Circular No. 122/2017/TT-BTC Issuing Vietnam Standard on Valuation No. 12

CIRCULAR

ISSUING VIETNAM VALUATION STANDARDS NO. 12

Pursuant to the Law on Prices No. 11/2012/QH13 dated June 20, 2012;

Pursuant to the Decree No. 89/2013/NĐ-CP dated August 6, 2013 of the Government detailing implementation of certain provisions of the Law on Prices regarding valuation;

Pursuant to the Decree No. 87/2017/NĐ-CP dated July 26, 2017 of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Director of the Price Management Department,

The Minister of Finance issues this Circular on issuing Vietnam Valuation Standard No. 12

Article 1. Attached hereto is Vietnam Valuation Standard No. 12 - Valuation Standard for Enterprises.

Article 2. Implementation

2. This Circular abolishes Circular No. 31/2016/TT-NHNN dated November 15, 2016 of the Governor of the State Bank of Vietnam amending and supplementing certain provisions of Circular No. 24/2015/TT-NHNN dated December 8, 2015 of the Governor of the State Bank of Vietnam on foreign currency loans by credit institutions and branches of foreign banks to resident borrowers./.

2. The Department of Price Management shall take the lead and coordinate with relevant agencies to guide, inspect the implementation of the regulations set forth in the valuation standard attached hereto and related legal documents.

3. In the course of implementation, if there are difficulties, units are requested to report to the Ministry of Finance for guidance on resolution and appropriate amendments and supplements.

SYSTEM OF VIETNAM VALUATION STANDARDS

Vietnam Valuation Standard No. 12

Valuation of Enterprises

(Code: VNS 12)

(Issued together with Circular No. 122/2017/TT-BTC dated November 15, 2017 of the Ministry of Finance)

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Scope of Application: This standard specifies and guides the implementation of enterprise valuation.

2. Applicability: Valuationpractitioners (hereinafter referred to as appraisers), appraisal enterprises,other organizations and individuals conducting valuation activities in accordance with the Law on Prices and other relevant legal provisions.

3. Clients and third parties using the valuation results (if any) must have necessary knowledge about the provisions in this standard to cooperate with appraisal enterprises during the valuation process..

4. Explanation of terms

Operating assetsare assets used in the production and business operations of enterprises and contribute to generating sales revenue and service income or help reduce production and business operation costs of the enterprise.

Non-operating assetsare assets not participating in the production and business operations of the enterprise, including: investments in other companies (except in cases where the enterprises to be valued are financial investment companies) that do not contribute to generating sales revenue and service income or do not help reduce production and business operation costs of the enterprise to be valued; short-term financial investments; cash and cash equivalents; assets owned and used by the enterprise that do not contribute to generating income but still have value (unexploited assets, unused patents, undeveloped land use rights, undeveloped land lease rights...); assets owned and used by the enterprise that generate income but do not contribute to generating sales revenue and service income or do not help reduce production and business operation costs of the enterprise to be valued (land use rights, undeveloped land lease rights... and other non-operating assets). When determining the enterprise value through the income approach, the value of non-operating assets at the valuation date should be added to the discounted income value of operating assets at the valuation date. However, in the dividend discount method, the portion of non-operating assets consisting of cash and cash equivalents is not added.

Continuous operating enterprise valueis the value of an enterprise currently operating under the assumption that the enterprise will continue to operate after the valuation date.

Limited-life operating enterprise valueis the value of an enterprise currently operating under the assumption that the lifespan of the enterprise is finite due to the enterprise being required to cease operations at a future point in time.

Liquidation enterprise valueis the value of an enterprise under the assumption that the enterprise's assets will be sold individually and the enterprise will soon cease operations after the valuation date.

II. CONTENT OF THE STANDARDS

1. Selection of valuation basis and use of financial statements in enterprise valuation

1.1 Basis of valuation in enterprise valuation

The enterprise valuation basis is either a market-based valuation basis or a non-market-based valuation basis. The enterprise valuation basis is determined based on the purpose of the valuation,legal characteristics, economic and technical characteristics, and market characteristics ofthe enterprise to be valued, the requirements of the valuation client in the valuation contract (if consistent with the purpose of the valuation) and relevant legal provisions. Other contents shall be implemented in accordance with Vietnam Valuation Standards No. 2 and No. 3.

Based on the actual prospects of the enterprise, the business market of the enterprise, the purpose of the valuation, and legal provisions, the appraiser makes an assessment of the operational status and transaction status (actual or hypothetical) of the enterprise to be valued after the valuation date. Generally, the enterprise value is the continuous operating enterprise value. If the appraiser assesses that the enterprise will cease operations after the valuation date, the enterprise value will be the limited-life operating enterprise value or liquidation value.

The application of enterprise valuation methods must be consistent with the enterprise valuation basis and the appraiser's assessment of the operational status of the enterprise at and after the valuation date.

1.2. Use of financial statements in enterprise valuation

a) Financial statements used in enterprise valuation

Financial reports used in enterprise valuation include annual financial reports, audited annual financial reports, interim financial reports, reviewed interim financial reports, and audited financial reports at the valuation date. Among these, for the same data and indicators, the following priority order applies:

- Data and indicators from the most recent financial report closest to the valuation date shall be prioritized for use.

- At the same time point, data and indicators from audited or reviewed financial reports shall be prioritized for use.

In cases where the enterprise requiring valuation is a parent company with consolidated financial reports available at the valuation date, the appraiser must consider both the consolidated financial reports and the individual financial reports of the parent company and subsidiary companies, prioritizing the use of individual financial reports, in accordance with the chosen approach and valuation method.

b) Some notes on using financial reports

- Appraisers should verify and check the accuracy to ensure reliability; if necessary, appraisers may request enterprises to adjust their financial reports and accounting books accurately before analysis and application of valuation approaches and methods. If the enterprise does not make adjustments, the appraiser may identify discrepancies and provide clear analysis of the basis for determining such discrepancies, which should be clearly recorded in the Valuation Report.

- When using data from unaudited or unreviewed financial reports without verifying their accuracy, the appraiser must disclose this limitation in the limitations section of the Certificate and Valuation Report so that the valuation client and users of the valuation results are aware.

- For the market approach method: when using data from the financial reports of the enterprise requiring valuation to calculate indicators such as basic earnings per share (EPS), earnings before interest, taxes, depreciation, and amortization (EBITDA) for market ratio calculations, the appraiser should consider adjusting to exclude income and expenses from non-operating assets, extraordinary income and expenses, and non-recurring items.

- For the cost approach and income approach methods: when using profit data from the financial reports of the enterprise requiring valuation over the past few years to forecast the enterprise's annual cash flow, the appraiser should consider excluding income and expenses from non-operating assets, extraordinary income and expenses, and non-recurring items.

Non-recurring expenses and profits include restructuring costs, gains or losses from asset sales, changes in accounting principles, inventory write-downs, impairment of goodwill, debt write-offs, court decisions, and other non-recurring income and expenses. Adjustments to these items must take into account the impact of corporate income tax, if applicable.

2. Approaches and Methods for Enterprise Valuation

Approaches applied in enterprise valuation include the market approach, cost approach, and income approach.The enterprise being valued may use all approaches for enterprise valuation..

In the market approach, the value of the enterprise is determined through the value of similar or identical enterprises regarding factors such as main business activities, customer and consumption markets, financial ratios, or successful transaction prices of the enterprise being valued.The method used in the market approach to determine the enterprise value is the average ratio method and the transaction price method.In the cost approach, the value of the enterprise is determined through the value of its assets. The method used in the cost approach to determine the enterprise value is the asset-based method.In the income approach, the value of the enterprise is determined by converting future net cash flows into present value. The methods used in the income approach to determine the enterprise value are the discounted free cash flow method, the discounted dividend method, and the discounted equity cash flow method.3. Average Ratio Method3.1. The average ratio method estimates the value of the enterprise being valued through the average market ratios of comparable enterprises..Comparable enterprises satisfy the following conditions:They are similar to the enterprise being valued in terms of main business activities, customer and consumption markets, and financial ratios.They have successfully traded shares on the market at the valuation date or close to it, but not more than one year prior to the valuation date.Market ratios used in the average ratio method include the price-to-earnings ratio (P/E), price-to-sales ratio (P/S), price-to-book ratio (P/B), and enterprise value-to-EBITDA ratio (EV/EBITDA).

- 3.2. Application of the Average Ratio MethodThey are similar to the enterprise being valued in terms of main business activities, customer and consumption markets, and financial ratios.There must be at least three comparable enterprises. Preferably, the comparable enterprises are listed on stock exchanges or registered for trading on UPCoM.

3.3. Implementation PrinciplesThey are similar to the enterprise being valued in terms of main business activities, customer and consumption markets, and financial ratios.- The determination of financial indicators and market ratios must be consistent across all comparable enterprises and the enterprise being valued.

3. The average ratio method

3.1. The average ratio method estimates the value of the enterprise to be appraised through the average market ratio of comparable enterprises.Comparable enterprises arethose that meet the following conditions:

comparedComparable enterprises arewith the enterprise to be appraised in terms of

- Tfactors: main business activities; customers and consumption markets; financial indicators.measuring instrument- Having successfully traded shares on the market at the time of appraisal or close to the appraisal time but not more than one year prior to the appraisal time.Market ratios used in the average ratio method include: price-to-income ratio (P/E), price-to-revenue ratio (P/S), price-to-book value ratio (P/BV), enterprise value-to-pre-tax profit, interest, and depreciation ratio (EV/EBITDA).

3.2. Application cases for the average ratio method

There must be at least threecomparable enterprises. Preferably, the comparable enterprises should be listedon the stock exchange or registered for trading on UPCoM.3.3. Principles).

for implementation

- The methods for determining financial indicators and market ratios must be consistent for all comparable enterprises and the enterprise to be appraised.foreign-invested enterprises that have invested in constructing power facilities outside the fence.The value of the enterprise to be appraised using the average ratio methodmay

include the formula for calculating working capital excluding cash and short-term non-operating assets:owned

- Assessing the similarity of financial indicators:

- Financial indicators and market ratios of comparable enterprises collected from different sources must be reviewed and adjusted to ensure consistency in the method of determination before being used in valuation.

3.4. Steps for Determining Enterprise Value

- Step 1: Evaluate and select comparable enterprises.

- Step 2: Determine the market ratios used to estimate the value of the enterprise to be valued.

- Step 3: Estimate the value of the enterprise to be valued.

3.5. Evaluation and Selection of Comparable Enterprises

Criteria for evaluating and selecting comparable enterprises include:

(i) The comparable enterprises must be similar to the enterprise to be valued in terms of main business activities; customer groups and consumption markets. In many cases, enterprises similar to the enterprise to be valued in these factors may be selected from competitors of the enterprise to be valued.

(ii) The comparable enterprises must be similar to the enterprise to be valued in financial indicators, including:

- Indicators reflecting the scale of the enterprise: registered capital, revenue, gross profit from sales and service provision.

- Indicators reflecting the growth potential of the enterprise: average annual post-tax income growth rate over the last three years.

- Indicators reflecting the operational efficiency of the enterprise: return on equity (ROE), return on assets (ROA).

The issuance of work permits is governed by the following legal documents as prescribed by current laws: i) Decree No. 34/2008/NĐ-CP dated March 25, 2008, on the recruitment and management of foreign workers in Vietnam; ii) Decree No. 46/2011/NĐ-CP dated June 17, 2011, amending certain provisions of Decree No. 34/2008/NĐ-CP; and iii) Circular No. 31/2011/TT-BLDTBXH dated November 3, 2011, issued by the Ministry of Labor, Invalids, and Social Affairs guiding the implementation of Decrees No. 34 and No. 46.The appraiser conducts evaluationaccording to the above criteria to select at least three comparable enterprises. The market ratios of these comparable enterprises are used to estimate the value of the enterprise to be valued.The number of comparable enterprises ismorethereliabilityof theaverage market ratios

increases.

3.6. Determination of Market Ratios Used to Estimate the Value of the Enterprise to Be Valued, , , The appraiser determines the market ratios of comparable enterprises, including:.

When valuing financial companies and banks, the appraiser may not need to determine market ratios.

Note when determining market ratios:- The share price of comparable enterprises is taken as the closing price of these shares on the stock exchange on the nearest trading day at the time of valuation. In the case where the shares of comparable enterprises have not been listed on the stock exchangeor have not been registered for trading on UPCoM,

the share price of comparable enterprises is the price of these shares successfully traded on the nearest market to the time of valuation but not exceeding one year prior to the valuation date.- The book value of shares in the ratio

should note the deduction of the book value of intangible fixed assets (excluding land use rights and exploitation rights of assets on land) to limit the impact of accounting regulations on intangible fixed assets that may distort the valuation results in cases where comparable enterprises and the enterprise to be valued have intangible fixed assets in their balance sheets. In cases where the book value of intangible fixed assets is not deducted, the reasons must be stated.- The market value parameter of comparable enterprises (EV) in the market ratio

Where:

Cash and cash equivalents value

+ The debt value, preferred share value, benefits of non-controlling shareholders, and cash and cash equivalents value are determined based on the book value in the accounting records.

+ In cases where the enterprise has issued convertible securities or option securities, the appraiser may consider converting these securities into common shares if appropriate when determining the market capitalization of the enterprise.

- EBITDA of comparable enterprises does not include income from cash and cash equivalents.

3.7. Estimating the Value of the Enterprise to Be Valued

a) Determining the Average Market Ratio for Each Market Ratio:The average market ratiocanbe determined by the arithmetic mean of the market ratios of comparable enterprises ordetermined by calculating the weighted averageof the market ratiosof comparable enterprises.VThe determination of weightsfor eachcomparable enterprise may be based onanalysis of industry-specific development characteristics and the development potential of eachenterprise.b) Determining the Value of the Enterprise to Be Valued According to Each Average Market Ratio:.

- Determining the value of the enterprise to be valued according to the market ratio

Market value of the enterprise to be valued:

+ Determining the value of the enterprise to be valued according to the market ratio

Market value of the enterprise to be valued, , :

Market value of the equity of the enterprise to be valued:

Market value of the equity of the enterprise to be valued:

Market value of the equity of the enterprise to be valued:

Wherein: The value of the debt of the enterprise to be valued is determined based on the market price if there is market evidence, otherwise it is determined based on the book value in the accounting records.

The value of the enterprise to be valued using the average ratio method

can

+ Evaluating the similarity of indicators reflecting the scale of the enterpriseThe enterprise to be appraisedis determined by the arithmetic mean of the enterprise value assessment results determined according to each average market ratio ordetermined by calculating the weighted averageof the results.Vof determining the weight for eachenterprise value result may be based on an evaluation of the degree of similarity between comparable enterprises for each type of market ratio used to calculate that enterprise value result, according to the principle: the higher the degree of similarity between comparable enterprises for a particular market ratio, the greater the weight of the enterprise value result using that market ratio.

4. Transaction Price Method

4.1. The transaction price method estimates the value of the enterprise requiring valuation through the transaction price of successful transfers of equity contributions or share transfers on the market of the enterprise requiring valuation.

4.2. Application cases for the transaction price method

The enterprise requiring valuation must have at least three successful transactions of equity contribution transfers or share transfers on the market, and the time of occurrence of the transactionsshall not exceed one year from the valuation date.

4.3. Principles of application

Appraisers need to adjust the prices of successful transactions appropriately to the valuation date if necessary.

4.4. Estimating enterprise value

The value of the enterprise requiring valuation is determined according to the formula for determining the market value of the enterprise as follows:

Where:

+ The market value of the enterprise's equity capital is calculated based on the volume-weighted average price of at least three successful transactions of equity contribution transfers or share transfers closest to the valuation date.

In the case where the enterprise requiring valuation is a listed company on the stock exchange or registered for trading on UPCoM, the closing price of shares over the fifteen trading days immediately preceding the valuation date is used to calculate the market value of equity capital. If there are unusual signs in transactions prior to the valuation date, appraisers may also consider transactions over the fifteen trading days immediately following the valuation date.

+ The value of the enterprise's debts is determined according to the market price if there is market evidence, otherwise it is determined according to the book value in accounting records.

5. Asset-Based Method

5.1. The asset-based method is a method of estimating the value of an enterpriserequiring valuation through the totalmarket value ofassetsownedand usedby the enterprise requiring valuation.

5.2. Principles of implementation:

- Assets considered during the valuation process include all assets of the enterprise, including both operating and non-operating assets.

- When valuing an enterprise based on market value, the value of the enterprise's assets is the market value of those assets at the valuation date. Assets recorded in accounting books need to be valued accurately according to their market value, with certain exceptional cases handled according to the guidelines set out in Section 5.4.

- Intangible assets that do not meet the conditions for recording in accounting books (such as trade names, trademarks, patents, industrial designs...) and assets not recorded in accounting books need to be valued using appropriate appraisal methods.

- For assets recorded in foreign currency: The foreign exchange rate is determined based on the buying rate of the commercial bank where the enterprise has the largest foreign currency transaction volume at the valuation date. If the enterprise requiring valuation does not have foreign currency transactions at the valuation date, the central rate published by the State Bank shall apply.

5.3. Steps to Implement

- Step 1: Estimate the total value of tangible assets and financial assets of the enterprise requiring valuation.

- Step 2: Estimate the total value of intangible assets of the enterprise requiring valuation.

- Step 3: Estimate the value of the enterprise requiring valuation.

5.4. Estimating the Total Value of Tangible Assets and Financial Assets of the Enterprise Requiring Valuation

The total value of tangible assets and financial assets of the enterprise requiring valuation is calculated as the sum of the values of the tangible assets and financial assets of the enterprise requiring valuation.

The estimation of the market value of tangible assets and financial assets of the enterprise is carried out according to Vietnam's appraisal standards on the market approach, cost approach, income approach, and real estate appraisal standards. Additionally, appraisers may follow the guidance as follows:

a) Determining the value of fixed tangible assets:

- For fixed tangible assets such as buildings, structures, investment real estate:

+ For projects where the scale of the project and unit price or investment cost can be determined: determined according to the cost approach in Vietnam's appraisal standards.

+ For newly completed construction projects within three years before the valuation date, use the approved final settlement value of the project by the competent authority. If there is no final settlement value, use the provisional value recorded in the accounting books, while clearly stating this limitation in the Appraisal Certificate and the Report on the Results of the Appraisal.

+ For special projects where the scale of the project or construction unit price, investment cost cannot be determined: calculated based on the original book value adjusted for inflation minus depreciation at the valuation date.

- For fixed assets such as machinery, transportation equipment, transmission equipment, management equipment:

+ For special assets that do not have equivalent market transactions, lack sufficient investment documentation, technical documentation, and are no longer produced: the value of these assets is determined based on the original book value adjusted for depreciation at the valuation date.

b) Determining the value of tools and equipment:

- The value of tools and equipment may be determined according to their book value or as follows:

The value of tools and equipment is determined based on the market transaction price of comparable assets; if the market transaction price of comparable assets cannot be obtained, it is determined based on the transaction price of new similar tools and equipment or with equivalent features, or by deducting the depreciation value at the time of valuation from the initial purchase price recorded in the accounting books.

- In cases where the value of tools and equipment is determined according to their book value, the appraiser must clearly state this limitation in the limitations section of the Valuation Certificate and the Valuation Result Report.

c) Determining the value for unfinished production and business costs, raw materials, and inventory:

- Unfinished production and business costs are determined based on the actual costs incurred and recorded in the accounting books. If unfinished production and business costs in construction projects are closely linked to the creation of future real estate assets, they shall be re-evaluated according to Vietnamese valuation standards using the market approach, cost approach, income approach, or real estate valuation standards.

- Raw materials and inventory

+ Inventory goods, raw materials, and stored tools and equipment serving normal operational and production needs, currently circulatingare determined based on the actual costs incurred recorded in the accounting books.

+ In cases where inventoryconsists of finished productsor real estate, the value of these real estate items can be determined according to Vietnamese valuation standards using the market approach, cost approach, income approach, or real estate valuation standards.

+ In cases where inventory, raw materials, and stored tools and equipment have been long-term due to production errors, unfinished products that cannot be further completed due to non-saleability, changes in production products... leading to lower quality, the enterprise must classify them for valuation based on the principle of the best possible recovery value.

d) Determining the value of monetary assets:

- Cash is determined based on the cash count record of the enterprise being valued.

- Deposits are determined based on the reconciled balance or subsidiary ledger with the bank where the enterprise being valued maintains its account at the time of valuation.

- Foreign currency cash and deposits are determined according to the principles set forth in Section 5.2 of this Standard.

đ) Determining the value of receivables and payables:

- The value of receivables is determined based on the actual balances recorded in the accounting books. For receivables that are not recoverable, the appraiser must clearly state these amounts along with the reasons why they may not be recoverable in the limitations section of the Valuation Certificate and the Valuation Result Report.

- In cases where there is no reconciliation of accounts receivable and payable, the appraiser must clearly state this in the limitations section of the Valuation Certificate and the Valuation Result Report so that users of the valuation results can consider this when using the valuation results.

e) Determining the value of investments:

The market value of enterprises' investments at the time of valuation shall be determined as follows:

- In cases where the enterprise (the enterprise being valued for capital contribution or share purchase) has successful transactions of capital or shares on the market, the value of capital contributions or share purchases is determined based on the market value of the equity of the enterprise in which the enterprise being valued has invested, and the market value of the equity of the enterprise in which the enterprise being valued has invested is determined according to the methods specified in Section 2 of this Standard or as follows:

+ In cases where the shares of enterprises not listed on stock exchanges or registered for trading on UPCoM, and the successful transactions of capital or shares on the market satisfy both conditions: (i) more than 51% of the equity of the enterprise is transferred in all transactions; (ii) the time of the transactions does not exceed one year from the valuation date; then the value of the enterprise's investments being valued can be determined based on the average transfer price per volume of the most recent transactions before the valuation date.

+ In cases where the investment is shares of enterprises listed on stock exchanges or registered for trading on UPCoM, the value of the investments is determined based on the closing price average per volume traded over the 15 trading days immediately preceding the valuation date. In cases where transactions prior to the valuation date show abnormal signs, the appraiser may also consider transactions over the 15 trading days immediately following the valuation date.

- In cases where the enterprise (the enterprise being valued for capital contribution or share purchase) does not have successful transactions of capital or shares on the market, the value of capital contributions or share purchases is determined as follows:

+ In cases where the enterprise being valued holds 100% of the equity of the invested enterprises: the value of the investment is determined based on the value of the invested enterprise and is determined according to the methods specified in Section 2 of this Standard.

+ In cases where the enterprise being valued holds between 51% and less than 100% of the equity of the invested enterprises: the value of the investments is determined based on the market value of the equity of the enterprises in which the enterprise being valued has invested, and the market value of the equity of the enterprises in which the enterprise being valued has invested is determined according to the methods specified in Section 2 of this Standard, in addition, it may be determined as follows:

(i) For the method of discounting the net equity cash flow: the cost of using equity capital may be estimated based on the average return on equity over the most recent five years, and the net equity cash flow may be forecasted based on the data of profits allocated to owners and the growth rate of the return on equity over the most recent five years.

(ii) For the average ratio method: the average ratios may be estimated based on the ratios, of at least three enterprises operating in the same production and business sector., The average ratios may be estimated based on the ratios, of at least three enterprises operating in the same production and business sector.

(iii) In cases where it is not possible to determine according to the two methods above, the value of the investment may be determined based on: the proportion of the investment capital of the enterprise under appraisal relative to the registered capital or total contributed capital at other enterprises and the value of the equity capital at other enterprises according to audited financial statements. If there has been no audit, then the basis shall be the value of the equity capital according to the financial statement at the nearest time point of that enterprise for determination.

+ In cases where the enterprise under appraisal holds less than 51% of the shares of the invested enterprises: the value of the investments may be determined according to the guidance provided in point (iii), while clearly stating the limitations in the Certification and Appraisal Report. However, it is encouraged that appraisers determine according to the methods specified in Section 2 of this Standard or according to the guidance provided in points (i) and (ii).

g) Determine the construction-in-progress costs, short-term and long-term deposits according to the accounting records.

h) The valuation of financial assets in the form of contracts should primarily apply the discounted future income approach.

5.5. Estimate the total value of intangible assets of the enterprise under appraisal.

The intangible assets of the enterprise under appraisal include fixed intangible assets recorded in the accounting books and other intangible assets identified as satisfying the conditions stipulated in point 3.1, section 3 of the Intangible Asset Valuation Standard.

The total value of intangible assets of the enterprise under appraisal is determined through one of the following methods:

a) Method 1: Estimate the total value of intangible assets of the enterprise under appraisal by estimating the value of each identifiable intangible asset and the value of unidentifiable intangible assets (remaining intangible assets).

The value of intangible assets of the enterprise under appraisal is calculated as the sum of the values of identifiable intangible assets and unidentifiable intangible assets.

Appraisers shall determine the value of each identifiable intangible asset according to the provisions of Vietnam Valuation Standard No. 13. Specifically, the value of land use rights and leasehold rights is determined according to the provisions of Vietnam Valuation Standards on market approach, income approach, and real estate valuation.

Appraisers determine the value of unidentifiable intangible assets (remaining intangible assets) through the following steps:

Step 1: Estimate the total market value of tangible and identifiable intangible assets participating in the process of generating income for the enterprise under appraisal. The market value of these assets is determined according to the provisions of Section 5.4 of this Standard and the guidelines in the Vietnam Valuation Standards System.

Step 2: Estimate the annual income that the enterprise under appraisal can achieve. This income level is the income under normal operating conditions of the enterprise under appraisal, estimated based on the results achieved by the enterprise under appraisal in the most recent three years, taking into account the development prospects of the enterprise after excluding abnormal factors affecting income such as gains or losses from the disposal of fixed assets, revaluation of financial assets, exchange rate risks...

Step 3: Estimate the appropriate rate of return for the tangible and identifiable intangible assets of the enterprise under appraisal. The rate of return for tangible assets must not exceed the weighted average cost of capital of the enterprise under appraisal. The rate of return for intangible assets must not be lower than the weighted average cost of capital of the enterprise under appraisal. The determination of the weighted average cost of capital of the enterprise under appraisal is made according to the formula specified in Section 6.4 of this Standard; wherein: the proportion of long-term debt to total long-term capital of the enterprise under appraisal is determined based on the capital structure of the enterprise under appraisal, and the cost of long-term debt is determined based on the weighted average interest rate of long-term debts of the enterprise under appraisal.

Step 4: Estimate the annual income generated by the tangible and identifiable intangible assets for the enterprise under appraisal through the value of the tangible and identifiable intangible assets already determined at step 1 multiplied by (×) the corresponding rates of return determined at step 3.

Step 5: Estimate the income generated by unidentifiable intangible assets for the enterprise under appraisal, which is calculated by subtracting (-) the income generated by tangible and identifiable intangible assets for the enterprise under appraisal at step 4 from the income that the enterprise under appraisal can achieve at step 2.

Step 6: Estimate the appropriate capitalization rate for the income generated by unidentifiable intangible assets for the enterprise under appraisal. This capitalization rate must be at least equal to the cost of using equity capital of the enterprise under appraisal. The determination of the cost of using equity capital of the enterprise under appraisal is made according to the provisions of point d, Section 6.4 of this Standard.

Step 7: Estimate the total value of无形资产的总价值 that cannot be identified of the enterprise to be appraised by capitalizing the income generated by these intangible assets for the enterprise to be appraised.

b) Method 2: Estimate the total value of intangible assets of the enterprise to be appraised through capitalizing the income stream generated by all intangible assets for the enterprise to be appraised.

Step 1: Estimate the market value of tangible assets participating in the process of generating income for the enterprise to be appraised. The market value of these assets is determined according to the provisions of Section 5.4 of this Standard.

Step 2: Estimate the annual income that the enterprise to be appraised can achieve. This income level is the income under normal operating conditions of the enterprise to be appraised, estimated based on the results achieved by the enterprise to be appraised in the most recent years, taking into account the development prospects of the enterprise after excluding abnormal factors affecting income such as: increased or decreased income from the disposal of fixed assets, revaluation of financial assets, exchange rate risks...

Step 3: Estimate the appropriate profit margin for the tangible assets of the enterprise to be appraised. This profit margin must not exceed the weighted average cost of capital of the enterprise to be appraised. The determination of the weighted average cost of capital of the enterprise to be appraised follows the formula prescribed in Section 6.4 of this Standard; wherein: the proportion of long-term debt in the total long-term capital of the enterprise to be appraised is determined based on the capital structure of the enterprise to be appraised, the cost of long-term debt is determined based on the weighted average interest rate of long-term debts of the enterprise to be appraised.

Step 4: Estimate the annual income generated by tangible assets for the enterprise to be appraised, calculated by multiplying (×) the total value of tangible assets of the enterprise to be appraised calculated at step 1 with the profit margin calculated at step 3.

Step 5: Estimate the income generated by all intangible assets for the enterprise to be appraised, calculated by subtracting (-) the income generated by tangible assets for the enterprise to be appraised calculated at step 4 from the income that the enterprise to be appraised can achieve calculated at step 2.

Step 6: Estimate the appropriate capitalization rate for the income generated by all intangible assets for the enterprise to be appraised. This capitalization rate must be at least equal to the cost of equity capital of the enterprise to be appraised. The determination of the cost of equity capital of the enterprise to be appraised is prescribed in point d of Section 6.4 of this Standard.

Step 7: Estimate the total value of intangible assets of the enterprise to be appraised by capitalizing the income generated by these intangible assets for the enterprise to be appraised.

5.6. Estimating the Value of the Enterprise to be Appraised

In cases where it is necessary to determine the value of equity capital fromthe market value of the enterprise to be appraiseddetermined by this method, the value of equity capital is determined by the following formula:

Wherein: The value of the enterprise's debts to be appraised is determined by the market price if there is market evidence, if not, it is determined by the book value in accounting records.

6. Discounted Cash Flow Method for Enterprise

6.1. The discounted cash flow method for enterprise determines the value of the enterprise to be appraised by estimating the total of the discounted free cash flow value of the enterprise to be appraised with the present value of non-operating assets of the enterprise at the time of appraisal. In the case of the enterprise to be appraised being a joint-stock company, the discounted cash flow method for enterprise is used with the assumption that the preferred shares of the enterprise to be appraised are like common shares. This assumption needs to be clearly stated in the limitations section of the Appraisal Certificate and the Appraisal Result Report.

6.2. Steps to determine the value of the enterprise:

- Step 1: Forecast the free cash flow of the enterprise to be appraised.

- Step 2: Estimate the weighted average cost of capital of the enterprise to be appraised.

- Step 3: Estimate the terminal value forecast.

- Step 4: Estimate the value of the enterprise to be appraised.

6.3. Forecasting the free cash flow of the enterprise to be appraised:

The appraiser needs to estimate the forecast period for cash flow. For enterprises that have sustained growth, the forecast period for cash flow is typically five years. For newly established enterprises or those growing rapidly, the forecast period for cash flow may extend beyond five years until the enterprise enters a steady growth phase. For enterprises with a limited operational lifespan, the forecast period for cash flow is determined based on the life span of the enterprise.

Formula for calculating annual free cash flow of the enterprise:

FCFF = Earnings Before Interest and Taxes After Tax (EBIAT) + Depreciation - Capital Expenditure - Net Change in Working Capital outside cash and short-term non-operating assets (difference in net working capital)

Earnings Before Interest and Taxes After Tax (EBIAT) is earnings before interest and taxes after excluding revenues and expenses from non-operating assets.The formula for calculating Earnings Before Interest and Taxes After Tax (EBIAT) from Earnings Before Interest and Taxes (EBIT) is as follows:

EBIAT = EBIT × (1 ̶ t)

t: corporate income tax rate

Where:

Capital expenditure includes: investment in fixed assets and other long-term assets; investment in operating assets within the group of purchasing debt instruments of other entities and investment in other entities (if any).

Formula for calculating working capital outside cash and short-term non-operating assets:

- Similarity

Current assets other than cash and non-operating short-term assets = (Short-term receivables + Inventory + Other short-term assets) - Short-term liabilities excluding short-term loans

6.4. Estimate the weighted average cost of capital for the enterprise to be appraised

The appraiser estimates the weighted average cost of capital for the enterprise to be appraised according to the formula:

WACC = R_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;} × F_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;} × (1 - t) + R_{Average loan repayment period is 10 years;} × F_{Average loan repayment period is 10 years;}

Where:

WACC: Weighted average cost of capital

R_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;}: Cost of debt

F_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;}: Proportion of long-term debt in total long-term capital

t: Corporate income tax rate

R_{Average loan repayment period is 10 years;}: Cost of equity

F_{Average loan repayment period is 10 years;}: Proportion of equity in total long-term capital

a) Estimate the proportion of long-term debt in total capital of the enterprise to be appraised:

The proportion of long-term debt in total capital of the enterprise to be appraised is determined based on the borrowing ratio of enterprises in the same production and business sector as the enterprise to be appraised. In cases where this cannot be determined according to the above guidance, it may be determined based on the proportion of long-term debt in total capital in the most recent years of the enterprise to be appraised, taking into account the future capital structure.

b) Estimate the cost of long-term debt of the enterprise to be appraised

The cost of long-term debt of the enterprise to be appraised is determined based on the interest rates of long-term loans of the enterprise to be appraised. In cases where there are no long-term loans in the current capital structure of the enterprise to be appraised, the interest rate of long-term loans is estimated based on the assessment of the enterprise's negotiation ability with credit providers, the interest rates of long-term loans of enterprises in the same production and business sector as the enterprise to be appraised. In cases where the enterprise borrows from multiple sources at different interest rates, the cost of long-term debt is determined based on the weighted average interest rate of long-term debts.

c) Estimate the proportion of equity in the capital of the enterprise to be appraised:

The proportion of equity in the capital of the enterprise to be appraised is determined according to the formula: F_{Average loan repayment period is 10 years;} = (1 − F_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;})

d) Estimate the cost of equity of the enterprise to be appraised (R_{Average loan repayment period is 10 years;})

The cost of equity of the enterprise to be appraised is calculated using the following methods:

d1) Method 1: There are at least three enterprises in the same business sector as the enterprise to be appraised that have listed or registered for trading shares on the Vietnam Stock Exchange.

The cost of equity of the enterprise to be appraised is calculated according to the following formula:

R_{Average loan repayment period is 10 years;} = R_f + b_L × (R_{Granite, gabbro, decorative stone...} – R_f)

- Risk-free rate of return (R_f) is estimated based on the yield of government bonds with a term of 10 years or the longest term closest to the appraisal date.

- Market risk premium (R_{Granite, gabbro, decorative stone...} – R_f) is estimated by subtracting the risk-free rate of return (R_{Granite, gabbro, decorative stone...}) from the expected rate of return when investing in the stock market (R_f). The expected rate of return when investing in the Vietnamese stock market is estimated by the appraiser using statistical methods based on the VN-INDEX over the past five years up to the appraisal date. The VN-INDEX is calculated monthly, specifically the closing index of the last trading day of each month.

- The risk factor considering the impact of capital structure (b_L) of the enterprise to be appraised is estimated through the risk factors of the stocks of enterprises in the same business sector as the enterprise to be appraised on the stock market.

The appraiser needs to select at least three enterprises in the same business sector as the enterprise to be appraised and determine the risk factor b_L of these enterprises.

Determining the risk factor b_L is carried out using the regression method of stock price volatility with market price volatility according to the formula:

Where price volatility is determined monthly and at least for five years (for enterprises without sufficient data for five years, calculation starts from the listing or registration date). Market returns are calculated based on the VN-INDEX. The appraiser can use the risk factor b_L that has been published if the calculation conditions are similar.

Due to differences in capital structure between the enterprise to be appraised and enterprises in the same sector, the appraiser needs to adjust the risk factors of enterprises in the same sector according to the capital structure of the enterprise to be appraised in the following steps:

+ Step 1: Eliminate the influence of capital structure in the risk factor according to the formula:

The Standing Office of the Council for International Cooperation on Non-Governmental Organizations (Vietnam Friendship Association) is the agency responsible for receiving registration dossiers, leading, and coordinating with member agencies of the Council to examine dossiers and return results of reviews of registration dossiers of foreign non-governmental organizations in Vietnam._{The decision to switch the issuance of coats, overcoats, windbreakers, and down jackets to other uniforms for civil servants working at the National Market Management and Development Agency is decided by the Minister of Industry and Trade.} = 

Where:

The Standing Office of the Council for International Cooperation on Non-Governmental Organizations (Vietnam Friendship Association) is the agency responsible for receiving registration dossiers, leading, and coordinating with member agencies of the Council to examine dossiers and return results of reviews of registration dossiers of foreign non-governmental organizations in Vietnam._{U :} Unlevered beta

 : Debt-to-equity ratio of enterprises in the same sector as the enterprise to be appraised

t: Corporate income tax rate

+ Step 2: Calculate the average unlevered beta of enterprises in the same business sector as the enterprise to be appraised.

+ Step 3: Estimate the risk factor considering the impact of capital structure (b_L) of the enterprise to be appraised according to the formula

The Standing Office of the Council for International Cooperation on Non-Governmental Organizations (Vietnam Friendship Association) is the agency responsible for receiving registration dossiers, leading, and coordinating with member agencies of the Council to examine dossiers and return results of reviews of registration dossiers of foreign non-governmental organizations in Vietnam._L appraisal = b_{The decision to switch the issuance of coats, overcoats, windbreakers, and down jackets to other uniforms for civil servants working at the National Market Management and Development Agency is decided by the Minister of Industry and Trade.} average × 

Where:

The Standing Office of the Council for International Cooperation on Non-Governmental Organizations (Vietnam Friendship Association) is the agency responsible for receiving registration dossiers, leading, and coordinating with member agencies of the Council to examine dossiers and return results of reviews of registration dossiers of foreign non-governmental organizations in Vietnam._L appraisal: Risk factor considering the impact of capital structure of the enterprise to be appraised

The Standing Office of the Council for International Cooperation on Non-Governmental Organizations (Vietnam Friendship Association) is the agency responsible for receiving registration dossiers, leading, and coordinating with member agencies of the Council to examine dossiers and return results of reviews of registration dossiers of foreign non-governmental organizations in Vietnam._{The decision to switch the issuance of coats, overcoats, windbreakers, and down jackets to other uniforms for civil servants working at the National Market Management and Development Agency is decided by the Minister of Industry and Trade.} average: Average unlevered beta

 : Debt-to-equity ratio of the enterprise to be appraised

t: Corporate income tax rate

d2) Method 2: Less than three enterprises in the same business sector as the enterprise to be appraised have listed and traded shares on the Vietnam Stock Exchange, but information on the risk premium ratio according to international stock risk premium indices is available.

The cost of equity of the enterprise to be appraised is calculated according to the following formula:

R_{Average loan repayment period is 10 years;} = R_f + R_p

- Risk-free rate of return (R_f) is estimated based on the yield of government bonds with a term of 10 years or the longest term at the appraisal date.

- Risk premium ratio (R_pshall be determined based on the international stock market risk premium index published by international financial advisory organizations. The appraiser needs to consider arguments, adjustments to apply appropriately to the actual situation of the enterprise being appraised.

d3) Method 3: In cases where there are fewer than three enterprises in the same business sector as the enterprise being appraised that have shares listed and traded on the Vietnamese stock market, but information on the risk coefficients of enterprises in the same business sector as the enterprise being appraised can be obtained from the U.S. market.

The cost of equity of the enterprise to be appraised is calculated according to the following formula:

R_{Average loan repayment period is 10 years;} = R_f+ b × (R_{Granite, gabbro, decorative stone...} – R_f) + country risk + exchange rate risk (if applicable)

- Risk-free rate of return (R_f) is estimated based on the interest rate of 10-year U.S. Treasury bonds.

- Market risk premium (R_{Granite, gabbro, decorative stone...} – R_f) is estimated based on the expected return when investing in the U.S. stock market (R_{Granite, gabbro, decorative stone...}) minus (-) the risk-free rate of return (R_f).

- b: Risk coefficient of enterprises in the same business sector as the enterprise being appraised in the U.S. market. If the risk coefficient is affected by capital structure, it must be adjusted according to the steps outlined in this case.

6.5 Estimating the Terminal Value

- Case 1: Cash flow after the forecast period is a constant growth stream extending indefinitely.

The formula for calculating the terminal value forecast is:

V_n = 

Where:

FCFF_n+1: Free cash flow year n + 1

- Case 2: Cash flow after the forecast period is a steady annual growth stream extending indefinitely.

The formula for calculating the terminal value forecast is:

V_n = 

Where:

g: Growth rate of cash flow

The growth rate of cash flow is determined based on the profit growth rate. The profit growth rate is forecasted based on the development prospects of the enterprise, the past profit growth rate of the enterprise, production and business plans, the retention ratio of post-tax profits for capital replenishment, and the return on total capital.

- Case 3: The enterprise ceases operations at the end of the forecast period. The terminal value forecast is determined based on the liquidation value of the enterprise being appraised.

6.6 Estimating the Value of the Enterprise Being Appraised

- Calculate the present value of the free cash flows and the terminal value forecast after discounting the free cash flows and the terminal value forecast of the enterprise at the weighted average cost of capital of the enterprise.

V₀ = + 

- Estimate the value of non-operating assets of the enterprise.

- Estimate the value of the enterprise being appraised by adding the present value of the free cash flows of the enterprise and the terminal value forecast with the value of non-operating assets of the enterprise being appraised.

7. Discounted Dividend Method

7.1 The discounted dividend method determines the equity value of the enterprise being appraised through the estimation of the total discounted dividends of the enterprise being appraised. In the case of appraising a joint-stock company, the discounted dividend method of the enterprise is used under the assumption that the preferred shares of the enterprise being appraised are treated as common shares. This assumption must be clearly stated in the limitations section of the Appraisal Certificate and the Appraisal Result Report.

In the case of enterprise appraisal, the enterprise value is determined according to the following formula:

Where:

The value of the debts of the enterprise being appraised is determined based on the market price if there is market evidence, otherwise it is determined based on the book value in accounting records.

7.2 Steps to Determine the Equity Value

a) Step 1: Forecast the dividends of the enterprise being appraised. The appraiser needs to forecast the dividend payout ratio and the dividend growth rate of the enterprise being appraised. For enterprises that have sustained growth, the forecast period for the dividend payout ratio and the dividend growth rate is typically five years. For newly established enterprises or those growing rapidly, the forecast period for the dividend payout ratio and the dividend growth rate may extend beyond five years until the enterprise enters a phase of stable growth with a constant dividend payout ratio or steady dividend growth. For enterprises with a limited operating term, the forecast period for dividends is determined based on the life span of the enterprise.

b) Step 2: Estimate the cost of equity capital according to point d Section 6.4 of this standard.

c) Step 3: Estimate the terminal equity value as follows:

- Case 1: Dividends after the forecast period (D_n) are a constant stream extending indefinitely. The formula for calculating the terminal value forecast is:

V_n = 

- Case 2: Dividends after the forecast period are a steady annual growth stream extending indefinitely. The formula for calculating the terminal value forecast is:

V_n = 

Where:

D_n+1:Dividends of the enterprise in year n + 1

g: Growth rate of dividends

The growth rate of dividends is forecasted based on the retention ratio of post-tax profits for capital replenishment and the return on equity capital.

- Case 3: The enterprise ceases operations at the end of the forecast period, the terminal value forecast is determined based on the liquidation value of the enterprise being appraised.

d) Step 4: Estimate the equity value of the enterprise being appraised:

- Calculate the total present value of the dividends of the enterprise and the terminal equity value forecast after discounting the dividends of the enterprise and the terminal equity value forecast of the enterprise at the discount rate which is the cost of equity capital.

V₀ = + 

- Estimate the value of non-operating assets of the enterprise.

- Estimate the equity value of the enterprise being appraised by adding the present value of the dividends of the enterprise and the terminal equity value forecast with the value of non-operating assets (excludingcash and cash equivalents)of the enterprise being appraised.

8. Discounted Equity Free Cash Flow Method) of the enterprise to be appraised is calculated according to the formula

8.1. The discounted equity cash flow method determines the value of the equity of the enterprise to be appraised through the estimation of the total of the discounted equity cash flows of the enterprise to be appraised. In the case where the enterprise to be appraised is a joint-stock company, the discounted equity cash flow method is applied with the assumption that the preferred shares of the enterprise to be appraised are treated as common shares. This assumption must be clearly stated in the limitations section of the Appraisal Certificate and the Appraisal Result Report.

In the case of enterprise appraisal, the enterprise value is determined according to the following formula:

Where:

The value of the debts of the enterprise being appraised is determined based on the market price if there is market evidence, otherwise it is determined based on the book value in accounting records.

8.2. Steps to determine the value of equity

a) Step 1: Forecast the equity cash flow of the enterprise to be appraised. The appraiser needs to estimate the forecast period for cash flow. For enterprises that have sustained growth, the forecast period for cash flow is typically five years. For newly established enterprises or those experiencing rapid growth, the forecast period may extend beyond five years until the enterprise enters a steady growth phase. For enterprises with a limited operating term, the forecast period is determined based on the age of the enterprise.

The formula for calculating the equity cash flow of the enterprise:

FCFE = Net incomeafter tax\+ Depreciation-\- Capital expenditures\- Changes in net working capital outside cash and short-term non-operating assets (difference in net operating working capital)\-\- Principal repayments + New debt issuances

Net income after tax is the net income after tax.The formula for calculating Earnings Before Interest and Taxes After Tax (EBIAT) from Earnings Before Interest and Taxes (EBIT) is as follows:

Formula for calculating working capital outside cash and short-term non-operating assets:

Similarity

Current assets other than cash and non-operating short-term assets = (Short-term receivables + Inventory + Other short-term assets) - Short-term liabilities excluding short-term loans

b) Step 2: Estimate the cost of equity capital of the enterprise to be appraised according to the guidance provided at point d, Section 6.4 of this Standard.

c) Step 3: Estimate the terminal value of the enterprise's equity at the end of the forecast period.

- Case 1: Cash flow after the forecast period is constant and extends indefinitely. The formula for calculating the terminal value is:

V_n = 

Where:

Terminal Value = FCFE / (Cost of Equity - Growth Rate)_n+1FCFE: Equity cash flow in year n + 1

- Case 2: Cash flow after the forecast period grows steadily each year and extends indefinitely. The formula for calculating the terminal value is:

V_n = 

Where:

Terminal Value = FCFE / (Cost of Equity - g)

g: the rate of growth of equity cash flow.

The rate of growth of cash flow is forecasted based on the enterprise's development prospects, the historical growth rate of cash flow, production and business plans, the retention ratio of post-tax profits, and the return on equity.

d) Step 4: Estimate the equity value of the enterprise being appraised:

- Case 3: The enterprise ceases operations at the end of the forecast period. The terminal value is determined based on the liquidation value of the enterprise to be appraised.

V₀ = + 

- Estimate the value of non-operating assets of the enterprise.

- Calculate the present value of the equity cash flows and the terminal value of the enterprise's equity after discounting the equity cash flows and the terminal value of the enterprise's equity using the discount rate which is the cost of equity capital.

- Estimate the value of the enterprise's equity to be appraised by adding the present value of the equity cash flows and the terminal value of the enterprise's equity with the value of the non-operating assets of the enterprise to be appraised.

8.3. For content not specifically regulated in this Appraisal Standard, the appraiser should also refer to the guidelines on applying the discounted cash flow method as stipulated in the Vietnamese Appraisal Standard on the income approach.

9. Conclusion on Enterprise Value

GThe final enterprise valuecan be determined throughthe weighted average calculation of the results of the appraisal methodsapplied.The determination of weights for each method is based on the reliability of each method, input data, purpose of the appraisal...ensuring market suitability.EXAMPLES ILLUSTRATIVE(Annexed to Vietnamese Appraisal Standard No. 12)These examples have been simplified and are only illustrative in nature. 1. Example 1: Applying the average index method to determine the enterprise value./.

ANNEX

An enterprise
operating in the

real estate sector needs to be appraised. Information about the enterprise to be appraised is as follows:

- Financial indicators:

Indicators reflecting the scale of the enterprise(Unit: billion VND)Gross profit

Indicators reflecting the growth potential of the enterprise

- The most recent book value of the enterprise's equity near the appraisal date: 6,544 billion VND

- Debt value: 4,908 billion VND

- At the appraisal date, the enterprise has no cash or cash equivalents.

Solution:

Through information collection, the appraiser learns that there are currently five enterprises competing with the enterprise to be appraised in the real estate sector. All these enterprises have listed and traded stocks on the stock exchange.

The appraiser observes that these enterprises are all competitors of the enterprise to be appraised, thus having many similarities with the enterprise to be appraised in terms of main business, customer groups, and sales markets. Stocks of these enterprises are listed and traded on the stock exchange. Therefore, the appraiser collects financial information of these enterprises to evaluate their similarity with the enterprise to be appraised in terms of financial indicators. After calculating the financial indicators of these enterprises, the following results were obtained:

Enterprise No. 1

Enterprise No. 2

Enterprise No. 3

Enterprise No. 4

- Evaluation of financial indicators similarity:

+ Evaluation of the index reflecting the scale of the enterprise:

+ Evaluation of similarity regarding indices reflecting the company's growth potential

+ Evaluation of similarity regarding indices reflecting the operational efficiency of the company

Conclusion: Companies number 1, 2, and 4 have many points of similarity with the company to be appraised in terms of financial indicators, therefore, these companies are selected as comparable companies. Accordingly, the market ratios of these companies are used to determine the value of the company to be appraised.

- Collecting market information, the appraiser identifies four market ratios of these comparable companies (, , , ) as follows:

- Determining the value of the company to be appraised:

Conclusion: The comparable companies are basically similar to the company to be appraised, thus, the average ratioThe enterprise to be appraisedis determined by the arithmetic mean of the market ratios of the comparable companies as follows:

Accordingly, the value of the company is determined according to the following market ratios:

Conclusion: The ratio,  is basically similar among the comparable companies, the ratio,  has less similarity, therefore, the value of the company determined according to the ratio,  average is calculated with a weight of 30% for each ratio, the value of the company determined according to the ratio,  average is calculated with a weight of 20% for each ratio.

The value of the company to be appraised = 10,972.98 × 30% + 13,044.4 × 20% + 11,234 × 20% + 10,241 × 30% = 11,219.87 billion VND

2. Example 2: applying the asset-based method to determine the value of the company

Appraise the value of a company with the following information:

- Balance sheet offoreign-invested enterprises that have invested in constructing power facilities outside the fence. as of December 31, N

Unit of measurement: millionVND

- Re-evaluating all assets of the company shows changes such as as follows:

+ Cash shortage of 20 million VND for unknown reasons.

+ Some accounts receivable are uncollectible at 1,000 million VND; 15,000 million VND are definitely collectible.

+ Raw materials inventory damaged at 200 million VND; the remaining amount increased by 300 million VND after revaluation.

+ Revaluation of tangible fixed assets according to market prices increased by 5,000 million VND.

+ The stock price of Hoang Sa Company calculated at the time of appraisal is 25,000 VND/share.

+ Joint venture investment revalued increased by 3,000 million VND.

+ Corporate income tax rate: 20%

- Other information as follows:

+ Cost of using shareholders' equity of the company is 20%, interest rate on long-term loans is 7.625%/year. Therefore, the weighted average cost of capital of the company is 15.83%

+ Average profit over the last three years of the company is 20,000 million VND (in the last three years, the company did not record abnormal profits from the sale of fixed assets or financial income).

Solution:

* Estimate the value of the company's tangible assets and financial assets as follows:

1. Cash count: - 20

2. Value of accounts receivable:

Uncollectible: -1.000

3. Raw materials:

+ Damaged: - 200

+ Increase: +300

4. Tangible fixed assets: + 5,000

5. Value of the investment in securities in Hoang Sa Company: The market price of 1,000,000 shares calculated at the time of determining the company's value is: 1,000,000 shares´ 25,000 VND/share = 25,000 million VND, an increase of 25,000 -15.000 = 10.000 million VND.

6. Joint venture investment increased: + 3,000

* Conclusion: Assets including short-term securities, securities investments, and joint venture investments do not participate in generating revenue for the company to be appraised, therefore, they are not included in the company's operating assets.

Total value of operating assets:

* Income generated from the company's operating tangible assets and financial assets = 101,680 × 15.83% = 16,095.944 million VND

* Income from intangible assets for the company = 20,000 - 16,095.944 = 3,904.056 million VND

* Value of the company's intangible assets =  = 19,520.28 million VND

Conclusion: Therefore, the value ofthe company to be appraised is: 154.200,28 million VND.

3. Example 3: applying the discounted cash flow method to determine the value of the company

Appraise the value of a company with the following information:

- Information from the financial report of the company as ofDecember 31, N as follows:

Unit of measurement: Million dong

- Based on the business situation of the last three years of the company to be appraised, business environment, macroeconomic prospects, forecast for the next five years, the annual growth rate of the company is 5%, followed by a stable annual growth rate of 3%.

- The cost of borrowing long-term debt is 10%/year and the proportion of long-term debt to total long-term capital is.

- The yield on government bonds with a term of 10 years is 6%/year.

- The unlevered beta coefficient is calculated based on the levered beta coefficient of stocks of 5 companies in the same industry as the company to be appraised currently listed on the Vietnam Stock Exchange is 1.145.

- The expected return on the Vietnam Stock Market is calculated using statistical methods based on the VN-Index is 12%/year.

- The company does not have non-operating assets.

Enterprise No. 2

* Determine the projected cash flow

FCFF at the end of December N is calculated as follows:

FCFF = Earnings Before Interest After Tax (EBIAT) + Depreciation - Capital Investment - Net Working Capital Change outside cash and short-term non-operating assets (Operating Net Working Capital Difference)

FCFF = (200,000 + 10,000) × (1 - 22%) + 50,000 - 35,000 - (-5,000)

FCFF = 183,800 million VND

FCFF for the period from year 1 to 5 is calculated as follows:

FCFF₁ = 183,800 × (100% + 5%) = 192,990 million VND

FCFF₂ = 192,990 × (100% + 5%) = 202,639.5 million VND

FCFF₃ = 202,639.5 × (100% + 5%) = 212,771.48 million VND

FCFF₄ = 212,771.48 × (100% + 5%) = 223,410.05 million VND

FCFF₅ = 223,410.05 × (100% + 5%) = 234,580.55 million VND

* The risk factor takes into account the impact of the capital structure (b) of the enterprise being appraised, calculated according to the formula_Lof the enterprise to be appraised for valuation is calculated according to the formula:

Cost of equity capital of the enterprise being appraised:

R_{Average loan repayment period is 10 years;} = R_f + b_L × (R_{Granite, gabbro, decorative stone...} – R_f)

R_{Average loan repayment period is 10 years;} = 6% + 1,431 × (13% - 6%) = 16%

Weighted average cost of capital of the enterprise being appraised:

13.17%

* Terminal value forecast

FCFF in the sixth year

FCFF₆ = 234,580.55 × (100% + 3%) = 241,617.97 million VND

The terminal value forecast is as follows:

* Enterprise value of the enterprise being appraised is as follows:

Conclusion: As the enterprise being appraised does not have non-operating assets, the enterprise value of the enterprise being appraised is 2,017,944.75 million VND./.