SPRITZER BHD LARGEST WATER BOTTLE PRODUCERS NATURAL MINERAL WATER, DISTILLED CERTIFIED BY WATER, CARBONATED& QUASI,LLC,USA & ISONON CARBONATED FRUIT 9001: 2008 BY SIRIM FLAVOURED DRINK MALAYSIA’S BEST SELLING NATURAL WATER
GUINNESS ANCHOR BHD QUALITY BRANDED LEADER OF BEER & STOUT TIGER, GUINNESS, CERTIFIED BY MINISTRYHEINEKEN, ANCHOR OF HEALTH & ISO 9001: SMOOTH, MALTA, 2001STRONGBOW & SOL MALAYSIA’S BEST SELLING BEER & STOUT
FRASER & NEAVE BHD LARGEST ISOTONIC DRINK PRODUCERS F&N FUN FLAVORS, 100 PLUS, SEASONS, CERTIFIED HALALSUNKIST, MAGNOLIA , PRODUCT & TRUSTEDFARMHOUSE & FRUIT BRAND FOR TEE GENERATION MALAYSIA’S BEST ISOTONIC DRINK (100 PLUS)
YEO HIAP SENG BHD ONE OF LARGEST FOOD & BEVERAGE PRODUCERS BOTTLED SOYA BEAN CERTIFIED HALALMILK, CHRYSANTHEMUM PRODUCT & TEA, CANNED CURRY PARTNERSHIP CHICKEN, INSTANT AGGREEMENT NOODLES & YOGURT 1ST GLOBAL BRAND IN SOYBEAN PACKAGES
Weighted Average Cost of Capital tell us the return of bothstakeholders which are equity owners and lender can expect. WACCrepresents the investors opportunity cost of taking on the risk of puttingmoney into a company. Thus, the formulation of WACC is formed bythree components as following: WACC = S/V(Rs) + B/V (Rb) * (1-Tc) + P/V (Rp) The cost of equity capital is derived from Capital Asset Pricing Model (CAPM). Thus, the formulation of CAPM is formed as following: Ri = Rf + βi [ Rm – Rf ]
Capital structure shows a company how much the company isfinanced by equity and debt. Besides, it also illustrates thelong-term financing of the company. Therefore, debt to equityratio indicates the extent to which the business relies on debtfinancing. Thus, the formulation is as follows: Debt to Equity Ratio = Long Term Debt Total Shareholder’s EquityCompany financed with debt can save cost of taxation during itsoperation that’s called leveraged; otherwise it will be anunleveraged company.
5-YEARS DEBT TO EQUITY RATIO COMPARISONS SPRITZ GAB 2% 5% 2005 40% 27% 2006 2005- 2007 2009 2008 26% 2009
LEVERAGED / UNLEVERAGED COMPARISONS LEVERAGED /COMPANIES REASONS UNLEVERAGED HIGHLY COST OF DEBT IS VERY SPRITZ LEVERAGED HIGH GAB UNLEVERAGED 100% EQUITY FINANCING COST OF DEBT IS HIGH F&N LEVERAGED FROM 2008 ONWARDS HIGHLY COST OF DEBT IS VERY YEOS LEVERAGED HIGH
Dividends are payments made by the company to its shareholders.It is the portion of corporate profits paid out to stockholders. Whena corporation earns a profit or surplus, that money can be put totwo uses: it can either be re-invested in the business (calledretained earnings), or it can be paid to the shareholders as adividend. Many corporations retain a portion of their earnings andpay the remainder as a dividend. Thus, the formulation is asfollows: Dividend Payout Ratio = Dividend Per Share (DPS) Earning Per Share (EPS)
Working capital actually shows the companys current position. It tells uswhat would be left if a company raised all of its short term resources, andused them to pay off its short term liabilities. Thus, the formulation is asfollowing: Net Working Capital = Current Asset – Current Liabilities The operating cycle is the number of days from cash to inventory to accounts receivable to cash. It reveals how long cash is tied up in receivables and inventory. Thus, the formulation is as following: Operating Cycle = Inventory Period + Receivable Period The cash cycle is the length of time between the purchase of raw materials and the collection of accounts receivable generated in the sale of the final product. It is also called cash conversion cycle. Thus, the formulation is as following: Cash Cycle = Operating Cycle – Payable Period
PART 1 SUMMARY : AVERAGE WACC COMPANIES 5 YEARS AVERAGE WACC SPRITZ 4.59% GAB 2.62% F&N 4.21% YEOS 11.73%Therefore, based on the average WACC comparisons, we would highlyrecommend investors to invest in GAB since the company has the lowestWACC.
PART 2 SUMMARY : DEBT TO EQUITY RATIOTherefore, based on the comparisons, we would highly recommendinvestors to invest in GAB since the company is debt free.PART 3 SUMMARY : TOTAL DIVIDEND DISTRIBUTION AVERAGE SPRITZ GAB F&N YEOS TOTAL 7,594,040 484,625,000 596,027,000 73,627,000 DIVIDEND (RM)Therefore, we can conclude that based on the dividend distribution, F&Nwould be the best company to invest as it has the highest dividenddistribution and also the highest dividend per share compared to other 3companies.
PART 4 SUMMARY : AVERAGE NET WC & AVERAGE OC, PP & CC AV SPRTZ GAB F&N YEOS CA 60,593 338,378 1,242,075 262,907 CL 26,169 152,244 662,381 119,405 NET WC 34,424 186,135 579,695 143,502Based on the analysis, we can conclude that the best company to investwould be F&N due to its large capital base.COMPANIES OPERATING CYCLE PAYABLE PERIOD CASH CYCLE SPRITZ 261.80 24.74 237.07 GAB 65.54 38.23 27.31 F&N 143.60 98.59 45.01 YEOS 166.01 123.56 42.45Therefore, GAB is highly recommended to investors as the company has thelowest operating cycle.
CONCLUSIONS NET DIVIDEND OPERATINGCOMPANIES WACC WORKING RANK POLICY CYCLE CAPITAL SPRTZ 3 4 4 4 3 GAB 1 2 2 1 1 F&N 2 1 1 2 1 YEOS 4 3 3 3 2