron deficiency in financial capacity. An unefficiency of business operation leading to a weakness in profitability, an inadequacy of capital structure causing a lack of liquidity and solvency, or an insufficiency of charter capital resulting in potential financial risks brings about big obstacles for securities companies in not only preserving business operation but also competing both other domestic and foreign companies with an abundant source of finance from parent corporation as well. As a result, the most practical method to encounter these difficulties must have accomplished their capability of effective business 1 operation and upgraded their competitiveness in the stock market, which principally results from an enhancement to solid financial capacity. Rongviet Securities Corporation (VDSC) is recognized as one of the largest and prestigious securities companies in Vietnamese stock market, which has been proved by an efficiency in business operation, an expansion of branches and huge support of high- reputation founding shareholders.
However, it demonstrated a sharp reduction in their financial capacity between 2017 and 2019 through expression of their profitability, their efficiency in business operation and their ability to meet obligations, which requires huge efforts on reform of business management and advancement of financial capacity, especially when competitiveness has been driven to a new level by the participation of foreign companies lately and acquisition of market shares among them becomes more extremely severe than ever. Accordingly, as an internship of VDSC, I did my research on the project titled: “An enhancement to financial capacity of Rongviet Securities Corporation” with a view to analyzing their financial capacity, comparing to other peers then recommending solutions to achieve their sustainable growth. Research objectives Objectives of the research consist of the followings: Firstly, systematize theoretical background and literature review about securities companies and financial capacity. Secondly, analyzing and assessing VDSC’s financial capacity in the period of 2017-2019, figuring out achievements and drawbacks, which supports them to get insights into their current financial capacity.
Thirdly, recommending solutions for both the Company and other authorities to upgrade their financial capacity in the period of 2020-2025. Materials and methods In order to achieve goals, the research uses descriptive statistical tools combined with the method of aggregating and comparing business results between enterprises in the industry and between years.