MIRA INFORM REPORT

 

 

Report No. :

302748

Report Date :

14.01.2015

 

IDENTIFICATION DETAILS

 

Name :

SOUTHERN ACIDS INDUSTRIES SDN. BHD.

 

 

Formerly Known As :

POFACHEM (M) SDN BHD (09/05/2011)

 

 

Registered Office :

9 Jalan Bayu Tinggi 2a/Ks6, Taipan 2, Batu Unjur, 41200 Klang, Selangor

 

 

Country :

Malaysia

 

 

Financials (as on) :

31.03.2014

 

 

Date of Incorporation :

01.11.1990

 

 

Com. Reg. No.:

207048-P

 

 

Legal Form :

Private Limited (Limited By Share)

 

 

Line of Business :

Manufacturing and marketing of oleochemical products

 

 

No. of Employee :

300 [2014]

 

 

RATING & COMMENTS

 

MIRA’s Rating :

A

 

RATING

STATUS

PROPOSED CREDIT LINE

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

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

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 – September 30, 2014

 

Country Name

Previous Rating

(30.06.2014)

Current Rating

(30.09.2014)

Malaysia

A2

A2

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

MALAYSIA ECONOMIC OVERVIEW

 

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

 

Source : CIA

 

EXECUTIVE SUMMARY

 

 

REGISTRATION NO.

:

207048-P

COMPANY NAME

:

SOUTHERN ACIDS INDUSTRIES SDN. BHD.

FORMER NAME

:

POFACHEM (M) SDN BHD (09/05/2011)

INCORPORATION DATE

:

01/11/1990

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED (LIMITED BY SHARE)

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

9 JALAN BAYU TINGGI 2A/KS6, TAIPAN 2, BATU UNJUR, 41200 KLANG, SELANGOR, MALAYSIA.

BUSINESS ADDRESS

:

CENTRO TOWER, 8, JALAN BATU TIGA LAMA, LEVEL 29, 41300 KLANG, SELANGOR, MALAYSIA.

TEL.NO.

:

03-32583333

FAX.NO.

:

03-32583300

CONTACT PERSON

:

LEONG KIAN MING ( CEO )

INDUSTRY CODE

:

20291

PRINCIPAL ACTIVITY

:

MANUFACTURING AND MARKETING OF OLEOCHEMICAL PRODUCTS

AUTHORISED CAPITAL

:

MYR 50,000,000.00 DIVIDED INTO
ORDINARY SHARE 50,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 30,000,000.00 DIVIDED INTO
ORDINARY SHARES 30,000,000 CASH OF MYR 1.00 EACH.

SALES

:

MYR 341,788,225 [2014]

NET WORTH

:

MYR 137,838,993 [2014]

M1000 OVERALL RANKING

:

860[2005]

M1000 INDUSTRY RANKING

:

45[2005]

STAFF STRENGTH

:

300 [2014]

BANKER (S)

:

MALAYAN BANKING BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

STRONG

PAYMENT

:

PROMPT

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

LOW

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

GOOD

INDUSTRY OUTLOOK

:

AVERAGE GROWTH

 

HISTORY / BACKGROUND

 

The Subject is a private limited company and is allowed to have a minimum of one and a maximum of forty-nine shareholders. As a private limited company, the Subject must have at least two directors. A private limited company is a separate legal entity from its shareholders. As a separate legal entity, the Subject is capable of owning assets, entering into contracts, sue or be sued by other companies. The liabilities of the shareholders are to the extent of the equity they have taken up and the creditors cannot claim on shareholders' personal assets even if the Subject is insolvent. The Subject is governed by the Companies Act, 1965 and the company must file its annual returns, together with its financial statements with the Registrar of Companies.

 

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

 

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

 

According to the Malaysia 1000 publication, the Subject's ranking are as follows:

YEAR

2005

2004

OVERALL RANKING

860

756

INDUSTRY RANKING

45

36

The immediate holding company of the Subject is SOUTHERN ACIDS (M) BERHAD, a company incorporated in MALAYSIA.

Share Capital History

Date

Authorised Shared Capital

Issue & Paid Up Capital

15/02/2013

MYR 50,000,000.00

MYR 30,000,000.00

 

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

 

Name

Address

IC/PP/Loc No

Shareholding

(%)

SOUTHERN ACIDS (M) BERHAD

9, JALAN BAYU TINGGI 2A/KS6, TAIPAN 2 BATU UNJUR, 41200 KLANG, SELANGOR, MALAYSIA.

64577K

30,000,000.00

100.00

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

------

30,000,000.00

100.00

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

=====

+ Also Director

DIRECTORS


DIRECTOR 1

 

Name Of Subject

:

MR. TIONG CHUU LING

Address

:

46, JALAN ATHINAHAPAN 7, YAMAN TUN DR. ISMAIL, 60000 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

IC / PP No

:

4426290

New IC No

:

530114-03-5155

Date of Birth

:

14/01/1953

Nationality

:

MALAYSIAN

Date of Appointment

:

07/03/2013

 

DIRECTOR 2

 

Name Of Subject

:

DR LOW KOK THYE

Address

:

104, JALAN HILIR SATU, TAMAN GEMBIRA, 41100 KLANG, SELANGOR, MALAYSIA.

New IC No

:

791208-14-5705

Date of Birth

:

08/12/1979

Nationality

:

MALAYSIAN

Date of Appointment

:

09/04/2014

 

DIRECTOR 3

 

Name Of Subject

:

DATO' LOW BOON ENG

Address

:

125, JALAN SS 15/5A, SUBANG JAYA, 47500 SUBANG JAYA, SELANGOR, MALAYSIA.

IC / PP No

:

2676656

New IC No

:

500506-10-5653

Date of Birth

:

06/05/1950

Nationality

:

MALAYSIAN

Date of Appointment

:

11/06/2009

Qualification

:

B.MEC.ENG. FROM IMPERIAL COLLEGE, UNIVERSITY OF LONDON IN 1974.

Profile

:

STARTED CAREER IN 1974 AS TRAINEE ENGINEER WITH SOUTHERN REALTY S/B.

Other Info

:

VICE-PRESIDENT OF THE SOUTHERN PENINSULAR PALM OIL MILLER ASSOCIATION & SITS ON THE TRAINING COMMITTEE OF THE PORIM. DATO

 

DIRECTOR 4

 

Name Of Subject

:

MR. LIM KIM LONG

Address

:

SELANGOR, MALAYSIA.

IC / PP No

:

6056368

New IC No

:

600929-10-5717

Date of Birth

:

29/09/1960

Nationality

:

MALAYSIAN

Date of Appointment

:

11/06/2009

 

DIRECTOR 5

 

Name Of Subject

:

MR. LEONG SO SEH

Address

:

12A, JALAN 14/54, 46100 PETALING JAYA, SELANGOR, MALAYSIA.

IC / PP No

:

4281632

New IC No

:

520228-10-5589

Date of Birth

:

28/02/1952

Nationality

:

MALAYSIAN

Date of Appointment

:

11/06/2009

 

DIRECTOR 6

 

Name Of Subject

:

MR. CHEONG KEE YOONG

Address

:

6E-10-08,KENANGAN APT, JALAN WAWASAN 2/3, PUCHONG,S'NGOR, 47100 PUCHONG, SELANGOR, MALAYSIA.

IC / PP No

:

A1076181

New IC No

:

681009-14-5289

Date of Birth

:

09/10/1968

Nationality

:

MALAYSIAN

Date of Appointment

:

09/04/2014

 

DIRECTOR 7

 

Name Of Subject

:

MR. CHAN CHOON HOONG

Address

:

9 JALAN JARAK, USJ TANAMERA, SUBANG JAYA, 47650 SUBANG JAYA, SELANGOR, MALAYSIA.

IC / PP No

:

A2260084

New IC No

:

720906-14-5421

Date of Birth

:

06/09/1972

Nationality

:

MALAYSIAN

Date of Appointment

:

09/04/2014



MANAGEMENT

 

1)

Name of Subject

:

LEONG KIAN MING

Position

:

CEO

 

AUDITOR

 

Auditor

:

DELOITTE

Auditor' Address

:

MENARA LGB, 1 JALAN WAN KADIR, TAMAN TUN DR. ISMAIL, LEVEL 16, 60000 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MR. PAUL IGNATIUS STANISLAUS

IC / PP No

:

1195610

New IC No

:

480731-10-5697

Address

:

138-H, JALAN KEMBOJA, TAMAN GEMBIRA, 41100 KLANG, SELANGOR, MALAYSIA.

 

2)

Company Secretary

:

MS. LIM KUI SUANG

IC / PP No

:

5619100

New IC No

:

580616-02-5788

Address

:

10 JALAN 8/24A, WANGSA MELAWATI, 53300 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

3)

Company Secretary

:

MS. LIM KING HUA

New IC No

:

581217-10-5670

Address

:

3 JALAN PALAS, SOUTHERN PARK, 41200 KLANG, SELANGOR, 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 against the Subject whether the Subject has been involved in any litigation. Our databank consists of 99% of the wound up companies in Malaysia.

No legal action was found in our databank.

No winding up petition was found in our databank.

 

 

DEFAULTER CHECK AGAINST SUBJECT


* We have checked through the Subject in our defaulters' database which comprised of debtors that have been blacklisted by our customers and debtors that have been placed or assigned to us for collection.

No blacklisted record & debt collection case was found in our defaulters' databank.

PAYMENT RECORD

 

 

SOURCES OF RAW MATERIALS:

Local

:

YES

Overseas

:

YES



The Subject refused to provide any name of trade/service supplier and we are unable to conduct any trade enquiry. However, from financial historical data we conclude that :

OVERALL PAYMENT HABIT

Prompt 0-30 Days

[

X

]

Good 31-60 Days

[

]

Average 61-90 Days

[

]

Fair 91-120 Days

[

]

Poor >120 Days

[

]

 

 

CLIENTELE

 

Local

:

YES

Domestic Markets

:

MALAYSIA

Overseas

:

YES

Export Market

:

ASIA

Credit Term

:

30 - 60 DAYS

Payment Mode

:

CHEQUES
TELEGRAPHIC TRANSFER (TT)

 

OPERATIONS

 

Products manufactured

:

OLEOCHEMICALS

Ownership of premises

:

OWNED

Factory / Premises

:

GOLCONDA ESTATE, BATU 10, JALAN KAPAR, 42200 KAPAR, SELANGOR, MALAYSIA.
Tel No: 03-32508723

Fax No: 03-32507406

Shifts

:

24 HOURS (3 SHIFTS)

 

Total Number of Employees:

 

YEAR

2014

2012

2011

2010

GROUP

N/A

N/A

N/A

N/A

COMPANY

300

300

300

310

 

Branch

:

NO

Other Information:


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

The Subject is mainly involved in manufacturing of oleochemicals such as glycerine and fatty acids.

The products are supplied to different industrial sectors such as cosmetics, fertilizers , rubber, plastics and tyres, both locally and overseas.

The Subject is capable of producing about 8000 to 9000 tonnes per month.

CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

 

Telephone Number Provided By Client

:

0332583333

Current Telephone Number

:

03-32583333

Match

:

YES

Address Provided by Client

:

LEVEL 29, CENTRO TOWER, NO 8, JALAN BATU TIGA LAMA,,41300,KLANG,SELANGOR.

Current Address

:

CENTRO TOWER, 8, JALAN BATU TIGA LAMA, LEVEL 29, 41300 KLANG, SELANGOR, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

 

Other Investigations


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



FINANCIAL ANALYSIS

 

 

Profitability

Turnover

:

Decreased

[

2010 - 2014

]

Profit/(Loss) Before Tax

:

Increased

[

2010 - 2014

]

Return on Shareholder Funds

:

Acceptable

[

13.65%

]

Return on Net Assets

:

Acceptable

[

18.16%

]

The continuous fall in turnover could be due to the lower demand for the Subject's products / services. The Subject's management have been efficient in controlling its operating costs. The Subject's management had generated acceptable return for its shareholders using its assets.

Liquidity

Current Ratio

:

Favourable

[

6.06 Times

]

The Subject was in good liquidity position with its current  liabilities  well covered by its current assets. With its net current assets, the Subject should be able to repay its short term obligations.

Solvency

Liability Ratio

:

Favourable

[

0.22 Times

]

A low liabilities ratio has minimised the Subject's financial risk.

Overall Assessment :

Due to the efficient control of its operating costs, the Subject was able to remain profitable despite lower turnover achieved during the year. The Subject was in good liquidity position with its total current liabilities well covered by its total current assets. With its current net assets, the Subject should be able to repay its short term obligations. The Subject has a low liabilities ratio. It's liabilities were low and was not vulnerable to the financial risk.

Overall financial condition of the Subject : STRONG

 

 

 

 

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

3.3

4.0

Unemployment Rate

3.3

3.2

3.0

3.0

3.0

Net International Reserves ( MYR Billion )

415

427

-

417

-

Average Risk-Weighted Capital Adequacy Ratio ( % )

3.50

2.20

-

-

-

Average 3 Months of Non-performing Loans ( % )

14.80

14.70

-

-

-

Average Base Lending Rate ( % )

6.60

6.53

6.53

-

-

Business Loans Disbursed( % )

15.3

32.2

-

-

-

Foreign Investment ( MYR Million )

23,546.1

26,230.4

38,238.0

-

-

Consumer Loans ( % )

-

-

-

-

-

Registration of New Companies ( No. )

45,455

45,441

46,321

-

-

Registration of New Companies ( % )

3.0

(0.0)

1.9

-

-

Liquidation of Companies ( No. )

132,485

17,092

26,430

-

-

Liquidation of Companies ( % )

417.8

(87.1)

54.6

-

-

Registration of New Business ( No. )

284,598

324,761

329,895

-

-

Registration of New Business ( % )

5.0

14.0

2.0

-

-

Business Dissolved ( No. )

20,121

20,380

18,161

-

-

Business Dissolved ( % )

1.9

1.3

(10.9)

-

-

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

-

-

Credit Cards Spending ( % )

15.6

12.6

-

-

-

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)

-

-

-

-

Other Mining

-

-

-

-

-

Industry Non-performing Loans ( MYR Million )

46.5

-

-

-

-

% of Industry Non-performing Loans

0.1

-

-

-

-

Manufacturing #

4.7

4.8

3.4

6.6

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

-

-

Plastic Products

3.8

-

-

-

-

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

-

-

-

-

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

20291 : Manufacture of photographic plates, films, sensitized paper and other sensitized unexposed materials

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 1990, the Subject is a Private Limited company, focusing on manufacturing and marketing of oleochemical products. The Subject has been in business for over two decades. It has built up a strong clientele base and good reputation will enable the Subject to further enhance its business in the near term.  The Subject is expected to enjoy a stable market shares. The Subject is a large entity with strong capital position of MYR 30,000,000. We are confident with the Subject's business and its future growth prospect. The Subject is well backed by a listed holding company which would stimulate further growth for the Subject. Hence, the potential growth of the Subject is positive.

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. 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 lower turnover, the Subject's pre-tax profit have increased compared to the previous year. The higher profit could be due to better control of its operating costs and efficiency in utilising its resources. Return on shareholders' funds of the Subject was at an acceptable range which indicated that the management was efficient in utilising its funds to generate income. The Subject is in good liquidity position with its current liabilities well covered by it current assets. Hence, it has sufficient working capital to meet its short term financial obligations. A low liabilities ratio has minimised the Subject's financial risk. Given a positive net worth standing at MYR 137,838,993, the Subject should be able to maintain its business in the near terms.

Having a strong assets backing, the Subject possesses latent assets as collateral for further financial extension. Hence, it has good chance of getting loans if the needs arises. The Subject's supplier are from both the local and overseas countries. This will eliminates the risk of dependency on deliveries from a number of key suppliers and insufficient quantities of its raw materials. Overall the Subject has a good control over its resources.

We regard that the Subject's overall payment habit is prompt. The Subject had a favourable creditors' ratio as evidenced by its favourable collection days.

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.

In view of the above favourable condition, we recommend credit be proceeded to the Subject with favourable term.

 

 

PROFIT AND LOSS ACCOUNT

 

 

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

SOUTHERN ACIDS INDUSTRIES SDN. BHD.

 

Financial Year End

2014-03-31

2013-03-31

2012-03-31

2011-03-31

2010-04-30

Months

12

12

12

11

12

Consolidated Account

Company

Company

Company

Company

Company

Audited Account

YES

YES

YES

YES

YES

Unqualified Auditor's Report (Clean Opinion)

YES

YES

YES

YES

YES

Financial Type

SUMMARY

SUMMARY

FULL

FULL

FULL

Currency

MYR

MYR

MYR

MYR

MYR

TURNOVER

341,788,225

375,445,083

376,281,828

348,371,618

310,385,594

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

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

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

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

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

Total Turnover

341,788,225

375,445,083

376,281,828

348,371,618

310,385,594

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

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

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

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

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

PROFIT/(LOSS) FROM OPERATIONS

26,321,725

21,479,434

8,579,807

20,319,780

4,026,498

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

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

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

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

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

PROFIT/(LOSS) BEFORE TAXATION

26,321,725

21,479,434

8,579,807

20,319,780

4,026,498

Taxation

(7,512,673)

(4,269,000)

(1,738,772)

(5,015,097)

(1,041,473)

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

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

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

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

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

PROFIT/(LOSS) AFTER TAXATION

18,809,052

17,210,434

6,841,035

15,304,683

2,985,025

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

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

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

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

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

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

184,129,941

171,917,507

168,676,472

153,371,789

150,386,764

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

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

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

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

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

As restated

184,129,941

171,917,507

168,676,472

153,371,789

150,386,764

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

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

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

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

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

PROFIT AVAILABLE FOR APPROPRIATIONS

202,938,993

189,127,941

175,517,507

168,676,472

153,371,789

DIVIDENDS - Ordinary (paid & proposed)

(95,100,000)

(4,998,000)

(3,600,000)

-

-

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

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

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

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

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

RETAINED PROFIT/(LOSS) CARRIED FORWARD

107,838,993

184,129,941

171,917,507

168,676,472

153,371,789

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

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

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

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

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

 

 

 

BALANCE SHEET

 

 

SOUTHERN ACIDS INDUSTRIES SDN. BHD.

 

ASSETS EMPLOYED:

FIXED ASSETS

28,199,938

26,347,021

28,015,240

28,155,246

27,011,765

Deferred assets

-

-

492,000

2,230,772

7,244,107

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

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

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

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

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

TOTAL LONG TERM INVESTMENTS/OTHER ASSETS

-

-

492,000

2,230,772

7,244,107

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

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

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

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

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

TOTAL LONG TERM ASSETS

28,199,938

26,347,021

28,507,240

30,386,018

34,255,872

Stocks

-

-

57,417,532

67,353,485

51,681,274

Trade debtors

-

-

40,549,759

-

-

Other debtors, deposits & prepayments

-

-

1,302,403

1,727,077

329,075

Short term deposits

-

-

5,261,157

3,007,048

-

Amount due from holding company

-

-

90,009,735

115,847,993

122,675,402

Cash & bank balances

-

-

6,949,696

11,603,698

2,619,974

Others

-

-

35,465

35,465

37,227

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

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

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

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

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

TOTAL CURRENT ASSETS

139,815,753

218,715,382

201,525,747

199,574,766

177,342,952

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

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

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

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

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

TOTAL ASSET

168,015,691

245,062,403

230,032,987

229,960,784

211,598,824

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

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

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

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

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

CURRENT LIABILITIES

Trade creditors

-

-

17,626,470

24,728,404

21,852,835

Other creditors & accruals

-

-

7,719,906

3,888,009

3,773,515

Amounts owing to related companies

-

-

7,468

23,183

35,207

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

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

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

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

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

TOTAL CURRENT LIABILITIES

23,087,215

24,665,584

25,353,844

28,639,596

25,661,557

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

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

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

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

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

NET CURRENT ASSETS/(LIABILITIES)

116,728,538

194,049,798

176,171,903

170,935,170

151,681,395

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

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

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

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

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

TOTAL NET ASSETS

144,928,476

220,396,819

204,679,143

201,321,188

185,937,267

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

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

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

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

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

SHARE CAPITAL

Ordinary share capital

30,000,000

30,000,000

30,000,000

30,000,000

30,000,000

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

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

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

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

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

TOTAL SHARE CAPITAL

30,000,000

30,000,000

30,000,000

30,000,000

30,000,000

Retained profit/(loss) carried forward

107,838,993

184,129,941

171,917,507

168,676,472

153,371,789

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

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

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

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

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

TOTAL RESERVES

107,838,993

184,129,941

171,917,507

168,676,472

153,371,789

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

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

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

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

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

SHAREHOLDERS' FUNDS/EQUITY

137,838,993

214,129,941

201,917,507

198,676,472

183,371,789

Retirement benefits provision

-

-

2,761,636

2,644,716

2,565,478

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

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

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

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

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

TOTAL LONG TERM LIABILITIES

7,089,483

6,266,878

2,761,636

2,644,716

2,565,478

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

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

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

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

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

144,928,476

220,396,819

204,679,143

201,321,188

185,937,267

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

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

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

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

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

 

 

 

 

FINANCIAL RATIO

 

 

SOUTHERN ACIDS INDUSTRIES SDN. BHD.

 

TYPES OF FUNDS

Cash

-

-

12,210,853

14,610,746

2,619,974

Net Liquid Funds

-

-

12,210,853

14,610,746

2,619,974

Net Liquid Assets

116,728,538

194,049,798

118,754,371

103,581,685

100,000,121

Net Current Assets/(Liabilities)

116,728,538

194,049,798

176,171,903

170,935,170

151,681,395

Net Tangible Assets

144,928,476

220,396,819

204,679,143

201,321,188

185,937,267

Net Monetary Assets

109,639,055

187,782,920

115,992,735

100,936,969

97,434,643

BALANCE SHEET ITEMS

Total Borrowings

-

-

0

0

0

Total Liabilities

30,176,698

30,932,462

28,115,480

31,284,312

28,227,035

Total Assets

168,015,691

245,062,403

230,032,987

229,960,784

211,598,824

Net Assets

144,928,476

220,396,819

204,679,143

201,321,188

185,937,267

Net Assets Backing

137,838,993

214,129,941

201,917,507

198,676,472

183,371,789

Shareholders' Funds

137,838,993

214,129,941

201,917,507

198,676,472

183,371,789

Total Share Capital

30,000,000

30,000,000

30,000,000

30,000,000

30,000,000

Total Reserves

107,838,993

184,129,941

171,917,507

168,676,472

153,371,789

LIQUIDITY (Times)

Cash Ratio

-

-

0.48

0.51

0.10

Liquid Ratio

-

-

5.68

4.62

4.90

Current Ratio

6.06

8.87

7.95

6.97

6.91

WORKING CAPITAL CONTROL (Days)

Stock Ratio

-

-

56

71

61

Debtors Ratio

-

-

39

0

0

Creditors Ratio

-

-

17

26

26

SOLVENCY RATIOS (Times)

Gearing Ratio

-

-

0.00

0.00

0.00

Liabilities Ratio

0.22

0.14

0.14

0.16

0.15

Times Interest Earned Ratio

-

-

0.00

0.00

0.00

Assets Backing Ratio

4.83

7.35

6.82

6.71

6.20

PERFORMANCE RATIO (%)

Operating Profit Margin

7.70

5.72

2.28

5.83

1.30

Net Profit Margin

5.50

4.58

1.82

4.39

0.96

Return On Net Assets

18.16

9.75

4.19

10.09

2.17

Return On Capital Employed

18.16

9.75

4.19

10.09

2.17

Return On Shareholders' Funds/Equity

13.65

8.04

3.39

7.70

1.63

Dividend Pay Out Ratio (Times)

5.06

0.29

0.53

0.00

0.00

NOTES TO ACCOUNTS

Contingent Liabilities

-

0

0

0

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.62.10

UK Pound

1

Rs.94.09

Euro

1

Rs.73.41

 

INFORMATION DETAILS

 

Analysis Done by :

KRN

 

 

Report Prepared by :

DPT

 

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.