Accounting final project 2

Basic Accounting (ACC30205)
Assignment: Financial Ratio Analysis
FNBE MARCH 2015
Group Members: Adele Lu Khai Syn (0323151)
Kenneth Tan Sin Kwang (0322482)
Ng Sheng Zhe (0323830)
Goh Jia Jun (0323302)
Lecturer: Ms. Tay Shir Men

Contents Page
Background Study 3
Recent Development 4
Profitability 5
Liquidity 6
Stability 6
P/E Ratio 7
Report 8-9
Investment Recommendation 10
Appendix 11-19
References 20

BACKGROUND STUDY
LBS Bina Group Bhd. is a management and investment holding company in Malaysia,
which engages in the property development business. It is formerly known as Instangreen
Corporation Berhad and its date of incorporation is on 29 June 2000. It made its debut on
the Main Board of the Kuala Lumpur Stock Exchange (KLSE), known as Bursa Malaysia on 30
January 2002. The company provides management services to its subsidiary companies.
The company is founded by Dato’ Seri Lim Bock Seng on June 29, 2000 and is
headquartered in Petaling Jaya, Malaysia. He is assisted by his 5 children who are Tan Sri Lim
Hock San, Datuk Wira Lim Hock Guan, Dato’ Sri Lim Hock Sing, Datuk Lim Hock Seong and
Ms Lim Mooi Pang to expand his business. Tan Sri Lim Hock San is now currently the
managing director of the company and the other 4 siblings are the executive directors of the
company. LBS Bina Group Bhd’s activities include residential and commercial development,
management, trading, insurance, tourism, construction, racing circuit.
The company operates through 5 major segments, namely the Property
Development, Management & Investment, Trading & Others, Construction, and Racing
Circuit. The Property Development segment involves development of residential, industrial
and commercial properties. The Management and Investment segment involves investment
holding and provision of management services. The Trading and Others segment involves
trading in building material, insurance agent, selling of insurance membership cards and
tourism development. The Construction segment involves building, project planning and
implementation contractor. The Racing Circuit segment involves motor racing circuit
development and management. Other business segments include selling of membership
cards covering personal insurance and insurance agent.
The company has fully owned subsidiaries and non-fully owned subsidiaries. The
example of fully owned subsidiaries are Intel place Holdings Limited, Linkway Property Co.
Ltd, LBS Landscape Sdn Bhd, LBS Bina Holdings Sdn Bhd, Maju Kepunyaan Sdn Bhd, Saga
Serata Sdn Bhd, SPJ Construction Sdn Bhd and more. The example of non-fully owned
subsidiaries are ML Global Berhad, Zhuhai International Circuit Limited, Sepadan Maju Sdn
Bhd, Johan Anggun Sdn Bhd, Iringan Kejora Sdn Bhd, Pembangunan Primer Sdn Bhd, Prima
Utuh Sdn Bhd and more.

RECENT DEVELOPMENT
One of LBS Bina Group Bhd residential projects is the D' Island Residence. It is a township
surrounded by the scenic lakes of Puchong. The concept of D' Island Residence is to build luxury
houses nestled amidst lush blooms and natural flora with complete serenity and security. The
residence is launched at 2011 and it is as huge as 175 acres. It features landscaped lake with aquatic
features, parks and jogging tracks and lakeside recreational facilities. The residence has several types
of houses such as 2 Storey Semi-Detached Home, Bungalow lots, Three-Storey Superlink and Three-
Storey Semi-D. The cheapest houses which are the 2 Storey Semi-Detached Home cost from RM1.5
million onwards with the Three-Storey Semi-D as the most expensive houses which cost for RM2.4
million onwards. Besides, D' Island residence is estimated to have tenure of five to seven years with
total Gross Development Value of RM3 billion. In addition, phases launched in the 2012 are closed
strongly with sale value of RM43.5 million. The residence also gained many awards such as the “Best
Urban Scenic Development” by the Malaysian Reserve and “Highly Commended: Development
MarketingMalaysia”duringthe AsiaPacificPropertyAwards2013.
LBS Bina Group Bhd will also be launching a new project called the Telok Gong Industrial Park in the
future. It is one of the master-planned industrial park in Telok Gong, Klang. The project types are 1 ½
Storey Semi Detached Factory, 1 ½ Storey Bungalow Factory and Single Storey Low cost factory. The
size of the project is 60.92 acres and it has a total of 96 units of buildings. The industrial park is
conceptualized as modern industrial zone with systematic layout and practical design of factory.
Furthermore, it will features organised site with proper access, attractive modern façade design
which enhance corporate image, multifunction design for factory, warehouse, showroom and office,
private security guard house, roller shuttle and gate and purpose built for fully function as industrial
building.

PROFITABILITY
ProfitabilityRatios 2012 2013 Interpretation
ReturnOn Equity
(ROE)
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑂/𝐸
× 100%
39,003,430
516,690,656.5
× 100% = 7.55%
397,323,654
699,735,858
× 100%
= 56.78%
Duringthe periodof
2012-2013, ROE has
increasedfrom 7.55% to
56.78%. Thismeansthat
LBS is gettingmore
returnfrom the capital
in2013 comparedto
2012.
NetProfitMargin Ratio
(NPM)
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
× 100%
39,003,430
509,644,355
× 100%
= 7.65%
397,323,654
533,532,722
× 100%
= 74.47%
Duringthe periodof
2012-2013, NPMhas
increasedfrom7.65% to
74.47%. Thismeansthat
LBS is betterathandling
theirexpensesin2013
comparedto 2012.
Gross ProfitMarginRatio
(GPM)
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡
× 100%
146,227,906
509,644,355
× 100%
= 28.69%
168,577,154
533,532,722
× 100%
= 31.6%
Duringthe periodof
2012-2013, GPM has
increasedfrom28.69%
to 31.6%. This means
that LBS is gettingbetter
at controllingtheircost
of goodssold(COGS).
SellingExpensesRatio(SER)
𝑇𝑜𝑡𝑎𝑙 𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
× 100%
General ExpensesRatio
(GER)
𝑇𝑜𝑡𝑎𝑙 𝐺𝑒𝑛𝑒𝑟𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
× 100%
67,470,147
509,644,355
× 100%
= 13.24%
85,596,945
533,532,722
× 100%
= 16.04%
Duringthe periodof
2012-2013, GER has
increasedslightlyfrom
13.24% to16.04% This
meansthat LBS isnot
gettingbetterat
controllingtheirgeneral
expenses.
Financial ExpensesRatio
(FER)
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
× 100%
18,457,247
533,532,722
× 100%
= 3.62%
15,170,850
509,644,355
× 100%
= 2.84%
Duringthe periodof
2012-2013, FER has
decreasedfrom3.62%
to 2.84%. This means
that LBS is gettingbetter
inmanagingthe
financial expense.

LIQUIDITY
LiquidityRatio 2012 2013 Interpretation
WorkingCapital Ratio
(WCR)
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 927,829,389
520,720,661
= 1.78:1
925,492,766
609,599,485
= 1.52:1
Duringthe 2012-2013
period,the WCRhas
decreased from1.78:1
to 1.52:1. This means
that the business’
abilitytopaycurrent
liabilitieswithcurrent
assetsis not getting
better.However,it
will experience
difficultyinrepaying
itscurrent liabilities
because itdoesnot
have minimumof
WCR 2:1.
STABILITY
StabilityRatios 2012 2013 Interpretation
Total DebtRatio
(TDR)
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
× 100%
908,176,834
1,435,008,317
× 100%
= 63.29%
1,137,172,437
2,009812670
× 100%
= 56.58%
Duringthe 2012-2013
period,the TDR has
decreasedfrom
63.29% to 56.58%.
Thismeansthat the
business’total debts
has reduced. Butitstill
exceed50%,itis
considered highriskof
goingbankrupt.
InventoryTurnoverRatio
(ITR)
365 ÷
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
365÷
363,416,449
15,721,777.5
= 15.79 𝐷𝑎𝑦𝑠
365 ÷
364,955,568
18,084,313
= 18.1 𝐷𝑎𝑦𝑠
Duringthe 2012-2013
period,the ITRhas
increased from15.79
daysto 18.1 days.This
meansthat the
businessissellingtheir
goodsat a slowerrate.
InterestCoverage Ratio
(ICR)
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒 + 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
18,457,247 + 39,003,430
18,457,247
= 3.1 𝑇𝑖𝑚𝑒𝑠
397,323,654 + 15,170,850
15,170,850
= 27.19 𝑇𝑖𝑚𝑒𝑠
Duringthe year 2012-
2013 period,the ICR
has increased from3.1
timesto27.19 times.
In 2013, the business
has enoughprofitsto
pay itsinterest
expenses27.19 times.

P/E RATIO
LBS Bina Group in 2012 is RM0.84 per share. It’s earning per share is RM 0.097. This means
that the ratio of price-to-earning of this company is RM0.84 divided by RM 0.097
P/E 𝑅𝑎𝑡𝑖𝑜 =
0.84
0.097
= 8.66
LBS Bina Group in 2013 is RM1.56 per share. It’s earning per share is RM 0.96. This means
that the ratio of price-to-earning of this company is RM1.56 divided by RM 0.96
P/E 𝑅𝑎𝑡𝑖𝑜 =
1.56
0.96
= 1.625
The P/E ratio measures how expensive a share is. In the year 2012, the P/E ratio is 8.66
which mean the inventor needed to wait for 8.66 years to recoup their investment. In the
year 2013, the P/E ratio is 1.625 which means the inventor needed to wait for 1.625 years to
recoup their investment. Therefore the return of LBS Bina Group in 2012 is shorter than
2013. As a conclusion, it’s recommended to invest LBS Bina Group as it is a highly potential
company.

REPORT
Based on the graph above is the stock graph of LBS Bina Bhd and KLCI on 1st Jan 2015 to 31st
December 2015 from Yahoo Finance.
The share price of LBS Bina Bhd on 17th April 2015 is RM1.50, it decreased to RM1.68 on
19th May 2015 which decreased by (
1.68−1.50
1.50
= 0.12%). While the index is RM 1845.86 on
17th April 2015 and increased to RM1809.72 (
1809.72 −1845 .86
1845.86
= -0.0196%) on 19th May 2015.
Hence, the performance of LBS Bina Berhad is better than the index.
The share price of LBS Bina Bhd on 5t Jun 2015 is RM 1.64, which increased to RM1.60 on
7th July 2015 (
1.60−1.64
1.64
= −0.024%) and the index is decreased from 1745.33 to 1712.30
(
1712.30−1745 .33
1745 .33
= −0.0189%). Hence, the performance of LBS Bina Berhad is slightly worse
than the index.

The share price of LBS Bina Bhd on 6th August 2015 is RM1.48 while on 1st September 2015
it decreased to RM1.28 (
1.28−1.48
1.48
= −0.135%). The index on 6th August 2015 is 1694.64
that dropped to 1609.21 on the 1st September 2015 (
1609.21−1694.64
1694 .64
= -0.05%). Hence, the
performance of LBS Bina Berhad is worse than the index.
The share price of LBS Bina Bhd on 2nd September 2015 is RM1.34, which decreased to
RM1.51 on 23th September 2015 (
1.51−1.34
1.34
= 0.127%) and the index on 2nd September
2015 is decreased from 1590.19 to 1613.17 on 23th September 2015 (
1613.17−1590 .19
1590 .19
=
0.0145%). Hence, the performance of LBS Bina Berhad is better than the index.
The share price of LBS Bina Bhd on 7th October 2015 is RM 1.41, which decreased to
RM1.45 on 11th November 2015 (
1.45 −1.41
1.41
= 0.028%) and the index on 7th October 2015 is
decreased from 1689.25 to 1665.32 on 11th November 2015 (
1665 .32−1689 .25
1689 .25
= −0.0141%).
Hence, the performance of LBS Bina Berhad is better than the index.
Based on both of the graphs above, the share price of LBS Bina Bhd and KLCI increases and
decreases simultaneously although there are times where KLCI’s share price will be
fluctuated. However, in the year 2015, the graph is unstable and the decreasing of the share
price is greater than the increasing of the share price. As a conclusion, the 5 points that was
shown above stated the investment in LBS Bina Berhad is not recommended.

INVESTMENT RECOMMENDATION
According to LBS Bina Berhad profitability ratio, the return on equity (ROE), net profit
margin (NPM) and gross profit margin (GPM) has improved and showed positive signs for
the business. Even though the general expenses ratio (GER) increase from the year 2012 to
the year 2013, the overall profit has indicated that the business is doing fairly well. LBS Bina
Berhad ability to pay off its current liabilities had slightly decreased from 1.78:1 to 1.51:1
but it still did not satisfy the 2:1 ratio of staying within the borderline of borrowing. Besides
that, LBS’s total debt ratio (TDR) showed that its total debt has decreased from 63.2% to
56.58% in 2013. Having the TDR in 2013 below 50% ensured that the business will not have
a higher risk of bankruptcy. Their stock turnover has taken a shorter period of time so they
are taking a shorter time to generate more cash quickly, making the business to be able to
pay off its liabilities. Moreover, LBS Bina Berhad interest coverage ratio (ICR) has also shown
an improvement in the business’ ability to pay its interest expense.
LBS Bina Berhad earned more profit in 2013 compared to 2012. In other words, the
company has demonstrated a decent profitability and financial stability and its shares are
available at a cheaper price (P/E Ratio <8.7). An investor will need to wait for a period of
time that is 1.625 years (19.5 months) as of 2013 to recoup his investment. The company
has shown good promise in terms of their growth in revenue. As such, LBS Bina Berhad has
proven to be a stable company. So, LBS Bina Berhad’s share is worth to invest back then.
However, the graph of the share price of 2015 shows that LBS Bina Berhad is not making
profit as the economy in Malaysia is not stable and recession. It is not recommended to
invest LBS Bina Berhad.

APPENDIX
Financial Statement of LBS Bina Berhad for the year 2012

Financial Statement of LBS Bina Berhad for the year 2013

Balance Sheet of LBS Bina Berhad of the year 2012

Balance Sheet of LBS Bina Berhad of the year 2013

REFERENCES
- LBS Bina Group Bhd LBS (Malaysia). (n.d.). Retrieved February 01, 2016, from
http://quotes.wsj.com/MY/XKLS/LBS/company-people
- Equities. (n.d.). Retrieved February 01, 2016, from
http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=LBS:KLS
- LBS Bina Group Berhad - Home.com.my. (2014). Retrieved February 01, 2016, from
http://www.home.com.my/article/lbs-bina-group-berhad
-LBS: D' IslandResidence.(n.d.).RetrievedFebruary02,2016, from
http://www.lbs.com.my/property-collections/residential/klang-valley/landed-property/d-island-
residence/
- LBS: TelokGongIndustrial Park.(n.d.).RetrievedFebruary02,2016, from
http://www.lbs.com.my/property-collections/commercial/klang-valley/mixed-development/telok-
gong-klang/telok-gong-industrial-park/

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