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Company Profile Kia Lim Berhad Essays Company Profile Kia Lim Berhad Essay Company Profile Kia Lim Berhad Essay Kia Lim Berhad was set up as the holding company of Syarikat Kia Lim Kilang Batu Bata Sdn Bhd (SKL) and Kangkar Raya Batu Bata Sdn Bhd (KRBB) bricks manufacturers, which had been operating since 1973. SKL has set up a fully automated plant employing German technology. It was incorporated in Malaysia on 8 May 1995 as public limited company and listed in the KLSE Main Board (Industrial Products) on 29 May 1996. Commercial production commenced in mid 1999. KRBB installed a second plant in late 1991, which is fully automated and capable of producing common, block and facing bricks. The Group has diversified its range of products to include clay-roofing tiles, facing bricks and pavers. The Groups products are exported to regional markets like Singapore, Japan, Taiwan and Qatar. Kian Joo Can Factory Berhad Kian Joo Can Factory Berhad is manufacturer and distributor of tin cans and 2-piece aluminium beverage cans. They also produced polyethelene terephalate products, corrugated fibreboard cartons, provision of engineering services, letting of property, provision of share registration and provided management services. Kim Hin Industry Berhad The Company (KHI), which is Kuching-based, started operations in 1975 as a small-scale manufacturer of clay bricks. In 1979 it ceased this activity and ventured into the manufacture of mosaic tiles. It changes its name from Kim Hin Industry Sdn Bhd to present form on conversion. From a single production line, the Company now has three factories with 24 production lines. Today, KHI is one of Malaysias largest integrated ceramics manufacturers. The Group is a fully integrated manufacturer of wall, floor and homogeneous tiles, with installed production capacity of 19m sq m p.a. The Group has invested approximately RM266m in state-of-the-art Italian tile manufacturing plant and equipment. Kris Components Berhad Kris Components Bhd was incorporated on 9 September 1975 in Malaysia as a private limited company but converted to a public company on 2 November in year 1995. Its principal activities are manufacturing and stamping of precision metal parts and anodizing high-end cosmetic surface-finishing metal parts. YTL Cement Berhad YTL Cement Berhad listed on KLSE Second Board on September 6, 1993 and transferred to Main Board (Industrial Products) on June 26, 1997. It is incorporated on 29 January 1977 in Malaysia as a private limited company and converted into a public limited company on 4 May 1992. It change its name from Buildcon Sdn Bhd to Buildcon Bhd on conversion and to YTL Cement Bhd on 26, February in year 1997. The Company manufactures and supplies ready-mixed concrete to the construction industry. The Groups operations are located in Westport, Selangor, Bukit Sagu, Pahang and Pasir Gudang, Johor. Body of Contents Company Analysis Kia Lim Berhad Refer to Table 1, common-size analysis of capital structure shows that the liabilities constitute 76% and equity 24% of the companys financing in 2001 compare with 30% of total liabilities and 70% equity in the companys financing in 1996. Debt ratio and total to debt equity ratio increases sharply in 2001 compare to the previous years. In 2001, the company financed its assets approximately 72% of its debt. It was supported when the trend index of long-term liabilities (391.926%) exceeds its current liabilities (308.003%) and shareholders equity (55.331%) ( refer to Table 2). From Table 2, we can see that cash and bank balances decreases sharply from 99.356% to 2.813%. Yet the companys the companys cash flow adequacy ratio is 0.745, which is less than 1. This implies that the internal cash sources in the company were insufficient to maintain its dividend and current operating growth levels. There is a need for the company to seek for external financing in order to fulfill the requirement of the company. Table 3 shows the financial ratios of Kia Lim Berhad, which indicates that the company is facing liquidity needs. The current ratio of the company dropped over the past 5 years and the inventory turnover decreases. Kia Lim Berhads return on invested capital showed unfavorable level, where every unit of invested capital generates less profits to the company from 1998 onwards. The return on common equity also decreases over the past 5 years. The growth rate is decreasing, which the SEGR drop from 0.062% in Year 1997 to 0.185% in Year 2001. This can be seen from Table 1, which total equity capital is 28% in 2001 compare to 70% in 1996. This indicates that when the indebtedness of the company reaches a risky point, the more financial leverage the company has. The company sales show an average declining trend, which it decreases sharply in Year 2000 (-32.084%) and rebound to 100.529% in Year 2001. The forecasted sales for the next year are RM 32062120.43, which the sales are dropping and the companys net profit is forecasted to decline in Year 2003. The dollar of amount earned on behalf of each share decreases from RM 0.08 (1998) to RM 0.04 (1999) and further decreases to nil. This means there is no earning generate for each share of the company. Similar behavior was found in dividends yield, in which it decreases from 3.14 in year 1997 to 1.58 in year 1999. Kian Joo Can Factory Berhad From Table 4, we can conclude that the highest proportion of total liabilities and equity to total equity capital, are recorded in year 1999. As an overall, the average of total liabilities and total equity constitutes 41.6% and 78.37% each year of Kian Joos financing. Besides that, Table 5 reveals the trend of selected accounts, which year 1996 as the base year. The highest record of net income is in year 1997, which is 80.839%. However, the performance of Kian Joo Can Factory in year 1999 is worsening due to the net income earned are decrease for two consecutive years. A tremendous drop in net income in year 2000, which is almost 44.8% less than previous year reflect the company is overcapacity and may attract the new competitors enter into this industry. In year 1998, we can see that the trends of almost all the account selected are downturn because financial crisis occur in that year. Over these five years, the average of sales is 22.18%. Since the inventory growth is more than sales growth over the 5 years period, the company has more funds to invest in inventory. By reviewing Table 6, we find out the return on invested capital is in increasing trend except for year 1997 and 1998. The highest ratio is in year 1997. A large portion variability of the return on common equity of this company is due to changes in return on assets. Notice that the sustainable equity growth ratio, which relative to the prior year is shrink over the four years period except for year 2001. However, the average of this measurement over the five years period is 0.36%. For the debt ratio, there is a sudden drop between year 1998 and 1999 due to 23.6% increase in long term debts. The total debt to equity ratio record the highest amount in year 1998 due to the economic crisis and the company increase their credit line. In year 2000, there is a sudden drop from RM2 dividends yield to RM1.52. After year 1999, earnings per share are decrease for two consecutive years. This is because reducing in net profit over the years. There is an improvement in PE ratio except the year 20 01. Since economic recession in year 1998, the company must sell their stock in higher price, that is RM28.3 in order to get RM1 earnings. The forecasted sales of this company for year 2003 are RM473, 509,169, which is 1.17% less compare with previous year. However, net income is expected increase 5.97%, which is from RM28, 220,000 raise to RM29, 904,528. In summary, the company will performed better in year 2003 since the forecasted net income is higher. Kim Hin Industry Berhad Table 7 shows a common size analysis of capital structure for Kim Hin Industry Berhad. For year 1996, liabilities constitute 16.702% and this percentage decreases to 0.099% in year 2000, which indicates that the obligations of Kim Hin Industry are reducing. However, in year 2001, this amount increases 0.015% to 0.114%. From the table, it shows the shareholders equity of Kim Hin industry Berhad is stable over years. The reserve of this company reaches its peak in year 1998. This may be due to the economic crisis that makes the company to increase their reserve in the bank to face the contingency in the future. From Table 8, we can see that cash and bank balances increase the most in year 2001 (2492.699%) if compared with the other short-term assets. This indicates that Kim Hin Industry Berhads liquidity needs is improving over the year. Although long term asset and long term liability show a downturn from year to year, they are still remained above the level of total long term assets based on year 1996. From here we can see that sales growth are faster than the inventory growth. This is a good sign for Kim Hin Industry Berhad. This may be due to the better inventory system in this company. Net income shows a rising trend over these six consecutive years except in year 1998, the net income decreased 33.954% if compared with year 1996. Besides, account receivables are growing faster than the sales (118.975% versus 110.042%), this is suggestive for a more aggressive credit policy. After doing the time series forecasting of the value of sales and net income in year 2003, we predict that both categories will be in a decreasing trend, which reach an amount of RM 15,561,322.19 for net income and RM 150,277,952 of sales. From Table 9, the value of cash flow adequacy ratio (CFAR), which is 1.01606, indicates that this company is able to cover these cash without a need for external financing. The debt ratio of this company over five years is decreasing from year to year. This implies that the portion of assets that are being financed by the creditors are keep on dropping. Furthermore, the debt to equity is decreasing from year 1997 (0.352044 times) to 2001 (0.161399 times). The highest ROCE over these five business-operating years is in year 1997 which yield an amount of 27.8%. The growth rate is decreasing, which shows by the SEGR, from 25.03% in year 1997 to -5.827% in year 1998. After year 1998, the growth rate increase steadily from year 1999 (7.116%) to 2001(11.35%). Although the companys earning per share decreases from 0.18 in year 1997 to 0.05 in year 2001, the dividend yield increases from 0.53 in year 1997 to 0.98 in year 2001. In year 1998, dividend yield comes to it highest point of 3.23 which designates that the selling price of each share, the company will get RM 3.23 dividend in return. The PE ratios of Kim Hin Industry Berhad fluctuate over time. The highest PE ratio among these five years is in year 2000, which yields that the company should sell its share for RM 27.90 in order to earn RM 1.00. Kris Components Berhad Table 10 shows a common-size analysis of capital structure for Kris Components Berhad. For year 2001, liabilities constitute 52.1% and equity 47.9% of Kriss financing, while long term liabilities equal l2.41%. Total liabilities is increase from 22.44% in year 1997 to 52.1% in year 2001, whereas total equity capital has decreased from 77.56% to 47.9%. This shows that there is a greater likelihood of insolvency in company since the higher the proportion of debt, the larger the interest charges and debt repayment. Table 11 shows the trend index of selected accounts of Kris Components Berhad. The cash and cash balances was decrease dramatically from 864% in year 2000 to 530.3% in year 2001, whereas inventory is increase substantially from 639.3% to 1049.8%. This shows that the company has more funds invested in inventory in year 2001. However, the inventory growth is less than sales growth from year 1998 to year 2001. Net income is in an increasing trend except from year 1999 to 2000. Therefore, we have forecasted the sales and net income using regression model for year 2003. As the result, estimated sales in 2003 is RM 484,523,776.2 while the estimated net income is RM46,118,828.51. Refer to Table 12, the total debt to equity ratio shows an increasing trend during the 5 years period. This indicates the proportion of the companys capital that derived from debt is larger compared to other sources of capital. The total debt to equity ratio in year 2001 (108.475%) shows that the likelihood of insolvency in the company is greater especially during periods of earnings decline. The debt ratio of the company also increases over the 5 years period. It shows the portion of assets that is financed by creditors is increase from year to year. The return on invested capital ratio is fluctuated over the 5 years period. It shows 12.43% in 1999 indicates the company is able to attract financing compare with previous year. Kriss higher return on common shareholders equity as compared to its return on invested capital reflects the favourable effects of financial leverage. That is, Kris is successfully trading on the equity. Kriss cash flow adequacy ratio for the five-year period is 0.364, implying that funds generated from operations are insufficient to maintain dividends and current operating growth levels and there is a need for external financing. Kris sustainable equity growth rate in year 2001 is 12.14% compare with 10.01% in year 2000, markedly improve relative to prior years. This indicates better future growth in sales and earning. The year 2001 net income of RM19.771 million and dividend of RM 3.711 million leave sufficient funds for reinvestment and internally financed growth. While earnings per share increase from RM0.20 in year 1998 to RM0.42 in year 2001, the PE ratio was fluctuate during that period. Dividend yield was decline. Declining in dividend yield is attributable mainly to increase in PE ratio. YTL Cement Berhad Refer to Table 13, the company total liabilities decreased since 1999 with 65.1% compare to 36.36% (2002). Besides that, the overall total shareholders equity fluctuates each year with a moderate high percentage (63.64%) in 2002. The total debt to equity ratio is decreased from year 1999 to 2002. There is a sudden decreased of almost 70% from 186.506% in 1999 to 57.139% in 2002. Table 14 indicates that the sales and the net income of the company was in good condition for 4 consecutive years with an increment from 79% (1999) to 188% (2002) and net income increased from 21% (1999) to 438% (2002). In addition, we have forecasted the sales and net income using regression model for year 2003. As the result, estimated sales for year 2003 slightly decrease with the amount of RM 382,055,745.50 compare to 2002 with the amount of RM 422,639,071 while there is a rise in estimated net income for 2003 with RM7,454,009.69 (refer to Appendix). From the short-term liquidity ratio of YTL Cement Berhad, we analyze the companys inventory turnover. From Table 14, we can see that the companys inventory turnover increased over 4 consecutive years from year 1999 to 2002. We can also see that there is a sudden increased of almost 50% in 2000 due to an increased in YTL Cement Berhads sales from 109% in 2000 to 188% in 2002. This shows that there is effectiveness in managing inventory by YTL Cement Bhd. Besides that, CFAR for YTL Cement Berhad for 5 years period is 2.33 (refer to Table15). This ratio indicates that the company is able to cover cash needs without a need for external financing. The return on invested capital (ROIC) is increased from year 2000 to 2002. This is cause by the increment in the net income of the company over the past 3 years. Similar to ROIC, return on common equity (ROCE) of the company also increased. This is cause by the rise of the net income of the company over the past 3 years from 113% (2000) to 438% (2002) (refer to Table14). Sustainable equity growth rate (SEGR) recognizes the internal growth for YTL Cement Bhd depends on both earnings retention and return earned on earnings retained. There is an improvement on SEGR for 5 consecutive years from 1998 to 2002 after a sudden drop from 13.52% in 1997 to 1.58% in 1998 due to the occurrence of financial crisis (refer to Table15). From the view of financial market measures, YTL Cement Berhad EPS increased for 4 consecutive years from 0.03 in 1999 to 0.479 in 2002. This shows that the company earnings had improved over the periods. The company had lower PE ratio during year 2002, 2001, 2000 compare with the previous 3 years. This is good for the company. The company highest DY (5.12) was in 1998 compare to other years (refer to Table 15).

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