Company Profile

Company Overview

CAELY HOLDING BERHAD

Market: Main Market

Sector: Consumer Product

Stock Code: 7154

Market Capital: 32 Million

(Source:Bursamalaysia.com, 23/11/2017)
3.0 Common Size Analysis

Balance Sheet

Analysis of Common size balance sheet for 3 consecutive years

Common size balance sheet is a standardized balance sheet which is presenting all items
in percentage terms. This will help investors to compare the company financial position across
the years or with competitors. In this analysis, it includes QL Resources Berhad and Caely
Holdings Berhad for 3 years balance sheet start from 2014 until 2016. Basically, the analysis
will discuss on both company assets, liabilities and equity in 3 years. 3 years common size
balance sheet is attached at the end of the analysis.

Assets

Current Assets

From the common size balance sheet, we can found out that most of the assets are current
assets. The current assets include Property development costs, Inventories, Receivables, deposits
and prepayments, Tax Recoverable, Marketable securities, Deritative Financial Instruments,
Deposits with licensed banks Cash and bank balances, and deposits with licensed banks From
2014 to 2016, the percentages of current assets are roughly 80% on total assets. It is because
Caely Holdings Berhad is a Consumer Product company which highly depends on the sales of
the products. Basically, the percentage for inventories decrease from 2014 to 2016 which is 12%
until 9.7%. In other words, the sales or turnover of the company may not fluctuate and stable.
For Property development costs, the percentage show an increase from 2014 until 2016 by 23%
to 16%. The difference was about 7%. Receivables, deposits and prepayments showed decrease
between that three years by 0.35. On 2016, there is no amount of receivable recorded on that
years. Tax Recoverable recorded unstable percentage. In 2014 the amount was about 0.2% and
decrease to 0.02%. However, it increase drastically to 8.37% in 2016 Marketable securities
decreasing by 0.3% between that three years due to unstable economic. Deritative Financial
Instruments show decreased by 0.35%. It is due to on year 2016 there is no deritative financial
instruments amount recorded on that day. Deposits with licensed banks show decreased on that
three years by 3.64%. Cash and bank balances increase and decrease on that three years. On
2014, the percentage was about 2.5% and decrease to 1.92% and increase drastically by 4.15%.

Non-Current Assets

Non-current assets for Caely Holdings Berhad are consisted of property, plant and
equipment ,investment property, Defferred tax assets and receivable, deposits and prepayments.
It is same with current assets which is remaining constant for 3 consecutive years. The
percentage for non-current assets is around 29% to 20% in these 3 years. For property, plant and
equipment, it shows a decreasing trend but in a slower rate. In other words, the decreasing of
percentage of property, plant and equipment is due to the depreciation and amortization. Besides
that, it also shows that Caely Holdings Berhad do not have major acquisition or selling of non-
current assets. Intangible assets also show the similar trend as compare to property, plant and
equipment. It has a decreasing trend but in slower rate.

Liabilities

Current Liabilities

For Dutch Lady Milk Industries Berhad, the current liabilities include trade and other
payables, provision and current tax liabilities. The percentage of current liabilities is decreased
from 43.21% in 2008 to 33.95% in 2011. In 2012, the percentage is raise and achieves 42.27%.
The possible reasons for the raise are increment in revenue and high amount payment of special
interim payment. Trade and other payables generally is the debt that Dutch Lady Milk Industries
Berhad owes to creditor. Trade and other payables shows a decreasing trend from 2008 to 2011
which is from 41.61% to 30.57%. It means that Dutch Lady Milk Industries Berhad’s ability in
paying debt is good. However, the percentage is increased from 30.57% in 2011 to 38.28% in
2012. In other words, Dutch Lady Milk Industries Berhad has increased their short term debt to
finance the operation of business. It may due to extensive marketing campaign of company like
“Drink more do more” and introduction of new products like Dutch Lady Chocolate Drink and
Dutch Lady ActivGold. For current tax liabilities, it shows increasing trend from 2008 to 2012,
which is from 1.51% to 3.94%. Since the current tax liabilities are depend on the net income, it is
normal that the percentage of the current tax liabilities also increase.

Non-Current Liabilities

The percentage of non-current liabilities is only 1%-2% of the total. In other words,
Dutch Lady Milk Industries Berhad does not depend on the long term debt to finance their
business. The only item in non-current liabilities is deferred tax liabilities. Generally, deferred
tax liabilities are records the fact that the company will pay more income tax in the future due to
transaction that took place during the current period. The trend of the deferred tax liabilities for
Dutch Lady Milk Industries Berhad is fluctuating across these 5 years which is around 1%-2%.

Equity

From the common size balance sheet, we can see that Dutch Lady Milk Industries Berhad
uses more equity financing rather than debt financing. In 2012, the percentage of the equity is
56.47% and the liability is 43.53%. From 2008-2011, the percentage of the equity is higher than
the percentage of the liability. There are two items in equity which are share capital and retained
earnings.

Share capital is the fund that rose by the company by issuing shares. Basically, the
company has constant of the amount in share capital. In other words, Dutch Lady Milk Industries
Berhad does not raise any new shares in these 5 years. Thus, it means that the Dutch Lady Milk
Industries Berhad have enough capital to run their business.

For retained earnings, it has been increased from 2008 to 2011 which is 33.82% to
48.97%. In other words, Dutch Lady Milk Industries Berhad able to put in more income in order
to funding their business. However, the retained earnings are dropped to 39.75% in 2012. It is
because Dutch Lady Milk Industries Berhad is giving out their special interim dividend and the
amount is greater than the new profit that company earns. Therefore, it will decrease the retained
earnings.
Income Statement

Analysis of Common size income statement for 5 consecutive years

Common size income statement is a standardized income statement which is presenting

all items in percentage terms. It is ease to assists any party to read and compare the income
statement. In this analysis, it includes Dutch Lady Milk Industries Berhad’s 5 years income
statement start from 2008 until 2012. Basically, the analysis will discuss on the revenue, gross
profit, operating profit, profit before tax, net profit, dividend and additional to retained earnings
of Dutch Lady Milk Industries Berhad in 5 years. 5 years common size income statement is
attached at the end of the analysis.

Revenue

Basically, revenue is income which company receives from his ordinary business
activity. Dutch Lady Milk Industries Berhad able to increase their revenue by 24% from year
2008 to 2012 which is around RM 170 million. As compare to one of their main competitors,
Nestle (Malaysia) Berhad able to achieve increment of 17% from year 2008 to 2012. In other
words, Dutch Lady Milk Industries Berhad performs better than Nestle (Malaysia) Berhad in
these 5 years. The increase of revenue is mainly due to high demand of company’s core products
like milk powder and liquid dairy products.

Gross profit

Gross profit is the sum left after revenue minus the cost of goods sold. In year 2012, the
gross profit of Dutch Lady Milk Industries Berhad is 39.30% of revenue. It shows improvement
from year 2008 which is only 25.98%. The increment of gross profit is due to Dutch Lady Milk
Industries Berhad ability to reduce their cost of goods sold. From the common size income
statement, we can see that the cost of goods sold in year 2008 and 2012 is indifferent. Besides
that, the cost of goods sold in year 2008 is 74.02% of revenue and 60.70% in 2012 which is a
decrease of 10.32%. Introduction of new technology and innovation in product are possible
reasons of reduction of cost of goods sold.
Operating profit

Operating profit is known as earnings before interest and tax (EBIT). Operating profit is
the income that company earns after deduct the operation expenses like administrative expenses,
transportation, sales commission and so on. Basically, the operating profit for Dutch Lady Milk
Industries Berhad also show increasing trend which is increase from 8.17% in 2008 to 18.43% in
2012. This is because the effect of increment in gross profit. We can see that the percentage of
the operating expenses do not fluctuate much across these 5 years. Generally, the ranges of the
percentage are from 19% to 24%. In other words, the operating expenses of Dutch Lady Milk
Industries Berhad do not change across these 5 years.

Profit before tax

Profit before tax is computed by using operating profit minus interest expenses.
Basically, profit before tax can tell us how much money company spends to pay their interest
cost. Besides that, it also shows that company is financed more to debt finance if company pays a
lot of interest cost. Dutch Lady Milk Industries Berhad’s profit before tax also shows an
increasing trend which is increase from 8.13% in 2008 to 18.79% in 2012. It is believed that the
reason of the increasing is due to increase in gross profit. As we can see from the common size
income statement, the finance cost of Dutch Lady Milk Industries Berhad is very low which is
below 1%. The highest finance cost is 0.32% in 2012. Thus, we can see that Dutch Lady Milk
Industries Berhad do not depend much on debt financing.

Net profit

Net profit is the earning of the company after deducting all the expenses, interest cost and
tax. Sometimes, net profit also referred as net income or net earnings. Basically, net profit is the
key indicator for the company performance. It can measure how effective a company in doing
business to maximize the profit. The net profit for Dutch Lady Milk Industries Berhad is only
5.99% in 2008 and increase by 8% and result in 13.99% in 2012.It shows a great improvement.
As mentioned earlier, the reduction in cost of goods sold is the main reason of the increment in
net profit. Other than that, the increase of the revenue also play important role in increment of
net profit. The net profit margin of Dutch Lady Milk Industries Berhad is good as compare to
Nestle (M) Berhad. Nestle (M) Berhad net profit margin is only 8.8% in 2008 and 11.1% in
2012. Thus, Dutch Lady Milk Industries Berhad shows a great improvement.

Dividend

Dividend is a form of profit distribution to the shareholder who is the owner of the
company. From the income statement, we can see that the dividend payment remains constant
from year 2008 to 2012 which is around 5%-7%. However, it shows a drastically increase in
2012 which is roughly 19%. The increment of the dividend is due to the distribution of special
interim dividend.

Additional to retained earnings

Basically, retained earnings are the earnings that company does not distribute to the
shareholders as dividend but use for company future operation. In most cases, earnings that
retained by company is to invest in research and development, expansion of business and so on.
Additional to retained earnings referred to the earnings that company adds from net profit to the
retained earnings account for every year. The additional to retained earnings are increasing
across the year 2008 to 2011 for Dutch Lady Milk Industries Berhad. It increases from 0.09% to
7.61%. However, the additional to retained earnings for Dutch Lady Milk Industries Berhad
shows negative in the year of 2012 which is -4.88%. In other words, there is no additional to
retained earnings but a reduction of retained earnings. It is because the special interim dividend
that distributed in year 2012 is more than the net profit. In other words, Dutch Lady Milk
Industries Berhad paying more dividend than their net profit.

Trend Analysis

Trend analysis is the analysis for a company information that was compared over the time. It will
tell us the extent and direction of change of particular financial items for the past few years.

Ringgit 2014 2015 2016

Sales 94530810 94496191 118134832
Net Income 7130355 3637396 4878042
 Trend(%) 2014 2015 2016
Sales(%) 100 100 100
Net Income(%) 7.54 3.84 4.13

100%

98%

96%

94% Net Income

Sales

92%

90%

88%
2014 2015 2016

This graph shows that the sales and net income percentage of Caely Holdings Berhad has
improved from 2014 to 2016. The percentage of sales and net income increase steadily from
2014 to 2016.

Financial Ratio

Financial ratio is the relationships determined from a firm’s financial information. The
uses of financial ratio includes help the investors to do comparison between business firm,
determine the performance level of business firm and so on. By using financial ratio as tools,
investors able to determine whether is it worth to invest in particular business firm or not. In this
analysis, few important financial ratios are computed from the financial statement of Caely
Holding Berhad. Besides , 3 years ratios are computed to look at the trend of the performance
and justifications will be made.

Net Working Capital

Formula: Current Assets- Current Liabilities

Year 2014 2015 2016

Net working Capital RM(‘000) 76234650-28052244 46808275 64572847

=48182406

Working Capital is used to determine the liquidity for a company based on the differences
between total current assets and total current liabilities. The result from NWC can be positive or
negative. It should state positive due to the company needs more current assets to support its
business operations and also to meet the obligation of current liabilities. The greater the current
asset, the more liquid is the company to meet short term obligation.

Net working Capital (RM)

70000000
60000000
50000000
40000000
Net working Capital
30000000 (RM)
20000000
10000000
0
2014 2015 2016

Net working capital for Caely Holdings Berhad was unstable between three years where it
decrease from 2014 to 2015 and increase drastically in 2016.
Current Ratio

Formula: Current Assets

Current Liabilities

Year 2014 2015 2016

Current Ratio
2.71 2.10 2.03

Current Ratio
3
2.5
2
1.5
Series 1
1
0.5
0
2014 2015 2016

Current ratio is used to analysis a company’s liquidity. Basically, current ratio is computed to see
the ability of company to handle short term debt by using short term assets (current asset). In
2014, Caely Holdings Berhad is able to achieve 2.71 for current ratio. In other words, it means
that Caely Holdings Berhad has RM2.71 in current asset for every RM1.00 in current liabilities.

From the chart above, we can see that the current ratio of Caely Holdings Berhad decreasing
from 2.71 in 2014 until 2.10 in 2015 and it continue decrease by 0.07 in 2016 which is 2.03.
This is because company has higher current liabilities in 2016. As the company is quite active in
different marketing campaign, it increases the debt of the company. Besides that, launching of
new products like Dutch Lady Chocolate drink also increase the current liabilities as more
money is spent.
Quick Ratio

𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬−𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲−𝐏𝐫𝐞𝐩𝐚𝐢𝐝 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬

Formula:
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

Year 2014 2015 2016

Quick Ratio 2.24 1.78 1.79

Quick Ratio
2.5
2
1.5
1 Quick Ratio

0.5
0
2014 2015 2016

Quick ratio is also known as acid-test ratio. From the formula, it is similar with current
ratio, just need to exclude the inventories for current assets. It is because inventories have the
least liquidity. Thus, quick ratio measures a company's ability to meet its short-term obligations
with its most liquid assets. For Caely Holdings Berhad, the quick ratio in 2016 is 1.79 in its
liquidity. This is because 1.79 is higher than 1.78 which is industry indicator. From the chart above, we
can see that the trend of the quick ratio is similar with the trend of current ratio. It starts with 2.24 in
2014 and decreased to 1.71 in 2015. However, the ratio is increased to 1.79 in 2016 .
Gross Profit Margin

𝐒𝐚𝐥𝐞𝐬−𝐂𝐨𝐬𝐭 𝐎𝐟 𝐠𝐨𝐨𝐝𝐬 𝐒𝐨𝐥𝐝

Formula:
𝐒𝐚𝐥𝐞𝐬

Year 2014 2015 2016

Gross Profit Margin (%) 18.1 17.9 17.8

Gross Profit Margin (%)

18.2

18.1

18

17.9 Gross Profit Margin

(%)
17.8

17.7

17.6
2014 2015 2016
Net Profit Margin

𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭
Formula:
𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬

Year 2014 2015 2016

Net Profit Margin (%) 7.54 3.84 4.13

Series 1
8
7
6
5
4
Series 1
3
2
1
0
2014 2015 2016

Return On Total Assets

𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐀𝐟𝐭𝐞𝐫 𝐓𝐚𝐱

Formula:
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐀𝐬𝐬𝐞𝐭𝐬
 Year 2014 2015 2016

Return On total Assets (%) 3.46 0.91 0.03

Return On total Assets

4

3.5

2.5

2
Return On total Assets
1.5

0.5

0
2014 2015 2016

Return On Common Stockholder

𝐄𝐚𝐫𝐧𝐢𝐧𝐠 𝐀𝐟𝐭𝐞𝐫 𝐓𝐚𝐱

Formula:
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐒𝐭𝐨𝐜𝐤𝐡𝐨𝐥𝐝𝐞𝐫𝐬 𝐞𝐪𝐮𝐢𝐭𝐲

Year 2014 2015 2016

Return On Common Stockholder

0.06
(%)

Earnings Per Share Of Common Stock

 𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐚𝐟𝐭𝐞𝐫 𝐓𝐚𝐱 𝐏𝐫𝐞𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐝𝐢𝐯𝐢𝐝𝐞𝐧𝐝
Formula:
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐧𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐢𝐬𝐬𝐮𝐞𝐝 𝐨𝐫𝐝𝐢𝐧𝐚𝐫𝐲 𝐬𝐡𝐚𝐫𝐞𝐬

Year 2014 2015 2016

Earnings Per Share Of Common

0.24
Stock (%)

Price/Earnings ratio

𝐌𝐚𝐫𝐤𝐞𝐭 𝐩𝐫𝐢𝐜𝐞 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞

Formula:
𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞

Year 2014 2015 2016

Price/Earnings ratio (%)

62.5

Dividend payout ratio

𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝 𝐩𝐞𝐫 𝐬𝐡𝐚𝐫𝐞

Formula:
𝐄𝐏𝐒
Year 2014 2015 2016

Dividend payout ratio (%)

0

Inventory Turnover

𝐂𝐨𝐬𝐭 𝐨𝐟 𝐠𝐨𝐨𝐝𝐬 𝐒𝐨𝐥𝐝

Formula:
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲
 Year 2014 2015 2016

Inventory Turnover (%)

2.16

Average Inventory Period

𝟑𝟔𝟓 𝐝𝐚𝐲𝐬
Formula:
𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫

Year 2014 2015 2016

Average Inventory Period (%)

168.9

Accounts Receivable Turnover

𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬
Formula:
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞𝐬

Year 2014 2015 2016

Accounts Receivable Turnover

326.0
(%)
Average Collection Period
𝟑𝟔𝟓 𝐝𝐚𝐲𝐬
Formula:
𝐀𝐜𝐜𝐨𝐮𝐧𝐭 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫

Year 2014 2015 2016

Average Collection Period (%)

1.11

Total asset Turnover

𝐒𝐚𝐥𝐞𝐬
Formula:
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐀𝐬𝐬𝐞𝐭𝐬

Year 2014 2015 2016

Total asset Turnover (%)

0.29

Debt Ratio
𝐓𝐨𝐭𝐚𝐥 𝐃𝐞𝐛𝐭
Formula:
𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬

Year 2014 2015 2016

Debt Ratio (%)

2.98
Equity Ratio
𝐎𝐫𝐝𝐢𝐧𝐚𝐫𝐲 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭
Formula:
𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬

Year 2014 2015 2016

Equity Ratio (%)

0.35

Times Interest Earned

𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐁𝐞𝐟𝐨𝐫𝐞 𝐈𝐧𝐞𝐫𝐞𝐬𝐭 𝐚𝐧𝐝 𝐓𝐚𝐱 (𝐄𝐁𝐈𝐓)
Formula:
𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐄𝐱𝐩𝐞𝐧𝐬𝐞

Year 2014 2015 2016

Times Interest Earned (%)

219.2

Debt to Equity Ratio

𝐓𝐨𝐭𝐚𝐋 𝐃𝐞𝐛𝐭
Formula:
𝐓𝐨𝐭𝐚𝐥 𝐄𝐪𝐮𝐢𝐭𝐲

Year 2014 2015 2016

Debt to Equity Ratio (%)

5.73