This document provides an analysis of the financial ratios of LTKM Berhad, a Malaysia-based investment holding company, for the years 2013-2014. The profitability ratios show improved performance from 2013 to 2014, with returns on equity increasing from 7.4% to 19.4% and net profit margins rising from 6.2% to 15.9%. Some stability ratios declined slightly over this period, such as working capital ratio decreasing from 2.4:1 to 1.8:1. However, the overall financial analysis indicates good profitability and growth for the company from 2013 to 2014.

1.
Assignment: Financial Ratio Analysis
Subject: Basic Accounting (ACC30205)
Company: LTKM Berhad
Group members: Le Jia Nian (0319957)
Marco Leong Wong Ka Henn (0320026)
Chin Khang Wei (0320728)
Submission Date: ​1st June 2015

2.
Company Overview:
LTKM Berhad​ is a subsidiary of “Ladang Ternakan Kelang Management Sendirian Berhad”. It
is one of the Malaysia­based famous investment holding company and engaged in the provision
of management services. LTKM Berhad is based in Klang, Malaysia.
The Company is engaged in production and sales of eggs initially.Over the times until
present, the company expand and operates in three segments: production and sale of poultry
and related products, extraction and sale of sand and investment holding.
Core production and sale of poultry and related products segment is engaged in the
production, distribution and sales of chicken eggs, chickens and organic fertilizers for plantation,
gardening, or landscaping.
Their extraction and sale of sand segment is engaged in the mining, extracting and sale
of sand. In this segment, LTKM Berhad involved in production and processing of glass.
Whereas the investment holding segment is engaged in investment activities in quoted
and unquoted securities, as well as investment properties held by the Company on a long term
basis.
The Company’s brands of products include LTK Omega Plus, LTK Organic Selenium
Plus and LTK Bio­Fer. LTKM Berhad eggs export to Singapore and Hong Kong reputed by its
qualities to control the price floor.
“Successful companies are about people who commit their jobs towards excellence”
­ LTKM Berhad

3.
Company’s History:
The passion for egg business has led the Tan family to establish a small scale farm for the
production of chicken eggs, which also led to the incorporation of Ladang Ternakan Kelang Sdn
Bhd that was held in 1976 by the three Tan brothers. From its humble beginning, the farm
initially operated on a small piece of 10­acre land in Kampung Jawa, Klang.
Over the years, the company has progressed to a sophisticated, highly automated farm in
Malacca spanning over 400 acres. A total of 1.8 million birds accommodate over 100
conventional and modern multi decker cages and closed house systems that produce over one
million eggs per day. The group has over 400 staff, of which 25% are foreign workers. A large
number of these employees are long serving and dedicated members of the management team
who synonymously developed and grew with the Group.
Steady growth, sustainable profitability and very prudent management define LTKM group
today. In anticipation of future development, the company will continue to tap into research and
development as well as emphasize on innovation that brings the company to new dimensions,
along with new opportunities. The journey continues until today.
Company’s Board Of Directors:
Ir. Kamarudin bin Md Derom ​(Chairman)
Datuk Tan Kok ​(Managing Director)
Datin Lim Hooi Tin ​(Non­Executing Director)
Ooi Chee Seng ​(Non­Executing Director)
Ravindran Markandu ​(Audit Head)
Company’s Value:
LTKM Berhad wants to uphold the highest standards of professionalism and corporate
governance to maximize the benefit of our stakeholders at all times.
● Integrity,
● Technical leadership,
● Cost efficiency and effectiveness,
● Teamwork, and
● Professional business ethics

4.
Profitability Ratios 2013 2014 Interpretation
Return on Equity
(ROE)
009,575,297
(133,326,264+124,058,087)÷2 × 1
=7.4%
0028,262,534
(158,134,503 + 133,326,264)÷2 × 1
= 19.4%
During the period of
2013 to 2014, the
return on equity
increase from 7.4%
to 19.4%. The owner
is getting more return
from the business.
Net Profit Margin
(NPM)
009,575,297
154,830,563 × 1
=6.2%
0028,262,534
178,063,772 × 1
=15.9%
Over the period of
2013 to 2014, net
profit margin rise
from 6.2% to 15.9%.
The business ability
to control its
expenses is better
than last year.
Gross Profit Margin
(GPM)
0017,501,191
154,830,563 × 1
=11.3%
0038,542,547
178,063,772 × 1
=21.6%
During the period of
2013 to 2014, the
gross profit margin
has increase from
11.3% to 21.6%. The
business ability to
control its cost of
good sold expenses
is better than last
year.
Selling Exp. Ratio
(SER)
00(6,274,482)
154,830,563 × 1
=­4.05%
00(6,189,479)
178,063,772 × 1
=­3.5%
During the period of
2013 to 2014, the
selling expenses ratio
is increased from
­4.05% to ­3.5%. The
business ability to
control its selling is
worse than last year.
General Exp Ratio
(GER)
00(56,316)
154,830,563 × 1
=­0.04%
00(676,519)
178,063,772 × 1
=­0.4%
Over the period of
2013 to 2014, the
general expenses
ratio rise from ­0.04%
to ­0.4%. The
business ability to
control the general
expenses is worse
than last year.
Financial Exp. Ratio
(FER)
00(1,241,970)
154,830,563 × 1
=­0.8%
00(1,194,060)
178,063,772 × 1
=­0.67%
During the period of
2013 to 2014, the
financial expenses
ratio is rise from
­0.8% to ­0.67%. The
business ability to
control its financial
expenses is worse
than last year.

5.
Stability Ratios 2013 2014 Interpretation
Working Capital
24,638,111
59,089,052
=2.4 : 1
35,482,099
64,069,372
=1.8 : 1
Over the period, the
business working capital
has decreased from
2.4:1 to 1.8:1. The
business ability to pay
current liabilities is worse.
In addition, it exceed the
minimum 2:1 ratio.
Total Debt 0043,379,534
176,705,798 × 1
=24.6%
00 47,215,434
205,349,937 × 1
= 23%
Over the period,the total
debt has decreased from
24.6% to 23%. The
business total debt has
decreased. However, it
satisfied the maximum
50% limit..
Stock Turnover 653 ÷ 137,329,372
(12,753,072+11,603,549)÷2
=32.4 days
365 ÷ 139,521,315
(17,500,317 + 12,753,072)÷2
= 39.6 days
During the period of 2013
to 2014, the stock
turnover has increased
from 32.4 days to 39.6
days. This proof that the
business ability to sell its
goods slower than last
year.
Debtor Turnover 653 ÷ 77,415,282
(12,002,645+10,947,818)÷2
=54.1 days
653 ÷ 89,031,886
(11,600,253+12,002,645)÷2
=48.4 days
During the period of 2013
to 2014, the debtor
turnover has decreased
from 54.1 days to 48.4
days . The business is
taking less time to collect
its debts.
Interest Coverage
1,241,970
1,241,970+9,575,297
=8.7 times
1,191,060
1,191,060+28,262,534
=24.7 times
During the period of 2013
to 2014, the interest
coverage has increased
from 8.7 times to 24.7
times. The ability for the
business to pay its
interest coverage is
better. However, the
business should never fell
below 5 times.

6.
Price/Earning (P/E) Ratio
Last done of LTKM Berhad at 30 May 2015 : RM 6.550
Earning per share of LTKM Berhad : RM0.64
P/E Ratio​ =
Current share price
Earnings per share (in number of time)
= 0.65
6.550
=10.1
Interpretation​: ​According to the financial report of LTKM Berhad at the year 2014, the earning
per share is RM 0.60. By using the formula to calculate P/E ratio as shown above, the outcome
is 10.1 times. This means that the share price of LTKM Berhad is 6.550. If an investor
purchases the share of LTKM Berhad, he will have to take 10 years to recoup his investment.

7.
Investment Recommendation
Based on the profitability ratios calculated over the year 2013 to 2014, the company has
exhibited good profitability, as shown in the profitability ratio analysis.
First of all, the Return on Equity (ROE) has vastly increased to 19.4% compared to the
result on 2013 is only 7.4%. Hence, the business is getting more return from the business.
Besides, Net Profit Margin (NPM) is also obviously rise from 6.2% to 15.9%. This shows that the
company control their expenses well. There is a big difference on Gross Profit Margin (GPM)
which is 10.3% more than year 2013. Although the selling expenses, general expenses and
financial expenses not much difference over the years and no fluctuate performance.
On the other hand as for stability ratio, even though he debtor turnover is increased from
54.1% to 48.1% but business does has some flaw on their ability to pay current liabilities is
worse than year 2013 and not satisfied the minimum 2:1 ratio. Moreover, the business total debt
had slightly decrease to 23% from 24.6% and also satisfied the maximum 50% limit. As for the
stock turnover, the business is taking 3.2 days more to sell their goods. For the interest
coverage, the business hugely pump up to 24.7 times compared to last year, it is only 8.7 times
although the business have not fell below 5 times.
The last done today is RM6.550. In January 2015, it only reaches on the price RM4.20, it
shows a great performance within this half year. In my opinion, due to the business core on egg
supply and it is always the demand exist and also with the performance of this company, this
company is worth to invest in. But 10.1 to recoup an investment is quite a long period. If the
company decide to split their share into half which is 3.275 and the earning per share remain, it
only takes about 5.05 years to recoup it. Then, i would only recommend investor to invest in to
this company.

18.
References Link:
www.ltkm.com.my
http://klse.i3investor.com/servlets/stk/7085.jsp
http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=LTKM:MK
http://mystarjob.com/job/company.aspx?eid=12593