MIRA INFORM REPORT

Report Date :

01.03.2014

IDENTIFICATION DETAILS

Name :	SHENG FOONG PLASTIC INDUSTRIES SDN. BHD
Registered Office :	81, Jalan Market, (2nd Floor), 30000 Ipoh, Perak
Country :	Malaysia
Financials (as on) :	31.12.2012
Date of Incorporation :	08.04.1999
Com. Reg. No.:	480510-P
Legal Form :	Private Limited Company
Line of Business :	· Manufacturer of plastic pellet · engaged in the manufacturing , recycling & sales of plastic raw materials such as PVC, PP, HDPE, HIPS and ABS form the bulk of the Subject's products · Subject's core business is to recycle plastic waste into plastic pellets as raw materials for related industries.
No. of Employees	60 [2014]

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 :	Satisfactory
Payment Behaviour :	Slow but Correct
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 – december 01, 2013

Country Name	Previous Rating (30.09.2013)	Current Rating (01.12.2013)
Malaysia	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	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 strained government finances, has forced Kuala Lumpur to begin to reduce government subsidies. The government is also trying to lessen its dependence on state oil producer Petronas. The oil and gas sector supplies about 35% of government revenue in 2011. Bank Negera 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 has raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but he has encountered significant opposition, especially from Malay nationalists and other vested interests.

Source : CIA

* Adopted abbreviations :	SC - Subject Company (the company enquired by you)
	N/A - Not Applicable

EXECUTIVE SUMMARY

REGISTRATION NO.

:

480510-P

COMPANY NAME

:

SHENG FOONG PLASTIC INDUSTRIES SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

08/04/1999

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

81, JALAN MARKET, (2ND FLOOR), 30000 IPOH, PERAK, MALAYSIA.

BUSINESS ADDRESS

:

NO. 3 (PT 2159) K/M 10,KAWASAN PERINDUSTRIAN SIPUTEH, OFF JALAN SIPUTEH-TRONOH, 31750 TRONOH, PERAK, MALAYSIA.

TEL.NO.

:

05-3677163

FAX.NO.

:

05-3677189

EMAIL

:

MD@SHENGFOONGPLASTIC.COM

WEB SITE

:

WWW.SHENGFOONGPLASTIC.COM

CONTACT PERSON

:

YEONG SAI KEY ( CEO )

INDUSTRY CODE

:

22209

PRINCIPAL ACTIVITY

:

Manufacturer of plastic pellet

engaged in the manufacturing , recycling & sales of plastic raw materials such as PVC, PP, HDPE, HIPS and ABS form the bulk of the Subject's products

Subject's core business is to recycle plastic waste into plastic pellets as raw materials for related industries.

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 100,000 CASH AND 400,000 OTHERWISE OF MYR 1.00 EACH.

SALES

:

MYR 20,389,605 [2012]

NET WORTH

:

MYR 2,733,697 [2012]

STAFF STRENGTH

:

60 [2014]

BANKER (S)

:

HSBC BANK MALAYSIA BHD OCBC BANK (MALAYSIA) BHD PUBLIC BANK BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

FAIR

PAYMENT

:

AVERAGE

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

LOW

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

SATISFACTORY

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) manufacture , recycle & sales of plastic raw material.

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

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
15/02/2013	MYR 500,000.00	MYR 500,000.00

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

Name	Address	IC/PP/Loc No	Shareholding	(%)
MS. NG LEE KAM +	23, LORONG TASEK TIMUR 7, TAMAN SRI DERMAWAN, 31400 IPOH, PERAK, MALAYSIA.	650212-08-6358 A0076339	250,000.00	50.00
MR. YEONG SAI KEY +	23, LORONG TASEK TIMUR 7, TAMAN SRI DERMAWAN, 31400 IPOH, PERAK, MALAYSIA.	630525-08-5243 7073292	250,000.00	50.00
			---------------	------
			500,000.00	100.00
			============	=====

+ Also Director

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

Local No	Country	Company	(%)	As At
372559V	MALAYSIA	KERUING MAHIR INDUSTRI SDN. BHD.	100.00	29/03/2013

DIRECTORS

DIRECTOR 1

Name Of Subject	:	MS. NG LEE KAM
Address	:	23, LORONG TASEK TIMUR 7, TAMAN SRI DERMAWAN, 31400 IPOH, PERAK, MALAYSIA.
IC / PP No	:	A0076339
New IC No	:	650212-08-6358
Date of Birth	:	12/02/1965
Nationality	:	MALAYSIAN
Date of Appointment	:	08/04/1999

DIRECTOR 2

Name Of Subject	:	MR. YEONG SAI KEY
Address	:	23, LORONG TASEK TIMUR 7, TAMAN SRI DERMAWAN, 31400 IPOH, PERAK, MALAYSIA.
IC / PP No	:	7073292
New IC No	:	630525-08-5243
Date of Birth	:	25/05/1963
Nationality	:	MALAYSIAN CHINESE
Date of Appointment	:	08/04/1999

MANAGEMENT

1)	Name of Subject	:	YEONG SAI KEY
	Position	:	CEO

AUDITOR

Auditor	:	M. F. CHAI & CO.
Auditor' Address	:	81, JALAN MARKET, 30000 IPOH, PERAK, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MS. LAM CHUI YOKE
	IC / PP No	:	7249846
	New IC No	:	640219-01-5246
	Address	:	12, LORONG KLEDANG UTARA 12, TAMAN KLEDANG SURIA, 31450 MENGLEMBU, PERAK, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)

Name

:

HSBC BANK MALAYSIA BHD

2)

Name

:

OCBC BANK (MALAYSIA) BHD

3)

Name

:

PUBLIC BANK BHD

ENCUMBRANCE (S)

Charge No	Creation Date	Charge Description	Chargee Name	Total Charge	Status
1	25/08/2003	N/A	OCBC BANK MALAYSIA BERHAD	MYR 2,580,000.00	Satisfied
2	07/09/2006	DEED OF DEBENTURE	PUBLIC BANK BERHAD	-	Unsatisfied
3	15/04/2008	FACILITIES AGREEMENT & TRADE FINANCING GENERAL AGREEMENT	HSBC BANK MALAYSIA BERHAD	-	Unsatisfied

LEGAL CHECK AGAINST SUBJECT

* A check has been conducted in our databank against 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

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	[	X	]
Fair 91-120 Days	[	]	Poor >120 Days	[	]

CLIENTELE

Local	:	YES
Domestic Markets	:	MALAYSIA
Overseas	:	YES
Export Market	:	CHINA TAIWAN INDIA INDONESIA
Credit Term	:	AS AGREED
Payment Mode	:	CHEQUES TELEGRAPHIC TRANSFER (TT)

OPERATIONS

Products manufactured

:

RECYCLED PE/PROPARELINE

Award

:

1 ) GOLDEN BULL AWARD Year :2008

Competitor(s)

:

PLASTRADE TECHNOLOGY BHD

Member(s) / Affiliate(s)

:

MALAYSIAN PLASTICS MANUFACTURERS ASSOCIATION (MPMA)

SMI ASSOCIATION OF MALAYSIA

MALAYSIA EXTERNAL TRADE DEVELOPMENT CORPORATION (MATRADE)

SMALL & MEDIUM ENTERPRISE

Total Number of Employees:
YEAR	2014	2012	2010
GROUP	N/A	N/A	N/A
COMPANY	60	60	15

Branch

:

NO

Other Information:

The Subject is principally engaged in the (as a / as an) manufacture , recycle & sales of plastic raw material. 

The Subject's core business is to recycle plastic waste into plastic pellets as raw materials for related industries.

Plastic materials such as PVC, PP, HDPE, HIPS and ABS form the bulk of the Subject's products. 

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	05-3677163
Match	:	N/A
Address Provided by Client	:	X10.3(PT 2159) K/M 10, KAWASAN PERINDUSTRIAN, SIPUTEH
Current Address	:	NO. 3 (PT 2159) K/M 10,KAWASAN PERINDUSTRIAN SIPUTEH, OFF JALAN SIPUTEH-TRONOH, 31750 TRONOH, PERAK, MALAYSIA.
Match	:	NO
Latest Financial Accounts	:	YES

Other Investigations

we contacted one of the staff from the Subject and she provided some information.

The address provided is incomplete.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Erratic	[	2008 - 2012	]
Profit/(Loss) Before Tax	:	Decreased	[	2008 - 2012	]
Return on Shareholder Funds	:	Acceptable	[	17.55%	]
Return on Net Assets	:	Acceptable	[	24.20%	]
The fluctuating turnover reflects the fierce competition among the existing and new market players.The dip in profit could be due to the stiff market competition which reduced the Subject's profit margin. The Subject's management had generated acceptable return for its shareholders using its assets.
Working Capital Control
Stock Ratio	:	Favourable	[	34 Days	]
Debtor Ratio	:	Favourable	[	38 Days	]
Creditors Ratio	:	Favourable	[	7 Days	]
The Subject'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 Subject. 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	[	0.56 Times	]
Current Ratio	:	Unfavourable	[	0.93 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	:	Acceptable	[	3.80 Times	]
Gearing Ratio	:	Unfavourable	[	1.69 Times	]
The Subject's interest cover was slightly low. If there is no sharp fall in its profit or sudden increase in the interest rates, we believe the Subject is able to generate sufficient income to service its interest and repay the loans. 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 :
The Subject recorded lower profits as its turnover showed a erratic trend. The Subject's management was unable to control its costs efficiently as its profit showed a downward trend. 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. The Subject had an acceptable interest cover. If there is no sudden sharp increase in interest rate or fall in the Subject's profit, we do believe the Subject is able to generate sufficient cash flow to service its interest payment. 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 : FAIR

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  (Source : Department of Statistics / Economic Report / Bank Negara Report)

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 1999, the Subject is a Private Limited company, focusing on manufacture, recycle & sales of plastic raw material. Having been in the industry for over a decade, the Subject has achieved a certain market share and has built up a satisfactory reputation in the market. It should have received supports from its regular customers. The Subject is considered as a medium size company with issued and paid up capital standing at MYR 500,000. 

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 Subject has a total workforce of 60 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. 

The Subject's business performance showed a reverse trend as both its turnover and pre-tax profit have decreased compared to the previous year. Return on shareholders' funds of the Subject 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 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 2,733,697, the Subject should be able to maintain its business in the near terms. 

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

We regard that the Subject's overall payment habit is average. 

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)

SHENG FOONG PLASTIC INDUSTRIES SDN. BHD.

Financial Year End	2012-12-31	2011-12-31	2010-12-31	2009-12-31	2008-12-31
Months	12	12	12	12	12
Consolidated Account	GROUP	GROUP	GROUP	GROUP	GROUP
Audited Account	YES	YES	YES	YES	YES
Unqualified Auditor's Report (Clean Opinion)	YES	YES	YES	YES	YES
Financial Type	FULL	FULL	FULL	FULL	SUMMARY
Currency	MYR	MYR	MYR	MYR	MYR
TURNOVER	20,389,605	20,445,389	17,391,611	13,977,342	16,797,304
Other Income	-	-	42,507	-	30,600
	----------------	----------------	----------------	----------------	----------------
Total Turnover	20,389,605	20,445,389	17,434,118	13,977,342	16,827,904
Costs of Goods Sold	(17,321,010)	(17,242,237)	(15,135,026)	(11,896,245)	(14,314,786)
	----------------	----------------	----------------	----------------	----------------
Gross Profit	3,068,595	3,203,152	2,299,092	2,081,097	2,513,118
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	639,453	754,453	419,472	419,090	729,616
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	639,453	754,453	419,472	419,090	729,616
Taxation	(159,651)	(51,063)	(37,861)	(31,381)	(19,335)
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	479,802	703,390	381,611	387,709	710,281
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	1,660,356	1,334,840	1,226,103	959,108	839,507
	----------------	----------------	----------------	----------------	----------------
As restated	1,660,356	1,334,840	1,226,103	959,108	839,507
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	2,140,158	2,038,230	1,607,714	1,346,817	1,549,788
TRANSFER TO RESERVES - General	-	2,126	2,126	4,286	(90,680)
DIVIDENDS - Ordinary (paid & proposed)	-	(380,000)	(275,000)	(125,000)	(500,000)
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	2,140,158	1,660,356	1,334,840	1,226,103	959,108
	=============	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Bank overdraft	36,830	27,890	-	-	-
Bankers' acceptance	129,673	110,230	-	-	-
Hire purchase	22,385	21,380	27,119	15,035	16,703
Term loan / Borrowing	21,936	29,490	34,798	10,502	14,999
Others	17,829	-	183,848	167,970	155,184
	----------------	----------------	----------------	----------------	----------------
	228,653	188,990	245,765	193,507	186,886
	=============	=============	=============	=============	=============

BALANCE SHEET

SHENG FOONG PLASTIC INDUSTRIES SDN. BHD.

ASSETS EMPLOYED:
FIXED ASSETS	3,958,689	2,859,363	2,914,635	2,615,835	2,439,015
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	3,958,689	2,859,363	2,914,635	2,615,835	2,439,015
CURRENT ASSETS
Stocks	1,871,388	1,559,831	2,047,680	1,654,867	-
Trade debtors	2,107,690	2,390,577	1,645,497	1,196,603	-
Other debtors, deposits & prepayments	366,973	260,925	228,646	60,730	-
Short term deposits	-	444,601	-	-	-
Amount due from director	-	-	-	396,196	-
Cash & bank balances	334,177	493,755	897,394	68,661	-
Others	184	-	13,574	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	4,680,412	5,149,689	4,832,791	3,377,057	2,954,197
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	8,639,101	8,009,052	7,747,426	5,992,892	5,393,212
	=============	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	336,615	592,250	626,799	129,517	-
Other creditors & accruals	357,162	461,069	827,101	241,584	-
Hire purchase & lease creditors	323,489	124,625	88,509	143,744	-
Bank overdraft	584,412	138,381	191,307	597,487	-
Short term borrowings/Term loans	101,646	91,685	158,268	103,838	-
Bill & acceptances payable	3,077,000	3,666,000	3,140,000	2,350,000	-
Amounts owing to director	155,398	8,279	8,279	8,428	-
Provision for taxation	-	2,493	-	8,277	-
Other liabilities	116,808	-	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	5,052,530	5,084,782	5,040,263	3,582,875	3,330,534
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	(372,118)	64,907	(207,472)	(205,818)	(376,337)
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	3,586,571	2,924,270	2,707,163	2,410,017	2,062,678
	=============	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	500,000	500,000	500,000	500,000	500,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	500,000	500,000	500,000	500,000	500,000
RESERVES
Share premium	-	-	-	-	102,077
Revaluation reserve	93,539	93,539	95,665	97,791	-
Retained profit/(loss) carried forward	2,140,158	1,660,356	1,334,840	1,226,103	959,108
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	2,233,697	1,753,895	1,430,505	1,323,894	1,061,185
	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	2,733,697	2,253,895	1,930,505	1,823,894	1,561,185
LONG TERM LIABILITIES
Long term loans	142,950	248,507	343,180	74,511	-
Hire purchase creditors	380,924	221,381	224,366	312,875	-
Deferred taxation	329,000	200,487	209,112	198,737	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	852,874	670,375	776,658	586,123	501,493
	----------------	----------------	----------------	----------------	----------------
	3,586,571	2,924,270	2,707,163	2,410,017	2,062,678
	=============	=============	=============	=============	=============

FINANCIAL RATIO

SHENG FOONG PLASTIC INDUSTRIES SDN. BHD.

TYPES OF FUNDS
Cash	334,177	938,356	897,394	68,661	-
Net Liquid Funds	(3,327,235)	(2,866,025)	(2,433,913)	(2,878,826)	-
Net Liquid Assets	(2,243,506)	(1,494,924)	(2,255,152)	(1,860,685)	(376,337)
Net Current Assets/(Liabilities)	(372,118)	64,907	(207,472)	(205,818)	(376,337)
Net Tangible Assets	3,586,571	2,924,270	2,707,163	2,410,017	2,062,678
Net Monetary Assets	(3,096,380)	(2,165,299)	(3,031,810)	(2,446,808)	(877,830)
BALANCE SHEET ITEMS
Total Borrowings	4,610,421	4,490,579	4,145,630	3,582,455	-
Total Liabilities	5,905,404	5,755,157	5,816,921	4,168,998	3,832,027
Total Assets	8,639,101	8,009,052	7,747,426	5,992,892	5,393,212
Net Assets	3,586,571	2,924,270	2,707,163	2,410,017	2,062,678
Net Assets Backing	2,733,697	2,253,895	1,930,505	1,823,894	1,561,185
Shareholders' Funds	2,733,697	2,253,895	1,930,505	1,823,894	1,561,185
Total Share Capital	500,000	500,000	500,000	500,000	500,000
Total Reserves	2,233,697	1,753,895	1,430,505	1,323,894	1,061,185
LIQUIDITY (Times)
Cash Ratio	0.07	0.18	0.18	0.02	-
Liquid Ratio	0.56	0.71	0.55	0.48	-
Current Ratio	0.93	1.01	0.96	0.94	0.89
WORKING CAPITAL CONTROL (Days)
Stock Ratio	34	28	43	43	-
Debtors Ratio	38	43	35	31	-
Creditors Ratio	7	13	15	4	-
SOLVENCY RATIOS (Times)
Gearing Ratio	1.69	1.99	2.15	1.96	-
Liabilities Ratio	2.16	2.55	3.01	2.29	2.45
Times Interest Earned Ratio	3.80	4.99	2.71	3.17	4.90
Assets Backing Ratio	7.17	5.85	5.41	4.82	4.13
PERFORMANCE RATIO (%)
Operating Profit Margin	3.14	3.69	2.41	3.00	4.34
Net Profit Margin	2.35	3.44	2.19	2.77	4.23
Return On Net Assets	24.20	32.26	24.57	25.42	44.43
Return On Capital Employed	19.31	29.60	22.27	19.44	44.43
Return On Shareholders' Funds/Equity	17.55	31.21	19.77	21.26	45.50
Dividend Pay Out Ratio (Times)	0.00	0.54	0.72	0.32	0.70
NOTES TO ACCOUNTS
Contingent Liabilities	0	0	0	0

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.62.07
UK Pound	1	Rs.103.61
Euro	1	Rs.85.03

INFORMATION DETAILS

Report Prepared by :

MNL

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%)