MIRA INFORM REPORT

Report Date :

24.06.2014

IDENTIFICATION DETAILS

Name :	ARITA PLASTICS INDUSTRIES (M) SDN. BHD.

Registered Office :	272-K, Jalan Air Itam, 11400 Pulau Pinang, Pulau Pinang

Country :	Malaysia

Financials (as on) :	31.12.2012

Date of Incorporation :	16.03.1993

Com. Reg. No.:	259615-V

Legal Form :	Private Limited

Line of Business :	Manufacturing of Plastic Products

No. of Employees :	70 - Group [2014]

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate
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 31, 2014

Country Name

Previous Rating

(31.12.2013)

Current Rating

(31.03.2014)

Malaysia

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderately Low Risk	B1
Moderate Risk	B2
Moderately High Risk	C1
High Risk	C2
Very High Risk	D

MALAYSIA - ECONOMIC OVERVIEW

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. NAJIB's Economic Transformation Program (ETP) is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. The NAJIB administration also is continuing efforts to boost domestic demand and reduce the economy's dependence on exports. Nevertheless, exports - particularly of electronics, oil and gas, palm oil and rubber - remain a significant driver of the economy. As an oil and gas exporter, Malaysia has profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with sustained budget deficits, has forced Kuala Lumpur to begin to address fiscal shortfalls, through initial reductions in energy and sugar subsidies and the announcement of the 2015 implementation of a 6% goods and services tax. The government is also trying to lessen its dependence on state oil producer Petronas. The oil and gas sector supplies about 32% of government revenue in 2013. Bank Negara Malaysia (central bank) maintains healthy foreign exchange reserves, and a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. Nevertheless, Malaysia could be vulnerable to a fall in commodity prices or a general slowdown in global economic activity because exports are a major component of GDP. In order to attract increased investment, NAJIB earlier raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program (BEEP), policies that favor and advance the economic condition of ethnic Malays.

Source : CIA

EXECUTIVE SUMMARY

REGISTRATION NO.

259615-V

COMPANY NAME

ARITA PLASTICS INDUSTRIES (M) SDN. BHD.

FORMER NAME

N/A

INCORPORATION DATE

16/03/1993

COMPANY STATUS

EXIST

LEGAL FORM

PRIVATE LIMITED

LISTED STATUS

REGISTERED ADDRESS

272-K, JALAN AIR ITAM, 11400 PULAU PINANG, PULAU PINANG, MALAYSIA.

BUSINESS ADDRESS

1073, MUKIM 6, LORONG PERUSAHAAN MAJU 2, PRAI INDUSTRIAL ESTATE, PHASE 4, 13600 PRAI, PULAU PINANG, MALAYSIA.

TEL.NO.

04-5078688

FAX.NO.

04-5075688

INFO@ARITAPLASTIC.COM

WEB SITE

WWW.ARITAPLASTIC.COM

CONTACT PERSON

KHOO PHAIK EE ( EXECUTIVE DIRECTOR )

INDUSTRY CODE

22209

PRINCIPAL ACTIVITY

MANUFACTURING OF PLASTIC PRODUCTS

AUTHORISED CAPITAL

MYR 5,000,000.00 DIVIDED INTO
ORDINARY SHARE 5,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

MYR 5,000,000.00 DIVIDED INTO
ORDINARY SHARES 5,000,000 CASH OF MYR 1.00 EACH.

SALES

MYR 37,741,635 [2012]

NET WORTH

MYR 13,051,411 [2012]

STAFF STRENGTH

70 - GROUP [2014]

BANKER (S)

CIMB BANK BHD
UNITED OVERSEAS BANK (MALAYSIA) BHD

LITIGATION

CLEAR

DEFAULTER CHECK

CLEAR

FINANCIAL CONDITION

POOR

PAYMENT

AVERAGE

MANAGEMENT CAPABILITY

AVERAGE

COMMERCIAL RISK

LOW

CURRENCY EXPOSURE

MODERATE

GENERAL REPUTATION

GOOD

INDUSTRY OUTLOOK

AVERAGE GROWTH

HISTORY / BACKGROUND

The Subject 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 Subject must have at least two directors. A private limited company is a separate legal entity from its shareholders. As a separate legal entity, the Subject 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 Subject is insolvent. The Subject 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 Subject is principally engaged in the (as a / as an) manufacturing of plastic products.

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

The immediate holding company of the Subject is ARITA HOLDINGS SDN. BHD., a company incorporated in MALAYSIA.

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
15/02/2013	MYR 5,000,000.00	MYR 5,000,000.00
18/02/2003	MYR 3,000,000.00	MYR 2,525,000.00
08/11/2000	MYR 1,000,000.00	MYR 525,000.00
02/07/1993	MYR 25,000.00	MYR 25,000.00
16/03/1993	MYR 25,000.00	MYR 2.00

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

Name	Address	IC/PP/Loc No	Shareholding	(%)
ARITA HOLDINGS SDN. BHD.	272-K, JALAN AIR ITAM, 11400 PULAU PINANG, PULAU PINANG, MALAYSIA.	210905P	5,000,000.00	100.00
			---------------	------
			5,000,000.00	100.00
			============	=====

+ Also Director

The Subject's interest in other companies (Subsidiaries/Associates) are shown as follow :

Local No	Country	Company	(%)	As At
755253K	MALAYSIA	PLASTECH PRECISION COATING SDN. BHD.	65.00	29/03/2013

DIRECTORS

DIRECTOR 1

Name Of Subject	:	DATIN KHOO PHAIK EE
Address	:	23, JALAN KHAW SIM BEE, 10400 GEORGETOWN, PULAU PINANG, MALAYSIA.
IC / PP No	:	6371383
New IC No	:	611202-07-5354
Date of Birth	:	02/12/1961

Nationality	:	MALAYSIAN
Date of Appointment	:	03/08/2007

DIRECTOR 2

Name Of Subject	:	DATO' LIM THENG HOOI
Address	:	23, KHAW SIM BEE ROAD, 10400 GEORGETOWN, PULAU PINANG, MALAYSIA.
IC / PP No	:	5332350
New IC No	:	580610-07-5389
Date of Birth	:	10/06/1958

Nationality	:	MALAYSIAN CHINESE
Date of Appointment	:	19/04/1993

MANAGEMENT

1)	Name of Subject	:	ALVIN LIM THENG HOOI
	Position	:	MANAGING DIRECTOR

2)	Name of Subject	:	KHOO PHAIK EE
	Position	:	EXECUTIVE DIRECTOR

3)	Name of Subject	:	FRANCIS TAN
	Position	:	CHIEF FINANCE OFFICER

AUDITOR

Auditor	:	WONG THAI SUN & ASSOCIATES
Auditor' Address	:	PENANG STREET, 15 (1ST FLOOR), 10200 GEORGE TOWN, PULAU PINANG, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MR. HO SOO THENG @ HO SOO AUN
	IC / PP No	:	1851967
	New IC No	:	410906-10-5397
	Address	:	14, KEBUN NYOR ROAD, 10470 PULAU PINANG, PULAU PINANG, MALAYSIA.

2)	Company Secretary	:	MR. TAN YEN WOOI

	New IC No	:	780622-07-5331
	Address	:	15, LINTANG KURAU 5, TAMAN CHAI LENG, 13700 PERAI, PULAU PINANG, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)	Name	:	CIMB BANK BHD

2)	Name	:	UNITED OVERSEAS BANK (MALAYSIA) BHD

ENCUMBRANCE (S)

Charge No	Creation Date	Charge Description	Chargee Name	Total Charge	Status
1	15/06/1994	DEBENTURE	UNITED OVERSEAS BANK MALAYSIA BHD	MYR 4,700,000.00	Satisfied
2	04/04/2001	FACILITY AGREEMENT & 1ST PARTY 2ND ALL MONIES DEBENTURE	UNITED OVERSEAS BANK MALAYSIA BHD	-	Unsatisfied
3	05/06/2002	ALL MONIES DEBENTURE	UNITED OVERSEAS BANK MALAYSIA BHD	-	Unsatisfied
4	22/01/2005	OPEN CHARGE	UNITED OVERSEAS BANK MALAYSIA BHD	-	Satisfied
5	22/01/2005	MEMORANDUM OF LEGAL CHARGE OVER DEPOSITS	UNITED OVERSEAS UNION BANK (MALAYSIA) BHD	-	Unsatisfied
6	11/09/2009	FACILITY AGREEMENT, GUARANTEE & INDEMNITY BY INDIVIDUAL, MEMO OF DEPOSIT	CIMB BANK BERHAD	MYR 2,000,000.00	Unsatisfied
7	14/07/2010	FACILITY AGREEMENT, GUARANTEE & INDEMNITY BY INDIVIDUAL, MEMO OF DEPOSIT	CIMB BANK BERHAD	MYR 800,000.00	Unsatisfied
8	21/03/2013	MEMORANDUM OF DEPOSIT OF FIXED DEPOSIT RECEIPT AS SECURITY & LETTER OF SET-OFF IN RESPECT OF DEPOSITS / CREDIT BALANCES / MARGIN DEPOSITS	ALLIANCE BANK MALAYSIA BERHAD	-	Unsatisfied
9	21/03/2013	MEMORANDUM OF DEPOSIT OF FIXED DEPOSIT RECEIPT AS SECURITY & LETTER OF SET-OFF IN RESPECT OF DEPOSITS / CREDIT BALANCES / MARGIN DEPOSITS	ALLIANCE BANK MALAYSIA BERHAD	-	Unsatisfied
10	06/06/2013	MEMORANDUM OF DEPOSIT OF FIXED DEPOSIT RECEIPT EXECUTED BY ARITA PLASTICS INDUSTRIES (M) SDN. BHD.	MALAYAN BANKING BERHAD	-	Unsatisfied
11	14/11/2013	LETTER OF SET-OFF	RHB BANK BERHAD	-	Unsatisfied

LEGAL CHECK AGAINST SUBJECT

* A check has been conducted in our databank againt the Subject 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 SUBJECT

* We have checked through the Subject 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	:	YES
Overseas	:	YES
Import Countries	:	ASIA

The Subject 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

[

]

Fair 91-120 Days

[

]

Poor >120 Days

[

]

CLIENTELE

Local	:	YES
Domestic Markets	:	MALAYSIA
Overseas	:	YES
Export Market	:	SINGAPORE AUSTRALIA LEBANON ASIA CANADA
Credit Term	:	30 - 60 DAYS

Payment Mode	:	CHEQUES

OPERATIONS

Products manufactured

PLASTIC PRODUCTS

Product Brand Name

A-PLAS

Member(s) / Affiliate(s)

MALAYSIAN PLASTICS MANUFACTURERS ASSOCIATION (MPMA)

SMI ASSOCIATION OF MALAYSIA

SMALL & MEDIUM ENTERPRISE

Total Number of Employees:
YEAR	2014	2013	2012

GROUP	70	70	70
COMPANY	60	60	60

Branch

Other Information:

The Subject is principally engaged in the (as a / as an) manufacturing of plastic products.

The Subject are specialized in manufacturing and supplying extruded plastic sheets for various different industries for their different applications, from manufacturing extruded plastics sheets to design and produce various specifications and fabrication for forming to any shapes as desired.

The Subject plastics products that uses our in-house facilities to be turned into Finished or Semi-Finished Products, by using Thermoforming or Vacuum forming process combined with the 5 Axis NC Router Cutting service.

The Subject products covered with wide range of Resin Materials which includes PMMA (Acrylic) , HI-PMMA (High Impact PMMA) , Optical Clear PMMA, PETG (UV & NON-UV) , Polycarbonate, GPPS, ABS, PS, HIPS, TPO, Others.

The Subject is equipped with fully automated machinery and hi-tech facilities at the production site.

The Subject's production capacity is based on its customers' orders and requirements.

According to the Subject, it does not have any branch at the moment.

RECENT DEVELOPMENT

We have checked with the Malaysian National News Agency's (BERNAMA)

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	04-5078688
Match	:	N/A

Address Provided by Client	:	1073, MUKIM 6, LORONG PERUSAHAAN MAJU 2, PRAI INDUSTRIAL ESTATE, PHASE 4,13600,PRAI,PULAU PINANG.
Current Address	:	1073, MUKIM 6, LORONG PERUSAHAAN MAJU 2, PRAI INDUSTRIAL ESTATE, PHASE 4, 13600 PRAI, PULAU PINANG, MALAYSIA.
Match	:	YES

Latest Financial Accounts	:	YES

Other Investigations

On 18th June 2014 we contacted one of the staff from the Subject and she provided some information.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Increased	[	2009 - 2012	]
Profit/(Loss) Before Tax	:	Increased	[	2009 - 2012	]
Return on Shareholder Funds	:	Unfavourable	[	5.68%	]
Return on Net Assets	:	Acceptable	[	15.21%	]

The Subject's turnover increased steadily as the demand for its products / services increased due to the goodwill built up over the years.The Subject's management have been efficient in controlling its operating costs. The unfavourable return on shareholders' funds could indicate that the Subject was inefficient in utilising its assets to generate returns.

Working Capital Control
Stock Ratio	:	Unfavourable	[	104 Days	]
Debtor Ratio	:	Unfavourable	[	98 Days	]
Creditors Ratio	:	Favourable	[	11 Days	]

The Subject could be incurring higher holding cost. As its capital was tied up in stocks, it could face liquidity problems. The Subject's debtors ratio was high. The Subject should tighten its credit control and improve its collection period. The Subject had a favourable creditors' ratio where the Subject could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.

Liquidity
Liquid Ratio	:	Unfavourable	[	0.60 Times	]
Current Ratio	:	Unfavourable	[	1.06 Times	]

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

Solvency
Interest Cover	:	Unfavourable	[	1.75 Times	]
Gearing Ratio	:	Unfavourable	[	1.60 Times	]

The Subject's interest cover was low. If its profits fall or when interest rate rises, it may not be able to meet all its interest payment. The Subject was highly geared, thus it had a high financial risk. The Subject was dependent on loans to finance its business needs. In times of economic downturn and / or high interest rate, the Subject will become less profitable and competitive than other firms in the same industry, which are lowly geared. This is because the Subject has to service the interest and to repay the loan, which will erode part of its profits. The profits will fluctuate depending on the Subject's turnover and the interest it needs to pay.


Overall Assessment :
Generally, the Subject's performance has improved with higher turnover and profit. Due to its weak liquidity position, the Subject 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 Subject. If there is a fall in the Subject's profit or any increase in interest rate, the Subject may not be able to generate sufficient cash-flow to service its interest. The Subject's gearing level was high and its going concern will be in doubt if there is no injection of additional shareholders' funds in times of economic downturn and / or high interest rates.

Overall financial condition of the Subject : POOR

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

Major Economic Indicators:	2009	2010	2011	2012*	2013**

Population ( Million)	28.13	28.35	28.70	29.30	29.80
Gross Domestic Products ( % )	(0.5)	7.2	5.1	5.6	5.3
Domestic Demand ( % )	2.9	6.3	8.2	9.4	5.6
Private Expenditure ( % )	(2.7)	8.1	8.2	8.0	7.4
Consumption ( % )	0.7	6.7	7.1	1.0	5.7
Investment ( % )	(17.2)	17.7	12.2	11.7	13.3
Public Expenditure ( % )	5.2	3.8	8.4	13.3	1.2
Consumption ( % )	3.1	0.2	16.1	11.3	(1.2)
Investment ( % )	8.0	2.8	(0.3)	15.9	4.2

Balance of Trade ( MYR Million )	89,650	118,356	116,058	106,300	110,700
Government Finance ( MYR Million )	(28,450)	(40,482)	(45,511)	(42,297)	(39,993)
Government Finance to GDP / Fiscal Deficit ( % )	(4.8)	(5.6)	(5.4)	(4.5)	(4.0)
Inflation ( % Change in Composite CPI)	(5.2)	5.1	3.1	1.6	2.5
Unemployment Rate	4.5	3.9	3.3	3.2	3.0

Net International Reserves ( MYR Billion )	331	329	415	427	-
Average Risk-Weighted Capital Adequacy Ratio ( % )	2.87	2.20	3.50	2.20	-
Average 3 Months of Non-performing Loans ( % )	11.08	15.30	14.80	14.70	-
Average Base Lending Rate ( % )	5.53	6.30	6.60	6.53	-
Business Loans Disbursed( % )	10.5	14.7	15.3	32.2	-
Foreign Investment ( MYR Million )	22,156.8	22,517.9	23,546.1	26,230.4	-
Consumer Loans ( % )	-	-	-	-	-

Registration of New Companies ( No. )	41,578	44,148	45,455	45,441	-
Registration of New Companies ( % )	(0.1)	6.2	3.0	(0.0)	-
Liquidation of Companies ( No. )	39,075	25,585	132,476	-	-
Liquidation of Companies ( % )	39.6	(34.5)	417.8	-	-

Registration of New Business ( No. )	312,581	271,414	284,598	324,761	-
Registration of New Business ( % )	-	-	-	-	-
Business Dissolved ( No. )	19,345	19,738	20,121	-	-
Business Dissolved ( % )	2.4	2.0	1.9	-	-

Sales of New Passenger Cars (' 000 Unit )	486.3	543.6	535.1	552.2	-
Cellular Phone Subscribers ( Million )	30.1	32.8	35.3	38.5	-
Tourist Arrival ( Million Persons )	23.6	24.6	24.7	25.0	-
Hotel Occupancy Rate ( % )	58.0	63.0	60.6	62.4	-

Credit Cards Spending ( % )	12.8	14.1	15.6	12.6	-
Bad Cheque Offenders (No.)	36,667	33,568	32,627	26,982	-
Individual Bankruptcy ( No.)	16,228	18,119	19,167	19,575	-
Individual Bankruptcy ( % )	16.7	11.7	5.8	2.1	-

INDUSTRIES ( % of Growth ):	2009	2010	2011	2012*	2013**

Agriculture	0.4	2.1	5.9	0.6	2.4
Palm Oil	(1.1)	(3.4)	10.8	(2.8)	-
Rubber	(19.8)	9.9	6.1	(0.6)	-
Forestry & Logging	(5.9)	(3.3)	(7.6)	(2.2)	-
Fishing	5.5	5.6	2.1	(0.7)	-
Other Agriculture	9.0	7.9	7.1	6.4	-
Industry Non-Performing Loans ( MYR Million )	413.7	508.4	634.1	-	-
% of Industry Non-Performing Loans	1.3	2.1	3.2	-	-

Mining	(3.8)	0.2	(5.7)	1.5	2.7
Oil & Gas	2.1	0.5	(1.7)	-	-
Other Mining	-	-	-	-	-
Industry Non-performing Loans ( MYR Million )	44.2	49.7	46.5	-	-
% of Industry Non-performing Loans	0.1	0.1	0.1	-	-

Manufacturing #	(9.4)	11.4	4.7	4.2	4.9
Exported-oriented Industries	(19.0)	12.1	2.8	4.1	-
Electrical & Electronics	(30.3)	28.4	(4.9)	1.6	-
Rubber Products	(10.1)	25.3	15.4	3.6	-
Wood Products	(24.1)	20.1	(4.9)	4.6	-
Textiles & Apparel	(19.5)	(0.4)	14.8	(7.1)	-
Domestic-oriented Industries	(9.8)	16.3	6.5	8.6	-
Food, Beverages & Tobacco	0.2	3.0	4.2	-	-
Chemical & Chemical Products	(7.7)	16.2	5.5	9.9	-
Plastic Products	(9.1)	2.4	3.8	-	-
Iron & Steel	(32.7)	29.3	2.4	-	-
Fabricated Metal Products	(2.5)	14.9	25.2	-	-
Non-metallic Mineral	(15.5)	20.2	27.1	6.6	-
Transport Equipment	(13.5)	36.5	(10.4)	13.7	-
Paper & Paper Products	(5.0)	18.7	14.8	(7.8)	-
Crude Oil Refineries	0.2	(11.4)	9.3	-	-
Industry Non-Performing Loans ( MYR Million )	6,007.3	6,217.5	6,537.2	-	-
% of Industry Non-Performing Loans	18.3	23.8	25.7	-	-

Construction	5.8	5.1	4.4	15.5	11.2
Industry Non-Performing Loans ( MYR Million )	3,241.8	4,038.5	3,856.9	-	-
% of Industry Non-Performing Loans	9.9	10.7	10.2	-	-

Services	2.6	6.5	6.4	5.5	5.6
Electric, Gas & Water	0.4	8.5	5.6	4.8	-
Transport, Storage & Communication	1.6	7.7	6.5	7.3	-
Wholesale, Retail, Hotel & Restaurant	2.8	4.7	5.2	6.9	-
Finance, Insurance & Real Estate	3.8	6.1	6.3	6.5	-
Government Services	2.0	6.7	7.6	5.6	-
Other Services	4.4	4.2	5.4	5.7	-
Industry Non-Performing Loans ( MYR Million )	6,631.3	7,384.6	6,825.2	-	-
% of Industry Non-Performing Loans	20.2	25.7	23.4	-	-


* Estimate / Preliminary
** Forecast
# Based On Manufacturing Production Index

INDUSTRY ANALYSIS

MSIC CODE
22209 : Manufacture of diverse plastic products n.e.c.

INDUSTRY :	MANUFACTURING


The Manufacturing sector is one of the important sectors to the growth of the Malaysian economy. According to Ministry of Finance, the manufacturing sector is expected to grow 4.9% in year 2013. Export oriented-industries are expected to benefit from the higher growth of global trade, while domesticoriented industries expand in line with the better consumer sentiment and business confidence. The resource-based industries are envisaged to grow steadily attributed to improved demand for petroleum, chemical, rubber and plastic products. With better job prospects and higher disposable income, the transportation equipment subsector, in particular, the passenger car segment is expected to expand.

Value-added of the manufacturing sector expanded 5% during the first half of 2012. Output of the sector rose 5.2% during the first sevenmonths of 2012 in line with the increase in sales value of manufactured products by 6.5% to RM363.1 billion. Output from domesticoriented industries continued to expand 8.6% while export-oriented industries grew 4.1%.

According to the Department of Statistics, the sales value of the Manufacturing sector in January 2013 posted a growth of 7.4% (RM3.6 billion) to record RM52.4 billion as compared to RM48.8 billion reported in year 2012. Meanwhile, month-on-month basis, the sales value has decreased by 0.4% (RM0.2 billion) as compared with the preceding month. The sales value in December 2012 has been revised positive 7.5% year-on-year to record RM52.6 billion.

Output of rubber products increased 3.6% in the first seven month of 2012 mainly supported by continuous demand for rubber gloves. Output of rubber gloves grew 5.9% on account of the expansion in the global healthcare industry and wider usage of gloves in other sectors. Similarly, output of catheters, especially for use in medical appliances, also registered a strong growth of 12.6%. Nevertheless, production of rubber tyres and tubes reduced 10.9% in tandem with slowing external demand from the automotive industry, especially China.

Meanwhile, production of wood and wood products rebounded 4.6% largely supported by higher demand for wooden and cane furniture (33.5%). The positive performance was attributed to vibrant higher demand from major export destinations such as China and the United States (US) for Malaysian-made furniture. Demand from China accelerated further following the country’s rising income level and the implementation of zero import duty on Malaysian made-furniture. Malaysia government has growth target of 6.5% for wood based furniture where estimated to reach up to RM53 billion by year 2020.The government providing pioneer status for tax exemption and investment tax allowance for this industry as a boost up step towards produce good quality product and to meet the world demand.

The output of chemicals and chemical products rose 9.9% in the first seven month of year 2012 on account of increasing demand for plastic products (11.8%) and basic chemicals (11.1%). External demand for plastic packaging materials surged during the early part of the year 2012, particularly from Japan and Thailand, as manufacturers resumed operations, which were interrupted by natural calamities and power outages. Chemical production are expected to show 7.5 % in year 2013 inline with Malaysia as one of the largest contributor in world Chemicals & Chemical industries.

Tax and non-tax incentives provided by goverment encourage manufacturers to move up the value chain of manufacturing industry. The new growth initiatives by goverment in the manufacturing sector such assolar and medial services can be important drivers of growth apart from helping to diversify the manufacturing base and contributing to the resilience of the sector.

OVERALL INDUSTRY OUTLOOK : Average Growth

CREDIT RISK EVALUATION & RECOMMENDATION

Incorporated in 1993, the Subject is a Private Limited company, focusing on manufacturing of plastic products. The Subject has been in business for over two decades. It has built up a strong clientele base and good reputation will enable the Subject to further enhance its business in the near term. The Subject is expected to enjoy a stable market shares. Having strong support from its holding company has enabled the Subject to remain competitive despite the challenging business environment. The capital standing of the Subject is fair. With an adequate share capital, the Subject has the potential of expanding its business in future.

Over the years, the Subject has penetrated into both the local and overseas market. The Subject has positioned itself in the global market and is competing in the industry. Its stable clientele base will enable the Subject to further enhance its business in the near term. Being a moderate size company, the Group has a total workforce of 70 employees in its business operations. Overall, we regard that the Subject's management capability is average. This indicates that the Subject has greater potential to improve its business performance and raising income for the Subject.

We noted that both the turnover and profits have increased compared to the previous year. The higher profit could be due to increase in turnover and better control over its operating costs. The Subject has generated an unfavourable return on shareholders' funds indicating that the management was inefficient in utilising its funds to generate return. Due to its weak liquidity position, the Subject may face working capital deficiency in meeting its short term financial obligations if no fresh capital are injected into the Subject. The high gearing ratio clearly implied that the Subject was supported by more debt than equity. Nevertheless, given a positive net worth standing at MYR 13,051,411, the Subject should be able to maintain its business in the near terms

The Subject's supplier are from both the local and overseas countries. This will eliminates the risk of dependency on deliveries from a number of key suppliers and insufficient quantities of its raw materials. Overall the Subject has a good control over its resources.

The Subject's payment habit is average. With its adequate working capital, the Subject should be able to pay its short term debts

The industry shows an upward trend and this trend is very likely to sustain in the near terms. Hence, the Subject is expected to benefit from the favourable outlook of the industry

Based on the above condition, we recommend credit be granted to the Subject normally.

PROFIT AND LOSS ACCOUNT

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

Financial Year End	2012-12-31	2011-12-31	2010-12-31	2009-12-31	2009-01-31
Months	12	12	12	11	12
Consolidated Account	Company	Company	Company	Company	Company
Audited Account	YES	YES	YES	YES	YES
Unqualified Auditor's Report (Clean Opinion)	YES	YES	YES	YES	YES
Financial Type	FULL	FULL	FULL	SUMMARY	FULL
Currency	MYR	MYR	MYR	MYR	MYR

TURNOVER	37,741,635	27,541,807	25,293,176	24,687,649	24,038,448
	----------------	----------------	----------------	----------------	----------------
Total Turnover	37,741,635	27,541,807	25,293,176	24,687,649	24,038,448
Costs of Goods Sold	(34,014,222)	(23,850,482)	-	-	-
	----------------	----------------	----------------	----------------	----------------
Gross Profit	3,727,413	3,691,325	-	-	-
	----------------	----------------	----------------	----------------	----------------

PROFIT/(LOSS) FROM OPERATIONS	883,199	882,162	719,925	698,654	372,049
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	883,199	882,162	719,925	698,654	372,049
Taxation	(142,001)	(134,322)	(166,153)	0	0
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	741,198	747,840	553,772	698,654	372,049
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	2,880,596	2,132,756	1,578,984	880,330	508,281
	----------------	----------------	----------------	----------------	----------------
As restated	2,880,596	2,132,756	1,578,984	880,330	508,281
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	3,621,794	2,880,596	2,132,756	1,578,984	880,330
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	3,621,794	2,880,596	2,132,756	1,578,984	880,330
	=============	=============	=============	=============	=============

INTEREST EXPENSE (as per notes to P&L)
Bank overdraft	285,679	255,315	217,562	-	239,810
Bankers' acceptance	717,978	715,921	571,780	-	-
Hire purchase	69,013	77,063	28,303	-	7,713
Letter of credit	9,559	13,934	12,993	-	-
Trust receipts	21,580	3,149	3,616	-	2,765
Others	80,500	151,370	95,416	-	637,868
	----------------	----------------	----------------	----------------	----------------
	1,184,309	1,216,752	929,670	-	888,156
	=============	=============	=============	=============	=============

BALANCE SHEET

ASSETS EMPLOYED:
FIXED ASSETS	10,880,800	11,131,759	10,400,439	9,784,136	6,138,688

LONG TERM INVESTMENTS/OTHER ASSETS
Subsidiary companies	1,300,000	-	-	-	-
Investments	6,000	6,000	6,000	-	6,000
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM INVESTMENTS/OTHER ASSETS	1,306,000	6,000	6,000	6,000	6,000

	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	12,186,800	11,137,759	10,406,439	9,790,136	6,144,688

Stocks	10,703,596	10,016,491	11,563,093	-	8,039,443
Trade debtors	10,112,452	9,889,869	8,258,839	-	5,384,075
Other debtors, deposits & prepayments	292,851	2,537,455	298,050	-	232,457
Short term deposits	2,479,525	2,408,734	2,345,687	-	1,669,092
Amount due from subsidiary companies	707,255	-	-	-	-
Amount due from related companies	-	-	872,929	-	946,838
Cash & bank balances	362,815	8,107	23,011	-	7,154
Others	-	-	-	-	14,273
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	24,658,494	24,860,656	23,361,609	19,261,413	16,293,332
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	36,845,294	35,998,415	33,768,048	29,051,549	22,438,020
	=============	=============	=============	=============	=============

CURRENT LIABILITIES
Trade creditors	991,604	336,819	1,324,223	-	853,348
Other creditors & accruals	828,055	958,033	1,411,777	-	133,272
Hire purchase & lease creditors	296,965	415,444	186,761	-	26,505
Bank overdraft	4,065,872	3,557,614	3,255,129	-	2,873,771
Other borrowings	617,346	70,329	-	-	38,544
Bill & acceptances payable	15,336,000	16,310,000	13,697,000	-	11,010,000
Amounts owing to holding company	563,713	559,713	545,712	-	543,317
Amounts owing to director	497,646	497,646	1,122,646	-	938,846
Provision for taxation	54,755	145,025	151,733	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	23,251,956	22,850,623	21,694,981	18,179,050	16,417,603
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	1,406,538	2,010,033	1,666,628	1,082,363	(124,271)
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	13,593,338	13,147,792	12,073,067	10,872,499	6,020,417
	=============	=============	=============	=============	=============

SHARE CAPITAL
Ordinary share capital	5,000,000	5,000,000	5,000,000	5,000,000	5,000,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	5,000,000	5,000,000	5,000,000	5,000,000	5,000,000

Revaluation reserve	4,429,617	4,429,617	4,429,617	4,178,816	-
Retained profit/(loss) carried forward	3,621,794	2,880,596	2,132,756	1,578,984	880,330
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	8,051,411	7,310,213	6,562,373	5,757,800	880,330

	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	13,051,411	12,310,213	11,562,373	10,757,800	5,880,330

Hire purchase creditors	541,927	837,579	510,694	-	140,087
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	541,927	837,579	510,694	114,699	140,087
	----------------	----------------	----------------	----------------	----------------
	13,593,338	13,147,792	12,073,067	10,872,499	6,020,417
	=============	=============	=============	=============	=============

Contingent Liabilities	8,500,000	8,500,000	8,500,000		8,500,000

FINANCIAL RATIO

TYPES OF FUNDS
Cash	2,842,340	2,416,841	2,368,698	-	1,676,246
Net Liquid Funds	(16,559,532)	(17,450,773)	(14,583,431)	-	(12,207,525)
Net Liquid Assets	(9,297,058)	(8,006,458)	(9,896,465)	1,082,363	(8,163,714)
Net Current Assets/(Liabilities)	1,406,538	2,010,033	1,666,628	1,082,363	(124,271)
Net Tangible Assets	13,593,338	13,147,792	12,073,067	10,872,499	6,020,417
Net Monetary Assets	(9,838,985)	(8,844,037)	(10,407,159)	967,664	(8,303,801)
BALANCE SHEET ITEMS
Total Borrowings	20,858,110	21,190,966	17,649,584	-	14,088,907
Total Liabilities	23,793,883	23,688,202	22,205,675	18,293,749	16,557,690
Total Assets	36,845,294	35,998,415	33,768,048	29,051,549	22,438,020
Net Assets	13,593,338	13,147,792	12,073,067	10,872,499	6,020,417
Net Assets Backing	13,051,411	12,310,213	11,562,373	10,757,800	5,880,330
Shareholders' Funds	13,051,411	12,310,213	11,562,373	10,757,800	5,880,330
Total Share Capital	5,000,000	5,000,000	5,000,000	5,000,000	5,000,000
Total Reserves	8,051,411	7,310,213	6,562,373	5,757,800	880,330
LIQUIDITY (Times)
Cash Ratio	0.12	0.11	0.11	-	0.10
Liquid Ratio	0.60	0.65	0.54	-	0.50
Current Ratio	1.06	1.09	1.08	1.06	0.99
WORKING CAPITAL CONTROL (Days)
Stock Ratio	104	133	167	-	122
Debtors Ratio	98	131	119	-	82
Creditors Ratio	11	5	19	-	13
SOLVENCY RATIOS (Times)
Gearing Ratio	1.60	1.72	1.53	-	2.40
Liabilities Ratio	1.82	1.92	1.92	1.70	2.82
Times Interest Earned Ratio	1.75	1.73	1.77	-	1.42
Assets Backing Ratio	2.72	2.63	2.41	2.17	1.20
PERFORMANCE RATIO (%)
Operating Profit Margin	2.34	3.20	2.85	2.83	1.55
Net Profit Margin	1.96	2.72	2.19	2.83	1.55
Return On Net Assets	15.21	15.96	13.66	6.43	20.93
Return On Capital Employed	11.51	12.26	10.63	6.43	14.13
Return On Shareholders' Funds/Equity	5.68	6.07	4.79	6.49	6.33
Dividend Pay Out Ratio (Times)	0.00	0.00	0.00	-	0.00
NOTES TO ACCOUNTS
Contingent Liabilities	8,500,000	8,500,000	8,500,000	-	8,500,000

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.60.19
UK Pound	1	Rs.102.56
Euro	1	Rs.81.91

INFORMATION DETAILS

Analysis Done by :	SUM

Report Prepared by :	NNA

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%)

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