MIRA INFORM REPORT

 

 

Report Date :

04.07.2012

 

 

 

Tel. No.:

606 985 9971

Fax No.:

606 985 9972

 

IDENTIFICATION DETAILS

 

Name :

SPRING ART INDUSTRIES SDN BHD

 

 

Formerly Known As :

SPRING ART MARKETING SDN BHD (13/04/1999)

 

 

Registered Office :

67, Room B, Jalan Ali, 2nd Floor, 84000 Muar, Johor

 

 

Country :

Malaysia

 

 

Financials (as on) :

31.12.2010

 

 

Date of Incorporation :

28.12.1996

 

 

Com. Reg. No.:

415155-P

 

 

Legal Form :

Private Limited

 

 

Line of Business :

Manufacturing of Office and Household Furnitures

 

 

No. of Employees :

130

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Status :

Good

Payment Behaviour :

No Complaints

Litigation :

Clear

 

 

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

 

ECGC Country Risk Classification List – March 31st, 2012

 

Country Name

Previous Rating

(31.12.2011)

Current Rating

(31.03.2012)

Malaysia

A2

A2

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

 

 

 

 

 

 

* Adopted abbreviations :

SC - Subject Company (the company enquired by you)

 

 

N/A - Not Applicable

 



EXECUTIVE SUMMARY

 

 

REGISTRATION NO.

:

415155-P

COMPANY NAME

:

SPRING ART INDUSTRIES SDN BHD

FORMER NAME

:

SPRING ART MARKETING SDN BHD (13/04/1999)

INCORPORATION DATE

:

28/12/1996

 

 

 

 

 

 

COMPANY STATUS

:

EXIST

LEGAL STATUS

:

PRIVATE LIMITED

LISTED STATUS

:

NO

 

 

 

 

 

 

REGISTERED ADDRESS

:

67, ROOM B, JALAN ALI, 2ND FLOOR, 84000 MUAR, JOHOR, MALAYSIA.

BUSINESS ADDRESS

:

LOT PLO 49, JALAN RAMI 2, KAWASAN PERINDUSTRIAN BUKIT PASIR, 84300 BUKIT PASIR, JOHOR, MALAYSIA.

TEL.NO.

:

06-9858114

FAX.NO.

:

06-9859972

EMAIL

:

spring2@streamyx.com

WEB SITE

:

www.springart.com

CONTACT PERSON

:

LIM KOK ENG ( DIRECTOR )

 

 

 

INDUSTRY CODE

:

36101

PRINCIPAL ACTIVITY

:

MANUFACTURING OF OFFICE AND HOUSEHOLD FURNITURES

AUTHORISED CAPITAL

:

MYR 500,000.00 DIVIDED INTO 
ORDINARY SHARE 500,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 500,000.00 DIVIDED INTO 
ORDINARY SHARES 500,000 CASH OF MYR 1.00 EACH.

 

 

 

SALES

:

MYR 26,130,061 [2010]

NET WORTH

:

MYR 7,544,913 [2010]

 

 

 

STAFF STRENGTH

:

130 [2012]

BANKER (S)

:

CIMB BANK BHD
HONG LEONG BANK BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

FAIR

PAYMENT

:

AVERAGE

MANAGEMENT CAPABILITY

:

GOOD

 

 

 

COMMERCIAL RISK

:

MODERATE

CURRENCY EXPOSURE

:

HIGH

GENERAL REPUTATION

:

GOOD

INDUSTRY OUTLOOK

:

MARGINAL GROWTH

 

HISTORY / BACKGROUND

 

The SC is a private limited company and is allowed to have a minimum of one and a maximum of forty-nine shareholders. As a private limited company, the SC must have at least two directors. A private limited company is a separate legal entity from its shareholders. As a separate legal entity, the SC is capable of owning assets, entering into contracts, sue or be sued by other companies. The liabilities of the shareholders are to the extent of the equity they have taken up and the creditors cannot claim on shareholders' personal assets even if the SC is insolvent. The SC is governed by the Companies Act, 1965 and the company must file its annual returns, together with its financial statements with the Registrar of Companies.

 

The SC is principally engaged in the (as a / as an) manufacturing of office and household furnitures.

 

The SC is not listed on Bursa Malaysia (Malaysia Stock Exchange).

 

The major shareholder(s) of the SC are shown as follows :

Name

Address

IC/PP/Loc No

Shareholding

(%)

MR. LIM KOK ENG +

315, BATU 6 1/2, BAKRI, 84000 MUAR, JOHOR, MALAYSIA.

660826-01-5799 A0486639

400,000.00

80.00

MS. KWAN CHIAN POH +

5, TAMAN DESA WISMA, TAMAN SAKEH, 84000 MUAR, JOHOR, MALAYSIA.

680711-01-5084 A1021624

100,000.00

20.00

 

 

 

---------------

------

 

 

 

500,000.00

100.00

 

 

 

============

=====

 

+ Also Director

 

DIRECTORS


DIRECTOR 1

 

Name Of Subject

:

MS. KWAN CHIAN POH

Address

:

5, TAMAN DESA WISMA, TAMAN SAKEH, 84000 MUAR, JOHOR, MALAYSIA.

IC / PP No

:

A1021624

New IC No

:

680711-01-5084

Date of Birth

:

11/07/1968

 

 

 

Nationality

:

MALAYSIAN CHINESE

Date of Appointment

:

28/12/1996

 

 

 

 

 

 

 

 

 

 

 

 

 

DIRECTOR 2

 

Name Of Subject

:

MR. LIM KOK ENG

Address

:

315, BATU 6 1/2, BAKRI, 84000 MUAR, JOHOR, MALAYSIA.

IC / PP No

:

A0486639

New IC No

:

660826-01-5799

Date of Birth

:

26/08/1966

 

 

 

Nationality

:

MALAYSIAN CHINESE

Date of Appointment

:

28/12/1996

 

 

MANAGEMENT

 

 

 

1)

Name of Subject

:

LIM KOK ENG

 

Position

:

DIRECTOR

 

 

 

 

 

2)

Name of Subject

:

HO CHIAW ENG

 

Position

:

ACCOUNT MANAGER

 

 

 

AUDITOR

 

Auditor

:

JOHN LIM & ASSOCIATES

Auditor' Address

:

67, JALAN ALI, ROOM A, 2ND FLOOR, 84000 MUAR, JOHOR, MALAYSIA.

 

 

 

 

 

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MR. TAN WANG GIAP

 

IC / PP No

:

A0067697

 

New IC No

:

650503-01-5883

 

Address

:

27, LORONG ARA 1, TAMAN BAKARIAH, 84000 MUAR, JOHOR, MALAYSIA.

 

 

 

 

 

 

 

 

 

 

 

 

 

BANKING


Banking relations are maintained principally with :

1)

Name

:

CIMB BANK BHD

 

 

 

 

 

2)

Name

:

HONG LEONG BANK BHD

 

 

 

 

 

The SC enjoys normal banking routine with above mentioned banker(s). The SC has bank charges with above mentioned banker(s).

 

 

ENCUMBRANCE (S)


ENCUMBRANCE 1

Date of Creation

:

06/12/1999

Description Of Charge

:

N/A

 

Amount Secured

:

RM100,000.00

Description Of Property Affected

:

N/A

 

Name & Address Of Chargee

:

CIMB BANK BHD

 

 

 

 

 

 

 

 

Form 40 Dated

Registered and Numbered 2 In The Register of Charges



ENCUMBRANCE 2

Date of Creation

:

26/11/2001

Description Of Charge

:

N/A

 

Amount Secured

:

RM2,300,000.00

Description Of Property Affected

:

N/A

 

Name & Address Of Chargee

:

HONG LEONG BANK BHD

 

 

 

 

 

 

 

 

Form 40 Dated

Registered and Numbered 4 In The Register of Charges



ENCUMBRANCE 3

Date of Creation

:

26/11/2001

Description Of Charge

:

N/A

 

Amount Secured

:

RM500,000.00

Description Of Property Affected

:

N/A

 

Name & Address Of Chargee

:

HONG LEONG BANK BHD

 

 

 

 

 

 

 

 

Form 40 Dated

Registered and Numbered 5 In The Register of Charges



ENCUMBRANCE 4

Date of Creation

:

20/02/2003

Description Of Charge

:

N/A

 

Amount Secured

:

RM1,100,000.00

Description Of Property Affected

:

N/A

 

Name & Address Of Chargee

:

HONG LEONG BANK BHD

 

 

 

 

 

 

 

 

Form 40 Dated

Registered and Numbered 6 In The Register of Charges



ENCUMBRANCE 5

Date of Creation

:

06/09/2006

Description Of Charge

:

OPEN CHARGE

 

Amount Secured

:

N/A

Description Of Property Affected

:

N/A

 

Name & Address Of Chargee

:

HONG LEONG BANK BHD

 

 

 

 

 

 

 

 

Form 40 Dated

Registered and Numbered 7 In The Register of Charges

 


LEGAL CHECK AGAINST SC


* A check has been conducted in our databank againt the SC whether the subject has been involved in any litigation. Our databank consists of 99% of the wound up companies in Malaysia.

No legal action was found in our databank. 

No winding up petition was found in our databank. 

DEFAULTER CHECK AGAINST SC


* We have checked through the SC in our defaulters' database which comprised of debtors that have been blacklisted by our customers and debtors that have been placed or assigned to us for collection since 1990. Information was provided by third party where the debt amount can be disputed. Please check with creditors for confirmation as alleged debts may have been paid since recorded or are being disputed. 

No blacklisted record & debt collection case was found in our defaulters' databank. 

PAYMENT RECORD

 

 

 

SOURCES OF RAW MATERIALS:

Local

:

N/A

Overseas

:

N/A

 

 

 


The SC refused to disclose its suppliers.


The SC refused to provide any name of trade/service supplier and we are unable to conduct any trade enquiry. However, from financial historical data we conclude that :

OVERALL PAYMENT HABIT

Prompt 0-30 Days

[

 

]

 

Good 31-60 Days

[

 

]

 

Average 61-90 Days

[

X

]

 

Fair 91-120 Days

[

 

]

 

Poor >120 Days

[

 

]

 

 

 

 

 

 

 

CLIENTELE

 

Local

:

NO

Percentage

:

0%

 

 

 

 

 

 

Overseas

:

YES

Percentage

:

100%

Export Market

:

ASIA, EUROPE, MIDDLE EAST

Credit Term

:

AS AGREED

 

 

 

 

 

 

Payment Mode

:

TELEGRAPHIC TRANSFER (TT),LETTER OF CREDIT (LC)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATIONS

 

Products manufactured

:

CABINETS, DESKS, TV TROLLEYS

 

 

 

Brand Name

:

SPRING ART

 

 

 

 

Competitor(s)

:

CLASSIC SCENIC BHD
EURO HOLDINGS BHD
MALAYSIA AICA BHD
POH HUAT RESOURCES HOLDINGS BHD
SIGNATURE INTERNATIONAL BHD

 

 

 

 

 

 

 

 

Member(s) / Affiliate(s)

:

SMI ASSOCIATION OF MALAYSIA

MALAYSIA EXTERNAL TRADE DEVELOPMENT CORPORATION (MATRADE)

MALAYSIA FURNITURE INDUSTRY

 

 

 

Ownership of premises

:

OWNED

 

 

Total Number of Employees:

 

YEAR

2012

2011

2009

2008

2007

 

 

GROUP

N/A

N/A

N/A

N/A

N/A

 

 

 

 

COMPANY

130

130

130

120

110

 

 

 

 

 

Branch

:

YES

 

Other Information:


The SC is principally engaged in the (as a / as an) manufacturing of office and household furnitures.

The SC is an export oriented company which principally engaged in the manufacturing of furniture products.

The SC specialises in the office furnitures.

The SC's products portfolio includes computer tables, office tables,office cabinets, shoe cabinets and others.

The SC also manufactures furnitures based on the customers' designs and specifications.

In addition the SC utilises the advanced semi-automated machineries to ensure production of high quality products.

PROJECTS


No projects found in our databank 

CURRENT INVESTIGATION

Latest fresh investigations carried out on the SC indicated that :

Telephone Number Provided By Client

:

606 985 9971

Current Telephone Number

:

06-9858114

Match

:

NO

 

 

 

Address Provided by Client

:

LOT PLO 49, JALAN RAMI 2, KAWASAN PERINDUSTRIAN BUKIT PASIR,84300,BUKIT PASIR,JOHOR.

Current Address

:

LOT PLO 49, JALAN RAMI 2, KAWASAN PERINDUSTRIAN BUKIT PASIR, 84300 BUKIT PASIR, JOHOR, MALAYSIA.

Match

:

YES

 

 

 

Latest Financial Accounts

:

YES

 

Other Investigations


We contacted one of the staff from the SC and she provided some informatio on the SC.


FINANCIAL ANALYSIS

 

Profitability

 

 

 

 

 

 

Turnover

:

Increased

[

1.95%

]

 

Profit/(Loss) Before Tax

:

Decreased

[

40.36%

]

 

Return on Shareholder Funds

:

Acceptable

[

23.69%

]

 

Return on Net Assets

:

Favourable

[

31.56%

]

 

 

 

 

 

 

 

 

The higher turnover could be attributed to the favourable market condition.The SC's profit fell sharply because of the high operating costs incurred. The SC's management had generated acceptable return for its shareholders using its assets.

 

 

 

 

 

 

 

Working Capital Control

 

 

 

 

 

 

Stock Ratio

:

Favourable

[

30 Days

]

 

Debtor Ratio

:

Favourable

[

22 Days

]

 

Creditors Ratio

:

Favourable

[

29 Days

]

 

 

 

 

 

 

 

 

The SC's stocks were moving fast thus reducing its holding cost. This had reduced funds being tied up in stocks. The favourable debtors' days could be due to the good credit control measures implemented by the SC. The SC had a favourable creditors' ratio as evidenced by its favourable collection days. The SC could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.

 

 

 

 

 

 

 

Liquidity

 

 

 

 

 

 

Liquid Ratio

:

Unfavourable

[

0.59 Times

]

 

Current Ratio

:

Unfavourable

[

1.17 Times

]

 

 

 

 

 

 

 

 

A low liquid ratio means that the SC may be facing working capital deficiency. If the SC cannot obtain additional financing or injection of fresh capital, it may face difficulties in meeting its short term obligations.

 

 

 

 

 

 

 

Solvency

 

 

 

 

 

 

Interest Cover

:

Favourable

[

43.95 Times

]

 

Gearing Ratio

:

Favourable

[

0.10 Times

]

 

 

 

 

 

 

 

 

The interest cover showed that the SC was able to service the interest. The favourable interest cover could indicate that the SC was making enough profit to pay for the interest accrued. The SC was lowly geared thus it had a low financial risk. The SC was mainly financed by its shareholders' funds and internally generated funds. In times of economic slowdown / downturn, the SC being a lowly geared company, will be able to compete better than those companies which are highly geared in the same industry.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overall Assessment :

 

 

 

 

 

 

Although the SC's turnover had increased, its profits had declined over the same corresponding period. This could be due to the stiffer market competition and / or higher operating costs which lowered the SC's profit margin. Due to its weak liquidity position, the SC will be faced with problems in meeting all its short term obligations if no short term loan is obtained or additional capital injected into the SC. With the favourable interest cover, the SC could be able to service all the accrued interest without facing any difficulties. The SC as a lowly geared company, will be more secured compared to those highly geared companies. It has the ability to meet all its long term obligations.

 

 

 

 

 

 

 

Overall financial condition of the SC : FAIR

 

 

 

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

 

Major Economic Indicators:

2008

2009

2010

2011*

2012**

 

 

 

 

 

 

Population ( Million)

27.73

28.13

28.35

28.70

29.10

Gross Domestic Products ( % )

4.6

<0.5>

7.2

5.5

5.3

Domestic Demand ( % )

6.9

2.9

6.3

4.8

7.6

Private Expenditure ( % )

7.1

<2.7>

8.1

7.0

8.7

Consumption ( % )

8.4

0.7

6.7

6.3

7.1

Investment ( % )

1.5

<17.2>

17.7

16.2

15.9

Public Expenditure ( % )

6.5

5.2

3.8

7.6

4.7

Consumption ( % )

11.6

3.1

0.2

8.9

3.0

Investment ( % )

0.7

8.0

2.8

0.6

7.0

 

 

 

 

 

 

Balance of Trade ( MYR Million )

129,563

89,650

118,356

116,058

-

Government Finance ( MYR Million )

<34,462>

<28,450>

<40,482>

<45,511>

<43,021>

Government Finance to GDP / Fiscal Deficit ( % )

<4.8>

<4.8>

<5.6>

<5.4>

<4.7>

Inflation ( % Change in Composite CPI)

<3.3>

<5.2>

5.1

3.1

-

Unemployment Rate

3.7

4.5

3.9

3.3

-

 

 

 

 

 

 

Net International Reserves ( MYR Billion )

388

331

329

415

-

Average Risk-Weighted Capital Adequacy Ratio ( % )

1.91

2.87

2.20

3.50

-

Average 3 Months of Non-performing Loans ( % )

13.24

11.08

15.30

14.80

-

Average Base Lending Rate ( % )

6.72

5.53

6.30

6.60

-

Business Loans Disbursed( % )

11.6

10.5

14.7

15.3

-

Foreign Investment ( MYR Million )

23,261.4

22,156.8

22,517.9

23,546.1

-

Consumer Loans ( % )

-

-

-

-

-

 

 

 

 

 

 

Registration of New Companies ( No. )

41,599

41,578

44,148

-

-

Registration of New Companies ( % )

<4.0>

<0.1>

6.2

-

-

Liquidation of Companies ( No. )

27,992

39,075

25,585

-

-

Liquidation of Companies ( % )

23.7

39.6

<34.5>

-

-

 

 

 

 

 

 

Registration of New Business ( No. )

269,866

312,581

271,414

-

-

Registration of New Business ( % )

-

-

-

-

-

Business Dissolved ( No. )

18,885

19,345

19,738

-

-

Business Dissolved ( % )

<7.6>

2.4

2.0

-

-

 

 

 

 

 

 

Sales of New Passenger Cars (' 000 Unit )

497.5

486.3

543.6

363.0

-

Cellular Phone Subscribers ( Million )

25.1

30.1

32.8

35.3

-

Tourist Arrival ( Million Persons )

21.5

23.6

24.6

25.3

-

Hotel Occupancy Rate ( % )

68.0

58.0

63.0

51.3

-

 

 

 

 

 

 

Credit Cards Spending ( % )

17.1

12.8

14.1

15.6

-

Bad Cheque Offenders (No.)

34,834

36,667

33,568

27,208

-

Individual Bankruptcy ( No.)

13,907

16,228

18,119

16,155

-

Individual Bankruptcy ( % )

5.1

16.7

11.7

<10.8>

-

 

 

 

 

 

 



INDUSTRIES ( % of Growth ):

2008

2009

2010

2011*

2012**

 

 

 

 

 

 

Agriculture

3.6

0.4

2.1

4.7

4.1

Palm Oil

7.0

<1.1>

<3.4>

7.3

-

Rubber

<1.1>

<19.8>

9.9

6.4

-

Forestry & Logging

<1.5>

<5.9>

<3.3>

<4.7>

-

Fishing

4.0

5.5

5.6

2.8

-

Other Agriculture

5.9

9.0

7.9

8.5

-

Industry Non-Performing Loans ( MYR Million )

393.0

413.7

508.4

634.1

-

% of Industry Non-Performing Loans

<2.0>

1.3

2.1

3.2

-

 

 

 

 

 

 

Mining

<0.8>

<3.8>

0.2

<2.4>

2.5

Oil & Gas

12.7

2.1

0.5

<1.7>

-

Other Mining

-

-

-

-

-

Industry Non-performing Loans ( MYR Million )

36.0

44.2

49.7

46.5

-

% of Industry Non-performing Loans

0.1

0.1

0.1

0.1

-

 

 

 

 

 

 

Manufacturing #

1.3

<9.4>

11.4

5.6

4.5

Exported-oriented Industries

2.7

<19.0>

12.1

2.8

-

Electrical & Electronics

2.4

<30.3>

28.4

<4.9>

-

Rubber Products

4.2

<10.1>

25.3

15.4

-

Wood Products

<6.0>

<24.1>

20.1

<7.3>

-

Textiles & Apparel

1.9

<19.5>

<0.4>

14.8

-

Domestic-oriented Industries

9.9

<9.8>

16.3

6.3

-

Food, Beverages & Tobacco

9.5

0.2

3.0

4.2

-

Chemical & Chemical Products

1.4

<7.7>

16.2

5.6

-

Plastic Products

6.5

<9.1>

2.4

3.8

-

Iron & Steel

16.8

<32.7>

29.3

2.4

-

Fabricated Metal Products

14.7

<2.5>

14.9

25.2

-

Non-metallic Mineral

8.3

<15.5>

20.2

16.3

-

Transport Equipment

27.1

<13.5>

36.5

<9.4>

-

Paper & Paper Products

8.6

<5.0>

18.7

15.6

-

Crude Oil Refineries

7.8

0.2

<11.4>

9.3

-

Industry Non-Performing Loans ( MYR Million )

5,729.4

6,007.3

6,217.5

6,537.2

-

% of Industry Non-Performing Loans

16.8

18.3

23.8

25.7

-

 

 

 

 

 

 

Construction

2.1

5.8

5.1

4.4

7.0

Industry Non-Performing Loans ( MYR Million )

4,149.8

3,241.8

4,038.5

3,856.9

-

% of Industry Non-Performing Loans

12.2

9.9

10.7

10.2

-

 

 

 

 

 

 

Services

7.3

2.6

6.5

6.4

6.5

Electric, Gas & Water

5.0

0.4

8.5

5.6

4.8

Transport, Storage & Communication

7.8

1.6

7.7

6.5

7.3

Wholesale, Retail, Hotel & Restaurant

10.0

2.8

4.7

5.2

6.9

Finance, Insurance & Real Estate

9.2

3.8

6.1

6.3

6.5

Government Services

8.6

2.0

6.7

7.6

5.6

Other Services

5.9

4.4

4.2

5.4

5.7

Industry Non-Performing Loans ( MYR Million )

8,281.4

6,631.3

7,384.6

6,825.2

-

% of Industry Non-Performing Loans

24.3

20.2

25.7

23.4

-

 

 

 

 

 

 

 

 

 

 

 

 

* Estimate / Preliminary

 

 

 

 

 

** Forecast

 

 

 

 

 

# Based On Manufacturing Production Index 
(Source : Department of Statistics / Economic Report / Bank Negara Report)

 

INDUSTRY ANALYSIS

 

MSIC CODE

36101 : Manufacture of wooden and cane furniture

 

 

INDUSTRY :

FURNITURE & FIXTURES

 

 

 


MALAYSIA's 2011 furniture exports are likely to improve by 9% to RM8.7 billion, provided the US dollar stabilises at the current level and manufacturers are able to secure enough foreign workers at their factories. 


According to the Malaysian Furniture Industry Council (MFIC), the government's policy to reduce the country's dependency on foreign workers is having an adverse impact on furniture production and exports. Furniture export earnings will decline if there have not enough foreign workers to work on the orders. Many small and medium enterprises will face shutdown prospects.


Under the the National Timber Industry Policy (MTIP), the government has targeted RM16 billion furniture exports by 2020.


There was growing demand for Malaysian-made furniture from the US and Australia, especially now as American consumer spending is showing signs of recovery and Australians need to refurbish their homes after the big flood. Traditional markets like the US and Europe tend to favour Malaysia over low-cost producers like China and Vietnam due to better quality control and reliable after-sales services.


Singapore and Thailand are enjoying zero tariff on upholstery and wooden furniture when it is shipped into Australia and New Zealand. Malaysia, however, is not. These may affect the furniture industry. Malaysian furniture exporters sell in US dollar. When the ringgit strengthens, their exports become more expensive. This leads to a fall in demand. In the last 12 months, the ringgit has been strengthening against the dollar. The profit margins in the furniture export industry are between 3 and 15 per cent and the order process takes an average of two months.


Malaysia stands as the world's 10th largest exporter of furniture by sales volume. The industry's main export markets are the United States, Japan, Europe, Australia and the Middle East. The local furniture industry will continue to be a major revenue earner for the country.


The Malaysian producers and exporters must rebrand themselves to move up the value chain, to achieve higher levels of performance and competitiveness and progress from being OEM production towards own design manufacturing and original brand manufacturing. The Plantation Industries and Commodities Ministry and the Malaysian Timber Industry Board has drawn up strategies through the National Timber Industry Policy towards this direction. The small- and medium-sized enterprises to penetrate countries in the Middle East, East Asia, Southeast Asia and Africa as an avenue to improve international trade performance.

 

 

OVERALL INDUSTRY OUTLOOK : Marginal Growth

 


CREDIT RISK EVALUATION & RECOMMENDATION

 


Incorporated in 1996, the SC is a Private Limited company, focusing on manufacturing of office and household furnitures. With its long establishment in the market, the SC has received strong support from its stable customers base. Its business position in the market is quite stable and it is expected to enjoy better market shares over its rivals. With a weak shareholders' backing, the SC's capital position is weak. Inadequate capital may be a constraint to the SC as it limits its ability to expand its business in future. The capital standing of the SC is weak. The SC may face difficulties to expand its business compared to other large corporation. Without a strong capital, the business expansion opportunities of the SC is limited.


The SC focuses only on overseas market. This global approach has enabled the SC to generate a better growth sales. Being an export-oriented company, the SC however is subjected to certain inherent risk of global economy slowdown, foreign currencies fluctuations and stiff competition in the international market. The SC is a fairly large and rapidly growing company with over 130 staff in its operations The SC has a good management capability. Its capable management team has enabled the SC to keep its business on going. Hence, the future prospect of the SC is bright.


Financially, the SC registered a higher turnover compared to previous year. However, its profits showed a reverse trend. The lower profit achieved was a result of higher operating cost and increased competition. Return on shareholders' funds of the SC was at an acceptable range which indicated that the management was efficient in utilising its funds to generate income. Due to its weak liquidity position, the SC may face working capital deficiency in meeting its short term financial obligations if no fresh capital are injected into the SC. Being a lowly geared company, the SC is exposed to low financial risk as it is mainly dependent on its internal funds to finance its business needs. Given a positive net worth standing at MYR 7,544,913, the SC should be able to maintain its business in the near terms.


Having a strong assets backing, the SC possesses latent assets as collateral for further financial extension. Hence, it has good chance of getting loans if the needs arises.


We regard that the SC's overall payment habit is prompt. The SC had a favourable creditors' ratio as evidenced by its favourable collection days.


The industry has reached its maturity stage and only enjoying a marginal growth. The steady growth of the country's economy will further enhance the industry activities. Thus, the SC's future performance is very much depend on its marketing strategies in order to retain its position in the market.


Based on the above condition, we recommend credit be granted to the SC promptly.

 


PROFIT AND LOSS ACCOUNT

 

 

THE FINANCIAL STATEMENTS WERE PREPARED IN ACCORDANCE WITH MALAYSIAN FINANCIAL REPORTING STANDARDS(FRS)

SPRING ART INDUSTRIES SDN BHD

 

Financial Year End

31/12/2010

31/12/2009

Months

12

12

Consolidated Account

Company

Company

Audited Account

YES

YES

Unqualified Auditor's Report (Clean Opinion)

YES

YES

Financial Type

FULL

FULL

Currency

MYR

MYR

 

 

 

TURNOVER

26,130,061

25,629,034

 

----------------

----------------

Total Turnover

26,130,061

25,629,034

Costs of Goods Sold

<20,207,287>

<19,867,980>

 

----------------

----------------

Gross Profit

5,922,774

5,761,054

 

----------------

----------------

 

 

 

PROFIT/(LOSS) FROM OPERATIONS

2,350,996

3,941,896

 

----------------

----------------

PROFIT/(LOSS) BEFORE TAXATION

2,350,996

3,941,896

Taxation

<563,353>

<839,014>

 

----------------

----------------

PROFIT/(LOSS) AFTER TAXATION

1,787,643

3,102,882

 

----------------

----------------

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

 

 

As previously reported

7,757,270

6,154,388

 

----------------

----------------

As restated

7,757,270

6,154,388

 

----------------

----------------

PROFIT AVAILABLE FOR APPROPRIATIONS

9,544,913

9,257,270

DIVIDENDS - Ordinary (paid & proposed)

<2,500,000>

<1,500,000>

 

----------------

----------------

RETAINED PROFIT/(LOSS) CARRIED FORWARD

7,044,913

7,757,270

 

=============

=============

 

 

 

INTEREST EXPENSE (as per notes to P&L)

 

 

Bank overdraft

13,013

14,320

Bankers' acceptance

24,136

11,591

Hire purchase

7,775

24,898

Term loan / Borrowing

9,597

29,250

Others

211

4,500

 

----------------

----------------

 

54,732

84,559

 

 

 

BALANCE SHEET

 

 

SPRING ART INDUSTRIES SDN BHD

 

ASSETS EMPLOYED:

 

 

FIXED ASSETS

6,982,033

7,517,647

 

 

 

 

----------------

----------------

TOTAL LONG TERM ASSETS

6,982,033

7,517,647

 

 

 

CURRENT ASSETS

 

 

Stocks

2,180,384

2,413,885

Trade debtors

1,608,091

3,132,272

Other debtors, deposits & prepayments

187,209

240,346

Cash & bank balances

418,318

9,596

 

----------------

----------------

TOTAL CURRENT ASSETS

4,394,002

5,796,099

 

----------------

----------------

TOTAL ASSET

11,376,035

13,313,746

 

=============

=============

 

 

 

CURRENT LIABILITIES

 

 

Trade creditors

1,587,140

1,893,928

Other creditors & accruals

569,322

1,092,931

Hire purchase & lease creditors

50,929

140,310

Bank overdraft

594,763

335,571

Short term borrowings/Term loans

127,241

264,631

Bill & acceptances payable

807,000

609,000

Amounts owing to director

55

55

Provision for taxation

17,876

514,021

 

----------------

----------------

TOTAL CURRENT LIABILITIES

3,754,326

4,850,447

 

----------------

----------------

NET CURRENT ASSETS/(LIABILITIES)

639,676

945,652

 

----------------

----------------

TOTAL NET ASSETS

7,621,709

8,463,299

 

=============

=============

 

 

 

SHARE CAPITAL

 

 

Ordinary share capital

500,000

500,000

 

----------------

----------------

TOTAL SHARE CAPITAL

500,000

500,000

 

 

 

RESERVES

 

 

Retained profit/(loss) carried forward

7,044,913

7,757,270

 

----------------

----------------

TOTAL RESERVES

7,044,913

7,757,270

 

 

 

 

----------------

----------------

SHAREHOLDERS' FUNDS/EQUITY

7,544,913

8,257,270

 

 

 

LONG TERM LIABILITIES

 

 

Long term loans

-

133,573

Hire purchase creditors

8,757

-

Deferred taxation

68,039

72,456

 

----------------

----------------

TOTAL LONG TERM LIABILITIES

76,796

206,029

 

----------------

----------------

 

7,621,709

8,463,299

 

=============

=============

 

 

 

 

 

 

FINANCIAL RATIO

 

 

SPRING ART INDUSTRIES SDN BHD

 

TYPES OF FUNDS

 

 

Cash

418,318

9,596

Net Liquid Funds

<176,445>

<325,975>

Net Liquid Assets

<1,540,708>

<1,468,233>

Net Current Assets/(Liabilities)

639,676

945,652

Net Tangible Assets

7,621,709

8,463,299

Net Monetary Assets

<1,617,504>

<1,674,262>

BALANCE SHEET ITEMS

 

 

Total Borrowings

781,690

874,085

Total Liabilities

3,831,122

5,056,476

Total Assets

11,376,035

13,313,746

Net Assets

7,621,709

8,463,299

Net Assets Backing

7,544,913

8,257,270

Shareholders' Funds

7,544,913

8,257,270

Total Share Capital

500,000

500,000

Total Reserves

7,044,913

7,757,270

LIQUIDITY (Times)

 

 

Cash Ratio

0.11

0.00

Liquid Ratio

0.59

0.70

Current Ratio

1.17

1.19

WORKING CAPITAL CONTROL (Days)

 

 

Stock Ratio

30

34

Debtors Ratio

22

45

Creditors Ratio

29

35

SOLVENCY RATIOS (Times)

 

 

Gearing Ratio

0.10

0.11

Liabilities Ratio

0.51

0.61

Times Interest Earned Ratio

43.95

47.62

Assets Backing Ratio

15.24

16.93

PERFORMANCE RATIO (%)

 

 

Operating Profit Margin

9.00

15.38

Net Profit Margin

6.84

12.11

Return On Net Assets

31.56

47.58

Return On Capital Employed

29.10

45.04

Return On Shareholders' Funds/Equity

23.69

37.58

Dividend Pay Out Ratio (Times)

1.40

0.48

NOTES TO ACCOUNTS

 

 

Contingent Liabilities

0

0

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.54.81

UK Pound

1

Rs.86.04

Euro

1

Rs.69.06

 

 

INFORMATION DETAILS

 

Report Prepared by :

PRL

 

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Capability to overcome financial difficulties seems comparatively below average.

 

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

--

NB

New Business

 

--

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)            Ownership background (20%)                 Payment record (10%)

Credit history (10%)                    Market trend (10%)                                Operational size (10%)

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.