MIRA INFORM REPORT

 

 

Report No. :

328323

Report Date :

23.06.2015

 

 

IDENTIFICATION DETAILS

 

Name :

SOP EDIBLE OILS SDN. BHD.

 

 

Formerly Known As :

SHIN YANG EDIBLE OIL SDN. BHD.

 

 

Registered Office :

124-126, Jalan Bendahara, P.O. Box 547, 98007 Miri, Sarawak

 

 

Country :

Malaysia

 

 

Financials (as on) :

31.12.2013

 

 

Date of Incorporation :

05.02.2001

 

 

Com. Reg. No.:

538248-X

 

 

Legal Form :

Private Limited (Limited By Share)

 

 

Line of Business :

Manufacture of crude palm oil and palm kernal

 

 

No. of Employee :

Not Available

 

 

RATING & COMMENTS

 

MIRA’s Rating :

B

 

RATING

STATUS

PROPOSED CREDIT LINE

26-40

B

Capability to overcome financial difficulties seems comparatively below average.

Small

 

Status :

Moderate

 

 

Payment Behaviour :

Slow but correct

 

 

Litigation :

Clear

 

 

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

 

 

ECGC Country Risk Classification List – March 31, 2015

 

Country Name

Previous Rating

(31.12.2014)

Current Rating

(31.03.2015)

Malaysia

A2

A2

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

MALAYSIA ECONOMIC OVERVIEW

 

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

 

Source : CIA

 

 

 

EXECUTIVE SUMMARY

 

 

REGISTRATION NO.

:

538248-X

COMPANY NAME

:

SOP EDIBLE OILS SDN. BHD.

FORMER NAME

:

SHIN YANG EDIBLE OIL SDN. BHD. (30/12/2009)

INCORPORATION DATE

:

05/02/2001

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED (LIMITED BY SHARE)

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

124-126, JALAN BENDAHARA, P.O. BOX 547, 98007 MIRI, SARAWAK, MALAYSIA.

BUSINESS ADDRESS

:

124-126, JALAN BENDAHARA, 98000 MIRI, SARAWAK, MALAYSIA.

TEL.NO.

:

085-428669

FAX.NO.

:

085-439699

CONTACT PERSON

:

LING LU KUANG ( DIRECTOR )

INDUSTRY CODE

:

10401

PRINCIPAL ACTIVITY

:

MANUFACTURE OF CRUDE PALM OIL AND PALM KERNAL

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 40,000,000.00 DIVIDED INTO
ORDINARY SHARES 40,000,000 CASH OF MYR 1.00 EACH.

SALES

:

MYR 1,692,363,313 [2013]

NET WORTH

:

MYR 35,431,808 [2013]

STAFF STRENGTH

:

N/A

BANKER (S)

:

OCBC BANK (MALAYSIA) BHD
HSBC BANK MALAYSIA BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

LIMITED

PAYMENT

:

SLOW BUT CORRECT

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

MODERATE

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

SATISFACTORY

INDUSTRY OUTLOOK

:

MATURE

 

 

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) manufacture of crude palm oil and palm kernal.

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

 

The immediate holding company of the Subject is SOP INDUSTRIES SDN. BHD., 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 40,000,000.00

30/12/2010

MYR 5,000,000.00

MYR 1,000,000.00

05/02/2001

MYR 100,000.00

MYR 2.00

 

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

Name

Address

IC/PP/Loc No

Shareholding

(%)

SOP INDUSTRIES SDN. BHD.

124-126, JALAN BENDAHARA, 98007 MIRI, SARAWAK, MALAYSIA.

758562D

40,000,000.00

100.00

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

------

40,000,000.00

100.00

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

=====

+ Also Director


DIRECTORS

 

DIRECTOR 1

 

Name Of Subject

:

MR. LING LU KUANG

Address

:

LOT 515, JALAN DATUK EDWARD JELI, PIASAU INDUSTRIAL ESTATE, 98000 MIRI, SARAWAK, MALAYSIA.

IC / PP No

:

K0401393

New IC No

:

770104-13-5809

Date of Birth

:

04/01/1977

Nationality

:

MALAYSIAN

Date of Appointment

:

25/02/2015

 

DIRECTOR 2

 

Name Of Subject

:

MR. WONG HEE KWONG

Address

:

LOT 354, JALAN CORDIA, BAKAM ROAD, 98000 MIRI, SARAWAK, MALAYSIA.

IC / PP No

:

K789261

New IC No

:

620514-13-5541

Date of Birth

:

14/05/1962

Nationality

:

MALAYSIAN

Date of Appointment

:

15/10/2009

 

DIRECTOR 3

 

Name Of Subject

:

MR. LING CHIONG SING

Address

:

SHIN YANG GROUP, 515, JALAN DATUK EDWARD JELI, PIASAU INDUSTRIAL ESTATE, 98000 MIRI, SARAWAK, MALAYSIA.

IC / PP No

:

K561872

New IC No

:

560714-13-5499

Date of Birth

:

14/07/1956

Nationality

:

MALAYSIAN

Date of Appointment

:

05/02/2001

 

DIRECTOR 4

 

Name Of Subject

:

MR. LING CHIONG HO

Address

:

LOT 409, LUAK BAY, 98000 MIRI, SARAWAK, MALAYSIA.

IC / PP No

:

K317629

New IC No

:

520422-13-5415

Date of Birth

:

22/04/1952

Nationality

:

MALAYSIAN

Date of Appointment

:

15/10/2009

 

DIRECTOR 5

 

Name Of Subject

:

MR. HASBI BIN SUHAILI

Address

:

313-D, LOT 1627, KAMPUNG SIOL KANDIS, JALAN SIOL KANDIS PETRA JAYA, 93050 KUCHING, SARAWAK, MALAYSIA.

IC / PP No

:

K0008849

New IC No

:

630716-13-5071

Date of Birth

:

16/07/1963

Nationality

:

MALAYSIAN

Date of Appointment

:

15/10/2009



MANAGEMENT

 

 

 

1)

Name of Subject

:

LING LU KUANG

Position

:

DIRECTOR

 

 

 

AUDITOR

 

Auditor

:

ERNST & YOUNG

Auditor' Address

:

MENARA MILENIUM, JALAN DAMANLELA, PUSAT BANDAR DAMANSARA, DAMANSARA HEIGHTS, LEVEL 23A, 50490 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

 

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MR. ERIC KIU KWONG SENG

IC / PP No

:

K0279636

New IC No

:

711030-13-5215

Address

:

419, JALAN PANTAI, LUAK BAY, 98000 MIRI, SARAWAK, MALAYSIA.

 

 

 

BANKING


Banking relations are maintained principally with :

1)

Name

:

OCBC BANK (MALAYSIA) BHD

 

2)

Name

:

HSBC BANK MALAYSIA BHD

 

 

 

ENCUMBRANCE (S)

 

Charge No

Creation Date

Charge Description

Chargee Name

Total Charge

Status

1

30/05/2012

GENERAL AGREEMENT

HSBC BANK MALAYSIA BHD

-

Unsatisfied

2

17/10/2012

DEBENTURE

OCBC 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



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)

 

 

OPERATIONS

 

Products manufactured

:

CRUDE PALM OIL AND PALM KERNAL

 

Branch

:

NO

Other Information:


The Subject is principally engaged in the (as a / as an) manufacture of crude palm oil and palm kernal.

The Subject is engaged in the palm oil refinery business.


CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

085-428669

Match

:

N/A

Address Provided by Client

:

124-126, JALAN BENDAHARA,98000,MIRI,SARAWAK.

Current Address

:

124-126, JALAN BENDAHARA, 98000 MIRI, SARAWAK, MALAYSIA.

Match

:

YES

Latest Financial Accounts

:

YES

 

Other Investigations


On 19th June 2015 we contacted one of the staff from the Subject and he provided some information.

The Subject refused to disclose its number of employees.



FINANCIAL ANALYSIS

 

 

Profitability

Turnover

:

Increased

[

2009 - 2013

]

Profit/(Loss) Before Tax

:

Decreased

[

2009 - 2013

]

Return on Shareholder Funds

:

Acceptable

[

25.37%

]

Return on Net Assets

:

Acceptable

[

18.87%

]

The Subject's turnover increased steadily as the demand for its products / services increased due to the goodwill built up over the years.The management had succeeded in turning the Subject into a profit making company. The profit could be due to better control of its operating costs and efficiency in utilising its resources. The Subject's management had generated acceptable return for its shareholders using its assets.

Working Capital Control

Stock Ratio

:

Favourable

[

30 Days

]

Debtor Ratio

:

Favourable

[

17 Days

]

Creditors Ratio

:

Favourable

[

10 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

:

Unfavourable

[

0.48 Times

]

Current Ratio

:

Unfavourable

[

0.88 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

[

2.53 Times

]

Gearing Ratio

:

Unfavourable

[

6.95 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 higher turnover had helped to reduce the Subject's losses. Due to its weak liquidity position, the Subject will be faced with problems in meeting all its short term obligations if no short term loan is obtained or additional capital injected into the Subject. If there is a fall in the Subject's profit or any increase in interest rate, the Subject may not be able to generate sufficient cash-flow to service its interest. The Subject'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 : LIMITED

 

 

 

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

 

Major Economic Indicators:

2011

2012

2013

2014*

2015**

Population ( Million)

28.7

29.3

29.8

30.3

30.5

Gross Domestic Products ( % )

5.1

5.6

5.3

6.0

6.0

Domestic Demand ( % )

8.2

9.4

5.6

6.4

6.2

Private Expenditure ( % )

8.2

8.0

8.6

7.9

6.9

Consumption ( % )

7.1

1.0

5.7

6.5

5.6

Investment ( % )

12.2

11.7

13.3

12.0

10.7

Public Expenditure ( % )

8.4

13.3

4.4

2.3

4.2

Consumption ( % )

16.1

11.3

(1.2)

2.1

3.8

Investment ( % )

(0.3)

15.9

4.2

2.6

4.7

Balance of Trade ( MYR Million )

116,058

106,300

71,298

52,314

-

Government Finance ( MYR Million )

(45,511)

(42,297)

(39,993)

(37,291)

-

Government Finance to GDP / Fiscal Deficit ( % )

(5.4)

(4.5)

(4.0)

(3.5)

(3.0)

Inflation ( % Change in Composite CPI)

3.1

1.6

2.5

3.3

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

10401 : Manufacture of crude palm oil

INDUSTRY :

PALM OIL

According to the Malaysian Palm Oil Council (MPOC), Malaysia currently accounts for 39% of world palm oil production and 44% of world exports in year 2014. Malaysia is also one of the biggest producers and exporters of oil palm and palm oil products. In the last 5 years until year 2014, Malaysia earned between RM50 billion and RM70 billion a year from palm oil exports.

Besides, the ongoing implementation of Entry Point Projects (EPPs) under the National Key Economic Area (NKEA) on palm oil to enhance productivity of upstream and downstream activities will further boost the palm oil sector. Thus, palm oil sector is expected to grow 6.7% in 2014 (2013: 2.6%). Moreover, the total oil palm planted areas increased 2.8% to 5.3 million hectares as at end-June 2014 (end-June 2013: 5.2 million hectares) following the opening of 30,544 hectares of cultivated areas mainly in Sabah and Sarawak. Other than that, the production of palm oil is expected to growth by 1.6% (19.52 million tonnes) in year 2014, compared to 19.22 million tonnes in year 2013.

According to Kenanga Research, the estimated average crude palm oil (CPO) price for 2014 and 2015 is between RM2,100 and RM2,500 per tonne due to lower inventory estimate by end-2015. The estimated prices also lifted by factors such as biofuel demand and petroleum price level. But, the average price of crude palm oil (CPO) strengthened to RM2,542 per tonne during the first eight months of 2014 (January - August 2013: Rm2,309 per tonne). However, with production rising in the second quarter coupled with high inventory level (end-August 2014: 2.1 million tonnes), the price of CPO moderated to RM2,162 per tonne as at end-August 2014, and hitting a five-year low of RM1,914 per tonne in Sept 2014 as stockpiles surged to a more than 1 year high above 2 million tonnes. The moderation in CPO prices was also due to a surge in global supplies of edible oil, particularly the bumper harvest of soybean in the US.

Over the total exports of major products in year 2013, palm oil accounts 6.4% of share in the total exports. During the first seven months of 2014, export receipts of palm oil rebounded by 4.9% to RM25.8 billion (January - July 2013: -21.9%, RM 24.6 billion) due to higher export prices averaging RM 2,703 per tonne (January - July 2013: Rm 2,456 per tonne). As a measure to reduce the high inventory due to strong output, the Government has exempted export tax on CPO until December 2014. The Government's move to extend the export duty exemption for crude palm oil (CPO) has received positive reaction from industry players. The chairman of Malaysian Palm Oil Board (MPOB) said the move provided a stable effect on the CPO market prices.

In Budget 2015, there is an allocation of RM41 million for smallholders to plant and replant oil palm. The incentives for commodities announced in Budget 2015 will help alleviate the problems faced by the industry, especially the poor prices for rubber and palm oil.

According to the Minister of Plantation Industries and Commodities, the Malaysian government will increase the amount of palm oil based bio-diesel in the national diesel supply mix from November 2014, in a move that will also help to increase consumption of crude palm oil (CPO) and reduce stockpile levels of the commodity. The implementation of the B7 blend will also increase the use palm oil which prices have softened due to oversupply in the market. According to the Malaysian Palm Oil Council (MPOC), CPO prices are expected to improve to between RM2,100 and RM2,500 in year 2015, lifted by factors such as biofuel demand from the B7 programme. CIMB Research estimates that the rollout could raise the country's palm oil demand by 263,000-390,000 tonnes per annum, or 1-2% of the total palm oil production in 2013.

OVERALL INDUSTRY OUTLOOK : Mature



CREDIT RISK EVALUATION & RECOMMENDATION

 

 


Incorporated in 2001, the Subject is a Private Limited company, focusing on manufacture of crude palm oil and palm kernal. Having been in the industry for over a decade, the Subject has achieved a certain market share and has built up a satisfactory reputation in the market. It should have received supports from its regular customers. We noted that the issued and paid up capital of the Subject stands at MYR 40,000,000 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. Overall, we regard that the Subject's management capability is average. This indicates that the Subject has greater potential to improve its business performance and raising income for the Subject.

We noted that both the turnover and profits have increased compared to the previous year. The higher profit could be due to increase in turnover and better control over its operating costs. Based on the higher profitability, the Subject has generated a favourable return based on its existing shareholders' funds which indicated that the management was efficient in utilising its funds to generate income. 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. 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. Given a positive net worth standing at MYR 35,431,808, the Subject should be able to maintain its business in the near terms.

The Subject's supplier are from both the local and overseas countries. This will eliminates the risk of dependency on deliveries from a number of key suppliers and insufficient quantities of its raw materials. Overall the Subject has a good control over its resources.

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 has reached its optimum level and is generally stable. It is saturated and very competitive. Thus, the Subject's growth prospect is very much depends on its capacity in sustaining its performance in the market.

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

SUMMARY

SUMMARY

SUMMARY

Currency

MYR

MYR

MYR

MYR

MYR

TURNOVER

1,692,363,313

712,596,530

48,961,611

-

-

Other Income

34,894

2,104,970

-

-

-

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

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

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

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

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

Total Turnover

1,692,398,207

714,701,500

48,961,611

-

-

Costs of Goods Sold

(1,643,786,682)

(719,586,984)

-

-

-

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

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

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

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

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

Gross Profit

48,611,525

(4,885,484)

-

-

-

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

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

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

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

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

PROFIT/(LOSS) FROM OPERATIONS

13,207,741

(16,371,099)

(821,213)

(69,521)

(1,398)

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

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

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

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

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

PROFIT/(LOSS) BEFORE TAXATION

13,207,741

(16,371,099)

(821,213)

(69,521)

(1,398)

Taxation

(4,219,797)

3,715,061

-

-

-

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

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

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

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

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

PROFIT/(LOSS) AFTER TAXATION

8,987,944

(12,656,038)

(821,213)

(69,521)

(1,398)

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

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

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

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

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

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

(13,556,136)

(900,098)

(78,885)

(9,364)

(7,966)

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

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

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

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

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

As restated

(13,556,136)

(900,098)

(78,885)

(9,364)

(7,966)

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

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

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

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

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

PROFIT AVAILABLE FOR APPROPRIATIONS

(4,568,192)

(13,556,136)

(900,098)

(78,885)

(9,364)

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

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

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

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

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

RETAINED PROFIT/(LOSS) CARRIED FORWARD

(4,568,192)

(13,556,136)

(900,098)

(78,885)

(9,364)

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

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

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

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

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

INTEREST EXPENSE (as per notes to P&L)

Bankers' acceptance

4,672,086

1,719,819

-

-

-

Lease interest

13,767

-

-

-

-

Loan from holding company

1,848,561

2,176,620

-

-

-

Term loan / Borrowing

4,206,601

3,022,652

-

-

-

Others

(2,086,973)

(3,480,581)

-

-

-

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

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

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

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

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

8,654,042

3,438,510

-

-

-

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

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

-

-

-

DEPRECIATION (as per notes to P&L)

8,102,263

2,469,012

-

-

-

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

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

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

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

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

8,102,263

2,469,012

-

-

-

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

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

 

 

 

BALANCE SHEET

 

 

 

ASSETS EMPLOYED:

FIXED ASSETS

156,506,436

149,771,033

92,466,428

17,812,384

-

Deferred assets

-

3,715,061

-

-

-

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

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

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

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

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

TOTAL LONG TERM INVESTMENTS/OTHER ASSETS

-

3,715,061

-

-

-

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

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

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

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

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

TOTAL LONG TERM ASSETS

156,506,436

153,486,094

92,466,428

17,812,384

-

Stocks

136,990,699

124,836,735

-

-

-

Trade debtors

77,934,943

25,608,195

-

-

-

Other debtors, deposits & prepayments

2,314,145

1,055,139

-

-

-

Short term deposits

-

87,478,100

-

-

-

Amount due from related companies

91,865

87,733

-

-

-

Cash & bank balances

80,596,313

13,181,938

-

-

-

Others

665,972

672,608

-

-

-

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

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

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

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

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

TOTAL CURRENT ASSETS

298,593,937

252,920,448

25,443,391

9,373,711

2

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

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

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

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

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

TOTAL ASSET

455,100,373

406,406,542

117,909,819

27,186,095

2

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

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

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

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

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

CURRENT LIABILITIES

Trade creditors

44,656,922

22,757,985

-

-

-

Other creditors & accruals

17,396,613

31,926,043

-

-

-

Hire purchase & lease creditors

172,505

-

-

-

-

Short term borrowings/Term loans

15,800,000

8,400,000

-

-

-

Bill & acceptances payable

150,390,000

150,054,000

-

-

-

Amounts owing to holding company

109,199,658

83,688,432

-

-

-

Amounts owing to related companies

50

50

-

-

-

Amounts owing to director

168

168

-

-

-

Other liabilities

1,636,060

-

-

-

-

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

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

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

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

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

TOTAL CURRENT LIABILITIES

339,251,976

296,826,678

78,809,917

17,264,980

9,364

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

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

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

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

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

NET CURRENT ASSETS/(LIABILITIES)

(40,658,039)

(43,906,230)

(53,366,526)

(7,891,269)

(9,362)

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

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

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

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

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

TOTAL NET ASSETS

115,848,397

109,579,864

39,099,902

9,921,115

(9,362)

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

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

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

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

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

SHARE CAPITAL

Ordinary share capital

40,000,000

40,000,000

10,000,000

10,000,000

2

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

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

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

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

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

TOTAL SHARE CAPITAL

40,000,000

40,000,000

10,000,000

10,000,000

2

Retained profit/(loss) carried forward

(4,568,192)

(13,556,136)

(900,098)

(78,885)

(9,364)

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

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

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

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

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

TOTAL RESERVES

(4,568,192)

(13,556,136)

(900,098)

(78,885)

(9,364)

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

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

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

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

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

SHAREHOLDERS' FUNDS/EQUITY

35,431,808

26,443,864

9,099,902

9,921,115

(9,362)

Long term loans

79,640,000

83,136,000

-

-

-

Lease obligations

271,853

-

-

-

-

Deferred taxation

504,736

-

-

-

-

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

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

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

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

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

TOTAL LONG TERM LIABILITIES

80,416,589

83,136,000

30,000,000

-

-

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

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

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

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

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

115,848,397

109,579,864

39,099,902

9,921,115

(9,362)

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

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

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

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

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

 

 

 

FINANCIAL RATIO

 

 

 

TYPES OF FUNDS

Cash

80,596,313

100,660,038

-

-

-

Net Liquid Funds

(69,793,687)

(49,393,962)

-

-

-

Net Liquid Assets

(177,648,738)

(168,742,965)

(53,366,526)

(7,891,269)

(9,362)

Net Current Assets/(Liabilities)

(40,658,039)

(43,906,230)

(53,366,526)

(7,891,269)

(9,362)

Net Tangible Assets

115,848,397

109,579,864

39,099,902

9,921,115

(9,362)

Net Monetary Assets

(258,065,327)

(251,878,965)

(83,366,526)

(7,891,269)

(9,362)

PROFIT & LOSS ITEMS

Earnings Before Interest & Tax (EBIT)

21,861,783

(12,932,589)

-

-

-

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

29,964,046

(10,463,577)

-

-

-

BALANCE SHEET ITEMS

Total Borrowings

246,274,358

241,590,000

-

-

-

Total Liabilities

419,668,565

379,962,678

108,809,917

17,264,980

9,364

Total Assets

455,100,373

406,406,542

117,909,819

27,186,095

2

Net Assets

115,848,397

109,579,864

39,099,902

9,921,115

(9,362)

Net Assets Backing

35,431,808

26,443,864

9,099,902

9,921,115

(9,362)

Shareholders' Funds

35,431,808

26,443,864

9,099,902

9,921,115

(9,362)

Total Share Capital

40,000,000

40,000,000

10,000,000

10,000,000

2

Total Reserves

(4,568,192)

(13,556,136)

(900,098)

(78,885)

(9,364)

LIQUIDITY (Times)

Cash Ratio

0.24

0.34

-

-

-

Liquid Ratio

0.48

0.43

-

-

-

Current Ratio

0.88

0.85

0.32

0.54

0.00

WORKING CAPITAL CONTROL (Days)

Stock Ratio

30

64

-

-

-

Debtors Ratio

17

13

-

-

-

Creditors Ratio

10

12

-

-

-

SOLVENCY RATIOS (Times)

Gearing Ratio

6.95

9.14

-

-

-

Liabilities Ratio

11.84

14.37

11.96

1.74

(1.00)

Times Interest Earned Ratio

2.53

(3.76)

-

-

-

Assets Backing Ratio

2.90

2.74

3.91

0.99

(4,681.00)

PERFORMANCE RATIO (%)

Operating Profit Margin

0.78

(2.30)

(1.68)

-

-

Net Profit Margin

0.53

(1.78)

(1.68)

-

-

Return On Net Assets

18.87

(11.80)

(2.10)

(0.70)

14.93

Return On Capital Employed

18.84

(11.80)

(2.10)

(0.70)

14.93

Return On Shareholders' Funds/Equity

25.37

(47.86)

(9.02)

(0.70)

14.93

Dividend Pay Out Ratio (Times)

0.00

0.00

-

-

-

NOTES TO ACCOUNTS

Contingent Liabilities

0

0



FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.63.51

UK Pound

1

Rs.100.94

Euro

1

Rs.72.32

 

 

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.