Case Study on Cement Industry

TERM PAPER
MANAGERIAL FINANCE (FIN745)
NURHIDAYAH JANTRAZ
(2014596341)
MUHAMMAD ASHRAF DANISH NASRY LANDUS
(2014186811)
SHAHRINA LEILY SHUHAILI
(2014374999)
JOHANN RAFIQUE MOHD ISA
(2014280832)
“CEMENT INDUSTRY”
Sub-Contractors:

Contents
1. Introduction
2. Trend Analysis
3. DuPont Analysis
4. Industry
Comparative
Analysis
5. Recommendations

1. INTRODUCTION
By

1. INTRODUCTION
Cement Industry in Malaysia
- Low commodity prices but high
imported materials paid in US
currency affecting the cement
industries in Malaysia

1. INTRODUCTION
Lafarge Malaysia
Berhad
Cahya Mata Sarawak
Berhad
Tasek Corporation
Berhad
- Formed in 1950 and formerly known
as Malayan Cement Berhad
- HQ in Klang Valley
-Facilities : Integrated cement plants
in Langkawi, Kanthan and Rawang, a
grinding station in Pasir Gudang, more
than 30 ready-mixed concrete
batching plants and 6 aggregates
quarries throughout Peninsular
Malaysia
-60 years in the industry
- Formed in 1974
-Diversification and expansion of
cement business; cement &
construction Mateials, Alloys
Smelting; Township, Property and
Infrastructure Development,
Education, Financial Services and
telecommunications
infrastructure
- 42 years in the industry
- Formed in 1962
-Cement Plant in Perak and
Distribution Terminal in Sg.
Buloh, Selangor. As a continuous
effort to improve on quality, they
emphasize on Information
Technology for the ready-mixed
batching plants
- 55 years in the industry

CEMENT MANUFACTURING PROCESS
Limestone
Crusher
Grinder
Raw Material Kiln
Clinker
Additives
Grinder Cement
Bulk Dispatch
Packing
Machine
Distribution

By
NURHIDAYAH JANTRAZ
2. TREND ANALYSIS

2. TREND ANALYSIS
Performance Area 2013 2014 2015 Trend Analysis
LEVERAGE:
Debt % Total Assets 22.12% 25.91% 28.42% Increasing leverage since 2013
Interest Coverage 70.6 times 106.74 times 20.67 times Drop of coverage since 2014
LIQUIDITY:
Current Ratio 2.99 times 2.51 times 2.14 times Decreasing liquidity since 2013
Quick Ratio 2.7 times 2.32 times 1.9 times Decreasing liquidity since 2013
Interval Measure (days) 14.73 days 14.58 days 12.49 days Number of days decrease to use assets to meet expense
PROFITABILITY:
Profit Margin (%) 24.76% 23.63% 23.14% Slightly drop in profitability since 2013
Return on Assets (%) 7.22% 7.90% 7.68% Lower profitability since 2014
Return on Equity (%) 11.17% 12.77% 12.96% Higher profitability since 2013
EFFICIENCY:
Asset Turnover 0.58 times 0.60 times 0.55 times Slightly drop of efficiency since 2014
Receivables Turnover 68.90 days 60.77 days 81.72 days Increasing days of collection period since 2014
Inventory Turnover 8.17 times 10.52 times 9.56 times Slightly drop in efficiency since 2014
MARKET:
Price/Book Value 1.5 2.3 2.9 Higher market value since 2013
CAHYA MATA SARAWAK (CMSB)

2. TREND ANALYSISCAHYA MATA SARAWAK (CMSB)
22.12%
24.76%
7.22%
11.17%
25.91%
23.63%
7.90%
12.77%
28.42%
23.14%
7.68%
12.96%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Debt % Total Assets Profit Margin (%) Return on Assets (%) Return on Equity (%)
Percentage%
CMSB
2013
2014
2015

2. TREND ANALYSISCAHYA MATA SARAWAK (CMSB)
2.99
2.7
0.58
8.17
2.51 2.32
0.6
10.52
2.14
1.9
0.55
9.56
0
2
4
6
8
10
12
Current Ratio Quick Ratio Asset Turnover Inventory Turnover
TimesAverage
CMSB
2013
2014
2015

2. TREND ANALYSISTASEK CORPORATION BERHAD (TCB)
LEVERAGE:
Interest Coverage 0.83 times 0.64 times 0.71 times Decreasing coverage since 2013
LIQUIDITY:
Interval Measure (days) 4.54 days 3.33 days 2.59 days Number of days decrease to use assets to meet expense
PROFITABILITY:
Return on Equity (%) 10.45% 13.40% 12.90% Drop of profitability since 2014
EFFICIENCY:
Asset Turnover 0.57 times 0.71 times 0.83 times Increasing efficiency since 2013
Inventory Turnover 3.57 times 4.23 times 4.73 times Increasing efficiency since 2013
MARKET:
Price/Book Value 7.50 6.76 5.88 Slightly decreasing market value since 2014

11.50%
33.80%
9.24%
10.45%
15.10%
34.25%
11.36%
13.40%
16.43%
34.03%
10.79%
12.90%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Percentage%
TCB
2013
2014
2015

0
1
2
3
4
5
6
7
8
Interest Coverage Current Ratio Quick Ratio Asset Turnover Inventory Turnover
TimesAverage
TCB
2013
2014
2015

2. TREND ANALYSISLAFARGE MALAYSIA BERHAD (LMB)
LEVERAGE:
Interest Coverage 16.29 times 0.94 times 5.14 times Decreasing coverage since 2014
LIQUIDITY:
Interval Measure (days) 2.15 days 1.95 days 1.71 days Number of days decreased to use assets to meet expense
PROFITABILITY:
Return on Equity (%) 11.40% 8.19% 8.12% Drop of profitability since 2014
EFFICIENCY:
Asset Turnover 0.70 times 0.69 times 0.63 times Decreasing efficiency since 2013
Inventory Turnover 7.55 times 7.13 times 6.84 times Decreasing efficiency since 2013
MARKET:
Price/Book Value 2.60 2.60 2.50 Slightly drop in market value since 2014

0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Percentage%
LMB
2013
2014
2015

0
2
4
6
8
10
12
14
16
18
Interest Coverage Current Ratio Quick Ratio Asset Turnover Inventory Turnover
TimesAverage
LMB
2013
2014
2015

3. DuPont Analysis
By
JOHANN RAFIQUE

i. CAHYA MATA SARAWAK
Item/Ratio 2013 2014 2015 Evaluation
NET INCOME (RM `000) 210,795 247,310 305,170 Increasing trend since 2013
REVENUE (RM `000) 1,416,841 1,673,898 1,788,008 Increasing trend since 2013
ASSETS (RM `000) 2,423,892 2,800,131 3,231,079 Increasing trend since 2013
EQUITY (RM `000) 1,887,706 2,074,533 2,312,727 Increasing trend since 2013
NET PROFIT MARGIN (%) 14.88 14.77 17.07 Increasing trend 2013
TOTAL ASSET TURNOVER 0.58 0.60 0.55 Highest achieved in 2014
RETURN ON ASSET (ROA) (%) 8.63 8.86 9.39 Increasing trend since 2013
EQUITY MULTIPLIER 1.28 1.35 1.40 Increasing trend since 2013
RETURN ON EQUITY (%) 11.05 12.0 13.15 Increasing trend since 2013

ii. lafarge malaysia berhad
NET INCOME (RM `000) 367,118 256,007 251,233 Decreasing trend since 2013
REVENUE (RM `000) 2,852,400 2,743,090 2,750,820 Highest achieved in 2013
ASSETS (RM `000) 4,047,096 3,990,632 4,358,928 Highest achieved in 2015
EQUITY (RM `000) 3,215,430 3,120,721 3,088,546 Decreasing trend since 2013
NET PROFIT MARGIN (%) 13.0 9.33 9.13 Decreasing trend 2013
TOTAL ASSET TURNOVER 0.70 0.69 0.63 Decreasing trend since 2013
RETURN ON ASSET (ROA)
(%)
9.1 6.44 5.75 Decreasing trend since 2013
RETURN ON EQUITY (%) 11.47 8.24 8.11 Decreasing trend since 2013

iii. tasek corporation berhad
NET INCOME (RM `000) 93,903 105,043 91,260 Highest net income in 2014
REVENUE (RM `000) 577,009 656,061 702,576 Increasing trend since 2013
ASSETS (RM `000) 1,015,742 925,002 845,402 Decreasing trend since 2013
EQUITY (RM `000) 898,960 785,323 706,494 Decreasing trend since 2013
NET PROFIT MARGIN (%) 16.27 16 12.9 Decreasing trend since 2013
TOTAL ASSET TURNOVER 0.57 0.71 0.83 Increasing trend since 2013
RETURN ON ASSET (ROA)
(%)
9.27 11.36 10.71 Highest achieved in 2014
RETURN ON EQUITY (%) 10.46 13.4 12.85 Highest achieved in 2014

4. Industry Comparative
Analysis
By
MUHAMMAD ASHRAF DANISH

4. Industry Comparative Analysis
28.4
34.99 39.7
13
17.8
19.7
25.7
27.7
40.9
22.4
26.83
33.4
0
5
10
15
20
25
30
35
40
45
2013 2014 2015
LEVERAGE: DEBT/ EQUITY %
CAHYA MATA SARAWAK TASEK CORPORATION BERHAD
LAFARGE INDUSTRY AVERAGE
Debt/ Equity ratio measure a company’ financial leverage. It indicates
how much debt a company is using to finance its assets relative to the
amount of value represented in shareholders’ equity.
#1 Cahya Mata Sarawak ratio show an increasing
from 2013 to 2015 indicate they been aggressively
involved in debt in financing its growth.
#2 Lafarge value greater than Industry Average
which indicate they been aggressively in financing its
growth with debt over the period from 2013 to 2015.
#3 Tasek Corporation Berhad shows that they are
below the Industry Average which indicate they not
taking sufficient advantage of financial leverage to
increase profits. However, from 2013 to 2015 its
shows slightly increasing.
# = Ranking

70.6
106.74
20.67
0.83 0.64
0.71
16.29
0.94
5.14
29.24
36.11
8.84
0
20
40
60
80
100
120
2013 2014 2015
LEVERAGE: INTEREST COVERAGE (TIMES)
Interest Coverage ratio determine how easily a company can pay interest
expenses on outstanding debt. The lower the ratio, the more the company is
burned by debts expenses.
#1 Cahya Mata Sarawak ratio greater than Industry
Average which indicate they not been burned by debts
expenses. However, from 2014-2015 a tremendous fall
which in-line with Industry Average, but still ok.
#2 Lafarge value still ok since if more than 1.5 even
though it is below than the Industry Average.
#3 Tasek Corporation Berhad on alarmed for since
their ratio from 2013 – 2015 are below 1.5 that indicate
the ability to fulfil its interest obligation may be
questionable.
# = Ranking

Current ratio measure the ability of company to pay short-term and long-term
obligations.
#1 Tasek Corporation above the Industry Average
indicate they are able to meet their short-term and long-
term obligations. However, from 2013-2015 show a
tremendous fall which in-line with Industry Average that is
acceptable and still Good since more than 1.
#2 Cahya Mata Sarawak ratio below the Industry
Average and slight decrease from 2013 t0 2015 however,
the value still Good since it is more than 1.
#3 Lafarge ratio below Industry Average and from 2013 to
2015 a decrease in ratio in-line with Industry Average
trend but still acceptable and Ok.
# = Ranking
2.99
2.51
2.14
7
4.6
4
2.2
1.94
1.11
4.06
3.02
2.21
0
1
2
3
4
5
6
7
8
2013 2014 2015
LIQUIDITY: CURRENT RATIO (TIMES)

24.8
23.61
23.1
33.8
34.2
34
32.3 28.4
27.8
30.3
28.7
28.3
0
5
10
15
20
25
30
35
40
2013 2014 2015
PROFITABILITY: PROFIT MARGIN
(%)
Profit Margin ratio show the what percentage of sales left after all expenses are paid by
the business.
#1 Tasek Corportation Berhad ratio is above the Industry
Average which is Good. It indicate that the company well
manage its expenses while provide a high profits and from
2013 - 2015 it show a consistency.
#2 Lafarge slightly on par with Industry Average which is Ok
in manage their expenses while profits high enough. From
2013 until 2015 show a slight drop.
#3 Cahya Mata Sarawak ratio below Industry Average which
is Fair in manage its expenses while provide a sufficient net
profit. However, a slightly drop from 2013 to 2015.
# = Ranking

7.22
7.9 7.68
9.24
11.36
10.79
9.07
6.42
5.76
8.51
8.56 8.08
0
2
4
6
8
10
12
2013 2014 2015
PROFITABILITY: RETURN ON ASSETS (%)
LAFARGE INDUSTRY AVERAGE # = Ranking
Return on Assets ratio indicate how efficient they using their assets to generate earnings.
#1 Tasek Corporation Berhad ratio shows that they above the
Industry Average and very efficient in using their assets to
generate earning. From 2013 to 2014 it increase however, it
slightly drop in 2015. Overall, still Good.
#2 Cahya Mata Sarawak ratio below Industry Average,
however from 2013 t0 2015 they slowly increasing which still
Ok.
#3 Lafarge ratio show on 2013 they are above Industry
Average and tremendously drop on 2014 and keep on
dropping in 2015 which indicate inefficient on utilizing their
assets to generate earnings.

11.17
12.77
12.96
10.45
13.4
12.9
11.4
8.19
8.12
11.01
11.45
8.08
0
2
4
6
8
10
12
14
16
2013 2014 2015
PROFITABILITY: RETURN ON EQUITY (%)
Return on Equity ratio show the ability of a company to generate profits from
shareholders investment in the company.
#1 Tasek Corporation Berhad ratio show a rose from 2013 to
2014 and slight drop in 2015. However, still above Industry
Average and align with the trend dropping of the Industry
Average which able to generate profit from a shareholders
investment.
#2 Cahya Mata Sarawak also show a similar pattern with
Tasek. However, it does not drop but slightly increasing from
2013 until 2015. They are Good in generating profit from
shareholders investment.
#3 Lafarge ratio show a tremendous dropping in 2014 and
slightly drop in 2015 which indicate not able to generate profits
from shareholders investment.

11.17
12.77
12.96
10.45
13.4
12.9
11.4
8.19
8.12
11.01
11.45 8.08
0
2
4
6
8
10
12
14
16
2013 2014 2015
EFFICIENCY: REVENUE/ ASSETS
(TIMES)
Revenue/ Assets ratio indicate either the company efficient in deploying its assets in
generating revenue.
#1 Tasek Corporation Berhad ratio show a growth from 2013 to
2014 which indicate a Good utilization of their assets to generate
revenue. However, a bit drop in 2015 but compare to Industry
Average they are above and it align with the trend of Industry
Average a tremendous drop from 2014 to 2015.
#2 Cahya Mata Sarawak ratio show a steady growth from 2013
to 2015 which above the Industry Average that indicate they are
consistently efficient utilizing their assets to generate revenue/
#3 Lafarge ratio a tremendous fall from 2013 to 2014 and slightly
drop in 2015. They are below Industry Average and not efficient in
using their assets to generate revenue.

1.5
2.3
2.9
7.5
6.76
5.88
2.6
2.6
2.5
3.86
3.89
3.76
0
1
2
3
4
5
6
7
8
2013 2014 2015
MARKET VALUE: PRICE/ BOOK VALUE
(RM)
# = Ranking
Price/ Book Value ratio is to compare a stock's market value to its book value.
#1 Tasek Corporation Berhad value show slightly
decreasing from 2013 to 2014 however it still above
Industry Average and at Good position.
#2 Lafarge show a constant growth from 2013 to 2015
even though below the Industry Average the value is at
par.
#3 Cahya Mata Sarawak show an increasing value from
2013 to 2015 indicate a steadily growth even though
below Industry Average.

15.8 16.8
26.1
20.7
18.1
17.1
23.2
23.3
23.3
19.9
19.4 22.2
0
5
10
15
20
25
30
2013 2014 2015
MARKET VALUE: PRICE/ EARNING
(RM)
# = Ranking
Price/ Book Value ratio is to compare a stock's market value to its book value.
#1 Tasek Corporation Berhad value show slightly
decreasing from 2013 to 2014 however it still above
Industry Average and at Good position.
#2 Lafarge show a constant growth from 2013 to 2015 even
though below the Industry Average the value is at par.
#3 Cahya Mata Sarawak show an increasing value from
2013 to 2015 indicate a steadily growth even though below
Industry Average.

2.47
1.39
1.66
10.22
11.49
9.6
3.9
3.9
3.9
5.53 5.59
5.05
0
2
4
6
8
10
12
14
2013 2014 2015
MARKET VALUE: DIVIDEND YIELD (RM)
# = Ranking
measure of dollars of dividends received by investors per hundred dollars of their
investments in the stock.
#1 Tasek Corporation Berhad dividends show increase
from 2013 to 2014 received by the investors however,
reduced in 2015. However, they are paying a dividends
higher than Industry Average which is very Good.
#2 Lafarge show a constant dividends payment from 2013
to 2015 even though they are paying below the Industry
Average which is still Good.
#3 Cahya Mata Sarawak show a decline in dividends
payment in 2014 and then slightly increase in 2015
however, dividends pay is below Industry average.

5. Recommendations
By

5. Recommendations
LafargeMalaysiaBerhad
•To improve on the
receivables in order
to settle the short
term debt and avoid
a high interest
coverage and
improve the expense
of outstanding debt
company’s collection
period in order to
improve on the
receivables/ short
term debt
•To increase sales and
marketing effort to
increase in sales
performance
CahyaMataSarawakBerhad
•Increase in its Sales &
Marketing to increase
Asset Turnover
company’s collection
period in order to pay
off its short term
debts.
•To reduce financial
leverage to improve
CMS liquidity on
assets.
TasekCorporationBerhad
•To push more on the
sales and marketing
effort in order to
increase sales and
revenue.
•The Interest coverage
is significantly low.
Tasek Corporation
Berhad should
expedite and improve
on the collection
period so that the
company wont face a
high interest
coverage to payoff
the outstanding
interest esxpense

JOHANN RAFIQUE MOHD ISA
Dedicated Team Members;
Assoc. Prof. Dr. Noryati Ahmad
Special Thanks to;
THANK YOU

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