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SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN
FOUNDATION IN NATURAL AND BUILT ENVIRONMENT
Assignment: FinancialRatio Analysis
Company Name: LBS
Group Members:
Michelle Tung Man Kaye 0324175
Boon Li Ying 0323839
Lee Xin Ying 0322432
Basic Accounting (ACC30205)
Lecturer: Ms. Tay Shir Men
Submission Date: 4th
February
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Table of Content
Contents Page
Brief History of LBS 1
Recent Development 2
Profitability Ratio (Year 2012 & 2013) 3 – 4
Liquidity Ratio (Year 2012 & 2013) 4
Stability Ratio (Year 2012 & 2013) 5
Price Earning Ratio (Year 2012 & 2013) 6
Share Price (Current share price) 7 - 9
Investment Recommendation 10
Appendices 11 – 17
References 18
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Brief History of LBS
This company was founded by Dato’ Seri Lim on June 29, 2000 and is
headquartered in Petaling Jaya, Malaysia. He was appointed as the Chairman of
LBS Bina Group Berhad on 6 December 2001. He was initially involved in the
supply and transportation ofsand, aggregates, earth and ball clay for construction
of infrastructure works such as earthworks, sewerage works, roads and drainage.
Subsequently, he ventured into construction of houses, shops and factory
buildings. LBS Bina Group Berhad is a prominent propertydeveloper in Malaysia.
Having been around for more than 20 years, LBS Bina has built a strong
reputation for developing high quality properties all over Malaysia and abroad.
LBS would then expand further in 1992 when it ventured into the property
development sector through the Jelapang Maju Light Industrial Park in Perak. .
That would be the springboard to more projects as LBS continued to grow
exponentially. Before long, the company was undertaking several large projects
including its flagship projects like the Taman Perindustrian Bukit Serdang
Seksyen 14, Taman Pinggiran Putra and the very popular Bandar Saujana Putra,
which was a mega project. Since then, LBS has continued to expand and grow
where it is among the primary players in the Malaysian market while it is
expanding further outside the country into China, seen as one of the most
challenging markets in the world. Today, LBS is involved not only in property
development but in several other related areas like property management,
building materials and landscaping, among others.
LBS Bina Group Bhd. is a management and investment holding company,
which engages in the property development business. It operates through the
following segments: PropertyDevelopment, Management & Investment, Trading
& Others, Construction, and Racing Circuit. The Property Development segment
develops residential, industrial and commercial properties. The Management &
Investment segment focuses oninvestment holding and provision of management
services. The Trading & Others segment involves in trading of building material,
insurance agent, and selling ofmembership and covering insurance products. The
construction segment undertakes in the building, project planning and
implementation contracting activities.
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Recent Development
Property developer LBS Bina Bhd is targeting to achieve sales worth
RM1bil from 12 projects with a gross development value of RM1.7bil to be
launched in 2015. These are mainly residential properties, priced at below
RM500,000 a unit, located in in the Klang Valley, Pahang and Johor. LBS Bina
managing director Datuk Sri Lim Hock San added the company would ascertain
there is no delay in the land approval of projects this year compared to last year
as it can drag LBS’s revenue.
For the current year, Lim pointed out that the properties to launch would
comprise of both residential and commercial properties of 81% and 19%
respectively, adding that more than half of the residential properties would be
priced below RM500,000.
Moreover, Lim noted that the company would be launching projects with
a GDV of RM6bil in the next three year in Selangor, Pahang and Johor
comprising of both residential and commercial projects. “We are confident and
bullish with the new launches over the next three years,” he said.
The company’s property sales jumped 38% to RM234mil for first quarter
ended March 31, 2015, from RM169mil in the corresponding quarter a year ago
due to BSP21 sales that contributed about 68% of total sales.
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Profitability Ratio (Year 2012 & 2013)
Profitability Ratios 2012 2013 Interpretation
Return On Equity (ROE)
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑂/𝐸
× 100%
39,003,430
516,690,656.5
× 100%
= 7.5 %
397,323,654
699,735,858
× 100%
= 56.8 %
ROE in year
2013(56.8%) is
higher than year
2012(7.5%), show
that the business,
LBS is earning a
higher return on the
capital in 2013.
Net Profit Margin Ratio
(NPM)
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
× 100%
39,003,430
509,644,355
× 100%
= 7.7 %
397,323,654
533,532,722
× 100%
= 74.5 %
NPM in year
2013(74.5%) is
higher than year
2012(7.7%), show
that the business’
overall expenses are
lower and controlled
better in 2013
compare to 2012.
This resulting in
high net profit for
the business in 2013.
Gross Profit Margin Ratio
(GPM)
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
× 100%
146,227,906
509,644,355
× 100%
= 28.7 %
168,577,154
533,532,722
× 100%
= 31.6 %
GPM in year
2013(31.6%) is
higher than year
2012(28.7%), show
that the cost of goods
sold expense is in
well managed in
2013 compare to
2012.
General Expenses Ratio
(GER)
𝑇𝑜𝑡𝑎𝑙 𝐺𝑒𝑛𝑒𝑟𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
× 100%
67,470,147
509,644,355
× 100%
= 13.2 %
85,596,945
533,532,722
× 100%
= 16 %
GER in year
2013(16%) is higher
than year
2012(13.2%), this
means that general
expenses are not in
well managed and
resulting in a lower
NPM.
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Financial Expenses Ratio
(FER)
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
× 100%
18,457,247
509,644,355
× 100%
= 3.6 %
15,170,850
533,532,722
× 100%
= 2.8 %
FER in year
2013(2.8%) is lower
than year
2012(3.6%), this
means that financial
expenses are in well
managed and
resulting in a higher
NPM.
Liquidity Ratio (Year 2012 & 2013)
Liquidity Ratio 2012 2013 Interpretation
Working Capital Ratio
(WCR)
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
927,829,389
520,720,661
= 1.8 : 1
925,492,766
609,599,483
= 1.5 : 1
For every RM1 of
current liability in
the year 2013, LBS
has RM1.5 of
current assets to
pay for it.
During year 2012-
2013, the WCR has
decreased from
1.8:1 to 1:5:1. This
means that the
business will
experience more
difficulty in
repaying its current
liabilities compare
to 2012.
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Stability Ratio (Year 2012 & 2013)
Stability Ratios 2012 2013 Interpretation
Total Debt Ratio (TDR)
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
× 100%
908,176,834
1,435,008,317
× 100%
= 63.3 %
1,137,172,437
2,009,812,670
× 100%
= 56.6 %
During year 2012-
2013, TDR has
decreased from
63.3% to 56.6%.
This means that
assets contributed
by the business is
increased in 2013
compare to 2012.
Inventory Turnover Ratio
(ITR)
365 ÷
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
365
÷
363,416,449
15,721,777.5
= 15.8 days
365
÷
364,955,568
18,084,313
= 18.1 days
During year 2012-
2013, ITR has
increased from
15.8 days to 18.1
days. This means
that this business
sold its goods
slowly and
generated less cash
to pay its liabilities
in 2013 compare to
2012.
Interest Coverage Ratio
(ICR)
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 +
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
÷
18,457,247 +
39,003,430
18,457,247
= 3.1 times
15,170,850 +
397,323,654
15,170,850
= 27.2 times
During the year
2012-2013, ICR
has increased from
3.1 times to 27.2
times. This show
that the business’
ability to pay off its
interest expense is
higher in 2013
compare to 2012.
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Price Earning Ratio (P/E Ratio, Year 2012 & 2013)
Price Earning Ratio 2012 2013 Interpretation
P/E Ratio
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑆ℎ𝑎𝑟𝑒 𝑃𝑟𝑖𝑐𝑒
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒
1.35
9.70
= 0.14 years
1.35
96.09
= 0.01 years
The P/E ratio measures
how expensive a share
is. The share price in
2013 (0.01 times) is
less expensive
compare to 2012 (0.14
time). This means the
investor will have to
wait longer in 2012
which is 0.14 years to
claim back his original
principal. While in
2013, an investor will
need to wait a shorter
time which is 0.01
years to recoup his
investment.
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Share Price (Current Share Price)
LBS Bina Group Berhad (5789.KL)
FTSE Bursa Malaysia KLCI (^KLSE)
Based on the graph above, it shows that the share price for LBS Bina Group
Berhad and index for FTSE Bursa Malaysia KLCI. Before determining whether
to invest in either in a company or an overall market share KLCI, which company
has a better percentage over the time period from 1st January 2015 to 31st
December 2015 must be understood. Hence, we will compare 5 different points
from the graphs to determine the performance of them in the same time period.
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The first point that we compare between LBS Bina Group Berhad and
FTSEBursa Malaysia KLCI are on22nd January 2015 and 30th January 2015. The
share price for LBS Bina Group Berhad on 22nd January 2015 is 1.6500 whereas
the index for FTSE Bursa Malaysia KLCI is 1781.75. On 30th January 2015, the
share price for LBS Bina Group Berhad is decreased to 1.5400 and the index for
FTSEBursa Malaysia KLCI is decreased to 1781.26. The decreaseof share price
is (1.5400 – 1.6500) / 1.6500 = -0.07%, whereas the index changes is (1781.26 –
1781.75) /1781.75 = -0.0003%. This shows that the performance ofthe LBS Bina
Group Berhad is worse than the FTSEBursa Malaysia KLCI.
The second point we chose to compare between LBS Bina Group Berhad
and FTSEBursaMalaysia KLCI is on6th May 2015 and 19th May 2015. The share
price for LBS Bina Group Berhad on 6th May 2015 is 1.5600 whereas the index
for FTSEBursa Malaysia KLCI is 1820.97. The share price of LBS Bina Group
Berhad on 19th May 2015 is increased to 1.6800 and the index for FTSE Bursa
Malaysia KLCI is decreased to 1809.72. The increase of share price is (1.6800 –
1.5600) / 1.5600 = 0.08% and the decrease of the index is (1809.72 – 1820.97) /
1820.97 = -0.006%. Hence, the performance of LBS Bina Group Berhad during
this period is better than FTSEBursa Malaysia KLCI.
The third point is on 7th July 2015 and 24th July 2015. LBS Bina Group
Berhad’s share price on 7th July 2015 is 1.6000 while FTSE Bursa Malaysia
KLCI’s index is 1712.30. On 24th July 2015, the share price of LBS Bina Group
Berhad is decreased to 1.4700 and the index for FTSE Bursa Malaysia KLCI is
increased to 1720.76. The share price is decreased (1.4700 – 1.6000) / 1.6000 = -
0.08% and the index is increased (1720.76 – 1712.30) / 1712.30 = 0.005%. As
such, the performance of LBS Bina Group Berhad is worse than FTSE Bursa
Malaysia KLCI this time.
The fourth point that we compare between LBS Bina Group Berhad and
FTSE Bursa Malaysia KLCI is on 6th August 2015 and 1st September 2015. The
share price forLBS Bina Group Berhad on6th August 2015 is 1.4800 whereas the
index for FTSE Bursa Malaysia KLCI is 1694.64. The share price of LBS Bina
Group Berhad is decreased to 1.2800 on 1st September 2015 and the index for
FTSEBursa Malaysia KLCI is decreased to 1609.21. The decreaseof share price
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is (1.2800 – 1.4800) / 1.4800 = -0.14% and the decrease of the index is (1609.21
– 1694.64) / 1694.64 = -0.05%. As a result, the performance of LBS Bina Group
Berhad during this period is worse than FTSE Bursa Malaysia KLCI.
The last point we choseto compare between LBS Bina Group Berhad and
FTSEBursa Malaysia KLCI is on 23rd September 2015 and 7th October2015. On
23rd September 2015, the share price of LBS Bina Group Berhad is 1.5100 while
the index for FTSE Bursa Malaysia KLCI is 1613.17. The share price of LBS
Bina Group Berhad is decreased to 1.4100 on 7th October 2015 and the index for
FTSEBursa Malaysia KLCI is increased to 1689.25. The decrease of share price
is (1.4100 – 1.5100) / 1.5100 = -0.07% while the increase in index is (1689.25 –
1613.17) / 1613.17 = 0.05%. Hence, the performance ofLBS Bina Group Berhad
is worse than FTSEBursa Malaysia KLCI.
By comparing the LBS Bina Group Berhad with the FTSE Bursa Malaysia
KLCI, LBS Bina Group Berhad is continuous dropping, while FTSE Bursa
Malaysia KLCI is increasing although it also has sometime is dropped, butnotas
bad as LBS Bina Group Berhad. Moreover, the 5 points that we compared have
been calculated, shown that LBS Bina Group Berhad is not recommended for
investing in because the business’ performance is not stable.
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Investment Recommendation
According to LBS Bina Group Berhad’s 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. Even though the general
expenses ratio (GER) is increased from year 2012 to year 2013, but the financial
expenses ratio (FER) is decreased, so the overall profit has indicated that the
business is doing sufficiently. Next, the ability ofLBS Bina Group Berhad to pay
off its current liabilities had decreased from 1.8 : 1 to 1.5 : 1. This show that the
business will experience difficulty in repaying its current liabilities. Besides that,
LBS Bina Group Berhad’s total debt ratio (TDR) showed that its total debt has
decreased by 6.7%, making it 56.6% in 2013. This means that the assets funded
by liabilities is decreased compare to 2012. Although the business has improved
in its TDR, but it still higher than 50%. TDR below 50% can ensure that the
business will not have a higher risk of bankruptcy. Thus, the inventory turnover
ratio (ITR) is increased from 15.8 days to 18.1 days. This means that the business
has taken a longer period of time to sell its goods, so theyare taking a longer time
to generate limited cash. This is making the business is more difficult to pay off
its liabilities. Moreover, LBS Bina Group Berhad’s interest coverage ratio (ICR)
has also shown an improvement in the business’ ability to payits interest expense.
LBS Bina Group Berhad earned more profit in 2013 compared to 2012.
Subsequently, the company has indicated a decent profitability and financial
stability and its shares are applicable at a lower price to warrant an investment.
An investor will only need to wait for a short period of time that is 0.01 years
(0.12 months) as of 2013 to recoup his investment. Furthermore, LBS Bina Group
Berhad has shown good promise in terms of their growth in revenue as the
company has proven to be a stable company. So, the share is more worthy to
invest.
However in the year 2015, the graph from LBS Bina Group Berhad and
FTSEBursa Malaysia KLCI shows that the business, LBS Bina Group Berhad is
not making profit and continuous dropping. On the other hand, the market, KLCI
is generating profit during the year. As a result, LBS Bina Group Berhad is not
recommended to invest in now based on the graph from 2015.
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Appendices
2012
Profit and Loss Statement
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References
1. Property developer LBS Bina eyes RM1bil sales – Business News, The Star Online.
(n.d.). Retrieved January 27, 2016, from
http://www.thestar.com.my/business/business-news/2015/04/04/property-developer-
lbs-bina-eyes-rm1bil-sales/
2. LBS Bina to launch RM6b projects over next 3 years, says managing director,
theSundaily. (n.d.). Retrieved January 27, 2016, from
http://www.thesundaily.my/news/1375620
