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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
6.0 Conclusion 20
2
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 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,
1
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 (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.
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
2
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, 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.
3
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
Non-Current Liabilities
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
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%
4
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%
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%
5
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
6
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%
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
7
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
2018 2017
8
Gross profit 614,761,864 25.56 490,572,000 26.93
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%
9
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%
10
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%
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%
11
TOTAL ASSETS 72,399,044 100% 72,301,679 100%
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.
12
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.
b. Inventory Turnover
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
Net Income
Return on Equity =
Total Owners’ Equity
13
Asset Management Ratios attempt to measure the firm's success in managing its assets
to generate sales.
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
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
14
4.0 RATIO CALCULATION
COMPANY 2017 (RM’000) 2018 (RM’000)
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.
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.
17
COMPANY 2017 (RM’000) 2018 (RM’000)
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.
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
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
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
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
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
267,809
20 122,272,830 162,549,914 -
12 98,762,525 76,421,486 -
917,634,028
20
194,371,214 147,492,056 -
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