BIBICA CORPORATION

Code: BBC (HOSE) Industry: Consumer/Confectionary

Recommendation
Rating
Current price
Upside potential (1 year)


BUY
09/10
42,900 VND
30%

BRIEF REPORT

Financial Summary
VND 2011 2012 2013 2014F
Sales (bil) 1,000.31 929.65 1,052.96 1,250.00
+/- yoy (%) 27.0% -7.1% 13.3% 18.7%
Net profit (bil) 46.37 25.89 44.88 52.96
+/- yoy 11.0% -44.2% 73.4% 18.0%
Total asset (bil) 786.20 768.38 808.29 969.95
+/- yoy 3.6% -2.3% 5.2% 20.0%
Equity (bil) 574.31 579.05 594.88 617.00
+/- yoy 5.5% 0.8% 2.7% 3.7%
Debt/Asset 27.0% 24.6% 26.4% 32.2%
Gross profit margin 29.0% 28.6% 31.5% 30.5%
Net profit margin 4.6% 2.8% 4.3% 4.2%
EPS (VND) 2,709 3,007 2,910 3,434
ROA 6.0% 3.3% 5.6% 5.5%
ROE 8.3% 4.5% 7.5% 8.6%

Highlights:

The main business activities of BBC is manufacturing and distributing
confectionary products such as biscuits, cookies, candies, chocolates,
nutrition, moon cakes, pies and breads. In 2013, products of BBC
account 10% market share of domestic confectionary industry. Products
of BBC are distributed through 117 distributors and 250 supermarkets in
all areas of Vietnam as well as exported to Asian, Europe and American
markets.

Generally, BBC achieved high growth rate in the period of 2009 2013.
Only in 2012, revenue decreased slightly (-7.1%) and profit decreased
significantly (-44.2%).

Recently, there has been a big war between Bibica, Lotte and SSI. It is
quite silent recently. However, it seems that this war hasnt finished yet.
Recently, from Q4/2003 to QI, II/2014, Lotte and SSI continue to buy
stocks of BBC from minority shareholders. The nature of this war is that
Lotte would like to acquire Bibica, making BBC become a branch of
Lotte. This is not BBC managements intention. Currently, SSI is
supporting the management. However, this is not the final decision
because SSI is just a financial investor.

























RESEARCH DEPARTMENT
ASIA-PACIFIC SECURITIES JSC

Analyst
Vu Thi Thu Trang
trangvtt@apec.com.vn

Hanoi, April 28, 2013













ASIA-PACIFIC SECURITIES JSC
Head office: APEC Building, 14 Le Dai
Hanh, Hai Ba Trung, Hanoi
Tel: +844 35730200 Ext: 692
Fax: +844 35771966

2
COMPANY BACKGROUND

History
Bibica Corporation was originally the confectionary factory
established in 1990, under Bien Hoa Sugar. Bibica was
equitized in 1998 with initial charter capital of 25 bil VND.

Shareholder Structure
The biggest shareholder of BBC is Lotte Confectionery
Co.Ltd holding 43.56% shares of the company, SSI Fund
Management 19.98%, Sun Sugar JSC 19.05%, Albizia
Asean Opportunities Fund 4.45% and SSI Vision Fund
3.19%. Among them, chairman of Sun Sugar JSC is a brother of chairman of SSI. Therefore, they are considered SSI
investor group.

Recently, there has been a big war between Bibica, Lotte and SSI. It is quite silent recently. However, it seems that
this war hasnt finished yet. Recently, from Q4/2003 to QI, II/2014, Lotte and SSI continue to buy stocks of BBC
from minority shareholders.

The nature of this war is that Lotte would like to acquire Bibica, making BBC become a branch of Lotte. This is not
BBC managements intention. Currently, SSI is supporting the management. However, this is not the final decision
because SSI is just a financial investor.

COMPANY ANALYSIS

Business Model
The main business activities of BBC is manufacturing and distributing confectionary products such as biscuits,
cookies, candies, chocolates, nutrition, moon cakes, pies and breads. In 2013, products of BBC account 10% market
share of domestic confectionary industry. Products of BBC are distributed through 117 distributors and 250
supermarkets in all areas of Vietnam as well as exported to Asian, Europe and American markets.

BBC has 3 factories: The first factory is the head quarter of the company, in Bien Hoa I industrial zone in Dong Nai
(built in 1999); the second factory is in Sai Dong B industrial zone, Long Bien, Ha Noi (built in 2012) and the third
factory is in My Phuoc I Industrial Zone, Binh Duong (built in 2006 and 2009).

Growth
Unit: Bil VND 2009 2010 2011 2012 2013
Sales 626.95 787.84 1,000.31 929.65 1,052.96
Growth rate of sales 25.7% 27.0% -7.1% 13.3%
Net income 57.29 41.78 46.37 25.89 44.88
Growth rate of net income -27.1% 11.0% -44.2% 73.4%
Total asset 736.81 758.84 786.20 768.38 808.29
Growth rate of total asset 3.0% 3.6% -2.3% 5.2%
Owner equity 523.25 544.57 574.31 579.05 594.88
Growth rate of owner equity 4.1% 5.5% 0.8% 2.7%

Generally, BBC achieved high growth rate in the period of 2009 2013. Only in 2012, revenue decreased slightly
(7.1%) and profit decreased significantly (44.2%). This year is the peak of war between BBC management and Lotte.
According to explanation of BBC, there are a number of reasons which reduced revenue and profit of BBC in this
year:

- Impacts of economic recession in Vietnam and other countries.
- BBC spent more money in selling and marketing activities to promote its sales in this condition.
- Lottepie production line in BBC Eastern Factory had been fired, stopped production and started working again in
Feb of 2012. Total recovering cost was 155 bil which has been insured by PVI. However, until the end of this
year, they hadnt reached an agreement in the insurance value yet.
- Export decreased 20% because BBC and Lotte did not reach an agreement in selling price of Chocopie
- BBC lost 12.2 bil from Lotte Pie product, mostly from domestic market.

Basic Information
Price on Apr 25 (k VND) 44.4
EPS trailing ~ QI (k VND) 2.91
P/E 15.26
Book value per share (k VND) 38.58
Beta 0.49
Average trading volume 17,966
Outstanding shares 15,420,782
Market Cap (bil VND) 684.68

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However, revenue and profit of BBC recovered significantly in 2013. In this year, BBC imported 1,500 tons of sugar
with price lower than domestic price 15%. At the end of 2013, BBC and PVI hadnt reached an agreement in
insurance value, yet. BBC record the rehabilitation cost of 101 bil VND as a short-term receivable.

Current Investment
BBC is investing in a factory in Hung Yen. They have put 30.5 bil in this project. Total investment capital of this
factory is 265 bil. This factory is expected to started operation in 2015.

Financial Ratios
Ratios 2009 2010 2011 2012 2013
Liquidity Ratios
Current Ratio 2.17 1.81 2.01 2.03 2.13
Quick Ratio 1.72 1.18 1.44 1.39 1.71
Cash Ratio 1.30 0.48 0.29 0.26 0.72
Solvency Ratios
Long term Debt/Total Asset 0.07 0.03 - - -
Debt/Total Asset 0.13 0.08 0.00 0.00 0.00
Liability/Total Asset 0.29 0.28 0.27 0.25 0.26
Activity Ratios
Day of sales outstanding 36 28 56 85 68
Day of inventory on hand 65 59 61 66 53
Number of days of payable 57 50 48 48 40
Cash conversion cycle 44 38 69 103 81
Profitability Ratios
Gross profit margin 29.7% 26.6% 29.0% 28.6% 31.5%
Operating profit margin 10.1% 5.0% 5.4% 3.1% 5.6%
Pretax profit margin 10.3% 5.7% 5.5% 3.5% 5.4%
Net profit margin 9.1% 5.3% 4.6% 2.8% 4.3%
ROA 8.5% 5.6% 6.0% 3.3% 5.7%
ROE 11.3% 7.8% 8.3% 4.5% 7.6%

BBC has a very safe and stable financial structure. The company does not have any debt and the liability/total asset
ratio is kept stably at ~ 0.25 0.29. Most of BBC liability is in payable account. Other liquidity ratios are also stable
and conservative.

Day of sales outstanding increased significantly from 2009 2012/2013 as the company expanded their distribution
network. However, day of inventory on hand decreasing gives positive sign. Number of days of payable and low
leverage structure show that BBC has very strong financial source.

Although gross profit margin has been kept stable in the period of 2009 2013, operating profit margin and net profit
margin decreased significantly mostly because of increase in selling expense. ROA and ROE are quite stable after
2009.

Comparison with other confectionary companies
Ratios BBC HHC KDC Among 3 companies, KDC has
highest profit margin because it is
leading company in this industry.
Market share of KDC in
confectionary industry is around
36% and they are market maker and
price setter of this industry.

All companies use low leverage.
BBC has a middle position in both
scale and efficiency.


Price 44,400 32,000 53,000
Outstanding shares 15.42 8.21 166.14
Market cap (bil VND) 684.68 262.8 8,805.21
Foreign holding 49 2.01 46.46
EPS (VND) 2,845.78 2,974.30 2,990.01
BV (VND) 38,577 24,528 29,122
EBITDA(bil VND) 98.25 41.8 892.06
EBIT (bil VND) 57.47 32.28 662.01
P/E 15.6 10.76 17.73
P/B 1.15 1.3 1.82
Cash ratio 0.81 1.04 1.59
Current ratio 2.13 1.99 2.54
Long-term loan/Assets 0 0 0.03
Loan/Assets 0 0 0.09

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OUTLOOK

BBCs plan for next 3 years
Unit: Bil VND 2014 2015 2016
Sales 1,250 1,600 2,010
Sale growth 19% 28% 26%
Market share 11% 12% 13%














































Liabilities/Assets 0.26 0.33 0.23
Gross profit margin 31.50% 18.03% 43.33%
Operating profit margin 5.56% 4.07% 13.66%
Net profit margin 4.26% 3.31% 10.81%
ROE 7.65% 12.44% 11.11%
ROA 5.69% 7.98% 8.31%

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APPENDIX - FINANCIAL STATEMENTS

Income Statement
Bil VND 2009 2010 2011 2012 2013
Net revenue 626.95 787.84 1,000.31 929.65 1,052.96
Cost of goods sold (441.05) (578.22) (709.97) (664.23) (721.26)
Gross profit 185.91 209.62 290.34 265.42 331.70
Financial income 26.96 13.71 14.81 6.34 3.24
Financial expenses (7.28) (9.36) (13.46) (4.21) 0.17
Interest (1.80) (5.15) (6.73) - (0.17)
Selling expenses (109.31) (139.92) (188.97) (191.29) (233.71)
General and Admin expenses (32.80) (35.00) (49.11) (47.32) (42.88)
Operating profit 63.48 39.04 53.61 28.95 58.50
Other profit 0.82 6.08 1.72 3.51 (1.20)
Profit of investments in associates - - - - -
Profit before tax 64.30 45.13 55.33 32.46 57.30
Net profit after tax 57.29 41.78 46.37 25.89 44.88
For the parent company 57.29 41.78 46.37 25.89 44.88
Earnings per share (VND) 3,715 2,709 3,007 1,679 2,910

Balance Sheet
Bil VND 2009 2010 2011 2012 2013
Current assets 341.52 333.37 421.80 380.70 450.60
Cash and cash equivalents 204.76 89.08 60.32 49.47 151.71
Short-term investments 5.00 45.00 - 2.85 16.81
Provision of financial investment - - - - (6.11)
Short-term receivables 43.24 78.43 229.70 201.23 191.47
Provision of receivables (0.45) (0.43) (0.74) (3.65) (5.96)
Inventories 70.84 117.41 120.84 120.09 87.60
Provision of inventories - (1.38) (2.22) (1.65) (2.25)
Other current assets 17.69 3.46 10.93 7.05 3.01
Non-current assets 395.29 425.47 364.40 387.68 357.70
Fixed assets 366.59 401.41 344.07 373.55 339.99
Works on progress 198.63 35.12 33.25 45.88 34.33
Long-term investments 14.16 10.79 4.65 - -
Total assets 736.81 758.84 786.20 768.38 808.29
Liabilities 213.56 214.27 211.89 189.33 213.41
Short -term liabilities 157.21 183.69 209.36 187.57 211.94
Short-term borrowings 16.97 43.66 35.73 0.88 1.20
Trade accounts payable 57.44 75.15 96.20 92.48 81.80
Advances from customers 4.14 3.41 3.66 7.06 6.05
Long-term liabilities 56.35 30.58 2.53 1.75 1.47
Long-term borrowings 8.21 54.00 24.00 - -
Owner's equity 523.25 544.57 574.31 579.05 594.88
Charter capital 154.21 154.21 154.21 154.21 154.21
Share premium 302.73 302.73 302.73 302.73 302.73
Retained earnings 47.05 41.12 45.71 25.23 34.97
Minority interest - - - - -
Total equity and liabilities 736.81 758.84 786.20 768.38 808.29

Cash Flow
Bil VND 2009 2010 2011 2012 2013
Cash flow from operation 126.63 32.10 (36.39) (35.21) 151.85
Cash flow from investment 0.25 (94.42) 81.85 42.65 (21.18)
Cash flow from finance 47.54 (53.23) (74.23) (18.28) (28.46)
Cash available 204.76 89.08 60.32 49.47 151.71



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This report has been prepared by analysts of APECS on the basis of information believed to be reliable at the
time of publication. APECS makes no representation or warranty regarding the completeness and accuracy of
such information. Investors must make their investment decisions based upon independent advice subject
to their particular financial situation and investment objectives.

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Tel: (84- 4) 3573 0200 EXT: 692
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Email: research@apec.com.vn; Website: http://www.apec.com.vn