MIRA INFORM REPORT

 

 

Report No. :

333641

Report Date :

28.07.2015

 

IDENTIFICATION DETAILS

 

Name :

HENG HUAT CHAN SDN. BHD.

 

 

Registered Office :

182a, Jalan Raja Uda, Pusat Perniagaan Raja Uda, 12300 Butterworth, Pulau Pinang

 

 

Country :

Malaysia

 

 

Financials (as on) :

28.02.2014

 

 

Date of Incorporation :

28.02.1987

 

 

Com. Reg. No.:

Malaysia

 

 

Legal Form :

Private Limited

 

 

Line of Business :

Wholesales in onions, garlic, potatoes, brown surger and general goods.

 

 

No. of Employee :

20 [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

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

MALAYSIA ECONOMIC OVERVIEW

 

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. NAJIB's Economic Transformation Program (ETP) is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. The NAJIB administration also is continuing efforts to boost domestic demand and reduce the economy's dependence on exports. Nevertheless, exports - particularly of electronics, oil and gas, palm oil and rubber - remain a significant driver of the economy. As an oil and gas exporter, Malaysia has previously profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with sustained budget deficits, has forced Kuala Lumpur to begin to address fiscal shortfalls, through initial reductions in energy and sugar subsidies and the announcement of the 2015 implementation of a 6% goods and services tax. Falling global oil prices in the second half of 2014 have strained government finances, shrunk Malaysia’s current account surplus and put downward pressure on the ringgit. The government is also trying to lessen its dependence on state oil producer Petronas. The oil and gas sector supplied about 29% of government revenue in 2014. Bank Negara Malaysia (central bank) maintains healthy foreign exchange reserves, and a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. Nevertheless, Malaysia could be vulnerable to a fall in commodity prices or a general slowdown in global economic activity because exports are a major component of GDP. In order to attract increased investment, NAJIB earlier raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program (BEEP), policies that favor and advance the economic condition of ethnic Malays. Malaysia is a member of the 12-nation Trans-Pacific Partnership free trade agreement negotiations and, with the nine other ASEAN members, will form the ASEAN Economic Community in 2015.

 

Source : CIA

 

 

 

EXECUTIVE SUMMARY

 

 

REGISTRATION NO.

:

159808-A

COMPANY NAME

:

HENG HUAT CHAN SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

28/02/1987

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

182A, JALAN RAJA UDA, PUSAT PERNIAGAAN RAJA UDA, 12300 BUTTERWORTH, PULAU PINANG, MALAYSIA.

BUSINESS ADDRESS

:

2 & 4, LORONG MAK MANDIN 2, KAWASAN PERINDUSTRIAN MAK MANDIN, 13400 BUTTERWORTH, PULAU PINANG, MALAYSIA.

TEL.NO.

:

04-3314349

FAX.NO.

:

04-3230023

CONTACT PERSON

:

LEE LIONG HUAT ( MANAGING DIRECTOR )

INDUSTRY CODE

:

46329

PRINCIPAL ACTIVITY

:

WHOLESALES IN ONIONS, GARLIC, POTATOES, BROWN SURGER AND GENERAL GOODS

AUTHORISED CAPITAL

:

MYR 1,000,000.00 DIVIDED INTO
ORDINARY SHARE 1,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 250,000.00 DIVIDED INTO
ORDINARY SHARES 250,000 CASH OF MYR 1.00 EACH.

SALES

:

MYR 19,654,843 [2014]

NET WORTH

:

MYR 987,019 [2014]

STAFF STRENGTH

:

20 [2015]

BANKER (S)

:

UNITED OVERSEAS BANK (MALAYSIA) BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

POOR

PAYMENT

:

AVERAGE

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

HIGH

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) wholesales in onions, garlic, potatoes, brown surger and general goods.

 

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

 

Share Capital History

Date

Authorised Shared Capital

Issue & Paid Up Capital

28/08/2014

MYR 1,000,000.00

MYR 250,000.00

26/02/1987

MYR 1,000,000.00

MYR 4.00


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

 

Current Shareholder(s) :

Name

Address

IC/PP/Loc No

Shareholding

(%)

MR. LEE KIEN KOK +

18, JALAN BAGAN 37, TAMAN BAGAN, 13400 BUTTERWORTH, PULAU PINANG, MALAYSIA.

661109-07-5283 A0562745

100,000.00

40.00

MR. LEE LIONG HUAT +

16, LINTANG KURAU 3, CHAI LENG PARK, BUTTERWORTH, 13700 PERAI, PULAU PINANG, MALAYSIA.

450102-07-5109 1553007

62,500.00

25.00

MR. LEE KEAN JOO +

16, LINTANG KURAU 3, TAMAN CHAI LENG, 13700 PERAI, PULAU PINANG, MALAYSIA.

730119-07-5347 A2428507

50,000.00

20.00

LEE KEAN LEE

18, LORONG PERAI UTAMA 5, TAMAN PERAI UTAMA, 13600 PRAI, PULAU PINANG, MALAYSIA.

700228-07-5381 1511071

37,500.00

15.00

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

------

250,000.00

100.00

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

=====

+ Also Director

 

Former Shareholder(s) :

Name

IC/PP/Loc No

LEE CHEW KOON

460702-07-5371

TAN TEOH HAI

3907182




 

 

 

DIRECTORS


DIRECTOR 1

 

Name Of Subject

:

MR. LEE KEAN JOO

Address

:

16, LINTANG KURAU 3, TAMAN CHAI LENG, 13700 PERAI, PULAU PINANG, MALAYSIA.

IC / PP No

:

A2428507

New IC No

:

730119-07-5347

Date of Birth

:

19/01/1973

Nationality

:

MALAYSIAN

Date of Appointment

:

01/04/2010

 

DIRECTOR 2

 

Name Of Subject

:

MR. LEE LIONG HUAT

Address

:

16, LINTANG KURAU 3, CHAI LENG PARK, BUTTERWORTH, 13700 PERAI, PULAU PINANG, MALAYSIA.

IC / PP No

:

1553007

New IC No

:

450102-07-5109

Date of Birth

:

02/01/1945

Nationality

:

MALAYSIAN

Date of Appointment

:

28/02/1987

 

DIRECTOR 3

 

Name Of Subject

:

MR. LEE KIEN KOK

Address

:

18, JALAN BAGAN 37, TAMAN BAGAN, 13400 BUTTERWORTH, PULAU PINANG, MALAYSIA.

IC / PP No

:

A0562745

New IC No

:

661109-07-5283

Date of Birth

:

09/11/1966

Nationality

:

MALAYSIAN

Date of Appointment

:

25/08/1995

 

MANAGEMENT

 

 

 

1)

Name of Subject

:

LEE LIONG HUAT

Position

:

MANAGING DIRECTOR

 

 

 

AUDITOR

 

Auditor

:

WONG LIU & PARTNERS

Auditor' Address

:

184A, JALAN RAJA UDA, PUSAT PERNIAGAAN RAJA UDA, 12300 BUTTERWORTH, PULAU PINANG, MALAYSIA.

 

 

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MR. GOH BOON KAN

IC / PP No

:

A2908403

New IC No

:

741218-02-5429

Address

:

63, LORONG 2, TAMAN SEPILAI, 09700 KARANGAN, KEDAH, MALAYSIA.

 

 

 

BANKING


Banking relations are maintained principally with :

1)

Name

:

UNITED OVERSEAS BANK (MALAYSIA) BHD

 

 

 

ENCUMBRANCE (S)

 

Charge No

Creation Date

Charge Description

Chargee Name

Total Charge

Status

1

21/07/1988

N/A

UNITED ASIAN BANK BHD

MYR 500,000.00

Satisfied

2

10/11/1994

N/A

BANK OF COMMERCE M BHD

MYR 710,000.00

Satisfied

3

10/11/1994

N/A

BANK OF COMMERCE M BHD

MYR 210,000.00

Satisfied

4

15/03/1996

N/A

BANK OF COMMERCE M BHD

MYR 459,000.00

Satisfied

5

13/11/1996

2ND LEGAL CHARGE

UNITED OVERSEAS BANK MALAYSIA BHD

MYR 1,050,000.00

Unsatisfied

6

13/11/1996

N/A

UNITED OVERSEAS BANK MALAYSIA BHD

MYR 300,000.00

Unsatisfied

7

13/11/1996

LEGAL CHARGE

UNITED OVERSEAS BANK MALAYSIA BHD

MYR 300,000.00

Unsatisfied

8

13/11/1996

2ND LEGAL CHARGE

UNITED OVERSEAS BANK MALAYSIA BHD

MYR 1,050,000.00

Unsatisfied

9

17/03/1999

THIRD LEGAL CHARGE

UNITED OVERSEAS BANK MALAYSIA BHD

MYR 1,450,000.00

Unsatisfied

10

17/03/1999

N/A

UNITED OVERSEAS BANK MALAYSIA BHD

MYR 1,450,000.00

Unsatisfied

11

19/05/2009

1ST PARTY 4TH LEGAL CHARGE UNDER NATIONAL LAND CODE

UNITED OVERSEAS BANK (MALAYSIA) BHD

MYR 1,000,000.00

Unsatisfied

12

19/05/2009

1ST PARTY 4TH LEGAL CHARGE UNDER NATIONAL LAND CODE

UNITED OVERSEAS BANK (MALAYSIA) BHD

MYR 1,000,000.00

Unsatisfied

13

05/07/2013

MEMORANDUM OF LEGAL CHARGE OVER DEPOSIT

UNITED OVERSEAS BANK (MALAYSIA) BHD

-

Unsatisfied

 

 

LITIGATION CHECK AGAINST SUBJECT


* A check has been conducted in our databank againt the Subject whether the Subject has been involved in any litigation. Our databank consists of 99% of the wound up companies in Malaysia.

No legal action was found in our databank.

No winding up petition was found in our databank.

 

DEFAULTER CHECK AGAINST SUBJECT


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

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

 

PAYMENT RECORD

 

 

SOURCES OF RAW MATERIALS:

Local

:

YES

Overseas

:

YES

Import Countries

:

INDIA



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

Percentage

:

100%

Domestic Markets

:

MALAYSIA

Overseas

:

NO

Credit Term

:

N/A

Payment Mode

:

CHEQUES
CASH

Type of Customer

:

RETAIL

 

 

OPERATIONS

 

Goods Traded

:

GROCERY ITEMS

 

Total Number of Employees:

 

YEAR

2015

2011

2010

GROUP

N/A

N/A

N/A

COMPANY

20

20

10

 

Branch

:

NO

Other Information:


The Subject is principally engaged in the (as a / as an) wholesales in onions, garlic, potatoes, brown surger and general goods.

The Subject offers a wide range of food products onions, potatoes, dried chillies, beans and others.

 

CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

04-3314349

Match

:

N/A

Address Provided by Client

:

2 & 4 LORONG MAK MANDIN 2, KAWASAN PERINDUSTRIAN MAK MANDIN,13400,BUTTERWORTH,PULAU PINANG.

Current Address

:

2 & 4, LORONG MAK MANDIN 2, KAWASAN PERINDUSTRIAN MAK MANDIN, 13400 BUTTERWORTH, PULAU PINANG, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

 

Other Investigations


On 24th July 2015 we contacted one of the staff from the Subject and he provided some information.


FINANCIAL ANALYSIS

 

 

Profitability

Turnover

:

Erratic

[

2010 - 2014

]

Profit/(Loss) Before Tax

:

Decreased

[

2010 - 2014

]

Return on Shareholder Funds

:

Unfavourable

[

(5.22%)

]

Return on Net Assets

:

Unfavourable

[

8.49%

]

The fluctuating turnover reflects the fierce competition among the existing and new market players.The Subject incurred losses during the year due to the inefficient control of its operating costs. 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

[

7 Days

]

Debtor Ratio

:

Favourable

[

39 Days

]

Creditors Ratio

:

Favourable

[

5 Days

]

The Subject's stocks were moving fast thus reducing its holding cost. This had reduced funds being tied up in stocks. The favourable debtors' days could be due to the good credit control measures implemented by the Subject. The Subject had a favourable creditors' ratio where the Subject could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.

Liquidity

Liquid Ratio

:

Acceptable

[

0.81 Times

]

Current Ratio

:

Unfavourable

[

0.91 Times

]

The Subject's liquid ratio was slightly low. This could indicate that the Subject's working capital was slightly deficient. The Subject will have to improve its liquidity position either by obtaining short term financing or increase its paid up capital so that it can meet all its short term obligations as and when they fall due.

Solvency

Interest Cover

:

Unfavourable

[

0.74 Times

]

Gearing Ratio

:

Unfavourable

[

3.45 Times

]

The Subject's interest cover was low. If its profits fall or when interest rate rises, it  may not be able to meet all its interest payment. The Subject was highly geared, thus it had a high financial risk. The Subject was dependent on loans to finance its business needs. In times of economic downturn and / or high interest rate, the Subject will become less profitable and competitive than other firms in the same industry, which are lowly geared. This is because the Subject has to service the interest and to repay the loan, which will erode part of its profits. The profits will fluctuate depending on the Subject's turnover and the interest it needs to pay.

Overall Assessment :

The Subject's losses increased but its turnover showed a  fluctuating trend. This indicate the Subject was slowly losing its market share due to its competitors. The Subject's liquidity was at an acceptable range. If the Subject is able to obtain further short term financing, it should be able to meet all its short term obligations. If there is a fall in the Subject's profit or any increase in interest rate, the Subject may not be able to generate sufficient cash-flow to service its interest. The Subject's gearing level was high and its going concern will be in doubt if there is no injection of additional shareholders' funds in times of economic downturn and / or high interest rates.

Overall financial condition of the Subject : POOR

 

 

 

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

46329 : Wholesale of other foodstuffs

INDUSTRY :

TRADING

The wholesale and retail trade is expected to increase 7.1% in 2015 (2014: 7.7%) driven by strong domestic consumption and higher tourist arrivals following the Malaysia Year of Festivals 2015. Besides, in 2014, the wholesale and retail trade subsector is expected to increase 7.7% (2013: 6.4%) supported by strong domestic consumption.

According to Retail Group Malaysia (RGM), the pharmacy and personal care sub-sector had slow growth rate of 2.6% for the first quarter of 2014, while "other specialty stores" grew at a rate of 3.5%. During the first quarter of 2014, fashion and fashion accessories recorded a sustainable growth of 6.3% as compared with the same period last year (3.6%).

The retail segment increased 10.1% (January - June 2013: 7.1%) attributed to brisk sales in retail outlets such as hypermarkets and large-scale superstores. Since the launch of the Small Retailer Transformation programme (TUKAR) in January 2011 up to end-July 2014, 1,761 small retailer stores (end-July 2013: 1,381) have been modernized to improve their competitiveness. In addition, the strong growth of the retail segment was supported by 1Malaysia Unified Sales held from 29 June 2014 to 1 September 2014 to attract foreign and local tourists to shop in Malaysia. Meanwhile, the wholesale segment expanded 8.2% (January - June 2013: 4.9%) due to higher sales of non-agricultural intermediate products, such as petrol, diesel, lubricants and household goods. Furthermore, food and beverage outlets, laundry outlets, car wash centres, abd health and beauty outlets took a hit from the water rationing in the Klang Valley since February this year.

On the other hand, in 2014, Malaysia's total trade is expected to grow 5.2% to RM1.44 trillion (2013: 4.5%; RM1.37 trillion) underpinned by recovery in key advanced economies, resilient regional demand, and partly due to the base effect arising from sluggish exports in the corresponding period last year. Gross exports are anticipated to expand 6% to RM762.8 billion while import decreased 4.3% to RM677.2 billion (2013: 2.4%; RM719.8 billion; 7%; RM 649.1 billion). Consequently, the trade surplus is expected to be higher at RM85.6 billion or 7.9% of GDP in 2014 (2013: RM70.7 billion; 7.2%).

Furthermore, gross exports rebounded by 10.7% to RM441.3 billion during the first seven months of 2014 (January - July 2013: -2.8%; RM398.5 billion), with manufactured and mining exports rising at a double digit pace of 11.4% and 12.5%. Shipment of agriculture products grew at a slower pace of 2.7%, primarily due to lower receipts of crude rubber (-24.6%) while export growth of other commodities remained steady. Consequently, exports of manufactured and mining products are expected to grow 6.1% and 6.4% in 2014 (2013: 5.1%; 3.3%). Meanwhile, agriculture exports are expected to rebound sharply by 4.5% in 2014 (2013: -14.4%) despite moderating commodity prices. Malaysia's top 3 trading partners are China, Singapore, and Japan.

Over 60% of Gross Domestic Product (GDP) is contributed by domestic consumption. Therefore the wholesale and retail sector plays a crucial role in driving Malaysia's growth over the next decade despite the ongoing global economic slowdown. By 2020, Malaysia's wholesale and retail sector is expected to boost the country's total Gross National Income (GNI) by RM156 billion, creating 454,190 new jobs.

OVERALL INDUSTRY OUTLOOK : Average Growth



CREDIT RISK EVALUATION & RECOMMENDATION

 

 

Incorporated in 1987, the Subject is a Private Limited company, focusing on wholesales in onions, garlic, potatoes, brown surger and general goods. The Subject has been in business for over two decades. It has built up a strong clientele base and satisfactory reputation will enable the Subject to further enhance its business in the near term.  The Subject is expected to enjoy a stable market shares. With an issued and paid up capital of MYR 250,000 contributed by individual shareholders, the Subject may face difficulties in its attempt to further expand its business in the future. Thus, the Subject should put more efforts on its business to gain higher market share while competing aggressively in the market.

Investigation revealed that the Subject concentrates only on the local market. This narrow market segment has placed the Subject at high business risk and limits its business expansion opportunities. Any adverse changes to the local economy might have a negative impact on the Subject's business performance. Being a small company, the Subject's business operation is supported by 20 employees. 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. The Subject managed to maintain an adequate liquidity level, indicating that the Subject has the ability to meet its financial obligations. The high gearing ratio clearly implied that the Subject was supported by more debt than equity. Thus, the Subject is exposed to high financial risk.

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.

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

2014-02-28

2013-02-28

2012-02-29

2011-02-28

2010-02-28

Months

12

12

12

12

12

Consolidated Account

Company

Company

Company

Company

Company

Audited Account

YES

YES

YES

YES

YES

Unqualified Auditor's Report (Clean Opinion)

YES

YES

YES

YES

YES

Financial Type

FULL

FULL

SUMMARY

SUMMARY

FULL

Currency

MYR

MYR

MYR

MYR

MYR

TURNOVER

19,654,843

16,136,211

18,341,556

18,558,871

16,198,183

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

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

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

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

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

Total Turnover

19,654,843

16,136,211

18,341,556

18,558,871

16,198,183

Costs of Goods Sold

(18,467,676)

(14,920,278)

-

-

(15,304,281)

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

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

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

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

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

Gross Profit

1,187,167

1,215,933

-

-

893,902

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

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

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

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

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

PROFIT/(LOSS) FROM OPERATIONS

(30,010)

52,135

132,543

204,478

1,002

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

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

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

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

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

PROFIT/(LOSS) BEFORE TAXATION

(30,010)

52,135

132,543

204,478

1,002

Taxation

(21,479)

(25,531)

(24,679)

(49,266)

(11,881)

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

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

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

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

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

PROFIT/(LOSS) AFTER TAXATION

(51,489)

26,604

107,864

155,212

(10,879)

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

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

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

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

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

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

788,508

761,904

654,040

498,828

509,707

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

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

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

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

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

As restated

788,508

761,904

654,040

498,828

509,707

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

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

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

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

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

PROFIT AVAILABLE FOR APPROPRIATIONS

737,019

788,508

761,904

654,040

498,828

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

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

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

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

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

RETAINED PROFIT/(LOSS) CARRIED FORWARD

737,019

788,508

761,904

654,040

498,828

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

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

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

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

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

INTEREST EXPENSE (as per notes to P&L)

Bank overdraft

695

3,221

-

-

762

Bankers' acceptance

109,916

88,937

-

-

-

Hire purchase

5,594

7,446

-

-

4,511

Trust receipts

-

-

-

-

1,835

Others

-

-

-

-

71,774

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

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

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

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

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

116,205

99,604

-

-

78,882

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

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

-

-

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

DEPRECIATION (as per notes to P&L)

169,753

171,005

-

-

136,146

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

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

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

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

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

169,753

171,005

-

-

136,146

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

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

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

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

 

 

 

BALANCE SHEET

 

 

 

ASSETS EMPLOYED:

FIXED ASSETS

1,350,143

1,491,786

1,439,173

1,422,951

1,543,512

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

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

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

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

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

TOTAL LONG TERM ASSETS

1,350,143

1,491,786

1,439,173

1,422,951

1,543,512

Stocks

379,560

435,216

-

-

389,094

Trade debtors

2,122,686

2,325,131

-

-

3,037,116

Other debtors, deposits & prepayments

223,358

33,991

-

-

40,405

Deposits with financial institutions

103,707

154,725

-

-

-

Cash & bank balances

488,012

428,240

-

-

638,608

Others

27,172

40,470

-

-

16,681

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

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

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

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

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

TOTAL CURRENT ASSETS

3,344,495

3,417,773

2,633,299

3,809,029

4,121,904

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

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

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

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

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

TOTAL ASSET

4,694,638

4,909,559

4,072,472

5,231,980

5,665,416

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

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

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

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

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

CURRENT LIABILITIES

Trade creditors

228,625

318,504

-

-

803,516

Other creditors & accruals

63,736

81,463

-

-

170,046

Hire purchase & lease creditors

53,168

66,864

-

-

-

Other borrowings

-

-

-

-

3,720,195

Bill & acceptances payable

3,334,000

3,320,000

-

-

-

Amounts owing to director

-

-

-

-

133,951

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

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

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

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

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

TOTAL CURRENT LIABILITIES

3,679,529

3,786,831

3,010,969

4,285,520

4,827,708

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

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

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

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

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

NET CURRENT ASSETS/(LIABILITIES)

(335,034)

(369,058)

(377,670)

(476,491)

(705,804)

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

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

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

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

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

TOTAL NET ASSETS

1,015,109

1,122,728

1,061,503

946,460

837,708

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

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

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

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

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

SHARE CAPITAL

Ordinary share capital

250,000

250,000

250,000

250,000

250,000

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

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

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

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

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

TOTAL SHARE CAPITAL

250,000

250,000

250,000

250,000

250,000

Retained profit/(loss) carried forward

737,019

788,508

761,904

654,040

498,828

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

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

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

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

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

TOTAL RESERVES

737,019

788,508

761,904

654,040

498,828

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

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

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

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

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

SHAREHOLDERS' FUNDS/EQUITY

987,019

1,038,508

1,011,904

904,040

748,828

Other long term borrowings

-

-

-

-

82,673

Hire purchase creditors

17,701

70,867

-

-

-

Deferred taxation

10,389

13,353

-

-

6,207

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

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

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

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

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

TOTAL LONG TERM LIABILITIES

28,090

84,220

49,599

42,420

88,880

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

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

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

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

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

1,015,109

1,122,728

1,061,503

946,460

837,708

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

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

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

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

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

 

 

 

FINANCIAL RATIO

 

 

 

TYPES OF FUNDS

Cash

488,012

428,240

-

-

638,608

Net Liquid Funds

(2,845,988)

(2,891,760)

-

-

638,608

Net Liquid Assets

(714,594)

(804,274)

(377,670)

(476,491)

(1,094,898)

Net Current Assets/(Liabilities)

(335,034)

(369,058)

(377,670)

(476,491)

(705,804)

Net Tangible Assets

1,015,109

1,122,728

1,061,503

946,460

837,708

Net Monetary Assets

(742,684)

(888,494)

(427,269)

(518,911)

(1,183,778)

PROFIT & LOSS ITEMS

Earnings Before Interest & Tax (EBIT)

86,195

151,739

-

-

79,884

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

255,948

322,744

-

-

216,030

BALANCE SHEET ITEMS

Total Borrowings

3,404,869

3,457,731

-

-

3,802,868

Total Liabilities

3,707,619

3,871,051

3,060,568

4,327,940

4,916,588

Total Assets

4,694,638

4,909,559

4,072,472

5,231,980

5,665,416

Net Assets

1,015,109

1,122,728

1,061,503

946,460

837,708

Net Assets Backing

987,019

1,038,508

1,011,904

904,040

748,828

Shareholders' Funds

987,019

1,038,508

1,011,904

904,040

748,828

Total Share Capital

250,000

250,000

250,000

250,000

250,000

Total Reserves

737,019

788,508

761,904

654,040

498,828

LIQUIDITY (Times)

Cash Ratio

0.13

0.11

-

-

0.13

Liquid Ratio

0.81

0.79

-

-

0.77

Current Ratio

0.91

0.90

0.87

0.89

0.85

WORKING CAPITAL CONTROL (Days)

Stock Ratio

7

10

-

-

9

Debtors Ratio

39

53

-

-

68

Creditors Ratio

5

8

-

-

19

SOLVENCY RATIOS (Times)

Gearing Ratio

3.45

3.33

-

-

5.08

Liabilities Ratio

3.76

3.73

3.02

4.79

6.57

Times Interest Earned Ratio

0.74

1.52

-

-

1.01

Assets Backing Ratio

4.06

4.49

4.25

3.79

3.35

PERFORMANCE RATIO (%)

Operating Profit Margin

(0.15)

0.32

0.72

1.10

0.01

Net Profit Margin

(0.26)

0.16

0.59

0.84

(0.07)

Return On Net Assets

8.49

13.52

12.49

21.60

9.54

Return On Capital Employed

8.07

12.76

12.49

21.60

9.54

Return On Shareholders' Funds/Equity

(5.22)

2.56

10.66

17.17

(1.45)

Dividend Pay Out Ratio (Times)

0

0

-

-

0

NOTES TO ACCOUNTS

Contingent Liabilities

0

0

-

0

 

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.64.00

UK Pound

1

Rs.99.43

Euro

1

Rs.70.61

 

 

INFORMATION DETAILS

 

Analysis Done by :

DIV

 

 

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.