Executive Summary Of Can One Berhad And Johore Tin Berhad Finance Essay

The companies that we have chosen for the assignment are Can-One Berhad and Johore Tin Berhad. Both the companies were listed on the Main Board of Bursa Malaysia. The companies engage in Sn tins industry, which manufacture assorted Sns, tins and other containers. Eminently, they are rivals to each other. The aim of this study is to measure the strengths and failings of each company by analysing their fiscal statements and other non-financial information. Other than that, this study besides discussed the issues and restrictions faced by the companies and subsequently suggested the recommendations for both companies. Last, based on the analysis, the study concluded with the company that has greater possible for future returns and is more ideal to put in.

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Basically, the companies in Sn tins industry are facing with the barrier of acquiring the chief natural stuffs, tin plate in production of Sn tins. They besides confronted with the permutation menace from alternate packaging stuffs. Another concern for the industry is the increasing excavation cost and deficiency of new mines supply. Strong competition among each company in the same industry is besides another issue. However, Can-One has overcome the challenges and competitions from the industry by redefining its market place as an comestible oil-can specializer. It besides diversified its merchandise by presenting a new packaging merchandise, Bag-In-Box. On the other manus, as Johore Tin ‘s production capacity is smaller, it focuses chiefly on the market in Johore part. Based on the issues discussed, we recommended the companies to apportion partial disbursals in advancing Sn tins recycling consciousness activities which can diminish the cost of production and increase the repute of the companies. The companies may apportion more budgets on research and development to work out the deficiency of new mines supply job in a long term footing.

From the analysis consequences of liquidness ratio, plus direction efficiency, debt funding and coverage ratio and overall efficiency and public presentation of both companies, overall, we found that Can-One has greater possible for future growing. The overall efficiency and public presentation of the company is better than Johore Tin. Its Earning per Share has increased 80 % from twelvemonth 2008 to twelvemonth 2009. It shows that investors have greater opportunities of acquiring future returns if they invest in Can-One. On the other manus, investor can merely acquire meager return ( EPS merely increased 0.53 % ) if they invest in Johore Tin Berhad.

Chapter 2: Background of the Companies

CAN-ONE BERHAD

Can-One Berhad ( Can-One ) was incorporated on 7 January 2004 and was listed on the Main Board of Bursa Malaysia Securities Berhad on 29 July 2005. Can-One Berhad is Malaysia-based investing keeping company which through its subordinates, operates in two sections which includes general tins and nutrient merchandises. Its subordinates are Aik Joo Can Factory Sdn Bhd, Canzo Sdn Bhd and F & A ; B Nutrition Sdn Bhd which engage in the industry of lithographed Sn tins, plastic Kraut tins and dairy and non diary merchandises. Its major rivals are Johore Tin and Kian Joo Can Factory Bhd. Meanwhile, its rivals for Kraut can industry in Malaysia are Ralco Plastic Sdn Bhd, Mapo Industries Sdn Bhd and United Plactiscs Sdn Bhd.

JOHORE TIN BERHAD

Johore Tin Berhad is an investing keeping company. Its subordinates are Johore Tin Factory Sdn Bhd, Unican Industries Sdn Bhd, Kluang Tin & A ; Can Factory Sdn Bhd and PT Medan Johor Tin which manufacture assorted Sns, tins, containers, and tin plates. Johore Tin Berhad commenced concern on 22 November 2000. Its merchandises include biscuits Sns, comestible oil and vegetable ghee tins, plastic Kraut tins, pigment andA chemicalsA tins, sweetened condensed milk ( SCM ) and evaporated milk tins, pineapple tins and processed nutrient tins. The major rivals of Johore Tin Berhad are Kian Joo Can Factory Bhd and Can-One Berhad.

Chapter 3: Ratio Analysis

3.0 CAN-ONE BERHAD

3.1.1 Liquidity and plus direction efficiency:

Ratio Calculation

No.

Ratio

Formula of Ratio

Year 2008

Ratio Calculated

Year 2009

Ratio Calculated

1

Current ratio

Current assets / current liabilities

237,880,940 / 202,459,203

1.17

248,887,221 / 166,271,492

1.50

2

Quick ratio

( Current assets-inventories ) / current liabilities

( 237,880,9401-15,443,561 ) / 101,959,311

1.20

( 248,887,221-97,237,409 ) / 166,271,492

0.91

3

Account receivable turnover

Net gross revenues / histories receivable

413,705,032 / 99,053,685

4.18 times

405,926,330 / 123,712,300

3.28 times

4

Inventory turnover

Cost of goods sold / stock lists

367,346,963 / 115,443,561

3.18 times

336,465,396 / 97,237,409

3.46 times

5

Payabless turnover

Cost of goods sold / histories collectible

367,346,963 / 43,407,864

8.46 times

336,465,396 / 50,835,572

6.62 times

Interpretation of ratios ( Year 2008 and Year 2009 ) :

1. Current ratio of the company is increasing from 1.17 to 1.50. The tendency shows that the company is going more capable to pay its debts over the following concern rhythm. In 2009, the company is able to pay its RM1 current liability with RM1.50 current plus.

2. Quick ratio of the company is diminishing from 1.20 to 0.91. The diminishing tendency shows that the company becomes less capable in paying its short-run debts.

3. Account receivable turnover ratio is besides diminishing from 4.18 to 3.28 ( times ) . On norm, the company ‘s receivables collectability times is reduced from approximately 4 times to 3 times in a twelvemonth. The company may hold some aggregation job and it may necessitate to review its recognition policy.

4. Inventory turnover of the company is somewhat increasing from 3.18 to 3.46 ( times ) . The company ‘s efficiency in pull offing and selling its stock list is considered high. The company can change over the stock list into gross revenues for approximately 3 times.

5. Collectible turnover ratio of the company is diminishing reasonably from 8.46 to 6.62 ( times ) . The diminishing tendency shows that the company is taking longer clip to pay off its provider.

3.1.2 Debt funding and coverage:

Ratio Calculated

No.

Ratio

Formula of Ratio

Year 2008

Ratio Calculated

Year 2009

Ratio Calculated

1

Debt ratio

Entire liabilities / entire assets

259,830,489 / 406,813,782

0.64

266,110,315 / 444,465,774

0.60

2

Long-run debt to entire capitalisation

Long-run debt / ( long-run debt + stockholders ‘ equity )

57,371,286 /

( 57,371,286+76,200,000 )

0.43

99,838,823 / ( 99,838,823 + 76,200,000 )

0.57

3

Debt to equity

Entire liabilities / stockholders ‘ equity

259,830,489 / 76,200,000

3.41

266,110,315 / 76,200,000

3.49

4

Timess involvement earned

Operating net income / involvement disbursal

29,115,152 / 10,049,826

2.90 times

48,527,569 / 11,372,181

4.27 times

Interpretation of ratios ( Year 2008 and Year 2009 ) :

1. The debt ratio decreases from 0.64 to 0.60. The proportion of debt Can-One has relative to its assets has lessenings about 0.04. Both ratios showed in the computation are less than 1 indicates that the company has more assets than debt.

2. The company has increased the long term debt to entire capitalisation for approximately 24.56 % . Can-One is now more hazardous as compared to twelvemonth 2008.

3. Debt to equity ratio has somewhat increases from 3.41 to 3.49. It indicates that the company will confront somewhat higher hazardous place as compared to YA 2008. Can-One will now hold to bear extra involvement load of debt service.

4. The company increases their times involvement earned from 2.90 to 4.27 ( times ) in Year 2008 to Year 2009 severally. The higher times involvement earned ratio shows that Can One is able to run into its involvement payment.

3.1.3 Profitability- overall efficiency and public presentation and market ratios:

Ratio Calculation

No.

Ratio

Formula of Ratio

Year 2008

Ratio Calculated

Year 2009

Ratio Calculated

1

Net net income border

Net net income / net gross revenues

17,448,747 / 413,705,032

4.22 %

31,476,150 / 405,926,330

7.75 %

2

Cash flow border

Cash flow from runing activities / net gross revenues

22,247,300 / 413,705,032

5.38 %

86,748,875 / 405,926,330

21.37 %

3

Tax return on entire assets

Net net incomes / entire assets

17,448,747 / 406,813,782

4.29 %

31,476,150 / 444,465,774

7.08 %

4

Tax return on equity

Net net incomes / stockholders ‘ equity

17,448,747 / 76,200,000

22.89 %

31,179,643 / 76,200,000

40.92 %

5

Net incomes per common portions

Net net incomes / mean common portions outstanding

17,314,512 / 152,400,000

11.36 cents

31,179,643 / 152,400,000

20.46 cents

Interpretation of ratios ( Year 2008 and Year 2009 ) :

Net net income border additions from 4.22 % to 7.75 % shows that the company has been efficient in commanding its disbursals and costs. The cost of good sold has been decreased for 8.41 % from twelvemonth 2008 to twelvemonth 2009.

Can-One increases its hard currency flow border organize 5.38 % to 21.37 % . It is a good mark as the company able to bring forth more hard currency from gross revenues.

Tax return on entire assets has somewhat increased from 4.29 % to 7.08 % from twelvemonth 2008 to twelvemonth 2009 severally. It indicates that the company is efficient in pull offing assets and generates net income before contractual duties must be paid.

In twelvemonth 2009, the company ‘s return on equity ( ROE ) has increased for approximately 18 % . It shows that the company is efficient in bring forthing net incomes from every unit of stockholder ‘s equity. Can-One is able to bring forth gaining growing by utilizing those investing financess by the stockholders.

Gaining per common portions in the company has increased from 11.36 cents to 20.46 cents for the twelvemonth 2009. It indicates that the ability of the company to bring forth net income to the common stockholder for each portions owned is better every bit compared to twelvemonth 2008. It is besides evident that as the company ‘s earning addition, the earning per portion will look better.

3.2 JOHORE TIN BERHAD

3.2.1 Liquidity and plus direction efficiency:

Ratio Calculation

No.

Ratio

Formula of Ratio

Year 2008

Ratio Calculated

Year 2009

Ratio Calculated

1

Current ratio

Current assets / current liabilities

80,899,796 / 28,705,428

2.82

69,512,526 / 13,442,655

5.17

2

Quick ratio

( Current assets-inventories ) / current liabilities

( 80,899,796-38,502,441 ) / 28,705,428

1.48

( 69,512,526-26,911,443 ) / 13,442,655

3.17

3

Account receivable turnover

Net gross revenues / histories receivable

105,199,209 / ( 37,133,062+966,414 )

2.76 times

107,313,770 / ( 32,080,333+1,126,163 )

3.23 times

4

Inventory turnover

Cost of goods sold / stock lists

( 126,535+68,282,692 ) / 38,502,441

1.78 times

( 99,382+70,432,433 ) / 26,911,443

2.62 times

5

Payabless turnover

Cost of goods sold / histories collectible

68,409,227 / ( 5,878,062+3,600,043 )

7.22 times

70,432,433 / ( 2,952,634+3,527,022 )

10.87 times

Interpretation of ratios ( Year 2008 and Year 2009 ) :

The computation shows that current ratio of the company is increasing from 2.82 to 5.17. It shows for each RM 1 current liability, the company is able to pay RM 5.17 current plus for its debt.

Quick ratio of the company is increasing from 1.48 to 3.17. The capableness of the company to pay its short-run debts has improved. It means that the company can pay its current liabilities from its current assets ( fewer stock lists ) at 3.17.

Account receivable turnover ratio shows an increasing from 2.76 to 3.23 ( times ) . It shows the figure of times has increased to 3.23 times that account receivable sum is collected throughout the twelvemonth.

Inventory turnover of the company is increasing from 1.78 to 2.62 ( times ) . It shows the figure of times stock list is sold or used in a clip period has increased in 2009. The company is able to change over the stock list into gross revenues for about 2 times.

Collectible turnover ratio of the company is increasing from 7.22 to 10.87 ( times ) . The increasing figure shows there is a comparatively short clip to pay off its provider.

3.2.2 Debt funding and coverage:

No.

Ratio

Formula of Ratio

Ratio Calculation

Year 2008

Ratio Calculated

Year 2009

Ratio Calculated

1

Debt ratio

Entire liabilities / entire assets

43,113,317 / 128,652,618

0.34

24,760,701 / 114,606,742

0.22

2

Long-run debt to entire capitalisation

Long-run debt / ( long-run debt + stockholders ‘ equity )

14,407,889 / ( 14,401,889+65,979,000 )

0.18

11,318,046 / ( 11,318,046+65,979,000 )

0.15

3

Debt to equity

Entire liabilities / stockholders ‘ equity

43,113,317 / 65,979,000

0.65

24,760,701 / 65,979,000

0.38

4

Timess involvement earned

Operating net income / involvement disbursal

4,941,718 / 1,268,934

3.89 times

4,965,308 / 723,848

6.86 times

Interpretation of ratios ( Year 2008 and Year 2009 ) :

Debt ratio is diminishing from 0.34 to 0.22. Debt ratio less than 1 show that the company has more assets than debt.

The long-run debt to entire capitalisation is somewhat diminishing from 0.18 to 0.15.Johore Tin has become more effectual in financing their long term debt in twelvemonth 2009.

Debt to equity ratio from 2008 to 2009 is diminishing from 0.65 to 0.38. In twelvemonth 2009, the proportion of equity in the company used to finance its entire liabilities is lesser as compared to twelvemonth 2008.

Timess involvement earned is increasing from 3.89 to 6.86 ( times ) . A higher ratio indicates that the company has become more capable to run into its involvement disbursal duties. Its net incomes are 7 times greater than its one-year involvement duties.

3.2.3 Profitability- overall efficiency and public presentation and market ratios:

No.

Ratio

Formula

Ratio Calculation

Year 2008

Ratio Calculated

Year 2009

Ratio Calculated

1

Net net income border

Net net income / net gross revenues

4,941,718 / 105,199,209

4.70 %

4,965,308 / 107,313,770

4.63 %

2

Cash flow border

Cash flow from runing activities / net gross revenues

( 3,111,021 ) / 105,199,209

-2.96 %

22,379,419 / 107,313,770

20.85 %

3

Tax return on entire assets

Net net incomes / entire assets

4,941,718 / 128,652,618

3.84 %

4,965,308 / 114,606,742

4.33 %

4

Tax return on equity

Net net incomes / stockholders ‘ equity

4,941,718 / 65,979,000

7.49 %

4,965,308 / 65,979,000

7.53 %

5

Net incomes per common portions

Net net incomes / mean common portions outstanding

4,941,718 / 65,979,000

7.49 cents

4,965,308 / 65,979,000

7.53 cents

Interpretation of ratios ( Year 2008 and Year 2009 ) :

Net net income border in twelvemonth 2008 and 2009 in the company has somewhat decreased from 4.70 % to 4.63 % . However, the diminishing value does non significantly act upon the company ‘s public presentation.

Cash flow border in twelvemonth 2009 has increased from -2.96 % to 20.85 % . It shows that in twelvemonth 2008, the company is able to bring forth hard currency from gross revenues compared with twelvemonth 2008 ; the company is unable to bring forth hard currency from gross revenues.

Tax return on entire assets in twelvemonth 2009 has increased to 4.33 % . The overall efficiency of the company in pull offing assets and bring forthing net incomes has increased about 0.5 % .

Johore Tin has somewhat increased their return on equity from 7.49 % to 7.53 % from twelvemonth 2008 to twelvemonth 2009. The company should better their public presentation in order to accomplish higher return on equity to fulfill their stockholders.

The net incomes per portion of Johore Tin besides increase from 7.49cents to 7.53cents in twelvemonth 2008 and 2009. It shows that the company is making good because the return of each common portion owned has addition

Chapter 4: Extra Information and Critical Issues

4.1 Extra Information:

In twelvemonth 2010, Can-One Berhad is one of the largest Sn can makers in Malaysia by its end product capacity and is a market leader in the comestible oil section. Besides that, the Group is besides one of the largest makers of plastic Kraut tins in Malaysia by their end product capacity.

Critical Issues:

1 ) Competition:

Can-One Berhad has overcome the challenges and competition from the industry by redefining its market place as an comestible oil-can specializer. The Sn can and plastic Kraut can concern is its main support concern in bring forthing repeating income. Other than that, it has diversified its merchandise by presenting a new packaging merchandise, Bag-In-Box. It has besides become an original equipment maker of sweetened condensed milk, sweetened drink cream pitcher and evaporated milk for international trade names, which becomes the company ‘s chief growing accelerator.

Johore Tin Berhad chief focal point is around Johore part. It narrows down its future growing as when it compared to other rival such as Can-One Berhad and Kian Joo Can Factory, Johore Tin is considered little.

2 ) Substitution menace:

The lifting demand for Can-One Berhad is extremely dependent on the production degree. So, even with an addition in demand from cardinal end-users may non needfully transform into an addition in demand for Sn tins due to substitution menace from alternate packaging stuffs.

3 ) Barrier in acquiring natural stuffs.

An issue that may impact Can-One and Johore Tin public presentation are the fact that Can-One is extremely depending on Perstima Group ( the sole tin plate provider in Malaysia who controls the supply and monetary values of tin plates ) to provide tin plate, the chief natural stuff used in the production of Sn tins. Tin can shapers are unable to provide stuff at cheaper monetary values elsewhere as a 15 % responsibility is imposed on all imported tin plates ( James, 2009 ) . Volume addition becomes a key to prolong net incomes growing as with the lower net income border.

4 ) Social concern

Can-One has participated in human resource development by supplying preparation chances, locally or abroad for staff of the Group. It besides offers industrial preparation for local colleges and universities undergraduates. The Group besides committed to continuously overhaul its machinery and equipment to guarantee that they are environmentally friendly.

The Board of Johore Tin Group is committed to the public assistance of its employees, the community and the environment. During the fiscal twelvemonth under reappraisal, the Group contributes to assorted societies, associations and other charitable organisations to help the community.

5 ) Environmental issue

Malaysia ‘s current issues about environmental pollution are air pollution ; industrial emanations and H2O pollution are significantly increased. Johore Tin Berhad is fabricating assorted types of containers, Sns, tins and tin plates. By that, major natural stuffs such as plastic, steel and tin plate are used to fabricate the merchandises. Therefore, Johore Tin Berhad needs to increase the consciousness of the benefits of recycling to construct up the company ‘s repute in this industry.

Chapter 5: Recommendation

In conformity for the companies to accomplish corporate societal duty, we recommend both companies to pattern recycling and apportion partial disbursals in making runs about the consciousness of recycle publically. They can keep a recycle run which collects the empty Sns, tins, tin plates and containers sporadically throughout the twelvemonth. The company can recycle those gathered Sns and recycle it to diminish the usage of mine. This will finally diminish the cost of production for both companies and non to advert it will assist the company to increase their repute in this industry. Besides that, harmonizing to the informations collected, it is forecasted that the demand of Sn will spread out about 15 % and the Sn reserved will be lessenings. The increasing excavation costs and deficiency of new mines supply are large concern. So, we recommend both companies to happen alternate to increase the production of Sn and efficaciously usage of this mines. Companies can apportion more budgets on research and development to work out this job in a long term footing.

Chapter 6: Decision

The liquidness ratio for Johore Tin Berhad is executing better than Can-One Berhad. The ground is the speedy ratio in 2009 shows that Can-One is depending on settlement of its stock list to pay its short-run debts. However, Johore Tin does non hold the job. Other than that, Johore Tin besides performs more efficient in its plus direction if comparison to Can-One Berhad, based on the ratio analysis. Besides, Johore Tin Berhad has better public presentation in debt funding and coverage compared to Can-One Berhad. Johore Tin ‘s entire liabilities have decreased significantly in twelvemonth 2009. It shows that Johore Tin does non hold to take many loans to run its concern. Meanwhile, Can- One Berhad has higher entire liabilities in twelvemonth 2009 because the on the job capital has increased and the company spends much on expansionary points like machine and extra lines. Can One Berhad demand to use for loans to finance its working capital and machineries and later Can One has to bear the involvements that derived from the long term debts.

However, the overall efficiency and public presentation for Can-One Berhad is better than Johore Tin Berhad. This is because the incremental per centum for the ratios of Can-One is much greater than Johore Tin. The net net income border for Can-One increased for 3.53 % , on the other manus, Johore Tin ‘s net net income border somewhat decrease. Can-One is more efficient in pull offing its assets and bring forthing net income from every unit stockholders ‘ equity as compared to Johore Tin, based on the ROA and ROE ratios analysis.

As an investor, we would wish to put in Can-One Berhad. This is because the overall efficiency and public presentation of the company is better than Johore Tin Berhad. Can-One has much more possible for future growing as its Earning per Share has increased 80 % from twelvemonth 2008 to twelvemonth 2009. Shareholder can acquire more returns on their investing in the company. On the other manus, investor can merely acquire meager return ( EPS= increased 0.53 % ) if they invest in Johore Tin Berhad.

Chapter 7: Mention

Can-One Berhad 2009 Annual Report. Malaysia, Kuala Lumpur.

Johore Tin Berhad 2009 Annual Report. Malaysia, Kuala Lumpur.

Smith, L. ( 2009 ) , Management Accounting, Information for Creating and Managing Value, Australia: McGraw Hill Australia Pty Limited.

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