1.Executive Summary . .. 2
2.Company Overview . .... 3 3.Non-financial Analysis . .. 5 3.1Market and Industry Overview 6
3.2Corporate Governance . ... 6
3.3Board of Directors . 6
3.4Internal Control and Risk Management .... . .. 6
3.5Environmental, Safety and Health .. . 7
3.6Corporate Social Responsibility ... 7
4.Financial Analysis . ... . 8 4.1Profitability Ratios
4.1.1Net Profit Margin .. 8
4.1.2Return on Assets (ROA) . 9
4.1.3Return on Equity (ROE) . . ...13
4.2Activity/Working Capital Ratios
4.2.1Average Collection Period Ratio.. ....14
4.2.2Inventory Turnover Ratio . 15
4.3Debt/Financial Leverage Ratios
4.3.1Debt Performance Ratio . ..16
4.3.2Interest Cover Ratio .17
4.4.1Current Ratio ..18
4.4.2Quick (Acid Test) Ratio .19
4.5Market Related Ratios
4.5.1Earnings per Share (EPS) 20
4.5.2Earnings Yield Ratio 21
4.5.3Price-earning (P/E) Ratio 22
4.5.4Dividend Yield Ratio 23
4.5.5Dividend Coverage Ratio .24
4.5.6Dividend Payout Ratio 25
4.6 Segment Analysis
4.6.1Revenue and EBIT
4.6.3Return of Assets (ROA)
4.6.4Debt Performance Ratio
5.Conclusions and Recommendations ..26 6. References .... ..2 7. Appendix
1.0 Executive Summary
Sime Darby Group is one of the largest and oldest conglomerates in Asia-Pacific. An analysis was done to identify the potential of the company in the perspective of an investor. The analysis was divided into two sections which are non-financial and financial aspects of the company.
In the non-financial section, we have included the following:
a.A company overview of Sime Darby which provides details on its diversity of business. In addition, the market overview identifies the political, economic, social and technology factors which are related to its business.
b.Directors' profiles which determine the competency of the Board to manage and to ensure the profitable growth of the company.
c.Corporate Governance, Internal Control and Risk Management to ensure the credibility of its financial reporting and to gauge its sustainability in the fast changing economic environment.
d.Environment & Social Responsibility policy which determines the long term commitment towards the Malaysia's welfare and interest.
In the financial section, Sime Darby's performance was analyzed by the following approach:
a.Key financial ratio such as Profitability, Working Capital, Debt, Liquidity and Market ratios was used on its Annual Reports for 4 years (2002-2005).
b.Sime Darby was benchmark with IOI Corporation due to its similarity on its plantation and property development segments. Moreover, IOI Corporation has been a well performed company in Bursa Malaysia and was rated "Top Plantation Stock" by Mayban Securities Research (The Edge Daily, Mayban Research: IOI Corp top plantation stock)
In the final section, conclusions and recommendations to potential investors was included.
2.0 Company Overview
Sime Darby was founded in 1910 as Sime, Darby & Co Limited involves in plantation sector and has evolved to become a largest conglomerate in Malaysia. It was later incorporated under Sime Darby Berhad in 1979.
Sime Darby's core businesses are organized into five groups: plantations, property, heavy equipment, motor and energy (oil & gas). Besides that, it has other secondary businesses which are in manufacturing, travel and tourism and healthcare. The Group is in the process of rationalizing and streamlining its activities by disposing of non-core assets and strengthening its core businesses.
In addition, Sime Darby has put much focus in its brand management leveraging of its more than 95 years of...