Tham khảo Assignment

Introduction

Hoa Binh Construction & Real Estate Corporation is the full name and the transaction name and abbreviated name is ‘Hoa Binh Corporation’ (hereinafter called Hoa Binh Corporation) with its motto, “Reach the peaks peacefully” is one of the most outstanding construction companies in Vietnam in the era of post-WTO (World Trade Organization). (Hoa Binh 2007)
Hoa Binh Joint Stock Corperation was established with a view for:

 1. Providing clients with products and services of the best quality and in the shortest time possible and for their most convenient utilization in the realm of construction and real estate.

2. Creating a working environment that could bring a high degree of efficiency in order to help staff to fully develop their capacity. On such a basis Hoa Binh Corporation aims to satisfy to the fullest extent the needs and the desires of the individual staff and hence, brings reasonable benefit to the corporation and shareholders as well as make the utmost contributions to the welfare of the country and the society.

3. These corporation‘s missions initiated by the Board of Directors were wholeheartedly supported and   carried out with strong determination by all of Hoa Binh Corp’s members.

Business Operations & Services:
- Industrial & Civil Construction
- Bridges And Roads Building, Transportation Projects,  Water Supply & Drainage System  Building 
- Surface Leveling
- Housing
- Construction Consultations ( project design consultations are not included )
- Production, Building Materials  And  Interior Decoration Products.
- Services: Housing Renovation, Interior Decoration.
Business Operations

While continuously updating and upgrading its main activity (construction), Hoa Binh Corporation has also invested in other related sectors (building materials and services). This diversified expansion has enhanced the Corporation’s effectiveness and work quality to succeed in its main activity, simultaneously satisfying Clients’ requirements and offering them the most benefit by exploiting resources and providing a balanced package service at high standard. This superiority has been demonstrated through a whole series of projects of which Hoa Binh was the main contractor during recent years, especially projects in Sai Gon South.

All sections of Hoa Binh Corporation are given independent authority and supported to specifically develop, while remaining under the Corporation management system to assure a balanced strength and strong power. Hoa Binh Corporation always aims at perfection in all of its products and services. This is achieved by taking an active, creative and highly professional approach to work, by total application of ISO 9001 : 2000 quality management system, and encouraging non-stop study to step by step develop business following the slogan “Slowly But Steady”.

After a successful organization of procedures for whole package tendering, costs reduction, effectiveness increase for both Owners and the Corporation, from the promotion of its subsidiaries’ strengths, Hoa Binh is accelerating the transformation of subsidiaries with effective operations such as MHB Co., Ltd., HBP Co., Ltd., HBT Co., Ltd., to joint-stock companies; and parallelly with this action, Hoa Binh and its partners will establish Hoa Binh House Corporation, Hoa Binh Securities Corporation, and Hoa Binh Technical Company.

The equitization of developing subsidiaries is a strategic move, really necessary to create positioning and force to grow more and more in technologies and the related markets in this fierce competition battle of WTO era.

Hoa Binh presently has 10 specialized units in charge of production and supply of 10 different products and services: 
♦ Hoa Binh Architecture - HBA

♦ Hoa Binh Building - HBB

♦ Hoa Binh Civil Engineering - HBCE

♦ Hoa Binh Engineering - HBE

♦ Moc Hoa Binh - MHB

♦ Anh Huy Aluminium - AHA

♦ Hoa Binh Paint - HBP

♦ Hoa Binh Housing - HBH

♦ Hoa Binh Trading - HBT

♦ Hoa Binh Decoration – HBD

Hoa Binh Corporation issues its policy:

This Policy includes commitments as follows:

- Comply to Vietnamese legal regulations on labour and other current laws; respect international conventions cited in part II of SA 8000:2001 standards and the related explanations.

- Frequently express concern to introduce upgrading of working conditions to our staff and workers and environment protection for the community.

- Propagate all documents on Social Accountability Policy to all its staff and workers, including our subsidiaries, sub-contractors, and suppliers for a full understanding for support and implementation. 

The Board of Directors of Hoa Binh engages to establish, apply and maintain a Social Accountability Management System in compliance with SA 8000 : 2001, ISO 14000 : 2004 standards, in order to aim at the improvement of working conditions, environment protection and consciousness in the whole Corporation on these subjects.

Problem Statement

Difficuties in the era of post-WTO. One of them is the shortage of capital for the new projects, the development and innovation of Hoa Binh itself.

Hoa Binh has tried its best to fulfill its responsibilities as follows:

Responsibility to shareholders: BOD focuses on management with a good managing machine to secure clear verification and obligation in carrying out the duty from executive director, build up confidence for shareholder investors and relevant parties. To carry out well this issue, the policy support for this machine are released with the following basic points:

1. Shareholders and pelative parties are equally or indifferently.

2. BOM commits to create more value for company’s aspects of operation in long term by careful management, take charge of implementing duty and secure compatible result, attain maximum interest for shareholders, prevent any conflicts and take charge of any decision or agreement executed by company.

3. All operations are transparent for public survey, provide sufficient information to relevant parties.

4. Business operations are provide for pusks and these should be under a suitable risk control management level. The company realizes the rights of shareholders in acknowledging full in high, accurate, fair adequate equal and information in order to release decision at shareholder meetings. The company creates opportunities for shareholders to have equal rights in supervising company operation, to carry out every demand, proposal or comment.

Responsibility to the society: The Board of Directors of Hoa Binh believes that improvement of working conditions for its staff and workers is a vital duty; and the impact on the environment of its activities is an important concern with a view to contributing to a stable development of the society.

Responsibility to labor’s interest: The company created and issued document in relation to cadres employees responsibility to open training courses and vocational training. To transmit by media communication like posting web page bulletin meeting. Departments to direct cadres employees in executing strictly their missions and company policy with their training and give genvine attention for clean ethical spirit and professional conscience.

Wage - Salary -–Award: The company release policy of reasonable awards, and penalty fairly by explanation to promote any effort and get close with cadres employees like to build up a clean working environment.

Training Policy: To aim this policy to train cadres and employees, the company set a large amount to support training operations such as professional and technical courses, foreign language and technological advancement and new approaches abroad.

Employees are conceived both as objects those the company provides services and as cores for development. Hoa Binh’s employee policy is favorable that keeping and attracting many talented persons for years: No “Brain drainage”. Hoa Binh’s culture together with comprehensive Quality Management System are more and more perfect helping new employees soon join the company.

Policies for customers and partners: Hoa Binh is always in search for a perfect way for our customers and partners is satisfaction, with respect to fairness. Justice secures the harmonization parties interests. Hoa Binh ensure that only good cooperation can bring good result and can bring development and progress for both parties. The development of each enterprise is the foundation for social common development. And the distribution for this development is one important mission of Hoa Binh Corporation. Therefore, a spirit of right competition is a way to reflect and to perform by all cadres and employees.

Research Methods: Quantitative and Qualitative Research.

Analysis of Data
Growth in the term of 2004 – 2006: [1]

As the first general contractor being quoted in Ho Chi Minh stock exchange in December 2006, Hoa Binh Corporation has had many good opportunities of getting involved in many projects as the principal contractor or investor. The corporate operating activities have been strongly develop with high growth rate during the past period. Hoa Binh Corporation is one of the businesses with high competitiveness and effective operations in the field of building. In 2004, when the prices of iron, steel and certain other building materials were suddenly raised (60 – 70%). Hoa Binh Corporation’s operations suffered from many difficulties, and the coporate net turnover only reached 97.8 billion dong, and profit only 3% by turnover. However, compared with the average turnover in the field of 11.873 billion dong, that gained by Hoa Binh Corporation was still 8 times higher. Such superb achievement made by Hoa Binh Corporation, was continued, maintained, and enhanced, when the coporate operations began to tecover and strongly grew, and were further increased when currently Hoa Binh Corporation is making great success in executing large-scale works. In 2005, the corporate turnover was 133.3 billion dong (increased 36.3% over 2004). In 2006, its turnover was 205.6 billion dong (increased 54.2% over 2005). And expectedly, in 2007 its turnover would be 450 billion dong (increased 118.9% over 2006) As to after-tax profit, in 2005 it attained 3.09 billion dong (increased 42.7% over 2004); in 2006 reached 9.01 billion dong (increased 192% over 2005). And it is envisaged to earn after-tax profit of 27.5 billion in 2007 (increased 205.2% over 2006). In addition to its operations in construction, Hoa Binh Corporation has had so many opportunities in its real-estate development, of which one can say the project of building an office building at the financial and commercial center of Phu My Hung New Urban Area is a project having good prospect, with total investment value (including land value) of 500 billion dong, and total building area of nearly 40,000 m², 2 basements included. To grasp such opportunities, the Board of Directors decides to increased the corporate registered capital by further ensuing 7,860,000 shares – increasing total number of quoted stocks from 5,640,0000 to 13,500,000 stocks, and quoted capital from 56.4 billion dong to 135 billion dong – divided into two stages in 2007: first stage in the end of the second quarter, and the second stage in the fourth quarter. Hoa Binh Corporation’s strong growth is not only embodied via its turnover, profit, and assets, but also via the value of Hoa Binh Corporation’s trademark, which is the summary of such important factors constituting its great potentialities in development. The said important are prestige, relationships, unique culture, active human resopurce and the length of experience which has been embodied through several well-known structures.

PLAN FOR 2007 AND ORIENTATION UP TO 2010

Targets	2007	% increase	2008	% increase	2009	% increase	2010	% increase
Turnover (billion dong)	450	118.86	800	77.78	1,150	43.75	1,600	39.13
After-tax profit (billion dong)	27.50	205.22	54	96.36	78	44.44	150	92.31
After-tax profit/ turnover (%)	6.11	39.46	6.75	10.45	6.78	0.48	9.38	38.22
Registered capital (billion dong)	135	139.36	185	37.04	235	27.03	285	21.28
After-tax profit/ mean Registered capital (%)	36.16	125.44	36.61	1.24	39.49	7.88	60.61	53.46
Dividends (%)	12	20	14	16.67	15	7.14	20	33.33

  Risks Analysis

1. Risks in Management and due to late execution of works:

The Company is aware of the risks in management, hence its direction already set out to prevent the possible errors and omissions by radically implementing the quality management system of ISO 9001: 2000 to maintain the operational standards at all of its working sites and offices, with full respect for the continuous improvement of such quality management system. The Company also prepared the working Guidelines to enhance its staff’s qualifications, ensuring their adequate knowledge, skills, morals and sense of responsibility to the company, and to all the relevant peeople, minimizing damages and preventing the occurrence thereof. Normally, the risks due to late execution in different works may be caused by the workers or the contractors or due to certain majeure events. The delay due to the investors is normally caused by the late delivery of ground, review of arising costs, and review of the design for execution. Such delays may affect the progress and costs of execution. However, the Company has minimized such risks of delay by well cooperating and coordinating with the relevant parties, including the investor’s representative, consultants, project manager, and the designer to ensure the successful completion of the building work.

Throughout 20 years’ operations, Hoa Binh Corporation has taken good control over the execution progress. In cases of delay caused by contractors, if any, e.g. shortage of building materials,… Hoa Binh Corporation has prevented the same by reaching agreements in advance on the sale-purchase of different materials. As to such delays caused by events of force majeure in the contract performance, Hoa Binh Corporation often has to effect insurance policies to restrict the damages caused thereby.

2. Economic risks:

The operating conditions of a company is a quite common basis for the investor’s decision making. Considering the fluctuations of a company’s operating conditions is the indirect prediction of its stock price. Investors may assess the operation conditions via such factors as economic growth rate, market, interest rate, inflation, exchange rate, …

Economic growth rate: A stable economy with good growth can increase the social needs of investment and may bring about the rise of stock prices in the market. On the contrary, in an unstable economy, or with slow development, the stock prices may be decreased due to low needs of investment and the risks in stock investment will be increased.

Interest rate: After being quoted, the corporate loan capital accounted for some 25% of its registered capital, of which 7.5% was long-term loans with stable interest rate of 10.95% p.a,; 17.5% as short-term loans with interest rate of 9.96% p.a. Thus, at present, the factor of interest rate has not much impact on Hoa Binh Corporation’s operations. However, in the time to come, when Hoa Binh Corporation makes the capital mobi lization for its large projects, its capital structure shall undergo great changes, with large rate of loan capital, and then the interate rate fluctuation might affect the corporate operations.

Exchange rate: The corporate product import/ export accounts for low rate, thus the exchange rate fluctuation shall not much affects its operating activities.

Inflation: During 2004 and 2005, the inflation rate of Vietnam was always high, approximately 10%, and as predicted by economic experts, that rate would be higher this year. This would remarkably affect the corporate operating activities, because high inflation rate would increase the input prices, including both labor and materials, indirectly and directly.    

3. Risks caused by drift of building materials’ prices:

Effect of assorted materials’ prices on turnover and profit:

The fluctuations of assorted materials’ prices tending towards short-term increase would bring about the increase of the investors’ investment costs, accordingly. This may reduce the number and scale of investment projects, affecting the turnover of the construction field, in general, and of Hoa Binh Corporation, in particular. The costs of construction are much affected by the fluctuations of the prices of such building materials as iron, steel, cement,… The sudden increase of such prices would quickly have impact on the corporate input prices, bringing about the great increase of costs of the signed long-term building contracts, which mayaffect the corporate profit. Since 2001, Hoa Binh Corporation has adopted a quality management system under the international standard of ISO 9001: 2000, in its operating activities; thus, its costs have been always under tight control, in accordance with the ISO management procedures, such as thos of procuring materials, building equipment; those of recruitment and personnel training; those of execution process control, etc… ensuring its competitiveness against other builders. These has been embodied through the case when Hoa Binh Corporation, from the status of a sub-contractor, was chosen as the principal contractor by such large investors as Phu My Hung Joint-venture Co., Van Phat Hung Co., Bitexco Land Co., Fico Building Materials Corporation, with their confidence and trust.

Hoa Binh Corporation has effective measures all the times to limit its risks due to the fluctuations of materials’ prices, from the calculation of bidding quotation to the negotiation on terms and conditions of building contracts and materials and materials supply contracts. As a result, for many past years, at times the materials’ prices suffered from great fluctuations (e.g. in 2004, the prices of iron, steel, other metals, petrol and oil, were increased 60-70%), but there has been no years when Hoa Binh Corporation suffered losses. 

4. Risks in the Construction Market:

Recently, in November 2006, Vietnam had official accession to WTO. Such accession would bring about great and direct competitive pressure from those foreign organizations who have great potentialities in finance, technology and human resources, on such fields as civil and industrial construction, production of building materials, trade in real estates, etc… Besides, in Ho Chi Minh City, there are currently concentrated many large businesses who operate in the construction field. Such companies are Hoa Binh Corporation’s direct competitors. However, in a large market, those truly competent construction companies shall always ensure their matkets shares; therefore, the higher the competitiveness is, the less risks in the market will be.

5. Other risks:

Such risks due to force majeure as earthquakes, acts of God, storms, floodss, fires, wars, epidemics, terrorism … shall more or less affect the corporate operations, such as delaying the progress or causing damages for the works’ quality (partly or wholly).

Recommendations: The policies, strategies, and measures Hoa Binh Corporation will issue to be successful in its goals.

Certain immediate solutions:

First: Registered capital increase;

Second: Grant to its officers & employees the right to purchase shares;

Third: Making the capital contributions to establishing Hoa Binh Joint Stock Co., Hoa Binh Engineering Co., (HBE);

Fourth: Choice of Auditing unit in 2007.  

Conclusion
Being faced with some obstacles of post-WTO, Hoa Binh Corporation has tried its best to overcome the difficulties and fulfill all its goals with its policies and strategies. Despite all the difficulties lying ahead, Hoa Binh Corporation’s corporate financial conditions in 2006 were good and stable. The books, documents, and financial statements were clear and scientifically maintained. The inventory of cash, assets, and materials was correctly made as stipulated. In managing and operating its activities, Hoa Binh Corporation has fully compiled with all the provisions of the Laws: Corporate Law, Labor Law, Bidding Law, Construction Law … as well as correctly and fully implemented all the provisions in the Corporate Articles of Association. The Board of Directors of Hoa Binh Corporation also share its profit in charitable activities and education activities.

   

References

www.hoabinhcorporation.com

Hoa Binh Corporation’s Press Release Document