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Report Sections:
1. Disclaimer p2
2. Financial Statements p3
3. Cashflow Statements p4
4. Enhanced Ratios p5
5. Key Findings p6
6. Cause-and-Effect Analysis p7
7. Corporate Developments p8
8. Liquidity Insights p9
9. Working Capital Analysis p10
10. Equity Market Indicators p11
11. Peer Comparisons p12
12. Sensitivity Analysis p13
13. Credit Risk Checklist (Phase 1 - 4) p14 - 17
14. Recommendations for the Business p18
15. Reference I - Financial Ratios Explanation p19
16. Reference II - How to Use the Report p20
Company: NEURO NADI GLOBAL SDN. BHD
Date of Report: 28 June 2019
Industry: Education
Currency: RM
Latest FY: 2018
Country: Malaysia
FINANCIALREVIEW(ULTIMATE +)
Copyright ©2019, MyFinB. No parts of this publication may be copied, duplicated or distributed without the consent of MyFinB.
DISCLAIMER
The rating scores published by MyFinB are solely statements of opinion and not
statements of fact or recommendations to purchase, hold, or sell any securities or
make any other investment decisions.
Accordingly, any user of scores issued by MyFinB should not rely on any such
scores or other opinion issued by MyFinB in making any investment decision.
Scores are based on information received by MyFinB. MyFinB has established
policies and procedures to maintain the confidentiality of non-public information
received during the scoring process.
This report may not be reproduced in whole or in part in any form or manner
whatsoever. This report is forwarded to the Subscriber in strict confidence for use
by the Subscriber as one factor in connection with rating and other business
decisions. The report may contain information compiled from information which
MyFinB does not control and which has not been verified unless indicated in this
report.
Whilst every endeavor is made to ensure that the information provided is updated
and correct, MyFinB disclaims any liability for any damage or loss that may be
caused as a result of any error or omission arising out of or in any way related to
the contents of this report.
Certain figures in the financial statements may have been adjusted for analytical
classification purposes in accordance with the methodology and research
processes.
Copyright 2019 © MyFinB Holdings Pte Ltd Page 2 of 21
INCOME STATEMENT
BALANCE SHEET
RM 2018 2017 %Chg
FINANCIAL STATEMENTS
Gross Profit 14,919 14,295 4.4%
Operating Expenses (10,088) (9,513) -6.0%
Sales 17,532 16,711 4.9%
Cost of Sales (2,613) (2,416) -8.1%
Finance Cost (345) (260) -33.1%
Others Income / (Expense) 3,986 2,231 78.7%
Operating Profits 4,831 4,782 1.0%
Depreciation (2,340) (2,239) -4.5%
Profit After Tax 5,430 3,831 41.8%
RM 2018 2017 %Chg
Profit Before Tax 6,132 4,515 35.8%
Taxation (701) (684) -2.5%
Trade Debtors 3,803 3,827 -0.6%
Stocks 397 352 12.8%
Current Assets 5,981 5,918 1.1%
Cash 525 534 -1.7%
Property, Plant & Equipment 11,801 11,893 -0.8%
Other Investments 30,472 30,484 0.0%
Other CA 1,256 1,205 4.2%
Fixed Assets 42,273 42,376 -0.2%
Trade Creditors 399 3,591 -88.9%
Overdrafts - - N.A
Total Assets 48,254 48,294 -0.1%
Current Liabilities 8,293 9,272 -10.6%
Long Term Liabilities 10,307 10,809 -4.6%
Loans - 31 -100.0%
Short Term Loans 672 2,068 -67.5%
Other Current Liabilities 7,222 3,613 99.9%
Equity / Reserves 29,654 28,214 5.1%
Total Liabilities and Capital 48,254 48,295 -0.1%
Other Long Term Liabilities 10,307 10,778 -4.4%
Total Liabilities 18,600 20,081 -7.4%
Copyright 2018 © MyFinB Holdings Pte Ltd Page 3 of 21
Currency: RM % Change
Operating Activities:
35.8%
Adjustments
4.5%
N.A
Interest expenses / (income) 32.7%
Loss / (Gain) on foreign exchange, net N.A
Share of loss of associates -11.4%
Writebacks N.A
Reversal N.A
Others 16877.2%
Operating profit before working capital changes 2.2%
145.8%
-65.3%
N.A
N.A
-18.2%
N.A
N.A
-0.5%
Cash generated from operations 6.7%
Income tax paid -27.1%
12.1%
Investing Activities:
-59.0%
3.9%
Addition in Intangible Assets 335.7%
164.0%
-59.6%
Financing Activities:
7.8%
8.3%
8.0%
59.1%
849.9%
-107.0%
Effect of exchange rate changes in cash and cash equivalents -106.7%
Cash and cash equivalents at beginning of financial year 15.6%
-1.7%
Depreciation, Amortisation and Impairment $2,340 $2,239
Loss / (Gain) on disposal $0 $0
CASHFLOW STATEMENTS
2018 2017
Profit for the year $6,132 $4,515
Trade receivables -$195 -$562
Other receivables, deposits and prepayments $0 $0
Advances to suppliers $0
Trade payables $77 $94
$0 $0
Inventories -$59 -$24
$0 $0
-$1,935 -$11
$5,094 $4,985
-$1,787 -$2,017
$0 $0
Net Cash From Financing Activities -$4,009 -$422
Others -$11,020 -$6,926
Interest Paid -$380 -$351
$0
Net Cash From Operating Activities $5,955 $5,315
$0 $0
$345 $260
Other payables and accruals
Due to related party (trade)
Others
Interest received $16 $39
$61
Dividends -$5 -$5
Others
$6,563 $6,149
Purchase of Property, Plant and Equipment -$2,349 -$2,261
Net Cash From Investing Activities
Increase in Borrowings
Net (decrease) / increase in cash and cash
equivalents
$0 $0
$1,647 $1,656
-$1,951 -$4,832
$7,397 $6,860
Cash and cash equivalents at end of financial year $525 $534
-$608 -$834
-$4 $60
$1,506 -$2,352
-$4
$534 $462
-$1,124 -$258
Copyright 2017 © MyFinB Holdings Pte Ltd Page 4 of 21
% change
Profitability Ratio
-3.7%
35.1%
N.A
N.A
N.A
N.A
N.A
(8) Return on Assets Growth (%) N.A
41.9%
N.A
9.9%
5.0%
-7.0%
4.9%
13.0%
11.0%
9.9%
-68.0%
-69.5%
(20) Current Liability Ratio (%) -10.5%
(21) Total Liabilities-to-Equity Ratio (%) -11.9%
29.2%
(23) Total Liabilities Growth vs Sales Growth (%) N.A
-4.9%
0.31% N.A
17.19% 19.20%
Activity Ratio
(15) Current Ratio (x) 0.72 0.64
(17) Cash Ratio (x) 0.06 0.06
(16) Quick Ratio (x)
(7) Cost / Sales Growth (%) 2.27% N.A
(4) Profit Margin Growth (%) 8.05% N.A
(5) Rate of Sales Growth (%) 43.44% N.A
(6) Rate of Cost Growth (%) 47.07% N.A
(3) Profit Before Tax Growth (%) 10.94% N.A
RATIO 2018 2017
ENHANCED RATIOS
30.97% 22.92%
(1) Operating Margin (%) 27.56% 28.61%
(2) Net Profit Margin (After Tax) (%)
(12) Sales to Total Assets (%) 36.33% 34.60%
(14) Asset Efficiency (%) 36.32% 34.62%
(13) Sales to Inventory (%) 4416.12% 4747.44%
0.52 0.47
Leverage Ratio
(18) Debt to Assets (%) 1.39% 4.35%
(24) Equity Multiplier (x) 1.63 1.71
(19) Debt-Equity (%) 2.27% 7.44%
62.72% 71.17%
-47.70% N.A
(22) Return on Shareholders' Equity (%) 20.68% 16.00%
(9) Return on Assets (After Tax) (%) 11.25%
Liquidity Ratio
(11) Cash to Current Liabilities (%) 6.33% 5.76%
(10 ) Asset Growth (%) 7.64% N.A
7.93%
Copyright 2017 © MyFinB Holdings Pte Ltd Page 5 of 21
FINANCIAL PERFORMANCE & OPERATIONS
SHAREHOLDER VALUE CREATION
RISK LEVELSModerate level of short-term creditors/financing relative to asset base - slight dependency on creditor financing in the
short-term. The firm's total liability exposure was somewhat high relative to its shareholder equity level during the
period. Shareholder's funds could be inadequate to cover all of the firm's obligations. Overall sales growth
overwhelmingly outpaced the firm's total liability growth during the period. The firm's mode of expansion had been
driven by sales management and resulted to a faster sales growth compared to liability growth. There was increasing
demand for the goods and services of the firm which resulted in a fairly high level of revenue growth. The very good
performance of the firm was as a result of an effective pricing model and appropriate market strategies during the
period.
Airtel uses funds to cut debt and shore up its balance sheet at a time when the broader Indian telecom industry is
grappling with a price war triggered by the entry of Reliance Jio Infocomm Ltd. The reoffered yield of 3.889 per cent
represents a spread of 105 basis points over 10-year US Treasuries. Comes under Singtel's S$10 billion euro medium
term note programme, received interest worth US$2.85 billion.
As at 31 March 2018, the Group’s net debt was S$9.8 billion, 5% lower than a year ago. The Group’s net cash inflow
from operating activities for the year grew strongly by 12% to S$5.96 billion. The increase was mainly driven by
working capital movements and lower tax payments. Total liabilities decreased on the reduction in borrowings and
the release of net deferred gains of S$1.10 billion on past sales of infrastructure assets to NetLink Trust following the
disposal of an effective interest of 75.2% in NetLink Trust in July 2017. In Australia, we committed another A$1
billion in networks to improve and expand mobile coverage in rural and regional Australia.
KEY FINDINGS
The firm experienced a fairly high level of revenue growth - with an increasing demand for its goods and services. The
firm's operating costs have risen significantly. It could be facing challenges to contain the costs arising from industry-
wide drivers. The cost of generating additional revenue was slightly higher compared to the previous year. Profit
levels remained modest relative to sales. May not be adequately attractive for shareholders who may demand for
higher margins. Small decline in profit margins was experienced where this could signify increasing competition and
operational costs during the period.
Competition affected India’s Bharti Airtel and Indonesia’s PT Telekomunikasi Selular, leading to a 6.6% decline in its
regional associates’ overall profits. Singtel faces pressure to cut costs and find new sources of revenue - competitor
StarHub Ltd last year cut about 12 percent of its workforce. Its underlying net profit fell 22 percent in the second-
quarter, hit by a stronger Singapore dollar and intense competition in India.
Singtel delivered a record profit of S$5.45 billion for the year just ended, with the successful IPO of NetLink
Trust.However, underlying earnings declined 8%, largely the result of a decline in Airtel’s India earnings and charges
from increased network investments and spectrum. Overall, earnings remain resilient and we have made solid
progress on our digital transformation. Our digital businesses are building new revenue streams with ICT and digital
now accounting for nearly 25% of revenue. Our cyber-related revenues totalled S$530 million in FY 2018. Operating
revenue was S$17.53 billion, 4.9% higher than FY 2017, while EBITDA rose 1.8% to S$5.09 billion reflecting strong
customer gains in Australia and first time contribution from Turn (acquired by Amobee in April 2017). In constant
currency terms, operating revenue and EBITDA increased by 4.7% and 1.5% respectively.
The shareholders attained moderately average returns based on their investments during the period. Firm's underlying
valuation would likely be subdued during the period. The shareholder equity level of the firm was somewhat low
compared to its total liability exposure during the period. If the firm's shareholder funds are overwhelmed by its
liability levels, it could be faced with valuation risk. There was an average profitability growth experienced by the firm,
compared to the previous year. Profit levels remained modest relative to sales. May not be adequately attractive for
shareholders who may demand for higher margins.
Airtel Africa Limited, a subsidiary of Bharti Airtel Limited, has announced its potential intention to undertake an initial
public offering for listing its equity shares on London Stock Exchange. Telecom operator, is keen to expand beyond its
traditional carrier services into areas such as digital marketing, cybersecurity, mobile payments and video streaming
to India, the Philippines and Indonesia. Bought roughly $525 million worth Bharti Airtel stock as part of the Indian
telecoms operator’s plan to raise $4.6 billion through shares and bonds.
The Board is of the view that a dividend of 17.5 cents is sustainable for the next two financial years. Thereafter,
barring unforeseen circumstances, the Group will continue with the payout ratio of 60 to 75% of underlying net profit.
Amobee investment is showing green shoots, crossing S$1.1 billion in revenue as EBITDA turned positive for the first
time. Our long-term view on India’s prospects remains positive as we increased our effective stake in Airtel to 39.5%
last year. The associates’ pre-tax contributions declined 15% to S$2.46 billion on weaker earnings from Airtel India
and Telkomsel impacted by intense competition and mandated reduction in mobile termination charges in India, as
well as lower contribution from NetLink NBN Trust following the reduction in economic interest of 75.2% in July 2017.
The decline was partly mitigated by higher contribution from Intouch (acquired in November 2016).
From a top-line growth standpoint,
NEURO NADI GLOBAL SDN. BHD
registered higher revenues compared to
the previous period. Its profits improved
by 8.1% due to the surge in operational
expenses. Total costs grew at a faster
compared to sales, by 2.3%.
NEURO NADI GLOBAL SDN. BHD posted
ROE of 16.0% during the period, on the
back of equity of $29,654 (change of
5.1%) and profit of $5,430 (change of
41.8%.
Total liabilities decreased by 7.4% whilst
equity increased by 5.1%. Consequently,
debt to equity levels were manageable as
equity was sufficient to cover debt
obligations.
LOW GROWTH HIGH GROWTH
LOW ROE HIGH ROE
HIGH RISK LOW RISK
Copyright 2019 © MyFinB Holdings Pte Ltd Page 6 of 21
From a top-line growth standpoint, NEURO NADI GLOBAL SDN. BHD registered higher revenues compared to the previous period. Its profits
improved by 8.1% due to the surge in operational expenses. Total costs grew at a faster compared to sales, by 2.3%.
Revenue changes had been driven by the expansion of assets - NEURO NADI GLOBAL SDN. BHD increased its asset base by 7.6% with
recorded sales growth of 43.4%. In addition, ROA increased from 7.9% to 11.3% because of improvement in profits, likely due to the
increase in operational costs.
Competition affected India’s Bharti Airtel and Indonesia’s PT Telekomunikasi Selular, leading to a 6.6% decline in its regional associates’
overall profits. Singtel faces pressure to cut costs and find new sources of revenue - competitor StarHub Ltd last year cut about 12 percent
of its workforce. Its underlying net profit fell 22 percent in the second-quarter, hit by a stronger Singapore dollar and intense competition in
India.
Total liabilities decreased by 7.4% whilst equity increased by 5.1%. Consequently, debt to equity levels were manageable as equity was
sufficient to cover debt obligations.
Airtel uses funds to cut debt and shore up its balance sheet at a time when the broader Indian telecom industry is grappling with a price
war triggered by the entry of Reliance Jio Infocomm Ltd. The reoffered yield of 3.889 per cent represents a spread of 105 basis points over
10-year US Treasuries. Comes under Singtel's S$10 billion euro medium term note programme, received interest worth US$2.85 billion.
NEURO NADI GLOBAL SDN. BHD posted ROE of 16.0% during the period, on the back of equity of $29,654 (change of 5.1%) and profit of
$5,430 (change of 41.8%).
Airtel Africa Limited, a subsidiary of Bharti Airtel Limited, has announced its potential intention to undertake an initial public offering for
listing its equity shares on London Stock Exchange. Telecom operator, is keen to expand beyond its traditional carrier services into areas
such as digital marketing, cybersecurity, mobile payments and video streaming to India, the Philippines and Indonesia. Bought roughly $525
million worth Bharti Airtel stock as part of the Indian telecoms operator’s plan to raise $4.6 billion through shares and bonds.
CAUSE-AND-EFFECT ANALYSIS
47.1%
-2.3% 16.4% -4.3%
43.4% 7.6%
35.8%
SALES ASSETS
LIABILITIESEQUITYPROFIT MARGIN
GROWTH
COST GROWTH
LIABILITIES / EQUITY
60.3%
COSTS / SALES
2.3%
ROA
10.6%
PROFIT MARGIN
7.8%
ROE
17.0%
SALES / ASSETS
36.3%
LEGEND
Financial variable Ratios % Change YoY
PBT GROWTH (YoY)
Copyright 2019 © MyFinB Holdings Pte Ltd Page 7 of 21
BUSINESS PERFORMANCE & PRODUCTIVITY
Date
15/5/2019
14/5/2019
11/8/2018
SHAREHOLDERS VALUE
Date
29/5/2019
18/3/2019
3/7/2019
RISK & LIABILITIES
Date
3/7/2019
21/8/2018
Airtel raising a total of $4.6 billion
Airtel uses funds to cut debt and shore up its
balance sheet at a time when the broader Indian
telecom industry is grappling with a price war
triggered by the entry of Reliance Jio Infocomm
Ltd.
Liabilities/Equity
Singtel sells US$500m of 10-year bonds at
3.875% coupon; reoffered yield at 3.889%
The reoffered yield of 3.889 per cent represents
a spread of 105 basis points over 10-year US
Treasuries. Comes under Singtel's S$10 billion
euro medium term note programme, received
interest worth US$2.85 billion.
Liabilities/Equity
Singtel injects $525 mln in telco Airtel as
competition mounts in India
Bought roughly $525 million worth Bharti Airtel
stock as part of the Indian telecoms operator’s
plan to raise $4.6 billion through shares and
bonds.
Equity | Liabilities/Equity
Headline Key Causes Financial Variables
Singtel: Airtel Africa LSE IPO Registration
Document Submitted For Approval To The
UK Financial Conduct Authority.
Airtel Africa Limited, a subsidiary of Bharti Airtel
Limited, has announced its potential intention to
undertake an initial public offering for listing its
equity shares on London Stock Exchange.
Liabilities | Equity |
Liabilities/Equity
Singtel signs deal to expand mobile wallet
alliance to Japan
Telecom operator, is keen to expand beyond its
traditional carrier services into areas such as
digital marketing, cybersecurity, mobile
payments and video streaming to India, the
Philippines and Indonesia.
Sales | Profit margin | ROA |
Equity
Sales | Profit margin | ROA |
ROE
Cost growth | Cost/Sales
growth | Sales | Profit margin |
ROA | ROE
Profit margin | ROA | ROE
Headline Key Causes Financial Variables
CORPORATE DEVELOPMENTS
Headline
Regional competition takes bite out of
Singtel's Q1 profit
Singtel stumbles toward lowest profit in 16
years, faces cost pressure
Singtel Q2 underlying net profit drops 22 pct
Key Causes
Competition affected India’s Bharti Airtel and
Indonesia’s PT Telekomunikasi Selular, leading
to a 6.6% decline in its regional associates’
overall profits.
Singtel faces pressure to cut costs and find new
sources of revenue - competitor StarHub Ltd
last year cut about 12 percent of its workforce.
Its underlying net profit fell 22 percent in the
second-quarter, hit by a stronger Singapore
dollar and intense competition in India.
Financial Variables
Copyright 2019 © MyFinB Holdings Pte Ltd Page 8 of 21
Overall, the cashflow from investments
was negative, mainly due to an outflow in
purchases of property, plant and
equipments, and an outflow in addition in
intangible assets, at a value of $2,349 and
$1,124 respectively.
LIQUIDITY INSIGHTS
RM
Overall, the cashflow from finances was
negative, mainly due to an increase
position in borrowings. There was an
outflow of $5 coming from dividends, an
outflow of $380 from interest paid.
Overall, the cashflow from operations was
positive, mainly due to a profitable
position. There was an outflow of $195
coming from receivables, an inflow of $77
from payables and an outflow of $59 in
inventory.
Currency
CASHFLOW FROM OPERATIONS
CASHFLOW FROM FINANCING
CASHFLOW FROM INVESTMENTS
POSITIVE
NEGATIVE
NEGATIVE
Copyright 2019 © MyFinB Holdings Pte Ltd Page 9 of 21
HOW MUCH IS REQUIRED BY THE BUSINESS?
CREDIT TERMS (NO. OF DAYS) - 4 SCENARIOS 30 60 90 180
FUNDING AMOUNT REQUIRED (RM)
Accounts Receivables $ 25,421 $ 50,842 $ 76,263 $ 152,526
Inventory $ 15,253 $ 30,505 $ 45,758 $ 91,516
Accounts Payables $ 15,253 $ 30,505 $ 45,758 $ 91,516
Net Working Capital Requirement (Amount) $ 25,421 $ 50,842 $ 76,263 $ 152,526
RISK METRICS
Credit Score 7.1 Indicative Probability of Default 17.1%
Indicative Credit Migration (1-Tier Higher Risk) 14.6%
RECOMMENDED FINANCING AMOUNT
Indicative Recommended Credit Limit ($) Impact on L/E with additional financing
Net working capital requirement was tabulated based on an assumption of 30, 60, 90 and 180 credit terms and inventory days to turnaround the sales.
+ Accounts receivables = Credit days X Daily revenue
+ Inventory = Inventory days X Daily costs of sales
+ Accounts payables = Credit days X Daily costs of sales
98.23%
275.75%
Minimum
Maximum
$10,529
$63,171
Taking into account the overall credit score of 7.1 and its existing leverage, NEURO NADI GLOBAL SDN. BHD should only be
financed based on a minimum of $10,529, and up till $63,171. This needs to take into account other factors such as industry
and management risks, as well as factors to mitigate the risks and the financing structure to ringfence those said risks.
WORKING CAPITAL ANALYSIS
Based on four scenarios of operating cash cycle days, NEURO NADI GLOBAL SDN. BHD is estimated to have funding gaps of
between $25,421 and $152,526.
For every 30 days' of delay of conversion into cash, NEURO NADI GLOBAL SDN. BHD would require at least $25,421 for its
working capital needs.
Its last reported cashflow from operations was positive mainly due to a profitable position in profitability. No other sources of
funding are available. . .
(RM)
EXCELLENT GOOD MODERATE LOW
High Financial Strength Above Average Financial Strength Average Financial Strength Low Financial Strength
Greater than or equal to 10, less than or equal
to 12Greater than or equal to 7, less than 10 Greater than or equal to 4, less than 7 Less than 4, greater than or equal to 1
Copyright 2019 © MyFinB Holdings Pte Ltd Page 10 of 21
-
- -
-
59% -
6.3
2.66 0.00%
10.94% -
EQUITY MARKET INDICATORS
ATTRACTIVE VALUATION? NO FUNDAMENTALLY SOUND? YES
Fair Value
Price-to-Book Share Price
Company
Credit Score Peer Avg
Current Ratio Dividend Yield
Pre-Tax Profit Qterly Per Share
Was the company financially strong generally?
Did the company have free cashflow?
Did the company have buffer for its short-term obligations?
Was the P/E lower than its peers?
FALSE
Was the company worth less than its book value now?
Did the company pay dividends?
NO
YES
Were the profit levels growing?
Was the company undervalued?
YES
YES
NO
N.A N.AA value of its EPS x 8.1 that is below its share price suggests that it is overvalued (assuming it is not loss making).
A lower value indicates the company is trading below its original value and may indicate a "cheap" buy, but not necessarily all the time.
The credit score takes into account balance sheet and P&L of the company. A higher score indicates a stronger credit position.
The P/E indicates how much premium investors are willing to pay for each profit earned. A lower P/E indicates "less premium"
A higher current ratio indicatesa higher liquidity position but need to check the level of inventories and actual cash levels- in order to meet short-term dues.
A company that has been paying dividends suggests that the company is doing well and continues to be optimistic about the future.
A company that is showing consistent earnings growth indicates a positive outlook. A company that shows negative growth may indicate tougher times ahead.
FCF must be sufficiently positive because it signals a company's ability to pay debt, pay dividends, buy back stock and facilitate the growth of business.
Copyright 2019 © MyFinB Holdings Pte Ltd Page 11 of 21
BUSINESS PERFORMANCE
PEER ANALYSIS
COMPETITOR ANALYSIS
On a standalone basis, NEURO NADI GLOBAL SDN. BHD took on 3.6x more risk to generate every unit of return.
Vodafone registered a liability to equity ratio of 112.2% (higher than NEURO NADI GLOBAL SDN. BHD), and ROE of 5.7% (lower
than NEURO NADI GLOBAL SDN. BHD).
Telstra Corp registered a liability to equity ratio of 185.5% (higher than NEURO NADI GLOBAL SDN. BHD), and ROE of 34.0%
(higher than NEURO NADI GLOBAL SDN. BHD).
Starhub registered a liability to equity ratio of 348.2% (higher than NEURO NADI GLOBAL SDN. BHD), and ROE of 41.8% (higher
than NEURO NADI GLOBAL SDN. BHD).
From a topline growth perspective, NEURO NADI GLOBAL SDN. BHD's sales fared better than the average of its peers; it grew
43.4% as compared to -2.2% (Vodafone), 0.0% (Telstra Corp), -2.0% (Starhub).
Meanwhile, comparing profit growth levels, NEURO NADI GLOBAL SDN. BHD's profits fared better than the average of its
peers; it grew by 8.1% as compared to 14.4% (Vodafone), -1.3% (Telstra Corp), -2.44% (Starhub).
NEURO NADI GLOBAL SDN. BHD was ranked 1st in terms of its sales growth and 2nd in terms of its profit growth as compared
to its peers.
NEURO NADI GLOBAL SDN. BHD's sales growth position was ahead by 45.67% against Vodafone, which was ranked last in
position.
NEURO NADI GLOBAL SDN. BHD's profit growth position was behind by 6.30% against Vodafone, which was ranked 1st in
position.
Company
Vodafone
Telstra Corp Starhub
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0% 50% 100% 150% 200% 250% 300% 350% 400%
Ret
urn
on
Equi
ty (
%)
Liability-to-Equity (%)
Peer Analysis: Risk Return (%)
Company
VodafoneTelstra Corp
Starhub
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
Sal
es G
row
th (
%)
Profit Growth (%)
Peer Analysis: Business Performance
Copyright 2019 © MyFinB Holdings Pte Ltd Page 12 of 21
SENSITIVITY RATING 7.1
WHAT-IF ANALYSIS
RATING SHIFTS ANALYSIS
Overall, NEURO NADI GLOBAL SDN. BHD appeared to be generally able to withstand varying levels of hypothetical shocks to its financial
position. NEURO NADI GLOBAL SDN. BHD scored a rating of 7.1; suggesting that it had reasonably good ability to withstand balance sheet
stressors.
We applied the stress test on NEURO NADI GLOBAL SDN. BHD's revenue and costs to see how NEURO NADI GLOBAL SDN. BHD can cope
with worsening conditions and assess the impact on its overall profitability. It was also noted that costs grew at a faster compared to
sales, by 2.3%. Now what would happen to its margins if costs actually grew by 5% and 10% respectively?
Based on its most recent financial position, if there was a drop of 5% in its revenue position due to aggravating economic conditions; while
facing a 10% increase in overall costs, NEURO NADI GLOBAL SDN. BHD's overall profit margin would decline to -6.1% as a result. It was
observed that based on its financial results, NEURO NADI GLOBAL SDN. BHD registered a higher revenue compared to the previous period;
while its profits expanded by 41.8% due to a surge in operational expenses.
Other than potential macro factors, NEURO NADI GLOBAL SDN. BHD needs to watch the following risks listed below as it could impact its
margins further if not sufficiently addressed:
1. The firm's operating costs have risen significantly. It could be facing challenges to contain the costs arising from industry-wide drivers.
The firm may also be struggling to contain its administrative expenses.
2. The shareholder equity level of the firm was somewhat low compared to its total liability exposure during the period. If the firm's
shareholder funds are overwhelmed by its liability levels, it could be faced with valuation risk.
3. Moderate level of short-term creditors/financing relative to asset base - slight dependency on creditor financing in the short-term. The
firm’s liquidity risk may have risen compared to the previous year.
NB: For more factors please refer to the risk section found in the report.
MODERATE RISK HIGHLY SUSCEPTIBLE
Highly susceptible to even small
changes in financial variables
Greater than or equal to 10, less than or equal
to 12Greater than or equal to 7, less than 10 Greater than or equal to 4, less than 7 Less than 4, greater than or equal to 1
SENSITIVITY ANALYSIS
High ability to withstand balance sheet
stressors
Reasonably good ability to withstand
balance sheet stressors
Somewhat vulnerable to short term adverse
changes in financial & economic conditions
ROBUST INTACT
10.0% 7.5% 5.0% 0.0% -5.0% -7.5% -10.0%
-10.0% 29.68% 26.32% 23.08% 16.98% 11.38% 8.77% 6.28%
-7.5% 27.14% 23.84% 20.66% 14.68% 9.19% 6.64% 4.21%
-5.0% 24.61% 21.36% 18.24% 12.37% 7.00% 4.51% 2.13%
-2.5% 22.07% 18.88% 15.82% 10.06% 4.81% 2.37% 0.06%
0.0% 19.53% 16.40% 13.40% 7.76% 2.62% 0.24% -2.02%
2.5% 17.00% 13.92% 10.98% 5.45% 0.43% -1.89% -4.09%
5.0% 14.46% 11.44% 8.55% 3.15% -1.76% -4.03% -6.17%
7.5% 11.92% 8.97% 6.13% 0.84% -3.95% -6.16% -8.24%
10.0% 9.39% 6.49% 3.71% -1.47% -6.14% -8.29% -10.32%
IMPACT ON PROFIT MARGIN
19.97%
To
tal
Co
sts
Ch
an
ge
d B
y
15.24%
12.88%
14.12%
-2.5%
11.87%
9.62%
7.38%
2.88%
5.13%
17.61%
Total Sales Changed By
10.51%
2.5%
8.15%
5.79%
3.42%
0.63%
-1.62%
-3.87%1.06%
Copyright 2017 © MyFinB Holdings Pte Ltd Page 13 of 21
PHASE ONE (I)
CHECK
LIST
TARGET
DATE●
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ROADMAP
STATEMENTACTION PLAN
CREDIT RISK CHECKLIST
BUSINESS
PERFORMANCE
REPORT
(BPR)
The firm's operating
costs have risen
significantly. It could
be facing challenges
to contain the costs
arising from industry-
wide drivers.
List down the variable and fixed costs in the last 24 months
and evaluate the trends.
Distinguish between one-off and ongoing costs.
Obtain more information on the cost of materials / labour and
compare against previous levels.
Identify any capital and revenue expenditure of the firm -that
is linked to research and development costs.
Compare and measure marketing and business development
costs against the sales performance during the period.
SHAREHOLDER VALUE
REPORT (SVR)
The shareholder equity
level of the firm was
somewhat low
compared to its total
liability exposure
during the period. If
the firm's shareholder
funds are
overwhelmed by its
liability levels, it could
be faced with
valuation risk.
Discuss with management on the potential for leveraged
recapitalisation or debt restructuring in the business.
Determine whether the liability in the firm is short-term or long-
term and what it is costing the firm to maintain this level of debt
in the business.
Perform an analysis to determine whether the existing level of
debt is threatening the on-going nature of the firm and assess to
what extent its asset-liability management can be improved.
Determine whether the liability in the firm is short-term or long-
term and what it is the cost to the firm, to maintain this level of
debt in the business.
Examine the potential to restructure the firm in order to increase
the equity level in the business.
RISK AND LIABILITIES
REPORT (RLR)
There was increasing
demand for the
goods and services
of the firm which
resulted in a fairly
high level of revenue
growth. The very
good performance of
the firm was as a
result of an effective
pricing model and
appropriate market
strategies during the
period.
Examine to what extent price margins or debt acquisition was
responsible for the increased level of sales.
Develop an assessment of the firm to determine the extent to
which the sales growth has been driven by increased
liabilities. Analyse whether the sales growth experienced by the firm is
sustainable, or whether it was more of a short term
improvement. Determine whether the increased level of sales growth was a
result of a single client or contract.
Identify whether the firm's dominant position, can be
maintained through organic or non-organic means,
PRODUCTIVITY
REPORT (PRR)
There was a steady
increase in the value
of the firm's total
assets during the
period - could signify
a gradual build-up of
the firm's operations
during the period.
Establish management antecedents of the firm's expansion
plans if any.
Examine the firm's current level of resources in terms of its
current assets and how these are being deployed.
Evaluate historical trends of asset levels - both for fixed and
current levels.
Ascertain the use and functions of the asset types that were
acquired.
Copyright 2019 © MyFinB Holdings Pte Ltd Page 14 of 21
PHASE TWO (II)
CHECK
LIST
TARGET
DATE●
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ROADMAP
STATEMENTACTION PLAN
CREDIT RISK CHECKLIST
BUSINESS
PERFORMANCE
REPORT
(BPR)
Small decline in profit
margins was
experienced where
this could signify
increasing
competition and
operational costs
during the period.
Seek inputs if Management has formulated a business
strategy to improve margins for subsequent years.
Ascertain if there are going to be any improvements to be
made on the business model of the firm.
Check if there are concentration of customer base within its
revenue mix.
Check if there are limited product/service lines that may be
less relevant for the changing demographics or settings.
SHAREHOLDER VALUE
REPORT (SVR)
There was an average
profitability growth
experienced by the
firm, compared to the
previous year.
Determine whether the main reason for profits growth was
due to margins/sales management or leverage.
Ascertain the level of risks undertaken by the firm to generate
the current/recent profit growth.
Evaluate the sustainability of the performance in subsequent
years as this may be a one-off streak.
Examine whether there are single major client or large
contract that resulted in the strong performance.
Ascertain whether there are any possible mergers and
acquisitions or non-organic growth to maintain position.
RISK AND LIABILITIES
REPORT (RLR)
Moderate level of
short-term
creditors/financing
relative to asset base
- slight dependency
on creditor financing
in the short-term.
Check cost of financing of creditors and impact on
profitability.
Examine the terms and penalties imposed by creditors, if any -
for longer-than-expected funding duration
Obtain and seek medium to long-term financing to extend
funding duration.
Explore equity option as part of long-term expansion plans.
Evaluate existing relationships with creditors and check for
existence of supplier concentration or related-party suppliers.
PRODUCTIVITY
REPORT (PRR)
The profitability
growth experienced
by the firm was
average, compared to
the previous year.
Examine to what extent price margins or debt acquisition was
responsible for the increased level of profits.
Assess to what extent was the increase in profitability,
generated by increased risks undertaken by the firm.
Analyse whether the profitability growth experienced by the
firm is sustainable, or whether it was more of a short term
improvement. Determine whether the increased level of profitability growth
was a result of a single client / contract.
Identify whether the firm's dominant position, can be
maintained through organic or non-organic means,
Copyright 2018 © MyFinB Holdings Pte Ltd Page 15 of 21
PHASE THREE (III)
CHECK
LIST
TARGET
DATE●
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ROADMAP
STATEMENTACTION PLAN
CREDIT RISK CHECKLIST
BUSINESS
PERFORMANCE
REPORT
(BPR)
The cost of
generating additional
revenue was slightly
higher compared to
the previous year.
Examine possibilities of structural drivers within the industry
and company that impact the revenue-cost structure of firm.
Determine the cost of marketing and sales operations over
the years relative to sales growth.
Obtain the supplier listings and analyse the relationships and
credit costs associated with each transaction.
Evaluate across the value chain of processing and delivering
goods/services within the firm.
SHAREHOLDER VALUE
REPORT (SVR)
Profit levels remained
modest relative to
sales. May not be
adequately attractive
for shareholders who
may demand for
higher margins.
Identify customer base of firm and review its growth rate over
the past few years.
Clarify any client retention programs adopted by the firm to
maintain client base.
Examine absolute profit figures and trace back at least 5
years to assess volatility levels.
Obtain management estimates of future profitability and
revenue projections.
RISK AND LIABILITIES
REPORT (RLR)
Overall sales growth
overwhelmingly
outpaced the firm's
total liability growth
during the period. The
firm's mode of
expansion had been
driven by sales
management and
resulted to a faster
sales growth
compared to liability
growth.
Evaluate liability trends in past years and compare against
revenue.
Assess creditor payment policies and drawdown facilities to
have better understanding how the firm manages its
liabilities.Examine the firm's access to trade finance and long-term
financing facilities.
Obtain insights on the firm's expansion plans and financing
strategies.
Ascertain the extent the firm relies on internal financing to
expand or manage its working capital needs.
PRODUCTIVITY
REPORT (PRR)
The assets have
generated above
average profit growth
for the firm over the
period.
Establish understanding of how the acquired assets formed
part of the expansion plans of the firm.
Check their rates of revenue and profitability arising from the
rapid asset expansion trends experienced by firm.
Ascertain the types of assets being acquired; trade versus
non-trade.
Evaluate whether the acquired assets are part of a horizontal
or vertical types of expansion.
Copyright 2018 © MyFinB Holdings Pte Ltd Page 16 of 21
PHASE FOUR (IV)
CHECK
LIST
TARGET
DATE●
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●
ROADMAP
STATEMENTACTION PLAN
CREDIT RISK CHECKLIST
BUSINESS
PERFORMANCE
REPORT
(BPR)
The firm experienced
a fairly high level of
revenue growth - with
an increasing
demand for its goods
and services.
Determine whether the main reason for sales growth was due
to margins/sales management or leverage.
Ascertain the level of risks undertaken by the firm to generate
the current/recent sales growth.
Evaluate the sustainability of the performance in subsequent
years as this may be a one-off streak.
Examine whether there are single major client or large
contract that resulted in the strong performance.
Ascertain whether there are any possible mergers and
acquisitions or non-organic growth to maintain position.
SHAREHOLDER VALUE
REPORT (SVR)
The shareholders
attained moderately
average returns
based on their
investments during
the period. Firm's
underlying valuation
would likely be
subdued during the
period.
Ascertain whether the losses are due to structural or cyclical
(seasonal) effects.
Further examine the relevance and demand of the firm's
products in the marketplace.
Obtain listings of key clients and ascertain whether any
pullout from any of its customers that caused the decline.
Assess whether there have been structural downward
changes in pricing expectations from customers.
Gather past performance data and future estimates on
pipelines and orders for a longer trend analysis.
RISK AND LIABILITIES
REPORT (RLR)
The firm's total
liability exposure was
somewhat high
relative to its
shareholder equity
level during the
period. Shareholder's
funds could be
inadequate to cover
all of the firm's
obligations.
Discuss with management on liability restructuring plans, if
any.
Gain more insights into the liability duration structure and
cost of financing for firm.
Assess going concern of firm and establish if the firm can
improve its asset-liability management.
Discuss with management on liability restructuring plans, if
any.
Evaluate any existing plans to boost equity position into the
firm.
PRODUCTIVITY
REPORT (PRR)
The capacity of the
firm's assets to
generate profits was
exceptionally strong.
It was more than able
to utilise its assets to
generate very high
levels of profitability.
Gain insights on how the assets contribute to the profitability
growth of the firm during the period.
Check with management for any risks associated with rapid
expansion of profits relative to assets.
Evaluate whether the acquired assets are part of a horizontal
or vertical types of expansion.
Need to check the quality of earnings through its customer
profile for sustainability and concentration.
Ascertain the extent of and rationale for inter-company
transactions, if any and its impact on overall profitability.
Copyright 2018 © MyFinB Holdings Pte Ltd Page 17 of 21
RECOMMENDATIONS FOR THE BUSINESS
To reduce variable costs without impacting your business adversely: 1) find a lower-cost supplier for
your company's product 2) scrutinize your products or services and cut down on those that are least
profitable while investing more on those products that are the most lucrative 3) cut down on
fluctuating costs like advertising and employee salaries first before targeting fixed costs like the
rent and utilities.
You should consider reducing the threat of high debt through 1) increasing sales revenues and
profitability by raising prices, reducing costs or increasing sales to pay off existing debt 2)
restructuring liabilities by agreeing on longer or scheduled payment terms with suppliers; replacing
existing loans with loans that have a lower interest rate or secured ones (replacing unsecured loans)
to reduce the interest rate; deferring tax liabilities 3) restructuring assets by selling unnecessary
assets, converting necessary assets into liabilities or use investments or cash to pay off loans 4)
raising more capital by finding more investors, eg venture capitalists; issuing more shares to current
investors or obtaining grants.
Retain high sales growth by 1) reviewing pricing strategies - find out what your competition is
charging and raise or lower your prices based on your goals. 2) expanding distribution channels –
explore new distribution channels to boost sales and revenue 3) diversifying your offerings - add
new products and services to create exponential growth; identify new opportunities within your
niche or replace old products with new ones 4) developing relationships – propose partnership with
a complementary company and develop cross promotions; acquire other businesses (competitors)
or expand internationally.
Improve your return on assets by 1) reducing asset costs - reduce inventory costs by managing the
levels of inventory to reflect your sales expectations; reduce equipment costs by selling idle fixed
assets or leasing equipment instead of buying a piece of equipment that may sit idle if your needs
change 2) increasing revenues - improve customer service or explore market segments you have not
sold to previously 3) reducing expenses - watch for excessive payroll expenses, rising materials
supplies and shipping costs that increase; reduce the number of employees you need by improving
productivity; reduce the cost of materials by renegotiating with suppliers or finding new suppliers.
Copyright 2018 © MyFinB Holdings Pte Ltd Page 18 of 21
"BEAR" RATINGS
DESCRIPTION METHODOLOGY
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Bus
ines
s P
erfo
rman
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Sha
reho
lder
Val
ue
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Ris
k an
d L
iabi
litie
s
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●
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Pro
duc
tivi
ty
●
●
●
●
Measures Return on Equity, Debt-to-Equity,
Profit before Tax Growth, Profit Margin for
latest year
Understand the efficiency and effectiveness
of investments
Indicates how much funds are used for
expansion/ secure new markets
Return on Equity (Pre-tax): Profit before Tax / Shareholders fund
Total Liabilities-to-Equity Ratio: Total Liabilities / Shareholder Fund
Profit before Tax Growth: (Profit before Tax (Current year) - PBT (previous year)) / Profit before Tax (previous year)
Profit Margin (After Tax): Profit after Tax / Sales
Measures current liability, liability-to-equity,
total liabilities growth and rate of sales
growth of the business
Determines the direction in which the
business is heading
Identify types of financing plans of the
business Indicates the level of risk exposure
and leverage faced by the business
Current Liabilities Ratio: Current Liabilities / Total Assets
Total Liabilities-to-Equity Ratio: Total Liabilities / Shareholder Funds
Total Liabilities Growth vs Sales Growth: ((Liabilities (Current year) – Liabilities (Previous year)) / Liabilities (Previous year)) - ((Sales (Current year) – Sales (Previous year) / Sales (Previous Year))
Rate of Sales Growth: (Sales (Current year) - Sales (previous year)) / Sales (previous
year)
Indicates the performance of assets
Provides an overview on how the assets are
being utilized and liabilities are managed
Portrays the interrelation between assets
efficiency and the profitability of the
business
Return on Assets Growth: (Profit after tax / Total Assets (current year)) - (Profit after
tax / Total Assets (previous year))
Return on Assets: Profit after tax / Total asset
Profit Before Tax Growth: (Profit before tax (current year) - Profit before tax (previous year)) / Profit before tax (previous year)
Asset Growth: (Total Assets (Current year) – Total Assets (previous year)) / Total
Assets (previous year)
Measures sales, expenses and profitability
of the business
Assess suitability for investment purposes
Evaluates sustainability for generation of
future inflows
Identification of ways to improve current
performance
Rate of Sales Growth: (Sales (Current year) - Sales (previous year)) / Sales (previous
year)
Rate of Cost Growth: (Cost (Current year) - Cost (previous year)) / Cost (previous
year)
Cost/Sales Growth: Cost / Sales (Current year) - Cost / Sales (Previous year)
Profit Margin (After Tax): Profit after Tax / Sales
Profit Margin Growth: (Profit after tax / sales (Current year)) - (Profit after Tax /
Sales (previous year))
FINANCIAL RATIO EXPLANATION
BLACK (B) EMARALD (E) AMBER (A) RED (R)
High Intrinsic Value Above Average Intrinsic Value Average Intrinsic Value Low Intrinsic Value
Greater than or equal to 10, less than or equal
to 12Greater than or equal to 7, less than 10 Greater than or equal to 4, less than 7 Less than 4, greater than or equal to 1
The Financial Scores are the result of conducting the regression analysis of more than 100,000 companies since 1992 and have been validated/back
tested against credit downgrades, defaults, corporate actions and significants shifts in the economic cycles: by countries and industry groups.
Copyright 2019 © MyFinB Holdings Pte Ltd Page 19 of 21
PRACTICAL USES
Bus
ines
s P
erfo
rman
ce ●
●
Sha
reho
lder
Val
ue
●
●
●
Ris
k an
d L
iabi
litie
s ●
●
Pro
duc
tivi
ty
●
●
The rating scores published by MyFinB are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. Accordingly, any user of
scores issued by MyFinB should not rely on any such scores or other opinion issued by MyFinB in making any investment decision. Scores are based on information received by MyFinB. MyFinB has established policies and
procedures to maintain the confidentiality of non-public information received during the scoring process. This report may not be reproduced in whole or in part in any form or manner whatsoever. This report is forwarded to the
Subscriber in strict confidence for use by the Subscriber as one factor in connection with rating and other business decisions. The report may contain information compiled from information which MyFinB does not control and
which has not been verified unless indicated in this report. Whilst every endeavor is made to ensure that the information provided is updated and correct, MyFinB disclaims any liability for any damage or loss that may be caused as
a result of any error or omission arising out of or in any way related to the contents of this report. Certain figures in the financial statements may have been adjusted for analytical classification purposes in accordance with the
methodology and research processes.
HOW TO USE THE REPORTS (Illustration)
If you are an investor or thinking of partnering with this company, the factors listed here could assist you in
the decision whether to invest in a company or consider partnering with them via joint ventures.
For creditors and debt financiers, you would want to have a good understanding of whether this company’s
business performance is sustainable to generate future inflows to pay existing and/or future obligations.
Existing and even potential new shareholders should use this report to find out how much the profits are
being generated and how these are being achieved.
It is also to gauge the adequacy of returns to shareholders who may come into the firm at different period of
time.
Users could have a closer look at how internal reserves are used for expansion, new funds being raised to
secure new markets/clients and how much dividends could be paid out to manage its ROE levels.
Financiers such as bank and private lenders should use this report under two circumstances:
1. At the point of lending
2. Upon lending, they can get a sense of how the balance sheet risks may evolve based on ascertaining their
risk appetite at the onset.
The effects of ascertaining risk appetite usually come at a later stage; and it is a powerful indicator to
determine where the firm is heading and how it is going to finance its plans
Financiers with vested interests in the firm are required to know the performance of assets that have been
invested by the firm.
The asset structure of the firm is a good indicator of how resourceful or efficient management has been in
order to generate profits for the period; and to what extent this has been achieved.
Copyright 2019 © MyFinB Holdings Pte Ltd Page 20 of 21
Company: Advancecon Holdings BerhadDate of Report: 23/11/2018Industry: Building Construction
MyFinB Group is an award-winning fintech company that specializes in AI -Natural Language Generation (NLG) since 2016.
One of MyFinB's (MFB) core missions is to help financial institutions enhancetheir speed, accuracy and competencies in analyzing large amounts offinancial and business data in the areas of business financing, commercialunderwriting, financial reviews and due diligence as well as active portfoliomonitoring.
MFB helps process various data types and use AI to turn them intomanagement reports to detect and classify risks, develop strategies forbusiness growth and rationalize operations.
MFB works with regulators, institutions and practitioners to build the capacityof financial professionals in AI, Big Data and Analytics.
CONTACT US
MyFinB (M) Sdn. Bhd.Level 13A, Menara Tokio Marine 189 Jalan
Tun Razak, Hampshire Park, 50450 Kuala Lumpur, Malaysia
MyFinB Holdings Pte. Ltd.6 Raffles Boulevard,
Marina Square #03-308, Singapore 039594
Tel : (65) 6932 2658
URL: www.MyFinB.com | Email: [email protected]: MyFinB | Twitter: @MyFinBGroup
MyFinB.com Inc.Werqwise, 149 NewMontgomery St, 4th
Floor, San Francisco, CA 94105, USA
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Campus, Lucknow Road,Allahabad Uttar Pradesh,
India 211004
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1193, Changning Road Office Tower 3, 22nd
Floor, Changning District, Shanghai 200051