Financial management Group assignment

Financial Management
(FIN60203)
Bachelor of Quantity Surveying (Honours)
School Of Architecture, Building & Design
GROUP ASSIGNMENT
Name Student ID
Tan Jia San 0322406
Kenneth Tan Sin Kwang 0322482
Lew Quo Ming 0322884
Ng Sheng Zhe 0323830
Goh Jia Jun 0323302
Yip Xiaojung 0323852
Lecturer: Tay Shir Men
Date of Submission: 29th November 2018

TABLE OF CONTENTS
Company Background
Principle Activities
Analysis of Revenue Contributions
Evaluation of Major Industries
Strength & Weaknesses Analysis
Strategic Plans for Seizing Opportunities
Major Capital Investments
Analysis of Financial Conditions
Conclusion & Recommendations
Appendices

COMPANY BACKGROUND
KEN Holdings Berhad operates as an investment holding company. The KEN
Holdings Berhad is Malaysia’s 1st
Multiple Award- Winning Green Development. KEN
Holdings began in the 1980s are a specialist contractor providing engineering and have
since grown to be the reputable property development company it stands as today. The
KEN narrative is telling of its dedication to details and quality and as its growing portfolio
stands to show, this pioneer of green building design here in Malaysia will seek to
continue making its mark, steadily.
Dato’ Tan Boon Kang is the founder of the Group and has been the driving force
behind the growth of the Group in all its activities over the past 38 years. He was
appointed to the Board on 18 March 1996 and has been Chairman of the Group from
March 2009 to February 2013. He is the father of Mr. Tan Chek Siong, Group Managing
Director and the brother of Mr. Tan Moon Hwa, Executive Director of the Company.
In 2017, the Malaysian property market remained soft with concerns on
oversupply of properties, stringent lending environment from financial institutions, hike
in interest rates, increasing cost of living and cautious consumer spending which led to
the dampening of demand and price of properties. Despite the challenging economic
environment, the Group achieved a commendable financial performance with higher

revenue of RM104.2 million as compared to RM92.8 million in the previous year on the
back of higher sales and progressive revenue recognition form the KEN Rimba
Condominium 1 project in Shah Alam. Correspondingly, the Group’s profit before tax
increased to RM62.9 million during the year.

Vision, Mission and Core Values
Vision
KEN Holdings recognizing their responsibilities as a developer and nation
builder, they will aspire to deliver sustainable, quality developments that exceed
customers’ expectation.
Mission
1. To enhance shareholders’ value through sustainable resource management and sound corporate
governance that promotes steady earnings growth.
2. Committed to delivering sustainable quality homes that are efficiently planned and innovatively
designed on schedule.
3. Embrace sustainable practices to preserve the environment for future generations.
4. Create learning opportunities and ac conductive working environment that promotes teamwork and
work life balance for sustainable job satisfaction.

Company’s core values
● We are hands-on and committed
○ We will accomplish, learn and coach effectively with our own hands -on experience. We
will commit ourselves at all times faithfully fulfilling our responsibilities as a developer to
the communities in which we operate.
● We take pride in our work
○ We are proud of our KEN brand and we will keep your brand promise to constantly
improve our ability to contribute to customers. We will be Careful, Mindful and Thoughtful
in all things that we do to fulfill our Vision Statement.
● We are innovators and we create value
○ We will continually innovate and create value for our brand to achieve world class
recognition
● We are part of the KEN Family
○ We will treat everyone in KEN as a family member and we will pool our abilities to
accomplish our shared goals. No matter how talented we are as individuals, without
cooperation and family spirit, we will be a company
● We embrace sustainable practice – “ Mottanai”
○ We must value the precious resources that we have and use them wisely, efficiently and
effectively. We will embrace sustainable practices and endeavours to create more value
by using lesser resources.

LIST OF 30 LARGEST SHAREHOLDERS OF THE COMPANY

PRINCIPAL ACTIVITIES OF THE COMPANY
KEN Holdings Berhad is a company involved in investment holding and provision of
management services. This company also has a subsidiary company which also involved in
property holding, properties development, investment, civil engineering works, geo technical
specialist engineering services,building works, land reclamation and marine engineering,
property management and car park management. Majority if these revenue originates from these
operations and services helped to maintain the company’s running for all these years.
Besides that, financial analysis of the company has also been done to clearly explain and
understand on how all these operations and services had contributed to the company yearly
income. From there, the annual profit of this company can also be determined. Based on the
financial statistics of the company, KEN Holdings Berhad had generated RM 104,208,000.00 of
revenue in the Year of 2017 which is approximately RM 47,392,000 more than the Year 2016.
However, revenue generated is from construction and properties development but most of it
comes from properties development as it obtained around 97% and construction contract
generated from 3 % of it’s revenue in the Year 2017.
The financial statistic of KEN Holdings Berhad also illustrated that there’s a fluctuation
of the company’s net profit before taxation between the Year 2013 to 2017. The profit of this
company gradually increases from the Year 2015-2017 and the profit for the Year 2017 alone is
RM 62,867,000. KEN Holdings Berhad manage to obtain approximately 59% of it’s profit from
properties development alone in the Year 2017 while the remaining 41% is from construction
operations.

Moving on will be the net earning per share of the company. The basic earnings per share
are calculated based on the consolidated profit for the financial year attributable to owners of the
parent and the weighted average number of ordinary shares in issue during the financial year
There’s a significant decrease of earning per share from the Year 2013-2015. However, it’s also
has a gradual increase from the Year 2016 to 2017 from 15 to 28 sen per share. Lastly,there have
been no significant changes in the nature of these activities of the Company and its subsidiaries
during the financial year.

ANALYSIS OF REVENUE CONTRIBUTIONS
2013
Figure 3.1: Revenue Contributions of the Different Segments for Year 2013
Figure 3.3: Reconciliations of reportable segment revenues, profit or loss, assets and other
material items Revenue Contributions of the Different Segments for Year 2013

Pie chart 3.1: Revenue Contributions of the Different Segments for Year 2013
According to the information extracted from KEN Holdings Berhad 2013 annual report,
the company had generated a total revenue of RM 55,828,000.00 (deduction of elimination with
the total amount of RM 33,775,000). We can observe that the property segment had generated
the most revenue with an amount of RM 54,731,000.00 (deduction of elimination of
inter-segment transactions or balances) which hold 61.60% of the overall revenue which is
shown in the pie chart. Comparing with the revenue generated in Year 2012, KEN Holdings
Berhad had increased their revenue with a total of RM 738,000.00 in the property development.
The following most revenue segment in KEN Holdings Berhad in Year 2013 is the construction
segment which earns a total of RM 33,775,000.00 and it weigh 38.02% of overall revenue.
Comparing with the revenue generated in Year 2012, the property development has decreased a
revenue of RM 5,141,000.00 in Year 2013. Lastly, in Year 2013, the revenue from the
management fee has the amount of RM 336,000.00 that weigh 0.38% of the overall revenue and
compare to revenue of Year 2012, in the year of 2013 had increased RM 217,000.00 of revenue.

2014

the most revenue with an amount of RM 90,688,000.00 which hold 60.78% of the overall
revenue which is shown in the pie chart. Comparing with the revenue generated in Year 2013,
KEN Holdings Berhad had increased their revenue with a total of RM 35,196,000.00 in the
property development. The following most revenue segment in KEN Holdings Berhad in Year
2014 is the construction segment which earns a total of RM 58,114,000.00 and it weigh 38.95%
of overall revenue. Comparing with the revenue generated in Year 2013, the property
development has increased a revenue of RM 35,196,000.00 in Year 2014. Lastly, in Year 2014,
the revenue from the management fee has the amount of RM 394,000.00 that weigh 0.26% of the
overall revenue and compare to revenue of Year 2013, in the year of 2014 had increased RM
58,000.00 of revenue.

2015

Pie chart 3.3: Revenue Contributions of the Different Segments for year 2015
the most revenue with an amount of RM 73,789,000.00 which hold 50.96% of the overall
revenue which is shown in the pie chart. Comparing with the revenue generated in Year 2014,
KEN Holdings Berhad had decreased their revenue with a total of RM 16,899,000.00 in the
2015 is the construction segment which earns a total of RM 70,522,000.00 and it weigh 48.71%
of overall revenue. Comparing with the revenue generated in Year 2014, the construction has
increased revenue of RM 12,408,000.00 in Year 2015. Lastly, in Year 2015, the revenue from
the management fee has the amount of RM 477,000.00 that weigh 0.33% of the overall revenue
and compare to revenue of 2014, in the year of 2015 had increased RM 83,000.00 of revenue.

2016

Pie chart 3.4: Revenue Contributions of the Different Segments for year 2016
the total amount of RM 95,718,000). We can observe that the construction segment had
generated the most revenue with an amount of RM 95,718,000.00 which hold 50.77% of the
overall revenue which is shown in the pie chart. Comparing with the revenue generated in Year
2015, KEN Holdings Berhad had increased their revenue with a total of RM 25,196,000.00 in the
construction. The following most revenue segment in KEN Holdings Berhad in Year 2016 is the
property development which earns a total of RM 92,492,000.00 and it weigh 49.06% of overall
revenue. Comparing with the revenue generated in Year 2015, the property development has
increased revenue of RM 18,703,000.00 in 2016. Lastly, in Year 2016, the revenue from the
management fee has the amount of RM 324,000.00 that weigh 0.17% of the overall revenue and
compare to revenue of Year 2015, in the year of 2016 had decreased RM 153,000.00 of revenue.

2017

the total amount of RM 57,408,000). We can observe that the property development segment had
generated the most revenue with an amount of RM 101,555,000.00 which hold 62.84% of the
overall revenue which is shown in the pie chart. Comparing with the revenue generated in Year
2016, KEN Holdings Berhad had increased their revenue with a total of RM 9,063,000.00 in the
2017 is the construction which earns a total of RM 57,692,000.00 and it weigh 35.70% of overall
revenue. Comparing with the revenue generated in Year 2016, the construction has decreased a
revenue of RM 38,026,000.00 in 2017. Besides, the investment properties generate a revenue of
RM 2,063,000.00 that weigh 1.28% of the overall revenue and compare to revenue of Year 2016,
in the year of 2017 has increased 100% as no revenue earned in Year 2016. Lastly, in Year 2017,
the revenue from the management fee has the amount of RM 306,000.00 that weigh 0.19% of the
overall revenue and compare to revenue of Year 2016, in the year of 2017 had decreased RM
18,000.00 of revenue.

Evaluation of Major Industries
1. Current Size of Industry
KEN Holdings Berhad is arguably the country’s most eco-friendly property developers
with a paid-up capital of around Rm 95.9 million. It’s unique and diversified portfolio projects
had ingrained as a key player in the property development industry. It also consists of quite a
number of subsidiary in different areas such as property holding, investment and development,
specialist engineering services, geotechnical, civil engineering and building works, land
reclamation and marine engineering, project and property management. This showcases the
major and minor industries in which KEN Holdings Berhad operates.
KEN Rimba is the highlight development of KEN Holdings Bhd. Ken Rimba is
Malaysia’s first Green Township that has revolutionised the landscape of Shah Alam from an
industrial area to a tropical paradise-like residential enclave. KEN Rimba is located at Shah
Alam and is easily accessible via the Federal Highway and the NKVE. The premium township
comprises of KEN Rimba Legian Residences, Jimbaran Residences, Commercial Centre and 2
phases of condominium developments.
The KEN Rimba Condominium 1 (KRC1) was completed in Q1 of 2018 and had
become one of the most popular property in Shah Alam. KRC1, which is the 5th
Phase of the
development comprising of 679 units and villas, is another strong addition to the KEN Rimba
Township offering affordable green homes to the market. The integration of contemporary
functionality with modern aesthetic makes it truly a wonder, with a Gross Development Value of
RM 340 million, it will consist of 3 tower blocks, Tower A, B, and C along with a separate
section of pool villas. Tower A and C will be 27 storeys high, with the penthouse occupying the

top floors, while Tower B will be 30 storeys, with penthouse at the top two levels. The 3 towers
offer total of 637 typical units, with 3 bedrooms and built-ups ranging from 1,076 to 1,183 sq. ft.
The starting price is around RM399,000 or RM357 psf. The penthouses will have 4 bedrooms
and built-ups of 1,872 to 2,367 sq. ft. The starting price would be from RM 722,000 (RM385
psf.).
The KRC1 is the first high-rise residential development being awarded with the
prestigious BCA Green Mark GoldPLUS Award (Provisional) and GreenRE Gold Award
(Provisional). Despite the cautious consumer sentiment, the take up rate for this project remains
encouraging at more than 80% as at year end 2017, this shows that the quality green rated homes
offered at an affordable price provides a good value proposition to consumers. There are also
recreational facilities and green features invested within the development for the residence of
KRC1. This includes the Vertical Garden, Sakura Garden, Cabana, Hanging Garden, Community
Garden, Ironwood Forest and Lake Sanctuary.
Another highlight of KEN Holdings Bhd property is the Menara KEN TTDI. Menara
KEN TTDI is a 13-storey office-tower with 20,000 square meter of lettable area in TTDI. It is
the main corporate office tower, situated within Taman Tun Dr Ismail, Kuala Lumpur comprises
Platinum Grade office suites, performing arts theatre, art gallery, food and beverage outlets and
more. This office tower stands as a testament to the Group’s conscientious efforts towards the
sustainable environment, the world class corporate office tower has been awarded with two
environmental platinum awards, including BCA Greenmark Platinum Award and the USGBC
LEED Platinum Award (Pre-Certification). It was also able to obtain MSC-status specifications,
allowing tenants to enjoy up to 10 years tax-free privilege.
KEN Holdings Bhd invested RM 120 million to construct the Menara KEN TTDI. This
office tower integrates the lifestyle needs of today’s urbanites and combines various facilities

and amenities that elevates the status and functionality of the building in order to secure more
tenants. The building was initially priced at RM 120 million, however it rose up to the final
amount of RM 150 million by the end of the project. As of 31st
December 2017, the building has
an occupancy rate of approximately 30%. In hopes of improving occupancy rate that will be
translated into long term earnings visibility, the group will focus on obtaining a broader tenant
base of quality corporations with longer leasing periods in the coming years. It is also expected
to start churning more than RM 10 million a year of recurring income by year-end from the
rental of the Menara KEN TTDI office tower.

2. Prospects of Future Growth
With the new government in 2018, there would be significant changes to the
construction industry. Both positive and negative, the introduction to Sales and Service Tax
(SST) is one of the positive areas. As reported in The Edge Market (2018), on September 24,
Finance Minister Lim Guan Eng has exempted the construction materials and services from any
SST charges. This is to encourage developers such as KEN Holdings Berhad to lower prices of
homes and to be more affordable to more residents. The exemption is expected to provide only
up to 3% in cost savings.
As of 31st December 2017, KEN Holdings Bhd is listed as the top 10 property
developer with a registered net profit margin of 45.86% and this double-digit margin extended
into the first half of 2018 where it stood at 47%. Currently, KEN Holdings Berhad is settling
upon the recurring income from its development of KEN TTDI of an estimated RM 10 million
each year.
With the land price increasing and causing prices of houses to be high, majority of the
homebuyers are unable to afford their own homes. Therefore, more affordable homes are in high
demand and are even requested by the government to decrease the prices for people to afford
homes. The KEN Rimba Condominium which was recently completed can be the saving grace
for affordable homes as its price is suitable for the general income residents. The price is
extremely affordable for even first time house buyers.
Currently, KEN Holdings berhad is working towards 2 more future development under
their green initiatives in Johor Bharu and Kota Bahru respectively. KEN Johor Bharu will be an
integrated development of residential and commercial units with a hotel, service suites and a
shopping mall. The project is located right at the heart of Johor Bharu which is near to the

Malaysia and Singapore causeway, allowing more accessibility to the area. As mentioned in The
Edge Financial Daily, Sam Tan mentioned that they are planning for this project to be a top rated
green district and they acknowledge that locals are unable to afford properties, so they are trying
their best to offer product that is still affordable and worthwhile in the first phase of their master
plan.
Green Building initiatives in Malaysia usually incurred more cost compare to others for
the local residents. This puts KEN Holdings Berhad in a tight situation and would have slightly
slower growth in the long run. It is projected that KEN Holdings Berhad property development
would not be as strong as others due to the current economy in housing development.

3. Challenges Facing the Industry
One of the key challenges faced by property development industry for KEN Holdings
Berhad would be the changing of the demand housing market. Recent analysis over Malaysia
property development have shown that there are numerous unsold residential area units around
Johor Bahru and Kuala Lumpur. Although, KEN Holdings Berhad did provide solutions by
accentuating the marketing on those unsold units, however the demand and requirement of
homebuyers now are hard to accommodate as they may not wish to invest in a residential unit
with substantially high initial cost comparing to other types of units. Properties of KEN Holdings
Berhad such as KEN Bangsar would be highly affected by this issue. KEN Holdings Berhad
would also be incurring costs if the units remains to be unsold.
With the introduction of Transit-Oriented development (TOD), location around Malaysia
has since been easier to be access by public transports. This in return allows residents to have
more convenience in terms of traveling from their houses. This also creates more competition
among developers as they would like to capitalise on the new market. Projects such as MRT
Lines and LRT extensions around Malaysia, there are key areas such as Kota Damansara being
targeted by developers to own and develop as the location is highly valuable with the ease of
accessibility around.
Additionally, there would also be challenges to KEN Holdings Berhad on managing and
strategizing the volume of property launch in the market. As more developers are entering the
industry causing the supply of housing to increase in the market. WIth that being said, KEN
Holdings Berhad is to be cautious in the supply of housing market to prevent any oversupply.

The current economy and state of the country, KEN holdings Berhad are to be cautious
with their projects initiated as the some of the project such as KEN Bangsar condominium has
been reported to have a high initial cost around RM 810,000 which is more than the average first
time home buyers could be affording at the start.

(e) An analysis of the company’s strengths and weaknesses.
Strengths
KEN Holdings is involved in multiple construction segments including engineering, land
reclamation, dredging and marine & civil engineering services. This make them have great
market presence. Their subsidiaries include KEN Grouting, KEN Property, Jewel Estate, KEN
Projects, KEN JBCC & Sphere Supreme. Their properties also include KEN Bangsar, KEN
TTDI, KEN Damansara Trilogy & KEN Aman Township. This shows that the company is strong
in brand recognition. Their awards also include several from the BCA Green Mark, the United
States Building Council (USGBC) LEED, FIABCI-Malaysia Property Award, GreenRE, Carbon
Neutral Status, PAM Award, FuturArc Green Leadership Award, Green Building Index (GBI) &
the MSC Cybercentre Status.
They are one of the 1st
green building developer in Malaysia. This make them one of the
most experienced & knowledgeable about the requirements and process to achieve a green
building in Malaysia. Being one of the green building developers, they are known for their
quality and experience regarding green buildings. Their corporate office tower, Menara Ken
TTDI is one of the sustainable developments in Malaysia, awarded by BCA & LEED – two of
the green building rating systems.
They are growing in terms of profits and have huge projects like the KEN Rimba
Condominium 1 (KRC1) – as shown in their FY2017 Annual Report. Their Financial status is
also looking good for investors, as their growth rate is increasing in the past 5 years.

Weaknesses
In a recent report by The EDGE Malaysia, several public-listed property developers
enjoy big profit margins. KEN Holdings is currently at the top for receiving a net profit margin
of 45.86% in FY2017, and 47% in just the first half of FY2018.
(http://www.theedgemarkets.com/article/developers-must-cut-profits-lower-property-prices-%E2
%80%93-report)
In 2016, their net profit almost doubled from 29.9% after completing their KEN Rimba
Condominium 1 (KRC1) project. This might look good to investors, shareholders and the like.
However, to the public they would look greedy as the profit margins are the only component of a
development cost that the developer can control.

In the past five years, the cash flow of KEN Holdings has been decreasing. This is not
good as cash is important to be able to pay expenses. Positive cash flow usually means a business
is running smoothly. A positive cash flow is also important for growth as it provides the comfort
and capabilities for a business to invest in growth-related investments. A positive cash flow also
means that the company can keep up with their debts.
f) The company’s strategic plans for seizing opportunities and for facing challenges in its industry.
KEN Holdings have several strategic plans to seize the opportunities. In light of the increase on
demand on green buildings, KEN Holdings aim specifically at the upmarket and
environmentally-conscious clients. They realize the importance of the “green” clients and their buying
power. They look to enter and compete in the market. For example, they revealed their Ken RIMBA
Condominium, with the honour of winning the first award for green township in Malaysia. They include
special green features with technology from around the world. It is a township built with environment in
the mind.
KEN Holdings also have 2 huge future projects in the planning phase, which are KEN Johor
Bharu & KEN Kota Bharu. In Johor Bharu, they plan to build an integrated development of residential
and commercial units with a hotel, suites and shopping malls. It will be located near the Woodlands
checkpoint, Johor Bharu which makes it accessible from Singapore.
The second project, is KEN Kota Bharu. It is a proposed mixed green-development featuring 200
units and 150 hotel rooms. It will also incorporate the signature green features of similar KEN projects.

They are trying to penetrate multiple markets, from townships, shopping malls to condominiums.
To face the challenges in the construction industry, KEN Holdings have multiple plans in hand.
The first main challenge faced by them is the change in the demand of the housing market. The increase
of unsold residential units have changed the market. This is due to the high initial cost in which the buyers
are unable or unwilling to pay for. Their properties like KRC1, KEN Bangsar is affected by this. This is
why the KEN Rimba Condominium is launched as the most affordable, highest rated green condominium
in Malaysia. It is award winning, with awards from the prestigious Singapore BC Green Mark &
GreenRE Award. This makes first time homebuyers to be able to afford a Green development with tip top
facilities. Their tagline – Bridging the Gap between Affordability and Sustainability shows that they have
not strayed from their main target, the environment.

G)
The KEN Holdings Berhad is a company that primarily involves in investment holding and
provision of management services. It is also actively involved in property holding, investment and
development, specialist engineering services, geo-technic field, civil engineering and building work,
land reclamation, marine engineering and property management for the past three years. Starting
from the year 2017, they started involved in car park management by the company.
KEN Holdings is Malaysia’s first Green Developer, and their major capital investment is
property development. KEN Rimba, the first green township is the main focus of the group. This
township include different types of development such as the KEN Rimba Commercial Centre which
is completed in 2013, KEN Rimba Jimbaran Residences in 2015, KEN Rimba Legian Residences in
2012, and the latest one being KEN Rimba Condominium 1. The developments are carried out
under KEN Rimba Sdn Bhd.
The main resources of KEN Holdings Berhad is from their most recent development which
is the KRCI projects. Based on the 2017 Annual Report, KEN Holding Berhad has an rise of their
revenue approximately 12.3% comparing to the year 2016 and recorded a total revenue of RM
104.20 million. During that year, the company profit before deduct tax also increased to RM 62.9
million. Moving on, new sales registered and higher progress billings from the KRCI is the main
causes of higher revenue for the company for that year.
Menara KEN TTDI is one of the major investment KEN Holdings Berhad had made besides
the KRC1 in the past three financial years. As at 31 December 2107, the total cash and cash
equivalents stood at RM 2.8 million according to the Annual Report 2017. Higher operating cash
flows were used to finance higher working capital requirements. As a result, KEN Holdings
Berhad’s net cash obtained from operations decreased to RM 10.7 million during the financial year.
With the completion of the corporate office tower, Menara KEN TTDI, the net cash used for
investing activities had reduced to RM 10.5 million as compared to RM 25.9 million in year 2016.

As mentioned above, the KRC1 is the one of the major investment that contributes majorly
to the company’s revenue. The major source of funding for this investment is via new sales
registered and progress billing. On the other hand, the Menara KEN TTDI that is completed in
year 2017 is funded by source of rental of office and commercial spaces. As for bank loans, the
principal banker for both of these investments is the Malayan Banking Berhad.
8.0 Analysis of Financial Condition
8.1 Current Ratio
Years 2013 2014 2015 2016 2017
Current Ratio 1.3 : 1 1.8 : 1 1.3 : 1 1.2 : 1 2.3 : 1

Current ratio is used to compare the firm’s current assets to its current liabilities. It is also a very
important tool to determine the company’s ability to pay of its short -term debts based on the
study of ratio between current asset and current liability. Shown on the diagram above, at the
year of 2013, the current ratio is 1.3 : 1, this means that for every one ringgit of current liability,
the KEN Holding Berhad has 1.3 ringgit of current asset. In the production line, a good ratio is 2
: 1, meaning that with every ringgit incurred, the business can regenerate and earn 2 ringgit in
return. Given that the construction industry has a slower performance in sale which brought
about a slower inventory turnover as its takes time to complete the final product. With the
construction projects, it cost a relatively higher price than other type of products, so it only
serves as a niche market of customers who has financial capacity to purchase. From the
statement above, we know that the current ratio of construction industry is incompatible with
other industry because of the industry nature. In 2014, the current ratio is 1.8 : 1 which indicates
there was an increase making the ratio healthier than before but going to 2015, it went back
down to 1.3: 1 which as previously mentioned in 2013 is not a good indication.
In 2016, the current ratio decrease and became 1.2 : 1, this indicates that it is not a healthy ratio
as mentioned above , a standard ratio shall range between 1.5 :1 to 3:1 . In 2016, the business
only earned around 20% of the profit for the cost incurred. From the statement above, we can see
that KEN Holdings Berhad can be able to pay off its debt in 2017. Fortunately, KEN Holdings
managed to clear of its debt at the start of 2017 and this was a major factor in the contribution to
low current ratio in that year.

Quick Ratio
Years 2013 2014 2015 2016 2017
Current Ratio 0.58 0.69 0.62 0.42 0.72
Quick ratio is a good indicator for a company to find out the short term liquidity position as
quick ratio is used to compare the a firm’s liquidity to repay the current liabilities without selling
off the inventory and withdraw the project development costs. Quick ratio also only looks at the
most liquid asset that can be converted into fast cash.
As seen from the diagram above, KEN Holdings Berhad’s quick ratio is positioned at 0.58 : 1 in
2013, increasing to 0.69 : 1 in 2014, decreasing back to 0.62 : 1 in the year of 2015 and further
dropping down to 0.42 : 1 in 2016 and then gaining a boost to 0.72 : 1 in 2017. In 2016, the

performance in sales was at its lowest point of 0.42 : 1 which is not healthy for as every ringgit
incurred liabilities, the company only generates 0.42 sens of liquid asset, this would show that
the KEN Holding Berhad are unable to sell the remaining inventories. While in the other years, it
manage to remain at a healthier ratio to earn.

Inventory turnover measures how fast a company sells inventory and how analysts compare it to
industry averages. KEN holdings Bhd sold his inventory 0.38, 0.62, 0.60, 0.74, 0.54 times in 2013, 2014,
2015, 2016 and 2017 respectively. The ability of KEN holdings Berhad to sell its inventory increased from
2013 to 2016 but it dropped to 0.54 times in year 2017. Overall, KEN group has high market demand but
the ability to sell property or inventory is getting slower from Year 2017 onwards which may due to low
market demand.
The average collection period is the amount of time it takes for a business to receive payments
owed in terms of account receivable. It is used to examine how fast a firm can collect its debts from the
debtors. KEN Holdings Bhd requires 183.26 days in Year 2013, 182.50 days in Year 2014,294.58 days in
Year 2015, 182.50 days in Year 2016 and 267.10 days in Year 2017. From the results, it shows that the
ability of the company to collect its debt from its debtors is not constant. Even though its ability
increases in Year 2014, but it got worse in Year 2017. In Year 2014 and 2016, KEN group has the best
ability to collect its debt respectively among all the years above.

Average Payment Period is defined as the number of days a company takes to pay off credit
purchases. KEN Holdings Berhad took 182.07 days in Year 2013, 174.31 days in Year 2014, 308.06 days in
Year 2015, 188.20 days in Year 2016 and 183.05 days in Year 2017. Result shows that the ability to repay
the debt of this company is getting better since 2016 even though the performance in Year 2014 is good
but the ability was decreasing in Year 2015. The shorter the time that the firm requires to repay the debt
represented the firm has good cash flow management to pay for the debts.

Total Asset Turnover
The total asset turnover measures how efficiently a firm is using its assets in generating sales. It
is computed by dividing total sales by total assets for a given period.
According to the line graph above, from Year 2013 to Year 2014, it grew from RM 0.20 to RM
0.32. The number RM 0.32 means that the company is generating RM 0.32 in sales for every RM 1
invested in assets. Generally speaking, the higher the total asset turnover ratio, the better the company
is performing. The total asset turnover then decreased from Year 2014 to Year 2015 but it eventually
increasing from Year 2016. As low ratio of total asset turnover for KEN Holdings Bhd indicates that the
company’s assets are losing their ability to generate assets.
It is important for the company to keep track and improve their asset turnover ratio at regular
intervals since this ratio helps to measure how productive the business is and how much revenue is
generated from its investment in the assets.

Debt Ratio
The debt ratio shows the percentage of the firm’s assets that are financed by the debt. This also
shows that the proportion of a company’s assets that are financed by debt. It is commonly referred as
the debt-to-assets ratio.
This means that if the debt ratio is high, the financial risk is also high. As seen in the table above,
the debt has been fluctuating from FY2013 to FY2017. When comparing to FY2016 to FY2017, the debt
has decreased by RM45,451,000.00. This shows the drastic decrease of the debt ratio from 28.85% to
16.10%. The total asset has increased by a mere RM462,000.00 in comparison.
Ken Holdings finance its assets by 34.30% in FY2013, followed by 24.94% in FY2014, 30.53% in

FY2015, 28.85% in FY2016 and 16.10% in FY2017. With this decline in Debt Ratio, the company is doing
well as the amount of debt to finance the assets is reducing.
Times Interest Earned
`
Times Interest Earned shows the amount of operating income (operating profits) available to
service interest payments. In Ken Holdings’ Annual Report, their interest expense is stated as finance
cost. Times Interest Earned is a simple way to measure their capacity to service its debts.

Ken Holdings’ ability to pay their interest payments by using their operating income in FY2013 is
108.8x, in FY2014, 229.52x, in FY2016, 300.59x, in FY2016, 352.86x and in FY2017 538.33x. In the chart
above, you can see an increase in their times interest earned, with a sharp incline in FY2017. This shows
that Ken Holdings are able to pay off their debts interests.
Fixed-Payment Coverage Ratio (FPCR)
Fixed-Payment Coverage Ratio (FPCR) measures the ability of a firm to meet their fixed-payment
obligations. In the annual report of Ken Holdings, there are certain information which are unavailable
and not found in the Annual Reports from FY2013 to FY2017. This include Lease Payments, Principal
Payment & Preferred stock dividends. Therefore, the FPC Ratio cannot be calculated.
8.4 Profitability
Gross Profit Margin

Years 2013 2014 2015 2016 2017
Gross Profit
Margin (%)
63.94 60.68 54.35 46.64 65.93
Gross profit margin shows how much money is left after taking into account cost of goods sold
(COGS) from revenue. The gross profit margin of KEN Holding Berhad fell gradually from year
2013 to year 2016. The main reason that caused it to drop it due to poor management and control
over the company on-going projects. However in the Year of 2017, the increase significantly
from 46.64 % to 65.93% which has proven the ability of the company to manage its cost of sales
along the annual accounting period .

Years 2013 2014 2015 2016 2017
Operating
Profit Margin
(%)
50.87 47.88 42.50 39.92 60.44
Operating margin measures how much profit a company makes on a dollar of sales, after paying
for variable costs of production such as wages and raw materials, but before paying interest or
tax. It basically shows how the company profitable is after deducting operating expenses and
depreciation. It is calculated by dividing a company’s operating profit by its net sales. However
for KEN Holding Berhad, The company’s operating profit margin decreased steadily from year
2013 to Year 2016 from 50.87 % to 39.92. It also went to the increases significantly during the
Year 2017 after decreasing for 3 years which is approximately 60.44%.

Years 2013 2014 2015 2016 2017
Net Profit
Margin (%)
37.43 35.07 31.40 29.87 48.36
Net profit margin is one of the most important factor in assessing a company’s profitability. It
can be used to develop projected profits based on sales.is equal to net income or profits divided
by total revenue, and basically means how much profit each ringgit of sales generates. Net profit
margin is the ratio of net profits or net income to revenues for a company, business segment or
product. Net profit margin is typically expressed as a percentage but can also be represented in
decimal form. The net profit margin illustrates how much of each ringgit collected by a company
as revenue translates into profit. Not only that, net profit margin is also different from gross
profit margin and operating profit margin. There’s no significant changes for KEN Holding
Berhad net profit margin from 2013 to 2016. However the profit margin rise substantially in the
Year 2017 which is 48.36% which means it’s a good sign for the company.

Years 2013 2014 2015 2016 2017
Return on
Total Assets
(%)
7.48 11.30 6.99 7.76 14.09
Return on Total Assets (ROTA) is used to analysts the overall management efficiency in generating
profits by utilizing the company’s total asset. The Return on Total Assets of Ken Holdings Berhad. has
increased from 7.48% to 11.30% between Year 2013 and Year 2014. It drops to 6.99% in the followings
year and slightly rising of 7.76% in Year 2016. In Year 2017 the Return on Total Asset has increased
dramatically with indication of 14.09%. The greater a company’s net profit in proportion to its asset, the
more effectively the company manage its assets
Return on Common Equity

Years 2013 2014 2015 2016 2017
Return on
Total Assets
(%)
11.38 15.05 10.06 10.91 16.79
Return on Common Equity or Return on Equity (ROE) is used to measure the ability of a firm or company
to generate profits from every investment by the shareholders. The Return on Common Equity of Ken
Holdings Berhad in Year 2013 and Year 2014 is 11.38% and 15.05% respectively. However, in Year 2015
the ROE was decreased to 10.06% and it is maintained at 10.91% in the following year. In Year 2017, it
increased to 16.79%. In short term, every single ringgit that the shareholders invest in the firm will get
11 cents, 15 cents, 10 cents, 11 cents, and 17 cents from 2013 to 2017 respectively. The higher the
Return on Common Equity showed that the company is generating high income with the money
invested from the shareholders.

8.5 Market Performance
Market Performance 2013 2014 2015 2016 2017
Earnings Per Share 0.23 : 1 0.18 : 1 0.13 : 1 0.15 : 1 0.28 : 1
Price/Earnings Ratio (Times) 3.26 5.53 7.77 5.67 3.16
Price/Book Ratio (Times) 1.50 1.99 2.02 1.70 1.77

Earnings per Share is served as an indicator of firm’s financial health and profitability. Earnings
per Share of Ken Holdings Berhad in Year 2013, 2014, 2015, 2016 and 2017 is 23 sen, 18 sen, 13 sen, 15
sen and 28 sen respectively per RM1 of share. Earnings per share indicate the value of the money that the
shareholders will get on the every RM1 they had invested. The higher the earning per share, the higher the
return of the share and more worth to invest.

Price/Earnings Ratio measures how much the investors are willing to pay for every one ringgit of
reported earnings. The investors had to pay 3.26 times in Year 2013, 5.53 times in Year 2014, 7.77 times
in Year 2015, 5.67 times in Year 2016 and 3.16 times in Year 2017. The higher the price/earnings value
indicates that the company is having positive future performance opportunity and the investors are willing
to pay more for the company’s share.
Price/Book Ratio is used to compare the market value of the stock to the book value per share of
the reported equity on the balance sheet. The Price/Book Ratio for Ken Holdings Berhad in Year 2013,
2014, Year 2015, Year 2016 and Year 2017 is 1.50 times, 1.99 times, 2.02 times, 1.70 times and 1.77
times respectively. The lower the price/book value indicated that the stock is undervalued.

9.0 Conclusion & Recommendation
Based on the financial analysis, we can concluded that most of the revenue contribution of Ken
Holdings Berhad is mainly contributed by property development segment. This company also has a
subsidiary company which also involved in property holding, properties development, investment, civil
engineering works, geo technical specialist engineering services, building works, land reclamation and
marine engineering, property management and car park management. Majority of the revenue
originates from these operations and services helped to maintain the company’s running for all these
years.
Ken Holdings Berhad’s major development are KEN Rimba and KEN Rimba Condominium 1
(KRC1). Ken Rimba is Malaysia’s first Green Township that has revolutionised the landscape of Shah
Alam from an industrial area to a tropical paradise-like residential enclave. KRC1 is one of the most
popular property in Shah Alam, the take up rate for this project remains encouraging at more than 80%
as at year end 2017.
The financial statistic of KEN Holdings Berhad also illustrated that there’s a fluctuation of the
company’s net profit before taxation between the Year 2013 to 2017. The profit of this company
gradually increases from the Year 2015-2017 and the profit for the Year 2017 alone is RM 62,867,000.
KEN Holdings Berhad manage to obtain approximately 58% of its profit from properties development
alone in the Year 2017 while the remaining 42% is from construction operations.
From the current ratio, we can see that KEN Holdings Berhad can be able to pay off its debt in
2017. Fortunately, KEN Holdings managed to clear of its debt at the start of 2017 and this was a major
factor in the contribution to low current ratio in that year. Besides, with the decline in Debt Ratio, the
company is doing well as the amount of debt to finance the assets is reducing. However, the profit
margin rises substantially in the Year 2017 which is 48.36% which means it is a good sign for the
company.
In conclusion, Ken Holdings Berhad is suggested to focus in property development segment
more than construction segment as it generates more revenue. They are also advised to develop more
residences like KRC1 as it is selling very well. Lastly, considering that 2017 has the highest earnings per
share, it is a good timing now to invest in Ken Holdings Berhad as it is progressing really well in the
construction industry.

References
KEN (2018). KEN Holdings Berhad – Malaysia's 1st Green Developer. Kenholdings.com.my. Retrieved
19 November 2018 from http://kenholdings.com.my
Jones (2018). KEN.MY Company Profile & Executives - Ken Holdings Bhd - Wall Street
Journal.Quotes.wsj.com. Retrieved 19 November from https://quotes.wsj.com/MY/KEN/company-people
JobStreet (2016). Working at KEN Holdings Berhad company profile and information | JobStreet.com
Malaysia. Company Profiles and Reviews - JobStreet.com Malaysia. Retrieved 19 November 2018, from
https://www.jobstreet.com.my/en/companies/444457-ken-holdings-berhad
KEN (2013) KEN Holdings Berhad Annual Report 2013. Retrieved 15 November 2018, from
http://kenholdings.com.my/v2/wp-content/uploads/2015/09/AnnualReport2013.pdf
http://kenholdings.com.my/v2/wp-content/uploads/2017/04/KEN-AR-2016-Final.pdf
http://kenholdings.com.my/v2/wp-content/uploads/2018/05/AnnualReport2017_LowRes.pdf
E. (n.d.). Ken Rimba to offer affordable, green condos. Retrieved from
https://www.edgeprop.my/content/ken-rimba-offer-affordable-green-condos
The edge markets. (2015, April 16). Stocks With Momentum: KEN. Retrieved from
http://www3.theedgemarkets.com/article/stocks-momentum-ken
KEN JOHOR BHARU. (n.d.). Retrieved October 10, 2018, from
http://kenholdings.com.my/properties/ken-johor-bharu/
Yahoo Finance. (n.d). 7323.KL Interactive Chart | KEN HOLDINGS BHD Stock. Retrieved November 27,
2018, from https://finance.yahoo.com/quote/7323.KL

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