MIRA INFORM REPORT

 

 

Report No. :

336769

Report Date :

19.08.2015

 

IDENTIFICATION DETAILS

 

Name :

P.P. STEEL SDN. BHD.

 

 

Registered Office :

10A, Jalan 54, Desa Jaya, Kepong, 52100 Kuala Lumpur, Wilayah Persekutuan

 

 

Country :

Malaysia

 

 

Financials (as on) :

28.02.2014

 

 

Date of Incorporation :

24.01.1989

 

 

Com. Reg. No.:

178180-D

 

 

Legal Form :

Private Limited

 

 

Line of Business :

The Subject is principally engaged in the steel service centre.

 

 

No. of Employees :

50 [2015]

 

 

RATING & COMMENTS

 

MIRA’s Rating :

B

 

RATING

STATUS

PROPOSED CREDIT LINE

26-40

B

Capability to overcome financial difficulties seems comparatively below average.

Small

 

Status :

Moderate

 

 

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 – March 31, 2015

 

Country Name

Previous Rating

(31.12.2014)

Current Rating

(31.03.2015)

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 previously 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. Falling global oil prices in the second half of 2014 have strained government finances, shrunk Malaysia’s current account surplus and put downward pressure on the ringgit. The government is also trying to lessen its dependence on state oil producer Petronas. The oil and gas sector supplied about 29% of government revenue in 2014. 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. Malaysia is a member of the 12-nation Trans-Pacific Partnership free trade agreement negotiations and, with the nine other ASEAN members, will form the ASEAN Economic Community in 2015.

 

Source : CIA

 

EXECUTIVE SUMMARY

 

REGISTRATION NO.

:

178180-D

COMPANY NAME

:

P.P. STEEL SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

24/01/1989

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

10A, JALAN 54, DESA JAYA, KEPONG, 52100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

BUSINESS ADDRESS

:

LOT 33, JALAN INDUSTRI 2/1, RAWANG INTEGRATED INDUSTRIAL PARK, 48000 RAWANG, SELANGOR, MALAYSIA.

TEL.NO.

:

03-60929888

FAX.NO.

:

03-60929018

WEB SITE

:

WWW.PPSSC.COM.MY

CONTACT PERSON

:

LEE SIN PEN ( MANAGING DIRECTOR )

INDUSTRY CODE

:

24109

PRINCIPAL ACTIVITY

:

STEEL SERVICE CENTRE

AUTHORISED CAPITAL

:

MYR 10,000,000.00 DIVIDED INTO
ORDINARY SHARE 10,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 6,000,000.00 DIVIDED INTO
ORDINARY SHARES 200,000 CASH AND 5,800,000 OTHERWISE OF MYR 1.00 EACH.

SALES

:

MYR 69,674,634 [2014]

NET WORTH

:

MYR 40,035,898 [2014]

STAFF STRENGTH

:

50 [2015]

 

 

 

BANKER (S)

 

ALLIANCE BANK MALAYSIA BHD
AMBANK (M) BHD
HONG LEONG BANK BHD
PUBLIC BANK BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

LIMITED

PAYMENT

:

SLOW BUT CORRECT

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

MODERATE

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) steel service centre.

 

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

 

Share Capital History

Date

Authorised Shared Capital

Issue & Paid Up Capital

21/08/2014

MYR 10,000,000.00

MYR 6,000,000.00

16/12/1996

MYR 5,000,000.00

MYR 2,000,000.00

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

 

Current Shareholder(s) :

Name

Address

IC/PP/Loc No

Shareholding

(%)

DATUK LEE SIN PEN

107, JALAN DEDAP BATIK, SIERRAMAS RESORT HOMES, 47000 SUNGAI BULOH, SELANGOR, MALAYSIA.

510125-04-5385 4133965

3,000,000.00

50.00

MR. LEE SIN CHOON

52, LOT 478, JALAN SENYUM MATAHARI, COUNTRY HEIGHTS SUNGAI RAMAL, 43000 KAJANG, SELANGOR, MALAYSIA.

541205-04-5053 4714107

1,200,000.00

20.00

MR. LEE SIN PIN +

22, SD 11/3C, JALAN KIARA PJU 9, BANDAR SRI DAMANSARA, 52200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

451130-04-5147 0192085

900,000.00

15.00

LEE CHOW HUA

NO. 14, JALAN DESA BAHRU, TAMAN BAHRU, 75350 BATU BERENDAM, MELAKA, MALAYSIA.

0230012

900,000.00

15.00

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

------

6,000,000.00

100.00

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

=====

+ Also Director

 

 

DIRECTORS

 

DIRECTOR 1

 

Name Of Subject

:

MR. LEE CHOW LIN

Address

:

107, JALAN DEDAP BATIK, SIERRAMAS RESORT HOMES, 47000 SUNGAI BULOH, SELANGOR, MALAYSIA.

New IC No

:

880505-14-5925

Date of Birth

:

05/05/1988

Nationality

:

MALAYSIAN

Date of Appointment

:

07/02/2013

 

DIRECTOR 2

 

Name Of Subject

:

MR. LEE CHOW KIM

Address

:

8, JALAN ELITIS AMBAL BIRU, VALENCIA, 47000 SUNGAI BULOH, SELANGOR, MALAYSIA.

New IC No

:

751220-04-5129

Date of Birth

:

20/12/1975

Nationality

:

MALAYSIAN

Date of Appointment

:

02/05/2012

 

DIRECTOR 3

 

Name Of Subject

:

MR. LEE CHOW HAUR

Address

:

107, JALAN DEDAP BATIK, SIERRAMAS RESORT HOMES, 47000 SUNGAI BULOH, SELANGOR, MALAYSIA.

New IC No

:

850412-04-5311

Date of Birth

:

12/04/1985

Nationality

:

MALAYSIAN

Date of Appointment

:

07/02/2013

 

DIRECTOR 4

 

Name Of Subject

:

DATUK LEE SIN PEN

Address

:

107, JALAN DEDAP BATIK, SIERRAMAS RESORT HOMES, 47000 SUNGAI BULOH, SELANGOR, MALAYSIA.

IC / PP No

:

4133965

New IC No

:

510125-04-5385

Date of Birth

:

25/01/1951

Nationality

:

MALAYSIAN

 

DIRECTOR 5

 

Name Of Subject

:

MR. LEE CHOW LEONG

Address

:

107, JALAN DEDAP BATIK, SIERRAMAS RESORT HOMES, 47000 SUNGAI BULOH, SELANGOR, MALAYSIA.

New IC No

:

820310-14-5517

Date of Birth

:

10/03/1982

Nationality

:

MALAYSIAN

Date of Appointment

:

02/05/2012

 

DIRECTOR 6

 

Name Of Subject

:

MR. LEE SIN PIN

Address

:

22, SD 11/3C, JALAN KIARA PJU 9, BANDAR SRI DAMANSARA, 52200 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

IC / PP No

:

0192085

New IC No

:

451130-04-5147

Date of Birth

:

30/11/1945

Nationality

:

MALAYSIAN

Date of Appointment

:

24/01/1989



MANAGEMENT

 

1)

Name of Subject

:

LEE SIN PEN

Position

:

MANAGING DIRECTOR

 

 

AUDITOR

 

Auditor

:

YYC & CO

Auditor' Address

:

17 & 19, JALAN BRUNEI BARAT, OFF JALAN PUDU, 55100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MS. LING SIOW MOY

IC / PP No

:

8380891

New IC No

:

540117-10-5162

Address

:

17, JALAN RIMBA RIANG 9/8, SEKSYEN 9, KOTA DAMANSARA, 47810 PETALING JAYA, SELANGOR, MALAYSIA.

 

2)

Company Secretary

:

MS. FONG LAI CHEE

IC / PP No

:

5485728

New IC No

:

580404-10-5946

Address

:

40, LORONG CP 1/8, CHERAS PERDANA, BATU 9 3/4, CHERAS, 43200 BALAKONG, SELANGOR, MALAYSIA.

 

 


BANKING

 

Banking relations are maintained principally with :

1)

Name

:

ALLIANCE BANK MALAYSIA BHD

 

2)

Name

:

AMBANK (M) BHD

 

3)

Name

:

HONG LEONG BANK BHD

 

4)

Name

:

PUBLIC BANK BHD

 

 

ENCUMBRANCE (S)

 

Charge No

Creation Date

Charge Description

Chargee Name

Total Charge

Status

1

30/12/1992

N/A

PUBLIC BANK BERHAD

MYR 600,000.00

Unsatisfied

2

24/06/1993

N/A

HONGKONG BANK MALAYSIA BERAHD

MYR 1,000,000.00

Satisfied

3

06/05/1996

N/A

ARABMALAYSIAN BANK BERHAD

MYR 4,500,000.00

Satisfied

4

29/11/1996

2ND NATIONAL LAND CODE CHARGE

PUBLIC BANK BERHAD

MYR 3,500,000.00

Unsatisfied

5

20/12/1996

1ST LOAN AGREEMENT AND DEED OF ASSIGNMENT

PUBLIC BANK BERHAD

MYR 85,000.00

Unsatisfied

6

20/12/1996

N/A

PUBLIC BANK BERHAD

MYR 85,000.00

Unsatisfied

7

02/04/1997

N/A

HONG LEONG BANK BERHAD

MYR 28,380,000.00

Satisfied

8

13/10/1997

N/A

HONG LEONG BANK BERHAD

MYR 208,000.00

Satisfied

9

18/12/1997

N/A

HONG LEONG BANK BERHAD

MYR 264,000.00

Satisfied

10

23/03/2004

FIRST LEGAL CHARGE UNDER NATIONAL LAND CODE 1965

AMBANK BERHAD

MYR 2,800,000.00

Unsatisfied

11

22/12/2004

N/A

HONG LEONG BANK BERHAD

-

Satisfied

12

22/12/2004

N/A

HONG LEONG BANK BERHAD

-

Satisfied

13

28/11/2006

LEGAL CHARGE OVER PROPERTY

ALLIANCE ISLAMIC BANK BERHAD

-

Unsatisfied

14

28/11/2006

N/A

ALLIANCE ISLAMIC BANK BERHAD

-

Unsatisfied

15

02/06/2011

FIRST PARTY SECOND LEGAL CHARGE

AMBANK (M) BHD

MYR 1,500,000.00

Unsatisfied

16

26/03/2013

FIRST PARTY THIRD LEGAL CHARGE DATED 26/03/2013

AMISLAMIC BANK BERHAD

MYR 2,500,000.00

Unsatisfied

 

 

LITIGATION 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.

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

[

X

]

Average 61-90 Days

[

]

Fair 91-120 Days

[

]

Poor >120 Days

[

]

 

 

CLIENTELE

 

Local

:

YES

Percentage

:

100%

Domestic Markets

:

MALAYSIA

Overseas

:

NO

Credit Term

:

30 DAYS

Payment Mode

:

CHEQUES

Type of Customer

:

END USERS

 

 

OPERATIONS

 

Services

:

STEEL SERVICE CENTRE

Ownership of premises

:

OWNED

 

Total Number of Employees:

 

YEAR

2015

2013

2012

2010

GROUP

N/A

N/A

N/A

N/A

COMPANY

50

50

50

100

 

Branch

:

NO

Other Information:

 

The Subject is principally engaged in the (as a / as an) steel service centre.

The Subject provides a wide range of services as follows,

1) Slitting

2) Precision

3) Warehouse/ Storage and others.

The Subject serves a wide range of products which include:-

* Electric-Resistance-Welded (ERW) carbon steel pipes
* Square and rectangular hollow sections
* Light-gauge lip channels
* Flat bars
* Mild steel plates

The Subject sells the production to engineering/construction companies, electrical and electronic industry, automotive industry and others.

 

 

CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

03-60929888

Match

:

N/A

Address Provided by Client

:

LOT 33, JALAN INDUSTRI 2/1, RAWANG INTEGRATED INDUSTRIAL PARK,48000,RAWANG,SELANGOR.

Current Address

:

LOT 33, JALAN INDUSTRI 2/1, RAWANG INTEGRATED INDUSTRIAL PARK, 48000 RAWANG, SELANGOR, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

 

Other Investigations


We contacted one of the staff from the Subject and he provided some information.


FINANCIAL ANALYSIS

 

Profitability

Turnover

:

Erratic

[

2010 - 2014

]

Profit/(Loss) Before Tax

:

Decreased

[

2010 - 2014

]

Return on Shareholder Funds

:

Unfavourable

[

(0.45%)

]

Return on Net Assets

:

Unfavourable

[

3.13%

]

The fluctuating turnover reflects the fierce competition among the existing and new market players.The management had succeeded in turning the Subject into a profit making company. The profit could be due to better control of its operating costs and efficiency in utilising its resources. The Subject's unfavourable returns on shareholders' funds indicate the management's inefficiency in utilising its assets to generate returns.

Working Capital Control

Stock Ratio

:

Unfavourable

[

93 Days

]

Debtor Ratio

:

Unfavourable

[

74 Days

]

Creditors Ratio

:

Favourable

[

7 Days

]

The Subject could be incurring higher holding cost. As its capital was tied up in stocks, it could face liquidity problems. The high debtors' ratio could indicate that the Subject was weak in its credit control. However, the Subject could also giving longer credit periods to its customers in order to boost its sales or to capture / retain its market share. 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

[

1.04 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

[

1.04 Times

]

Gearing Ratio

:

Favourable

[

0.67 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 lowly geared thus it had a low financial risk. The Subject was mainly financed by its shareholders' funds and internally generated funds. In times of economic slowdown / downturn, the Subject being a lowly geared company, will be able to compete better than those companies which are highly geared in the same industry.

Overall Assessment :

The Subject's turnover showed a volatile trend but its losses were lower when compared to the previous corresponding period. This could suggest that the Subject was more efficient in its operating cost control and was more competitive. 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 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 Subject : LIMITED

 

 

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

 

Major Economic Indicators:

2011

2012

2013

2014*

2015**

Population ( Million)

28.7

29.3

29.8

30.3

30.5

Gross Domestic Products ( % )

5.1

5.6

5.3

6.0

6.0

Domestic Demand ( % )

8.2

9.4

5.6

6.4

6.2

Private Expenditure ( % )

8.2

8.0

8.6

7.9

6.9

Consumption ( % )

7.1

1.0

5.7

6.5

5.6

Investment ( % )

12.2

11.7

13.3

12.0

10.7

Public Expenditure ( % )

8.4

13.3

4.4

2.3

4.2

Consumption ( % )

16.1

11.3

(1.2)

2.1

3.8

Investment ( % )

(0.3)

15.9

4.2

2.6

4.7

Balance of Trade ( MYR Million )

116,058

106,300

71,298

52,314

-

Government Finance ( MYR Million )

(45,511)

(42,297)

(39,993)

(37,291)

-

Government Finance to GDP / Fiscal Deficit ( % )

(5.4)

(4.5)

(4.0)

(3.5)

(3.0)

Inflation ( % Change in Composite CPI)

3.1

1.6

2.5

3.2

4.0

Unemployment Rate

3.3

3.2

3.0

2.9

3.0

Net International Reserves ( MYR Billion )

415

427

-

417

-

Average Risk-Weighted Capital Adequacy Ratio ( % )

3.50

2.20

-

4.00

-

Average 3 Months of Non-performing Loans ( % )

14.80

14.70

-

-

-

Average Base Lending Rate ( % )

6.60

6.53

6.53

6.85

-

Business Loans Disbursed( % )

15.3

32.2

-

56.0

-

Foreign Investment ( MYR Million )

23,546.1

26,230.4

38,238.0

43,486.6

-

Consumer Loans ( % )

-

-

-

-

-

Registration of New Companies ( No. )

45,455

45,441

46,321

49,144

-

Registration of New Companies ( % )

3.0

(0.0)

1.9

6.1

-

Liquidation of Companies ( No. )

132,485

17,092

26,430

21,753

-

Liquidation of Companies ( % )

417.8

(87.1)

54.6

(17.7)

-

Registration of New Business ( No. )

284,598

324,761

329,895

332,723

-

Registration of New Business ( % )

5.0

14.0

2.0

1.0

-

Business Dissolved ( No. )

20,121

20,380

18,161

21,436

-

Business Dissolved ( % )

1.9

1.3

(10.9)

18.0

-

Sales of New Passenger Cars (' 000 Unit )

535.1

552.2

576.7

598.4

610.3

Cellular Phone Subscribers ( Million )

35.3

38.5

43.0

43.8

-

Tourist Arrival ( Million Persons )

24.7

25.0

25.7

28.0

-

Hotel Occupancy Rate ( % )

60.6

62.4

62.6

63.2

-

Credit Cards Spending ( % )

15.6

12.6

-

13.5

-

Bad Cheque Offenders (No.)

32,627

26,982

28,876

-

-

Individual Bankruptcy ( No.)

19,167

19,575

21,984

-

-

Individual Bankruptcy ( % )

5.8

2.1

12.3

-

-

 

 

INDUSTRIES ( % of Growth ):

2011

2012

2013

2014*

2015**

Agriculture

5.8

1.0

2.1

3.8

3.1

Palm Oil

10.8

(0.3)

2.6

6.7

-

Rubber

6.1

(7.9)

(10.1)

(10.4)

-

Forestry & Logging

(7.6)

(4.5)

(7.8)

(4.2)

-

Fishing

2.1

4.3

1.6

2.7

-

Other Agriculture

7.1

6.4

8.2

6.2

-

Industry Non-Performing Loans ( MYR Million )

634.1

-

-

-

-

% of Industry Non-Performing Loans

3.2

-

-

-

-

Mining

(5.4)

1.4

0.9

(0.8)

2.8

Oil & Gas

(1.7)

-

-

3.0

-

Other Mining

-

-

-

46.6

-

Industry Non-performing Loans ( MYR Million )

46.5

-

-

-

-

% of Industry Non-performing Loans

0.1

-

-

-

-

Manufacturing #

4.7

4.8

3.4

6.4

5.5

Exported-oriented Industries

4.1

6.5

3.3

5.6

-

Electrical & Electronics

(4.0)

12.7

6.9

13.3

-

Rubber Products

20.7

3.0

11.7

(0.3)

-

Wood Products

(5.1)

8.7

(2.7)

5.1

-

Textiles & Apparel

13.2

(7.1)

(2.6)

11.5

-

Domestic-oriented Industries

10.7

1.7

6.8

9.4

-

Food, Beverages & Tobacco

4.80

2.70

3.60

6.13

6.13

Chemical & Chemical Products

10.0

10.8

5.6

1.4

-

Plastic Products

3.8

-

-

2.7

-

Iron & Steel

2.2

(6.6)

5.0

0.1

-

Fabricated Metal Products

21.8

13.8

9.9

2.9

-

Non-metallic Mineral

12.1

2.9

(2.0)

5.4

-

Transport Equipment

12.0

3.4

13.8

22.9

-

Paper & Paper Products

9.5

3.1

1.8

4.7

-

Crude Oil Refineries

9.3

-

-

13.0

-

Industry Non-Performing Loans ( MYR Million )

6,537.2

-

-

-

-

% of Industry Non-Performing Loans

25.7

-

-

-

-

Construction

4.7

18.6

10.9

12.7

10.7

Industry Non-Performing Loans ( MYR Million )

3,856.9

-

-

-

-

% of Industry Non-Performing Loans

10.2

-

-

-

-

Services

7.1

6.4

5.9

5.9

5.6

Electric, Gas & Water

3.5

4.4

4.2

3.6

3.9

Transport, Storage & Communication

6.50

7.10

7.30

7.50

7.15

Wholesale, Retail, Hotel & Restaurant

5.2

4.7

5.9

6.9

6.5

Finance, Insurance & Real Estate

6.90

9.70

3.70

4.65

4.25

Government Services

12.4

9.4

8.3

6.1

5.6

Other Services

5.1

3.9

5.1

4.8

4.5

Industry Non-Performing Loans ( MYR Million )

6,825.2

-

-

-

-

% of Industry Non-Performing Loans

23.4

-

-

-

-

* Estimate / Preliminary

** Forecast

# Based On Manufacturing Production Index 

 

 

INDUSTRY ANALYSIS

 

MSIC CODE

24109 : Manufacture of other basic iron and steel products n.e.c.

INDUSTRY :

MANUFACTURING

The manufacturing sector is expected to grow by 5.5% in 2015. It will be bolstered by strong domestic and export-oriented industries in line with growing investment activities and favorable external demand. Moreover, in 2014, the manufacturing sectors have spearheading growth. The manufacturing sector is estimated to grow at a faster pace in 2014 on higher exports of electronics and electrical (E&E) products as external demand improves.

The manufacturing sector expanded strongly during the first half of 2014, the highest growth in three years, spurred by higher global semiconductor sales. Value-added of the manufacturing sector expanded 7.1% during the first half of 2014. Production of the sector rose 6.6% in the first seven months of 2014 supported by resilient domestic demand and recovery in the external sector during the first seven months of the years. The sales value of manufactured products rebounded by 7.7% in the first seven months of 2014. The strong performance of the sector was on account of higher output at 9.4% from the domestic-oriented industries, particularly transport equipment, food and beverage.

The manufacturing sector continued to attract domestic and foreign investment with investment approved by Malaysian Investment Development Authority (MIDA) totaling RM47.4 billion during the first six months of 2014, mainly from Japan, China and Germany. Meanwhile, the capacity utilization rate remained steady at 80.4% during the second quarter of 2014 while average wage per employee and productivity improved to RM2,772 per month and 5.9%, respectively during the first seven months of 2014. Boosted by favorable domestic economic activity and recovery in the external sector, the manufacturing sector is expected to record a better performance with growth of 6.4% in 2014.

In the meantime, production of wood products rebounded by 5.1% largely supported by higher output in the saw-milling and planning of wood segment at 25.9% during the first seven months of 2014. The positive performance was attributed to vibrant residential and commercial construction activities which contributed to increased use of timber frame and glued laminated timber for cost savings compared to the use of concrete and steel. Increased demand from major export destination such as the US, Japan and Australia for Malaysian made furniture contributed to the higher output, particularly wooden and cane furniture which rebounded by 2.2%.

Production of rubber products contracted 0.3% in the first seven months of 2014 on account of slower demand for rubber gloves and rubber tyres. The decline in rubber tyres for vehicles was due to the weaker external demand from the automotive industry, particularly from China. Output of other rubber products contracted 3.8% following the product shift from rubber-based to plastics, silicones and metal alloys in the manufacture of medical devices.

Besides, exports of manufactured products are expected to grow 6.1% in 2014 boosted by the growing demand from advanced economies. However, during the first seven months of 2014, manufactured exports surged 11.4%. The robust growth was buoyed by strengthening demand in the US and EU, reflecting significant exposure of Malaysian exports to the economic performance in the advance economies. The strength in export was broad-based with robust growth in both E&E and non- E&E subsectors.

Under budget 2015, the Government will provide incentive in the form of capital allowance on automation expenditure to encourage automation in the manufacturing sector, which may help in the manufacturing sector.

OVERALL INDUSTRY OUTLOOK : Average Growth

 

 

CREDIT RISK EVALUATION & RECOMMENDATION


Incorporated in 1989, the Subject is a Private Limited company, focusing on steel service centre. The Subject has been in business for over two decades. It has built up a strong clientele base and satisfactory reputation will enable the Subject to further enhance its business in the near term. The Subject is expected to enjoy a stable market shares. With MYR 6,000,000 in issued and paid up capital, the Subject has the potential of capturing a higher market shares as it is competing aggressively in the market.


Over the years, the Subject should have build up its clientele base and received supports from its regular customers. Investigation revealed that the Subject's interest lies mostly in the local market. Thus, any adverse changes to the local economy might have a negative impact on the Subject's business performance. The Subject is operating on a medium scale and it has approximately 50 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. Being a lowly geared company, the Subject 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 40,035,898, 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.


Overall, the Subject's payment habit is good as the Subject has a good credit control and it could be taking advantage of the cash discounts while maintaining a good reputation with its creditors.


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

2014-02-28

2013-02-28

2012-02-29

2011-02-28

2010-02-28

Months

12

12

12

12

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

FULL

FULL

Currency

MYR

MYR

MYR

MYR

MYR

TURNOVER

69,674,634

53,816,719

61,831,925

53,553,918

52,349,482

Other Income

184,686

203,974

230,207

249,211

200,459

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

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

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

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

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

Total Turnover

69,859,320

54,020,693

62,062,132

53,803,129

52,549,941

Costs of Goods Sold

(60,435,668)

(47,755,627)

(54,686,163)

(42,183,982)

(43,733,277)

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

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

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

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

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

Gross Profit

9,423,652

6,265,066

7,375,969

11,619,147

8,816,664

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

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

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

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

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

PROFIT/(LOSS) FROM OPERATIONS

45,166

(2,476,063)

(655,661)

613,674

(3,041,121)

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

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

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

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

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

PROFIT/(LOSS) BEFORE TAXATION

45,166

(2,476,063)

(655,661)

613,674

(3,041,121)

Taxation

(226,667)

-

(360,274)

(337,045)

390,915

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

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

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

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

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

PROFIT/(LOSS) AFTER TAXATION

(181,501)

(2,476,063)

(1,015,935)

276,629

(2,650,206)

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

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

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

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

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

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

8,124,898

10,600,961

11,616,896

11,340,267

13,990,473

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

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

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

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

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

As restated

8,124,898

10,600,961

11,616,896

11,340,267

13,990,473

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

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

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

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

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

PROFIT AVAILABLE FOR APPROPRIATIONS

7,943,397

8,124,898

10,600,961

11,616,896

11,340,267

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

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

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

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

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

RETAINED PROFIT/(LOSS) CARRIED FORWARD

7,943,397

8,124,898

10,600,961

11,616,896

11,340,267

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

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

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

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

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

INTEREST EXPENSE (as per notes to P&L)

Bank overdraft

559,880

475,771

402,585

303,023

264,376

Bankers' acceptance

562,831

414,466

111,491

100,955

91,512

Hire purchase

29,963

12,322

14,461

11,383

36,204

Letter of credit

19,792

6,631

-

-

-

Term loan / Borrowing

15,642

32,734

48,327

59,664

67,184

Trust receipts

32,803

-

-

-

6,778

Others

10,530

10,530

-

-

319

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

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

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

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

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

1,231,441

952,454

576,864

475,025

466,373

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

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

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

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

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

DEPRECIATION (as per notes to P&L)

676,892

672,798

829,014

854,773

913,148

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

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

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

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

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

676,892

672,798

829,014

854,773

913,148

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

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

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

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

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

 

 

BALANCE SHEET

 

ASSETS EMPLOYED:

FIXED ASSETS

38,684,626

12,367,952

12,963,475

13,763,840

12,282,459

Investments

360,000

360,000

360,000

360,000

360,000

Deferred assets

-

195,667

195,667

99,380

397,635

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

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

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

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

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

TOTAL LONG TERM INVESTMENTS/OTHER ASSETS

360,000

555,667

555,667

459,380

757,635

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

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

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

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

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

TOTAL LONG TERM ASSETS

39,044,626

12,923,619

13,519,142

14,223,220

13,040,094

Stocks

17,790,683

18,428,385

15,227,414

15,788,820

9,748,318

Trade debtors

14,045,144

9,481,335

11,156,615

10,497,586

8,706,016

Other debtors, deposits & prepayments

9,930,023

7,455,028

4,870,010

10,931,509

4,246,725

Amount due from director

-

28,168

28,168

27,746

27,746

Cash & bank balances

282,538

157,331

329,852

578,279

1,169,275

Others

105,807

406,618

380,071

861,210

1,179,848

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

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

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

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

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

TOTAL CURRENT ASSETS

42,154,195

35,956,865

31,992,130

38,685,150

25,077,928

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

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

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

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

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

TOTAL ASSET

81,198,821

48,880,484

45,511,272

52,908,370

38,118,022

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

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

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

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

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

CURRENT LIABILITIES

Trade creditors

1,175,799

1,946,152

2,161,756

7,150,904

541,239

Other creditors & accruals

12,218,886

6,931,738

1,884,859

4,514,223

1,135,777

Hire purchase & lease creditors

209,202

81,061

76,460

106,673

99,821

Bank overdraft

-

-

6,186,277

4,177,990

3,669,986

Short term borrowings/Term loans

26,083,916

24,706,579

209,039

195,907

189,025

Other borrowings

-

-

983,275

-

-

Bill & acceptances payable

-

-

16,152,532

17,597,600

13,447,042

Amounts owing to director

744,662

744,662

744,662

744,662

744,662

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

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

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

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

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

TOTAL CURRENT LIABILITIES

40,432,465

34,410,192

28,398,860

34,487,959

19,827,552

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

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

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

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

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

NET CURRENT ASSETS/(LIABILITIES)

1,721,730

1,546,673

3,593,270

4,197,191

5,250,376

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

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

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

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

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

TOTAL NET ASSETS

40,766,356

14,470,292

17,112,412

18,420,411

18,290,470

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

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

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

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

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

SHARE CAPITAL

Ordinary share capital

6,000,000

6,000,000

6,000,000

6,000,000

6,000,000

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

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

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

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

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

TOTAL SHARE CAPITAL

6,000,000

6,000,000

6,000,000

6,000,000

6,000,000

Revaluation reserve

26,092,501

-

-

-

-

Retained profit/(loss) carried forward

7,943,397

8,124,898

10,600,961

11,616,896

11,340,267

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

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

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

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

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

TOTAL RESERVES

34,035,898

8,124,898

10,600,961

11,616,896

11,340,267

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

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

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

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

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

SHAREHOLDERS' FUNDS/EQUITY

40,035,898

14,124,898

16,600,961

17,616,896

17,340,267

Long term loans

-

105,803

340,443

556,048

754,063

Hire purchase creditors

730,458

239,591

171,008

247,467

196,140

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

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

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

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

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

TOTAL LONG TERM LIABILITIES

730,458

345,394

511,451

803,515

950,203

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

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

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

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

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

40,766,356

14,470,292

17,112,412

18,420,411

18,290,470

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

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

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

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

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

 

 

FINANCIAL RATIO

 

TYPES OF FUNDS

Cash

282,538

157,331

329,852

578,279

1,169,275

Net Liquid Funds

282,538

157,331

(22,008,957)

(21,197,311)

(15,947,753)

Net Liquid Assets

(16,068,953)

(16,881,712)

(11,634,144)

(11,591,629)

(4,497,942)

Net Current Assets/(Liabilities)

1,721,730

1,546,673

3,593,270

4,197,191

5,250,376

Net Tangible Assets

40,766,356

14,470,292

17,112,412

18,420,411

18,290,470

Net Monetary Assets

(16,799,411)

(17,227,106)

(12,145,595)

(12,395,144)

(5,448,145)

PROFIT & LOSS ITEMS

Earnings Before Interest & Tax (EBIT)

1,276,607

(1,523,609)

(78,797)

1,088,699

(2,574,748)

Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)

1,953,499

(850,811)

750,217

1,943,472

(1,661,600)

BALANCE SHEET ITEMS

Total Borrowings

27,023,576

25,133,034

24,119,034

22,881,685

18,356,077

Total Liabilities

41,162,923

34,755,586

28,910,311

35,291,474

20,777,755

Total Assets

81,198,821

48,880,484

45,511,272

52,908,370

38,118,022

Net Assets

40,766,356

14,470,292

17,112,412

18,420,411

18,290,470

Net Assets Backing

40,035,898

14,124,898

16,600,961

17,616,896

17,340,267

Shareholders' Funds

40,035,898

14,124,898

16,600,961

17,616,896

17,340,267

Total Share Capital

6,000,000

6,000,000

6,000,000

6,000,000

6,000,000

Total Reserves

34,035,898

8,124,898

10,600,961

11,616,896

11,340,267

LIQUIDITY (Times)

Cash Ratio

0.01

0

0.01

0.02

0.06

Liquid Ratio

0.60

0.51

0.59

0.66

0.77

Current Ratio

1.04

1.04

1.13

1.12

1.26

WORKING CAPITAL CONTROL (Days)

Stock Ratio

93

125

90

108

68

Debtors Ratio

74

64

66

72

61

Creditors Ratio

7

15

14

62

5

SOLVENCY RATIOS (Times)

Gearing Ratio

0.67

1.78

1.45

1.30

1.06

Liabilities Ratio

1.03

2.46

1.74

2.00

1.20

Times Interest Earned Ratio

1.04

(1.60)

(0.14)

2.29

(5.52)

Assets Backing Ratio

6.79

2.41

2.85

3.07

3.05

PERFORMANCE RATIO (%)

Operating Profit Margin

0.06

(4.60)

(1.06)

1.15

(5.81)

Net Profit Margin

(0.26)

(4.60)

(1.64)

0.52

(5.06)

Return On Net Assets

3.13

(10.53)

(0.46)

5.91

(14.08)

Return On Capital Employed

3.12

(10.47)

(0.34)

4.79

(11.67)

Return On Shareholders' Funds/Equity

(0.45)

(17.53)

(6.12)

1.57

(15.28)

Dividend Pay Out Ratio (Times)

0

0

0

0

0

NOTES TO ACCOUNTS

Contingent Liabilities

0

0

0

0

0

 

FOREIGN EXCHANGE RATES

 

Currency

Unit

Indian Rupees

US Dollar

1

Rs.65.22

UK Pound

1

Rs.102.23

Euro

1

Rs.72.39

 

INFORMATION DETAILS

 

Analysis Done by :

DIV

 

 

Report Prepared by :

VNT

 

               

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.