Table of Content

ASSIGNMENT

PRINCIPLE OF FINANCE (FICD 113)

PREPARED FOR:

LECT: MISS NORLELA MOHD. ALI

[AHMAD HAMZI BIN AZHAR](ME092805)

Table of Content

ITEM PAGES

Overview 3

Executive Summary 4

Background of the Company

History

7

Summary Ratios

-Time Series

-Cross Sectional

-Graph

9

Conclusion and Recomendation 22

2

OVERVIEW

First of all, I am grateful towards Allah SWT with His blessing I could complete this

assignment on the right particular period which it is given to me. I have successfully take

efforts in this assignment. However, it would not have been possible without the kind support

and help of many individuals and organization. I would like to extend my sincere thanks to

all of them.

I was highly indebted to Miss Norlela for her guidance and constant supervision as well as for

providing necessary information regarding this assignment and also for her support in

completing this assignment. My thanks and appreciations also go to our colleague in

developing this assignment and people who have willingly helped me out with their abilities.

Last but not least, I have try my best to give the better information and hopefully Miss

Norlela will be satisfied with my task and I hope that I can achieve the higher level of

achievement regarding on this assignment.

3

Corporate Information

Ahmad Zaki Resources Berhad (432768 –x)

Board of Directors: Raja Dato’ Seri Aman Bin Raja Haji Ahmad (Independent Non-Executive Chairman)Dato’ Sri Haji Wan Zaki Bin Haji Wan Muda (Executive Vice Chairman)Dato’ Wan Zakariah Bin Haji Wan Muda (Managing Director)Dato’ Haji Mustaffa Bin Mohamad (Executive Director)Dato’ W Zulkifli Bin Haji W Muda (Executive Director)Tan Sri Dato’ Lau Yin Pin @Lau Yen Beng (Independent Non-Executive Director)Datuk (Prof.) A Rahman @ Omar Bin Abdullah (Independent Non-Executive Director)Dato’ Haji Ismail @ Mansor Bin Said (Independent Non-Executive Director)Dato’ Wan Ahmad Farid Bin Haji Wan Salleh (Independent Non-Executive Director)

Audit committee: Raja Dato’ Seri Aman BinRaja Haji Ahmad (Chairman)Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng (Member)Datuk (Prof.) A Rahman @ Omar Bin Abdullah (Member)Dato’ Haji Ismail @ Mansor Bin Said (Member)

Secretaries: Haji Bahari Bin Johari (LS 0008773)Seuhailey Binti Shamsudin @ Azraain (MAICSA 7046575)Wong Maw Chuan (MIA 7413)

Registered office

Level 2, Tower 1, Avenue 5 Bangsar South City59200 Kuala Lumpur Tel : 03-2283 6050Fax : 03-2283 6072

Registrar

Mega Corporate Services Sdn BhdLevel 15-2Jalan Sultan Ismail50250 Kuala LumpurTel : 03-2692 4271Fax : 03-2732 5388

Principal Bank

Alliance Bank BerhadAmBank (M) BerhadCIMB Bank BerhadMalayan Banking Berhad

Stock Exchange

Main Market of Bursa MalaysiaSecurities Berhad

Auditors

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UOB Bank BerhadKPMG Tower, 8 First AvenueBandar Utama47800 Petaling JayaSelangor

Kimlun Corporation Berhad(867077-X)

Board of Directors: Pang Tin @ Pang Yon Tin (Executive Chairman)Sim Tian Liang (Chief Executive Officer and Executive Director)Chin Lian Hing (Executive Director)Yam Tai Fong (Executive Director)Pang Khang Hau (Executive Director)Phang Piow @ Pang Choo Ing (Non-Independent Non-Executive Director)Dato’ Paduka (Dr.) Ir. Hj. Keizrul Bin Abdullah (Independent Non-Executive Director)Kek Chin Wu (Independent Non-Executive Director)Chua Kee Yat @ Koo Kee Yat (Independent Non-Executive Director)

Audit Committee: ChairmanKek Chin WuIndependent Non-Executive DirectorMembersChua Kee Yat @ Koo Kee YatIndependent Non-Executive DirectorDato’ Paduka (Dr.) Ir. Hj. Keizrul BinAbdullahIndependent Non-Executive Director

Remuneration Committee: (Chairman)Sim Tian Liang (Chief Executive Officer and Executive Director)MembersChua Kee Yat @ Koo Kee Yat (Independent Non-Executive Director)Kek Chin Wu (Independent Non-Executive Director)

Nomination Committee: ChairmanDato’ Paduka (Dr.) Ir. Hj. Keizrul Bin AbdullahMembersChua Kee Yat @ Koo Kee YatKek Chin Wu

Company Secretaries: Wong Peir Chyun (MAICSA 7018710)Tay Lee Shya (MIA 16982)Yeng Shi Mei (MAICSA 7059759)

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Head Office

Suite 19.06, Level 19,Johor Bahru City Square106-108, Jalan Wong Ah Fook80000 Johor Bahru,Johor Darul TakzimTelephone No. : (+607) 222 8080Facsimile No. : (+607) 223 8282E-mail : [email protected] : www.kimlun.com

Registrar & Transfer Office

Tricor Investor Services Sdn BhdLevel 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTelephone No. : (+603) 2264 3883Facsimile No. : (+603) 2282 1886

Auditor

Ernst & Young (AF: 0039)Suite 11.2, Level 11,Menara Pelangi 2,Jalan Kuning, Taman Pelangi80400 Johor Bahru,Johor Darul TakzimTelephone No. : (+607) 334 1740Facsimile No. : (+607) 334 1749

Registered Office

Level 18, The Gardens North Tower,Mid Valley City, Lingkaran Syed Putra,59200 Kuala LumpurTelephone No. : (+603) 2264 8888Facsimile No. : (+603) 2282 2733

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BACKGROUND OF THE COMPANY

Ahmad Zaki Resources Berhad

Ahmad Zaki Resources Berhad ('AZRB') was incorporated in Malaysia under the Companies Act, 1965 on 26 May 1997 as a public limited company under its present name.

The history of the AZRB Group began with the incorporation of Ahmad Zaki Sdn Bhd ('AZSB') on 17 February 1982. AZSB was incorporated as a private limited company. Its first contracting job was landscaping works for a housing project owned by Terengganu State Economic Development Corporation in Kemaman, Terengganu. In April 1984, the company secured its first major contract, which was the construction and completion of an external drainage system for the gas export terminal at the Kemaman Port.

Since then, AZSB has successfully secured contracts from government and semi-government agencies and the private sector. These include, amongst others, Jabatan Kerja Raya Malaysia, Majlis Amanah Rakyat, Yayasan Islam Terengganu, Kuala Lumpur City Centre Berhad, KLIA, Majlis Perbadanan Petaling Jaya, University of Malaya and International Islamic University of Malaysia. With the growth, the company upgraded its licensing status until it obtained a Class 'A' contracting license in 1993. Now AZSB has completed nearly 2 (two) Billion Ringgit worth of projects, consisting of various types of buildings and civil engineering works.

With the ensuing business growth and financial performance, the group under AZRB was listed as a Public Limited Company on the Second Board of Kuala Lumpur Stocks Exchange in June 1999 and subsequently transfered to the Main Board on 10 September 2003.

Looking to the future, the group has ventured overseas with the securing of three projects in Chennai, India and two in Riyadh, Saudi Arabia. Other activities of the group include Oil and Gas, Property Development and Plantations.

KIMLUN SDN BHD (35618-A)

Kimlun Sdn Bhd (“KLSB”) was incorporated in Malaysia on 21 October 1977 as a private limited company under the name of Kimlun Earthworks Sdn Bhd. Subsequently, on 22 October 1994, the company changed its name to Kimlun Sdn Bhd. Between 1977 and 2002, KLSB was involved in the carrying out of building construction and infrastructure projects with contract value less than RM20 million each. KLSB has, since 2003, expanded its construction services to larger scale building and infrastructure construction, and heavy engineering work such as flyovers and interchanges.

In 2003, KLSB secured its first contract with a value exceeding RM20.0 million. The contract was for the construction of apartments and townhouses in Johor Bahru at a contract value of approximately RM22.50 million. In the same year, KLSB secured its first design and build contract for a bridge in Johor Bahru and its first industrial building contract for the construction of a factory building, also in Johor Bahru.

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In 2005, KLSB branched into specialised infrastructure construction by undertaking the construction of the new Tanjung Puteri flyover, part of the access to the new Custom Inspection and Quarantine (CIQ), in Johor Bahru. In the same year, KLSB also expanded its operations into the Klang Valley by securing a contract for the construction of 70 units of semi-detached houses. In 2006, KLSB secured another specialised infrastructure construction project for the upgrading works of the Perling Interchange in Johor Bahru at a total contract value of RM71.03 million.

With continuous focus on providing construction services for building and civil engineering works, KLSB has gradually established its name in the construction industry. In 2007, in recognition of the quality of its services, KLSB was awarded the “ISO 9001:2000, Quality Management System” certification, which opened up more markets for the company. During the same year, KLSB secured its first contract to construct shopping complex in Taman Bukit Indah, Nusajaya, Johor.

In 2008, on the back of its experience, resources and network built up in the construction industry, KLSB secured its first contract with a value exceeding RM100 million for the construction of an interchange in Johor Bahru.

In 2009, KLSB secured its first building project based on IBS concept from Iskandar Regional Development Authority at a contract value of RM142.80 million.

In 2010, KLSB secured the contract for the construction of the reputable Malborough College at a contract value of RM70.00 million.

In 2011, KLSB secured its first hotel construction project for the construction of the Granada Hotel in Nusajaya. In the same year it also secured the contract for the construction of the Mall of Medini, Legoland, Johor Bahru at a contract value of RM51.00 million.

KLSB has evolved from being involved in building construction and infrastructure projects to an engineering and construction service provider. KLSB is currently involved in larger scale building and infrastructure construction projects in Johor Bahru and the Klang Valley, either as main contractor or sub-contractor, or teams up with public listed companies, government-linked corporations or other main contractors, to secure projects by participating in open tenders or invitations from our customers to tender for projects.

Liquidity Ratio

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1) Current Ratio

2012 20131.15

1.2

1.25

1.3

1.35

1.4

1.45

1.5

1.55

1.6

Current Ratio

ARK RESOURCES BERHAD KIMLUN CORPORATION BERHAD

Year 2012 2013

Ark Resources Berhad 1.30 1.55

Kimlun Corporation Berhad 1.55 1.49

Ark Resources Berhad Kimlun Corporation Berhad

Explanation The current ratio increase to 1.30 in

2012 and show its improvement when

increase to 1.55 in 2012

The current ratio show decrease in

2012 - 2013 from 1.55 to 1.46

Overall Current ratio matches current assets with current liabilities and tells us whether

the current assets are enough to settle current liabilities.

Both company shows credibility on maintaining its current asset within two

years. Current ratio below 1 shows critical liquidity problems because it means

that total current liabilities exceed total current assets. General rule is that

higher the current ratio better it is but there is a limit to this. Abnormally high

value of current ratio may indicate existence of idle or underutilized resources

in the company. For 2012, Kimlun Corporation Berhad shows better

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performance than Ark Resources Berhad but instead for the year 2013.

2) Quick Ratio

2012 20131.1

1.15

1.2

1.25

1.3

1.35

1.4

1.45

1.5

1.55

1.26

1.511.49

1.46

Quick Ratio


Year 2012 2013




Explanation Quick ratio on this company show

major increased from 1.26 in 2011 and

increase to 1.51 in 2012

The quick ratio slightly decrease

from 2012 to 2013

Overall Quick ratio measures the liquidity of a business by matching its cash and near

cash current assets with its total liabilities. It helps us to determine whether a

business would be able to pay off all its debts by using its most liquid assets.

Thus we conclude that, generally, a higher quick ratio is preferable because it

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means greater liquidity. Thus, we can conclude that in 2012 Kimlun

Corporation Berhad gives higher quick ratio than Ark Resources Berhad but

instead for the year 2013.

Conclusion;

The liquidity of Kimlun Corporation Berhad Berhad is better than Ark Resources Berhad in 2013. It’s shown by the current ratio and quick ratio. But not in 2012, Ark Resources Berhad shows better performance when recorded higher ratio than Kimlun Corporation Berhad. Therefore, Kimlun Corporation Berhad has a problem in paying their short-term liabilities by its current assets in 2012 while Ark Resources Berhad has the same problem one year later. .

Efficiency Ratio

3) Asset Turnover

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2012 20130

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

0.97

0.75

1.44

1.22

Asset Turnover


Year 2012 2013




Explanation Asset turnover ratio on this company

show decreasing from 0.97 in 2012

and increase to 0.75 in 2013

The asset turnover ratio decrease

from 2012 to 2013

Overall Asset turnover defined as the amount of sales or revenues generated per dollar

of assets. The Asset Turnover ratio is an indicator of the efficiency with which

a company is deploying its assets. Generally rule, the higher the ratio, the

better it is, since it implies the company is generating more revenues per dollar

of assets. From 2012 – 2013, both company show decrease of asset turnover

ratio, but in term of value of ratio, Kimlun Corporation Berhad makes higher

ratio than

Ark Resources Berhad . The conclusion is Kimlun Corporation Berhad shows

better performance in generate the amount of revenues per dollar asset.

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4) Average collection period

2012 20130

50

100

150

200

250

300

176

273

123135

Average collection period


Year 2012 2013

Ark Resources Berhad 176 273

Kimlun Corporation Berhad 123 135


Explanation For this company, their average

collection period are increasing from

176 to 273 in 2013

A slightly increase from 123 in 2012

to 135 in 2013

Overall A high average collection period can result to poor credit decisions, High

profit levels, Slow / poor collection of accounts receivables. thus, it shows that

Kimlun Corporation Berhad is better than Ark Resources Berhad in average

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collection period within 2 years.

5) Average Payment Period

2012 20130

50

100

150

200

250

190

223

120128

Average payment period


Year 2012 2013

Ark Resources Berhad 190 223

Kimlun Corporation Berhad 120 128


Explanation For this company, their average

payment period are increasing from

190 to 223 in 2013

A slightly increase from 220 in 2012

to 228 in 2013

Overall The more days of payment period reflects the longer period of funds within

companies. Kimlun Corporation Berhad maintains lower days of average

payment period, which is good, rather than Ark Resources Berhad that has

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higher days.

Conclusion

The efficiency of Kimlun Corporation Berhad is better than Ark Resources Berhad . It can be showed by the average collection period and average payment period. But the asset turnover for Ark Resources Berhad is better than Kimlun Corporation Berhad. So, Kimlun Corporation Berhad is more efficient in paying creditors and collecting the debts from its debtors. But Ark Resources Berhad is good at managing assets.

Profitability Ratio

6) Net Profit Margin

15

2012 20130.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2.80%

0.90%

6%

3%

Net Profit Margin


Year 2012 2013

Ark Resources Berhad 2.8% 0.9%

Kimlun Corporation Berhad 6% 3%


Explanation From the graph show that net profit

margin for this company decrease

from 2.8% to 0.9% in 2013

Net profit margin decrease from 6%

in 2012 to 3% in 2013.

Overall A ratio of profitability calculated as net income divided by revenues, or net

profits divided by sales. It measures how much out of every dollar of sales a

company actually keeps in earnings. Profit margin is very useful when

comparing companies in similar industries. A higher profit margin indicates a

more profitable company that has better control over its costs compared to its

competitors. In this case, Kimlun Corporation Berhad is more likely to cover

its non production cost and has better performance compared to Ark

Resources Berhad because of the higher percentage of net profit margin..

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7) Return On Equity

2012 20130.00%

5.00%

10.00%

15.00%

20.00%

25.00%

8.72%

2.46%

20%

12%

Return On Equity


Year 2012 2013


Kimlun Corporation Berhad 19.74% 11.86%


Explanation From the graph show that return on

equity for this company decrease

from 8.72% to 2.46% in 2013

Net profit margin decrease from

19.74% in 2012 to 11.86% in 2013.

Overall Return on equity is an important measure of the profitability of a company.

Higher values are generally favorable meaning that the company is efficient in

generating income on new investment. Kimlun Corporation Berhad has

generated more income on investment throughout the two years when

compared to Ark Resources Berhad . Investors should compare the ROE of

different companies and also check the trend in ROE over time. However,

relying solely on ROE for investment decisions is not safe.

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8) Return On Asset

2012 20130.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

2.57%

0.60%

7%

4%

Return On Asset


Year 2012 2013


Kimlun Corporation Berhad 6.74% 4.17%


Explanation This company shows major decrease

where 2.57% in 2012 but then drop

to 0.60% in 2013

The return on asset is 6.74% in 2013

and decrease at 4.17% in 2013

Overall The return on asset is an indicator of how profitable a company is relative to

its total assets. ROA gives an idea as to how efficient management is at using

its assets to generate earnings. The higher the ROA number, the better,

because the company is earning more money on less investment. . This

indicates that Kimlun Corporation Berhad is more profitable because of the

higher ratio when compared to Ark Resources Berhad.

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Conclusion

In conclusion, Kimlun Corporation Berhad is more profitable than Ark Resources Berhad in the years 2012 and 2013. It is represented by net profit margin, return on asset

and return on equity. All three ratios of IOI Corporation Berhad is higher than Ark Resources Berhad. Therefore, Kimlun Corporation Berhad has showed better performances

for the two years compared to Ark Resources Berhad.

Market Ratio

9) Earning per share

19

2012 2013 RM-

RM5.0

RM10.0

RM15.0

RM20.0

RM25.0

RM6.75

RM2.00

RM21

RM15

Earning per share


Year 2012 2013




Explanation The Price Earning decreased from

RM6.74 in 2012 to RM2.00 in 2013.

The Price Earning in 2012 with

amount RM20.77 felt down to

RM14.85 in 2013.

Overall In general, a high Price Earning suggests that investors are expecting higher

earnings growth in the future compared to companies with a lower Price

Earning. This indicates that Kimlun Corporation Berhad is expected by

investors to achieve higher earning growth in the future compared to Ark

Resources Berhad with a lower Price Earning.

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CONCLUSIONs AND RECOMMENDATION

The liquidity of Kimlun Corporation Berhad Berhad is better than Ark Resources

Berhad in 2013. It’s shown by the current ratio and quick ratio. But not in 2012, Ark

Resources Berhad shows better performance when recorded higher ratio than Kimlun

Corporation Berhad. Therefore, Kimlun Corporation Berhad has a problem in paying their

21

short-term liabilities by its current assets in 2012 while Ark Resources Berhad has the same

problem one year later.

The efficiency of Kimlun Corporation Berhad is better than Ark Resources Berhad . It

can be showed by the average collection period and average payment period. But the asset

turnover for Ark Resources Berhad is better than Kimlun Corporation Berhad. So, Kimlun

Corporation Berhad is more efficient in paying creditors and collecting the debts from its

debtors. But Ark Resources Berhad is good at managing assets.

Kimlun Corporation Berhad is more profitable than Ark Resources Berhad in the

years 2012 and 2013. It is represented by net profit margin, return on asset and return on

equity. All three ratios of IOI Corporation Berhad is higher than Ark Resources Berhad.

Therefore, Kimlun Corporation Berhad has showed better performances for the two years

compared to Ark Resources Berhad.

The market ratio of Kimlun Corporation Berhad is better in 2012 and 2011 when

compared to Ark Resources Berhad. It is shown by earnings per share which is higher in the

years. It shown that the company Kimlun Corporation Berhad has a better performance and

better position in the industry compared to Ark Resources Berhad

As a conclusion, we can see in the investor side of view that Kimlun Corporation

Berhad is better compared to Ark Resources Berhad in most aspect of ratio especially in late

one year. The liquidity and profitability ratio is higher on Kimlun Corporation Berhad. Thus,

we can clarify that Kimlun Corporation Berhad are favourable as a good investment.

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APPENDIC

ES

Financial Ratio in 2012

Financial Ratio ARK RESOURCES BERHAD KIMLUN CORPORATION

23

BERHADCurrent Ratio

(current asset ÷ current

liabilities¿

¿1.30×¿ 1.55×¿

Quick Ratio

(current asset−inventory )÷current liabilities

¿1.26×¿ ¿1.49×¿

Inventory Turnover

(COGS , sales ,revenue )÷ inventory

¿46.06×¿ ¿40.47×¿


( Account receivable÷ sales )×360

¿176days ¿123days

Average payment method

(Account payable÷ purchase)×360

¿190days ¿120days

Total Asset Turnover

¿ sales÷averagetotal asset ¿

¿0.97 ¿1.44

Debt Ratio

(Total liabilities ÷ totalasset )

¿0.71 ¿0.62

Net profit margin

(Net profit after tax ÷ sales ) %

¿2.8 % ¿6 %

Return on asset

(Net profit after tax ÷ total asset ) %

¿2.57 % ¿6.74 %

Return on equity

(Net profit after tax÷ total shareholde r ' sequity ) %

¿8.72 % ¿17.94 %

Earning per share ¿6.75 ¿20.77

Financial Ratio for 2013

Financial Ratio ARK RESOURCES BERHAD KIMLUN CORPORATION BERHAD

Current Ratio

(current asset ÷ current

liabilities¿

¿1.55×¿ 1.49×¿

Quick Ratio

(current asset−inventory )÷current liabilities

¿1.51×¿ ¿1.46×¿

Inventory Turnover ¿38.90×¿ ¿55.78×¿

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(COGS , sales ,revenue )÷ inventory


( Account receivable÷ sales )×360

¿273days ¿135days

Average payment period

(Account payable÷ purchase)×360

¿223days ¿128days

Total Asset Turnover

¿ sales÷averagetotal asset ¿

¿0.75 ¿1.20

Debt Ratio

(Total liabilities ÷ totalasset )

¿0.74 ¿0.66

Net profit margin

(Net profit after tax ÷ sales )

¿0.9 % ¿3 %

Return on asset

(Net profit after tax ÷ total asset ) %

¿0.6 % ¿4.17 %

Return on equity

(Net profit after tax÷ total shareholde r ' sequity ) %

¿2.46% ¿11.86 %

Earning per share ¿2.00 ¿14.85

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