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SCHOOL OF ARCHITECTURE, BUILDING & DESIGN FOUNDATION IN NATURAL & BUILT ENVIRONMENT
August Intake 2014 Semester 2
Basic Accounting (FNBE0145)
Lecturer : Mr. Chang Jau Ho
Assignment : Financial Ratio Analysis
Company : BONIA CORPORATION Berhad
Name Student ID No Ng Huoy Miin 0319097 Trace Gew Yee 0320269
1
Content
Title Page Company Background 3
Recent Development 4
Ratio Analysis & P/E Ratio 5 9
Investment Recommendation 10 11
Appendix
Appendix A: Consolidated Balance Sheet
Appendix B: Consolidated Statements of Income
12 25
References 26
2
Company Background
With its strong presence in the Malaysian fashion scene for over 30 years, Bonia moves its influence into international arena. Today, Bonia is a brand leader in fashion products made from fine leather and highquality accessories.
Bonia Corporation was incorporated on 28 August 1991 as private limited
company under the name of Premium Fashions Sdn Bhd. On 22 June 1993, the company was converted into a public limited company and changed its name to Bonia Corporation Berhad on 18 September 1993. The company was subsequently listed on the Second Board of the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia) on 23 August 1994. On 23 April 2007, Bonia Corporation was transferred to the Main Board of Bursa Malaysia. Bonia Group is principally engaged in manufacturing of leather goods / shoes; designing, promoting and marketing of fashion products for the company’s own brands; and distributing fashion products for some International Brands.
The Bonia Group had its humble beginning in 1978 with the formation of Bonia
Trading Co., a partnership dealing in leatherwear and accessories. In 1989, the Group established a manufacturing facility in Melaka to design and manufacture leather goods.
The company began its organic expansion strategies by positioning its products in
the domestic market and gradually into foreign territories. Even in those early years, the bone management recognizes the importance of brand building as opposed to just selling its product. The Bonia brand is associated with fashion, fine craftsmanship and quality. 28 years henceforth, the Bonia group can proudly reflect on its achievement of being the leading Malaysian company with strong positioning as a quality leatherwear fashion house.
Today, Bonia Corporation Berhad is one of Malaysia's leading local Leatherwear
manufacturers, enjoying a 28% market share of local products with 37 boutiques and over 200 counters within the department, retail and dutyfree stores across Malaysia, carrying product ranges from bags, wallets, shoes, apparels to accessories.
The group is gaining a strong foothold in the Middle East following the opening
of its flagship boutique in Jeddah, and three others in Saudi Arabia with more plans to come. Bonus financial performance in FY 2006 includes a 15% sales increase with marginally higher operating profit margin while market capitalization was up by 122% at RM 130 million.
3
Recent Developments
One of the most recent developments by Bonia Corporation is opening two boutiques in Vietnam. The first one is in Crescent Mall, HCMC, Vietnam in January 2012 and the other one is in Hanoi, Vietnam in June 2012. Next, they opened another boutique in Surabaya, Indonesia in July 2012. In November 2012, Bonia also launched customisation services at Pavilion, Kuala Lumpur and Singapore. In the same month, Bonia held the Pavilion, Kuala Lumpur Grand Launch.
Moreover, Bonia launched its own Instagram @boniafashion in April 2013. In
May 2013, BONIA launched its First Popup Store at Singapore and announced Sonia Sui, a famous model and actress in Taiwan, as its First International Brand Ambassador. In addition, Bonia opened another boutique in Trans studio Mall, Bandung Indonesia in Dec 2013.
Furthermore, Bonia opened another boutique in Indonesia located at Centre Point Medan Indonesia in January 2014. In May 2014, Bonia launched customisation services Italian Trunk and Special Edition: The Sonia Bag. Besides, Bonia opened a boutique in Skywalk Shopping Mall, Mandalay, Myanmar on 10th May 2014. Lastly, the opening of boutique in AEON Mall, Phnom Penh, Cambodia on 8th August 2014.
4
Profitability Ratios
2013 (RM,000) 2014 (RM,000)
Return on Equity (ROE)
%x100Net Profit
Average O/E = x100% 41000(284,259+315,503)÷2
= x100% 41,348299,881
=13.79%
%x100Net Profit
Average O/E
x100%= 55000(315,503+360,620)÷2
= x100% 55,123338,062
=16.27%
Net Profit Margin (NPM)
%x100Net Sales
Net Profit = x100%41,348632,318
=6.54%
%x100Net Sales
Net Profit = x100%55,123691,608
=7.97%
Gross Profit Margin (GPM)
%x100Net Sales
Gross Profit = x100% 632,318385,616
=60.98%
%x100Net Sales
Gross Profit = x100%422,275691,608
=61.05%
Selling Exp.Ratio
(SER)
%x100Net Sales
Total Selling Exp. = x100%632,318191,177
=30.23%
%x100Net Sales
Total Selling Exp. = x100% 691,608204,944
=29.63%
General Exp. Ratio (GER)
%x100Net Sales
Total General Exp. = x100%632,318121,853
=19.27%
%x100Net Sales
Total General Exp. = x100% 691,608131,253
=18.98%
Financial Exp.
Ratio (FER)
x100%Net Sales
Total Financial Exp. = x100%7,499632,318
=1.18%
x100%Net Sales
Total Financial Exp. = x100%8,085691,608
=1.17%
5
Profitable Stability Over the year 2013 and 2014, The Return Of Equity (ROE) has increased from 13.79% to 16.27%. This means the owner has received more return of the capital compare to last year. Over the year 2013 and 2014, Net Profit Margin (NPM) has increased from 6.54% to 7.97%. This means the ability of controlling the expenses has become better compare to last year. Over the year 2013 and 2014, Gross Profit Margin (GPM) has increased from 60.98% to 61.05%. This means the business has become better with the ability of controlling the COGS expenses compare to last year. Over the year 2013 and 2014, Selling Expense Ratio (SER) has decreased from 30.23% to 29.63%. This means the business has become better with the ability of controlling the selling expense compared to last year. Over the year 2013 and 2014, General Expense Ratio (GER) has decreased from 19.27% to 18.98%. This means the business has become better with the ability of controlling the general expense compared to last year. Over the year 2013 and 2014, Financial Expense Ratio (FER) has decreased from 1.18% to 1.17%. This means the business has become better with the ability of controlling the financial expense compared to last year.
6
Stability Ratios 2013 (RM ’000) 2014 (RM ’000)
Working Capital (WCR)
Total Current Asset
Total Current Liabilities
= 112890
292245
2.6 : 1=
Total Current Asset
Total Current Liabilities
= 135474
327258
.4= 2 : 1
Total Debt (TDR)
×100%Total Assets
Total Liabilities
×100%= 492996
177493
6%= 3
×100%Total Assets
Total Liabilities
×100%= 613088
252468
1.2%= 4
Stock Turnover (STR)
65 days÷3 Cost ofGood Sold
Average Inventory
65÷= 3 246702
( 83958+110280 )÷2
143.7 days=
65 days÷3 Cost ofGood Sold
Average Inventory
65÷= 3 269333
( 144620+110280 )÷2
172.7 days=
Debtor Turnover (DTR)
65 days÷3 Credit Sales
Average Debtors
65÷= 3 316159
( 105384+89546 )÷2
112.5 days=
65 days÷3 Credit Sales
Average Debtors
65÷= 3 345804
( 105384+112265 )÷2
114.9 days=
Interest Coverage (ICR)
Net ProfitInterest Exp.+Net Profit
= 47568
(3535+47568)
1.074 times=
Net ProfitInterest Exp.+Net Profit
= 60590
(3972+60590)
1.066 times=
7
Stability Ratios Over the year 2013 and 2014, the Working Capital (WCR) has decreased from 2.6 to 2.4. This means the business’ ability to pay back his/her current liabilities were getting worse. In addition, it does satisfy the 2:1 ratio. Over the year 2013 and 2014, the Total Debt (TDR) has increased from 36% to 41.2%. This means the business’ total debt has increased. However, it does not exceed the maximum 50% limit. Over the year 2013 and 2014, the Stock Turnover (STR) has increased from 143.7 days to 172.7 days. This means the business is selling the products slower. Over the year 2013 and 2014, the Debtor Turnover (DTR) has increased from 112.5 days to 114.9 days. This means the business using more time to collect the debt. Over the year 2013 and 2014, the Interest Coverage (ICR) has decreased from 1.074 times to 1.066 times. This means the business’ ability to pay his/her interest expenses is getting worse. In addition, it does not satisfy the minimum requirement of 5 times.
8
Price Earning Ratio (P/E Ratio) BONIA’s current share price is $40.10 per share and its Earning Per Share (EPS) is $2.67.
P/E Ratio = Current Share PriceEarning Share Price = 0.99
0.0627
= 15.79
This shows that the Price Earning Ratio (P/E Ratio) for BONIA is 15.79. It means that an investor who invests now will have to wait 16 years to recoup his investment.
9
Investment Recommendation (a) Profitability Based on the calculations and the information provided, Bonia Corporation had
experienced a good profitability since Return on Equity has increased from 13.79% to
16.27%, it shows more return from investments which is good. Based on the Net Profit
Margin which has increased from 6.54% to 7.97%, the company is better at controlling
its expenses which is also a good thing. The Gross Profit Margin indicates that they are
getting better at controlling their Costs of Goods Sold which is good too. On the other
hand, Selling Expenses, General Expenses and Financial Expenses Ratio increased 0.6%,
0.32% and 0.01% in the year. This means the business is getting better at controlling the
expenses.
(b) Stability
For the financial stability ratios of Bonia Corporation, the Working Capital Ratio has
decreased from 2.6 to 2.4 and it means that it does satisfy the ratio of 2:1 hence this is not
a good thing as the ability of this company to pay back its current liabilities has become
worse that the company is not able to pay back its current liabilities in a shorter time.
Moreover, the Total Debt Ratio has increased from 36% to 41.2% and this shows that the
business is now facing even more debt compare to last year. Furthermore, the Stock
Turnover Ratio has increased from 143.7 days to 172.7 days and this can be said that the
business is selling their products slower than last year. For Debtor Turnover Ratio ,it has
increased from 112.5 days to 114.9 days as the using of time to collect the debt has
became more. Lastly, the Interest Coverage Ratio has a slight increase from 1.074 times
to 1.066 times and this is good for the business because the ability to pay back their
interest expense has become worse than the two years we compared and still does not
satisfy the minimum requirement of 5 times.
10
In conclusion, the company is a good company to invest in. It is financially stable
and is able to make good profit at the same time. However, its Price Earning Ratio is 16
which mean that investors will have to wait for 16 years before recouping his
investments. If the investor is not conservative and is willing to wait for 16 years, then
Bonia Corporation is a very good company to invest in.
11
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References:
1. http://www.bonia.com/
2. http://financials.morningstar.com/ratios/r.html?t=BNACF
3. http://bonia.listedcompany.com/ar.html
4. http://www.bloomberg.com/quote/BON:MK
5. http://www.bonia.com/mobile/about_history.html
6. https://www.linkedin.com/company/bonia-corporation-berhad
7. http://www.klse.info/counters/view/stock/9288
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