School of Economics, Finance and banking (SEFB)
Universiti Utara Malaysia (UUM)
Second Semester; 2018-19 Academic Session
BWFF2033 Financial Management (V)
Group Project Paper
Financial Positions and Performances for the Years 2013 to 2017 of Five Selected Companies Listed on the General Industrials Sector in Malaysia
by Project Group V03:
Lim Chia Kee
Lee Hao Wen
Wong Pei Ting
Tan Shi Ji
Nur ‘Aqilah binti Jamaludin
The purpose of the financial reports is to provide information about the financial position and performance as well as the cash flows of an organization. This information used by the readers of financial statements to make decisions regarding the allocation of resources. To get know the further about a company’s financial health, so it important to analysis the annual report and carried out the ratio analysis of the company to determine whether the firm that we want to invest will have return in our investment. Ratio analysis is a quantitative method of gaining insight into a company’s liquidity, operational efficiency, and profitability by comparing information contained in its financial statements.
Master-Pack Group Berhad formerly known as Hunza Consolidation Berhad was incorporated in 1994 and became a public company in 1996. In 1997, the company successfully listed on the second board of the Malaysian stock market and traded under the “code”. 7029 HUNZA". The company has changed its name from Hunza Consolidation Berhad to Master-Pack Group Berhad in June 2009. Simultaneously the trading name changed to "7029 MASTER" in the Main Market of Bursa Malaysia. Master-Pack Group Berhad is principally engaged in the production of corrugated boxes and provides one-stop packaging solutions for customers. However, The Master-Pack Group has been an innovative niche market participant in the packaging industry for the past 26 years. The principal activities of the company are investment holdings and the provision of management services. The core activities for Master-Pack Group are in the industry of corrugated paper packaging.
Kian Joo Group is the largest packaging company in the ASEAN region by producing all types of tin cans and containers such as two-piece aluminium beverage cans, corrugated carton boxes, and other plastic products for the domestic and export markets. Kian Joo Can Factory Berhad is engaged in manufacturing and distribution of tin cans. Kian Joo Can Factory is one of the company in Malaysia which has ability to execute packaging solutions that deliver freshness, convenience and security for food and consumer products. Kian Joo is listed on Bursa Securities on 16th November 1984 with the trade code of 3522.
KUB Malaysia Berhad is an investment company which is listed on the Main Market of Bursa Malaysia. KUB Malaysia is operating in the business of Argo, Information & Communication Technology (ICT), Energy, Property and Power Industries. On October 1996, Permodalan Perak Berhad has changed its name to KUB Malaysia and subsequently hosted on The Main Board KLSE in 1997.
Kumpulan Fima Berhad (KFIM) is a diversified group which involved in the businesses of manufacturing, plantation, bulking, food sectors. KFIM was incorporated by the Malaysian Government on 24th February 1972 under the name Fima Sdn Bhd. KFIM's first business was canning of pineapples when Pineapple Cannery of Malaysia (PCM) was organised as KFIM's wholly owned subsidiary. KFIM was listed on the Main Market of Bursa Malaysia in 1996.
In 02 November 2000, Hap Seng Consolidated Berhad (HSCB) is a public company that listed on the Main Market of Kuala Lumper Stock Exchange. Hap Seng Consolidated is diversified conglomerate with six core businesses, the six core are plantations, property investment and development, credit financing, automotive, fertilizers trading and building materials.
Based on the five companies that we have analysis, we found that these five companies have some similarity and differences. The similarity of the five company are all of the company involve in manufacturing industry. Beside that, KUB Malaysia, Master-Pack Group, Hap Seng and Kumpulan Fima have the same similarity which involve in investment. Hap Seng involve in the same sector with Kumpulan Fima which is plantation. However, there are also some differences between these five companies. Kian Joo Can Factory is the largest food can manufacturer in Malaysia while Kumpulan Fima is a company that processed pineapple canned food. KUB Malaysia is a company that produce concrete materials while Hap Seng produce building materials. Last but not least, Master-Pack Group is a company that manufacture and sale of corrugated fiberboard cartons and packaging materials.
Table 1: Financial Ratios of Kian Joo Can Factory
Table 1 showed the financial ratios of Kian Joo Can Factory from 2013 to 2017. The market value ratios are often used to assess the stocks of publicly traded companies. These ratios are mainly used by investors to check whether the share’s prices were valued correctly in the market or they are trading with a higher price or lower. Kian Joo Can Factory had illustrated a fluctuation in market-to-book ratio of five years. In 2013, the market-to-book ratio recorded 0.929 times and inclined to 1.232 times in 2014. However, it kept reducing to 0.998 times, 0.993 times, and 0.903 times in 2015, 2016 and 2017 respectively. For the price-earnings ratio, the company recorded 8.146 times and inclined to 11.608 times in 2013 and 2014 respectively. In 2015, the price-earnings ratio recorded at 9.843 times and it increased again to 10.982 times in 2016. The price-earnings ratio grew much from 10.982 times to 14.714 times in 2017. In facts, the market value for Kian Joo Can Factory illustrated an unstable situation from 2013 to 2017.
The profitability ratios are used to assess a business's ability to generate earnings on its revenue, operating costs, balance sheet assets, and shareholders' equity over time, using data from a specific time. The higher value of profitability indicates that the company is doing well. Form the financial ratios of above, Kian Joo Can Factory experienced a downward trend in return on equity from 2013 to 2017. The company recorded the highest return on equity as 11.40% in 2013 and the lowest return on equity as 6.14% in 2017. For the return on assets also illustrated a dropping trend from 2013 to 2017. It recorded 7.76% (in 2013) as the highest return on asset and 3.64% (in 2017) as the lowest return on assets respectively. However, the profit margin had illustrated a falling trend from 2013 to 2017. It recorded 9.17% (in 2013) as the highest profit margin and 4.89% (in 2017) as the lowest profit margin. In facts, Kian Joo Can Factory illustrated a negative profitability ratio from 2013 to 2017.
Assets management ratios indicated how successfully a company is utilizing its assets to generate revenues. The total asset turnover for the company illustrated a downward trend from 2013 to 2017. Obviously, the highest and the lowest total asset turnover recorded at 0.846 times in 2013 and 0.743 times in 2017 respectively. The fixed asset turnover illustrated an oscillation situation from 2013 to 2017. It decreased from 1.763 times (in 2013) to 1.608 times (in 2014) and escalated to 1.753 times (in 2015). However, it dropped to 1.536 times in 2016 and rise again to 1.576 times in 2017. The receivables turnover also illustrated a fluctuation situation from 2013 to 2017. It declined from 4.599 times (in 2013) to 4.419 times (in 2014) and 4.419 times (in 2015) but inclined to 4.679 times in 2016 and dropped to 4.569 times in 2017. The inventory turnover also illustrated an undulation situation from 2013 to 2017. In 2013, the inventory turnover recorded 4.540 times and declined to 4.338 times in 2014. However, it increased to 4.939 times in 2015 and dropped to 3.755 times in 2016. Thus, it declined significantly to 0.556 times in 2017.
Solvency ratios is important since the investors would like to know about the solvency of the firm to meet their interest payments and to make sure that their investments are safe. For the long-term solvency ratios, the equity multiplier indicated an upward trend throughout five years. It increased from 1.470 times in 2013 to 1.688 times in 2017. However, the cash coverage ratio showed a downward trend throughout five years. It decreased continuously from 32.127 times in 2013 to 7.244 times in 2017.
The short-term solvency ratios indicated a downward trend in current ratio, quick ratio and cash ratio throughout five years. Obviously, the current ratio dropped continuously from 2.599 times to 1.733 times in 2013 and 2017 respectively. Nevertheless, the quick ratio declined continuously from 1.589 times in 2013 to 0.926 times in 2017. The cash ratio also decreased continuously from 0.520 times in 2013 to 0.273 times in 2017.
Table 2: Financial Ratios of KUB Malaysia Berhad
Based on the table 2 for the financial ratios, the market value ratios include market-to-book ratio and price-earnings ratio. The market-to-book ratio for KUB Malaysia Berhad in year 2013 is 0.804 times and increased to 0.853 times in year 2015. However, the market-to-book ratio declined from 0.853 times which in year 2015 to 0.488 times in year 2016. The market-to-book ratio of KUB Malaysia increased 0.275 times which is 0.763 times in year 2017. The price-earnings ratio in year 2013 is 45.358 times but increased significantly in year 2014 which is 97.030 times. In year 2015, the price-earnings ratio dropped from 97.030 times to 30.112 times in year 2015. The price-earnings ratio still decreased from 30.112 times to 6.394 times and 7.699 times in the year 2016 and 2017.
For the profitability ratios, the return on equity of KUB Malaysia is decreased from 1.77% in 2013 to 0.85% in 2014. After declined in year 2014, the return on equity increased from 2.83% in year 2015 to 9.92% in year 2017. Then for the returns on assets, it is decreased from 0.79% in year 2013 to 0.45% in the year 2014. The returns on assets increased continuously from 4.54% in year 2015 to 5.90% to year 2017. This value indicates that the company loss from 0.8 cents to 0.5 cents on each RM1.00 of common stockholders’ asset investment in year 2013 to year 2014 and earned 5.9 cents on each RM1.00 of common stockholders’ asset investment in year 2017. The profit margin of KUB Malaysia decreased from 0.52% in 2013 to 0.34% in the year of 2014. However in the year 2015 until year 2017, the profit margin increased from 1.76% to 5.37%. A higher profit margin indicates a more profitable company that has better control over its costs.
The asset management ratios which is total asset turnover is decreasing from 1.524 times in the year 2013 to 0.968 times in year 2015 while the total asset turnover increased from 0.994 times to 1.100 times in the year 2016 and year 2017. Fixed asset turnover is a measures of the firm’s efficient use of its investment in fixed assets. For the fixed asset turnover of KUB Malaysia Berhad in year 2013 decreased from 5.022 times in year 2013 to 1.922 times in year 2015.The fixed asset turnover then increased to 2.329 times and 2.627 times for the following years. In year 2013, the receivables turnover rose from 4.942 times to 7.409 times in year 2014 while in year 2015 until year 2017, it declined from 7.213times to 5.016 times. Decreasing value of receivable turnover indicates that accounts receivable can be converted into cash slowly. In the year 2013 until 2015, the inventory turnover decreased from 52.209 times to 35.465 times and then increased to 55.899 times in the year 2016. The inventory turnover for the year 2017 declined to 50.985 times.
For the next ratios are the long-term solvency ratios and short-term solvency ratios. For the long-term solvency ratios, the equity multiplier decreased from 2.239 times to 1.667 times in the year 2013 to year 2015 and then rose to 1.683 times in year 2016. In year 2017, the equity multiplier declined to 1.679 times. The cash coverage ratio increased significantly from 3.770 times to 23.974 times in year 2013 until year 2015. In year 2016, the cash coverage ratio of KUB Malaysia dropped to 14.502 times and after that increased to 16.697 times. The short-term solvency ratios which is current ratio rose from 1.243 times in year 2013 to 1.766 in year 2016. In year 2017, the current ratio decreased to 1.690 times. The quick ratio also increased from 1.179 times to 1.697 times in year 2013 to year 2016 and then dropped to 1.611 times in year 2017. For the cash ratio, it is increasing from 0.460 times to 1.037 times in year 2013 to year 2016. In year 2017, the cash ratio is decreased to 0.804 times.
Table 3: Financial Ratios of Hap Seng Consolidated
Based on the table 3, we can see that the market-to-book ratio for Hap Seng Consolidated had increased from 0.949 times in 2013 to 3.887 times in 2017. Market value is used to find by comparing its book value to its market value. The price-earnings ratio also increased from 5.410 times in 2013 to 20.298 times in 2017. Price-earnings ratio used to determine the relative value of a company’s shares in an apples-to-apples comparison.
For the part of profitability ratios, the return on equity of Hap Seng Consolidated increased from 17.54 % in 2013 to 21.41% in 2015 , but it started decreased until 18.23% in 2016. On 2017, the return on equity of Hap Seng Consolidated increased again until 19.15% on 2017. The return on asstes of Hap Seng Consolidated increased from 8.29% on 2013 to 9.69% on 2014, but this ratio decreased dramatically until 8.55% on 2016 and it increased again to 9.04% on 2017. Profit Margin increased from 16.87% on 2013 to 20.68% on 2015 and it increased until 20.46% on 2016. This ratio increased again until 20.87% in 2017.
Moreover, the asset management ratios such as total asset turnover for Hap Seng Consolidated, the ratio fall from 0.491% in 2013 until 0.418% in 2016 and it increased again until 0.433% in 2017. The fixed asset turnover for Hap Seng Consolidated rose form 1.893% in 2013 to 2.596% in 2015, and it fall until 2.167% in 2016. The ratio increased until 2.365% in 2017. While for the receivable turnover, the ratio continuously decreased from 2.668% in 2013 to 2.218% in 2017. The inventory turnover for this company went down slightly from 3.166% in 2013 until 2.445% in 2017.
Furthermore, the long-term solvency ratios such as equity multiplier went down from 2.115% in 2013 to 1.967% in 2014. This number rose until 2.361% in 2015 and it dropped slightly until 2.118% in 2017. The cash coverage ratio increased from 10.042% in 2013 to 11.223% in 2014 and it decreased until 8.574% in 2016. The ratio rose until 9.590% in 2017.
Last but not least, the short-term solvency ratio such as current ratio for Hap Seng Consolidated went down from 1.388% in 2013 to 1.269% in 2015 and it rose until 1.487% in 2016. The ratio plunged again until 1.349% in 2017. The quick ratio decreased from 0.889% in 2013 until 0.773% in 2015 and this ratio increased until 1.487% in 2016. This ratio decreased until 1.349% in 2017. The cash ratio decreased dramatically from 0.286% to 0.197% in 2015 and it rose again until 0.352% in 2016. The cash ratio also decreased until 0.194% in 2017.
Table 4: Financial Ratios of Master- Pack Group Berhad
Based on the table 4, first we can see the market value ratio for the company. The market-to-book ratio for Master-Pack Group Berhad was increasing from 0.389 times in 2013 to 0.636 times in 2015, but it decreasing at 2016 and 2017 from 0.636 times drop to 0.434 times in 2017. The value Market-to-book for the company was less then 1 that mean the company has not been successful overall in creating value for its stockholders according five years. Next ratio we can see in market value ratio was prices-earnings ratio also increase from 4.415 times in 2013 to 15.405 times in 2015 and it decrease from 15.405 until 8.307 in 2017.
For the next part profitability ratio, in the table we can saw the value of the return of equity as no stable. The value was decrease form 8.80% in 2013 until 4.26% in 2016 and it increase back to 5.23% in 2017. Based on the table it show the return earn of the company is very unstable in five, but the company still can got profit across this five years. For return of assets that show the percentage was decreasing sharply from 6.01% in 2013 drop to 3.28% in 2016 and it get increase at 2017 for 3.66%. This shows that the Company generates revenue through the use of its assets and effectively manages its production. Lastly the table show that the profit margin for Master-Pack Berhad was decreasing sharply form 6.85% in 2016 drop until 3.40% in 2017. This shows that the company cannot better control the expenses of the company.
Then above the assets management ratio we can saw that total assets turnover of the company was decreasing from 0.878 times in 2013 to 0.824 times in 2015 and the value increase back on 2016 0.881 times to 2017 1.075 times. This showed the efficiency use of Master-Pack on their investment in total assets is stable year by year. The table show Mater-Pack is efficiently used their assets to generate their revenue on 2016 and 2017. Next the fixed assets turnover show out the value was decreasing in 2013 which is 2.223 times to 2015 which is 1.945 times and it increase back on 2016 and 2017 from 2.204 times to 2.937 times. This means the fixed asset turnover of Master-Pack is continuously increased at 2016 and 2017 and Master-Pack have been efficiently used their investment in fixed assets. Then the receivables turnover for the company was unstable in this five years. In the table showed that the collection of Master-Pack on credit accounts is faster on 2014 compare to 2013, 2015, 2016 and 2017. Lastly the table show ours that inventory turnover of Master-Pack was increasing from 6.751 times in 2013 to 9.038 times in 2017. That mean Master- Pack faster in sold out their inventory and replaced it in the faster period of times. The minimum inventory turnover rate in 2013 was 6.751 times, and in 2016 it was 7.332, which means that Master-Pack's inventory in 2013 and 2016 was slow and the inventory was slowly replaced.
After that the long- term solvency ratios for the Master-Pack show ours the equity multiplier for the company was decreasing from 1.464 times in 2013 to 1.300 times in 2016 and it increase back to 1.429 times in 2017. Then of the cash coverage ratio was increasing in this five years from 7.199 times in 2013 to 11.063 times in 2017. After the long term solvency ratios we will saw the short term, first the current ratio for the company was increasing from 2013 which is 1.706 to 2016 which is 2.645 and it decrease at 2017 to 2.154. The table show that in 2016 is more liquid as its current ratio is higher as compared to year 2013, 2014, 2015 and 2017. Next the quick ratio for the company also increase from 2013 to 2016 which is 1.182 times to 1.923 times. Lastly the cash ratio show in the table was increasing on 2013 which is 0.204 times to 2016 which is 0.406 times and decrease in 2017 which is 0.815 times
Table 5: Financial Ratios of Kumpulan Fima Berhad
Based on the financial ratio in table 5, we can see that the market-to-book ratio for Kumpulan Fima Berhad had increased from 0.791 in 2013 to 0.844% in 2014. Then for the year 2015 the market-to-book ratio decreased from 0.754 to 0.676 in 2017. The price-earnings ratio also increased from 6.251% in 2013 to 17.401% in 2017.
For the profitability ratios",the return on equity is decreased from 12.65% in 2013 to 3.88% in 2017 this value indicates that during 2017 the company earned 3.88 cents on each RM1.00 of stock equity. Then for the returns on assets, it is decreased from 8.00% in 2013 to 2.45% in the year 2017. This value indicates that the company earned 2.45 cents on each RM1.00 of common stockholder’s asset investment. Based on the five years analysis data, profit margin decreased from 15.89% in 2013 to 5.45% in the year of 2017. A higher profit margin indicates a more profitable company that has better control over its costs.
Furthermore, the asset management ratios such as total asset turnover for Kumpulan Fima Berhad, the ratio fall from 0.503 times in 2013 to 0.450 times in 2017. Generally, the higher the firm’s total asset turnover, the more efficiently its assets its assets have been used. The fixed asset turnover is a measures of the firm’s efficient use of its investment in fixed assets. The fixed asset turnover for the year 2013 is 1.517 times then decrease to 1.382 times in 2014. For the year 2015, the fixed assets turnover is decrease from 1.189 times to 1.151 times in 2017. While for inventory turnover increase from 4.284 times in 2013 to 6.608 times in 2017. Higher value of inventory turnover indicates that inventory can be sold and replaced more frequently.
Moreover, the long-term solvency ratios is equity multiplier and cash coverage ratio. The equity multiplier increase from 1.549 in 2014 to 1.617 in 2015. Then, for the year 2016 it increase from 1.578 to 1.584 in 2017.
Compare and Analysis
In this part, we will explain the financial position and performance among the five companies which are Kian Joo Can Factory, KUB Malaysia Berhad, Hap Seng Consolidated, Master-Pack Group Berhad and Kumpulan Fima Berhad from year 2013 to 2017.
First of all, we will discuss about the market value ratios. Market value ratios are used to evaluate the current share price of a publicly-held company's stock. The market value ratios consist of market-to-book ratio and price-earning ratio. Market-to-book ratio measured the market price per share as the multiple of the firm’s book value per share from 2013 to 2017. Hap Seng Consolidated has the highest ratio among five companies. The higher market-to-book ratio reflect the higher price market is willing to pay per share, given book value per share. However, the price-earning ratio is the ratio that measure the share price as the multiple of earning per share. KUB Malaysia Berhad has the highest price-earning ratio in 2014 which is 97.030 times. This shows that KUB Malaysi.a Berhad have higher share price are willing to pay the earning in 2014.
Next, the return on equity measure the net income as proportion of total equity. Hap Seng Consolidated has the highest return on equity compare to the other companies from 2013 to 2017. This reflect Hap Seng Consolidated have more higher net income achieved from total equity. Profit margin measure net income as proportion of sale. Hap Seng Consolidated has higher profit margin compare the four companies from 2013 to 2017. This shows that Hap Seng Consolidated have more net income achieved from sale.
Moreover, asset management ratios attempt to measure the firm's success in managing its assets to generate sales. Asset management ratios which is total asset turnover measure the sale as the multiple of total asset. Hap Seng Consolidated has the lowest total asset turnover while KUB Malaysia Berhad has the highest total asset turnover compare to four companies from 2013 to 2017. This reflects that KUB Malaysia Berhad have lower relative use of asset ",so much lower needed financing. Receivable turnover measure sale as multiple of account receivable. KUB Malaysia Berhad has the highest receivable turnover from 2013 to 2017. This reflects KUB Malaysia Berhad has higher number of times receivables will be collected, re-created and collected again to attain the year sales.
On the other hand, long-term solvency indicates whether a company's cash flow is sufficient to meet its long-term liabilities by using equity multiplier and cash coverage ratio. Master-Pack Group Berhad have lower equity multiplier compare to the other company from 2013 to 2017. This means Master-Pack Group Berhad have lower relative debt used. Hence, Master-Pack Group Berhad have higher relative equity used.
Short-term solvency ratios attempt to measure the ability of a firm to meet its short-term financial obligations. One of the short-term solvency ratios is current ratio. Current ratio measured the current assets to meet current liabilities. Kumpulan Fima Berhad have higher current ratio, quick ratio and cash ratio compare to the four companies from 2013 to 2017. This show that Kumpulan Fima Berhad have more current assets to cover current liabilities. Its also means Kumpulan Fima Berhad have more liquidity.
In conclusion, all companies have experienced a turmoil performance and financial position in 2013 to 2017.
1. Bursa Malaysia (2013-2017). KUB Malaysia Berhad. Retrieved from:
2. Bursa Malaysia (2013-2017). Kian Joo Can Factory Berhad. Retrived from:
3. Bursa Malaysia (2013-2017). Kumpulan Fima Berhad. Retrived from:
4. Bursa Malaysia (2013-2017). Master-Pack Group Berhad. Retrieved from:
5. Bursa Malaysia (2013-2017). Hap Seng Consolidated. Retrieved from:
6. The Star Online (2 May, 2016). KUB in expansion mode. Retrieved from:
7. the Sun daily (21 April 2016). Kian Joo to invest RM90m in Myanmar. Retrieved from:
8. The Edge Market (24 February 2016). Kumpulan Fima’s 3Q earnings fall by 19%. Retrieved from:
9. New Straits Times (31 December 2016). Hap Seng is best performing stock with 36.7pc return. Retrieved from:
[image: ]KUB Malaysia Berhad
Kian Joo Can Factory Berhad
[image: ]Kumpulan Fima Berhad
Hap Seng Consolidated Berhad