BDFM8013:

Corporate Financial Strategy

Semester 2 2016/2017
Assignment # 3

Submitted by:
1. Mohd Hafizi Bin Abdul Fatah
2. Yanoorhady Norza Yahya
3. Adnan Yacob

(Matric No: 901611)

(Matric No: 900871)
(Matric No: 095582)

Lecturer Name: Assoc. Prof. Dr. Mohd Amy Azhar Hj Mohd Harif

Assignment No. 3
BUSINESS VALUATION EXERCISE

Valuation of Caf Business:

HAYAKI CAF UPTOWN
DAMANSARA,
PETALING JAYA

Overview of
Presentation
1.
2.
3.
4.

Introduction
Analysis of Pre Merger
Analysis of Post Merger
Conclusion and
Recommendations
5. Q&A Session

Merger & Acquisition

RESEARCH QUESTIONS
1. Does post-merger and acquisition improve
business profitability?
2. Does post-merger and acquisition improve
leverage?
3. Does post-merger and acquisition improve
liquidity position?
4. Does post-merger and acquisition improve
capital market?

INTRODUCTION (1/2)
1. Sime Darby Bhd. is an investment holding company, which
engages in the plantation, industrial equipment, motors, property,
and energy and utilities businesses.
2. It operates through the following segments: Plantation, Industrial,
Motors, Property, Energy and Utilities, and Others.
3. In March 2007, the Vice President of Sime Darby Bhd evaluated a
proposal for mega merger of Sime Darby, Golden Hope Bhd and
Guthrie Bhd. All the three listed companies are in the plantation
sector controlled by Permodalan National Berhad (PNB).
4. Special Purpose Vehicle (SPV) for this merger is Synergy Drive
Sdn Bhd.

INTRODUCTION (2/2)
5. This SPV was set up to facilitate the merger of the Golden Hope
Bhd, Guthrie Bhd and Sime Darby Bhd.
6. With the completion of the merger the three companies the group
comprised of the businesses, namely plantations, property, motor,
heavy equipment and energy and utilities.
7. The company is a merger of 3 large plantations entities with the
merger having taken place on November 2007. The entities
are Kumpulan Guthrie, Golden Hope and Sime Darby.
8. For details about Sime Darby. Please visit www.simedarby.com

WHATS UP WITH PRE & POST

MERGER?

WHY MERGER?
The merger it will give the group the competitive strengths as follows:
1. To grow further the upstream and downstream sectors
2. To optimise on cost and revenue synergies
3. To value-add further to the palm-oil business
4. To focus on enhancing technology for the industry (research and
development)

PRE & POST MERGER ANALYSIS

Pre Merger Analysis

PRE MERGER

Sime Darby

Golden Hope

Guthrie

Earnings After Tax

(EAT)

RM1,203.1 Million

RM269.08
Million

RM605.46 Million

No of Shares

RM2431.40 Million

RM1,432.49 Million

RM1,006.59 Million

EPS (Basic)

0.461

0.422

0.281

P/E Ratio (Times)

12.58

9.86

13.88

Market Price Per

Share (MPS)

RM5.8
(RM6.46)

RM4.16
(RM5.46)

RM3.9
(RM4.27)

TotalMarket Value
(N*MPS) OR (EAT*P/E
RATIO)

RM15,134.99 million

RM2,653.11 million

RM8,403.82 million

Post Merger Analysis

Pre Merger (2006)

Liquidity:
CA/CL
Profitability
:
ROA
ROE
PM: NI/Sales
BEP: EBIT/TA
Debt
Manageme
nt:
Debt Ratio

Pro-Forma Post(2007)
Merger
(2008)

Sime
Darby

Golden
Hope

Guthrie

SDB

SDB

1.99x

1.32x

2.23x

1.97x

3.86x

6.39%
12.73%
5.55%
9.36%

3.92%
5.23%
6.79%
6.13%

4.96%
13.87%
18.02%
6.92%

7.68%
12.96%
9.59%
10.13%

10.43%
17.32%
11:02%
14.59%

44.15%

22.09%

46.30%

39.11%

38.27%

Post Merger Market Multiple

Analysis
POST MERGER

FORECASTED POSITION

ACTUAL POSITION AFTER

MERGER (2008)

Earnings After Tax (EAT)

(Combined Firm)

RM2,706.8 Mil

RM3,512.1 Mil

No. of Shares

6,086 Mil

5,889.7 Mil

Earning Per Share

2706.8/6,086=RM0.43

3512.1/5889.7=RM0.60

Price/Earning Ratio (P/E

Ratio)
(Assumption: Average)

12.58+9.86+13.88/3 = 12.11x

9.05/59.51=15.17x

Market Price Per Share (MPS)

RM 5.33

RM 9.05

Total Market Value

RM 32,779.35

RM 53,278.56

Profitability Ratio
Pre-Merger

During
Merger

Post-Merger

ROSF Return
11.07%
of Shareholders
Funds

15.77%

17.32%

ROCE Return
on Capital
Employed

12.40%

17.15%

20.09%

Net Profit
Margin

10.65%

9.91%

15.42%

Gross Profit
Margin

11.10%

4.66%

20.83%

Efficiency Ratios
Pre-Merger

During
Merger

Post-Merger

Average
69.92 days
Turnover Period

62.54 days

84.78 days

Revenue To
Capital
Employed

1.16

1.73

1.30

Revenue Per
Employee

MYR258,095

MYR691,167

MYR340,447

Altmans Z-Score
PreMerger

During
Merger

PostMerger

Net working capital / Total 0.09

assets

0.06

0.12

Retained earnings / Total

Assests

0.40

0.45

0.52

EBIT / Total Assets

0.09

0.11

0.15

Market value of common

equity & preferred stock /
book value of debt

0.79

0.77

0.85

Sales / Total assets

0.80

1.06

0.95

Z-Score

2.22

2.52

2.81

Share Price Valuation

Sime Darby Share

Price

Golden Hope
Share Price

Guthrie
Share Price

Mean of Averages & P-Value For Each

Ratio

Conclusion & Recommendations

Conclusion
SDB in right business as at FY2008

Met the objective to create the worlds

largest listed oil palm

Improved profitability and efficiency

Recommendations
Taking the company private

Focus on business with core

competitive industries

Thank You