UNIVERSITI TEKNOLOGI MARA

KAMPUS BANDARAYA MELAKA

FACULTY OF BUSINESS AND MANAGEMENT

INTRODUCTION TO CORPORATE FINANCE

(FIN430)

AN ANALYSIS OF CORPORATE FINANCIAL PERFORMANCE : A TREND AND

COMPARATIVE STUDY (DAYANG VS KGB)

PREPARED FOR :
DR. NUR HAFIDZAH IDRIS

PREPARED BY :

NAME MATRICS ID

AFIQAH ANEESYA BINTI ZAINOL 2022455372

NURUL HAFIZAH BINTI ABDUL RAHIM 2022887182

NADHIRA IRDINA BINTI RASHA AZWADI 2022452852

KHAIREEN SOFEA BINTI KHAIRUL NIZAM 2022622966

NURKAMALIA WAFIQAH BINTI MOHD GHAZALI 2022868012

GROUP :
BA242 2A

SUBMISSION DATE :
9 JUNE 2023
 TABLE OF CONTENT
1.0 INTRODUCTION 3
2.0 TREND ANALYSIS FOR THE YEAR 2018, 2019, 2020 4
3.0 CROSS-SECTIONAL ANALYSIS DAYANG VS KGB FOR THE YEAR 2021 10
4.0 RECOMMENDATIONS 12
5.0 CONCLUSION 13
6.0 REFERENCES 14
7.0 APPENDICES 15
1.0 INTRODUCTION

In this assignment, we will be focusing on the financial backgrounds of both companies.

Dayang Enterprise Holdings Berhad (Dayang) and Kelington Group Berhad (KGB) are two
unique businesses that work in multiple sectors of the Malaysian economy. Both businesses
specialise in different fields and work in various industries. Dayang specialises in offshore
maintenance and services for the oil and gas industry, whereas KGB concentrates on technical
solutions for UHP gas and chemical delivery systems. Looking into their financial backgrounds,
we can observe each company’s liquidity, leverage, activity and also profitability positions.

KGB is a Malaysian multinational corporation specialising in integrated engineering

solutions and services. Since its founding in 1997, the business has grown to be an important
force in the engineering and construction sectors. In addition to cleanroom facilities, KGB
specialises in the design, implementation, and maintenance of ultra-high purity (UHP) gas and
chemical delivery systems. The semiconductor, photovoltaic (solar), and biopharmaceutical
sectors are just a few of the industries it covers. The corporation has operations in a number of
nations, including South Korea, Taiwan, Malaysia, Singapore, the Philippines, and China. The
Bursa Malaysia Securities Berhad Main Market is where Kelington Group Berhad is listed.

Dayang is an integrated offshore topside maintenance and services provider based in

Malaysia. Dayang, which was founded in 1980, has developed into a significant force in the oil
and gas sector. The company provides fabrication, hook-up, and commissioning (HUC), as well
as maintenance, repair, and operations (MRO) services for offshore installations. To maintain
the efficient and secure functioning of oil and gas platforms, Dayang offers a variety of services,
including routine inspections, preventative maintenance, repair, and overhaul services. The
company has expanded globally, including Vietnam, Saudi Arabia, and Qatar, and has carried
out projects for significant oil and gas operators in Malaysia. Dayang is traded on Bursa
Malaysia Securities Berhad's Main Market.

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 In this assignment, we will analyse the main statistics that show the liquidity, leverage,
activity, and profitability of Dayang and KGB’s financial performance. We may learn a lot about
these organisations' strengths, weaknesses, and overall financial health by contrasting and
analysing their financial profiles. We will be able to evaluate and suggest changes based on
these insights regarding their performance and potential.

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2.0 TREND ANALYSIS FOR THE YEAR 2018, 2019, 2020

2.1 DAYANG ENTERPRISE HOLDINGS BERHAD

1. LIQUIDITY RATIO

Current Ratio Quick Ratio

The liquidity ratios of Dayang Enterprise Berhad shows that there is an increment from
the year 2018 to 2019 and remain unchanged until 2020. The higher the ratio, the greater the
ability of Dayang Enterprise Holdings Berhad to pay off its short-term financial obligations.
Dayang has the ability to pay off their financial obligations as the liquidity ratio is high.

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 2. EFFICIENCY RATIO

Inventory Turnover Total Assets Turnover

The inventory turnover of Dayang Enterprise proves that it has declined. The inventory
turnover rate for the year 2019 is 1.76 times lower than that of 2018, which is 76.36 times.
Besides, the inventory turnover for the current year 2020 is stated 68.22 times, in comparison to
the previous years. Thus, it shows that Dayang Enterprise is bad at handling financial
performance.

Next, the total assets turnover for both 2018 and 2019 are the same, which amounted to
0.35 times. This means that the ability of the company to manage the assets remains the same,
which means no increase or decrease has occurred. However, in the year 2020, the total assets
turnover has decreased to an amount of 0.27 times. The company is not capable of managing
the total assets turnover in the year 2020 compared to the years before.

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 3. LEVERAGE RATIO

Debt Ratio Debt To Equity

According to the leverage ratios for Dayang Enterprise Berhad, it shows that as of the
year 2020, they have better performance in paying off the obligations compared to the year
2019 and 2018. Dayang has low risk as they have a low leverage ratio because Dayang is
subjected to low fixed payment obligations and thus will increase their profit.

4. PROFITABILITY RATIO

Net Profit Margin Gross Profit Margin

The profitability ratio of Dayang Enterprise Berhad in the year 2019 shows a great performance
compared to the year 2018. However, the data for the year 2020 has decreased both for net
profit and gross profit margin. Thus, it can be concluded that the company’s operational
activities do not possess good quality in generating profits.

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2.2 KELINGTON GROUP BERHAD (KGB)

1. LIQUIDITY RATIO

Current Ratio Quick Ratio

The liquidity ratios of Kelington Group Berhad indicate that for the year 2019 is higher
than 2018. This shows that for the year 2019, KGB has the ability to pay its short-term financial
obligation. However, for the year 2020, it is lower compared to 2019. Thus, for the year 2020,
KGB has less ability to pay off their financial obligations.

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 2. EFFICIENCY RATIO

Inventory Turnover Total Assets Turnover

The inventory turnover of KGB in 2019 shows that it has decreased for 1645.11 times
compared to that in 2018 which is only 572.75 times. Moreover, the inventory turnover of KGB in
2020 has decreased even more which amounted to 119.89 times. Thus, it shows that KGB is
not good at handling the financial performance of their company, since there is no increment
that occurs for over the three years.

The total assets turnover for the year 2018 is greater than that in 2019, which is 1.44
times while 1.25 times in 2018. In 2020, the total assets turnover has also decreased compared
to the year before to an amount 1.13 times. Thus, it is proven that KGB is not capable of
managing the total assets turnover for over the three years.

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 3. LEVERAGE RATIO

Debt Ratio Debt To Equity

According to the leverage ratios for Kelington Group Berhad, they had performed better
in 2019 compared to 2018 and 2020. This is because they have low degree of indebtedness
which results in low risk in 2019 as they had performed better in terms of the debt ratio and debt
to equity ratio. However, in the year 2020, they had a higher leverage ratio which resulted in a
high degree of indebtedness due to the KGB having high fixed payment obligations that reduced
their profits.

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 4. PROFITABILITY RATIO

Net Profit Margin Gross Profit Margin

The profitability ratio of KGB shows a greater performance in 2019 compared to 2018 for
net profit margin. However, the ratio has declined in 2020. Unlike gross profit margin, the
profitability ratio has always declined from 2018 to 2020. Thus, we can say that the company’s
operational activities do not possess good quality in generating profits.

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3.0 CROSS-SECTIONAL ANALYSIS DAYANG VS KGB FOR THE YEAR 2020

Liquidity ratios for both companies are shown in the above bar chart. Dayang has much
higher liquidity ratios than KGB, with a current ratio of 2.15x and a quick ratio of 2.13x. In
contrast, KGB has lower liquidity ratios than Dayang, with a current ratio of 1.83x and a quick
ratio of 1.82x. This graph illustrates that Dayang appears more capable of meeting its
obligations and paying the creditor's short-term debt.

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 The bar chart above illustrates that KGB has higher ratios compared to Dayang because the
company has a higher efficiency ratio. For example, KGB’s inventory turnover is 119.89 times
greater than Dayang’s, and Dayang’s total asset turnover is 1.13 times greater than KGB’s.
Because of the high turnover, which indicates the most effective and efficient use of inventory,
the analysis shows that KGB is more efficient and successful at managing its inventory to
generate profit.

Leverage ratios for KGB and Dayang can be observed in the graph above. Based on that,
we can see that the KGB debt ratio has become worse in comparison to Dayang where the
KGB debt ratio is 51.95%, and the debt to equity ratio is 108.13%, whereas Dayang's debt ratio
and debt to equity ratio are 35.20% and 54.33%, respectively. As a result, it is evident that KGB
faces greater financial risk than Dayang and this shows that KGB has taken on more debt than
it can handle and that it won't be able to pay it off with current cash flow. Furthermore, it's
possible that the business will find it more difficult to pay its debts.
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According to the above bar chart, KGB has a greater net profit margin than Dayang, with 4.46%
and 4.45%, respectively. It suggests that KGB, rather than Dayang, has a greater ability to profit
from a given quantity of sales. However, Dayang outperforms KGB in terms of gross profit
margin, with 31.74% and 14.9%, respectively. This means that Dayang, with 31.74%, has a
lower cost of products sold relative to sales than KGB.

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4.0 RECOMMENDATIONS

There are solutions for Dayang Enterprise Berhad to improve their activity ratio. The
company has to make sure the inventory holding cost is low, and minimal risk of obsolescence.
Therefore, the inventory turnover will have strong demand for its products. The company also
needs to avoid loss of value due to spoilage or depreciation thereby optimising the inventory
management system. Also, adjust the pricing strategy or diversify the product mix for inventory
turnover. While for asset turnover, it needs to focus on how effectively a company can generate
high sales volume and high profit margins. The company also needs to reduce the asset
investment or improve the asset utilisation.

For Kelington Group Berhad can improve their liquidity ratio to make sure they know
what's coming in and when it's coming in. It is critical to invoice on time and guarantee that
people pay on time to avoid a disruption in cash flow. Make a list of all assets in the company,
their present value, and how easy it would be to extract cash from each one. As company and
market situations change, this should be revised every few months. It's also useful to
understand what actions would be required to convert them to cash. Besides that, reduce
overhead by searching around before renewing the contracts to see if they can get a better
offer. Similarly, with insurance and rent, they may be able to save money with some negotiating.

To improve debt ratio, the company can focus on cash flow, the corporation can issue
new or more shares. This cash can be utilised to repay existing liabilities, lowering the debt
burden.Also, they can reduce the debt with pay the outstanding liabilities as quickly as possible.
A debt-equity swap allows a corporation to convert a debt holder into an equity shareholder.
This will eliminate the loan owing to him, lowering the company's debt and improving the ratio.
Convertible debentures may be issued if desired.

Lastly, Kelington Group Berhad can enhance their profitability and analyse financial
statements which can be adjusted through balance sheet, income statement and cash flow.
Moreover, decrease waste by decreasing overproduction, identifying, and resolving processes
that result in defects, limiting downtime and limiting the excess inventory as well as processing.
The company also can create budget whereby developing budget can helps set strict on the
amount the company can use on certain sectors, reducing administrative cost, and creating
salary cap to decrease the expenses.

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5.0 CONCLUSION

Based on the case study, two companies, Dayang Enterprise Holdings and Kelington
Group Berhad were analysed according to eight ratios in financial ratio analysis. This analysis
evaluated the performance of the companies and detected their strengths and the weakness.
This evaluation can show the performance of the companies to enhance what is lacking and
continue to improve their management.

Dayang Enterprise Holding Berhad in overall performance has a great performance in

terms of liquidity, debt and profitability ratio throughout three years compared with Kelington
Group Berhad. But unfortunately, in terms of activity ratio, its turnover ratio has declined
throughout three years as the number becomes less and less year by year. Low inventory
turnover can signal poor sales or high inventory levels. They may have ineffective inventory
management to convert their asset to cash or poor technique to improve the way to generate
the sales.

Meanwhile, for Kelington Group Berhad has a great performance in activity ratio with a
significant number compared to Dayang Enterprise throughout the three years. This shows that
they can manage the inventory and assets to convert into cash. Besides that, this company also
has low results in liquidity, debt, and profitability. Overall performance shows that the company
may not have an ability to pay off its current obligations and may face big risk with a higher debt
ratio. The unstable result will make them fall to bankruptcy as their low revenue failed to
stabilise it.

To sum up, Dayang Enterprise Berhad is still in a great position because of their ratio of
successful outcomes for the organisation in many terms. It shows that the company successfully
manages the asset and cash to gain profitability and avoid a lot of liabilities in the company. The
company also uses the revenue effectively to obtain raw material and salaries.

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6.0 REFERENCES

DAYANG - Annual Report & CG Report - 2018. (2019, April 23). KLSE Screener. Retrieved June

9, 2023, from https://www.klsescreener.com/v2/announcements/view/104406

DAYANG - Annual Report & CG Report - 2019. (2020, May 27). KLSE Screener. Retrieved June

9, 2023, from https://www.klsescreener.com/v2/announcements/view/3163789

DAYANG - Annual Report & CG Report - 2020. (2021, May 24). KLSE Screener. Retrieved June

9, 2023, from https://www.klsescreener.com/v2/announcements/view/3362831

Report & Presentation – KELINGTON GROUP BERHAD. (n.d.). KELINGTON GROUP

BERHAD. Retrieved June 9, 2023, from https://kelington-group.com/report-presentation/

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7.0 APPENDICES

1. LIQUIDITY RATIO
i) DAYANG (2018,2019,2020)

2018 2019 2020

CURRENT RATIO
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 520353 892019 765783
= 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 1299129 412024 356814
= 0.40x = 2.16x = 2.15x

QUICK RATIO
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 520353−7285 892019−7411 765783−6586
= 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 1299129 412024 356814
= 0.39x = 2.15x = 2.13x

ii) KGB (2018,2019,2020)

2018 2019 2020

CURRENT RATIO
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 212452 239437 279622
= 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 125663 121557 152459
= 1.69 = 1.97 = 1.83

QUICK RATIO
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 212452−177 239437−552 279622−2801
= 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 125663 121557 152459
= 1.69 = 1.97 = 1.82

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 2. EFFICIENCY RATIO

i) DAYANG (2018,2019,2020)

2018 2019 2020

Inventory Turnover 556,277 552,860 449,269

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 7,285 7,411 6,586
= 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
= 76.36 times = 74.60 times = 68.22 times

Total Assets Turnover 938,758 1,046,183 731,443

𝑆𝑎𝑙𝑒𝑠 2,697,142 2,947,163 2,745,503
= 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
= 0.35 times = 0.35 times = 0.27 times

ii) KGB (2018,2019,2020)

2018 2019 2020

Inventory Turnover 291,185 316,163 335,805

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 177 552 2,801
= 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
= 1645.11 times = 572.75 times = 119.89 times

Total Assets Turnover 350,023 379,768 394,599

𝑆𝑎𝑙𝑒𝑠 243,476 303,055 350,343
= 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
= 1.44 times = 1.25 times = 1.13 times

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3. DEBT RATIO
i) DAYANG (2018,2019,2020)

2018 2019 2020

DEBT RATIO 1,397,333

𝑥100
1,182,032
𝑥100
966513
𝑥100
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡 2,697,142 2,947,163 2,745,503
= 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 x 100 = 51.81% = 40.11% = 35.20%

LONG-TERM 2,176,789
𝑥100
2,055,144
𝑥100
1,979,720
𝑥100
2,697,142 2,947,163 2,745,503
DEBT
𝐿𝑜𝑛𝑔−𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡 = 80.71% =69.73% =72.11%
= 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

DEBT TO EQUITY 1,397,333

𝑥100
1,182,032
𝑥100
966513
𝑥100
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡 1,299,809 1,765,131 1,778,990
= 𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦 x100 = 107.51% = 66.97% = 54.33%

ii) KGB (2018,2019,2020)

2018 2019 2020

DEBT RATIO 127,261

𝑥100
147,521
𝑥100
182,014
𝑥100
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡 243,476 303,055 350,343
= 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 x 100 = 52.27% = 48.68% = 51.95%

LONG-TERM 31,024
𝑥100
63,618
𝑥100
29,555
𝑥100
243,476 303,055 350,343
DEBT
𝐿𝑜𝑛𝑔−𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡 = 12.74% = 20.89% = 8.44%
= 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

DEBT TO EQUITY 127,261

𝑥100
147,521
𝑥100
182,014
𝑥100
𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡 116,215 155,534 168,329
= 𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦 x100 = 109.50% = 94.85% = 108.13%

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4. PROFITABILITY RATIO
i) DAYANG (2018,2019,2020)

2018 2019 2020

Net Profit Margin 143,983

× 100
221,854
× 100
32,562
× 100
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 938,758 1,046,183 731,443
= 𝑆𝑎𝑙𝑒𝑠
× 100
= 15.34% =21.21% = 4.45%

Gross Profit Margin 382,481

× 100
493,323
× 100
232,174
× 100
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 938,758 1,046,183 731,443
= 𝑆𝑎𝑙𝑒𝑠
× 100
= 40.74% = 47.15% = 31.74%

ii) KGB (2018,2019,2020)

2018 2019 2020

Net Profit Margin 18,475

× 100
23,920
× 100
17,591
× 100
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 350,023 379,768 394,599
= 𝑆𝑎𝑙𝑒𝑠
× 100
= 5.28% =6.30% = 4.46%

Gross Profit Margin 58,838

× 100
63,605
× 100
58,794
× 100
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 350,023 379,768 394,599
= 𝑆𝑎𝑙𝑒𝑠
× 100
= 16.81% = 16.75% = 14.90%

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STATEMENT OF FINANCIAL POSITION FOR DAYANG ENTERPRISE HOLDINGS BHD

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22
STATEMENT OF FINANCIAL POSITION FOR KELINGTON GROUP BERHAD

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26
STATEMENT OF PROFIT OR LOSS OF DAYANG ENTERPRISE HOLDINGS BHD

27
28
STATEMENT OF PROFIT OR LOSS FOR KELINGTON GROUP BERHAD

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