The factors affecting the profitability of enterprises in the steel industy listed on Vietnam's stock exchange, 2022

MINISTRY OF EDUCATION STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

GRADUATE THESIS

BANKING AND FINANCE

MAJOR CODE: 7340201

THE FACTORS AFFECTING THE PROFITABILITY

OF ENTERPRISES IN THE STEEL INDUSTRY GROUP LISTED

ON VIETNAM’S STOCK EXCHANGE

SVTH : Lê Hồng Bảo Trân

MSSV : 050606180423

GVHD : Dr. Nguyễn Thị Như Quỳnh

Ho Chi Minh City, July 4, 2022

DISCLOSURE

My name is: LE HONG BAO TRAN

Commitment graduation thesis with the topic "THE FACTORS AFFECT THE

PROFITABILITY OF ENTERPRISES IN THE STEEL INDUSTRY GROUP

LISTED ON VIETNAM‟S STOCK EXCHANGE"

Instructor: Dr. NGUYEN THI NHU QUYNH

This graduation thesis is my research work, the contents and data in this thesis are

completely honest, in which there is no content previously published or content made

by others outside of this thesis. Excluding references to sources.

AUTHOR

LE HONG BAO TRAN

ACKNOWLEDGEMENT

Reality shows that to be successful at work, it is necessary to have the support

and help of those around, no matter how much or little that help, directly or indirectly.

During the time from the time, I started working on my graduation thesis outline, I

have received the attention, guidance and support of teachers, family, and friends

around.

With a very deep gratitude, I would like to express my sincerest thanks to the

lectures of Banking University of Ho Chi Minh City who used their knowledge and

enthusiasm to be able to impart capital to me. the most valuable knowledge during the

study period at university.

I would like to give my sincere thanks to Ms. NGUYEN THI NHU QUYNH

who dedicatedly guided me through each talk and discussion on the research topic.

Thanks to those instructions and teachings, my thesis outline has been completed

remarkably. Once again, I would like to express my sincere thanks to Ms Quynh.

This thesis was completed within 3 months. At first, I was surprised because

my knowledge was limited, so I couldn't avoid making mistakes. Thereby, I look

forward to receiving comments from teachers in the school to help my internship

outline more and more perfect.

Sincerely, thank you!

AUTHOR

LE HONG BAO TRAN

ABSTRACT

Today, the steel industry is an industry with great potential for development

and is an industry that plays an important role in economic activities and economic

growth of countries around the world. In Vietnam, in the past few years, the steel

industry is an industry that tends to have stable growth for a long time, which leads to

the prosperity of the domestic economy. In countries around the world in general and

in Vietnam in particular, the proportion of the steel industry in the total wealth of the

society varies, but generally accounts for about 20 to 30% respectively. Thereby, it

can be seen that the steel industry has a relatively large proportion in the economic

structure of our country and tends to increase. In the market economy, besides the

successes achieved, there are still many difficulties that many enterprises in the steel

industry are facing in the process of operation that inhibit growth such as lack of

capital, rapidly increasing price levels, policies that are not suitable with the actual

situation, the decline of confidence in the market, besides there are also risks such as

debt default or inability to pay and ability to pay debts. The main reason for this

situation is the lack of understanding and knowledge around working capital

management as well as factors affecting profitability of business operation.

For business, profitability plays an extremely important role, because the main

purpose of companies is to make a profit, when it is profitable, the company can

continue to maintain production and business.

The final objective of firm is maximizing the firm value and maximizing the

wealth of shareholder, to achieve this goal, the companies usually make profit.

Therefore, improving and enhancing profitability is always the top concern of

managers, in addition to improving profits, businesses need to ensure solvency to be

able to meet debt obligations as they come due. Therefore, the author chooses the

topic "The factors affect the profitability of enterprises in the steel industry group

listed on Vietnam’s Stock Exchange" to clarify the extent of impact of micro and

macro factors affecting profitability of steel industry enterprises on Vietnam stock

exchange. From there, provide necessary recommendations to improve profitability

coefficient in the future.

To complete the research results, the author proposes the necessary research

objectives, including determining the micro and macro factors affecting profitability,

assessing the trend and the level of impact of the factors mentioned above and propose

appropriate solutions to improve the level of impact of these factors on the

profitability of steel enterprises listed on the Vietnam stock exchange.

In order to have a complete article, the author proposes a research layout consisting of

5 main chapters, specifically as follows:

Chapter 1: Introduction

In chapter 1, this present the reason for the thesis through its necessity for the

economy. Besides, this chapter gives an overview of the objectives, methodology and

contributions of the thesis.

Chapter 2: Theoretical basic and literature review

In this chapter, this thesis introduces the concept of profit, profitability, the

formula for measuring profit and profitability, refers to the theory of profitability and

factors affecting the profitability of steel companies listed on the Vietnam stock

exchange. At the same time, this chapter also summarizes empirical studies on the

factors affecting the profitability of enterprises in the steel industry.

Chapter 3: Methodology

Based on chapter 2, this thesis will present the research model, explain the

variables in the model and expect the sign of the independent and dependent variables.

Next, this thesis will describe the data collection method, including data from annual

report of steel companies and data from World Bank, and the research model

estimation method, thereby serving as the basis for the implementation of the next

chapter.

Chapter 4: Empirical results

In this chapter, the author will analyze the results research, including

descriptive statistics, running regression models, testing the research model's defects,

and resolving the defects. Based on the results of this analysis, the author will evaluate

and compare with previous empirical studies. Then, this thesis will discuss the result

and give all of the recommendations in the next chapter.

Chapter 5: Conclusion

In this chapter, this thesis will summarize the results of the research conducted

in the previous chapter and make recommendations to construction industry

companies and the State Securities Commission based on the results of the assessment

obtained. At the same time, the author also raised the limitations and expanded

research direction for future topics.

The thesis researches and analyzes the factors affecting the profitability of 25

steel companies listed on the Vietnam Stock Exchange in the period 2012-2020. The

mentioned influencing factors include the regulation firm size (SIZE), financial

leverage (TDTA), liquidity (LQ), fixed assets investment (TANG), company growth

revenue (GR) and inflation rate (INF). Using panel data methodology, the study shows

that firm size (SIZE) and liquidity (LQ) have a positive impact on profitability while

variable financial leverage (TDTA) has the opposite effect. In addition, the variables

company growth revenue (GROWTH), fixed assets investment (TANG) and inflation

(INF) were not statistically significant. Based on the obtained analysis results, the

study proposes some recommendations for corporate administrators and state

management agencies to improve profitability coefficient in the future.

LIST OF ACRONYMS

Word English Meaning

CPI Consumer Price Index

FEM Fixed Effects Model

FGLS Feasible Generalized Least Squares Method

HNX Ha Noi Stock Exchange

HOSE Ho Chi Minh Stock Exchange

OLS Ordinary Least Squares

REM Random Effects Model

SC Shareholding Company