SEMESTER 2 2019/2020

CIX 2001: FINANCIAL MANAGEMENT

Group Assignment Topic:

Financial Ratio Analysis of

MISC Berhad and Malaysia Airport Holding Berhad

NO NAME MATRIC SIGNATURE

. NUMBER

1 NURNAZARTUL NAJWA BINTI IDZHAR 17182974/1 nazartul

2 MOHAMED NAZRUL IMRAN BIN MOHD ALI 17207382/1 nazrul

3 GOH SIEW MEI 17127747 siewmei

4 NORSHAHIRAH BINTI SHAHINI ISMAIL 17072517 shahirah

5 MAHJOUBE OUBEID 17094960/1 mahjoube

Group : Group 1 (Thursday 11am)

Submission Date : 9 June 2020
1. COMPANY BACKGROUND
1.1 MISC BERHAD
1.1.1 History of MISC Berhad
MISC stands for Malaysia International Shipping Corporation founded by Robert
Kuok in 1968 on Malaysian government order. ​Kuok, who had no experience in the
business, asked for the help of the Hong Kong-Chinese shipping magnate, ​Frank
Tsao​. Tsao was given the Tan Sri title by the King of Malaysia for his help to establish
the business.
The company's first two ships were supplied by Japan, addicted to the
Malaysian Chinese Association (MCA) as rectification for its carnage of Chinese
Malaysians during World War II. ​The Kuok brothers holding 20%, Tsao 15%, and the
MCA and other Chinese-Malaysian groups holding 20 to 30% make the company
initially have the 10 million ringgit capital. The first company chairman was Ismail
Abdul Rahman who served until 1968 and Kuok took over the company after that and
served until 1980s. Eddie Shih and Tony Goh ran the day-to-day business, and the
company quickly prospered after it started business in 1969.

1.1.2 Activities MISC Berhad

MISC Berhad does businesses comprising energy shipping and its related activities .
owning and operating offshore floating solutions, marine repair and conversion,
engineering and construction works as well as maritime education and training. Based
on their activities, one of them is LNG Shipping. LNG stands for Liquefied Natural
Gas, where they deliver it all around the world and is known for their distinguished
reputation for overall excellence in operational and reliability.
One of the offshore activities done by them is known as marine and heavy
engineering. They specialise in this offshore activity such as offshore construction,
offshore conversion and marine repair. MISC Berhad is also known to own and
operate the largest marine and heavy engineering facility in the region.

1.1.3 Market strength of MISC Berhad

In today's climate, business sustainability problems have become increasingly
challenging. MISC has to introduce new measures to future proof themselves and
ensure sustainable growth from the way of conduct business, manage staff, which
impact on the environment, deliver sustainability return to shareholders. The total
revenue for the MISC Berhad increased to RM 8.96 billion and operating profit is RM

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 1.93 billion. Among the world’s MISC Berhad also listed top 3 in shipping
conglomerates by market capitalisation at USD9.0 billion.
MISC Berhad has risen in revenue for the 9 months period ended September
2019 which is 3.1% higher than before. Group revenue was RM 6,587.2 million for
the 9 months period ended 30 september 2019. The increase in revenue is mainly
due to the LNG market segment's rise in the number of vessels operating and the
lower dry-docking and acquisition of two ( 2) LNG carriers, each in December 2018
and January 2019.

1.2 MALAYSIA AIRPORT HOLDING BERHAD

1.1.1.History of Malaysia Airport Holding Berhad

When Malaysian Parliament delivered a bill to split the Department of Civil Aviation
(DCA) into two entities with different responsibilities in 1991, the Malaysia Airport
Holding Berhad was incorporated. ​The holding company, Malaysia Airports Holdings
Berhad (MAHB) was integrated as a public restricted company in November 1999
and was after that recorded on the Main Board of the ​Kuala Lumpur Stock Exchange​,
becoming the first airport operating company to be listed in Asia and the sixth in the
world. The company is listed on the Malaysian Stock Exchange (Bursa Malaysia).

1.1.2 Activities of Malaysia Airport Holding Berhad

Malaysia Airport Holdings Berhad focuses on the operation, administration and care
of airports. These core activities include the administration, process and maintenance
as well as growth of airports. With a particular importance being put on the operating
efficiency, safety and protection of passengers, cargo and aircraft operations.
Malaysia Airport Holdings Berhad works to improve and increase their capability of
handling these core activities so that the services are at their best.

1.1.3 Market strength of Malaysia Airport Holding Berhad

Malaysia Airports Holdings Berhad is a Malaysian airport company that manages 39
airports in the whole Malaysia with 5 international airports. For the financial year end
2019, Malaysia Airports Holdings Berhad reported the revenue of RM 2513.5 million
and earnings before interest and tax (EBIT) of RM 1169.7 million which excluded
depreciation. This indicated that the group's revenue has risen 6% compared with the
previous financial year. Combine operating performance with Istanbul Sabiha Gokcen

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 International Airport (SGIA) which has contributed to healthy EBITDA to the group,
with a growth of 16.3%.
Immigration Department of Malaysia, Lembaga Tabung Haji and the Saudi
Arabian Immigration Authorities have collaborated to introduce technology. By
introducing this technology into collaboration, the waiting time for pilgrims to and from
their destination has been greatly reduced by as much as 60%, while data
transmission remains safe and seamless. (appendix 1)

2. TIME SERIES ANALYSIS OF MISC BERHAD

2.1 Liquidity Ratio

2017 2018 2019

,000 ,000 ,000

Current Ratio 10,280,139 9,969,383 11,127,250

9,952,235 7,779,081 7,801,794
T otal current assets
T otal current liabilities = 1.033 = 1.281 = 1.426

Quick Ratio 10,280,139−198,592 9,969,383−250,030 11,127,250−165,731

9,952,235 7,779,081 7,801,794
T otal current asset − inventory
T otal current liabilities = 1.013 = 1.249 = 1.405

Cash Ratio 5,792,035 5,534,894 5,740435

9,952,235 7,779,081 7,801,794
T otal cash and cash equivalent
T otal current liabilities = 0.582 = 0.711 = 0.736

Table 2.1: Data for Liquidity Ratio of MISC Berhad (2017-2019)

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 Graph 2.1: Data for Liquidity Ratio of MISC Berhad (2017-2019)

Liquidity ratios are financial metrics that gauge the entity’s ability to satisfy its short term
financial obligations, in this aspect current, quick and cash ratios are computed for MISC
Berhad, to know its potential to settle its current liabilities.
The current ratio shows the portion of current liabilities that can be paid by current
assets, the current ratio of MISC is 1.033 for 2017, 1.281 for 2018 and 1.426 for 2019
demonstrating that the company liquidity position is good and is getting better each year
compared to the previous one, as it is illustrated in the chart above. However the quick ratio
will give us a clearer vision of that, since it uses the most liquid assets by excluding
inventories. MISC quick ratio points to satisfactory liquidity in the three years with 1.013 in
2017, 1.249 in 2018 and 1,405 in 2019. However it is significantly improving with each year.
The difference between MISC current and quick ratios is small meaning that it does not rely
too much on its inventories. The cash ratio compares cash and cash equivalent to the
company current liabilities, MISC cash ratio is increasing each year, but is still lower than the
average that which manifests that the company does not have enough cash to pay its very
short term debt. However that can be due to efficient use of it by investing it to gain more
profit instead of earning the risk-free rate

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 2.2 Activity Ratio

2017 2018 2019

,000 ,000 ,000

Inventory Turnover 6,766,495 6,447,524 6,215,588

198,592
=​34.1 250,030 =25.8 165,731 =37.5
Cost of Good Sold
= 365/34.1 = 10.7 days = 365/25.8 = 14.1 days = 365/37.5 = 9.7 days
inventory

Account Receivable 10,068,212 8,780,275 8,962,724

Turnover 4,161,775 3,949,200 3,930,705

N et Sale = 2.419 = 2.222 = 2.281

Accounts Receivable
= 150.9 days = 164.2 days = 160 days

Total Asset Turnover 10,068,212 8,780,275 8,962724

50,469,803 6,697,554 51,863,795
N et Sales
T otal Assets = 0.199 = 0.169 = 0.173

Table 2.2: Data for Activity Ratio of MISC Berhad (2017-2019)

Graph 2.2: Data for Activity Ratio of MISC Berhad (2017-2019)

Activity ratios are financial ratios used to assess how efficiently the company uses
and manage its assets and resources and how efficient their operations are, so to
determine MISC fiscal health we are going to perform the following activity ratios.
Inventory turnover ratio which is used to determine how many times the firm fully used
their inventories for sales. MISC inventory turnover ratio is 34.1 in 2017 which can be an

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indication of strong sales of the company, however in 2018 the ratio was lower with 25.8
which is a result of increase in inventories compared to 2017. In 2019 the ratio is the
highest 37.5 among the three years, this can be due to insufficient inventories since sales
are still lower than 2017. The account receivable turnover determines the ability how
efficient a business is in collecting its money from their debtors. MISC ability to turn their
receivables into cash has a low ratio and is not efficient during the year 2017 to 2019 as
the ratio varies between 2.2 and 2.5, although 2017 was most efficient among them.
However MISC should evaluate its credit policies to ensure the collection of its accounts
receivable on time. The total assets turnover measures the efficiency of an entity in using
its total assets for sales and generating revenue. MISC asset turnover ratio indicating
inefficiency in the using one of the assets components as the account receivables or the
total asset. 2017 had a faster 0.2 for MISC followed by 2019 with 0.173 and the lower was
in 2018 for 0.17.

2.3 Leverage Ratio

2019 2018 2017

million million million
Debt to Asset 161101.1 15701.2 14565.0
T otal Liabilities 51863.8 52065.3 50469.8
T otal Assets = 0.31 = 0.3 = 0.29

Debt to Equity 161101.1 15701.2 14565.0

T otal Liabilities 357537.1 36364.1 35904.8
Common Stock Equity =0.45 =0.43 =0.41

Times Interest 1512.3 1344.1 2003.6

Earned Ratio 484 395 245
Earnings Bef ore T ax =3.12 =3.4 =8.2
Interest Expense

Table 2.3: Data for Leverage Ratio of MISC Berhad (2017-2019)

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 Graph 2.3: Data for Leverage Ratio of MISC Berhad (2017-2019)

The table shows the leverage ratio for MISC Berhad from 2017 to 2019. Debt to
asset ratio has increased from 0.29 in 2017, 0.3 in 2018 and 0.31 from 2019. Next the
debt to equity ratio also has increased from 2017 to 2019. Which is 0.41 in 2017, 0.43 in
2018 and 0.45 in 2019. The increase in this two ratio shows that MISC Berhad has
greater firm’s indebtedness. The last one is the interest earned ratio. MISC Berhad has
decreased in this ratio from 2017 (8.2), 2018 (3.4) until 2019 (3.12). This value shows that
MISC Berhad cannot fulfill its interest obligations well.

2.4 Profitability Ratio

2017 2018 2019

RM’000 RM’000 RM’000

Gross Profit 3,301,717 2,332,751 2,747,136

Margin 10,068,212 8,870,275 8,962,724
​Gross Profit = 0.328/32.8% = 0.266/ 26.6% = 0.307/ 30.7%
Sales

Net Profit Margin 1,981,509 1,311,503 1,426,355

​EACS 10,068,212 8,780,275 8,962,724
Sales = 0.197/ 19.7% = 0.150/ 15.0% = 0.160/ 16.0%

Operating Profit 2.003,580 1,344,113 1,512,323

Margin 10,068,212 8,780,275 8,962,724
​EBIT = 0.199/ 19.9% =0.153/ 15.3% =0.169/ 16.9%
Net Sales

Earning Per Share 1,981,509 1,311,503 1,426,355

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 ​EACS 4,463,794 4,463,794 4,463,794
Shares outstanding = RM 44.40 = RM 29.40 = RM 32

Return on Asset 1,981,509 1,311,503 1,426,355

​EACS 50,469,803 52,065,300 52,065,300
Total Asset = 0.039/ 3.9% = 0.025/ 2.5% = 0.027/ 2.7%

Return on 1,981,509 1,311,503 1,426,355

Common Equity 34,894,198 35,351,149 34,727,192
​EACS = 0.057/ 5.7% = 0.037/ 3.7% = 0.041/ 4.1%
Total Equity
Table 2.4: Data for Profitability Ratio of MISC Berhad (2017-2019)

Graph 2.4: Data for Profitability Ratio of MISC Berhad (2017-2019)

The table above shows the profitability ratio of MISC Berhad from the year 2017 to
2019. From the table above, we can see that the gross profit margin decreased in 2018
from 32.8% to 26.6% and had a slight increase in the following year which is 30.7%. As
for its net profit margin, MISC Berhad had a decrease in their net profit margin in
2018(15.0%) which was then increased again in 2019(16.0%). The operating profit margin
decreased from 2017(19.9%) to 2018(15.3%) and managed to increase its operating
profit margin in 2019(16.9) after the fall in 2018. As for MISC Berhad’s earnings per
share, it had the highest value in 2017 which is RM 44.40 before it started to drop to RM
29.40 in 2018. After that it will increase slightly in 2019 at RM 32. Their return on assets
decreased from 3.9% to 2.5% in 2018 and somehow increased its return in asset for
about 0.2% making it 2.7% in 2019. Lastly is the return on common equity which had a
solid 5.7% in 2017 before decreasing in the year 2018 at 3.7%. The return on common
equity then increased in the year 2019 making it 4.1%.

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2.5 Market Ratio

Market Ratio 2017 2018 2019

Price earning per ratio 16.64 22.69 26.00

market price per share

earning per share

Book value per share RM 8,923,262 RM 8,923,262 RM 8,923,262

4,463,794 4,463,794 4,463,794
total common stock
number of share =2.0 =2.0 =2.0

Market to book ratio RM 7.391 RM 6.674 RM 8.317

PE x ROE 8.5 6.95 7.9
market value per share
book value per share =0.87 =0.96 =1.05

Table 2.5: Data for market ratio of MISC Berhad 2017-2019

Graph 2.5: Data for market ratio of MISC Berhad 2017-2019

Time trend analysis for MISC Berhad had been done from 2017 to 2019.
Market price per share/ earning is used to calculate the earnings earned by each
stock for the year. A high ratio is preferred by the investors. For MISC Berhad they
had an increased market price per share/earnings ratio and for 2018 and 2019 they
had the highest ratio which is 26.00. This happened because the revenue for MISC
Berhad increased from 2017 to 2019 due to increased due to more LNG Carriers in
Operation (appendix 2 ). For book value per share ratio, MISC Berhad has a constant
which is 2.0. The book value per share is a market value ratio that weighs

9
 stockholders' equity against shares outstanding. Last but not least is the market book
ratio, it is used to identify undervalued or overvalued securities. If the value is less
than the book value then it is undervalued and vice versa. For MISC Berhad they
had a ratio that increased over the year and they had the highest ratio in 2019 which
is 1.05. Market book ratio keeps increasing over the years.

2.6 Du Pont Analysis

YEAR 2017 2018 2019

1,990,691,000 1.284,341,000 1,436,267,000

Profit = 10,068,212,000
= 8.780,275,000
= 8,962,724,000
Margin

= 19.77% = 14.63% = 16.02%

10,068,212,000 8,780,275,000 8,962,724,000

Asset = 43,276,863,000 = 42,401,893,500
= 44,174,110,000
Turnover

= 0.23 = 0.21 = 0.2

40,517,568,000 44,286,219,000 44,062,001,000

Financial = 35,904,764,000 = 36.364,131,000 = 35,753,718,000
Leverage

= 1.13 = 1.22 = 1.23

ROE = 0.2 x 0.23 x = 0.15 x 0.21 x = 0.16 x 0.2 x

1.13 1.22 1.23

= 5.2% = 3.84% = 3.94%

Table 2.6: Data Du Pont analysis of MISC Berhad 2017-2019

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 Graph 2.6: Du Pont analysis time series of MISC Berhad 2017-2019

Table 2.6 shows the comparisons of Return On Equity (ROE) that we used for Du
Pont analysis of MISC Berhad data for the 3 consecutive years of 2017,2018 and 2019.
The results show that ROE decreases from 2017 to 2018 from 5.2% to 3.84% with slight
improvement in year 2019 which is an increase of 3.94%. This is due to changes in the
three components of the Du Pont analysis namely profit margin, asset turnover and
financial leverage that we can look at the financial condition of the company in greater
depth. For the three years, the profit margin showed a decline and improvement of
19.77% (2017) to 14.63% (2018) and an increase of 16.02% for 2019. This indicates that
profit margin in 2017 was most efficient. Looking at asset turnover, there has been a
decline of 0.23, 0.21 and 0.2 for 2017,2018 and 2019 which in 2017 is the most favorable
situation where companies use assets for generating revenues or sales to the company.
Financial leverage for MISC Berhad shows an increase of 1.13 in 2017 to 1.22 and 1.23
respectively in 2018 and 2019. Financial leverage is an indirect analysis of a company's
use of debt to finance its assets and for this company, the good financial leverage is in
2019.

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 3. TIME SERIES ANALYSIS OF MALAYSIA AIRPORT HOLDING BERHAD

3.1 Liquidity Ratio

2017 2018 2019

,000 ,000 ,000

Current Ratio 3,372,812 4,262,876 4,400,956

2,226,377 2,132,646 3,289,120
T otal current assets
T otal current liabilities = 1.515 =1.999 =1.339

Quick Ratio 3,372,812−140,591 4,262,876−127,896 4,400,956−169,809

2,226,377 2,132,646 3,289,120
T otal current asset − inventory
T otal current liabilities = 1.452 = 1.939 = 1.286

Cash Ratio 1,293,391 1,450471 1,453,136

2,226,377 2,132,646 3,289,120
T otal cash and cash equivalent
T otal current liabilities =0.581 = 0.68 = 0.442

Table 3.1: Data for Liquidity ratio of Malaysia Airport Holding Berhad (2017-2019)

Graph 3.1: Data for Liquidity ratio of Malaysia Airport Holding Berhad (2017-2019)

The table and chart above describe the Malaysia Airport Holding Berhad liquidity
position in three consecutive years and its ability to meet its short term debts. The
current ratio for Malaysia Airport Holding Berhad is 1.515 in 2017, which has
increased in 2018 to reach almost 2, which indicate that the company capacity to pay
is inadequate and is growing comparing to 2017, however this increase was followed

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 by a drop in the next year 2019 to reach a lower rate than that of 2017 with a ratio of
1.339, this is due to the significant increase in the current liabilities of the company.
Despite that the company is still paying it’s short term obligations. For a shorter
period of debt we can measure the company liquidity position by the quick Ratio.
Malaysia Airport Holding Berhad shows a good ability for paying off the short term
debt with the most liquid assets, and with no major difference to the current ratio
since inventories are not reliant for this company. However, the company is not able
to meet its current liabilities by using cash and cash equivalents because the cash
ratio is 0.581, 0.68 and 0.442 respectively for 2017, 2018 and 2019.

3.2 Activity Ratio

2017 2018 2019

,000 ,000 ,000

Inventory Turnover 448,977 421,343 435,628

= 3.12 = 3.29 = 2.56
140,591 127,896 169,809
Cost of Good Sold
365/3.12 = 114.29 days 365/3.29 = 110.8 days 365/2.56 =142 days
inventory

Accounts Receivable 4,651,287 4,851,702 5,213,107

Turnover 758,528 1,283,531 973,653
N et Sale
Accounts Receivable = 6.13 = 3.78 = 5.35

= 59.52 days = 96.6 days = 68.2

Total Asset Turnover 4,651,287 4,851,702 5,213,107

22,204,824 22,273,103 22,182,657
N et Sales
T otal Assets = 0.21 = 0.22 =0.23

Table 3.2: Data for Activity ratio of Malaysia Airport Holding Berhad (2017-2019)

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 Graph 3.2: Data for Activity ratio of Malaysia Airport Holding Berhad (2017-2019)

The table above displays Malaysia Airport Holding Berhad activity ratios to evaluate
how efficient the company operations are by computing the inventory turnover,
account receivable turnover and total asset turnover. Malaysia Airport Holding
Berhad inventory turnover is lowest in 2019 with a rate of 2.56, followed by 2017 with
3.12 rate and slightly higher in 2018 compared to 2017, this indicates that Malaysia
Airport is slow in using its inventories which can implies weak sales that may be
resulted from issues in the services provided or deficiencies in marketing
performance. The company accounts receivable shows the highest rate of turnover in
2017 with 6.13, in contrast with 2018 that presents the lowest turnover in the three
years period which suggests that the company might have a bad collection process
that needs to be improved because it can impact the company profitability. Malaysia
Airport Holding Berhad total asset turnover is increasing from 2017 to 2019 with a
very small difference for 0.21 in 2017, 0.22 in 2018 and 0.23 in 2019. This illustrates
the inefficiency of the company in using its assets and having internal problems.

3.3 Leverage Ratio

2019 2018 2017

Debt Ratio 12857281 13132377 13489078
22182657 22273103 22204824
T otal Liabilities =​0.58 =0.59 =0.61
T otal Assets
Debt to Equity 12857281 13132377 13489078
T otal Liabilities 9325376 9140726 8715746
Common Stock Equity =1.38 =1.44 =1.55

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 Times Interest 659151 780592 338795
Earned Ratio 724515 732745 714071
Earnings Bef ore T ax =0.91 =1.07 ​=0.47
Interest Expense
Table 3.3: Data for leverage ratio of Malaysia Airport Holding Berhad (2017-2019)

Graph 3.3: Data for leverage ratio of Malaysia Airport Holding Berhad (2017-2019)

The table above shows the leverage ratio for Malaysia Airport Holding Berhad in
2017 until 2019. The debt to assets ratio has slightly decreased from 2017 to 2019.
In 2017 the ratio is 0.61 decreased to 0.59 in 2018 and 0.58 in 2019. Then. The debt
to equity ratio shows that Malaysia Airport Holding Berhad also has decreased from
2017 with 1.55, 2018 with 1.44 and 2019 with 1.38. The decrease in Malaysia Airport
Holding Berhad shows that this company cannot handle its degree of indebtedness
well. The last one is times interest earned ratio which increased from 2017 (0.47) to
2019 (1.07) and decreased in year 2019 (1.38). The increasing of this ratio show that
this company are able to fulfill its interest obligations while the decreasing show that
the company not doing well in fulfill its interest obligations

3.4 Profitability Ratio

2017 2018 2019

RM’000 RM’000 RM’000

Gross Profit 4,203,361 4,430,359 1,234,157

Margin 4,652,338 4,851,702 1,344,429
​Gross Profit = 0.903/ 90.3% = 0.913/ 91.3% = 0.918/ 91.8%
Sales

Net Profit Margin 236,486 727,303 29,513

​EACS 4,652,338 4,851,702 1,344,429
Sales = 0.051/ 5.1% = 0.15/ 15% = 0.222/2.2%

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 Operating Profit 334,485 780,592 46,146
Margin 4,652,338 4,851,702 1,344,429
​EBIT = 0.072/ 7.2% = 0.161/ 16.1% = 0.034/ 3.4%
Net Sales

Earning Per Share 179,598 669,803 15,020

​EACS 1,659,192 1,659,192 1,659,192
Shares outstanding = RM 10.80 = RM 40.40 = RM 0.91

Return on Asset 236,486 727,303 29,513

​EACS 22,495,643 22,273,103 22,182,657
Total Asset = 0.0105/ 1.05% = 0.033/ 3.3% = 0.0013/ 0.13%

Return on 236,486 727,303 29,513

Common Equity 9,009,157 9,140,726 12,857,281
​EACS = 0.026/ 2.6% = 0.080/ 8.0% = 0.0023/ 0.23%
Total Equity
Table 3.4: Data for profitability ratio of Malaysia Airport Holding Berhad (2017-2019)

Graph 3.4: Data for profitability ratio of Malaysia Airport Holding Berhad (2017-2019)

The table above shows the data collected from the year 2017 to 2019 for the record
of profitability ratio of Malaysia Airport Holding Berhad. First of is the gross profit margin,
from the year 2017, the company manages to increase their gross profit margin for these
3 years until 2019 from 90.3% to 91.8%. As for the net profit margin, there was a huge
increase in the year 2018 where the net profit margin increased from 5.1% to 15% in 2018
and it suddenly had a drop in 2019 where its net profit margin is 2.2%. The same goes for
their operating profit margin, where it had an increase from 7.2% to 16.1% in 2018. Then
it decreases to 3.4% in 2019. The earnings per share increase in 2018 and decrease in
2019. The return on assets also had a similar case where it increased in 2018 from 1.05%
to 3.3%. In 2019, it had a drop from 3.3% to 0.13%. Last but not least,is the return on

16
common equity, where the return on common equity increased in 2018 at 8.0% after an
increase of 5.4% higher than the previous year in 2017 where its return on common
equity is 2.6%. The return on common equity decreases in the year 2019 which is 0.23%.

3.5 Market Ratio

Market Ratio 2017 2018 2019

Price earning per ratio 46.26 12.36 17.27

market price per share

earning per share

Book value per share RM 1,659,192 RM 5,114,341 RM 5,114,341

1,659,192 1,659,192 1,659,192
total common stock
number of share =3.08 =3.08 =3.08

Market to book ratio RM 8.55 RM 8.30 RM 7.69

6.89 8.34 7.8
market value per share
book value per share =1.24 =0.99 =0.98

Table 3.5: Data for market ratio of Malaysia Airport Holding Berhad 2017-2019

Graph 3.5: Data for market ratio of Malaysia Airport Holding Berhad 2017-2019

Malaysia Airport Holding Berhad was carried out from 2017 to 2019 on time pattern
research. In order to calculate the earnings earned by each stock for the year, the market
price per share is used for the year. The investors prefer a high ratio. The market price
per share or earning ratio for Malaysia Airport Holding Berhad decreased and had the

17
highest ratio of 46.26 in 2017. For book value per share ratio, Malaysia Airport Holding
Berhad has a constant ratio of 3.08. The book value per share is a measure of market
value that weights the equities of shareholders against outstanding shares. The market
book ratio is used to identify undervalued or overvalued shares, last but not least. If the
book value is lower than it is undervalued and vice versa. Malaysia Airport Holding
Berhad market to book ratio dropped from 1.24 to 0.98, the market book ratio continues to
decrease.

3.6 Du Pont Analysis

YEAR 2017 2018 2019

240,369,000 727,303,000 537,042,000

Profit Margin = 4,651,287,000 = 4,851,702,000 = 5,213,107,000

= 5.17% = 14.99% = 10.30%

4,651,287,000 4,851,702,000 5,213,107,000

Asset Turnover = 21,746,692,000
= 22,238,963,500
= 22,227,880,000

= 0.21 = 0.22 = 0.23

22,204,824,000 22,273,103,000 22,182,657,000

Financial = 8,715,746,000
= 9,140,726,000
= 9,325,376,000
Leverage

= 2.55 = 2.44 = 2.38

ROE = 0.05 x0.21 x 2.55 = 0.15 x 0.22 x 2.44 = 0.1 x 0.23 x 2.38

= 2.68 = 8.05% = 5.47%

Table 3.6: Data Du Pont analysis of Malaysia Airport Holding Berhad 2017-2019

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 Graph 3.6: Du Pont analysis time series of Malaysia Airport Holding Berhad
2017-2019

Table 3.6 shows the comparisons of Return On Equity ROE that we used to analyze
Malaysia Airport Holding Berhad data for the 3 consecutive years of 2017,2018 and 2019.
The results show that ROE increased from 2017 to 2018 from 2.68% to 8.05% while a
decrease in 2019, down 5.47%. This is due to changes in the three components of the Du
Pont analysis namely profit margin, asset turnover and financial leverage that we can look
at the financial condition of the company in greater depth. For the three years, the profit
margin showed an increase and a decrease of 5.17% (2017) to 14.99% (2018) and a
decrease of 10.30% for 2019. This indicates that profit margin in 2018 was most efficient.
Looking at asset turnover, there has been an increase of 0.21, 0.22 and 0.23 for
2017,2018 and 2019 which in 2019 is the most favorable situation in which companies
use assets for generating revenues or sales to the company. Financial leverage for
Malaysia Airport Holding Berhad showed a decrease of 2.55 in 2017 to 2.44 and 2.38
respectively in 2018 and 2019. Financial leverage is an indirect analysis of a company's
use of debt to finance its assets and for this company, the good financial leverage is in
2019

19
 4. CROSS SECTIONAL ANALYSIS

4.1 Liquidity Ratio

MISC MAHB MISC MAHB MISC MAHB

2017 2017 2018 2018 2019 2019

Current Ratio 1.033 1.515 1.281 1.999 1.426 1.339

Quick Ratio 1.013 1.452 1.249 1.939 1.405 1.286

Cash Ratio 0.582 0.581 0.711 0.68 0.736 0.442

Table 4.1: Data for Liquidity ratios of MISC Berhad and Malaysia Airport Holding Berhad

Grap 4.1: Data for Liquidity ratios of MISC Berhad and Malaysia Airport Holding Berhad

Cross-Sectional analysis is an analysis used to compare a particular company to its

competitor in the same industry or from an industry-wide approach. Liquidity
cross-sectional analysis is used in this aspect to compare MISC ability to pay its short
term debts against Malaysia Airport Holding Berhad, fist we can observe that MAHB
liquidity ratios rates are higher both for current and Quick ratios, unlike the cash ratio that
is slightly higher for MISC during the period 2017 and 2018, opposed to 2019 where all
ratios (current, Quick and cash) shows that MAHB is slightly less liquid compared to
MISC. By comparing the liquidity ratios of both companies, we can note that MAHB have
better ability to meet their current liabilities, although both companies are doing quite good
for the payment of debts within one year period.

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 4.2 Activity Ratio

MISC MAHB MISC MAHB MISC MAHB

2017 2017 2018 2018 2019 2019

Inventory Turnover 34.1 3.12 25.8 3.29 37.5 2.56

Accounts Receivable 2.419 6.13 2.222 3.78 2.281 5.35

Turnover

Total Asset Turnover 0.2 0.21 0.17 0.22 0.173 0.23

Table 4.2: Data for Activity ratio for MISC Berhad and Malaysia Airport Holding Berhad for
2017-2019

Graph 4.2: Graph for Activity ratio for MISC Berhad and Malaysia Airport Holding Berhad for
2019

Activity cross-sectional analysis for MISC and MAHB is performed to determine which one of
the above mentioned companies’ operations is more efficient by comparing their activity
ratios to each other. The inventory turnover ratio for MISC is dramatically higher during the
three consecutive years 2017,2018 and 2019, which is an indicator of a higher sales and
more efficient employment of the inventories. The account receivable turnover ratio is
significantly higher for MAHB, as per opposite of inventory turnover, in 2017 and 2019 and
slightly higher in 2018 compared to MISC, which reflect a better collection process and credit
policies of Malaysia Airport Holding Berhad. In 2017, 2018 and 2019 the total asset turnover
is vaguely higher for that of MAHB relative to MISC which implies that MAHB is using its
assets more efficiently than MISC.

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 4.3 Leverage Ratio

MISC MISC MISC MALAYSIA MALAYSIA MALAYSIA

BERHAD BERHAD BERHAD AIRPORT AIRPORT AIRPORT
2019 2018 2017 HOLDING HOLDING HOLDING
BERHAD BERHAD BERHAD
2019 2018 2017

Debt to Assets 161101.1 15701.2 14565.0 12857281 13132377 13489078

51863.8 52065.3 50469.8 22182657 22273103 22204824
T otal Liabilities = 0.31 = 0.3 = 0.29 =​0.58 =0.59 =0.61
T otal Assets

Debt to Equity 161101.1 15701.2 14565.0 12857281 13132377 13489078

T otal Liabilities 357537.1 36364.1 35904.8 9325376 9140726 8715746
Common Stock Equity =0.45 =0.43 =0.41 =1.38 =1.44 =1.55
Times Interest 1512.3 1344.1 2003.6 659151 780592 338795
Earned Ratio 484 395 245 724515 732745 714071
Earnings Bef ore T ax =3.12 =3.4 =8.2 =0.91 =1.07 ​=0.47
Interest Expense
Table 4.3: Data for leverage ratio of MISC Berhad and Malaysia Airport Holding Berhad

Table 4.3: Data for leverage ratio of MISC Berhad and Malaysia Airport Holding Berhad

The table above shows the leverage ratio for MISC Berhad and Malaysia Airport
Holding Berhad company in three years 2017,2018 and 2019. For debt to assets and debt
to equity show that Malaysia Airport Holding Berhad have greater value which is 0.58 for
debt to asset in 2019, 0.59 in 2018 and 0.61 in 2017. While 1.38 for debt to equity in
2019, 1.44 in 2018 and 1.55 in 2019, compared to MISC Berhad which is less value for
debt to assets 0.31 in 2019, 0.3 in 2018 and 0.29 in 2017. While debt to equity 0.45 in
2019, 0.43 in 2018 and 0.41 in 2017. The greater value shows that companies can handle

22
 their debt well. The times interest earned ratio that MISC Berhad is better to fulfill its
interest obligations with 3.12 in 2019, 3.4 in 2018 and 8.2 in 2017 compared to Malaysia
Airport Holding Berhad with 0.91 in 2019, 1.07 in 2018 and 0.47 in 2017.

4.4 Profitability Ratio

2017 2018 2019

MISC Malaysia MISC Malaysia MISC Malaysia

Berhad Airport Berhad Airport Berhad Airport
Holding Holding Holding
Berhad Berhad Berhad

Gross Profit 3,301,717 4,203,361 2,332,751 4,430,359 2,747,136 1,234,157

Margin 10,068,212 4,652,338 8,870,275 4,851,702 8,962,724 1,344,429
​Gross Profit = 0.328/32.8 = 0.903/ 90.3 = 0.266/ 26.6 = 0.913/ = 0.307/ = 0.918/ 91.8
Sales 91.3 30.7

Net Profit 1,981,509 236,486 1,311,503 727,303 1,426,355 29,513

Margin 10,068,212 4,652,338 8,780,275 4,851,702 8,962,724 1,344,429
​EACS = 0.197/ = 0.051/ 5.1 = 0.150/ 15.0 = 0.15/ 15 = 0.160/ = 0.222/2.2
Sales 19.7 16.0

Operating 2.003,580 334,485 1,344,113 780,592 1,512,323 46,146

Profit Margin 10,068,212 4,652,338 8,780,275 4,851,702 8,962,724 1,344,429
​EBIT = 0.199/ = 0.072/ 7.2 =0.153/ 15.3 = 0.161/ =0.169/ = 0.034/ 3.4
Net Sales 19.9 16.1 16.9

Earning Per 1,981,509 179,598 1,311,503 669,803 1,426,355 15,020

Share 4,463,794 1,659,192 4,463,794 1,659,192 4,463,794 1,659,192
​EACS = RM 44.40 = RM 10.80 = RM 29.4 = RM 40.4 = RM 32.0 = RM 0.91
Shares
outstanding

Return on 1,981,509 236,486 1,311,503 727,303 1,426,355 29,513

Asset 50,469,803 22,495,643 52,065,300 22,273,103 52,065,300 22,182,657
​EACS = 0.039/ 3.9 = 0.0105/ = 0.025/ 2.5 = 0.033/ 3.3 = 0.027/ 2.7 = 0.0013/
Total Asset 1.05 0.13

Return on 1,981,509 236,486 1,311,503 727,303 1,426,355 29,513

Common 34,894,198 9,009,157 35,351,149 9,140,726 34,727,192 12,857,281
Equity = 0.057/ 5.7 = 0.026/ 2.6 = 0.037/ 3.7 = 0.080/ 8.0 = 0.041/ 4.1 = 0.0023/
​EACS 0.23
Total Equity
Table 4.4: Data for profitability ratio of MISC Berhad and Malaysia Airport Holding Berhad

MISC Berhad gross profit margin had a decrease in the year 2018 from 32.8% to 26.6%.
However for Malaysia Airport Holding Berhad, they were able to maintain the increase of

23
 the gross profit margin for 3 years. As for the net profit margin for MISC Berhad, they had a
decrease from the year 2017 to 2018 while Malaysia Airport Holding Berhad have a
different data where it increased from the year 2017 to 2018. In 2019, both have an
opposite reaction as well where MISC Berhad had an increase while Malaysia Airport
Holding Berhad had a decrease. The operating profit margin for MISC Berhad decreased in
2018 from 19.9% to 15.3% and then increased in 2019 to 16.9%. Malaysia Airport Holding
Berhad had a different outcome, where it had an increase in 2018(16.1%) and then
decrease in 2019(3.4%). MISC’s earnings per share had a similar outcome as their
operating profit margin decreased in the year 2018(RM 29.40) and increased again in the
year 2019(RM 32). The same goes to Malaysia Airport Holding Berhad where in 2018 it is
RM 40.40 and it had a huge drop to RM 0.91 in 2019. MISC's return on asset and return in
common equity has a similar result where it decreased in 2018 and increased in 2019. As
for Malaysia Airport Holding Berhad, it is also similar with its return on assets and return on
common equity where it increased in the year 2018 and decreased in 2019.

4.5 Market Ratio

Market Ratio 2017 2018 2019

MISC Malaysia MISC Berhad Malaysia MISC Berhad Malaysia

Berhad Airport Airport Airport
Holding Holding Holding
Berhad Berhad Berhad

Price earning per 16.64 46.26 22.69 12.36 26.00 17.27

ratio

market price per shar

earning per share

Book value per 8,923,262 1,659,192 RM 8,923,262 5,114,341 8,923,262 5,114,341

share 4,463,794 1,659,192 4,463,794 1,659,192 4,463,794 1,659,192

=2.0 =3.08 =2.0 =3.08 =2.0 =3.08

total common stock
number of share

Market to book RM 7.391 RM 8.55 RM 6.674 RM 8.30 RM 8.317 RM 7.69

ratio 8.5 6.89 6.95 8.34 7.9 7.8

market value per shar =0.87 =1.24 =0.96 =0.99 =1.05 =0.98
book value per share

Table 4.5: Data for market ratio of MISC Berhad and Malaysia Airport Holding Berhad

24
 Graph 4.5: Graph for market ratio of MISC Berhad and Malaysia Airport Holding
Berhad

Cross sectional analysis had been done to compare the performance of MISC
Berhad and Malaysia Airport Holding Berhad. Ratio that had been calculated are price
earnings ratio per share, book value per share and also market book ratio. For price
earnings ratio per share MISC Berhad has the higher than Malaysia Airport Holding Berhad
in 2019 with 26.00 meaning that each RM 1 of stock suffered a profit of RM20.42.
Meanwhile Malaysia Airport Holding Berhad has 17.27 giving profit of RM 17.27 profit per
stock in 2019. The increase in LNG Carriers in Operation has affected the revenue for
MISC Berhad and it makes them increase in revenue. For book value per share, with 2.0
MISC Berhad has the lower ratio than Malaysia Airport Holding Berhad(3.08). Last is the
Market book ratio, where MISC Berhad has a higher ratio than Malaysia Airport Holding
Berhad. Market ratio can be used to measure whether the stock for a company is
undervalued or overvalued by comparing the market book ratio to book value per share.
The value of stock for MISC Berhad is undervalued as their market book ratio is lower than
book value per share. The same happened with Malaysia Airport Holding Berhad as their
stock is undervalued with a market book ratio lower than their book value per share. They
need to do something before they lose the confidence of the public and investors toward
their company.

25
4.6 Du Pont Analysis

2017 2018 2019

MISC Berhad 5.2% 3.84% 3.94%

Malaysia Airport Holding 2.63% 8.05% 5.47%

Berhad

Table 4.6: Data of Du Pont analysis of MISC Berhad and Malaysia Airport Holding Berhad
for 3 years period.

Graph 4.6: Cross sectional analysis for MISC Berhad and Malaysia Airport Holding
Berhad for 2017, 2018 and 2019.

Table 4.6 shows the comparative data of two transportation and logistic sector
companies namely MISC Berhad and Malaysia Airport Holding Berhad for the three
consecutive years of 2017, 2018 and 2019. Refer to graph 4.6, MISC Berhad shows the
fundamental level of performance of the company is very efficient against Malaysia
Airport Holding Berhad for 2017. However, there has been a change in the next two
years where the level of fundamental performance of Malaysia Airport Berhad is more
efficient than MISC Berhad especially in 2018. This is because, despite Malaysia Airport
Holding Berhad increasing and declining on profit margin, it could reduce some of its
debt compared with MISC Berhad where its debt is increasing slightly for this 3 years
performance.

26
5. RECOMMENDATION AND CONCLUSION

Based on the analysis performance of MISC Berhad and Malaysia Airport Holding Berhad,
there are several recommendations to increase and improve the level of performance of the
company which is to increase the return on equity of the company.

5.1 ​ ​Increase profit margins.

This profit margin is one of the components that supports equity returns where profitability
increases as profits increase. Selling more products is not an obligation of profitability.
Benefits can be increased by raising the price of each product or service, lowering the cost
of goods sold, lowering the cost of overhead or combinations. When the profit margin is
better, net income also is better and subsequently can improve the return on equity. The
increase in profit margin is very important for the ratio and it helps to improve when the entity
could improve production systems and well as the costing system of the entity.

5.2 Improve asset turnover.

Company’s efficiency can be measured by asset turnover dimana revenue divided by

company’s total assets. It can be more revenue for a company when relative to its assets
and the more profitable should be produced. In fact, this way can make a higher return on
equity to earn. For example, the assets turnover high that mean assets are effectively used
or in other words the assets produce the good quantity of products with the high among. The
improved assets turnover can improve both gross profit and net profit since the cost of
products are low while the price could be increased due the quality of products.

5.3 Use the more financial leverage

The company can finance themselves with the debt and equity capital and by increasing the
amount of debt capital relative to equity capital, the company can increase their return on
equity. But leverage is something that the company needs to handled it with carefully
because the increasing debt can drives up the interest payments on corporate loans and in
the reality the debt financed company will be likely to earn a smaller after-tax profit than an
equity-financed company because of the due to payment of interest expenses of the loan. In
addition, when the company borrows aggressively, the ROE will increase largely especially
when the company uses the debt to buy back their own stock. These taking debt forces the
ROE to increase significantly but this cannot represent the actual growth rates or

27
performances of the company. Nonetheless, Financial leverage can help to improve the
return on equity for the company as long as the cost of the debt is not spiraling out of control.

As a conclusion, financial analysis determines the health and stability of a company, giving
insight into how the company operates their business. But it's important to know that
financial statements analysis also has its limits. Different accounting methods used by
different companies change the level of health and profit that looks good or worse. Different
analysts might get different results from the same information. Therefore, we must conclude
that financial statements analysis is just one of the tools in making investment decisions.
Liquidity ratio shows that MISC Berhad is highest compared to the Malaysia Airport
Holding Berhad in current ratio, quick ratio and also in cash ratio. In activity ratio, Malaysia
Airport Holding Berhad shows that they are higher than MISC Berhad in Accounts receivable
turnover and total asset turnover. But for inventory turnover, MISC Berhad is higher than
Malaysia Airport Holding Berhad. For leverage ratio, Malaysia Airport Holding Berhad is
higher than MISC Berhad in Debt to assets and debt to equity. But for the times interest
earned ratio show that MISC Berhad is higher than Malaysia Airport Holding Berhad. For the
profitability ratio MISC Berhad and Malaysia Airport Holding Berhad show opposite
directions. In gross profit margin, MISC Berhad showed decrease meanwhile Malaysia
Airport Berhad increased in these 3 years period. The net profit margin, operating profit
margin and earning profit margin show the same data which is MISC Berhad has decreased
and Malaysia Airport Holding Berhad has increased in 2018 meanwhile in 2019, MISC
Berhad has increased and Malaysia Airport Berhad has decreased. For return on asset and
return in common equity has similar effect which is MISC Berhad has decreased in 2018 and
increased into 2019, but for Malaysia Airport Holding Berhad show the opposite direction on
these 3 years. In the comparison of market ratio with this two company in the transportation
and logistic industry, MISC Berhad has show higher than Malaysia Airport Holding Berhad in
the price earning per share and market ratio but in the book value per share, Malaysia
Airport Holding Berhad has show that their are higher than MISC Berhad. As we can see, by
using the Du Pont analysis which used the ROE we can make the analysis between MISC
Berhad and Malaysia Airport Holding Berhad for these 3 years period. From the comparison,
we can assume that Malaysia Airport Holding Berhad has better performance compared to
MISC Berhad.

28
 6. REFERENCE

News, W. M. (2020, February 20). MISC Reports Revenue Rise due to More LNG Carriers in
Operation. Retrieved from
https://www.offshore-energy.biz/misc-reports-revenue-rise-due-to-more-lng-carriers-in-operat
ion/

Kenton, w. 2020. ​ ​Investopedia.​Activity Ratios Definition.​ Retrieved from

https://www.investopedia.com/terms/a/activityratio.asp

Bragg, S. 2018. ​AccoutingTools.​ ​Liquidity ratios​. Retrieved from

https://www.accountingtools.com/articles/2017/5/13/liquidity-ratios

Chen, J. 2019. ​Cross-Sectional Analysis. Investopedia. Retrieved from

https://www.investopedia.com/terms/c/cross_sectional_analysis.asp

MISC GROUP RECORDS HIGHER REVENUE AND PROFIT BEFORE TAX FOR THE 9
MONTHS PERIOD ENDED 30 SEPTEMBER 2019. (2019, November 13). Retrieved from
https://www.misc.com.my/media/252788/misc-group-records-higher-revenue-and-profit-befor
e-tax-for-the-9-months-period-ended-30-september-2019docx.pdf

Malaysia – Saudi Collaboration Taps Into Technology To Ease Haj Pilgrims Movement |
Malaysia Airports Holdings Berhad (MAHB). (2020). Retrieved 7 June 2020, from
https://www.malaysiaairports.com.my/media-centre/news/malaysia-saudi-collaboration-taps-t
echnology-ease-haj-pilgrims-movement

29
7. APPENDIX

1. Turnitin Report 19%

30
2. Malaysia – Saudi Collaboration Taps Into Technology To Ease Haj Pilgrims
Movement

3. MISC Reports Revenue Rise due to More LNG Carriers in Operation

31
4. MISC Sdn Bhd financial statements

32
33
34
35
5. Malaysia Airports Holding Berhad Financial Statements

36
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