MIRA INFORM REPORT

 

 

Report No. :

353482

Report Date :

14.12.2015

 

IDENTIFICATION DETAILS

 

Name :

BAHRU STAINLESS SDN. BHD.

 

 

Registered Office :

Ptd 4069 (Plo 108), Jalan Rumbia 4, Tanjung Langsat Industrial, Complex, 81700 Pasir Gudang, Johor

 

 

Country :

Malaysia

 

 

Financials (as on) :

31.12.2013

 

 

Date of Incorporation :

27.03.2008

 

 

Com. Reg. No.:

811430-H

 

 

Legal Form :

Private Limited (Limited By Share)

 

 

Line of Business :

Manufacturing of stainless steel.

 

 

No. of Employee :

100 [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. 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.

:

811430-H

COMPANY NAME

:

BAHRU STAINLESS SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

27/03/2008

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED (LIMITED BY SHARE)

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

PTD 4069 (PLO 108), JALAN RUMBIA 4, TANJUNG LANGSAT INDUSTRIAL, COMPLEX, 81700 PASIR GUDANG, JOHOR, MALAYSIA.

BUSINESS ADDRESS

:

PTD 4069 (PLO 108), JALAN RUMBIA 4, TANJUNG LANGSAT INDUSTRIAL COMPLEX, 81700 PASIR GUDANG, JOHOR, MALAYSIA.

TEL.NO.

:

07-2546440

FAX.NO.

:

07-2513186

HP.NO.

:

0197795888

WEB SITE

:

WWW.ACERINOX.COM

CONTACT PERSON

:

BENJAMIN RAMOS FLORES ( DIRECTOR )

INDUSTRY CODE

:

24102

PRINCIPAL ACTIVITY

:

MANUFACTURING OF STAINLESS STEEL

AUTHORISED CAPITAL

:

MYR 1,151,600,000.00 DIVIDED INTO
ORDINARY SHARE 1,151,600.00 OF MYR 1,000.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 1,151,600,000.00 DIVIDED INTO
ORDINARY SHARES 1,151,600 CASH OF MYR 1,000.00 EACH.

SALES

:

MYR 791,083,000 [2013]

NET WORTH

:

MYR 986,374,000 [2013]

STAFF STRENGTH

:

100 [2015]

BANKER (S)

:

MALAYAN BANKING BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

POOR

PAYMENT

:

AVERAGE

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) manufacturing of stainless steel.

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

 

The immediate and ultimate holding company of the Subject is ACERINOX, S. A., a company incorporated in SPAIN.

 

Former Address(es)

Address

As At Date

LOT PTD 3532, JALAN TEGAR, PERINDUSTRIAN TANJUNG LANGSAT, 81700, JOHOR, MALAYSIA

15/02/2013

 

Share Capital History

Date

Authorised Shared Capital

Issue & Paid Up Capital

20/06/2013

MYR 1,151,600,000.00

MYR 1,151,600,000.00

01/11/2010

MYR 1,151,600,000.00

MYR 701,600,000.00

30/03/2009

MYR 551,600,000.00

MYR 397,000,000.00

24/12/2008

MYR 1,000,000,000.00

MYR 106,000,000.00

10/12/2008

MYR 1,000,000,000.00

MYR 16,000,000.00

27/03/2008

MYR 100,000.00

MYR 2.00

 

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


Current Shareholder(s) :

Name

Address

IC/PP/Loc No

Shareholding

(%)

ACERINOX, S. A.

CALLE SANTIAGO DE COMPOSTELA, 100, MADRID

XLZ00213186

771,572.00

67.00

NISSHIN STEEL CO. LTD.

4-1, MARUNOUCHI 3-CHOME, CHIYODA-KU, TOKYO

0199-01-023784

345,480.00

30.00

METAL ONE CORPORATION

JAPAN

0104-01-049321

34,548.00

3.00

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

------

1,151,600.00

100.00

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

=====

+ Also Director


Former Shareholder(s) :

Name

Country

IC/PP/Loc No

Shareholding

Last Updated

PETER JOHN A/L FRANCIS

MALAYSIA

591109-10-5445

N/A

N/A

RAMOS FLORES BENJAMIN

SINGAPORE

XDA918292

N/A

09/07/2009



DIRECTORS

 

DIRECTOR 1

 

Name Of Subject

:

MR. BENJAMIN RAMOS FLORES

Address

:

132, TANJONG RHU ROAD, PEBBLE BAY, 04-10, 436919, SINGAPORE.

Other Address(es)

:

- NO. 51, JALAN PONDEROSA 1/10, TAMAN PONDEROSA, 81100 JOHOR BAHRU, JOHOR, MALAYSIA.

- 19-B, JALAN STULANG DARAT, 80300 JOHOR BAHRU, JOHOR, MALAYSIA.

IC / PP No

:

XDA918292

Nationality

:

SPANIARD

Date of Appointment

:

27/03/2008

 

DIRECTOR 2

 

Name Of Subject

:

BERNARDO VELAZQUEZ HERREROS

Address

:

SOPELANA 9 CASA 4, MADRID, 28023, SPAIN.

IC / PP No

:

AAI151372

Nationality

:

SPANIARD

Date of Appointment

:

07/04/2009

 

DIRECTOR 3

 

Name Of Subject

:

HIROYUKI MIZUMOTO

Address

:

UNIT 14-E2, BLOCK D, THE STRAITS, VIEW CONDOMINIUM, JALAN PERMAS, SELATAN, BANDAR BARU PERMAS JAYA, 81750 MASAI, JOHOR, MALAYSIA.

IC / PP No

:

MZ0697921

Nationality

:

JAPANESE

Date of Appointment

:

16/04/2009

 

DIRECTOR 4

 

Name Of Subject

:

DANIEL TOMAS AZPITARTE ZEMP

Address

:

C / JUAN DE HERRERA 14, 401, SAN SEBASTIAN DE LOS, REYES, MADRID, 28703, SPAIN.

IC / PP No

:

AAA159226

Date of Appointment

:

19/06/2014

 

DIRECTOR 5

 

Name Of Subject

:

OSWALD WOLFE GOMEZ

Address

:

PLO 108, JALAN RUMBIA 4, TANJUNG LANGSAT, INDUSTRIAL COMPLEX, 81700 PASIR GUDANG, JOHOR, MALAYSIA.

Other Address(es)

:

NO. 11, JALAN ANJUNG 3/4,, HORIZON HILLS, 79100 NUSAJAYA, JOHOR, MALAYSIA.

IC / PP No

:

AAI372044

Date of Appointment

:

01/11/2014

 

DIRECTOR 6

 

Name Of Subject

:

RYO HATTORI

Address

:

6-1005, OKANOMARCHI, 564-1, SHINANOCHO, TOTSUKA-KU, YOKOHAMA-CITY, KANAGAWA 244-0801, JAPAN.

IC / PP No

:

TK5162836

Date of Appointment

:

04/12/2014




MANAGEMENT

 

 

 

1)

Name of Subject

:

BENJAMIN RAMOS FLORES

Position

:

DIRECTOR

 

 

 

AUDITOR

 

Auditor

:

KPMG

Auditor' Address

:

KPMG TOWER, 8 FIRST AVENUE, BANDAR UTAMA, LEVEL 10, 47800 PETALING JAYA, SELANGOR, MALAYSIA.

 

 

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MS. JERRY YIN WA

IC / PP No

:

A0397689

New IC No

:

660629-01-5634

Address

:

20, JALAN MOLEK 3/16, TAMAN MOLEK, 81100 JOHOR BAHRU, JOHOR, MALAYSIA.

 

 

 

BANKING


Banking relations are maintained principally with :

1)

Name

:

MALAYAN BANKING 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

:

N/A

Overseas

:

N/A


The Subject refused to disclose its suppliers.

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

:

ASIA

Credit Term

:

N/A

Payment Mode

:

CHEQUES
TELEGRAPHIC TRANSFER (TT)

No of Customer

:

N/A

 

 

OPERATIONS

 

Products manufactured

:

STAINLESS STEEL

Production Line

:

N/A

Production Capacity

:

N/A

Shifts

:

N/A

 

Total Number of Employees:

 

YEAR

2015

2014

2013

2012

2011

GROUP

N/A

N/A

N/A

N/A

N/A

COMPANY

100

100

100

100

150

 

Branch

:

NO

Other Information:


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

The Subject mainly focuses on cold rolled stainless steel sheets and other metal product and hardware.

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


RECENT DEVELOPMENT


4 Sep 2012

KUB (M) Bhd's unit KUB Power Sdn Bhd has accepted a contract award from Bahru Stainless Sdn Bhd for a project worth RM33.9 million.

In a filing to Bursa Malaysia today, KUB said the project to "Supply, Install, Lay, Erect, Test and Commission A 275V Outdoor Conventional Single Busbar Electrical System" is at the stainless steel integrated plant in Tanjung Langsat, Pasir Gudang, Johor.

"The contract tenure is for a period of 365 days," it said, adding it will contribute positively to the group‘s earnings and earnings per share of KUB Group for the financial year ending Dec 31, 2012.

 

CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

07-2546440

Match

:

N/A

Address Provided by Client

:

PTD 4069 (PLO 108), JALAN RUMBIA 4, TANJUNG LANGSAT INDUSTRIAL COMPLEX,81700,PASIR GUDANG,JOHOR.

Current Address

:

PTD 4069 (PLO 108), JALAN RUMBIA 4, TANJUNG LANGSAT INDUSTRIAL COMPLEX, 81700 PASIR GUDANG, JOHOR, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

 

Other Investigations


On 8th December 2015 we contacted one of the staff from the Subject and he provided some information.


FINANCIAL ANALYSIS

 

 

Profitability

Turnover

:

Increased

[

2009 - 2013

]

Profit/(Loss) Before Tax

:

Increased

[

2009 - 2013

]

Return on Shareholder Funds

:

Unfavourable

[

(10.58%)

]

Return on Net Assets

:

Unfavourable

[

(8.47%)

]

The Subject's turnover increased steadily as the demand for its products / services increased due to the goodwill built up over the years.Higher losses before tax during the year could be due to the higher operating costs incurred. 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

:

Favourable

[

55 Days

]

Debtor Ratio

:

Unfavourable

[

81 Days

]

Creditors Ratio

:

Favourable

[

23 Days

]

The Subject's stocks were moving fast thus reducing its holding cost. This had reduced funds being tied up in stocks. 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

[

0.21 Times

]

Current Ratio

:

Unfavourable

[

0.27 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

[

(11.37 Times)

]

Gearing Ratio

:

Favourable

[

0.22 Times

]

The Subject incurred losses in the year. It did not generate sufficient income to service its interest.  If the situation does not improve, the Subject may be vulnerable to default in servicing the interest. 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 :

Although the Subject's turnover increased its profits however showed a reverse trend. The losses could be due to the management's failure to maintain its competitiveness in the market. 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's interest cover was negative, indicating that it did not generate sufficient income to service its interest. If its result does not show impressive improvements or succeed obtaining short term financing or capital injection, it may not be able to service its interest and repay the loans. 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 : POOR

 

 

 

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

 

Major Economic Indicators:

2011

2012

2013

2014*

2015**

Population ( Million)

28.7

29.3

29.8

30.0

30.5

Gross Domestic Products ( % )

5.1

5.6

5.3

6.0

4.7

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

82,480

85,258

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

3.2

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

49,203

-

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

44.0

44.2

Tourist Arrival ( Million Persons )

24.7

25.0

25.7

27.4

29.4

Hotel Occupancy Rate ( % )

60.6

62.4

62.6

63.6

58.8

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)

1.0

0.7

0.7

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

5.3

Electrical & Electronics

(4.0)

12.7

6.9

13.3

7.9

Rubber Products

20.7

3.0

11.7

(0.3)

3.4

Wood Products

(5.1)

8.7

(2.7)

5.1

7.1

Textiles & Apparel

13.2

(7.1)

(2.6)

11.5

7.2

Domestic-oriented Industries

10.7

1.7

6.8

9.4

3.3

Food, Beverages & Tobacco

4.80

2.70

3.60

6.13

8.90

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

3.6

Non-metallic Mineral

12.1

2.9

(2.0)

5.4

7.2

Transport Equipment

12.0

3.4

13.8

22.9

7.6

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

24102 : Production of bars and rods of stainless steel or other alloy steel

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 2008, the Subject is a Private Limited company, focusing on manufacturing of stainless steel. Having been in business for more than 5 years, the Subject has established a remarkable clientele base for itself which has contributed to its business growth. We noted that the issued and paid up capital of the Subject stands at MYR 1,151,600,000 and having strong backing from its holding company.

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 100 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.

Despite the higher turnover, the Subject suffered pre-tax losses which reflected a highly competitive business environment. 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 986,374,000, the Subject should be able to maintain its business in the near terms.

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

The industry shows an upward trend and this trend is very likely to sustain in the near terms.

In view of the above, we recommend credit be granted to the Subject with close monitoring.

 

 

 

PROFIT AND LOSS ACCOUNT

 

 

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

 

Financial Year End

2013-12-31

2012-12-31

2011-12-31

2010-12-31

2009-12-31

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

791,083,000

535,403,000

74,789,000

-

-

Other Income

4,247,000

6,979,000

490,000

21,000

514,000

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

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

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

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

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

Total Turnover

795,330,000

542,382,000

75,279,000

21,000

514,000

Costs of Goods Sold

(823,973,000)

(593,293,000)

(82,565,000)

-

-

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

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

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

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

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

Gross Profit

(28,643,000)

(50,911,000)

(7,286,000)

-

-

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

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

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

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

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

PROFIT/(LOSS) FROM OPERATIONS

(104,364,000)

(94,053,000)

(21,372,000)

(16,899,000)

(7,075,000)

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

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

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

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

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

PROFIT/(LOSS) BEFORE TAXATION

(104,364,000)

(94,053,000)

(21,372,000)

(16,899,000)

(7,075,000)

Taxation

-

136,000

(136,000)

(38,000)

(214,000)

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

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

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

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

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

PROFIT/(LOSS) AFTER TAXATION

(104,364,000)

(93,917,000)

(21,508,000)

(16,937,000)

(7,289,000)

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

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

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

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

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

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

(139,811,000)

(45,894,000)

(24,386,000)

(7,449,000)

(160,000)

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

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

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

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

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

As restated

(139,811,000)

(45,894,000)

(24,386,000)

(7,449,000)

(160,000)

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

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

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

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

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

PROFIT AVAILABLE FOR APPROPRIATIONS

(244,175,000)

(139,811,000)

(45,894,000)

(24,386,000)

(7,449,000)

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

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

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

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

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

RETAINED PROFIT/(LOSS) CARRIED FORWARD

(244,175,000)

(139,811,000)

(45,894,000)

(24,386,000)

(7,449,000)

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

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

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

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

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

INTEREST EXPENSE (as per notes to P&L)

Others

8,437,000

8,843,000

214,000

-

-

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

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

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

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

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

8,437,000

8,843,000

214,000

-

-

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

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

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

-

-

DEPRECIATION (as per notes to P&L)

11,280,000

10,296,000

6,907,000

3,368,000

2,690,000

AMORTIZATION

960,000

923,000

512,000

-

-

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

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

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

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

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

12,240,000

11,219,000

7,419,000

3,368,000

2,690,000

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

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

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

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

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

 

 

 

BALANCE SHEET

 

 

 

ASSETS EMPLOYED:

FIXED ASSETS

2,540,068,000

2,112,568,000

1,560,119,000

1,145,081,000

516,314,000

Computer software

982,000

1,625,000

2,071,000

-

-

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

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

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

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

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

TOTAL INTANGIBLE ASSETS

982,000

1,625,000

2,071,000

-

-

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

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

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

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

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

TOTAL LONG TERM ASSETS

2,541,050,000

2,114,193,000

1,562,190,000

1,145,081,000

516,314,000

Stocks

119,034,000

126,520,000

92,247,000

820,000

-

Trade debtors

174,849,000

144,490,000

-

-

-

Other debtors, deposits & prepayments

47,310,000

45,850,000

45,926,000

43,033,000

323,000

Short term deposits

4,841,000

111,031,000

189,921,000

236,910,000

50,019,000

Amount due from holding company

10,000

27,000

443,000

289,000

132,000

Amount due from related companies

66,415,000

73,281,000

28,134,000

221,000

38,000

Cash & bank balances

104,318,000

39,619,000

23,657,000

20,717,000

20,706,000

Others

-

303,000

166,000

166,000

-

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

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

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

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

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

TOTAL CURRENT ASSETS

516,777,000

541,121,000

380,494,000

302,156,000

71,218,000

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

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

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

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

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

TOTAL ASSET

3,057,827,000

2,655,314,000

1,942,684,000

1,447,237,000

587,532,000

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

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

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

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

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

CURRENT LIABILITIES

Trade creditors

52,534,000

19,451,000

3,902,000

-

-

Other creditors & accruals

98,961,000

271,820,000

61,376,000

92,915,000

41,392,000

Hire purchase & lease creditors

63,000

50,000

-

-

-

Short term borrowings/Term loans

48,644,000

11,334,000

-

-

-

Other borrowings

21,000,000

-

-

-

-

Amounts owing to holding company

1,460,381,000

830,150,000

516,165,000

475,581,000

517,000

Amounts owing to related companies

243,806,000

326,063,000

59,792,000

5,670,000

1,422,000

Provision for taxation

-

-

-

-

50,000

Other liabilities

-

14,447,000

-

-

-

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

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

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

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

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

TOTAL CURRENT LIABILITIES

1,925,389,000

1,473,315,000

641,235,000

574,166,000

43,381,000

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

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

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

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

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

NET CURRENT ASSETS/(LIABILITIES)

(1,408,612,000)

(932,194,000)

(260,741,000)

(272,010,000)

27,837,000

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

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

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

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

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

TOTAL NET ASSETS

1,132,438,000

1,181,999,000

1,301,449,000

873,071,000

544,151,000

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

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

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

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

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

SHARE CAPITAL

Ordinary share capital

1,151,600,000

1,151,600,000

1,151,600,000

701,600,000

551,600,000

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

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

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

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

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

TOTAL SHARE CAPITAL

1,151,600,000

1,151,600,000

1,151,600,000

701,600,000

551,600,000

Retained profit/(loss) carried forward

(244,175,000)

(139,811,000)

(45,894,000)

(24,386,000)

(7,449,000)

Others

78,949,000

(11,326,000)

(18,503,000)

(18,266,288)

-

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

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

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

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

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

TOTAL RESERVES

(165,226,000)

(151,137,000)

(64,397,000)

(42,652,000)

(7,449,000)

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

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

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

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

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

SHAREHOLDERS' FUNDS/EQUITY

986,374,000

1,000,463,000

1,087,203,000

658,948,000

544,151,000

Long term loans

145,930,000

181,339,000

199,616,000

194,386,000

-

Lease obligations

134,000

197,000

-

-

-

Others

-

-

14,630,000

19,737,000

-

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

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

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

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

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

TOTAL LONG TERM LIABILITIES

146,064,000

181,536,000

214,246,000

214,123,000

-

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

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

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

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

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

1,132,438,000

1,181,999,000

1,301,449,000

873,071,000

544,151,000

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

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

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

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

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

 

 

 

FINANCIAL RATIO

 

 

 

TYPES OF FUNDS

Cash

109,159,000

150,650,000

213,578,000

257,627,000

70,725,000

Net Liquid Funds

109,159,000

150,650,000

213,578,000

257,627,000

70,725,000

Net Liquid Assets

(1,527,646,000)

(1,058,714,000)

(352,988,000)

(272,830,000)

27,837,000

Net Current Assets/(Liabilities)

(1,408,612,000)

(932,194,000)

(260,741,000)

(272,010,000)

27,837,000

Net Tangible Assets

1,131,456,000

1,180,374,000

1,299,378,000

873,071,000

544,151,000

Net Monetary Assets

(1,673,710,000)

(1,240,250,000)

(567,234,000)

(486,953,000)

27,837,000

PROFIT & LOSS ITEMS

Earnings Before Interest & Tax (EBIT)

(95,927,000)

(85,210,000)

(21,158,000)

(16,899,000)

(7,075,000)

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

(83,687,000)

(73,991,000)

(13,739,000)

(13,531,000)

(4,385,000)

BALANCE SHEET ITEMS

Total Borrowings

215,771,000

192,920,000

199,616,000

194,386,000

0

Total Liabilities

2,071,453,000

1,654,851,000

855,481,000

788,289,000

43,381,000

Total Assets

3,057,827,000

2,655,314,000

1,942,684,000

1,447,237,000

587,532,000

Net Assets

1,132,438,000

1,181,999,000

1,301,449,000

873,071,000

544,151,000

Net Assets Backing

986,374,000

1,000,463,000

1,087,203,000

658,948,000

544,151,000

Shareholders' Funds

986,374,000

1,000,463,000

1,087,203,000

658,948,000

544,151,000

Total Share Capital

1,151,600,000

1,151,600,000

1,151,600,000

701,600,000

551,600,000

Total Reserves

(165,226,000)

(151,137,000)

(64,397,000)

(42,652,000)

(7,449,000)

LIQUIDITY (Times)

Cash Ratio

0.06

0.10

0.33

0.45

1.63

Liquid Ratio

0.21

0.28

0.45

0.52

1.64

Current Ratio

0.27

0.37

0.59

0.53

1.64

WORKING CAPITAL CONTROL (Days)

Stock Ratio

55

86

450

0

0

Debtors Ratio

81

99

0

0

0

Creditors Ratio

23

12

17

0

0

SOLVENCY RATIOS (Times)

Gearing Ratio

0.22

0.19

0.18

0.29

0

Liabilities Ratio

2.10

1.65

0.79

1.20

0.08

Times Interest Earned Ratio

(11.37)

(9.64)

(98.87)

0

0

Assets Backing Ratio

0.98

1.02

1.13

1.24

0.99

PERFORMANCE RATIO (%)

Operating Profit Margin

(13.19)

(17.57)

(28.58)

0

0

Net Profit Margin

(13.19)

(17.54)

(28.76)

0

0

Return On Net Assets

(8.47)

(7.21)

(1.63)

(1.94)

(1.30)

Return On Capital Employed

(8.46)

(7.20)

(1.62)

(1.94)

(1.30)

Return On Shareholders' Funds/Equity

(10.58)

(9.39)

(1.98)

(2.57)

(1.34)

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.66.79

UK Pound

1

Rs.101.10

Euro

1

Rs.73.10

MYR

1

Rs.15.42

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

 

 

INFORMATION DETAILS

 

Analysis Done by :

KAR

 

 

Report Prepared by :

ANK

 


 

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.