3. BackGround Study ( LBS Bina )
LBS Bina Group Bhd. is a management and investment holding company, which engages
in the property development business. It actually operates through the following segments such
as : Property Development, Management & Investment, Trading & Others, Construction, and
also Racing Circuit. The Property Development segment develops industrial, commercial
properties and also residential. The Management & Investment segment focuses on investment
holding and provision of management services. The Trading & Others segment involves in
trading of building material, insurance agent, and selling of membership and covering insurance
products. Moreover, the construction segment undertakes in the building, project planning and
implementation contracting activities. The Racing Circuit segment develops and manages racing
circuit. The company was founded on June 29, 2000 and is headquartered in Petaling Jaya,
Malaysia.
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4.
Recent Development ( LBS Bina )
D’ Island Residence Corallia
In year 2016, LBS Bina Group BHD. will be launching 10 wellappointed projects. The picture
that shown above is one of the project in LBS Bina Group BHD. This project is a landed
property which is also named as “ D’ Island Residence Corallia ”. It is measured at a
generous 40ft x 80 ft, with a lofty 14feet ceiling and nestled within the idyllic D’ Island
residence where gentle breeze blows over the cool and calm waters of landscaped lake, the
gorgeous and capacious Corallia semidetached home provide all the settings in which lasting
memories are created. In this project, the square size and also the features of each and every
semidetached houses have already been fixed by LBS Bina Group BHD. Corallia
D' Island Residence is located in Puchong, Selangor. The prices of every single semidetached
houses are From RM1,630,900 RM2,126,900.In every semidetached houses, it will be
consists of 5 bedrooms , 1 utility , and also 6 bathrooms. The gross built up of this building are
3,968 ft sq.ft , and also the total units of this projects are 86 units. The achievements of LBS
Bina Group BHD. last year and upcoming plans in 2016 is that they are aiming RM1.2 billion in
sales of year 2016 Nevertheless in this project , it is design for family or even big family who
want to stay happily together. It have a lot of space inside each and everyone of this
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5. semidetached houses, it is really sizable and also superior. ‘ Come home to a place, where
memories echoes forever ’
BSP SKYPARK
Another development in demand by LBS Bina Group BHD. is Barrington Square located
in Jalan Saujana Putra, Bandar Saujana Putra, 42610 Jenjarom, Selangor, Malaysia. This BSP
Skypark is a high rise residential cumcommercial development located in the budding
township of Bandar Saujana Putra in Puchong.This township is relatively new and soon to be
completed, with other projects in line to being developed by the same developer. In terms of
amenities, there is a plan by the developer to be put in motion to provide for the tenants and
residents. BSP SKypark has the ease of accessibility to several main highways, where KLIA is
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6. only a 20minute drive away,while Putrajaya & Cyberjaya are only 15 minutes away. However
there are a few setback to this development as it is still fairly new. Residents currently living
within Bandar Saujana Putra complained about the weak mobile phone service an absence of
maintained schools. The features of this projects are 3 bedrooms and 2 bathrooms in standard
unit, Type C. The gross built up of this building (serviced residence) are 1,048 sq.ft. Moreover,
in this project there are also several development details. The developer is under Utuh Sejagat
Sdn Bhd, which the development land area are 21.14 acres and the land tenure are leasehold
about 99 years . Moreover, about the facilities for the serviced residence, basically it is
approximately 8 acres of overall development dedicated to facilities. It also have over 70
facilities organised into multi active and quiet zone. It separate dedicated jogging and also
bicycle tracks totalling approximately 2.7km long too. It also
have a 66,000 sq. ft clubhouse which spread over 4 levels. In
this building, it have 8 different type of units layout to choose
individuality by the buyers. It also have 3 tier security system
in this building , so that residents can have a peace of mind to
stay relaxable and happily. The CCTV monitored lift , podium
lobby and also the car park are all with panic buttons. Last but
not least , the expected date of completion are within 4 years
and the launch price is from RM399,900.00. BSP 21 is a
lifestylefocused development with over 70 amazing facilities.
So now, get ready to live 21 hours of happiness.
TYPES OF UNITS LAYOUTS
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7.
Profitability Ratio
The following table shows the profitability ratio calculation and interpretation for LBS Bina Bhd.
in the year 2012 and 2013.
Profitability
Ratios
2012 2013 Interpretation
Return On Owners Equity
Ratio:
00%Net Profit
Owners equity × 1
00%
39,003,430
516,690,656.50 × 1
=7.55%
00%699,735,858
397,323,654
× 1
=56.78%
ROE increases greatly
from 7.55% in 2012 to
56.78% in 2013. Shows
that the business is earning
higher returns of capital in
2013.
Net Profit Margin Ratio:
00%Net Sales
Net Profit
× 1
00%39,003,430
509,644,355 × 1
=7.65%
00%533,532,722
397,323,654
× 1
=74.47%
NPM increases greatly
from 7.65% in 2012 to
74.47% in 2013. This is
due to a huge increase in
net profit in 2013
compared to 2012.
Gross Profit Margin Ratio:
00%Net Sales
Gross Profit
× 1
00%509,644,355
146,227,906
× 1
=28.69%
00%533,532,722
168,577,154
× 1
=31.60%
GPM increases from
28.69% in 2012 to 31.60%
in 2013. Shows an increase
in efficiency of managing
COGS and Net Sales in
2013 compared to 2012..
General Expense Ratio:
00%Net sales
Total General Expenses
× 1
00%67,470,147
509,644,355 × 1
=13.24%
00%85,596,945
533,532,722 × 1
=16.04%
GER increases from
13,24% in 2012 to 16.04%
in 2013. This shows that
the general expenses spent
in 2013 is higher than the
general expenses spent in
2012.
Financial Expense Ratio:
00%15,170,850
509,644,355 × 1 00%18,457,247
533,532,722 × 1 FER increases from 2.98%
in 2012 to 3.46% in 2013.
This shows that the
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8. 00%Net Sales
Total Financial Expenses
× 1
=2.98%
=3.46%
financial expenses spent in
2013 is higher than the
amount spent in 2012.
Financial Stability Ratio
The following table shows the profitability ratio calculation and interpretation for LBS Bina Bhd.
in the year 2012 and 2013.
Stability
Ratio
2012 2013 Interpretation
Working Capital Ratio:
Total Current Assets
Total Current Liabilities
520,720,661
927,829,389
=1.78 : 1
609,599,483
925,492,766
=1.52 : 1
In 2013, For every RM 1
in current liability, LBS
Bina has RM 1.52 to pay
for it. A huge drop from
RM 1.78 in 2012 due to
the increase in current
liabilities.
Total Debt Ratio:
00%Total Assets
Total Liabillities
× 1
00%908,176,834
1,435,008,317 × 1
=63.29%
00%2,009,812,670
1,137,172,437
× 1
=56.58%
In year 2013, TDR is
lower at 56.58% compared
to 63.29% in 2012. The
decrease in TDR is good
for the business as
business with TDR above
50% risk a higher chance
of bankruptcy.
Inventory Turnover Ratio:
65days 3 ÷ Stocks (average)
Costs of goods sold
653 ÷ 363,416,449
15,721,777.5
=15.79 days
653 ÷ 18,084,313
364,955,568
=18.09 days
There is a small increase in
ITR from 15.79 days in
2012 to 18.09 days in
2013. This means the
company is not able to
market their batch of
goods faster to pay off
their liabilities.
Interest Coverage Ratio:
Interest Expenses
Net profit + Interest Expenses
18,457,247
39,003,430+18,457,247
15,170,850
397,323,654+15,170,850
In 2013, LBS Bina has a
huge increase in ICR and
is able to pay off its
interest rate by 27.19 times
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12.
FTSE BURSA MALAYSIA KLCI INDEX JAN 2015JAN 2016
In order to figure out if an investment in LBS Bina is worth the risk, 3 points of time would be
selected from the time period January 2015 to January 2016 to determine the performance of the
business against the market.
Our first point of the period is January 5, 2015, the current share price is Rm 1.65 and the KLCI
Index is 1736.62. On February 5, 2015, the share price dropped to Rm 1.55 and the index
increase to 1803.09. The decrease in share price is (1.551.65)/1.65 x 100% = 6.06%. While the
index change is (1803.091736.62)/1736.62 x 100%= +3.83%. This concludes that the company
performance is much worse than the market performance.
Our second point is July 28, 2015. The current share price is Rm 1.48 and the index is 1699.70.
On August 28, 2015, the market share price dropped to Rm 1.35 and the index also dropped to
1612.74. The share differences are as follows, (1.351.48)/1.48 x 100%= 8.78% while the index
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13. change is (1612.741699.70)/1699.70 x 100%= 5.12%. This concludes the company
performance is worse than the market performance.
Our final point is September 1, 2015. The current share price is Rm 1.28 and the market index is
1609.21. On October 1,2015. The share price increased to 1.35 with the index also increasing to
1633.93. The increase of share price is (1.351.28)/1.28 x 100%= 5.47% and the increase in
index is (1633.931609.21)/1609.21 x 100%= 1.54%. This point concludes that the company is
able to perform better than the market after a financial hit.
By comparing LBS Bina and the overall market, LBS Bina often suffer a large decrease in share
prices compared to the market. Although LBS Bina is also able to recover slightly faster than the
market after a financial hit. The bad drop is share prices throughout the period strongly advises
against investing in LBS Bina.
Investment Recommendation
According to LBS Bina’s price earning ratio for the year 20122013, the increase of return of
1.63 times in 2013 from 8.66 times in 2012 would have lit up the eyes of many investors.
LBS bina’s profitability ratio, the return on equity (ROE), net profit margin (NPM) and gross
profit margin (GPM) has slightly improved and shown positive signs for the business. Although
the expenses spent has increased from the year 2012 to the year 2013, the overall profit has
indicated that the business is doing fairly well. However, LBS Bina’s ability to pay off its current
liabilities had decreased from 1.78 to 1.52 and does not satisfy the 2:1 ratio of staying within the
borderline of borrowing.
Besides that, LBS Bina’s total debt ratio (TDR) showed that its total debt has decreased by
6.71% to 56.58 but it’s still considered high above the 50% which ensures that the business will
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14. not have a risk of bankruptcy. Their stock turnover has taken a longer period of time so they are
taking a longer time to generate more cash quickly, making the business to pay off its liabilities
slower. On the other hand, LBS’s interest coverage ratio (ICR) has also shown a massive
improvement in 2013 compared to 2012.
In other words, the company has demonstrated a huge profitability and financial stability and its
shares are available at to warrant an investment. An investor will only need to wait for a short
period of time that is 1.63 years as of 2013 to recoup his investment. The company has shown
good promise in terms of their growth in revenue. As such, LBS has proven to be a stable
company. So, LBS’s share is worth to invest back then.
However, In the following 2 years, after a sharp increase in 4 months to its highest market price
of RM1.84 per share on 10 April 2014, the share price has fallen gradually throughout the rest of
the remaining period reaching its lowest point on September 1st 2015. The comparison between
the company and the market has also proven that LBS is not worth investing at the moment.
Therefore, from the above analysis of Profitability Ratios, Financial Stability Ratios, Price
Earning Ratios and Comparison to market Index, we can conclude that LBS used to be
recommended to invest in but not recommended to invest in at this current period.
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26. Summary
From this assignment, we have learnt many things. We have learnt the background of
LBS Bina, the projects that they are undergoing and completed. It has been a really good
opportunity to be able to do a research on such a company. We have also learnt how to put what
we studied in class to calculate the various profitability ratio, financial stability ratio and price
earning ratio.
We have learnt how to interpret the meanings of the ratio and how to justify what the
numbers mean. This assignment has teached us how to know if a share is profitable and whether
we should invest in a company or not. I think that this will help us in the future when we need to
do investments for ourselves.
We have also put our knowledge that we gained from attending the classes into real
world usage. This assignment helps us to fully understand the terms and meanings used in this
module.
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