MIRA INFORM REPORT

 

 

Report No. :

352526

Report Date :

02.12.2015

 

IDENTIFICATION DETAILS

 

Name :

DIC COMPOUNDS (MALAYSIA) SDN. BHD.

 

 

Registered Office :

Suite 18.01, Mwe Plaza, 8, Lebuh Farquhar, 18th Floor, 10200 George Town, Pulau Pinang

 

 

Country :

Malaysia

 

 

Financials (as on) :

31.12.2014

 

 

Date of Incorporation :

21.06.1988

 

 

Com. Reg. No.:

171369-U

 

 

Legal Form :

Private Limited

 

 

Line of Business :

Manufacturer of colorants for plastics, plastic compounds & plastics masterbatches

 

 

No. of Employee :

140 [2015]

 

 

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 – 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. Malaysia is vulnerable to a fall in world commodity prices or a general slowdown in global economic activity.

The NAJIB administration 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. Gross exports of goods and services constitute more than 80% of GDP. The oil and gas sector supplied about 29% of government revenue in 2014. 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 trying to lessen its dependence on state oil producer Petronas.

Bank Negara Malaysia (the central bank) maintains healthy foreign exchange reserves; a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. In order to attract increased investment, NAJIB 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.

:

171369-U

COMPANY NAME

:

DIC COMPOUNDS (MALAYSIA) SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

21/06/1988

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

SUITE 18.01, MWE PLAZA, 8, LEBUH FARQUHAR, 18TH FLOOR, 10200 GEORGE TOWN, PULAU PINANG, MALAYSIA.

BUSINESS ADDRESS

:

PLOT 481, LORONG PERUSAHAAN BARU 2, KAWASAN PERINDUSTRIAN PRAI, 13600 PRAI, PULAU PINANG, MALAYSIA.

TEL.NO.

:

04-3803200

FAX.NO.

:

04-3803224

WEB SITE

:

WWW.DCM-DIC.COM.MY

CONTACT PERSON

:

KOJI MORIOKA ( MANAGING DIRECTOR )

INDUSTRY CODE

:

20221

PRINCIPAL ACTIVITY

:

MANUFACTURER OF COLORANTS FOR PLASTICS, PLASTIC COMPOUNDS & PLASTICS MASTERBATCHES

AUTHORISED CAPITAL

:

MYR 20,000,000.00 DIVIDED INTO 
ORDINARY SHARE 20,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 19,600,002.00 DIVIDED INTO 
ORDINARY SHARES 19,600,002 CASH OF MYR 1.00 EACH.

SALES

:

MYR 155,525,237 [2014]

NET WORTH

:

MYR 52,744,187 [2014]

STAFF STRENGTH

:

140 [2015]

BANKER (S)

:

MALAYAN BANKING BHD
RHB BANK BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

LIMITED

PAYMENT

:

GOOD

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) manufacturer of colorants for plastics, plastic compounds & plastics masterbatches.

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

 

The immediate holding company of the Subject is DIC CORPORATION, a company incorporated in JAPAN.

 

Share Capital History

Date

Authorised Shared Capital

Issue & Paid Up Capital

19/03/2015

MYR 20,000,000.00

MYR 19,600,002.00

18/08/1989

MYR 15,000,000.00

MYR 14,000,002.00

31/10/1988

MYR 10,000,000.00

MYR 5,500,002.00

27/06/1988

MYR 10,000,000.00

MYR 2.00

 

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

 

Current Shareholder(s) :

Name

Address

IC/PP/Loc No

Shareholding

(%)

DIC CORPORATION

7-20, NIBONBASHI, 3-CHOME, CHUO-KU, TOKYO, 103

0114-01-003807

17,640,002.00

90.00

DIC ASIA PACIFIC PTE LTD

78, SHENTON WAY, 19-01

196700304Z

1,960,000.00

10.00

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

------

19,600,002.00

100.00

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

=====

+ Also Director

 

Former Shareholder(s) :

Name

Country

IC/PP/Loc No

Shareholding

Last Updated

DAINIPPON INK AND CHEMICALS INC.

N/A

XLZ000001837

19,600,002.00

10/03/2009

DIC CORPORATION

JAPAN

011401003807

N/A

N/A


 

DIRECTORS

 

DIRECTOR 1

 

Name Of Subject

:

SHUJI FURUTA

Address

:

2, MARINA BOULEVARD, 07-05,THE SAIL @ MARINA BAY, 018987, SINGAPORE.

IC / PP No

:

TH4725556

Nationality

:

JAPANESE

Date of Appointment

:

14/11/2014

 

DIRECTOR 2

 

Name Of Subject

:

TAKEHIRO ICHINOTSUBO

Address

:

35-8-4, MUTIARA VILLA, JALAN BAGAN JERMAL, 10250 GEORGETOWN, PULAU PINANG, MALAYSIA.

IC / PP No

:

TZ0845398

Nationality

:

JAPANESE

Date of Appointment

:

17/09/2009

 

DIRECTOR 3

 

Name Of Subject

:

YOSHIRO TOMITA

Address

:

35-8-4, MUTIARA VILLA, JALAN BAGAN JERMAL, 10250 GEORGETOWN, PULAU PINANG, MALAYSIA.

IC / PP No

:

TK5257612

Date of Appointment

:

01/04/2014

 

DIRECTOR 4

 

Name Of Subject

:

KIYOTAKA KAWASHIMA

Address

:

503, 3-16-16, MINAMI-CHO, CHUO-KU, CHIBA CITY, CHIBA PREFCETURE, JAPAN.

IC / PP No

:

TK2644933

Nationality

:

JAPANESE

Date of Appointment

:

12/06/2012

 

DIRECTOR 5

 

Name Of Subject

:

KOJI MORIOKA

Address

:

1B-5-6, QUAYSIDE, LORONG SERI TANJUNG PINANG, JALAN SRI TANJUNG PINANG, 10470 PULAU PINANG, PULAU PINANG, MALAYSIA.

IC / PP No

:

TK3218437

Nationality

:

JAPANESE

Date of Appointment

:

14/11/2014

 

DIRECTOR 6

 

Name Of Subject

:

TAKESHI FUJIOKA

Address

:

16-10, KINUGAWA 2, CHOME, OTSU-CITY, SHIGA, 520-0244, JAPAN.

IC / PP No

:

TZ0544661

Nationality

:

JAPANESE

Date of Appointment

:

14/11/2014



MANAGEMENT

 

 

 

1)

Name of Subject

:

KOJI MORIOKA

Position

:

MANAGING DIRECTOR

 

 

 

AUDITOR

 

Auditor

:

DELOITTE

Auditor' Address

:

HUNZA TOWER, 163E, JALAN KELAWEI, LEVEL 12A, 10250 GEORGETOWN, PULAU PINANG, MALAYSIA.

 

 

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MR. CHAI CHURN HWA

IC / PP No

:

6750318

New IC No

:

620705-08-5241

Address

:

SUITE 18.01, MWE PLAZA, 8, LEBUH FARQUHAR, 18TH. FLOOR, 10200 GEORGE TOWN, PULAU PINANG, MALAYSIA.

 

 

 

BANKING


Banking relations are maintained principally with :

1)

Name

:

MALAYAN BANKING BHD

 

2)

Name

:

RHB BANK BHD

 

 

ENCUMBRANCE (S)


No encumbrance was found in our databank at the time of investigation. 

 

 

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

:

EUROPE,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

Domestic Markets

:

MALAYSIA

Overseas

:

YES

Export Market

:

SINGAPORE

UNITED ARAB EMIRATES

ASIA

EUROPE

Credit Term

:

30 - 60 DAYS

Payment Mode

:

TELEGRAPHIC TRANSFER (TT)
CHEQUES

 

 

OPERATIONS

 

Products manufactured

:

COLORANTS FOR PLASTICS, PLASTIC COMPOUNDS & PLASTICS MOULDINGS

Member(s) / Affiliate(s)

:

FEDERATION OF MALAYSIAN MANUFACTURERS (FMM)

MALAYSIAN PLASTICS MANUFACTURERS ASSOCIATION (MPMA)

SMI ASSOCIATION OF MALAYSIA

SMALL & MEDIUM ENTERPRISE

CHEMICAL INDUSTRIES COUNCIL OF MALAYSIA (CICM)

Ownership of premises

:

OWNED

 

Total Number of Employees:

 

YEAR

2015

2014

2013

2012

2011

GROUP

N/A

N/A

N/A

N/A

N/A

COMPANY

140

140

140

140

150

 

Branch

:

NO

Other Information:


The Subject is principally engaged in the (as a / as an) manufacturer of colorants for plastics, plastic compounds & plastics masterbatches. 

The Subject's products range includes colouring plastic compounds, dry colour, masterbatches, plastic dairen and etc.

We were informed that the Subject's products are mainly used in the electronic and packaging industries.

The Subject utilizes advanced automated and semi-automated machineries to ensure production of high quality products.

Besides that, the Subject has a warehouse located at the same premises to keep stocks and materials.

The Subject has a workforce of dedicated personnel who uphold quality and safety as a common duty and responsibility. Equipped with state-of-the-art facilities. Its plant operates on a 24,000 square meter land area located at Perai Industrial Estate in Penang, Malaysia. 


CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

04-3803200

Match

:

N/A

Address Provided by Client

:

PLOT 481, LORONG PERUSAHAAN BARU 2, KAWASAN PERINDUSTRIAN PRAI,13600,PRAI,PULAU PINANG.

Current Address

:

PLOT 481, LORONG PERUSAHAAN BARU 2, KAWASAN PERINDUSTRIAN PRAI, 13600 PRAI, PULAU PINANG, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

 

Other Investigations


We contacted on of the staff from the Subject and she provided some information.


FINANCIAL ANALYSIS

 

 

Profitability

Turnover

:

Decreased

[

2010 - 2014

]

Profit/(Loss) Before Tax

:

Decreased

[

2010 - 2014

]

Return on Shareholder Funds

:

Unfavourable

[

4.03%

]

Return on Net Assets

:

Unfavourable

[

6.69%

]

The continuous fall in turnover could be due to the lower demand for the Subject's products / services.The Subject's profit fell sharply because of the high operating costs incurred. 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

[

66 Days

]

Debtor Ratio

:

Favourable

[

14 Days

]

Creditors Ratio

:

Favourable

[

22 Days

]

The Subject could be incurring higher holding cost. As its capital was tied up in stocks, it could face liquidity problems. 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

[

0.65 Times

]

Current Ratio

:

Unfavourable

[

1.30 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

[

5.58 Times

]

Gearing Ratio

:

Favourable

[

0.49 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 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 performance deteriorated over the years with lower 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. 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 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

 

20221 : Manufacture of paints, varnishes and similar coatings ink and mastics

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 1988, the Subject is a Private Limited company, focusing on manufacturer of colorants for plastics, plastic compounds & plastics masterbatches. 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. The Subject is a large entity with strong capital position of MYR 19,600,002. We are confident with the Subject's business and its future growth prospect. Having strong support from its holding company has enabled the Subject to remain competitive despite the challenging business environment. 


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. The Subject is a fairly large and rapidly growing company with over 140 staff in its 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. 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 52,744,187, 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)

DIC COMPOUNDS (MALAYSIA) SDN. BHD.

 

Financial Year End

2014-12-31

2013-12-31

2012-12-31

2011-12-31

2010-12-31

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

155,525,237

156,847,719

158,500,202

172,540,501

149,249,451

Other Income

357,039

282,605

1,782,978

-

-

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

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

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

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

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

Total Turnover

155,882,276

157,130,324

160,283,180

172,540,501

149,249,451

Costs of Goods Sold

(140,475,415)

(140,293,380)

(139,409,149)

(152,752,417)

(131,569,791)

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

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

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

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

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

Gross Profit

15,406,861

16,836,944

20,874,031

19,788,084

17,679,660

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

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

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

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

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

PROFIT/(LOSS) FROM OPERATIONS

3,132,248

6,216,219

6,882,125

7,112,928

6,328,198

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

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

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

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

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

PROFIT/(LOSS) BEFORE TAXATION

3,132,248

6,216,219

6,882,125

7,112,928

6,328,198

Taxation

(1,006,432)

(845,014)

(407,854)

(1,400,000)

(299,521)

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

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

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

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

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

PROFIT/(LOSS) AFTER TAXATION

2,125,816

5,371,205

6,474,271

5,712,928

6,028,677

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

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

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

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

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

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

28,795,528

23,424,323

19,089,011

13,376,083

9,743,406

Prior year adjustment

-

-

461,041

-

-

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

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

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

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

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

As restated

28,795,528

23,424,323

19,550,052

13,376,083

9,743,406

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

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

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

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

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

PROFIT AVAILABLE FOR APPROPRIATIONS

30,921,344

28,795,528

26,024,323

19,089,011

15,772,083

DIVIDENDS - Ordinary (paid & proposed)

(2,844,682)

-

(2,600,000)

-

(2,396,000)

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

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

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

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

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

RETAINED PROFIT/(LOSS) CARRIED FORWARD

28,076,662

28,795,528

23,424,323

19,089,011

13,376,083

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

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

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

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

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

INTEREST EXPENSE (as per notes to P&L)

Bank overdraft

-

-

9,643

10,778

8,203

Bankers' acceptance

-

-

-

-

22,826

Term loan / Borrowing

-

-

-

45,991

244,099

Others

683,293

908,427

1,014,820

634,844

19,415

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

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

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

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

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

683,293

908,427

1,024,463

691,613

294,543

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

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

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

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

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

DEPRECIATION (as per notes to P&L)

5,895,457

4,941,698

5,192,748

4,350,069

3,727,468

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

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

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

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

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

5,895,457

4,941,698

5,192,748

4,350,069

3,727,468

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

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

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

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

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

 

BALANCE SHEET

 

 

DIC COMPOUNDS (MALAYSIA) SDN. BHD.

 

ASSETS EMPLOYED:

FIXED ASSETS

44,212,281

39,755,620

36,141,079

39,032,117

22,114,090

Investments

-

-

-

-

120,000

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

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

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

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

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

TOTAL LONG TERM INVESTMENTS/OTHER ASSETS

-

-

-

-

120,000

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

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

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

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

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

TOTAL LONG TERM ASSETS

44,212,281

39,755,620

36,141,079

39,032,117

22,234,090

Stocks

28,033,189

28,811,668

24,085,697

26,702,494

17,452,968

Trade debtors

5,858,794

5,710,379

5,526,548

23,366,746

25,000,770

Other debtors, deposits & prepayments

3,410

3,206

1,333

236,439

3,083

Amount due from holding company

7,853,365

8,829,439

11,256,460

-

-

Amount due from related companies

10,943,194

9,551,256

7,200,008

-

-

Cash & bank balances

1,825,760

3,892,296

5,455,589

2,937,366

2,740,338

Others

1,420,637

1,333,395

206,206

162,500

642,668

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

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

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

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

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

TOTAL CURRENT ASSETS

55,938,349

58,131,639

53,731,841

53,405,545

45,839,827

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

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

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

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

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

TOTAL ASSET

100,150,630

97,887,259

89,872,920

92,437,662

68,073,917

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

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

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

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

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

CURRENT LIABILITIES

Trade creditors

8,301,740

7,911,042

8,214,581

11,484,891

12,316,857

Other creditors & accruals

6,071,404

6,936,049

3,649,840

6,360,199

4,024,284

Bank overdraft

-

-

-

-

294,233

Short term borrowings/Term loans

25,599,455

24,801,413

28,026,222

24,085,100

10,646,458

Amounts owing to holding company

2,145,984

2,836,661

1,541,040

321,992

-

Amounts owing to related companies

1,035,133

575,891

718,387

187,642

5,100,000

Provision for taxation

-

13,312

53,646

-

436,000

Dividends payable/proposed

-

-

-

-

980,000

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

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

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

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

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

TOTAL CURRENT LIABILITIES

43,153,716

43,074,368

42,203,716

42,439,824

33,797,832

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

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

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

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

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

NET CURRENT ASSETS/(LIABILITIES)

12,784,633

15,057,271

11,528,125

10,965,721

12,041,995

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

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

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

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

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

TOTAL NET ASSETS

56,996,914

54,812,891

47,669,204

49,997,838

34,276,085

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

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

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

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

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

SHARE CAPITAL

Ordinary share capital

19,600,002

19,600,002

19,600,002

19,600,002

19,600,002

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

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

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

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

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

TOTAL SHARE CAPITAL

19,600,002

19,600,002

19,600,002

19,600,002

19,600,002

Exchange equalisation/fluctuation reserve

5,067,523

1,656,131

(1,497,021)

-

-

Retained profit/(loss) carried forward

28,076,662

28,795,528

23,424,323

19,089,011

13,376,083

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

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

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

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

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

TOTAL RESERVES

33,144,185

30,451,659

21,927,302

19,089,011

13,376,083

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

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

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

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

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

SHAREHOLDERS' FUNDS/EQUITY

52,744,187

50,051,661

41,527,304

38,689,013

32,976,085

Long term loans

-

1,562,158

3,641,900

8,808,825

-

Deferred taxation

4,252,727

3,199,072

2,500,000

2,500,000

1,300,000

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

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

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

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

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

TOTAL LONG TERM LIABILITIES

4,252,727

4,761,230

6,141,900

11,308,825

1,300,000

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

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

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

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

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

56,996,914

54,812,891

47,669,204

49,997,838

34,276,085

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

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

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

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

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

 

 

 

FINANCIAL RATIO

 

 

DIC COMPOUNDS (MALAYSIA) SDN. BHD.

 

TYPES OF FUNDS

Cash

1,825,760

3,892,296

5,455,589

2,937,366

2,740,338

Net Liquid Funds

1,825,760

3,892,296

5,455,589

2,937,366

2,446,105

Net Liquid Assets

(15,248,556)

(13,754,397)

(12,557,572)

(15,736,773)

(5,410,973)

Net Current Assets/(Liabilities)

12,784,633

15,057,271

11,528,125

10,965,721

12,041,995

Net Tangible Assets

56,996,914

54,812,891

47,669,204

49,997,838

34,276,085

Net Monetary Assets

(19,501,283)

(18,515,627)

(18,699,472)

(27,045,598)

(6,710,973)

PROFIT & LOSS ITEMS

Earnings Before Interest & Tax (EBIT)

3,815,541

7,124,646

7,906,588

7,804,541

6,622,741

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

9,710,998

12,066,344

13,099,336

12,154,610

10,350,209

BALANCE SHEET ITEMS

Total Borrowings

25,599,455

26,363,571

31,668,122

32,893,925

10,940,691

Total Liabilities

47,406,443

47,835,598

48,345,616

53,748,649

35,097,832

Total Assets

100,150,630

97,887,259

89,872,920

92,437,662

68,073,917

Net Assets

56,996,914

54,812,891

47,669,204

49,997,838

34,276,085

Net Assets Backing

52,744,187

50,051,661

41,527,304

38,689,013

32,976,085

Shareholders' Funds

52,744,187

50,051,661

41,527,304

38,689,013

32,976,085

Total Share Capital

19,600,002

19,600,002

19,600,002

19,600,002

19,600,002

Total Reserves

33,144,185

30,451,659

21,927,302

19,089,011

13,376,083

LIQUIDITY (Times)

Cash Ratio

0.04

0.09

0.13

0.07

0.08

Liquid Ratio

0.65

0.68

0.70

0.63

0.84

Current Ratio

1.30

1.35

1.27

1.26

1.36

WORKING CAPITAL CONTROL (Days)

Stock Ratio

66

67

55

56

43

Debtors Ratio

14

13

13

49

61

Creditors Ratio

22

21

22

27

34

SOLVENCY RATIOS (Times)

Gearing Ratio

0.49

0.53

0.76

0.85

0.33

Liabilities Ratio

0.90

0.96

1.16

1.39

1.06

Times Interest Earned Ratio

5.58

7.84

7.72

11.28

22.48

Assets Backing Ratio

2.91

2.80

2.43

2.55

1.75

PERFORMANCE RATIO (%)

Operating Profit Margin

2.01

3.96

4.34

4.12

4.24

Net Profit Margin

1.37

3.42

4.08

3.31

4.04

Return On Net Assets

6.69

13.00

16.59

15.61

19.32

Return On Capital Employed

6.69

13.00

16.59

15.61

19.16

Return On Shareholders' Funds/Equity

4.03

10.73

15.59

14.77

18.28

Dividend Pay Out Ratio (Times)

1.34

0

0.40

0

0.40

NOTES TO ACCOUNTS

Contingent Liabilities

0

0

0

0

0



 

FOREIGN EXCHANGE RATES

 

Currency

Unit

Indian Rupees

US Dollar

1

Rs.66.52

UK Pound

1

Rs.100.44

Euro

1

Rs.70.44

MYR

1

Rs. 15.76

Note : Above are approximate rates obtained from sources believed to be correct

 

 

INFORMATION DETAILS

 

Analysis Done by :

KAR

 

 

Report Prepared by :

ASH

 


 

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.