VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL GRADUATION PROJECT PROJECT NAME The impact of Vietnam’s steel financial indicators on investment returns Student’s name: Khong Thuy Linh Hanoi – Year 2024 VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL GRADUATION PROJECT PROJECT NAME The impact of Vietnam’s steel financial indicators on investment returns SUPERVISOR: MSc. Chu Van Hung STUDENT: Khong Thuy Linh STUDENT ID: 20070225 COHORT: Finance SUBJECT CODE: INS4011 01 MAJOR: International Business Hanoi – Year 2024 ACKNOWLEDGEMENT Throughout life's adventure, there will be extremely important milestones for everyone. For me, 4 years of university is an important time that helps me acquire knowledge, hone skills and confidently stride towards the future. First and foremost, I would like to send my sincere thanks to the International School - Vietnam National University, Hanoi for giving me this valuable opportunity and always creating the best conditions for me to carry out my thesis.
The second gratefulness i would like to send to the teachers who have been teaching me many subjects at International School. They are not only people who impart to me deep, profound knowledge, but also give me positive energy and motivation to pursue my dreams. In particular, I would like to send special thanks to MSc. Chu Van Hung - my dedicated instructor guided me in a timely and meticulous manner, helping me complete my thesis to the fullest.
Finally, with my limited knowledge, I realized that my thesis may have shortcomings. I sincerely hope to receive your understanding and constructive feedback, which will be a valuable resource for me to improve myself. I wish you health, happiness and success in life! Sincerely thanks Student Linh Khong Thuy Linh COMMITMENT I hereby declare that this thesis is entirely my own work and the results of the research are genuine. It does not contain any content that has been previously published or that has been done by others, except for citations that are fully referenced in the thesis.
In case of any fraudulent behaviour, I am willing to take full responsibility before the lecturers and the Committee. Sincerely thanks Student Linh Khong Thuy Linh LIST OF ABBREVIATIONS Abbreviation Full form Pooled OLS Pooled Ordinary Least Square FEM Fixed Effects Model REM Random Effects Model FGLS Feasible Generalised Least Squares LIST OF TABLES Table 2.1: Classification of financial ratios.2: Summary of research results .1: Explaination of the independent variables .1: Descriptive Statistics of Variables in the Research Model .2: Correlation matrix of the model with the dependent variable Investment return .3: Results of Pooled OLS, FEM, REM Regression Model .4: Results of Choosing between the Pooled OLS and FEM Models .5: Results of Choosing between the Pooled OLS and REM Models .6: Results of Choosing between the FEM and REM Models .7: Results of Multicollinearity Test using VIF .8: Results of Heteroscedasticity of the model .9: Results of Autocorrelation Test of the model .10: Regression Results Using the FGLS Method .11: Summary and compare results with other research .1: Summary of Research Results .40 ABSTRACT The thesis conducted to examize the financial indicators affecting the investment returns from 14 steel companies listed on the Vietnam Stock Exchange. Data is taken from the website Vietstock.vn, annual reports and financial reports of the companies. The dependent variable is investment returns, 13 independent variables are Earning per share (EPS), Return on Average Equity (ROEA), Return on Average Assets (ROAA), Quick Ratio (QR), Current Ratio (CR), Inventory Turnover (IT), Asset Turnover (AT), Net Profit Margin (NPM), Account Receivable Turnover (ART), Debt-to-Equity Ratio (DE), Total Liability/Total Asset (TL/TA), Interest Coverage Ratio (ICR) and EBITDA Margin.
Panel data regression methods are utilized in this research study. The regression estimations include the Ordinary Least Squares (OLS) method, the Fixed Effects Model (FEM) approach, and the Random Effects Model (REM) approach. After conducting tests and overcoming defects of the model, the results are as follows: EPS and ROEA have positive impact on investment returns with a significance level of 1%; IT, ICR have positive impact on investment returns with a significance level of 5%. While AT and DE has negative impact on investment return with a significance level of 5%.
Through the results obtained, the thesis also proposes investors and management implications for efficiency in the future business TABLE OF CONTENT CHAPTER 1: INTRODUCTION. Statement of the Problem .4 CHAPTER 2: LITERATURE REVIEW. Relationship between financial indicators and investment returns .10 CHAPTER 3: RESEARCH METHODOLOGY AND RESEARCH MODEL 16 1.1 Descriptive Statistical Analysis.1 Pooled OLS regression model .2 Fixed Effects Model (FEM) .3 Random Effects Model (REM) .4 F-Test for Selecting between Pooled OLS and FEM .5 Breusch-Pagan Lagrangian Test for Selecting between Pooled OLS and REM .6 Hausman Test for Selecting between FEM and REM .4 Model Specification and Diagnostics.24 CHAPTER 4: RESEARCH RESULTS AND DISCUSSION. Descriptive Statistics of Research Data .1 Results of Pooled OLS, FEM, REM Regression .1 Comparing Regression Results between Pooled OLS and FEM Models 33 3.2 Comparing Regression Results between Pooled OLS and REM Models 33 3.3 Comparing Regression Results between FEM and REM models.
Model Deficiency Check .1 Test for Multicollinearity .2 Test for Heteroscedasticity .3 Test for Autocorrelation. Addressing Model Deficiencies .1 Estimating the Model Using the FGLS Method. Discussion of Research Results .37 CHAPTER 5: CONCLUSION AND MANAGERIAL IMPLICATIONS. Investors and Managerial Implications.
Limitations of the Thesis and Directions for Future Research .1 Limitations of the Thesis .2 Directions for Future Research. 45 3 CHAPTER 1: INTRODUCTION Chapter 1 will present the urgency of the research topic, define the objectives including general and specific research, corresponding research questions, scope, and objectives. The significance of the topic will also be presented in Chapter 1 and the overall structure of the topic will be presented at the end of this chapter. Statement of the Problem The steel industry is taken into consideration the spine of the national economic system, playing a strategic role inside the manner of industrialization and modernization of the country.
In the file providing to construct "Vietnam Steel Development Strategy to 2030, Vision to 2050", the Ministry of Industry and Trade emphasized: "The steel industry is a basic industry, presenting enter substances for important economic sectors of the country such as mechanical manufacturing, supporting industries. On the other hand, strongly developing the steel production industry also creates a solid foundation and develops the market for processing and manufacturing industries, construction, machinery. contributing to creating a stable supply source and improving the productivity and efficiency of industrial sectors." Currently, many researchers have assessed the importance of the steel industry. Steel is an important aspect for the improvement of any current economy within the international these days (Endri, Ridho et al.
Steel consumption is taken into consideration a critical indicator to degree socio-financial development and dwelling requirements of human beings within the country (Balakrishnan, C. Recognizing the key role of the steel enterprise, the enterprise has evolved strongly. Currently, the steel enterprise continues to be on the rise, the steel enterprise finished an average increase rate of about 10% yearly, even as the common annual GDP increase price in Vietnam turned into 6. By the give up of 2023, there had been more than 20 steel firms indexed at the Vietnamese stock market on all 3 exchanges: Ho Chi Minh City Stock Exchange (HOSE), Hanoi Stock Exchange (HNX) and UPCOM.
According to Vietnam Steel Association, Vietnam's metal enterprise holds a weighted position within the 1 VNindex by means of 2023. The general market capitalization of the VNindex reaches 6,660,000 billion VND, envisioned to be equivalent to 65.2% of Vietnam's GDP by using 2023. Notably, the steel industry itself contributed a substantial 1,495,000 billion VND to this total market cap. This translates to a 22.3% weight for the steel industry within the VNindex.
Furthermore, in 2023, the steel industry contributed 12.42% to the growth of the VNindex. These numbers underscore the significant role the steel industry plays in the Vietnamese stock market. With open potential and opportunities, many investors are currently interested in and trading in steel industry stocks listed on Vietnamese stock exchanges. Of course, for each trader, the most important thing is investment returns.
Therefore, researching the impact of steel industry financial indicators on investment returns is extremely important and necessary. To help investors to come to decision with significant investment choices, the usage of financial ratio evaluation is essential. Evaluating investment possibilities is of extreme significance due to the need to maximise investment returns (Kabir, Aripin et al. This helps investors make effective investment decisions and helps businesses in shareholder relations to raise capital.
Therefore, this research will be useful for investors interested in steel stocks, and managers of steel companies. My decision to delve into this topic stems from a confluence of personal aspirations and professional experiences. As an intern at SSI Securities Corporation, the author was fortunate to receive my initial training and guidance in steel analysis under the mentorship of my manager. While the steel industry presents a challenging analytical landscape due to its inherent volatility and cyclical nature, it also stands as a cornerstone of Vietnam's economy, full of untapped opportunities for further development.
Beyond the intellectual allure of steel industry analysis, I harbour a deep-seated desire to establish myself as a dedicated researcher in this field. The prospect of contributing to a more comprehensive understanding of “The impact of Vietnam’s steel financial indicators on investment returns” holds immense personal gratification. The author is confident that this research endeavor will not only enrich my academic pursuits but also enable me to make a meaningful contribution to the world of finance and investment.1 Overall Objective Evaluate the impact of financial indicators in Vietnam’s steel industry on investment returns in publicly traded steel companies listed on the Stock Exchange of Vietnam.2 Specific Objective First, identify the important financial indicators in the Vietnamese steel industry that affect the return on investment. Second, use each financial indicator to analyze the effect on the return on investment.
Third, based on the findings of the thesis, investors and managerial implications also proposed. Scope Scope: The study uses data collected from the annual reports and financial statements of 14 steel companies listed in the Vietnamese stock market. In reality, there are over 20 steel companies listed on the Vietnamese stock market. However, according to the author's survey, only 14 steel companies met the criteria and had sufficient information available as of 2023 to serve the research purposes.
Temporal: The study provides analytical data from 2014 to 2023. The reason the author chose this period is because the Vietnamese stock market is still quite new, the chosen timeframe ensures the availability of reliable and consistent financial data for 14 steel companies under investigation. This period also encompasses a decade of significant developments in Vietnam's steel industry, capturing both periods of growth and fluctuations. Research Methodology This thesis uses a mixed methods approach that combines qualitative and quantitative research methods.
The qualitative method includes statistical analysis, integration, analysis and previous analysis of the existing literature to establish the theoretical foundation of the study is established quantitative method uses linear regression model role to identify financial indicators and the extent to which each indicator influences the investment returns of Vietnamese steel companies. 3 In this thesis, the author will use these following research methods: - Literature Review Method: Textbooks, articles and previous research will be used as references for the study. - Data Collection, Processing, and Analysis Method: The study will use the help of both EXCEL and STATA 17.0 software systems, to analyze the impact of Vietnam's steel industry financial indicators on investment returns. - In addition, the thesis will use the OLS regression model, fixed effects model (FEM), random effects model (REM), F-test, Breusch and Pagan Lagrangian, Hausman test, and model impairment tests to examize the impact of Vietnamese steel industry financial indicators on returns of investment.