MIRA INFORM REPORT

Report No. :	346568
Report Date :	27.10.2015

IDENTIFICATION DETAILS

Name :	PALM-OLEO SDN BHD
Registered Office :	Wisma Taiko, 1 Jalan S.P.Seenivasagam, 30000 Ipoh, Perak
Country :	Malaysia
Financials (as on) :	30.09.2014
Date of Incorporation :	23.08.1989
Com. Reg. No.:	185886-V
Legal Form :	Private Limited (Limited By Share)
Line of Business :	Manufacturing Of Fatty Acid Products, Glycerine And Palm Oil Derivatives
No. of Employee :	350

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 :	Regular
Litigation :	Clear

NOTES :

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

ECGC Country Risk Classification List – March 31, 2015

Country Name	Previous Rating (31.12.2014)	Current Rating (31.03.2015)
Malaysia	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

MALAYSIA - ECONOMIC OVERVIEW

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. NAJIB's Economic Transformation Program (ETP) is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. Malaysia is vulnerable to a fall in world commodity prices or a general slowdown in global economic activity.

The NAJIB administration is continuing efforts to boost domestic demand and reduce the economy's dependence on exports. Nevertheless, exports - particularly of electronics, oil and gas, palm oil and rubber - remain a significant driver of the economy. Gross exports of goods and services constitute more than 80% of GDP. The oil and gas sector supplied about 29% of government revenue in 2014. As an oil and gas exporter, Malaysia has previously profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with sustained budget deficits, has forced Kuala Lumpur to begin to address fiscal shortfalls, through initial reductions in energy and sugar subsidies and the announcement of the 2015 implementation of a 6% goods and services tax. Falling global oil prices in the second half of 2014 have strained government finances, shrunk Malaysia’s current account surplus and put downward pressure on the ringgit. The government is trying to lessen its dependence on state oil producer Petronas.

Bank Negara Malaysia (the central bank) maintains healthy foreign exchange reserves; a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. In order to attract increased investment, NAJIB raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program (BEEP), policies that favor and advance the economic condition of ethnic Malays.

Malaysia is a member of the 12-nation Trans-Pacific Partnership free trade agreement negotiations and, with the nine other ASEAN members, will form the ASEAN Economic Community in 2015.

Source : CIA

EXECUTIVE SUMMARY

REGISTRATION NO.	:	185886-V
COMPANY NAME	:	PALM-OLEO SDN BHD
FORMER NAME	:	N/A
INCORPORATION DATE	:	23/08/1989
COMPANY STATUS	:	EXIST
LEGAL FORM	:	PRIVATE LIMITED (LIMITED BY SHARE)
LISTED STATUS	:	NO
REGISTERED ADDRESS	:	WISMA TAIKO, 1 JALAN S.P.SEENIVASAGAM, 30000 IPOH, PERAK, MALAYSIA.
BUSINESS ADDRESS	:	LOT 1245, KUNDANG INDUSTRIAL ESTATE, 48020 RAWANG, SELANGOR, MALAYSIA.
TEL.NO.	:	03-60344800
FAX.NO.	:	03-60341279
EMAIL	:	ENQUIRY.POL@PALMOLEO.COM.MY
WEB SITE	:	WWW.KLKOLEO.COM.MY
CONTACT PERSON	:	YEOW AH KOW ( DIRECTOR )
INDUSTRY CODE	:	10401
PRINCIPAL ACTIVITY	:	MANUFACTURING OF FATTY ACID PRODUCTS, GLYCERINE AND PALM OIL DERIVATIVES
AUTHORISED CAPITAL	:	MYR 500,000,000.00 DIVIDED INTO ORDINARY SHARE 500,000,000.00 OF MYR 1.00 EACH.
ISSUED AND PAID UP CAPITAL	:	MYR 403,000,000.00 DIVIDED INTO ORDINARY SHARES 157,904,417 CASH AND 245,095,583 OTHERWISE OF MYR 1.00 EACH.
SALES	:	MYR 1,802,250,000 [2014]
NET WORTH	:	MYR 826,923,000 [2014]
M1000 OVERALL RANKING	:	425[2011]
M1000 INDUSTRY RANKING	:	19[2011]
BANKER (S)		MALAYAN BANKING BHD
STAFF STRENGTH	:	350 [2015]
LITIGATION	:	CLEAR
DEFAULTER CHECK	:	CLEAR
FINANCIAL CONDITION	:	STRONG
PAYMENT	:	PROMPT
MANAGEMENT CAPABILITY	:	AVERAGE
COMMERCIAL RISK	:	LOW
CURRENCY EXPOSURE	:	MODERATE
GENERAL REPUTATION	:	GOOD
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) manufacturing of fatty acid products, glycerine and palm oil derivatives.

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

According to the Malaysia 1000 publication, the Subject's ranking are as follows:
YEAR	2011	2009	2008
OVERALL RANKING	425	403	413
INDUSTRY RANKING	19	9	6

The immediate holding company of the Subject is KL-KEPONG INDUSTRIAL HOLDINGS SDN. BHD., a company incorporated in MALAYSIA.

Former Address(es)

Address	As At Date
LOT 7.2,7YH FLOOR, MENARA LIEN HOE, NO.8,PERSIARAN TROPICANA, 47410, SELANGOR, MALAYSIA	15/02/2013

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
06/01/2015	MYR 500,000,000.00	MYR 403,000,000.00
25/03/2010	MYR 500,000,000.00	MYR 261,500,000.00
26/10/1998	MYR 500,000,000.00	MYR 141,500,000.00
11/04/1997	MYR 100,000,000.00	MYR 71,500,000.00
24/01/1997	MYR 100,000,000.00	MYR 54,000,000.00
11/07/1996	MYR 50,000,000.00	MYR 44,000,000.00
21/12/1993	MYR 50,000,000.00	MYR 34,000,000.00
15/07/1991	MYR 22,000,000.00	MYR 11,000,000.00
24/12/1990	MYR 1,000,000.00	MYR 1,000,000.00
23/08/1989	MYR 25,000.00	MYR 2.00

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

Current Shareholder(s) :

Name	Address	IC/PP/Loc No	Shareholding	(%)
KL-KEPONG INDUSTRIAL HOLDINGS SDN. BHD.	WISMA TAIKO, 1, JALAN S.P. SEENIVASAGAM, 30000 IPOH, PERAK, MALAYSIA.	300525M	321,545,583.00	79.79
MITSUI & CO.,LTD	2-1, OHTEMACHI 1-CHOME, CHIYODA-KU, TOKYO, JAPAN.	XLZ000000172	63,276,696.00	15.70
ADEKA CORPORATION	7-2-35, HIGASHIOGU, ARAKAWA-KU, 116-8554, TOKYO, JAPAN.	XLZ00208879	10,075,000.00	2.50
MITSUI & CO. (ASIA PACIFIC) PTE. LTD.	MILLENNIUM OFFICE BLOCK, 160 JALAN BUKIT BINTANG, 5TH FLOOR, 55100 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.	F995131	4,072,721.00	1.01
MIYOSHI OIL & FAT CO LTD	66-1, HORIKIRI,4-CHOME, KATSUSHIKA-KU, TOKYO, JAPAN.	XLZ000008382	4,030,000.00	1.00
			---------------	------
			403,000,000.00	100.00
			============	=====

+ Also Director

Former Shareholder(s) :

Name	Country	IC/PP/Loc No	Shareholding	Last Updated
ASAHI DENKA KOGYO K.K.	N/A	XLZ000002518	8,937,500.00	01/02/2010

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

Local No	Country	Company	Status	(%)	As At
435832T	MALAYSIA	PALM-OLEO (KLANG) SDN. BHD.	-	100.00	26/11/2014
120900P	MALAYSIA	KSP MANUFACTURING SDN. BHD.	-	100.00	13/10/2015
248395T	MALAYSIA	PALMAMIDE SDN. BHD.	-	100.00	26/11/2014
587027T	MALAYSIA	KL-KEPONG OLEOMAS SDN. BHD.	-	20.00	26/11/2014

DIRECTORS

DIRECTOR 1

Name Of Subject	:	MR. YEOW AH KOW
Address	:	3, JALAN SS 19/3C, SUBANG JAYA, 47500 SUBANG JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	8391290
New IC No	:	540203-05-5085
Date of Birth	:	03/02/1954
Nationality	:	MALAYSIAN
Date of Appointment	:	16/03/1998

DIRECTOR 2

Name Of Subject	:	TAN SRI LEE OI HIAN
Address	:	55, JALAN KELAB GOLF, 30350 IPOH, PERAK, MALAYSIA.
IC / PP No	:	8023079
New IC No	:	510207-08-5743
Date of Birth	:	07/02/1951
Nationality	:	MALAYSIAN
Date of Appointment	:	24/12/1990

DIRECTOR 3

Name Of Subject	:	MR. PUNG KOK HOOI
Address	:	1, JALAN SS 24/19, TAMAN MEGAH, 47301 PETALING JAYA, SELANGOR, MALAYSIA.
New IC No	:	660414-07-5357
Date of Birth	:	14/04/1966
Nationality	:	MALAYSIAN
Date of Appointment	:	26/12/2008

DIRECTOR 4

Name Of Subject	:	KAZUO IWASAKI
Address	:	UNIT B-17-7, HAMPSHIRE PLACE, 1, JALAN MAJANG SARI, 50450 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
IC / PP No	:	TZ0773449
Nationality	:	JAPANESE
Date of Appointment	:	01/10/2014

DIRECTOR 5

Name Of Subject	:	MR. KHOO PING KHEAN
Address	:	32, JALAN USJ HEIGHTS 6/1B, USJ HEIGHTS, 47620 SUBANG JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	4403571
New IC No	:	530121-08-5943
Date of Birth	:	21/01/1953
Nationality	:	MALAYSIAN
Date of Appointment	:	01/10/2014

DIRECTOR 6

Name Of Subject	:	MR. MADHEV A/L BALA SUBRAMANIAM
Address	:	4, SS 24/9, TAMAN MEGAH, 47301 PETALING JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	8294889
New IC No	:	600913-71-5115
Date of Birth	:	13/09/1960
Nationality	:	MALAYSIAN
Date of Appointment	:	26/12/2008

DIRECTOR 7

Name Of Subject	:	CHIKAO ISHIKAWA
Address	:	2-38-16, TSURUMAKI, SETAGAYA-KU, TOKYO, 154-0016, JAPAN.
IC / PP No	:	TK0415792
Nationality	:	JAPANESE
Date of Appointment	:	28/11/2014

DIRECTOR 8

Name Of Subject	:	SHINJI OUMI
Address	:	1-8-10 MIDORIGAOKA, YACHIYO-SHI, CHIBA, 276-0049, JAPAN
IC / PP No	:	TZ0411298
Date of Appointment	:	13/08/2015

DIRECTOR 9

Name Of Subject	:	YOSHIAKI ASSADA
Address	:	AMBASSADOR ROW HOTEL SUITES, 1, JALAN AMPANG HILIR, 55000 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.
IC / PP No	:	TK0666523
Date of Appointment	:	13/08/2015

MANAGEMENT

1)	Name of Subject	:	YEOW AH KOW
	Position	:	DIRECTOR

AUDITOR

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

COMPANY SECRETARIES

1)	Company Secretary	:	MS. YAP MIOW KIEN
	IC / PP No	:	A1171235
	New IC No	:	681220-05-5334
	Address	:	12, LINGKARAN MERU VALLEY 1A, LAKEVIEW VILLA, MERU VALLEY GOLF RESORT, JALAN BUKIT MERU, 30020 IPOH, PERAK, MALAYSIA.

2)	Company Secretary	:	MR. PUNG KOK HOOI
	New IC No	:	660414-07-5357
	Address	:	1, JALAN SS 24/19, TAMAN MEGAH, 47301 PETALING JAYA, SELANGOR, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)

Name

:

MALAYAN BANKING BHD

ENCUMBRANCE (S)

Charge No	Creation Date	Charge Description	Chargee Name	Total Charge	Status
2	08/11/1991	DEBENTURE	HONGKONG BANK MALAYSIA BERHAD	MYR 31,000,000.00	Satisfied
1	02/12/1991	N/A	HONGKONG BANK MALAYSIA BERHAD	-	Satisfied

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	Percentage	:	60%
Overseas	:	YES	Percentage	:	40%
Import Countries	:	ASIA

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

OVERALL PAYMENT HABIT
Prompt 0-30 Days	[	X	]	Good 31-60 Days	[	]	Average 61-90 Days	[	]
Fair 91-120 Days	[		]	Poor >120 Days	[	]

CLIENTELE

Local	:	YES	Percentage	:	45%
Domestic Markets	:	MALAYSIA
Overseas	:	YES	Percentage	:	55%
Export Market	:	EUROPE SOUTH AFRICA CANADA ASIA
Credit Term	:	30 - 60 DAYS
Payment Mode	:	CHEQUES TELEGRAPHIC TRANSFER (TT) LETTER OF CREDIT (LC)
No of Customer	:	N/A

OPERATIONS

Products manufactured

:

FATTY ACID PRODUCTS, GLYCERINE AND PALM OIL DERIVATIVES

Award

:

1 ) MS ISO 9001 : 2000 Year :0

Member(s) / Affiliate(s)

:

MALAYSIA EXTERNAL TRADE DEVELOPMENT CORPORATION (MATRADE)

CHEMICAL INDUSTRIES COUNCIL OF MALAYSIA (CICM)

MALAYSIA FOOD & BEVERAGE INDUSTRY

Ownership of premises

:

OWNED

Production Line

:

N/A

Production Capacity

:

N/A

Shifts

:

1

Total Number of Employees:
YEAR	2015	2014	2013	2012	2011
GROUP	N/A	N/A	N/A	N/A	N/A
COMPANY	350	350	350	350	350

Branch

:

NO

Other Information:

The Subject is principally engaged in the (as a / as an) manufacturing of fatty acid products, glycerine and palm oil derivatives.

The Subject is a joint venture between KLK, Mitsui & Co., Ltd., Miyoshi Oil & Fat Co., Ltd. and Asahi Denka Kyogo K.K.

The Subject was commissioned in 1992 and produces PALMERA Fatty Acids and Glycerine using the latest process technology and computerized monitoring systems.

The Subject is one of the largest standalone Oleochemical producers in the world.

Fatty Acids form the critical mass of many common products globally.

Widely accepted and sought after for its high level of stability and consistency, the Subject's Fatty Acid is being used extensively by many well-known international brands in industries such as pharmaceuticals, soap and detergents, cosmetics, food emulsifiers, varnishes and paints.

The Subject's Glycerine also finds wide appeal in many industries due to its renowned stability and quality consistency, crucial criteria for many of today's products.

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	03-60344800
Match	:	N/A
Address Provided by Client	:	WISMA TAIKO, 1 JALAN S.P. SEENIVASAGAM 30000 IPOH (MALAYSIA)
Current Address	:	LOT 1245, KUNDANG INDUSTRIAL ESTATE, 48020 RAWANG, SELANGOR, MALAYSIA.
Match	:	NO
Latest Financial Accounts	:	YES

Other Investigations

On 22th October 2015, we contacted one of the staff from the Subject and he provided some information.

The address provided belongs to the Subject's registered office.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Erratic	[	2010 - 2014	]
Profit/(Loss) Before Tax	:	Decreased	[	2010 - 2014	]
Return on Shareholder Funds	:	Acceptable	[	13.48%	]
Return on Net Assets	:	Acceptable	[	16.25%	]
The fluctuating turnover reflects the fierce competition among the existing and new market players.The Subject's profit fell sharply because of the high operating costs incurred. The Subject's management had generated acceptable return for its shareholders using its assets.
Working Capital Control
Stock Ratio	:	Favourable	[	35 Days	]
Debtor Ratio	:	Favourable	[	20 Days	]
Creditors Ratio	:	Favourable	[	6 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	:	Favourable	[	3.01 Times	]
Current Ratio	:	Favourable	[	4.83 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	:	Favourable	[	685.77 Times	]
Gearing Ratio	:	Favourable	[	0.00 Times	]
The interest cover showed that the Subject was able to service the interest. The favourable interest cover could indicate that the Subject was making enough profit to pay for the interest accrued. 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 recorded lower profits as its turnover showed a erratic trend. The Subject's management was unable to control its costs efficiently as its profit showed a downward trend. 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. With the favourable interest cover, the Subject could be able to service all the accrued interest without facing any difficulties. 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 : STRONG

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

Major Economic Indicators:	2011	2012	2013	2014*	2015**
Population ( Million)	28.7	29.3	29.8	30.3	30.5
Gross Domestic Products ( % )	5.1	5.6	5.3	6.0	6.0
Domestic Demand ( % )	8.2	9.4	5.6	6.4	6.2
Private Expenditure ( % )	8.2	8.0	8.6	7.9	6.9
Consumption ( % )	7.1	1.0	5.7	6.5	5.6
Investment ( % )	12.2	11.7	13.3	12.0	10.7
Public Expenditure ( % )	8.4	13.3	4.4	2.3	4.2
Consumption ( % )	16.1	11.3	(1.2)	2.1	3.8
Investment ( % )	(0.3)	15.9	4.2	2.6	4.7
Balance of Trade ( MYR Million )	116,058	106,300	71,298	52,314	-
Government Finance ( MYR Million )	(45,511)	(42,297)	(39,993)	(37,291)	-
Government Finance to GDP / Fiscal Deficit ( % )	(5.4)	(4.5)	(4.0)	(3.5)	(3.0)
Inflation ( % Change in Composite CPI)	3.1	1.6	2.5	3.2	4.0
Unemployment Rate	3.3	3.2	3.0	2.9	3.0
Net International Reserves ( MYR Billion )	415	427	-	417	-
Average Risk-Weighted Capital Adequacy Ratio ( % )	3.50	2.20	-	4.00	-
Average 3 Months of Non-performing Loans ( % )	14.80	14.70	-	-	-
Average Base Lending Rate ( % )	6.60	6.53	6.53	6.85	-
Business Loans Disbursed( % )	15.3	32.2	-	56.0	-
Foreign Investment ( MYR Million )	23,546.1	26,230.4	38,238.0	43,486.6	-
Consumer Loans ( % )	-	-	-	-	-
Registration of New Companies ( No. )	45,455	45,441	46,321	49,144	-
Registration of New Companies ( % )	3.0	(0.0)	1.9	6.1	-
Liquidation of Companies ( No. )	132,485	17,092	26,430	21,753	-
Liquidation of Companies ( % )	417.8	(87.1)	54.6	(17.7)	-
Registration of New Business ( No. )	284,598	324,761	329,895	332,723	-
Registration of New Business ( % )	5.0	14.0	2.0	1.0	-
Business Dissolved ( No. )	20,121	20,380	18,161	21,436	-
Business Dissolved ( % )	1.9	1.3	(10.9)	18.0	-
Sales of New Passenger Cars (' 000 Unit )	535.1	552.2	576.7	598.4	610.3
Cellular Phone Subscribers ( Million )	35.3	38.5	43.0	43.8	-
Tourist Arrival ( Million Persons )	24.7	25.0	25.7	28.0	-
Hotel Occupancy Rate ( % )	60.6	62.4	62.6	63.2	-
Credit Cards Spending ( % )	15.6	12.6	-	13.5	-
Bad Cheque Offenders (No.)	32,627	26,982	28,876	-	-
Individual Bankruptcy ( No.)	19,167	19,575	21,984	-	-
Individual Bankruptcy ( % )	5.8	2.1	12.3	-	-

INDUSTRIES ( % of Growth ):	2011	2012	2013	2014*	2015**
Agriculture	5.8	1.0	2.1	3.8	3.1
Palm Oil	10.8	(0.3)	2.6	6.7	-
Rubber	6.1	(7.9)	(10.1)	(10.4)	-
Forestry & Logging	(7.6)	(4.5)	(7.8)	(4.2)	-
Fishing	2.1	4.3	1.6	2.7	-
Other Agriculture	7.1	6.4	8.2	6.2	-
Industry Non-Performing Loans ( MYR Million )	634.1	-	-	-	-
% of Industry Non-Performing Loans	3.2	-	-	-	-
Mining	(5.4)	1.4	0.9	(0.8)	2.8
Oil & Gas	(1.7)	-	-	3.0	-
Other Mining	-	-	-	46.6	-
Industry Non-performing Loans ( MYR Million )	46.5	-	-	-	-
% of Industry Non-performing Loans	0.1	-	-	-	-
Manufacturing #	4.7	4.8	3.4	6.4	5.5
Exported-oriented Industries	4.1	6.5	3.3	5.6	-
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	1.4	-
Plastic Products	3.8	-	-	2.7	-
Iron & Steel	2.2	(6.6)	5.0	0.1	-
Fabricated Metal Products	21.8	13.8	9.9	2.9	-
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	-	-	13.0	-
Industry Non-Performing Loans ( MYR Million )	6,537.2	-	-	-	-
% of Industry Non-Performing Loans	25.7	-	-	-	-
Construction	4.7	18.6	10.9	12.7	10.7
Industry Non-Performing Loans ( MYR Million )	3,856.9	-	-	-	-
% of Industry Non-Performing Loans	10.2	-	-	-	-
Services	7.1	6.4	5.9	5.9	5.6
Electric, Gas & Water	3.5	4.4	4.2	3.6	3.9
Transport, Storage & Communication	6.50	7.10	7.30	7.50	7.15
Wholesale, Retail, Hotel & Restaurant	5.2	4.7	5.9	6.9	6.5
Finance, Insurance & Real Estate	6.90	9.70	3.70	4.65	4.25
Government Services	12.4	9.4	8.3	6.1	5.6
Other Services	5.1	3.9	5.1	4.8	4.5
Industry Non-Performing Loans ( MYR Million )	6,825.2	-	-	-	-
% of Industry Non-Performing Loans	23.4	-	-	-	-
* Estimate / Preliminary
** Forecast
# Based On Manufacturing Production Index

INDUSTRY ANALYSIS

MSIC CODE
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 1989, the Subject is a Private Limited company, focusing on manufacturing of fatty acid products, glycerine and palm oil derivatives. The Subject has been in business for over two decades. It has built up a strong clientele base and good reputation will enable the Subject to further enhance its business in the near term. The Subject is expected to enjoy a stable market shares. The Subject is a large entity with strong capital position of MYR 403,000,000. We are confident with the Subject's business and its future growth prospect. Having strong support from its holding company has enabled the Subject to remain competitive despite the challenging business environment.

Over the years, the Subject has established an extensive clientele base in the market. Besides catering to the local market, the Subject has penetrated into other countries. With the contribution of both local and overseas customers, the Subject is likely to be exposed to lower commercial risk. Hence, we believe that the Subject has better business expansion opportunities in the future. The Subject is a fairly large and rapidly growing company with over 350 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.

Financially, the Subject registered a higher turnover compared to previous year. However, its profits showed a reverse trend. The lower profit achieved was a result of higher operating cost and increased competition. Return on shareholders' funds of the Subject was at an acceptable range which indicated that the management was efficient in utilising its funds to generate income. The Subject is in good liquidity position with its current liabilities well covered by it current assets. Hence, it has sufficient working capital to meet its short term financial obligations. 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 826,923,000, 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.

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

The industry 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.

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)

PALM-OLEO SDN BHD

Financial Year End	2014-09-30	2013-09-30	2012-09-30	2011-09-30	2010-09-30
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	1,802,250,000	1,510,760,000	1,826,578,000	2,082,842,000	1,323,725,000
Other Income	3,142,000	2,318,000	7,609,000	4,644,000	11,866,000
	----------------	----------------	----------------	----------------	----------------
Total Turnover	1,805,392,000	1,513,078,000	1,834,187,000	2,087,486,000	1,335,591,000
Costs of Goods Sold	(1,644,313,000)	(1,270,719,000)	(1,687,083,000)	(1,946,645,000)	(1,240,176,000)
	----------------	----------------	----------------	----------------	----------------
Gross Profit	161,079,000	242,359,000	147,104,000	140,841,000	95,415,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	127,867,000	200,055,000	111,372,000	113,252,000	80,832,000
SHARE OF PROFITS/(LOSSES) OF ASSOCIATED COMPANIES	14,565,000	20,004,000	7,344,000	-	-
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	142,432,000	220,059,000	118,716,000	113,252,000	80,832,000
Taxation	(30,955,000)	(47,372,000)	(27,334,000)	(24,030,000)	(17,577,000)
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	111,477,000	172,687,000	91,382,000	89,222,000	63,255,000
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	554,117,000	426,768,000	350,007,000	280,512,000	358,886,000
Prior year adjustment	-	-	8,048,000	2,942,000	-
	----------------	----------------	----------------	----------------	----------------
As restated	554,117,000	426,768,000	358,055,000	283,454,000	358,886,000
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	665,594,000	599,455,000	449,437,000	372,676,000	422,141,000
TRANSFER TO RESERVES - General	-	-	-	-	(129,000)
CAPITALISATION FOR BONUS ISSUES	-	-	-	-	(141,500,000)
DIVIDENDS - Ordinary (paid & proposed)	(241,800,000)	(45,338,000)	(22,669,000)	(22,669,000)	-
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	423,794,000	554,117,000	426,768,000	350,007,000	280,512,000
	=============	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Others	208,000	183,000	2,147,000	7,408,000	2,814,000
	----------------	----------------	----------------	----------------	----------------
	208,000	183,000	2,147,000	7,408,000	2,814,000
	=============	=============	=============	=============	=============
DEPRECIATION (as per notes to P&L)	280,000	30,679,000	30,682,000	24,173,000	18,683,000
AMORTIZATION	280,000	279,000	279,000	279,000	280,000
	----------------	----------------	----------------	----------------	----------------
	560,000	30,958,000	30,961,000	24,452,000	18,963,000
	=============	=============	=============	=============	=============

BALANCE SHEET

PALM-OLEO SDN BHD

ASSETS EMPLOYED:
FIXED ASSETS	270,464,000	275,892,000	296,040,000	331,568,000	259,905,000
Associated companies	183,556,000	168,971,000	132,649,000	124,933,000	122,103,000
Others	20,459,000	20,739,000	21,018,000	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM INVESTMENTS/OTHER ASSETS	204,015,000	189,710,000	153,667,000	124,933,000	122,103,000
Goodwill on consolidation	35,082,000	35,082,000	35,082,000	35,082,000	-
	----------------	----------------	----------------	----------------	----------------
TOTAL INTANGIBLE ASSETS	35,082,000	35,082,000	35,082,000	35,082,000	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	509,561,000	500,684,000	484,789,000	491,583,000	382,008,000
Stocks	175,046,000	174,073,000	213,034,000	303,771,000	212,404,000
Trade debtors	99,301,000	79,243,000	87,119,000	199,911,000	79,808,000
Other debtors, deposits & prepayments	7,056,000	4,151,000	4,184,000	17,490,000	11,584,000
Short term deposits	99,637,000	228,956,000	104,455,000	13,248,000	11,475,000
Amount due from holding company	201,000	141,000	134,000	75,000	95,750,000
Amount due from related companies	47,261,000	47,885,000	35,352,000	16,000	14,861,000
Amount due from associated companies	12,203,000	23,987,000	24,097,000	146,000	65,866,000
Cash & bank balances	15,462,000	37,160,000	7,083,000	7,009,000	6,189,000
Others	7,998,000	2,377,000	6,485,000	4,032,000	970,000
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	464,165,000	597,973,000	481,943,000	545,698,000	498,907,000
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	973,726,000	1,098,657,000	966,732,000	1,037,281,000	880,915,000
	=============	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	26,402,000	28,337,000	35,102,000	47,326,000	37,367,000
Other creditors & accruals	45,082,000	44,303,000	39,654,000	30,918,000	24,315,000
Short term borrowings/Term loans	-	-	8,235,000	16,000,000	16,000,000
Other borrowings	-	-	-	60,423,000	-
Bill & acceptances payable	-	-	-	21,820,000	-
Amounts owing to holding company	11,275,000	89,000	99,000	30,501,000	29,786,000
Amounts owing to related companies	2,061,000	585,000	1,693,000	1,022,000	13,864,000
Amounts owing to associated companies	7,689,000	1,782,000	1,077,000	42,000	774,000
Provision for taxation	-	10,513,000	1,018,000	2,105,000	1,908,000
Other liabilities	3,684,000	4,150,000	-	9,565,000	9,000,000
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	96,193,000	89,759,000	86,878,000	219,722,000	133,014,000
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	367,972,000	508,214,000	395,065,000	325,976,000	365,893,000
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	877,533,000	1,008,898,000	879,854,000	817,559,000	747,901,000
	=============	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	403,000,000	403,000,000	403,000,000	403,000,000	403,000,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	403,000,000	403,000,000	403,000,000	403,000,000	403,000,000
Retained profit/(loss) carried forward	423,794,000	554,117,000	426,768,000	350,007,000	280,512,000
Capital redemption reserve	129,000	129,000	129,000	129,000	129,000
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	423,923,000	554,246,000	426,897,000	350,136,000	280,641,000
	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	826,923,000	957,246,000	829,897,000	753,136,000	683,641,000
Long term loans	-	-	-	8,174,000	24,292,000
Deferred taxation	46,117,000	47,444,000	49,474,000	56,249,000	39,968,000
Others	4,493,000	4,208,000	483,000	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	50,610,000	51,652,000	49,957,000	64,423,000	64,260,000
	----------------	----------------	----------------	----------------	----------------
	877,533,000	1,008,898,000	879,854,000	817,559,000	747,901,000
	=============	=============	=============	=============	=============

FINANCIAL RATIO

PALM-OLEO SDN BHD

TYPES OF FUNDS
Cash	115,099,000	266,116,000	111,538,000	20,257,000	17,664,000
Net Liquid Funds	115,099,000	266,116,000	111,538,000	(1,563,000)	17,664,000
Net Liquid Assets	192,926,000	334,141,000	182,031,000	22,205,000	153,489,000
Net Current Assets/(Liabilities)	367,972,000	508,214,000	395,065,000	325,976,000	365,893,000
Net Tangible Assets	842,451,000	973,816,000	844,772,000	782,477,000	747,901,000
Net Monetary Assets	142,316,000	282,489,000	132,074,000	(42,218,000)	89,229,000
PROFIT & LOSS ITEMS
Earnings Before Interest & Tax (EBIT)	142,640,000	220,242,000	120,863,000	120,660,000	83,646,000
Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)	143,200,000	251,200,000	151,824,000	145,112,000	102,609,000
BALANCE SHEET ITEMS
Total Borrowings	0	0	8,235,000	106,417,000	40,292,000
Total Liabilities	146,803,000	141,411,000	136,835,000	284,145,000	197,274,000
Total Assets	973,726,000	1,098,657,000	966,732,000	1,037,281,000	880,915,000
Net Assets	877,533,000	1,008,898,000	879,854,000	817,559,000	747,901,000
Net Assets Backing	826,923,000	957,246,000	829,897,000	753,136,000	683,641,000
Shareholders' Funds	826,923,000	957,246,000	829,897,000	753,136,000	683,641,000
Total Share Capital	403,000,000	403,000,000	403,000,000	403,000,000	403,000,000
Total Reserves	423,923,000	554,246,000	426,897,000	350,136,000	280,641,000
LIQUIDITY (Times)
Cash Ratio	1.20	2.96	1.28	0.09	0.13
Liquid Ratio	3.01	4.72	3.10	1.10	2.15
Current Ratio	4.83	6.66	5.55	2.48	3.75
WORKING CAPITAL CONTROL (Days)
Stock Ratio	35	42	43	53	59
Debtors Ratio	20	19	17	35	22
Creditors Ratio	6	8	8	9	11
SOLVENCY RATIOS (Times)
Gearing Ratio	0	0	0.01	0.14	0.06
Liabilities Ratio	0.18	0.15	0.16	0.38	0.29
Times Interest Earned Ratio	685.77	1,203.51	56.29	16.29	29.72
Assets Backing Ratio	2.09	2.42	2.10	1.94	1.86
PERFORMANCE RATIO (%)
Operating Profit Margin	7.90	14.57	6.50	5.44	6.11
Net Profit Margin	6.19	11.43	5.00	4.28	4.78
Return On Net Assets	16.25	21.83	13.74	14.76	11.18
Return On Capital Employed	15.63	21.10	13.21	14.15	11.18
Return On Shareholders' Funds/Equity	13.48	18.04	11.01	11.85	9.25
Dividend Pay Out Ratio (Times)	2.17	0.26	0.25	0.25	0
NOTES TO ACCOUNTS
Contingent Liabilities	0	0	0	0	0

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.64.96
UK Pound	1	Rs.99.54
Euro	1	Rs.71.64

INFORMATION DETAILS

Analysis Done by :	KIN
Report Prepared by :	SDA

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%)

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