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BWFF2033 Financial Management

Second Semester 2019/2020 (A191)

Class Group: Group D

Companies / Industry: Health Care Equipment & Services


Top Glove Corporation Berhad
Supermax Corporation Berhad
Kossan Rubber Industries Berhad
LKL Advance Metaltech Sdn Bhd
Hartalega Holdings Berhad

Prepared For:
Dr. Mohd Yushairi bin Mat Yusoff

Prepared By:
Lee Way Chun 262221
Ng Khai Loon 262428
Chia Wei Heng 262415
Tan Gang Shen 263469
Chua Yi Keng 262571

Date of Submission
6th November 2019
TABLE OF CONTENT

No. Title Page

1.0 Background Of The Company 1-3

2.0 Common-Size Analysis 4-12

3.0 Methodology 12-14

4.0 Calculation of Ratios 15-19

5.0 Analysis and Interpretation 19-20

6.0 Conclusion 20

7.0 References 21-35

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1.0 BACKGROUND OF THE COMPANY
SUPERMAX CORPORATION BERHAD

SUPERMAX Corporation Berhad is a world class latex glove conglomerate listed on the Main
Board of Bursa Malaysia Securities Berhad, is a leading international manufacturer, distributor
and marketer of medical gloves.

This comprehensive SWOT profile of Supermax Corporation Berhad provides you an in-depth
strategic analysis of the company’s businesses and operations. As at Sept 2011, 68% of its
gloves were sold under its own brands while 32% were sold as OEM gloves. We believe this
is the group’s biggest strength as it extracts the maximum value out of the glove supply chain
via downstream integration. On the flip side, we noted that Supermax has the highest share
price volatility due to its high beta as compared to its peers. This is very much related to the
market’s lack of confidence on Supermax’s investment approach following a bad investment
in APL Industries (APLI) back in Feb 2005, which was then fully written off in 2008. This is
the company’s biggest weakness, especially during the down cycle where discount might be
widening further. On the positive front, Supermax is currently still on expansion mode with the
aim to add 3.9 bn pieces of glove by 2013, translating to 22% additional capacity from current
capacity of 17.8 bn pieces. The group also draws a 10-year long term plan to build a glove city
with a total annual production capacity of 18 bn pieces on a 36.8-acre plot of land in Bukit
Kapar, Klang. The Trump administration, the uncertainties of global commodity prices, and
more recently, the threat of nuclear war posed by North Korea. As is also experienced by all
industries, the rubber glove industry also faces its fair share of challenges including natural gas
tariff hikes, higher minimum wage policy, tighter employment regulations on foreign workers
and shortage in labour among other matters.

TOP GLOVE HOLDINGS BERHAD

Top Glove Corporation Berhad is the world’s largest manufacturer of gloves. Top glove has
demonstrated steady growth with a compound annual growth rate (CAGR) of 21.8% for
revenue and 19.2% for profit after tax since year 2001. Top Glove has received 26% of the
market share and serves a network of over 2,000 customers in more than 195 countries.

One of the strengths of Top Glove is global market leader. Top Glove is the world’s largest
manufacturer of gloves. Top Glove has its manufacturing operations spanning across Malaysia,

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Thailand and China. Other than that, Top Glove has marketing offices in other countries such
as USA, Germany and Brazil. One of the weaknesses of Top Glove is the safety of the
employees in the factory is not guaranteed. There are many machineries in their operations.
This has increased the risk of the employees’ safety. This can be the weakness for the company
because the image of company can be affected if there is any accident occurs while the
operation is going on in the factory. The opportunity of Top Glove is obtaining subsidization
on natural gas by government. This can reduce the cost of production for Top Glove as we
know that Top Glove is the world largest glove manufacturer. Cost competitive is vital if they
wish to compete with their competitors around the world. As the global demand is increasing
8% to 10% annually, Top Glove needs to reduce their cost by getting subsidization from the
government to increase their productivity. The threat that may affect the performance of Top
Glove is increase in latex price.

HARTALEGA HOLDINGS BERHAD

Hartalega Holdings Berhad (HARTA) established since 1988, is the world’s largest
manufacturer of nitrile gloves with an annual production capacity of 30 billion pieces of gloves.
Their on-going major expansion will further boost our annual capacity to 42 billion pieces by
year 2020.

Hartalega Holdings Berhad is a holding company whose subsidiaries manufacture and sell a
variety of nitrile and latex gloves. The company's gloves are used in laboratories and healthcare
facilities. The gloves are also sold to manufacturers of semiconductors and consumer
electronics and for automotive maintenance and spray painting. The company organizes itself
into six segments based on geography: North America, Europe, Asia, Australia, Malaysia, and
South America. More revenue comes from the North America segment than any other.

The Strengths are owning several patents for in-house propriety machines and highly
automated production processes. Weakness is overly reliant on nitrile gloves production.
Opportunies are increasing exports to developed markets such as the US and EU and they create
own brand distribution channels in China and India. Last, Threats is the rice competition in the
rubber gloves industry.

KOSSAN RUBBER INDUSTRIES BHD

Established in 1979, KOSSAN is one of the largest manufacturers of latex disposable gloves
in the world with an annual production capacity of 25 billion pieces and the largest technical

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rubber products manufacturer in Malaysia with a total compounding capacity exceeding 10,000
mt. More than 80% of its products are exported to over 180 countries with 350 active customers
mostly located in developed nations such as United States, U.K., Scandinavian Countries,
Europe, China, Korea & Japan.

KOSSAN have a strength that they have a diverse product portfolio. The products and brand
portfolio of KOSSAN is enabling it to target various segments in the domestic market at the
same time. The weakness of KOSSAN is the company lack of work force diversity. KOSSAN
is not diverse enough given that most of its growth so far is in its domestic market. Besides
that, KOSSAN also have an opportunity that the company have a lucrative opportunities in
international markets. KOSSAN is in prime position to tap on those opportunities and grow the
market share. However, the culture of sticky prices in the industry is a threat to KOSSAN.
KOSSAN operates in an industry where there is a culture of sticky prices. According to Siriwan
Chutikamoltham, Chee Ming Lim of Kossan Rubber Industries Berhad: Stretching to its
Maximum Potential through an Expansion Strategy case study, this can lead to inability on part
of the organization to increase prices that its premium prices deserve.

LKL International Berhad

LKL International Berhad, an investment holding company through its subsidiary, LKL
Advance Metaltech Sdn Bhd, is principally involved in the provision of medical/healthcare
beds, medical equipment, composite dressing, medical peripherals and accessories. Our diverse
range of products are used in/by a wide portfolio of customers such as hospitals and medical
centres, as well as other healthcare-related facilities such as clinics and specialist institutions.

As of today, LKL brand & products have been widely used locally with the majority market
share as well as in overseas, reaching a milestone of 50 countries across 6 continents. The
Strengths is Possess technical expertise to conform to international compliance standards in
global healthcare industry and diversified range of products catering to wide range of demands.
The weaknesses is reliance on foreign workers in manufacturing operations and dependency
on purchase orders without long-term contracts. The Opportunities is to capitalize on growth
in local and international healthcare industry. Next, Government initiatives to promote
healthcare services industry. The Threats is Operating in a highly regulated industry and
volatility in raw material prices.

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2.0 COMMON-SIZE ANALYSIS
SUPERMAX CORPORATION BERHAD – Statement of Financial Position

2018 2017

Non-current assets
Total Non-Current Assets 1,127,577,298 66.34% 1,151,374,842 64.32%
Current asstes
Total Current Assets 572,089,211 33.66% 638,574,345 35.68%
TOTAL ASSETS 1,699,666,509 100% 1,789,949,187 100%
EQUITY AND LIABILITIES
Capital and reserves

Total Capital and Reserves 1,022,710,745 60.17% 1,070,235,557 59.79%

Non-Current Liabilities

Total Non-Current Liabilities 110,740,675 6.52% 149,116,926 8.33%

Current liabilities
Total Current Liabilities 566,215,089 33.31% 570,596,704 31.88%
TOTAL EQUITY AND
1,699,666,509 100% 1,789,949,187 100%
LIABILITIES
Statement of Profit or Loss

2018 2017

Revenue 1,304,459,662 100% 1,126,879,394 100%


Purchases (25,831,923) 1.98% (20,665,303) 1.83%

Other operating income 2,106,101 0.16% 41,725,599 3.70%

Share of results of associates 5,998,728 0.46% 11,272,887 1.00%

Changes in inventories in
finished goods and work in (839,338,761) 64.34% (742,049,714) 65.85%
progress

Administrative Cost
Directors’ remuneration (15,445,024) 1.18% (21,528,131) 1.91%

Staff costs (112,217,881) 8.60% (107,052,435) 9.50%

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Depreciation of property, 3.66%
(41,765,943) 3.20% (41,222,573)
plant and equipment
Depreciation of investment 0.00%
(13,071) 0.001% (13,071)
property
Amortisation of prepaid 0.01%
(64,776) 0.005% (64,776)
lease payments
Other operating expenses (102,008,225) 7.82% (128,288,079) 11.38%

Total Administrative Cost (271,514,920) 20.81% (298,169,065) 26.46%

Profit from operation 175,878,887 13.48% 119,003,798 10.56%

Finance costs (13,984,726) 1.07% (11,064,964) 0.98%

Profit before tax 161,894,161 12.41% 107,938,834 9.58%

Tax expenses (51,751,689) 3.97% (37,644,348) 3.34%

Net Profit For The Financial 6.24%


110,142,472 8.44% 70,294,486
Year

TOP GLOVE HOLDINGS BERHAD – Statement of Financial Position

2018 2017
Assets
Non-current assets
Property,plant and equipment 2,064,817 39.18% 1,498,486 50.11%
Land use rights 101,675 1.93% 40,457 1.35%
Investment property 163,900 3.11% 162,000 5.42%
Investment in an associate 1,697 0.03% - -
Deferred tax assets 14,288 0.27% 14,681 0.49%
Investment securities 392 0.007% 392 0.01%
Goodwill 1,304,496 24.75% 22,805 0.76%

Current assets
Inventories 508,186 9.64% 315,775 10.56%
Trade and other receivables 646,179 12.26% 419,349 14.02%

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Other current assets 106,380 2.02% 51,258 1.71%
Tax recoverable - - 17,351 0.58%
Investment securities 193,714 3.68% 206,910 6.92%
Derivative financial instruments - - 645 0.02%
Cash and bank balances 164,836 3.13% 240,068 8.03%
1,619,295 30.72% 1,251,356 41.85%
Total assets 5,270,560 100% 2,990,177 100%
Equity and liabilities
Current liabilities
Loans and borrowings 882,575 16.75% 314,644 10.52%
Trade and other payables 499,685 9.48% 418,802 14.01%
Other current liabilities 59,248 1.12% 62,292 2.08%
Income tax payable 8,680 0.16% - -
Derivative financial instruments 856 0.02% - -
1,451,044 27.53% 795,738 26.61%
Non-current liabilities
Loans and borrowings 1,330,359 25.24% 61,750 2.07%
Deferred tax liabilities 94.670 1.80% 68,257 2.28%
Provisions 719 0.01% - -
1,425,748 27.05% 130,007 4.35%
Total liabilities 2,876,792 54.58% 925,745 30.96

Equity attributable to owners


of the parent
Share capital 787,709 14.95% 636,644 21.29%
Share premium - - - -
Treasury shares (9,352) (0.18%) (9,739) (0.33%)
Other reserves 4,551 0.09% 62,499 2.09%
Retained earnings 1,595,546 30.27% 1,365,827 45.68%
Non-controlling interests 15,287 0.29% 9,201 0.31%
Total equity 2,393,768 45.42% 2,064,432 69.04%
Total equity and liabilities 5,270,560 100% 2,990,177 100%
Statement of Profit of Loss

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2018 2017
Revenue 4,214,482 100% 3,409,176 100%
Cost of sales (3,367,611) 79.91% (2,803,857) 82.24%
Gross profit 846,871 20.09% 605,319 17.76%
Other items of income
Interest income 12,256 0.29% 17,232 0.51%
Other income 39,752 0.94% 53,488 1.57%
Other items of expense
Distribution and selling costs (111,692) 2.65% (90,250) 2.65%
Administrative and general (224,968) 5.34% (193,452) 5.67%
expenses
Finance costs (35,321) 0.84% (6,314) 0.19%

Share of results of associates 1,697 0.04% (980) (0.03%)


Profit before tax 528,595 12.54% 385,043 11.29%
Income tax expense (90,689) 2.15% (54,514) 1.60%
Profit net of tax 437,906 10.39% 330,529 9.70%

HARTALEGA HOLDINGS BERHAD – Statement of Financial Position

2017(RM’000) Common 2018(RM’000) Common


Size(%) Size(%)
Non-current assets
Property, plant and equipment 1,393,169,746 60.92 1,589,455,722 60.39
Capital work-in-progress 177,216,079 7.75 155,142,964 5.89
Intangible asset 19,798,640 0.87 20,245,190 0.77
Deferred tax assets 4,875,999 0.21 776,119 0.03
Total non-current assets 1,595,060,464 69.75 1,765,619,995 67.08

Current assets
Inventories 270,434,418 11.83 291,273,696 11.07
Trade and other receivables 300,115,771 13.12 405,895,209 15.42
Tax assets 154,536 6.76 3,330,452 0.13

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Derivation financial assets - - 9,298,716 0.35
Cash, bank balances and short- 121,008,566 5.29 156,561,084 5.95
term investments
Total current assets 691,713,291 30.25 866,359,157 32.92
Total assets 2,286,773,755 100 2,631,979,152 100
Equity
Share capital 830,315,586 36.31 1,312,308,547 49.86
Reserves 851,845,366 37.25 681,919,346 25.91
Non-controlling interests 2,625,133 0.11 3,163,361 0.12
Total equity 1,684,786,085 73.68 1,997,391,254 75.89

Non-current liabilities
Loans and borrowings 162,549,914 7.11 122,272,830 4.65
Deferred tax liabilities 76,421,486 3.34 98,762,525 3.75
Total non-current liabilities 238,971,400 10.45 221,035,355 8.40

Current liabilities
Trade and other payables 206,971,407 9.05 218,669,781 8.31
Loans and borrowings 147,492,056 6.45 194,371,214 7.38
Derivatives financial 1,728,000 0.08 - -
liabilities
Tax liabilities 6,824,807 0.30 511,548 0.02
Total current liabilities 363,016,270 15.87 413,552,543 15.71
Total liabilities 601,987,670 26.32 634,587,898 24.11
Total equity and liabilities 2,286,773,755 100 2,631,979,152 100

Statement of Profit or Loss

2018 2017

Revenue 2,405,638,106 100% 1,821,873,353 100%


Cost of sales (1,790,876,242) 74.44 (1,331,301,353) 73.07

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Gross profit 614,761,864 25.56 490,572,000 26.93

Other income 62,963,190 2.62 13,848,838 0.76

Distribution expenses (26,952,306) 1.12 (21,152,967) 1.16

Administrative expenses (99,935,400) 4.15 (82,784,751) 4.54

Other operating expenses (16,484,775) 0.69 (50,487,096) 2.77

Total expenses (143,372,481) 5.96 (154,424,814) 8.48

Profit from operations 534,352,573 22.21 349,996,024 19.21

Finance costs (7,923,725) 0.33 (1,018,219) 0.06

Profit before tax 526,428,848 21.88 348,977,805 19.15

Tax expense (86,796,517) 3.61 (65,660,394) 3.60


Profit for the financial 15.55
439,632,331 18.28 283,317,411
year

KOSSAN RUBBER INDUSTRIES BERHAD – Statement of Financial Position

2017(RM’000) 2018(RM’000)
Non-current assets
Property, plant and equipment 1,028,011 55.12% 1,267,931 59.02%
Investment properties 5,223 0.28% 5,223 0.24%
Goodwill on consolidation 4,926 0.26% 4,926 0.23%
Intangible asset 1,639 0.09% 1,639 0.08%
Investments in subsidiaries - - - -
Investments in joint venture 1,362 0.07% 1,358 0.06%
Other investments 166 0.009% 398 0.02%
Deferred tax assets 94 0.005% 341 0.02%
Trade and other receivables - - - -
Total non-current assets 1,041,421 55.84% 1,281,816 59.67%

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Current assets
Inventories 212,950 11.42% 249,007 11.59%
Trade and other receivables 377,523 20.24% 436,427 20.32%
Prepayments 8,590 0.46% 17,669 0.82%
Current tax assets 3,378 0.18% 16,270 0.76%
Derivation financial assets 10,820 0.58% 723 0.03%
Cash and cash equivalents 210,382 11.28% 146,315 6.81%
Total current assets 823,643 44.16% 866,411 40.33%
Total assets 1,865,064 100% 2,148,227 100%
Equity
Share capital 323,885 17.36% 323,885 15.08%
Translation reserve 6,513 0.35% 4,950 0.23%
Capital reserve (240) -0.01% (240) -0.01%
Retained earnings 824,864 44.23% 986,269 45.91%
Non-controlling interests 23,249 1.25% 27,510 1.28%
Total equity 1,178,271 63.18% 1,342,374 62.49%
Non-current liabilities
Loans and borrowings 186,906 10.02% 229,273 10.67%
Deferred tax liabilities 86,705 4.65% 89,798 4.18%
Total non-current liabilities 273,611 14.67% 319,071 14.85%
Current liabilities
Loans and borrowings 209,840 11.25% 279,407 13%
Current tax liabilities 409 0.02% 777 0.04%
Trade and other payables 202,933 10.88% 206,598 9.62%
Total current liabilities 413,182 22.15% 486,782 22.66%
Total liabilities 686,793 36.82% 805,853 37.51%
Total equity and liabilities 1,865,064 100% 2,148,227 100%

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Statement of Profit or Loss
2017(RM’000) 2018(RM’000)
Revenue 1,957,627 100% 2,140,571 100%
Other income 10,121 0.52% 13,099 0.61%
Changes in inventories of (9,551) -0.49% 46,086 2.25%
finished goods and work-in-
progress
Raw materials and (1,150,144) -58.75% (1,263,950) -
consumables used 59.05%
Goods purchased for resale (4,434) -0.23% (4,891) -0.23%
Staff costs (252,817) -12.91% (282,640) -13.2%
Depreciation of property, plant (73,236) -3.74% (76,809) -3.59%
and equipment
Other operating expenses (241,577) -12.34% (307,115) -
14.35%
Results from operating 235,989 12.05% 264,351 12.35%
activities
Finance costs (11,324) -0.58% 19,504 0.91%
Finance income 3,667 0.19% 4,421 0.21%
Share of losses of equity (19) -0.001% (4) -
accounted joint venture, net of 0.0002
tax %
Profit before tax 228,313 11.66% 249,264 11.64%
Tax expense (44,078) -2.25% (44,665) -2.09%
Profit for the year 184,235 9.41% 204,599 9.56%

LKL INTERNATIONAL BERHAD – Statement of Financial Position

2018 2017

ASSETS
Non-current assets
Total Non-Current Assets 32,897,937 45.44% 28,157,730 38.94%
Current asstes
Total Current Assets 39,501,107 54.56% 44,143,949 61.06%

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TOTAL ASSETS 72,399,044 100% 72,301,679 100%

EQUITY AND LIABILITIES

Capital and reserves


Total Capital and Reserves 58,747,500 81.14% 59,776,822 82.68%
Non-Current Liabilities
Total Non-Current Liabilities 7,225,358 9.97% 8,295,268 11.47%
Current liabilities
Total Current Liabilities 6,426,186 8.89% 4,229,589 5.85%

TOTAL EQUITY AND


72,399,044 100% 72,301,679 100%
LIABILITIES

Statement of Profit or Loss

2018 2017
Revenue 29,716,400 100% 33,892,664 100%
Cost of sales (18,781,555) 63.20% (17,003,134) 50.17%
Gross Profit 10,934,845 36.80% 16,889,530 49.83%
Other income 460,151 1.55% 1,344,035 3.97%
11,394,996 38.35% 18,233,565 53.80%
Administrative Expenses (9,000,888) 30.29% (8,215,143) 24.24%
Selling and Distribution (1,806,703) 6.08% (2,337,141) 6.90%
Expenses
Other Expenses (1,358,022) 4.57% (1,158,315) 3.42%
Finance Cost (431,105) 1.45% (470,790) 1.39%
(Loss)/Profit before (1,201,722) 4.04% 6,052,176 17.86%
Taxation
Income Tax Expense (127,570) 0.43% (1,575,113) 4.65%
(Loss)/Profit After Taxation (1,329,292) 4.47% 4,477,063 13.21%

3.0 METHODOLOGY

Liquidity Ratios
Liquidity ratio is short-term solvency ratio which is measured by its ability to satisfy
its short-term obligations.

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a. Quick ratio
Quick ratio is an indicator of a company’s short-term liquidity and measures
a company’s ability to meet its short-term obligations with its most liquid
assets.

Current Assets - Inventory


Quick Ratio =
Current Liabilities

b. Inventory Turnover

Inventory turnover measures how efficiently or intensively a firm uses its


assets to generate sales.

Cost of Goods Sold


Inventory Turnover =
Inventory
Profitability Ratios
Profitability Ratios attempt to measure the firm's success in generating income. These
ratios reflect the combined effects of the firm's asset and debt management.

a. Operating Profit Margin

The Operating Profit Margin indicates the dollars in income that the firm earns
on each dollar of sales. This ratio is calculated by dividing Net Income by
Sales.
Net Income
Operating Profit Margin =
Sales

b.Return on Equity

Return on Equity measures the rate of return earned on the stockholder’s


equity investment in the firm.

Net Income
Return on Equity =
Total Owners’ Equity

Asset Management Ratios

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Asset Management Ratios attempt to measure the firm's success in managing its assets
to generate sales.

a. Total Asset Turnover

Total Asset Turnover measures a company’s ability to generate sales from its
assets by comparing net sales with total assets.

Sales
Total Asset Turnover =
Total Assets

b. Fixed Asset Turnover

Fixed Asset Turnover ratio is an efficiency ratio that measures a companies


return on their investment in property, plant, and equipment by comparing net
sales with fixed assets.

Sales
Fixed Asset Turnover =
Net Fixed Assets

Leverage Ratios
A leverage ratio is any one of several financial measurements that look at how much capital
comes in the form of debt (loans) or assesses the ability of a company to meet its financial
obligations.

a. Debt Ratio

Debt ratio measures the extents to which the firm has used non-owner
financing (borrowed money) to finance its assets.

Total Liabilities
Debt ratio =
Total Assets
b.
Time Interest Earned

Time Interest Earned measures the ability of an organization to provide


protection to the long-term creditors.

Profit before interest expense & income taxes


Time Interest Earned =
Interest Expense

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4.0 RATIO CALCULATION
COMPANY 2017 (RM’000) 2018 (RM’000)

Quick Ratio = (CA – Inventory) / CL

SUPERMAX (638,574,345-189,661,748)/ (572,089,211-187,846,933)/


CORPORATION 570,596,704 566,215,089
BERHAD = 0.79 time = 0.68 time
TOP GLOVE (1,251,356 – 315,775) / (1,619,295 – 508,186) /
HOLDINGS BERHAD 795,738 = 1.18 times 1,451,044 = 0.77 time
HARTALEGA
HOLDINGS BERHAD (691,713,291-270,434,418)/ (866,359,157-291,273,696)/
363,016,270 413,552,543
= 1.16 times = 1.39 times

KOSSAN RUBBER (823,643-212,950)/413,182 (866,411-249,007)/486,782


INDUSTRIES BERHAD =1.48 times =1.27 times
LKL (44,143,949-10,559-419)/ (39,501,107-15,310,290)/
INTERNATIONAL 4,229,589 6,426,186
BERHAD = 7.94 times = 3.76 times
Comment: Based on the quick ratio according to two years comparison, most of the
companies in year 2018 are less liquid than year 2017 except for Hartalega
Holdings Berhad. This means the liquidity of Hartalega Holdings Berhad is
improving in year 2018. The company could quickly convert assets into cash
with minimal impact to the price received in the open market, while current
liabilities are a company's debts or obligations that are due to be paid to
creditors within one year.

COMPANY 2017 (RM’000) 2018 (RM’000)

Inventory Turnover = Cost of Goods Sold / Inventory

SUPERMAX 20,665,303/ 189,661,748 25,831,923/ 187,846,933


CORPORATION = 0.11 times = 0.14 times
BERHAD
TOP GLOVE 2,803,857 / 315,775 3,367,611 / 508,186
HOLDINGS BERHAD
= 8.88 times = 6.63 times
HARTALEGA 1,331,301,353/ 270,434,418 1,790,876,242/ 291,273,696
HOLDINGS BERHAD = 4.92 times = 6.15 times
KOSSAN RUBBER 1,150,144/ 212,950 1,263,950/249,007
INDUSTRIES BERHAD = 5.4 times = 5.08 times

15
LKL 17,003,134/ 10,559,419 18,781,555/15,310,290
INTERNATIONAL = 1.61times = 1.23 times
BERHAD
Comment: Based on the inventory turnover, Hartalega Holdings Berhad and Supermax
Corporation Berhad show the upturn in the comparison. This means the ability
for the companies to convert their inventory into cash more quickly compared
to year 2017. Hartalega Holdings Berhad shows the greater upturn because the
company increases the inventory turnover by 1.23 times.

COMPANY 2017 (RM’000) 2018 (RM’000)

Operating Profit Margin = Net Income/ Sales

SUPERMAX 70,294,486/ 1,126,879,394 110,142,472/1,304,459,662


CORPORATION
BERHAD = 6.24% = 8.44%
TOP GLOVE 385,043 / 3,409,176 528,595 / 4,214,482
HOLDINGS BERHAD
= 11.29% = 12.54%
HARTALEGA 283,317,411/ 1,821,873,353 439,632,331/2,405,638,106
HOLDINGS BERHAD = 15.55% = 0.18%
KOSSAN RUBBER 181,486/2,140,571 202,883/1,957,627
INDUSTRIES BERHAD =8.47% =10.36%
LKL 4,477,063/33,892,664 (-1,329,292)/29,716400
INTERNATIONAL = 13.21% = -4.47%
BERHAD
Comment: According to the Operating Profit Margin based on the two years data, there are
3 companies show the greater increasing in Operating Profit Margin. This
shows that the 3 companies have done a good job in managing their cost of
goods sold and operating expenses. However, Hartalega Holdings Berhad and
LKL International Berhad do not control their expenses well since the operating
profit margin for both compnies are dropping dramatically.

COMPANY 2017 (RM’000) 2018 (RM’000)

Return on Equity = Net Income/ Total owner’s Equity

SUPERMAX 70,294,486/1,070,235,557 110,142,472/ 1,022,710,745


CORPORATION = 6.57% = 10.77%
BERHAD

16
TOP GLOVE 330,529 / 636,644 437,906 / 787,709
HOLDINGS BERHAD
= 51.92% = 55.60%
HARTALEGA 283,317,411/1,684,786,085 439,632,331/ 1,997,391,254
HOLDINGS BERHAD = 16.82% = 22.01%
KOSSAN RUBBER 181,486/ 1,178,271 202,883/1,342,374
INDUSTRIES BERHAD = 15.4% = 15.11%
LKL 4,477,063/59,776,822 (-1,329,292)/58,747,500
INTERNATIONAL = 7.49% = -2.26%
BERHAD
Comment: Based on the two years data, there are 3 companies in year 2018 has a higher
rate of return on equity as compared to year 2017. This indicates that the return
earned for the Group’s stockholders is greater, the Group can generate more
profit. This is important to enhance the confidence of stockholders toward the
companies if the company can generate more profit for them. LKL International
Berhad has negative ROE because the company is facing a loss in year 2018.

COMPANY 2017 (RM’000) 2018 (RM’000)

Total Asset Turnover = Sales/ Total Assets

SUPERMAX 1,126,879,394/1,789,949,187 1,304,459,662/1,699,666,509


CORPORATION = 0.63 times = 0.77 times
BERHAD
TOP GLOVE 3,409,176 / 2,990,177 4,214,482 / 5,270,560
HOLDINGS BERHAD = 1.14 = 0.80
HARTALEGA 1,821,873,353/2,286,773,755 2,405,638,106/2,631,979,152
HOLDINGS BERHAD = 0.80 times = 0.91 times
KOSSAN RUBBER 2,140,571/1,865,064 1,957,627/2,148,227
INDUSTRIES BERHAD = 1.15 times = 0.91 times
LKL 33,892,664/72,301,679 29,716,400/72,399,044
INTERNATIONAL = 0.47 times = 0.41 times
BERHAD
Comment: Based on the two years data, Supermax Corporation Berhad and Hartalega
Holdings Berhad are showing upturn on the total asset turnover compared to
year 2017. Both companies show the improvement in the asset utilization. This
helps the companies to build up their asset utilization efficiency.

17
COMPANY 2017 (RM’000) 2018 (RM’000)

Fixed Asset Turnover = Sales/ Net Fixed Assets


SUPERMAX 1,126,879,394/878,334,491 1,304,459,662/895,465,155
CORPORATION = 1.28 times = 1.46 times
BERHAD
TOP GLOVE 3,409,176 / 1,498,486 4,214,482 / 2,064,817
HOLDINGS BERHAD = 2.28 = 2.04
HARTALEGA 1,821,873,353/1,595,060,464 2,405,638,106/1,765,619,995
HOLDINGS BERHAD = 1.14 times = 1.36 times
KOSSAN RUBBER 2,140,571/1,041,421 1,957,627/1,281,816
INDUSTRIES BERHAD = 2.06 times = 1.53 times
LKL 33,892,664/28,157,730 29,716,400/32,897,937
INTERNATIONAL = 1.20 times = 0.90 times
BERHAD
Comment: Based on the two years data, Supermax Corporation Berhad and Hartalega
Holdings Berhad able to increase the utility of the fixed assets efficiently
compared to year 2017. This helps the companies to build up their asset
utilization efficiency.

COMPANY 2017 (RM’000) 2018 (RM’000)

Debt ratio = Total Liabilities/ Total Assets

SUPERMAX 719,713,630/1,789,949,187 676,955,764/1,699,666,509=


CORPORATION = 40.21% 39.83%
BERHAD
TOP GLOVE 925,745 / 2,990,177 2,876,792 / 5,270,560
HOLDINGS BERHAD
= 30.96% = 54.58%
HARTALEGA 601,987,670/2,286,773,755 634,587,898/2,631,979,152
HOLDINGS BERHAD = 26.32% = 24.11%
KOSSAN RUBBER 686,793/1,865,064 805,853/2,148,227
INDUSTRIES BERHAD = 36.82% = 37.51%
LKL 12,524,857/72,301,679 13,651,544/72,399,044
INTERNATIONAL = 17.32% = 18.86%
BERHAD
Comment: Based on the two years data, although LKL International Berhad has the lowest
debt ratio, Hartalega Holdings Berhad shows the improvement on decreasing
the financial leverage. The rate has decreases from 26.32% to 24.11%.

18
COMPANY 2017 (RM’000) 2018 (RM’000)

Time Interest Earned = Profit before interest expense & income taxes/ Interest Expense
SUPERMAX 161,894,161/51,751,689 107,938,834/37,644,348
CORPORATION = 3.13 times = 2.87 times
BERHAD
TOP GLOVE 385,043 / 54,514 528,595 / 90,689
HOLDINGS BERHAD
= 7.06 times = 5.83 times
HARTALEGA 348,977,805/65,660,394 526,428,848/86,796,517
HOLDINGS BERHAD = 5.31 times = 6.07 times
KOSSAN RUBBER 228,313/44,078 249,264/44,665
INDUSTRIES BERHAD = 5.18 times = 5.58 times
LKL 6,052,176/1,575,113 (-1,201,722)/127,570
INTERNATIONAL = 3.84 times = -9.42 times
BERHAD
Comment: According to the Times Interest Earned ratio based on the two years,
Hartalega Holdings Berhad shows the upturn and highest time interest earned
ratio in year 2018. This means the company has better and enough of cash
after paying its debts to continue to invest in the business.

5.0 ANALYSIS AND INTERPRETATION


Based on the data from year 2017 to 2018, we can see that only Hartalega Holdings Berhad
shows the improvement in year 2018 compared to year 2017. Although LKL International
Berhad has the highest quick ratio, the difference is 4.18 times if we compared between year
2017 and 2018. For the inventory turnover, Hartalega Holdings Berhad shows the largest
upturn which is from 4.92 times to 6.15 times. This shows the improvement of Hartalega
Holdings Berhad to convert their inventory to cash more quickly.

Based on the operating profit margin (OPM), Supermax Holdings Berhad, Top Glove Holdings
Berhad and Kossan Rubber Industries Berhad show their upturn in year 2018. However, the
rate of OPM of Hartalega Holdings Berhad and LKL International Berhad are dropping. We
found that the three companies have better performance in managing their operating expenses

19
and costs. For the return on equity (ROE), Hartalega Holdings Berhad shows the largest upturn
if compare to the other four companies. This shows that the company is enhancing the
confidence of the investors as they have the potential to provide high range of profit to the
investors.

For both total asset turnover and fixed asset turnover, Supermax Holdings Berhad and
Hartalega Holdings Berhad show their ability in managing the asset utilization efficiency. Both
companies show upturn in both ratios that prove that they are using the assets to generate more
sales in year 2018 compared to year 2017. This shows the stability of these companies in
managing their assets. For the debt ratio, Hartalega Holdings Berhad is also showing the
stability of the company on financial leverage. Decrease of debt ratio around 2,21% shows that
the company has managed their capital well with less reliance on non-owner finance. Hartalega
Holdings Berhad has the highest time interest earned if compared to other companies in year
2018. This shows that the company has enough of cash to pay the debts and they have more
money to invest in the business.

6.0 CONCLUSION

In conclusion, we prefer to invest in Hartalega Holdings Berhad. Although the operating profit
margin is insufficient, the stability of the management of the company is the key for the
investors to make their investment in this company.

Liquidity ratio helps us to determine how our current assets able to convert to cash without the
change in value when making short-term payment. Based on the assignment, we found that
Hartalega is showing their strength to the investors that the liquidity of the company is strong
and stable.

Assets management ratios helps us to identify whether the company is managing well with
their account receivables which is in relation to their sales. It determines whether the
organization is utilising their assets well to generate sales. As we mentioned before, the
management of Hartalega Holdings Berhad is strong and this helps the company to build good
asset utilization efficiency.

While leverage ratios is to see how reliable a company is towards financial borrowing.
Hartalega Holdings Berhad is minimizing the reliance on the financial leverage. The debt ratio
of the company is decreasing and the they have the highest time interest earned ratio among
the five companies.

20
7.0 REFERENCES : APPENDICES
Supermax Corporation Berhad
Statement of Financial Position

21
Statement of Profit or Loss and Other Comprehensive Income

22
Top Glove Corporation Berhad
Statement of Financial Position

23
24
Statements of Profit or Loss

25
Statements of Comprehensive Income

26
LKL Advance Metaltech Sdn Bhd
Statements of Financial Position

27
Statements of Profit or Loss and Other Comprehensive Income

28
Hartalega Holdings Berhad

STATEMENTS OF PROFIT
OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2018

Group Company

2018 2017 2018 2017


Note RM RM RM RM
Revenue 4 2,405,638,106 1,821,873,353 620,520,859 (1,790,876,242) 130,160,575
Cost of sales (1,331,301,353) - -

Gross profit 614,761,864 490,572,000 620,520,859 62,963,190 13,848,838 130,160,575


Other income 10,018,700 8,251,922

Distribution expenses (26,952,306) (21,152,967) - -


Administrative expenses (99,935,400) (82,784,751) (2,219,074) (1,408,858)
Other operating expenses (16,484,775) (50,487,096) (779) -

(143,372,481) (154,424,814) (2,219,853) (1,408,858)

534,352,573 349,996,024 628,319,706 137,003,639


Profit from operations (7,923,725) (1,018,219) - -
Finance costs

5 526,428,848 348,977,805 628,319,706 137,003,639


Profit before tax 6 (86,796,517) (65,660,394) (2,095,517) (1,904,104)
Tax expense

439,632,331 283,317,411 626,224,189 135,099,535


Profit for the financial year

Other comprehensive income


Items that may be
reclassified subsequently
to profit or loss Foreign
currency translation,
representing other
comprehensive (loss)/gain (1,687,434) 1,245,964 - -
for the financial year, net of tax
Total comprehensive
income for the financial 437,944,897 284,563,375 626,224,189 135,099,535
year

Profit attributable to: 438,919,102 283,001,350 626,224,189 135,099,535


Owners of the Company Non- 713,229 316,061 - -
controlling interests
439,632,331 283,317,411 626,224,189 135,099,535

29
Total comprehensive
income attributable to: 437,406,669 284,021,301 626,224,189 135,099,535
Owners of the Company Non- 538,228 542,074 - -
controlling interests
437,944,897 284,563,375 626,224,189 135,099,535

Earnings per ordinary


share attributable to
owners of the
Company: Basic earnings
per ordinary share 7 13.28 8.62
(sen) Diluted earnings per
7 13.06 8.57
ordinary share (sen)

The annexed notes form an integral part of, and should be read in conjunction with, these financial
statements.

STATEMENTS OF
FINANCIAL POSITION
AS AT 31 MARCH 2018

Group Company

2018 2017 2018 2017


Note RM RM RM RM

ASSETS
Non-Current Assets
Property, plant and equipment -
Capital work-in-progress -
Intangible assets -
Investments in subsidiaries 601,632,827
Deferred tax assets -
Amount owing by subsidiaries 298,609,505

Total Non-Current Assets 900,242,332

Current Assets
Inventories
-
Trade and other receivables
8 1,589,455,722 1,393,169,746 - 77,044
Tax assets
9 155,142,964177,216,079 - -
Amount owing by subsidiaries
10 20,245,190 19,798,640 - 6,290
Derivative financial assets
11 -- 622,176,785 -
Cash, bank balances and short-term
12 776,119 4,875,999 -
investments
22 - - 788,451,024 17,308,362
Total Current Assets
1,765,619,995 1,595,060,464 1,410,627,809 17,391,696

TOTAL ASSETS
13 291,273,696 270,434,418 -
14 405,895,209 300,115,771 167,431 917,634,028

30
EQUITY AND LIABILITIES

Equity Attributable to Owners


of the Company
Share capital Reserves
830,315,586
87,050,633
Non-controlling interests
15 3,330,452 154,536 - 917,366,219
Total Equity -

Non-Current Liabilities Loans


and borrowings 917,366,219
Deferred tax liabilities 866,359,157

Total Non-Current Liabilities


-
-
Current Liabilities
Trade and other payables
Loans and borrowings -
Derivatives financial liabilities
Tax liabilities 18 1,312,308,547 830,315,586 1,312,308,547
19 681,919,346 851,845,366 105,942,133
48,677
Total Current Liabilities -
-
Total Liabilities 1,994,227,893 1,682,160,952 1,418,250,680 219,132
3,163,361 2,625,133 -

TOTAL EQUITY AND LIABILITIES


267,809

267,809
20 122,272,830 162,549,914 -
12 98,762,525 76,421,486 -

917,634,028

21 218,669,781 206,971,407 86,341

20
194,371,214 147,492,056 -

2,631,979,152 2,286,773,755 1,418,774,655

The annexed notes form an integral part of, and should be read in conjunction with, these financial
statements.

31
Kossan Rubber Industries Berhad
Statements of Financial Position

32
33
Statements of Profit or Loss and Other Comprehensive Income

34
35