MIRA INFORM REPORT

 

 

Report No. :

311574

Report Date :

16.03.2015

 

IDENTIFICATION DETAILS

 

Name :

PALING INDUSTRIES SDN. BHD.

 

 

Registered Office :

Unit 203, Blokc, Damansara Intan, 1, Jalan Ss 20/27, Tingkat 2, 47400 Petaling Jaya, Selangor

 

 

Country :

Malaysia

 

 

Financials (as on) :

31.12.2013

 

 

Date of Incorporation :

18.08.1971

 

 

Com. Reg. No.:

11039-V

 

 

Legal Form :

Private Limited (Limited By Share)

 

 

Line of Business :

Subject is engaged in the manufacturing of plastic cisterns, pipes and fittings.

 

 

No. of Employees :

200 [2015]

 

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Status :

Satisfactory

Payment Behaviour :

Slow but correct

Litigation :

Clear

 

NOTES:

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

 

 

ECGC Country Risk Classification List – December 31, 2014

 

Country Name

Previous Rating

(30.09.2014)

Current Rating

(31.12.2014)

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.

:

11039-V

COMPANY NAME

:

PALING INDUSTRIES SDN. BHD.

FORMER NAME

:

VINCO INDUSTRY SDN BHD (06/01/1973)

INCORPORATION DATE

:

18/08/1971

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED (LIMITED BY SHARE)

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

UNIT 203, BLOKC, DAMANSARA INTAN, 1, JALAN SS 20/27, TINGKAT 2, 47400 PETALING JAYA, SELANGOR, MALAYSIA.

BUSINESS ADDRESS

:

LOT 12, JALAN PERUSAHAAN EMPAT, 68100 BATU CAVES, SELANGOR, MALAYSIA.

TEL.NO.

:

03-61898333/61896389

FAX.NO.

:

03-61883810

EMAIL

:

GENERAL@PALING.COM.MY

WEB SITE

:

WWW.PALING.COM.MY

CONTACT PERSON

:

TOM LYDIE JOHAN VAN GYSEGHEM ( DIRECTOR )

INDUSTRY CODE

:

22209

PRINCIPAL ACTIVITY

:

MANUFACTURING OF PLASTIC CISTERNS, PIPES AND FITTINGS

AUTHORISED CAPITAL

:

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

ISSUED AND PAID UP CAPITAL

:

MYR 4,500,000.00 DIVIDED INTO 
ORDINARY SHARES 1,110,002 CASH AND 3,389,998 OTHERWISE OF MYR 1.00 EACH.

SALES

:

MYR 45,288,459 [2013]

NET WORTH

:

MYR 33,015,092 [2013]

STAFF STRENGTH

:

200 [2015]

BANKER (S)

:

ALLIANCE BANK MALAYSIA BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

LIMITED

PAYMENT

:

GOOD

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

LOW

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

SATISFACTORY

INDUSTRY OUTLOOK

:

AVERAGE GROWTH

 

HISTORY / BACKGROUND


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

 

The Subject is principally engaged in the (as a / as an) manufacturing of plastic cisterns, pipes and fittings.

 

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

 

The immediate holding company of the Subject is GLYNWED HOLDING B. V., a company incorporated in NETHERLANDS.

 

Share Capital History

 

Date

Authorised Shared Capital

Issue & Paid Up Capital

28/06/2013

MYR 20,000,000.00

MYR 4,500,000.00

 

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


Name

Address

IC/PP/Loc No

Shareholding

(%)

GLYNWED HOLDING B. V.

INDUSTRIETERREIN 11, 5981 NK PANNINGEN, NETHERLANDS.

XLZ00212511

4,500,000.00

100.00

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

------

4,500,000.00

100.00

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

=====

 

+ Also Director

 

The Subject's interest in other companies (Subsidiaries/Associates) are shown as follow :



Local No

Country

Company

(%)

As At

352462P

MALAYSIA

LIGA CANGGIH SDN. BHD.

100.00

26/11/2014

690277D

MALAYSIA

PASTI BUMI SDN. BHD.

49.00

26/11/2014

 

 

 

 

 

 

DIRECTORS



DIRECTOR 1

 

Name Of Subject

:

TOM LYDIE JOHAN VAN GYSEGHEM

Address

:

2, TAMAN HIJAU, UKAY HEIGHTS, 68000 AMPANG, SELANGOR, MALAYSIA.

IC / PP No

:

EH976102

Date of Appointment

:

22/10/2012

 

DIRECTOR 2

 

Name Of Subject

:

COLIN DAVID LEACH

Address

:

25, BENBOW STREET, ST HELIERS, AUCKLAND 1071, NEW ZEALAND.

IC / PP No

:

LN267688

Date of Appointment

:

08/01/2008

 

DIRECTOR 3

 

Name Of Subject

:

MR. OOI SIM MUN

Address

:

A-3A-8, KONDOMINIUM DYNASTY KLANG, JALAN BATU TIGA LAMA, 41300 KLANG, SELANGOR, MALAYSIA.

IC / PP No

:

A1808457

New IC No

:

710312-07-5615

Date of Birth

:

12/03/1971

Nationality

:

MALAYSIAN

Date of Appointment

:

26/11/2014



MANAGEMENT

 

 

1)

Name of Subject

:

TOM LYDIE JOHAN VAN GYSEGHEM

Position

:

DIRECTOR

 

2)

Name of Subject

:

SHIRLEY

Position

:

ACCOUNTANT

 

AUDITOR

 

Auditor

:

YUEN TANG & CO

Auditor' Address

:

301, BANGUNAN LEE YAN LIAN, JALAN TUN PERAK, 50050 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

COMPANY SECRETARIES

 

1)

Company Secretary

:

MR. CHONG FOOK SIN

IC / PP No

:

7621227

New IC No

:

470314-01-5173

Address

:

5, JALAN PJU 1A/56, DAMANSARA IDAMAN, 47500 SUBANG JAYA, SELANGOR, MALAYSIA.

 

2)

Company Secretary

:

MR. KAN CHEE JING

IC / PP No

:

A2298936

New IC No

:

721220-08-5537

Address

:

BLOCK C-12-10, DANAU IDAMAN, JALAN 2/109F, TAMAN DANAU DESA, 58100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

 

BANKING


Banking relations are maintained principally with :

1)

Name

:

ALLIANCE BANK MALAYSIA BHD

 

 

ENCUMBRANCE (S)

 

Charge No

Creation Date

Charge Description

Chargee Name

Total Charge

Status

1

23/08/1973

N/A

BANGKOK BANK LTD

MYR 320,000.00

Satisfied

2

01/11/1974

N/A

BANGKOK BANK LTD

MYR 400,000.00

Satisfied

5

27/07/1979

N/A

BANGKOK BANK LTD

MYR 500,000.00

Satisfied

4

09/11/1979

N/A

MIDF

MYR 190,000.00

Satisfied

6

22/03/1982

N/A

MALAYSIAN INDUSTRIAL DEVELOPMENT FINANCE BHD

MYR 350,000.00

Satisfied

7

24/01/1983

N/A

BANGKOK BANK LTD

MYR 1,150,000.00

Satisfied

8

16/09/1983

N/A

MALAYSIAN INDUSTRIAL DEVELOPMENT FINANCE BHD

MYR 400,000.00

Satisfied

9

15/12/1986

N/A

MALAYSIAN INDUSTRIAL DEVELOPMENT FINANCE BHD

MYR 550,000.00

Satisfied

10

16/02/1990

N/A

MALAYSIAN INDUSTRIAL DEVELOPMENT FINANCE BERHAD

MYR 280,000.00

Satisfied

11

22/10/1990

N/A

MALAYSIAN INDUSTRIAL DEVELOPMENT FINANCE BERHAD

MYR 375,000.00

Satisfied

12

09/09/1991

N/A

MALAYSIAN INDUSTRIAL DEVELOPMENT FINANCE BERHAD

MYR 900,000.00

Satisfied

13

03/08/1992

N/A

MALAYSIAN INDUSTRIAL DEVELOPMENT FINANCE BERHAD

MYR 900,000.00

Satisfied

14

29/12/1992

N/A

MALAYSIAN INDUSTRIAL DEVELOPMENT FINANCE BERHAD

MYR 3,000,000.00

Satisfied

15

08/06/2006

OPEN CHARGE

PUBLIC INVESTMENT BANK BERHAD

-

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

[

X

]

Average 61-90 Days

[

]

Fair 91-120 Days

[

]

Poor >120 Days

[

]

 

CLIENTELE

 

Local

:

YES

Domestic Markets

:

MALAYSIA

Overseas

:

YES

Export Market

:

SINGAPORE

AUSTRALIA

UNITED ARAB EMIRATES

UNITED KINGDOM

GHANA

ASIA

Credit Term

:

30 - 60 DAYS

Payment Mode

:

LETTER OF CREDIT (LC)
TELEGRAPHIC TRANSFER (TT)
CHEQUES

 

OPERATIONS

 

Products manufactured

:

PLASTIC CISTERNS, PIPES AND FITTINGS

Product Brand Name

:

PALING

Award

:

1 ) MS ISO 9001 : 2000 Year :2003

Certification of Products

:

1) MS 979:PT.2:1985

Member(s) / Affiliate(s)

:

FEDERATION OF MALAYSIAN MANUFACTURERS (FMM)

MALAYSIAN PLASTICS MANUFACTURERS ASSOCIATION (MPMA)

SMI ASSOCIATION OF MALAYSIA

SMALL & MEDIUM ENTERPRISE

MALAYSIA EXTERNAL TRADE DEVELOPMENT CORPORATION (MATRADE)

Ownership of premises

:

OWNED

Factory Size

:

LARGE

Production Capacity

:

DEPENDS ON THE CUSTOMERS REQUIREMENT

 

Total Number of Employees:

 

YEAR

2015

2014

2013

2012

2011

2010

GROUP

N/A

N/A

N/A

N/A

N/A

N/A

COMPANY

200

200

150

150

156

150

 

Branch

:

NO

 

Other Information:


The Subject is principally engaged in the (as a / as an) manufacturing of plastic cisterns, pipes and fittings. 

The Subject produces a wide range of products from pipes and fittings to sanitary products for various applications in water and building industries.

The Subject's product range are includes PVC pressure pipes and fittings, soil, waste and vent (SWV) system, underground sewer system, rainwater piping system, telecom and electrical conduits. 

We were informed that the Subject also provides custom-made products based on the customers' specification.

Besides that the Subject has been continuously engaged in enhancing its material formulation, processing equipment and tools, and testing facilities in order to improve the performance and reliability of its products.

The Subject has a training center in Bandar Damansara Perdana and the training are held upon request too. 


CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

03-61898333/61896389

Match

:

N/A

Address Provided by Client

:

LOT 12, JALAN PARUSAHAAN EMPAT, 68100 BATU CAVES, SELANGOR, DARUL EHSAN, MALAYSIA

Current Address

:

LOT 12, JALAN PERUSAHAAN EMPAT, 68100 BATU CAVES, 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

:

Erratic

[

2009 - 2013

]

Profit/(Loss) Before Tax

:

Decreased

[

2009 - 2013

]

Return on Shareholder Funds

:

Unfavourable

[

(4.27%)

]

Return on Net Assets

:

Unfavourable

[

(3.15%)

]

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

:

Unfavourable

[

66 Days

]

Debtor Ratio

:

Unfavourable

[

68 Days

]

Creditors Ratio

:

Favourable

[

43 Days

]

The Subject could be incurring higher holding cost. As its capital was tied up in stocks, it could face liquidity problems. The high debtors' ratio could indicate that the Subject was weak in its credit control. However, the Subject could also giving longer credit periods to its customers in order to boost its sales or to capture / retain its market share. The Subject had a favourable creditors' ratio where the Subject could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.

Liquidity

Liquid Ratio

:

Favourable

[

1.91 Times

]

Current Ratio

:

Favourable

[

2.74 Times

]

A minimum liquid ratio of 1 should be maintained by the Subject in order to assure its creditors of its ability to meet short term obligations and the Subject was in a good liquidity position. Thus, we believe the Subject is able to meet all its short term obligations as and when they fall due.

Solvency

Interest Cover

:

Unfavourable

[

(372.96 Times)

]

Gearing Ratio

:

Favourable

[

0.00 Times

]

The Subject incurred losses in the year. It did not generate sufficient income to service its interest.  If the situation does not improve, the Subject may be vulnerable to default in servicing the interest. The Subject had no gearing and hence it had virtually no financial risk. The Subject was financed by its shareholders' funds and internally generated fund. During the economic downturn, the Subject, having a zero gearing, will be able to compete better than those which are highly geared in the same industry.

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 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's interest cover was negative, indicating that it did not generate sufficient income to service its interest. If its result does not show impressive improvements or succeed obtaining short term financing or capital injection, it may not be able to service its interest and repay the loans. The Subject was a zero gearing company, it was solely dependant on its shareholders to provide funds to finance its business. The Subject has good chance of getting loans, if the needs arises.

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

22209 : Manufacture of diverse plastic products n.e.c.

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 1971, the Subject is a Private Limited company, focusing on manufacturing of plastic cisterns, pipes and fittings. 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 4,500,000 and strong backing from its holding company, the Subject enjoys timely financial assistance should the needs arise. These favourable conditions has minimised its risk in the industry compared to other players. 

Over the years, the Subject has penetrated into both the local and overseas market. The Subject has positioned itself in the global market and is competing in the industry. Its stable clientele base will enable the Subject to further enhance its business in the near term. The Subject is a fairly large and rapidly growing company with over 200 staff in its operations Overall, we regard that the Subject's management capability is average. This indicates that the Subject has greater potential to improve its business performance and raising income for the Subject. To improve its quality products and services, we noted that the Subject has received a number of certifications & awards. This will improve the customer's confidence level to the Subject. 

Due to the challenging market conditions, the Subject's business performance seems to be deteriorating and losses incurred. 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 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. Being a zero geared company, the Subject virtually has no financial risk as it is mainly dependent on its internal funds to finance its business. Given a positive net worth standing at MYR 33,015,092, 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. 

Overall, the Subject's payment habit is good as the Subject has a good credit control and it could be taking advantage of the cash discounts while maintaining a good reputation with its creditors. 

The industry shows an upward trend and this trend is very likely to sustain in the near terms. Hence, the Subject is expected to benefit from the favourable outlook of the industry. 

Based on the above condition, we recommend credit be granted to the Subject promptly.

 

 

PROFIT AND LOSS ACCOUNT

 

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

PALING INDUSTRIES SDN. BHD.

 

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

GROUP

GROUP

GROUP

GROUP

GROUP

Audited Account

YES

YES

YES

YES

YES

Unqualified Auditor's Report (Clean Opinion)

YES

YES

YES

YES

YES

Financial Type

FULL

FULL

FULL

FULL

FULL

Currency

MYR

MYR

MYR

MYR

MYR

TURNOVER

45,288,459

47,416,918

42,946,960

39,739,558

33,322,254

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

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

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

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

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

Total Turnover

45,288,459

47,416,918

42,946,960

39,739,558

33,322,254

Costs of Goods Sold

(32,683,699)

(33,032,125)

(31,017,129)

(29,439,545)

(24,185,869)

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

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

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

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

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

Gross Profit

12,604,760

14,384,793

11,929,831

10,300,013

9,136,385

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

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

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

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

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

PROFIT/(LOSS) FROM OPERATIONS

(1,088,602)

3,875,736

2,817,949

2,279,407

2,155,622

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

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

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

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

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

PROFIT/(LOSS) BEFORE TAXATION

(1,088,602)

3,875,736

2,817,949

2,279,407

2,155,622

Taxation

(321,245)

(759,535)

(242,352)

(222,912)

(565,338)

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

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

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

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

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

PROFIT/(LOSS) AFTER TAXATION

(1,409,847)

3,116,201

2,575,597

2,056,495

1,590,284

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

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

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

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

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

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

29,243,514

26,116,322

23,480,339

21,412,853

19,811,578

Prior year adjustment

-

-

49,395

-

-

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

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

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

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

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

As restated

29,243,514

26,116,322

23,529,734

21,412,853

19,811,578

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

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

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

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

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

PROFIT AVAILABLE FOR APPROPRIATIONS

27,833,667

29,232,523

26,105,331

23,469,348

21,401,862

TRANSFER TO RESERVES - General

10,991

10,991

10,991

10,991

10,991

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

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

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

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

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

RETAINED PROFIT/(LOSS) CARRIED FORWARD

27,844,658

29,243,514

26,116,322

23,480,339

21,412,853

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

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

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

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

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

INTEREST EXPENSE (as per notes to P&L)

Bank overdraft

-

115

1,057

1,485

2,851

Hire purchase

-

-

-

6,454

16,764

Term loan / Borrowing

2,911

24,935

49,093

66,789

105,340

Others

-

-

-

163,913

90,252

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

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

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

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

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

2,911

25,050

50,150

238,641

215,207

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

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

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

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

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

 

 

 

 

 

 

 

BALANCE SHEET

 

PALING INDUSTRIES SDN. BHD.

 

ASSETS EMPLOYED:

FIXED ASSETS

17,284,641

16,661,320

16,075,889

16,210,380

17,057,059

Associated companies

49,000

49,000

49,000

-

-

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

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

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

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

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

TOTAL LONG TERM INVESTMENTS/OTHER ASSETS

49,000

49,000

49,000

-

-

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

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

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

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

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

TOTAL LONG TERM ASSETS

17,333,641

16,710,320

16,124,889

16,210,380

17,057,059

Stocks

8,236,359

11,854,310

11,662,485

9,869,202

12,209,132

Trade debtors

8,423,618

6,796,317

5,393,605

5,217,506

5,253,623

Other debtors, deposits & prepayments

3,190,906

562,709

1,145,611

850,750

152,557

Short term deposits

3,400,000

6,850,000

3,600,000

3,800,000

450,000

Amount due from holding company

-

-

-

-

50,220

Amount due from related companies

975,073

1,327,886

669,535

1,016,450

822,636

Amount due from associated companies

-

-

4,000

111,166

166,364

Cash & bank balances

2,267,300

2,191,666

1,705,319

921,581

442,634

Others

487,093

-

73,502

78,398

76,870

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

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

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

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

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

TOTAL CURRENT ASSETS

26,980,349

29,582,888

24,254,057

21,865,053

19,624,036

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

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

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

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

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

TOTAL ASSET

44,313,990

46,293,208

40,378,946

38,075,433

36,681,095

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

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

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

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

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

CURRENT LIABILITIES

Trade creditors

3,861,337

6,479,190

4,335,469

4,373,464

3,158,258

Other creditors & accruals

4,392,338

1,148,340

1,164,203

990,320

1,118,147

Hire purchase & lease creditors

-

-

-

-

144,296

Short term borrowings/Term loans

-

246,000

516,000

516,000

516,000

Bill & acceptances payable

-

-

-

-

882,000

Amounts owing to related companies

1,576,747

2,313,027

1,005,768

1,096,201

1,559,258

Provision for taxation

-

73,101

-

-

-

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

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

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

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

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

TOTAL CURRENT LIABILITIES

9,830,422

10,259,658

7,021,440

6,975,985

7,377,959

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

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

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

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

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

NET CURRENT ASSETS/(LIABILITIES)

17,149,927

19,323,230

17,232,617

14,889,068

12,246,077

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

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

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

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

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

TOTAL NET ASSETS

34,483,568

36,033,550

33,357,506

31,099,448

29,303,136

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

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

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

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

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

SHARE CAPITAL

Ordinary share capital

4,500,000

4,500,000

4,500,000

4,500,000

4,500,000

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

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

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

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

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

TOTAL SHARE CAPITAL

4,500,000

4,500,000

4,500,000

4,500,000

4,500,000

Capital reserve

670,434

681,425

692,416

703,407

714,398

Retained profit/(loss) carried forward

27,844,658

29,243,514

26,116,322

23,480,339

21,412,853

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

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

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

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

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

TOTAL RESERVES

28,515,092

29,924,939

26,759,343

24,183,746

22,127,251

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

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

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

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

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

SHAREHOLDERS' FUNDS/EQUITY

33,015,092

34,424,939

31,259,343

28,683,746

26,627,251

Long term loans

-

-

246,000

762,000

1,278,000

Hire purchase creditors

-

-

-

-

3,876

Deferred taxation

890,726

1,016,524

1,151,385

1,056,529

901,480

Retirement benefits provision

577,750

592,087

700,778

597,173

492,529

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

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

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

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

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

TOTAL LONG TERM LIABILITIES

1,468,476

1,608,611

2,098,163

2,415,702

2,675,885

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

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

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

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

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

34,483,568

36,033,550

33,357,506

31,099,448

29,303,136

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

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

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

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

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

 

 

 

 

 

 

 

FINANCIAL RATIO

 

PALING INDUSTRIES SDN. BHD.

 

TYPES OF FUNDS

Cash

5,667,300

9,041,666

5,305,319

4,721,581

892,634

Net Liquid Funds

5,667,300

9,041,666

5,305,319

4,721,581

10,634

Net Liquid Assets

8,913,568

7,468,920

5,570,132

5,019,866

36,945

Net Current Assets/(Liabilities)

17,149,927

19,323,230

17,232,617

14,889,068

12,246,077

Net Tangible Assets

34,483,568

36,033,550

33,357,506

31,099,448

29,303,136

Net Monetary Assets

7,445,092

5,860,309

3,471,969

2,604,164

(2,638,940)

BALANCE SHEET ITEMS

Total Borrowings

0

246,000

762,000

1,278,000

2,824,172

Total Liabilities

11,298,898

11,868,269

9,119,603

9,391,687

10,053,844

Total Assets

44,313,990

46,293,208

40,378,946

38,075,433

36,681,095

Net Assets

34,483,568

36,033,550

33,357,506

31,099,448

29,303,136

Net Assets Backing

33,015,092

34,424,939

31,259,343

28,683,746

26,627,251

Shareholders' Funds

33,015,092

34,424,939

31,259,343

28,683,746

26,627,251

Total Share Capital

4,500,000

4,500,000

4,500,000

4,500,000

4,500,000

Total Reserves

28,515,092

29,924,939

26,759,343

24,183,746

22,127,251

LIQUIDITY (Times)

Cash Ratio

0.58

0.88

0.76

0.68

0.12

Liquid Ratio

1.91

1.73

1.79

1.72

1.01

Current Ratio

2.74

2.88

3.45

3.13

2.66

WORKING CAPITAL CONTROL (Days)

Stock Ratio

66

91

99

91

134

Debtors Ratio

68

52

46

48

58

Creditors Ratio

43

72

51

54

48

SOLVENCY RATIOS (Times)

Gearing Ratio

0.00

0.01

0.02

0.04

0.11

Liabilities Ratio

0.34

0.34

0.29

0.33

0.38

Times Interest Earned Ratio

(372.96)

155.72

57.19

10.55

11.02

Assets Backing Ratio

7.66

8.01

7.41

6.91

6.51

PERFORMANCE RATIO (%)

Operating Profit Margin

(2.40)

8.17

6.56

5.74

6.47

Net Profit Margin

(3.11)

6.57

6.00

5.17

4.77

Return On Net Assets

(3.15)

10.83

8.60

8.10

8.09

Return On Capital Employed

(3.15)

10.83

8.60

8.10

8.05

Return On Shareholders' Funds/Equity

(4.27)

9.05

8.24

7.17

5.97

Dividend Pay Out Ratio (Times)

0.00

0.00

0.00

0.00

0.00

NOTES TO ACCOUNTS

Contingent Liabilities

0

0

0

0

0

 

 

FOREIGN EXCHANGE RATES

 

Currency

Unit

Indian Rupees

US Dollar

1

Rs.62.67

UK Pound

1

Rs.93.16

Euro

1

Rs.66.42

 

 

INFORMATION DETAILS

 

Analysis Done by :

DIV

 

 

Report Prepared by :

TPT

 

               


 

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.