Fna account

SCHOOL OF

ARCHITECTURE, BUILDING AND DESIGN

FOUNDATION IN NATURAL AND BUILT ENVIRONMENT

BASIC ACCOUNTING (ACC 30205)

FINANCIAL RATIO ANALYSIS

GROUP MEMBERS: LOH MUN TONG (0323680)

TAN JIA SAN (0322406)

CALVIN WONG PING KET (0322481)

KIEW CHEE YUAN (0323297)

LECTURER: MS. TAY SHIR MEN

SUMMISION DATE: 4 FEBRUARY 2016

TABLE OF CONTENT

LOH MUN TONG (0323680) l TAN JIA SAN (0322406) l CALVIN WONG PING KET (0322481) l KIEW CHEE YUAN (0323297)

1 | P a g e

CONTENT PAGE

Background Study 3

Recent Development 4 - 6

Profitability Ratio 7 - 8

Financial Stability Ratio 9 - 10

Price Earnings Ratio (P/E Ratio) 11

Share Price 12 - 13

Investment Recommendation 14

Appendix 15 - 20

References 21

Brief History of LBS Bina Group Bhd.


2 | P a g e

LBS began with one man’s vision in the 1980s – founded as a construction business by Dato’ Seri Lim Bock Seng. After a decade of rapid growth, LBS ventured into the property

development sector in 1992 where it started its first project of Jelapang Maju Light Industrial Park in Jelapang, Ipoh. Within a few years, its stable of projects established

LBS as a reputable developer and a dominant player in Malaysia’s property sector.

LBS Bina Group Bhd. is a management and investment holding company, which engages in the property development business. It operates through the following segments:

Property Development, Management & Investment, Trading & Others, Construction, and Racing Circuit.

The Property Development segment develops residential, industrial and commercial properties.

The Management & Investment segment focuses on investment holding and provision of management services.

The Trading & Others segment involves in trading of building material, insurance agent, and selling of membership and covering insurance products.

The Construction segment undertakes in the building, project planning and implementation contracting activities.

The Racing Circuit segment develops and manages racing circuit. The company was founded on June 29, 2000 and is headquartered in Petaling Jaya, Malaysia.

More recently, the Group re-strategized its business model, launching a brand new image, identity and direction as part of its long term objective to be an internationally recognised developer, building and inspiring lifestyle spaces that enhance community

living. As part of this new direction, the Group has extended its portfolio of quality homes to

the high-end market and has embarked on a progressive journey of change, which includes the areas of product, customer experience, after-sales services, sustainability,

green technology and design.

LBS builds homes that meet the needs of Malaysians. For over 20 years, LBS has carefully nurtured a reputation for delivering properties with unsurpassed quality that inspire and enrich. By insisting on continually improving not only construction technologies but the

very latest in architectural trends, LBS lives up to its belief that Malaysians deserve homes of the finest workmanship.

Recent DevelopmentLBS Bina Group Bhd has lined up RM6 billion worth of new projects for launch in the next three years from 2015 to 2017.


3 | P a g e

In terms of gross development value (GDV), 60% is planned for Selangor, followed by 25% in Johor and 15% in Pahang.

Managing Director of LBS Bina Group, Datuk Seri Lim Hock San states that property developer is targeting sales of RM1 billion this year compared with RM644 million achieved in 2014, mainly on the back of BSP21 serviced residences, BSP Village shop offices in Bandar Saujana Putra in the Klang Valley.

BSP21 HIGH RISE RESIDENTIAL LOCATED IN BANDAR SAUJANA PUTRA

BSP21 VILLAGE LOCATED IN BANDAR SAUJANA PUTRA


4 | P a g e

SKYVILLA, D’ ISLAND RESIDENCE

For the first quarter of 2015, the group achieved sales of RM234 million, a 38% increase compared with RM169 million in the first quarter of 2014.The improved sales was mainly due to the positive response from the BSP21 serviced residence that is affordably priced, which contributed 68% of the total sales in the first quarter of 2015.

Projects to be launched in 2015 include the BSP Village shop offices and BSP21 serviced residence, Corallia semi-detached homes and SkyVilla condominium in D'Island Residence in the Klang Valley.

These projects are offering up to some 2,600 units in total with a GDV of RM1.7 billion, consisting of 81% (RM1.3 billion) residential projects and the remaining 19% (RM369 million) non-residential projects.

It expects to follow in 2016, with some 4,000 units launches in Selangor, Pahang and Johor with a total GDV of RM2 billion; and by 2017, another 5,100 units with RM2.2 billion in GDV.

LBS's current land bank stood at 2,715 acres with a GDV of RM22.5 billion that will keep the group busy for 10 years.


5 | P a g e

Meanwhile, Using Guangdong as a corridor to form a closer connection, LBS Bina plan to establish a cultural museum, one-stop centre and Made-In-Malaysia Excellence exhibition hall within Zhuhai International Circuit (ZIC), a piece of land with a racing circuit (Zhuhai International Circuit) that occupies some 264 acres. Is is made possible with the strong support from Melaka state government

The cultural museum which will be showcasing the heritage and customary cultural of Melaka promotes cultural interaction between Malaysia and China, further strengthening Malaysia’s tourism industry, as well as attracting more international companies to invest in Malaysia, will inevitably bring about the outlook for the development of a thriving area of Melaka.”

Under a 60:40 joint venture between LBS and a Chinese government-linked company, the development of the tourism project is expected to include a theme park, factory outlet, car showroom, Malaysia cultural centre and hotel.

LBS Bina Group in this strategic collaboration with China aims to promote Malaysia and Malaysian tourism as well as culture in both countries to further drive economic and business growth in the future.

Profitability Ratio LOH MUN TONG (0323680) l TAN JIA SAN (0322406) l CALVIN WONG PING KET (0322481) l KIEW

CHEE YUAN (0323297)

6 | P a g e

The following table shows the profitability ratio calculation and interpretation for LBS and KLCI in the year 2012 and 2013.

Profitability Ratios 2012 2013 Interpretation

Return On Equity (ROE)

=7.55% =56.78%

During the year 2012-2013, the business’ Return On Equity (ROE) has increases from 7.55% to 59.33%. This means that the company is getting more return from the capital than last year.

Net Profit Margin Ratio (NPM)

=7.65% =74.47%

During the year 2012-2013, the business’ Net Profit Margin (NPM) has increases from 7.65% to 74.47%. This shows that the company is getting better at controlling its overall expenses.

Gross Profit Margin Ratio (GPM)

=28.69% =31.59%

During the year 2012-2013, the business’ Gross Profit Margin (GPM) has increase from 28.69% to 31.59%. this shows that the company is getting better at controlling its cost of goods sold expenses.

General Expenses Ratio (GER)

=13.24% =16.04%

During the year 2012-2013, the business’ General Expenses Ratio (GER) has increase from 13.24% to 16.04%. This shows that the business is getting better at controlling their general expenses.

Financial Expenses Ratio (FER)

=3.62% =2.84%

During the year 2012-2013, the business’ Financial Expenses Ratio (FER) has decrease from 3.62% to 2.84%. This shows that the business is getting better at controlling their financial


7 | P a g e

expenses.

Financial Stability RatioThe following table shows the stability ratio calculation and interpretation for LBS in the year 2012 and 2013.


8 | P a g e


9 | P a g e

Stability Ratios

2012 2013 Interpretation

Working Capital ratio (WCR)

= 1.78 : 1 = 1.52 : 1

For every RM1 of current liability in the year 2013, the business, LBS has 1.49 of current assets to pay for it. It has a higher ratio than 2012. However, a business should preferably have a minimum of 2:1 of current assets to current liability to ensure that the business does not face difficulties.

Total Debt Ratio

(TDR)

x 100%

= 63.29%

x 100%

= 56.58%

For 2013, the TDR is lower than 2012, having a TDR of 56.58% and 63.29% respectively. As the TDR is lower in 2013, this results in a higher amount of owner’s equity. It is strongly advised that a business’ TDR does not exceed more than 50% as it would have a higher risk of bankruptcy.

Inventory Turnover Ratio (ITR)

365

= 15.79

= 16 days

365

= 18.09

= 19 days

It takes 19 days for the business in 2013 to sell one batch of goods. The business in 2013 can sell goods rapidly, generating more cash quickly to pay off its liabilities.

Interest coverage ratio

= 3.11 times = 27.19 times

LBS’s ICR is higher in 2013 than in 2012. This means that the business’ ability to pay off its interest expense in higher than 2012. In the year 2013, MK Land has enough profit to pay its interest expenses 27.19 times. To avoid bankruptcy, a business’ interest coverage should not

fall below 5 times.

Price Earnings Ratio (P/E Ratio)2012

Basic earnings per share: RM 0.097

Current share price: RM 0.84

RM 0.84 / RM 0.097 = 8.7 times

2013

Basic earnings per share: RM 0.96

Current share price: RM 1.56

RM 1.56 / RM 0.96 = 1.6 times

The P/E ratio measures how expensive a share is. In the year 2012, the P/E ratio is 8.7 while

in the year 2013 the P/E ratio is 1.6. This means that the share in 2013 is less expensive

compared to the share in the year 2012. A P/E ratio of 1.6 indicates that an investor will need

to wait for 1.6 years to recoup his investment.


10 | P a g e

Share Price


11 | P a g e

Based on the graph above is the stock graph of LBS and KLCI on 1st January 2015 to 31st December 2015 from Yahoo Finance.

The share price for LBS is RM 1.50 on 1st April 2015, and the index is 1826.31. At 1st May 2015, the share price increase to RM 1.56 and the index decreases to 1818.27. The increase of share price is (1.56 – 1.50)/1.50 = 4%, whereas the index changes is (1818.27 – 1826.31)/1826.31 = -0.44%. Hence the performance of the company is better than the index.

The share price for LBS is RM 1.48 on 6th August 2015, and the index is 1,694.64. At 1st September 2015, the share price increase to RM 1.28 and the index decreases to 1609.21. The decrease of share

price is (1.28 – 1.48)/1.48 = -13.51%, whereas the index changes is (1609.21– 1,694.64)/ 1,694.64=-5.04 %. Hence the performance of the company is worse than the index.

The share price for LBS is RM 1.28 on 1st of September 2015, and the index is 1,609.21. At 17th of September 2015, the share price increase to RM 1.55 and the index increase to 1,681.54. The increase of share price is (1.55 – 1.28)/1.28x100% = 21.09%, whereas the index changes is (1,681.54 – 1,609.21)/1,609.21x100%= 4.49%. Hence the performance of the company is better that the index.

The share price for LBS is RM 1.51 on 23th September 2015, and the index is 1613.17. At 7th October 2015, the share price decrease to RM 1.41 and the index increases to 1689.25. The decrease of share price is (1.41 – 1.51)/1.51 = -6.62%, whereas the index changes is (1689.25– 1613.17)/ 1613.17= 4.72%. Hence the performance of the company is worse than the index.

The share price for LBS is RM 1.45 on 11th November 2015, and the index is 1665.32. At 25th November 2015, the share price decreased to RM 1.35 and the index increases to 1684.42. The decrease of share price is (1.32 – 1.45)/1.45 = -8.97%, whereas the index changes is (1684.42 – 1665.32)/1665.32 = 1.15 %. Hence the performance of the company is worse than the index.

Since the fluctuation shows that the performance of LBS is worse than KLCI. Hence, by considering the share price, it is recommended to not to invest LBS as when sometimes the KLCI increase, the LBS decrease.


12 | P a g e

Investment RecommendationAccording to LBS’ profitability ratio, the return on equity (ROE), net profit margin (NPM)

and gross profit margin (GPM) has improved and showed positive signs for the business.

While the financial expenses ratio (FER) has decrease which is good for the company.

However, the general expenses ratio (GER) is slightly increase from the year 2012 to the year

2013, the overall profit has indicated that the business is doing fairly well. LBS’s ability to

pay off its current liabilities had slightly decrease from 1.78:1 to 1.52:1 and it did not satisfy

the 2:1 ratio of staying within the borderline of borrowing. Besides that, LBS’s total debt

ratio (TDR) showed that its total debt has decrease 6.71%, making it 56.58% in 2013. Having

the TDR below 50% ensured that the business will not have a higher risk of bankruptcy.

Their stock turnover has taken a shorter period of time so they took a shorter time to generate

more cash inflow, it enable the business to have more ability to pay off its liabilities.

Moreover, LBS’s interest coverage ratio (ICR) has also shown an improvement in the


13 | P a g e

business’ ability to pay its interest expense. LBS earned more profit in 2013 compared to

2012.

LBS earned more profit in 2013 compared to 2012. In other words, the company has

demonstrated a decent profitability and financial stability and its shares are available at a

cheap price (P/E Ratio < 15) to warrant an investment. An investor will only need to wait for

a short period of time that is 1.6 years (19.2 months) as of 2013 to recoup his investment.

Based on the analysis above, LBS’s overall performance are actually increasing over the

year. However, It wold be not wise to invest in LBS when we look at its share price, most of

the period of the share price of LBS dropped when the KLCI increased, it shown that LBS is

faced some economy problem during the economy growth. Hence, it is recommended not to invest in

LBS currently.

Appendix


14 | P a g e


15 | P a g e


16 | P a g e


17 | P a g e


18 | P a g e


19 | P a g e

References LOH MUN TONG (0323680) l TAN JIA SAN (0322406) l CALVIN WONG PING KET (0322481) l KIEW

CHEE YUAN (0323297)

20 | P a g e

• http://quotes.wsj.com/MY/XKLS/LBS/company-people

• http://www.thesundaily.my/news/1375620

• http://www.lbs.com.my/about-us/corporate/overview-information/

• http://www.propertyguru.com.my/property-news/2015/9/108919/lbs-bina-group-

jiuzhou-signs-mou-for-upgrading-of-zhuhai-international-circuit-zic

• http://finance.yahoo.com/echarts?s=5789.KL+Interactive#{"allowChartStacking":true}

• http://finance.yahoo.com/q/hp?

s=5789.KL&a=02&b=27&c=2015&d=03&e=3&f=2015&g=d

• http://finance.yahoo.com/q/hp?

s=5789.KL&a=03&b=30&c=2015&d=04&e=1&f=2015&g=d

• http://finance.yahoo.com/echarts?s=

%5EKLSE+Interactive#{"allowChartStacking":true}

• http://finance.yahoo.com/q/hp?s=

%5EKLSE&a=02&b=27&c=2015&d=03&e=1&f=2015&g=d

• http://finance.yahoo.com/q/hp?s=

%5EKLSE&a=03&b=30&c=2015&d=04&e=1&f=2015&g=d

• http://finance.yahoo.com/echarts?s=5789.KL+Interactive#{"allowChartStacking":true}

• http://finance.yahoo.com/q/hp?s=5789.KL&a=11&b=27&c=2012&d=00&e=3&f=2013&g=d

• http://finance.yahoo.com/q/hp?s=5789.KL&a=11&b=27&c=2013&d=00&e=3&f=2014&g=d


21 | P a g e

http://finance.yahoo.com/q/hp?s=5789.KL&a=11&b=27&c=2013&d=00&e=3&f=2014&g=d


http://finance.yahoo.com/echarts?s=5789.KL+Interactive#%7B%5C

http://finance.yahoo.com/q/hp?s=%5EKLSE&a=03&b=30&c=2015&d=04&e=1&f=2015&g=d




http://finance.yahoo.com/echarts?s=%5EKLSE+Interactive#%7B%5C

http://finance.yahoo.com/echarts?s=%5EKLSE+Interactive#%7B%5C





http://finance.yahoo.com/echarts?s=5789.KL+Interactive#%7B%5C

http://www.propertyguru.com.my/property-news/2015/9/108919/lbs-bina-group-jiuzhou-signs-mou-for-upgrading-of-zhuhai-international-circuit-zic

http://www.propertyguru.com.my/property-news/2015/9/108919/lbs-bina-group-jiuzhou-signs-mou-for-upgrading-of-zhuhai-international-circuit-zic

http://www.lbs.com.my/about-us/corporate/overview-information/

http://www.thesundaily.my/news/1375620

http://quotes.wsj.com/MY/XKLS/LBS/company-people

Economy & Finance

Fna account