Growth Analysis

These analyze look into how fast the company grow. Generally, the company growth will hang on the
amount of resources kept and reinvested in the entity (retained earnings) and the rate of return earned on the
resources retained (ROE). The more the company reinvests, the greater the potential for growth.
Based on the financial statements of the Carlsberg Malaysia group, the profit for the year end 2018 is RM
249,963,000 which is considered increase in the growth of the company profit compared to the preceding
year 2017 which the profit was only RM 233,873,000. In terms of the company profit, Carlsberg group has
made the best profit in year 2018 compared to the year 2017.

Share Market Ratios

The common ratios under this grouping are earnings per share, price/earnings ratio, dividend per share,
dividend yield, payout ratio and book value per share. Those are the ratios used to assess the performance of
a company for stock/share valuation purposes. These ratios tell the investors entirely what part of total
profits, dividends, and equity is assigned to each share.

Earnings per Share

Net profit after tax−Preference share dividend

EPS=
Number of ordinary shares outstanding

249,963,000−0
EPS=
305,748,000 shares

EPS=RM 0.82

Earnings per share is an appropriate measure which is always presented at the lower part of a profit and loss
account. It specified the annual earning capacity of a company. Basically, this shows the company’s profit
obtainable to each unit of share taken by the shareholders. Although many investors don’t put too much of
attention to the EPS but a higher earnings per share ratio generally makes the stock price of a company to
increase. Therefore, the earnings per share of Carlsberg Group Company is RM 0.82. This means that if
Carlsberg distributed every ringgit of income to its shareholders, each share would receive RM 0.82.
Price/Earnings Ratio (P/E)

Market price of share

P/ E=
EPS

RM 19.68
P/ E=
RM 0.82

P/ E=24׿

*Note: The value of the market price of share is taken from the share price of Carlsberg Brewery Malaysia
Dec, 2018

The price to earnings ratio shows the expected price of a share based on its earnings. If the company’s
earnings per share is about to increase so does their market value per share. As a whole, a higher ratio
indicates that investors expect a higher performance and growth in the future. It also indicates that
companies with losses have poor P/E ratios. Basically, the P/E ratio looks at the price of the stock versus its
earnings. Based on the calculation above it can be concluded that a P/E ratio of 24 means that, for every RM
1 in company earnings per share, people are willing to pay RM 24 per share to buy the stock. In other words,
the stock is trading at a multiple of 24.

Gross Dividend per Share

Gross dividend per share= Annual gross dividend paid ¿ ordinary shareholders ¿
Number of ordinary shares outstanding

Net profit after tax−Preference share dividend

EPS=
Number of ordinary shares outstanding

249,963,000−0
EPS=
305,748,000 shares

EPS=RM 0.82

305,748,000
Di vidend per share=
305,748,000

Dividend per share=100 sen

*Note: Annual gross dividend paid to ordinary shareholders figure is taken from the five year dividend as % of
net profit the dividend amount declared and proposed for the year.

Dividend per share is the measure of the dividend payout per share of the company’s common stock. This
measure is used to estimate the amount of dividends that an investor might expect to receive when they want
to buy the company’s common stock. The measure is known as effective when it is followed on a trend line
because it demonstrate the management’s willingness to make constant payouts to investors. In February
2018, Carlsberg Malaysia announced a new dividend policy by paying out 100% of its annual net profit on a
quarterly basis to shareholders.
Gross Dividend Yield

Annual dividend per share

Dividend yield=
Current market price

RM 1.00
Dividend yield= × 100
RM 19.68

Dividend yield=RM 0.05@ 5.08 %

The dividend yield is a financial ratio that compute the amount of cash dividends issued to common
shareholders respective to the market value per share. It is used by the investors to demonstrate how their
investment in stock produce either in the form of dividends or increase in asset value by stock appreciation.
Besides that, investors also use the dividend yield formula in order to analyze their return on investment in
stocks. It can be said that the investors want to know how much dividends they are getting for every dollar
that the stock is worth. A company with high dividend yield pays its investors a big dividend compared to
the fair market of the stock. It can be said that the investors are getting highly compensated for their
investments compared with lower dividend yielding stocks. A high or low dividend yield is relative to the
industry of the company. Even a small dividend might produce a high dividend yield ratio for the Carlsberg
Company. Basically, investors wants to see a yield as high as possible. As shown in the calculation,
Carlsberg’s dividend yield is RM 0.05. This means that Carlsberg investors receive RM 0.05 in dividend for
every ringgit they invested in the company. In other words, the investors are getting 5.08% return on their
investment every year.

Dividend Payout Ratio

Dividend per share

Dividend payout ratio=
Earning per share
 RM 1
Dividend payout ratio=
RM 0.82

Dividend payout ratio=RM 1.22@ 122%

The dividend payout ratio measures the part of profits the company decides to keep to fund operations and
the part of profits that is given to its shareholders. The dividend payout ratio analysis is important since
investors will see a consistent stream of sustainable dividends from a company. A stable trend in this ratio is
usually more important than a high or low ratio. Generally, a company that has a downward trend of payouts
is making the investors to be more worried of. Although shareholders are in favor of dividends, normally
they do not like too high a dividend payout ratio because it would be difficult to maintain. If too much is
paid out, the company might not be able to remain profitable or the operation volume might be expended
due to reason like inflation. For instance, if the company declares 10% share dividend, each shareholder will
receive 1 new share for 10 shares which he holds. In Malaysia, it is known as the bonus issue. Another form
of share dividend is the distribution of treasury shares which the company obtained in its buy back of own
shares exercise. If a company has a dividend payout ratio over 100% then that means that the
company is paying out more to its shareholders than earnings coming in. This is typically not a good
recipe for the company's financial health; it can be a sign that the dividend payment will be cut in
the future. There are even times when investors should ignore dividend payout ratios all together, as
certain companies will always have unusually high numbers.

Book Value per Share

'
Sahareholder s equity
Book value per share=
Number of ordinary shares outstanding

394,831,000
Book value per share=
305,748,000

Book value per share=RM 1.29 per share

This formula is used to calculate the per share value of the company based on its equity available to
common shareholders. It is one of the procedure for the comparison in valuing the company. Therefore, it is
used by investors to determine the equity in a company relative to the market value of the company, which is
the price of its stock. Generally, the book value per share is for the investors to determine whether a share is
undervalued or overvalued. It can be concluded that the share is overvalued since the market price of share
is more than the book value per share where the market price of share is RM 19.68 whereas the book value
per share is RM 1.29.
Price to Book Value Ratio (PBVR)

Market price of share

PBVR=
Book value per share

RM 19.68
PBVR=
RM 1.29

PBVR=15.25

Price to book ratio expresses the relationship between the stock price and the book value of each share.
Generally, the lower the price to book ratio the better the value is. The value of the ratio differ over
industries. The higher the ratio, the higher the premium the market is willing to pay for the company above
its hard assets. Eventhough investors use price to book value ratio in order to get some idea of how
expensive a company’s stock is, it provides very limited information for some companies with hidden assets,
which are great value but are not reflected in the book value. As a results, investors pay RM 15.25 for every
ringgit of book value that a company has. The lower the ratio, the more attractive it will be in the view of the
investors. This is one of the ratios used in order to identify undervalued shares by some experts.

Recommendation on Share Market Ratio Analysis

Based on the calculation of the share market ratio which includes the earnings per share, price/earnings ratio,
gross dividend per share, gross dividend yield, dividend payout ratio, book value per share and price to book
value ratio, it can be said that the company performance is doing very well since the gross dividend per
share paying out 100% of its annual net profit. Whereas, their dividend payout ratio is also showing the
results of 122% which is the payout of the company to its shareholders is more than 100%. It can be said the
company is doing very well in terms of profit making where the payout is more than 100%. It is important
for investors to not rely on only the measures of earnings per share for making investment decisions because
there also other ratios can be used to measure. Based on the calculation above, it can be said that it benefits
the shareholders but not the investors. Investors might not invest since the book value per share is more than
one and the market price per share is exceeding the book value per share which is considered as overvalued
where the investors will try to avoid 30-day annualized overvalued stocks since they are not considered to be
a good buy.