MIRA INFORM REPORT

 

 

Report No. :

340886

Report Date :

18.09.2015

 

IDENTIFICATION DETAILS

 

Name :

KANEKA EPERAN SDN. BHD.

 

 

Registered Office :

Lot 123-124, Jalan Gebeng 2/3, Gebeng Industrial Estates, 26080 Kuantan, Pahang

 

 

Country :

Malaysia

 

 

Financials (as on) :

31.03.2014

 

 

Date of Incorporation :

12.07.1996

 

 

Com. Reg. No.:

393957-K

 

 

Legal Form :

Private Limited

 

 

Line of Business :

Manufacturing of Expandable Polyethylene, Expandable Polypropylene and Other Chemical Products.

 

 

No. of Employees :

70 [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 :

No Complaints

 

 

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.

:

393957-K

COMPANY NAME

:

KANEKA EPERAN SDN. BHD.

FORMER NAME

:

N/A

INCORPORATION DATE

:

12/07/1996

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

LOT 123-124, JALAN GEBENG 2/3, GEBENG INDUSTRIAL ESTATES, 26080 KUANTAN, PAHANG, MALAYSIA.

BUSINESS ADDRESS

:

LOT 123-124, JALAN GEBENG 2/3, GEBENG INDUSTRIAL ESTATE, 26080 KUANTAN, PAHANG, MALAYSIA.

TEL.NO.

:

09-5826000

FAX.NO.

:

09-5837777

WEB SITE

:

WWW.KANEKA.COM.MY

CONTACT PERSON

:

FUKUO TSUBOUCHI ( MANAGING DIRECTOR )

INDUSTRY CODE

:

20119

PRINCIPAL ACTIVITY

:

MANUFACTURING OF EXPANDABLE POLYETHYLENE, EXPANDABLE POLYPROPYLENE AND OTHER CHEMICAL PRODUCTS

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 16,000,000.00 DIVIDED INTO
ORDINARY SHARES 16,000,000 CASH OF MYR 1.00 EACH.

SALES

:

MYR 49,370,536 [2014]

NET WORTH

:

MYR 43,373,847 [2014]

STAFF STRENGTH

:

70 [2015]

BANKER (S)

:

MALAYAN BANKING BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

FAIR

PAYMENT

:

GOOD

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

LOW

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

GOOD

CREDIT RATING

:

A (Please refer to appendix)

 

 

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 expandable polyethylene, expandable polypropylene and other chemical products.

 

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

 

The immediate holding company of the Subject is KANEKA CORPORATION, a company incorporated in JAPAN.

 

Share Capital History

Date

Authorised Shared Capital

Issue & Paid Up Capital

25/08/2014

MYR 20,000,000.00

MYR 16,000,000.00

31/03/1997

MYR 12,000,000.00

MYR 12,000,000.00

28/02/1997

MYR 12,000,000.00

MYR 10,800,000.00

15/08/1996

MYR 12,000,000.00

MYR 1,000,000.00

12/07/1996

MYR 12,000,000.00

MYR 3.00

 

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


Current Shareholder(s) :

Name

Address

IC/PP/Loc No

Shareholding

(%)

KANEKA CORPORATION

3-2-4, NAKANOSHIMA, KITA-KU, OSAKA, 5308288, JAPAN.

XLZ00216208

16,000,000.00

100.00

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

------

16,000,000.00

100.00

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

=====

+ Also Director



DIRECTORS

 

DIRECTOR 1

 

Name Of Subject

:

KOKI TAKAHASHI

Address

:

A-6-3, TIFFANI KIARA, 1, CHANGKAT DUTA KIARA, OFF JALAN DUTA KIARA, 50480 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

IC / PP No

:

TK6809284

Nationality

:

JAPANESE

Date of Appointment

:

31/03/2014

 

DIRECTOR 2

 

Name Of Subject

:

IKUO AOI

Address

:

A-503, MARINE CITY, KANAZAWABUNKO, 391, SHIBAMACHI, KANAZAWA-WARD, YOKOHAMA-CITY, KANAGAWA-PREFECTURE, 236-0012, JAPAN.

IC / PP No

:

TG7110778

Nationality

:

JAPANESE

Date of Appointment

:

31/03/2014

 

DIRECTOR 3

 

Name Of Subject

:

MR. FUKUO TSUBOUCHI

Address

:

LOT 123-124, JALAN GEBENG 2/3, GEBENG INDUSTRIAL ESTATE, 26080 KUANTAN, PAHANG, MALAYSIA.

IC / PP No

:

TR3826629

Date of Appointment

:

16/04/2015



MANAGEMENT

 

 

1)

Name of Subject

:

FUKUO TSUBOUCHI

Position

:

MANAGING 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. SEOW SIEW CHAN

IC / PP No

:

A1414783

New IC No

:

690816-06-5300

Address

:

A-5644, LORONG ALOR AKAR 25, 25250 KUANTAN, PAHANG, MALAYSIA.

 

 

 

BANKING


Banking relations are maintained principally with:

1)

Name

:

MALAYAN BANKING BHD

 

 

 

 

ENCUMBRANCE (S)


No encumbrance was found in our databank at the time of investigation.

 

 

LITIGATION CHECK AGAINST SUBJECT


* A check has been conducted in our databank 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

:

ASIA

Credit Term

:

N/A

Payment Mode

:

CHEQUES
TELEGRAPHIC TRANSFER (TT)

 

 

OPERATIONS

 

Products manufactured

:

EXPANDABLE POLYETHYLENE, EXPANDABLE POLYPROPYLENE AND OTHER CHEMICAL PRODUCTS

Award

:

1 ) ISO/ TS 16949 : 2002 Year :2005
2 ) MS ISO 9001 : 2000 Year :2002

Competitor(s)

:

CAMEL FOAM INDUSTRIES SDN BHD
GRAND PLATFORM (M) SDN BHD
ODYSSEY TECHNOLOGIES (MALAYSIA) SDN BHD
POWER FOAM INDUSTRIES SDN BHD
VARIOUS RESOURCES (M) SDN BHD

Ownership of premises

:

OWNED

 

Total Number of Employees:

 

YEAR

2015

2014

2013

2012

2011


GROUP

N/A

N/A

N/A

N/A

N/A

COMPANY

70

50

50

50

54

 

Branch

:

NO

 

Other Information:


The Subject is principally engaged in the (as a / as an) manufacturing of expandable polyethylene, expandable polypropylene and other chemical products.

The Subject mainly focuses on manufacturing polyethylene polypropylene beads foams.

The Subject utilizes advanced automated and semi-automated machineries to ensure production of high quality products.


CURRENT INVESTIGATION

 

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client

:

N/A

Current Telephone Number

:

09-5826000

Match

:

N/A

Address Provided by Client

:

SUITE 15.02, 15TH FLOOR, CENTREPOINT SOUTH, MID VALLEY CITY LINGKARAN SYED PUTRA 59200 KUALA LUMPUR

Current Address

:

LOT 123-124, JALAN GEBENG 2/3, GEBENG INDUSTRIAL ESTATE, 26080 KUANTAN, PAHANG, MALAYSIA.

Match

:

NO

Latest Financial Accounts

:

YES

 

 

Other Investigations


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

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


FINANCIAL ANALYSIS

 

Profitability

Turnover

:

Increased

[

2010 - 2014

]

Profit/(Loss) Before Tax

:

Decreased

[

2010 - 2014

]

Return on Shareholder Funds

:

Unfavourable

[

5.11%

]

Return on Net Assets

:

Unfavourable

[

6.52%

]

The Subject's turnover increased steadily as the demand for its products / services increased due to the goodwill built up over the years.The dip in profit could be due to the stiff market competition which reduced the Subject's profit margin. The unfavourable return on shareholders' funds could indicate that the Subject was inefficient in utilising its assets to generate returns.

Working Capital Control

Stock Ratio

:

Unfavourable

[

94 Days

]

Debtor Ratio

:

Favourable

[

33 Days

]

Creditors Ratio

:

Favourable

[

8 Days

]

The Subject could be incurring higher holding cost. As its capital was tied up in stocks, it could face liquidity problems. 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

[

5.68 Times

]

Current Ratio

:

Favourable

[

8.12 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

:

Nil

[

0.00 Times

]

Gearing Ratio

:

Favourable

[

0.00 Times

]

The Subject's interest cover was nil as it did not pay any interest during the year. 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 :

Although the Subject's turnover had increased, its profits had declined over the same corresponding period. This could be due to the stiffer market competition and / or higher operating costs which lowered the Subject's profit margin. 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 did not make any interest payment during the year. The Subject was dependent on its shareholders' funds to finance its business needs. 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 : FAIR

 

 

 

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

20119 : Manufacture of other basic chemicals 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 1996, the Subject is a Private Limited company, focusing on manufacturing of expandable polyethylene, expandable polypropylene and other chemical products. 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. With an issued and paid up capital of MYR 16,000,000 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. Being a moderate size company, the Subject has a total workforce of 70 employees in its business 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. 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 43,373,847, 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.

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)

KANEKA EPERAN SDN. BHD.

 

Financial Year End

2014-03-31

2013-03-31

2012-03-31

2011-03-31

2010-03-31

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

FULL

FULL

FULL

Currency

MYR

MYR

MYR

MYR

MYR

TURNOVER

49,370,536

38,561,523

37,248,589

44,200,328

40,323,770

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

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

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

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

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

Total Turnover

49,370,536

38,561,523

37,248,589

44,200,328

40,323,770

Costs of Goods Sold

(35,101,406)

(25,656,029)

(26,081,654)

(30,179,038)

(26,150,436)

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

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

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

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

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

Gross Profit

14,269,130

12,905,494

11,166,935

14,021,290

14,173,334

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

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

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

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

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

PROFIT/(LOSS) FROM OPERATIONS

2,829,564

2,900,807

1,888,090

2,654,573

2,921,309

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

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

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

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

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

PROFIT/(LOSS) BEFORE TAXATION

2,829,564

2,900,807

1,888,090

2,654,573

2,921,309

Taxation

(614,344)

(844,454)

(478,203)

(576,121)

(1,333,015)

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

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

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

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

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

PROFIT/(LOSS) AFTER TAXATION

2,215,220

2,056,353

1,409,887

2,078,452

1,588,294

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

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

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

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

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

RETAINED PROFIT/(LOSS) BROUGHT FORWARD

As previously reported

26,182,627

24,958,274

24,588,387

23,309,935

22,521,641

Prior year adjustment

-

-

(1,040,000)

-

-

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

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

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

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

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

As restated

26,182,627

24,958,274

23,548,387

23,309,935

22,521,641

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

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

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

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

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

PROFIT AVAILABLE FOR APPROPRIATIONS

28,397,847

27,014,627

24,958,274

25,388,387

24,109,935

DIVIDENDS - Ordinary (paid & proposed)

(1,024,000)

(832,000)

-

(800,000)

(800,000)

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

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

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

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

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

RETAINED PROFIT/(LOSS) CARRIED FORWARD

27,373,847

26,182,627

24,958,274

24,588,387

23,309,935

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

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

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

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

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

INTEREST EXPENSE (as per notes to P&L)

DEPRECIATION (as per notes to P&L)

854,709

1,376,876

1,880,010

2,143,919

2,284,625

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

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

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

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

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

854,709

1,376,876

1,880,010

2,143,919

2,284,625

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

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

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

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

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

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

KANEKA EPERAN SDN. BHD.

 

ASSETS EMPLOYED:

FIXED ASSETS

6,364,652

4,118,328

5,115,597

6,418,358

7,830,468

Deferred assets

-

196,109

138,535

80,175

160,946

Others

-

-

17,834

20,896

53,096

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

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

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

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

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

TOTAL LONG TERM INVESTMENTS/OTHER ASSETS

-

196,109

156,369

101,071

214,042

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

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

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

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

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

TOTAL LONG TERM ASSETS

6,364,652

4,314,437

5,271,966

6,519,429

8,044,510

Stocks

12,654,393

10,130,432

6,257,953

5,762,972

6,966,483

Trade debtors

4,454,035

3,418,049

4,625,906

5,345,790

4,825,825

Other debtors, deposits & prepayments

175,006

287,913

667,563

412,504

195,466

Short term deposits

-

1,360,000

-

-

-

Amount due from holding company

42,479

-

-

21,598,723

12,205,007

Amount due from related companies

17,354,012

21,499,387

19,304,007

-

-

Cash & bank balances

7,244,082

4,175,557

7,536,350

4,424,533

11,345,109

Others

302,342

33,785

441,176

243,087

219,423

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

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

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

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

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

TOTAL CURRENT ASSETS

42,226,349

40,905,123

38,832,955

37,787,609

35,757,313

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

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

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

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

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

TOTAL ASSET

48,591,001

45,219,560

44,104,921

44,307,038

43,801,823

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

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

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

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

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

CURRENT LIABILITIES

Trade creditors

780,376

494,297

547,761

791,376

691,969

Other creditors & accruals

1,405,611

1,190,024

1,144,088

1,045,401

2,117,998

Bank overdraft

-

-

-

1,238

33,919

Amounts owing to holding company

1,976,715

632,427

798,133

1,880,636

1,648,002

Amounts owing to related companies

1,040,680

646,617

656,665

-

-

Other liabilities

-

73,568

-

-

-

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

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

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

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

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

TOTAL CURRENT LIABILITIES

5,203,382

3,036,933

3,146,647

3,718,651

4,491,888

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

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

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

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

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

NET CURRENT ASSETS/(LIABILITIES)

37,022,967

37,868,190

35,686,308

34,068,958

31,265,425

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

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

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

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

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

TOTAL NET ASSETS

43,387,619

42,182,627

40,958,274

40,588,387

39,309,935

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

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

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

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

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

SHARE CAPITAL

Ordinary share capital

16,000,000

16,000,000

16,000,000

16,000,000

16,000,000

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

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

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

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

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

TOTAL SHARE CAPITAL

16,000,000

16,000,000

16,000,000

16,000,000

16,000,000

Retained profit/(loss) carried forward

27,373,847

26,182,627

24,958,274

24,588,387

23,309,935

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

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

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

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

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

TOTAL RESERVES

27,373,847

26,182,627

24,958,274

24,588,387

23,309,935

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

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

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

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

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

SHAREHOLDERS' FUNDS/EQUITY

43,373,847

42,182,627

40,958,274

40,588,387

39,309,935

Deferred taxation

13,772

-

-

-

-

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

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

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

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

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

TOTAL LONG TERM LIABILITIES

13,772

-

-

-

-

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

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

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

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

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

43,387,619

42,182,627

40,958,274

40,588,387

39,309,935

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

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

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

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

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

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL RATIO

 

KANEKA EPERAN SDN. BHD.

 

TYPES OF FUNDS

Cash

7,244,082

5,535,557

7,536,350

4,424,533

11,345,109

Net Liquid Funds

7,244,082

5,535,557

7,536,350

4,423,295

11,311,190

Net Liquid Assets

24,368,574

27,737,758

29,428,355

28,305,986

24,298,942

Net Current Assets/(Liabilities)

37,022,967

37,868,190

35,686,308

34,068,958

31,265,425

Net Tangible Assets

43,387,619

42,182,627

40,958,274

40,588,387

39,309,935

Net Monetary Assets

24,354,802

27,737,758

29,428,355

28,305,986

24,298,942

PROFIT & LOSS ITEMS

Earnings Before Interest & Tax (EBIT)

2,829,564

2,900,807

1,888,090

2,654,573

2,921,309

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

3,684,273

4,277,683

3,768,100

4,798,492

5,205,934

BALANCE SHEET ITEMS

Total Borrowings

0

0

0

1,238

33,919

Total Liabilities

5,217,154

3,036,933

3,146,647

3,718,651

4,491,888

Total Assets

48,591,001

45,219,560

44,104,921

44,307,038

43,801,823

Net Assets

43,387,619

42,182,627

40,958,274

40,588,387

39,309,935

Net Assets Backing

43,373,847

42,182,627

40,958,274

40,588,387

39,309,935

Shareholders' Funds

43,373,847

42,182,627

40,958,274

40,588,387

39,309,935

Total Share Capital

16,000,000

16,000,000

16,000,000

16,000,000

16,000,000

Total Reserves

27,373,847

26,182,627

24,958,274

24,588,387

23,309,935

LIQUIDITY (Times)

Cash Ratio

1.39

1.82

2.40

1.19

2.53

Liquid Ratio

5.68

10.13

10.35

8.61

6.41

Current Ratio

8.12

13.47

12.34

10.16

7.96

WORKING CAPITAL CONTROL (Days)

Stock Ratio

94

96

61

48

63

Debtors Ratio

33

32

45

44

44

Creditors Ratio

8

7

8

10

10

SOLVENCY RATIOS (Times)

Gearing Ratio

0

0

0

0

0

Liabilities Ratio

0.12

0.07

0.08

0.09

0.11

Times Interest Earned Ratio

0

0

0

0

0

Assets Backing Ratio

2.71

2.64

2.56

2.54

2.46

PERFORMANCE RATIO (%)

Operating Profit Margin

5.73

7.52

5.07

6.01

7.24

Net Profit Margin

4.49

5.33

3.79

4.70

3.94

Return On Net Assets

6.52

6.88

4.61

6.54

7.43

Return On Capital Employed

6.52

6.88

4.61

6.54

7.43

Return On Shareholders' Funds/Equity

5.11

4.87

3.44

5.12

4.04

Dividend Pay Out Ratio (Times)

0.46

0.40

0

0.38

0.50

NOTES TO ACCOUNTS

Contingent Liabilities

0

0

0

0

0

 


 

FOREIGN EXCHANGE RATES

 

Currency

Unit

Indian Rupees

US Dollar

1

Rs.66.50

UK Pound

1

Rs.101.99

Euro

1

Rs.75.03

 

INFORMATION DETAILS

 

Analysis Done by :

KAS

 

 

Report Prepared by :

NIT

 

               

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.