Beruflich Dokumente
Kultur Dokumente
Introduction
Asia Poly Holdings Bhd (ASPY) is A-Cast cast acrylic sheet manufacturer and is among the top
choice for worlds leading brands. The company had applied a loan of RM 7,500,000 with loan tenure of
5 years from the Bank. ASPY intends to expand its production capacity by building a new facility which
would include a new plant, fittings and machineries to cope with the increasing demand of A-Cast
sheets.
2.0
Company Profile
2.1
Name of Company
Asia Poly Holdings Berhad
2.2
Date of incorporation
1st January 2003
2.3
Duration of existence
Approximately 14 years
2.4
The principal activity of company is manufacturing cast acrylic sheet wide range
colours, surfaces and finishes ranging from sanitary ware, fluorescent, silk, glass
look to opals.
The subsidiary of the group involves in research and development to develop new
products and services to keep the company a step ahead within the competitive
market and make it cost effective for the company.
2.5
Sheet is manufactured from 100% Virgin Methyl Methacrylate Monomer (MMA). The
cell-casting method used maximizes the chemical resistance and mechanical properties of
the acrylic sheets, making them suitable for indoor and outdoor applications. The
application includes building applications, food industry, domestic applications, transport,
medical applications and miscellaneous applications.
The company headquarters is in Malaysia at Klang, Selangor. After initiating its sales of
A-Cast in Asia Pacific region, increased production and demand require Asia Poly to
broaden its product internationally. Continuous research and development leads to
improved A-Cast product assortment capability, improved existing marketing
relationships, and attracting new customers. Despite the fire that destroyed the factory
completely in December 2007, with the help of excellent management and significant
investment in R&D, Asia Poly Industrial quickly re-established itself as premier
manufacturer of cell cast acrylic sheet in Malaysia 2 years later. The rapid growth of
business since 2009, supported by new and old customer bear testament to quality of ACast product and service shown that Asia Poly always putting customer satisfaction
first by conducting continual improvement in its product quality and production
efficiency.
2.6
2.7
Capital Structure
2.7.1 Authorized Capital
RM 10,000,000 from ordinary shares of RM 0.10 each.
2.7.2 Paid up Capital
RM 8,791,496 from ordinary shares of RM 0.10 each
2.8
No.
Directors
Position
3
4
2.9
Chairman /
Independent NonExecutive Director
Chief Executive
Officer
Executive Director
Executive Director
Independent NonExecutive Director
Independent NonExecutive Director
280,000
777,500
20,000,000
500,014
-
4,263,000
Senior Management
Name
Hans Peter Holst
Position
Chairman / Independent
Non-Executive Director
Summary
Danish, age 69
Appointed to BOD of Asia Poly as
Independent Non-Executive Chairman,
Accountancy in 2010.
Other qualification includes Alpha Certificate,
INSEAD in 1987 and Logisics-Projects
Remuneration Committee
In charge of Groups operation, management
of over 20 years
Started as Business Executive with Sumitomo
Corporation in 1980. During his tenure as
Senior Manager of Business Development
with Sumitomo Corp (KL), he successfully
initiated and developed business in areas such
as export and domestic markets for chemical
based products, food products, wires, animal
feed, fatty acids and palm oil and its
derivative products for both export and local
Executive Director
markets.
Malaysian , age 52
Appointed to the BOD of Asia Poly as
Independent Non-Executive Director and
subsequently redesignated as Executive
Director on 29th May 2006 and also a member
The table shown above summarizes the three important people in Asia Poly Holdings Berhad that make
important decisions that will affect the growth of the company. Based on their experience and knowledge,
this shows that Asia Poly Holdings Berhad is in good hands.
2.10
The table shown the page before is the financial performance of Asia Poly Holdings Berhad for
the past 3 years to show the financial status of ASPLY is a standard operating procedure to evaluate the
companies for loan appraisal. The current ratio of the company is below the benchmark of 2 which is not
favourable and ratio of 0.9549 is shows that the company is having difficulty meeting current
obligations but this does not mean that it will go bankrupt. Compared to the past 2 years, the current
ratio of the company is improving over the time from 0.8731 (2011) to 0.8999(2012) and to 0.9549
(2013). Improved current ratio over time means the company ability to make payment has also
improved.
Quick ratio measure the ability of company to settle its current liabilities on short notice. As for
Asia Poly, quick ratio of less than 1 for 3 years consecutive indicates that company cannot currently
fully pay back its current liabilities. Because Asia Poly is a manufacturing company for plastic product,
the industry standard for quick ratio is 0.6 and the ratios calculated for the 3 years is all lower than the
industry standard. Quick ratio which is lower than the industry average may suggest that the company is
taking too much risk by not maintaining an appropriate buffer of liquid resources. Alternatively, a
company may have a lower quick ratio due to better credit terms with suppliers than the competitors.
Asia Poly working capital shows a negative figure for the past 3 years explains that uncertainty of ability
to repay its current liability in short term. However, if a company is growing, this can be the most
advantageous working capital position because it literally coins money for the company. Due to some
circumstances, Asia Poly is in their recovery period and still growing after the fire incident happened
back in 2007 that burn the factory completely and later fully reinstate their production in 2009.
The inventory turnover ratio shows the efficiency of management of inventory. The inventory
turnover ratio improved yearly from 4.89 times in 2011 to 5.77 times in 2013. Compared to industry
average inventory turnover of 5.4 times, Asia Poly may seem to not able to reach the industry average
for in 2011 but in 2012 and 2013, Asia Poly inventory turnover ratio is higher than the industry. This
shows that demand of Asia Polys cast acrylic demand are slowly increasing. Aside from that, the
inventory turnover days is improving from 75 days in 2011 to 63 days in 2013. This means that it take
shorter time to sell the stock, which is good news to Asia Poly. Besides that, the average collection
period is also one of the important ratios to look at in order to determine the efficiency of the company
in collecting the receivables. The collection period had decreased 23 days from 91 days to 68 days but
increased back to 88 days in 2013.Although the average collection period is not stable, but it is still
within the company standard credit period of 30 to 90 days.
As for the profitability ratio, the company gross profit-sales ratio as well as the net profit ratio
has increased tremendously especially from year 2011 to 2012. Asia Poly records a meagre 1.24% of
gross profit ratio and a negative ratio for net profit in year 2011, but improved a lot in 2012 and 2013.
The gross profit ratio jumped above 20% (20.07% in 2012 and 24.44% in 2013), while the net profit
9
ratio recorded both positive figure in year 2012 and 2013. Although the gross profits improved by more
than 20 percent, the net profit figure is relatively small compared to the improvements made in 2012 and
2013. This can be explained by the price increases obtainable from domestic and export customers
lagged behind the absorption of cost increases imposed by the company especially on ingredient
suppliers. Aside from that, Asia Poly was facing managing the absorption of minimum wage increase
mandated by the Government of Malaysia. Compared to industry benchmark of 32%, Asia Poly gross
profit is still lower than the benchmark. Reason being is the company is recovery period, and this can be
seen by observing the gross profit ratios are improving as the years goes.
Leverage ratio helps to assess the risk arising from the use of debt capital. The debt to equity ratio
shows how much the company is financed by debt compared to the proprietors own investment in
business. The ratio had increased from 0.0750 in 2011 to 0.0896 in 2013. This shows the ratio is
increasing slowly due to the fact that Asia Poly are conducting more R&D and purchased machineries to
develop the polymerization process to study the thermoforming performance of acrylic sheet. Aside
from that sophisticated laboratory equipment was installed to control the finished products to meet
customers general and unique requirement and to comply with the international standards. Machineries
purchased were under hire-purchase agreement. Interest coverage ratio explains the ability of company
to generate revenue to cover its interest expenses. The interest coverage ratio for 2011 and 2012 was not
satisfactory while in 2013, Asia Poly records 1.7 which is above the ideal figure of 1.5. As mentioned
before, Asia Poly is still growing and recovering from the fire incident.
10
The main purpose of this project is that ASPL intends to expand its production capacity to meet the increasing
demand of cast acrylic sheets in the market. Asia Poly is famous for not compromising their quality by using
only 100% virgin material sourced exclusively by reputable suppliers, explains the reason for being top
choice material to world leading brand such as Adidas and McDonalds. Asia Poly needs to increase its
production capacity with the intention of coping to be able to meet the high demand of cast acrylic in the
market. In addition, Asia Poly always conduct research and development (R&D) to achieve the higher quality
of the cast acrylic at the lowest overall cost at better efficiency rate. The proposed project of building new
facility would include R&D center in the new factory.
4.3 Particulars of the land
Title no.
Lot no
Mukim
:
:
:
GM 2277
758
Kapar
11
Land area
Ownership
Land condition
Encumbrances
:
:
:
:
5.0
Land
Renovation Cost
Machinery Cost
Labour Cost
Material Cost
Total Cost
5.2
RM
1,000,000
6,000,000
1,000,000
500,000
1,000,000
9,500,000
RM 7,500,000
Company's Equity
RM 2,000,000
12
RM 9,500,000
The remaining cost of project of RM 2 million would be bear by Asia Poly through its cash and
bank balances as of year 2013. The remaining cost of RM 2 million is bear by the company to
show that the company has the same commitment into the proposed project.
5.3
Year
0
1
2
3
4
5
Projected Outflow
(RM)
(9,500,000)
(3,000,000)
(2,034,342)
(1,980,234)
(1,800,345)
(1,435,223)
Projected Inflow
(RM)
Nil
5,000,000
5,500,000
5,775,000
6,352,500
7,305,375
Total
The proposed project will take one year to complete and commission. Therefore, for the first year
there is only outflow amounting RM 11,000,000 which is the total cost of the project. The company
will only start to generate cash inflow or revenue when the factory commence in year 1 onwards.
The projected total net cash flow at end of year 5 will be RM 10,182,731.
5.3.1
NPV
RM 9,500,000+
= RM 6,200,0753.97
Decision Rule :
NPV > 0, therefore proposed project can be approve.
5.3.2
14
6.0
Capacity
6.1
Repayment of loan
6.1.1 Altmans Z-Score model
Altmans Z-Score Formula :
Z = 1.2X + 1.4X + 3.3X + 0.6X + 1.0X
X = Working Capital
Total Assets
Equals
RM
2013
-1,520,748
58,166,757
-0.0261
RM
2012
-3,586,563
59,065,063
-0.0607
RM
2011
(4,397,567)
57,270,188
-0.0768
X = Retained Earnings
Total Assets
Equals
9,408,446
58,166,757
0.1617
8,487,775
59,065,063
0.1437
8,012,922
57,270,188
0.1399
1,666,246
58,166,757
0.0286
860,640
59,065,063
0.0146
(677,446)
57,270,188
-0.0118
16,703,842
35,743,855
0.4673
16,703,842
35,838,950
0.4661
16,703,842
36,242,810
0.4609
X = Sales
Total Assets
Equal
77,704,663
58,166,757
1.3359
79,784,896
59,065,063
1.3508
61,953,160
57,270,188
1.0818
1.91
1.81
1.42
Variables
Z Score
X
X
X
X
=
=
=
=
Altman defines a zone of ignorance, a grey area, when the model produces a z-value 1.81 2.99,
where the model is unable to distinguish a bankrupt from a non-bankrupt firm.
In order to calculate the monthly installment, the mortgage constant needs to be calculated using
the formula of:
Mortgage constant
1( 1+r )
5 x 12
0.08
)
12
0.08
12
1(1+
= 0.02027639429
Where r is the interest rate charged on the loan which is 8 % per annum. The monthly
repayment (PMT) is then calculated using the following formula:
PMT = Amount of mortgaged loan X Mortgage Constant
= RM 7,500,000 x 0.02027639429
= RM 152,072.96
Therefore, Asia Poly would have to repay the Bank RM 152,072.96 monthly for the next
5 years in order to take up the loan of RM7, 500,000 from the Bank. The monthly
payment schedule is attached at the following page.
6.2
Tenure of Loan
5 years
6.3
Source of Repayment
The proposed new facility is said to take 1 year to complete. This can be seen in the
projected cash flow where there is no cash inflow in year 0 due to the fact that the new
17
facility is still under construction. On the other hand, the expenses incurred in year 0
which will amount to RM9, 500,000 and to top of that, the expenses of monthly
repayment of the loan will be covered by the company existing cash flow. After going
through the relevant financial ratios and doing the necessary analysis on Asia Poly, the
result were favorable and shows that the company will not have any problem making the
monthly repayment and conducting the business as usual during the year of construction.
The income and profit of the company will be able to cover the expenses and repay the
monthly installment of RM 152,072.96 for 5 years to the bank.
Once the construction of the factory is completed and the factory starts its production, the
company will be able to earn positive net cash flow that will be enough to cover the
installment payment to the bank.
6.4
18
Month
Beginning
Balance (RM)
Monthly
Repayment
(RM)
Interest
Expense
(RM) (8 %)
19
Ending
Principal
Balance
Payment (RM)
(RM)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
7,500,000.00
7,397,927.04
7,295,173.59
7,191,735.12
7,087,607.07
6,982,784.82
6,877,263.76
6,771,039.22
6,664,106.52
6,556,460.94
6,448,097.72
6,339,012.08
6,229,199.20
6,118,654.23
6,007,372.30
5,895,348.49
5,782,577.85
5,669,055.41
5,554,776.16
5,439,735.04
5,323,926.98
5,207,346.86
5,089,989.55
4,971,849.85
4,852,922.56
4,733,202.42
4,612,684.14
4,491,362.41
4,369,231.86
4,246,287.11
4,122,522.74
3,997,933.26
3,872,513.19
3,746,256.98
3,619,159.07
3,491,213.84
3,362,415.64
3,232,758.78
3,102,237.55
2,970,846.17
2,838,578.85
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
50,000.00
49,319.51
48,634.49
47,944.90
47,250.71
46,551.90
45,848.43
45,140.26
44,427.38
43,709.74
42,987.32
42,260.08
41,527.99
40,791.03
40,049.15
39,302.32
38,550.52
37,793.70
37,031.84
36,264.90
35,492.85
34,715.65
33,933.26
33,145.67
32,352.82
31,554.68
30,751.23
29,942.42
29,128.21
28,308.58
27,483.48
26,652.89
25,816.75
24,975.05
24,127.73
23,274.76
22,416.10
21,551.73
20,681.58
19,805.64
18,923.86
20
102,072.96
102,753.45
103,438.47
104,128.06
104,822.25
105,521.06
106,224.53
106,932.70
107,645.58
108,363.22
109,085.64
109,812.88
110,544.97
111,281.93
112,023.81
112,770.64
113,522.44
114,279.26
115,041.12
115,808.06
116,580.11
117,357.31
118,139.70
118,927.29
119,720.14
120,518.28
121,321.73
122,130.54
122,944.75
123,764.38
124,589.48
125,420.07
126,256.21
127,097.91
127,945.23
128,798.20
129,656.86
130,521.23
131,391.38
132,267.32
133,149.10
7,397,927.04
7,295,173.59
7,191,735.12
7,087,607.07
6,982,784.82
6,877,263.76
6,771,039.22
6,664,106.52
6,556,460.94
6,448,097.72
6,339,012.08
6,229,199.20
6,118,654.23
6,007,372.30
5,895,348.49
5,782,577.85
5,669,055.41
5,554,776.16
5,439,735.04
5,323,926.98
5,207,346.86
5,089,989.55
4,971,849.85
4,852,922.56
4,733,202.42
4,612,684.14
4,491,362.41
4,369,231.86
4,246,287.11
4,122,522.74
3,997,933.26
3,872,513.19
3,746,256.98
3,619,159.07
3,491,213.84
3,362,415.64
3,232,758.78
3,102,237.55
2,970,846.17
2,838,578.85
2,705,429.75
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
7.0
2,705,429.75
2,571,392.99
2,436,462.65
2,300,632.77
2,163,897.36
2,026,250.39
1,887,685.76
1,748,197.37
1,607,779.06
1,466,424.63
1,324,127.83
1,180,882.39
1,036,681.98
891,520.24
745,390.74
598,287.06
450,202.68
301,131.07
151,065.65
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
152,072.96
18,036.20
17,142.62
16,243.08
15,337.55
14,425.98
13,508.34
12,584.57
11,654.65
10,718.53
9,776.16
8,827.52
7,872.55
6,911.21
5,943.47
4,969.27
3,988.58
3,001.35
2,007.54
1,007.10
134,036.76
134,930.34
135,829.88
136,735.41
137,646.98
138,564.62
139,488.39
140,418.31
141,354.43
142,296.80
143,245.44
144,200.41
145,161.75
146,129.49
147,103.69
148,084.38
149,071.61
150,065.42
151,065.86
2,571,392.99
2,436,462.65
2,300,632.77
2,163,897.36
2,026,250.39
1,887,685.76
1,748,197.37
1,607,779.06
1,466,424.63
1,324,127.83
1,180,882.39
1,036,681.98
891,520.24
745,390.74
598,287.06
450,202.68
301,131.07
151,065.65
0.00
Collateral
7.1
Collateral offered
For the proposed project, Asia Poly had offered the land and fixtures of the proposed
project as the collateral. The land is situated at Kapar, Selangor and it is acquired by Asia
21
Poly. It is a freehold land and located within the industrial estate zone. This loan will be
able to serve as collateral for the loan amount of RM 7,500,000 for loan tenure of 5 years.
7.2
Value of collateral
The land and fixtures had been valued by the Bank panel real-estate valuer and the
current market price of the collateral is RM 12,500,000.
7.3
Loan to Value
Loan Amount
RM 7,500,000
Value of collateral
RM 12,500,000
Loan to Value
=
=
RM 7,500,000/RM12,500,000
0.6 / 60%
This fulfills the bank requirement of loan to value benchmark of 80%. The loan to value
of figure does not exceed 80%, therefore this land can be taken as the collateral of the
project and the loan.
7.4
Encumbrances
The land is free from encumbrances.
8.0
Conditions
8.1
The economic environment and status of an industry is the key point that will affect the
performance of the company. Asia Poly share of the Malaysian market for cast acrylic sheets is
very strong and continues to grow, while export markets play an important role of the companys
manufacturing and marketing strategy. The economic growth of Malaysia and the exports
22
markets and the foreign currency exchange rates are crucial factors to Asia Poly. As stated in the
annual report, Asia Poly claimed that the global economy, domestic and export markets of ACast are less predictable.
Recently, Budget 2014 was tabled by the Prime Minister Datuk Seri Najib announced the
implementation of Goods and Services Tax at a rate of 6% from 1st April 2015. One of the
changes would be no tax will be imposed on exports will make Malaysian export goods to be
cheaper, more competitive and sellable in foreign countries. Thus, this will make Asia Poly
goods cheaper and marketable in global market and hopefully, will increase the demand of ACast.
Due to the fierce competition, the company also did a lot of research and development in order to
improve the quality and lower the cost without compromising the quality. With continuous R&D
to improve the technological efficiency of its A-Cast product assortment capability and
cementing will produce better marketing relationships and create new customers at this higher
level of efficiency. In addition to its ISO certifications, Asia Poly was certified for complying
with European Union's EN263 standard for sanitary grade sheets, and with Japan's JIS standard
for general purpose sheets. By complying with international standards, the market of A-Cast
will expand internationally and will increase the revenue of Asia Poly. This means that the
revenue of Asia Poly will not only solely depend on Malaysian market and even if Malaysian
economy is not doing well, Asia Poly will not be badly affected because the demand of A-Cast
is diverse. The sale of A-Cast will not solely depend on Malaysian market but will also depend
23
on the international customers. As explained before, no tax on exports will further boost the
international orders on A-Cast.
At the moment, Asia Poly third casting line is past the drawing board stage and can be
implemented relatively quickly when market conditions are deemed to be right. Asia Poly
believes that in order to support the company growth, continuous improvisation of technology is
important. Therefore, Asia Poly will continue to further to prioritize technological upgrading of
its production over an increase of capacity.
9.0
Compliance Issue
Asia Poly met the requirement of the Banks internal policy, of maintaining a good track of
payment record with the Bank with reference to the previous loans, facilities and services
undertaken with the Bank. After conducting detailed credit checks on the company and directors,
results shown that their past record is clean. Detailed analysis of the companys financial report
for the past 3 years was conducted and Asia Poly can be concluded as a profitable and reputable
24
company in the industry. Besides that, the cash flow are seen to be able to meet the loan
repayment stated above. The product of Asia Poly; A-Cast Precast is highly demanded and
rated by the customers locally and globally.
Besides that, the necessary permits and license for building the new facility was approved by the
government. The layout plan had been approved by the Land Office and buildings plans was
approved by the Town Council.
Since Asia Poly met the required benchmark and fulfill the Banks internal policy, the loan
should be approve.
25
The borrower, Asia Poly, is a reputable company that manufactures their own brand of A-Cast cast
acrylic sheets is manufactured from 100% Virgin Methyl Methacrylate monomer (MMA) with
worldwide demand. Based on the 3 financial years audited financial report, the financial ratios
calculated in part 3, the company gross profit is high but recorded a low net profit margin, higher
expenses due to stricter regulations set by the government. But, this is not an issue because Asia Poly is
still recovering from the fire incident and the recovery speed is moving very fast. Based on Altmans Zscore, Asia Poly score improved to zone of ignorance in 2013. Zone of ignorance means difficult to
determine whether Asia Poly is a bankrupt or non -bankrupt company, but the improvements made for
the past 3 years shows that Asia Poly has improved their sales figure and profitability ratio. The
company cash flow are able to meet the loan repayment as shown in the repayment schedule.
The proposed project is secured with the lands and buildings as collateral. The Bank had requested a
valuation report from the panel valuer of the Bank and a land visit was done to ensure the conditions of
land is as the same as stated. The loan to value of the collateral is 60% which is more than enough, as
the minimum bench of the Bank is 80%. A land search was done with the Land Office and confirmed
that Asia Poly have the full ownership of the land.
The proposed project cost RM 9,500,000 is financed up to 80% by the bank and the remaining of RM
2,000,000 is the capital contribution by the company. The corporation contributed more than 20%,
amounting RM 2 million in the proposed project means that the company is confident that project will
generate substantial amount to recover its capital.
26
While for the economic condition in the manufacturing industry, the cast acrylic sheets have high
demand in domestic and international market. The company is always conducting research and
development to improve its quality as a leading manufacturer and innovator in the production and
supply of cast acrylic sheets. Aside from quality measure, Asia Poly prides itself on its international
service and delivery capability, supporting many distributors worldwide with a wide portfolio of quality
products. With the recent announcement made by Government for absence of GST on exports, this will
boost the companys revenue in international market. The company has strong team player and well
managed team that ensure the growth of business and also make sure that business practice comply with
general aspect for environment.
Lastly, the company had fulfilled all the requirement of the banks internal policy. Thus, I hereby
recommend the loan for approval.
:
:
:
:
:
RM 7,500,000
5 years
Fixed interest rate of 8% throughout 5 years
RM 152,072.96 for 5 years
Borrower will repay the monthly installment of RM 152,072.96
Default Term
Disbursement
pledge.
In three stages, 30%. 40% and 30% of the loan amount. The last
installment will be disbursed three or four weeks prior to the
Collateral
12.1
Conclusion
In conclusion, after evaluating the relevant information and documents from Asia Poly Holdings Berhad,
I hereby recommend this loan for approval based on justification and analysis made above with the terms
and conditions applied.
Other loan/legal documents that I would like to require in order to make loan decisions are:
Surveyor
Costing report for the Project
Approved layout plan and buildings plan
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