Financial Performance Osk Holdings Bhd And Affin Holdings Finance Essay

1.0 Executive Summary

In this written study, we are stressing on the comparing of the fiscal public presentation between OSK Holdings Bhd and Affin Holdings Berhad. From an investor ‘s point of position, the fiscal public presentation is more of import as it will be used for doing investing determination.

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As an investor, benefits in signifier of dividend come foremost. Therefore, we have to analyse the fiscal public presentation of both of the company in order to find their sustainability in pull offing the concern. For this intent, we look into the fiscal studies issued by OSK Holdings Bhd and Affin Holdings Berhad in 2008 and 2009 to carry on a tendency analysis in fiscal ratio. Trend analyses help the users to anticipate the public presentation of the company in the hereafter. It is non merely used by current investors to make up one’s mind the continuity of investing, but besides used by possible investors to value the worthiness of the company ‘s portions.

Besides quantitative information, we besides look at the quantitative information which included other critical issues which will hold the fiscal impact to the company and most significantly, the investors themselves.

Based on the fiscal statements and other researches of the company, we will come out with a decision from the investors ‘ point of position.

2.0 Background of Companies

2.0.1 OSK Holdings Berhad

OSK Retentions Berhad ( OSK ) is a fiscal services company. The company is offering a assortment of fiscal advisory and investing services for persons every bit good as endeavors. The company ‘s chief concern runing state included Malaysia, Singapore, Hong Kong and Shanghai. OSK offers a scope of investing banking merchandises and services, wealth direction services, Venture capital services, and retail fiscal merchandises and services. The company has many concern sections which are, Investment banking ; Commercial banking, Futures & A ; options, Equity, Venture capital ; Capital funding ; Property development, Unit trust ; Holding entities, Property investing and other.

2.0.2 Affin Holdings Berhad

Affin Bank was incorporated as a private limited company on 31 May 1975. Now, Affin Holdings Berhad is an investing keeping company. It operates in five sections: commercial banking and hire purchase, investing banking, stock-broking, insurance and others. The Commercial Banking and Hire Purchase section concentrating on concern of banking in all facets which includes Islamic Banking operations. Investing banking section includes concern of a merchandiser bank, price reduction house, fund and unit trusts direction. Stock-broking section comprises institutional and retail broking concern for securities listed on the Bursa Malaysia Securities Berhad, investing direction and research services. TheA insuranceA section includes subventioning all categories of general and life insurance concerns in Malaysia. Other concern sections in the Group include operation of investing keeping companies, money-broking, insurance-broking and other related fiscal services. Operationss are carried out in Malaysia. Besides, the major stockholder of AFFIN Holdings Berhad is Lembaga Tabung Angkatan Tentera

3.0 Ratio Analysis

3.0.1 Liquidity ( Short-term solvency ) and Asset Management Efficiency

Current ratio

From the above computation, the short term liquidness has been decreased from 0.3909 to 0.2862. It means that the ability of the house to run into the demands for hard currency is diminishing.

From the above computation, it shows the ability of Affin Holdings Bhd to run into short term settlement has been increase from 1.6470 to 1.8150.

Working Capital

From the above computation, we notice that OSK Holdings Bhd has negative working capital, which means that the company presently is unable to run into its short-run liabilities with its current assets.

For Affin Holdings Bhd, the on the job capital is positive, this show that the company able to pay off its short-run liabilities with its current assets.

Fixed Assets Turnover From the computation above, we realize that there is an addition from 0.0189 to 0.1599 in how OSK Holdings Bhd generates gross revenues from fixed assets.

From the computation above, we realize that there is an addition from 0.0357 to 0.0428 in how Affin Holdings Bhd generates gross revenues from fixed assets.

Entire Assets Turnover

From the computation above, we realize that there is an addition from 0.0184 to 0.1553 in how OSK Holdings Bhd generates gross revenues from all assets.

From the computation above, we realize that there is an addition from 0.0329 to 0.0376 in how Affin Holdings Bhd generates gross revenues from all assets.

3.0.2 Debt Financing and Coverage

Debt Ratio

In the twelvemonth 2008, 0.09 shows that OSK Holdings Bhd is utilizing RM 0.09 of liabilities for each RM 1 of assets. In the twelvemonth 2009, OSK Holdings Bhd is utilizing RM 0.1069 for each RM 1. The addition of the ratio from 0.09 to 0.1069 shows the increasing of the liabilities to finance the assets.

In the twelvemonth 2008, 0.2440 shows that Affin Holdings Bhd is utilizing RM 0.2440 of liabilities for each RM 1 of assets. In the twelvemonth 2009, Affin Holdings Bhd is utilizing RM 0.2765 for each RM 1. The addition of the ratio from 0.2440 to 0.2765 shows the increasing of the liabilities to finance the assets.

Long Term Debt To Total Capitalization

Long Term Debt to Total Capitalization shows the extent of the company financing the debts by utilizing long term debts. As the ratio gets higher, it shows the company is utilizing higher proportion of debt for the lasting funding.

From the above computation, the ratio shows that merely 0.05 of debts are financed by long term debts in the twelvemonth 2008 and 0.071 for the twelvemonth of 2009. The increased of ratio shows the increasing of the usage of long term debts to finance the debts.

From the above computation, the ratio shows that merely 0.0037 of debts are financed by long term debts in the twelvemonth 2008 and 0.0846 for the twelvemonth of 2009. The increased of ratio shows the increasing of the usage of long term debts to finance the debts.

Debt to Equity

From the computation above, in the twelvemonth 2008, the ratio shows that 9.89 % of liabilities are financed by the creditors and 11.98 % in the twelvemonth 2009. The debt equity increases from 9.89 % on twelvemonth 2008 to 11.98 % on twelvemonth 2009. It proves that the company holding higher liabilities is financed by the creditors.

From the computation above, in the twelvemonth 2008, the ratio shows that 32.37 % of liabilities are financed by the creditors and 38.22 % in the twelvemonth 2009. The debt equity increases from 32.37 % on twelvemonth 2008 to 38.22 % on twelvemonth 2009. It proves that the company holding higher liabilities is financed by the creditors.

Timess Interest Earned

From the computation above, the ratio indicates that every RM 25.56 of operating income is able to cover each RM 1 of involvement disbursal in the twelvemonth 2008.For the twelvemonth 2009, every RM 3.58 of operating income is able to cover each RM 1 of involvement expense.The diminishing ratio of times involvement earned from 25.56 on twelvemonth 2008 to 3.58 on twelvemonth 2009 shows that OSK keeping less capable in paying the involvement on its debts.

From the computation above, the ratio indicates that every RM 10.0632 of operating income is able to cover each RM1 of involvement disbursal in the twelvemonth 2008. For the twelvemonth 2009, every RM 12.5372 of operating income is able to cover each RM 1 of the involvement disbursal. The increasing ratio of times earned involvement signifier 10.0632 on the twelvemonth 2008 to 12.5372 on the twelvemonth 2009 shows that Affin Holdings become more capable in paying the involvement on its debts.

3.0.3 Profitability – overall market efficiency & A ; market ratios

Profitableness of two companies can be judged by comparing the overall market efficiency and market ratios. Therefore, a category of fiscal prosodies used to measure comparing between both companies ‘ ability to bring forth net income as compared to its disbursals and other relevant costs incurred for the twelvemonth 2008 and 2009. A higher value of ratios between two companies indicates that the company is making good. For the undermentioned computation, all is in RM’000.

Overall market efficiency ratios

Net Net income Margin

From the computation above, net net income has been increased from 0.0091 to 0.2713. the net income generated had been increased.

From the computation above, there is a lessening of net net income from 0.6538 to 0.5917. the net income generated had been decreased.

Tax return on Equity

From the computation above, the return on stockholders ‘ investing has been increase from 0.0014 to 0.0063. It means net income generated from equity has been increased.

From the computation above, the return on stockholders ‘ investing has been increase from 0.0289 to 0.0308. It means net income generated from equity has been increased.

Tax return on Total Assetss

From the computation above, the efficiency of OSK Holdings Bhd in pull offing assets and bring forthing net incomes has been increase from 1.2540 to 5.6094. It means net income generated from equity has been increased.

From the computation above, the efficiency of OSK Holdings Bhd in pull offing assets and bring forthing net incomes has been increase from 0.0216 to 0.0223. It means net income generated from equity has been increased.

Market Ratios

Dividend Payout

From the computation above, the dividend payout has been decreased from 0.5344 to 0.2161 and this means that the dividend paid to stockholders has been decreased.

From the computation above, the dividend payout has been increased from 0.2551 to 0.3416 and this means that the dividend paid to stockholders has been increased.

4.0 Critical Issues

The most critical issue faced by both OSK Holdings Berhad and Affin Berhad is the economic downswings during 2009. The twelvemonth was full with glooming economic environment and deteriorating chance. Global growing had decreased and Malaysia ‘s economic was estimated to contract from 4-6 % . The unfavorable economic status had so brought a ambitious twelvemonth for both mentioned companies. However, both of the company still performed better than they expected.

Harmonizing to Tan Sri overview in The Star, because of Malaysia Banking Industry ‘s strong capitalization, healthy plus quality and improved hazard direction criterions and patterns, it remain ressilent during the twelvemonth of 2009. Besides, harmonizing to OSK Holdings Bhd Chairman, the prompt actions by the Central Bank in developing states had besides disallowed the autumn down of planetary economic downswings.

Besides, the attempts by the company itself besides stand an of import function in order to last in the disputing market environment of 2009. The OSK Holdings Berhad ‘s direction implemented good schemes group continues to be progressive and continues to better their capableness and fight. The group besides continue the growing in their merchandise and services, human capital, market coverage and others.

On the other manus, The Affin Holdings Berhad has undertaken assorted new enterprises such as rebranding and strengthening of their human capital The group implemented new and dynamic systems and engineering that will farther better their operations. The Group enhance the operations and so that the group and be promoted as a vibrant and dynamic organisation.

5.0 Conclusion & A ; Recommendations

Below is the sum-up of the ratio computation:

Based on the drumhead above, we can recognize from liquidness and plus direction efficiency, debt funding and coverage, and besides profitableness ratio, Affin Holdings Bhd is executing rather good and better if compared to OSK Holdings Bhd which are in the same industry.

For the overall liquidness and plus direction efficiency ratio, Affin Holdings Bhd had an addition from twelvemonth 2008 to 2009. But, for OSK Holdings Bhd there is some addition and some is diminishing. This shows that the ability of the OSK Holdings Bhd to change over an plus into hard currency is diminishing from the twelvemonth 2008 to 2009 and the ability of Affin Holdings Bhd is increasing. For the overall debt funding and coverage, the ratio of both companies shows increasing from the twelvemonth 2008 to 2009. From the ratios calculated, we noticed that Affin Holdings Bhd is better in paying back the debt of company. For the overall profitableness, we noticed that there is some addition in the computations of related profitableness ratios, but there is besides some is diminishing from the twelvemonth 2008 to 2009. For this, Affin Holdings Bhd besides executing better than OSK Holdings Bhd as the return is higher than OSK Holdings Bhd. Besides, we think that Affin Holdings Bhd is more stable than OSK Holdings Bhd as the ratios shows that there is some fluctuations from the twelvemonth 2008 to the twelvemonth 2009.

Recommendation for OSK Holdings Bhd is to seek to compare with othe companies within same industry ‘s public presentation to happen out what is the job they presently face. Besides, OSK Holdings Bhd is recommended to inquire for consultancy as there is fluctuation between the twelvemonth 2008 and the twelvemonth 2009. Current issues are besides important for current and possible investors to foretell the stock pricing, and therefore doing better investing determination, so that their wealth can be maximized.

As investors, we would put in Affin Holdings Berhad as the company is more stable and more profitable based on the analysis above.

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