Fm assignment final report

Names: Student IDs:
Tan Jit Kim 0323854
Loh Wen Jun 0323551
Michelle Tung Man Kaye 0324175
Lee Xin Ying 0322432
Tey Cheng Fern 0323912
Programme: Bachelor of Quantity Surveying (Honours), SCHOOL OF ARCHITECTURE, BUILDING &
DESIGN
Email (Group Leader): Lee Xin Ying Contact No (Group Leader):
Subject code and title: FIN60203 FINANCIAL MANAGEMENT
Module Lecturer/ Tutor: Tay Shir Men
Assignment number: Group Written Assignment Due date:
Assignment topic: Business and financial analyses and forecasts of a company.
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Signed: Name: Date:
Tan Jit Kim
Loh Wen Jun
Michelle Tung Man Kaye
Lee Xin Ying
Tey Cheng Fern
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A. A feedback form needs to be included with each assignment. Please complete all details clearly.
Student Names and IDs:
Tan Jit Kim 0323854
Loh Wen Jun 0323851
Michelle Tung Man Kaye 0324175
Lee Xin Ying 0322432
Tey Cheng Fern 0323912
Programme: Bachelor of Quantity Surveying (Honours), SCHOOL OF ARCHITECTURE, BUILDING &
DESIGN
Email : Contact No :
Module code and title: FIN60203 FINANCIAL
MANAGEMENT
Module Lecturer/ Tutor: Tay Shir Men
Assignment number: Group Written Assignment Due date: Word Count:
Assignment topic: Business and financial analyses and forecasts of a company.
GRADE/ MARK

B. This section will be completed by the lecturer/tutor assessing your assignment:
CRITERIA %
DISTINCTION
(7.5-10)
CREDI
T
(6-7.4)
PASS
(5-
5.9)
MAR
GINA
L
FAIL(
4-4.9)
FAIL
(0-3.9)
SCO
RE
Executive
summary,
introduction,
background and
principal activities,
and strategic plans
of the company
5 # Excellent
Well-researched, objective
and clearly written.
# Good # Fair # Poor # Confusing
Shows little or no
research, biased or
irrelevant, lacks clarity.
Industry analysis 10 # Excellent
Relevant, up-to-date and
well-researched.
# Good # Fair # Poor # Erroneous
Irrelevant, outdated, little
evidence of research.
Financial analysis 70 # Excellent
Accurate calculations of
the latest financial data
over two years,
comparison with industry
data, well-reasoned
analyses.
Multiple errors in
calculations showing lack
of understanding, fails to
evaluate company by
comparing with relevant
industry data, no reasoned
analysis of financial data.
Financial forecasts 10 # Excellent
Accurate calculations and
correct conclusions.
Excellent evaluation of the
projected cash
requirements.
Multiple errors in
calculations showing lack
of understanding.
Forecasts without any
basis or justification.
Missing or invalid
conclusions and analyses.
Structure and
presentation,
language, reference
of sources
5 # Excellent
Excellent headings/sub-
headings, layout,
pagination. Excellent
grammar, spelling.
Effective/accurate use of
figures and tables.
Excellent references of
sources.
Inappropriate or no
headings, poor and
confusing layout,
innappropriate or no
numbering. Weak
grammar, many spelling
mistakes,
ineffective/inaccurate use
of figures and tables. Poor
or no references of
sources.
Penalty
Total (100%)
Final score (25%)
Any additional comments (if there is any):Comments:
Assessed by: Date:
Sample Moderated by (if any): Date:

TABLE OF CONTENT
CONTENT PAGE NUMBER
1.0 Company Background
1.1 Company Name
1.2 Company Founder and Hearquater of the Company
1.3 Segments of KEN Holdings
1.4 Vision and Mission of KEN Holdings
1.5 Subsidiaries of KEN Holdings
1.6 KEN Holdings Organization Chart
1.7 Analysis of shareholdings as at 22nd
March 2018
1.7.1 Analysis by Size of Shareholdings
1.7.2 List of 30 largest shareholders
1.7.3 Substantial Shareholders
1.7.4 Statement of Directors’ Shareholdings
1
2.0 The Principles Activities of the Company 11
3.0 Analysis of the Revenue Contributions of Different Segments
3.1 Financial performance of the revenue contribution for year 2017
3.2 Revenue
3.3 Segment information
3.4 Revenue contribution for year 2015
3.7 Profit and loss for investment properties
12
4.0 Current State of Industry
4.1 Current size of market
4.2 Prospect for future growth
4.3 Challenges faced the industry
26
5.0 Company’s Strengths and Weaknesses
5.1 Company’s strengths
5.1.1 Financial performance
5.1.2 Responsibilities and confidence
5.1.3 Award and recognition
5.2 Company’s weaknesses
5.2.1 Low inventory turnover
5.2.2 Risk management and internal control
5.2.3 Increase in loans and borrowings
30

6.0 Company’s Strategic Plans
6.1 Quality
6.2 Environment
6.3 Shareholders’ investment
32
7.0 Company’s Major Capital Investments & Major Sources of
Funding
7.1 Major Capital Investments
7.2 Major Sources of Funding
33
8.0 Analysis of Financial Condition
8.1 Liquidity
8.2 Activity
8.3 Debt
8.4 Profitability
8.5 Market Performance
52
9.0 Conclusion and Recommendation 76
10.0 References 78
11.0 Appendices 79

1.0 Company Background
1.1 Company Name
KEN Holdings Sdn Bhd is a Malaysia-based company whom began as a specialist contractor in
1980s. It operates as a public investment holding company through 2 segments which are construction
and property development. It engaged in investment holding and the provision of management services
had grown to be a reputable property development company.
1.

1.2 Company Founder and Headquarter of the Company
Dato’ Tan Boon Kang is the founder of KEN Holdings and assisted by a co-founder which is
Puan Lau Pek Kuan. Dato’ Tan was appointed to the Board of Directors on 18th March 1996 and became
the Chairman / Managing Director of the Group from March 2009 to February 2013. On 28th February
2013, he was redesignated as KEN Holding’s Group Executive Chairman. He is also one of the members
of the Remuneration Committee.
He has been watching the growth of the Group in all its activities over the past 38 years. In these
38 years, he has vast experience in the specialist engineering business. He contributed significantly in
elevating the Group to one of the more established specialist engineering companies in Malaysia and
Hong Kong. He was diversifying the Group’s business into property development and has created a very
eminent brand name whilst developing a loyal following amongst property buyers. He does not hold any
other directorship in other public listed companies.
Puan Lau Pek Kuan is the co-founder of the Group and she has another identity which is the
spouse of Dato’ Tan. She was instrumental in developing and implementing the accounting and human
resource policies for KEN Holdings. She was also a member of the Board since 1996 to 2008.
Puan Lau has extensive knowledge and experience in procurement of materials in specialist
engineering and building construction. She has been responsible for integrating the Group’s operations
for effective cost containment measures and maintaining a high level of efficiency for the Group. Same
as Dato’ Tan, Puan Lau does not hold any other directorship in other public listed companies.
Headquarter :
Level 12, Menara Ken TTDI,
No.37, Jalan Burhanuddin Helmi,
Taman Tun Dr.Ismail
60000 Kuala Lumpur.
2.

1.3 Segments of KEN Holdings
As mentioned previously, KEN Holdings now operates as a public investment holding company
which engage construction and property development business in Malaysia through 2 main segments
which are construction segment and property segment. The construction segment offers specialist
engineering services, undertakes turnkey contracts, building and civil engineering works, land
reclamation, dredging, marine and civil engineering works.
Whereas in property development segment, the Group focuses on the development of residential
and commercial properties. Besides that, KEN Holdings does involving in the rental of investment
properties, provision of property and car park management and geo-technical services.
The Company, through its subsidiaries, is engaged in property holding, investment and
development, specialist engineering services, geo-technical, civil engineering and building works, land
reclamation and marine engineering, and property management.
The subsidiaries’ properties of the company include KEN Bangsar, KEN Damansara Trilogy
and KEN Aman township, Ken Grouting Sdn. Bhd., Ken Projects Sdn. Bhd., Ken Property Sdn. Bhd.,
Ken JBCC Sdn. Bhd., Sphere Supreme Sdn. Bhd and etc.
1.4 Vision and Mission of KEN Holdings Sdn. Bhd
KEN Holdings’s vision is to aspires and deliver sustainable, quality developments that exceed
customers’ expectation in order for public society more recognising their responsibilities as a developer
and nation builder. There are 4 missions for KEB Holdings to achieve which are they enhance
shareholders’ value through sustainable resource management and sound corporate governance that
promotes steady earnings growth. Secondly, they committed to deliver sustainable quality homes that
are efficiently planned and innovatively designed on schedule. Third, they embrace sustainable practices
to preserve the environment for future generations. Fourth, they create learning opportunities and a
conducive working environment that promote teamwork and work life balance for sustainable job
satisfaction.
3.

1.5 Subsidiaries of KEN Holdings Sdn Bhd
No. Name of Company Principal Activities
1 Ken Grouting Sdn. Bhd. - Specialist engineering services
- Turnkey contracts
- Building and Civil Engineering works
2 Ken-Chec Sdn. Bhd. - Land reclamation
- Civil engineering
- Dredging engineering
- Marine engineering
3 Ken Projects Sdn. Bhd. - Investment holdings
4 Ken Highlands Sdn. Bhd. - Investment holdings
5 Ken TTDI Sdn. Bhd. - Investment holding
6 Ken Rimba Sdn. Bhd. - Property development
- Investment holding
7 Ken Link Sdn. Bhd. - Property development
8 Ken JBCC Sdn. Bhd. - Property development
9 Ken Property Sdn. Bhd. - Property holding
- Investment and property development
10 Khidmat Tulin Sdn. Bhd. - Property holding
11 T.B.S.Management Sdn. Bhd. - Property management services
12 Genesis Nature Sdn. Bhd. - Property management services
13 Swift Frontiers Sdn. Bhd. - Property management services
14 Jewel Estate Sdn. Bhd. - Property management services
15 Ken Park Sdn. Bhd. - Car park management
16 Kenergy Sdn. Bhd. Dormant
17 Ken JBCC Holdings Sdn. Bhd. Dormant
18 Ken Estate Sdn. Bhd. Dormant
19 Ken City Sdn. Bhd. Dormant
20 Ken Management Sdn. Bhd. Dormant
21 Ken City JB Sdn. Bhd. Dormant
22 Ken JBCC Land Sdn. Bhd. Dormant
23 Ken Capital Sdn. Bhd. Dormant
4.

24 Ken Estate (Penang) Sdn. Bhd. Dormant
25 Ken Estate (Melaka) Sdn. Bhd. Dormant
26 Ken Kelantan Land Sdn.Bhd. Dormant
27 Ken Damansara Land Sdn.Bhd. Dormant
28 Wealthy Resort Sdn.Bhd. Dormant
5.

1.6 KEN Holdings’ Organisation Chart
BOARD OF DIRECTORS
NAME POSITION CURRENT BOARD
MEMBERSHIP
Dato’ Tan Boon Kang Group Executive Chairman - Kenly HK Ltd
- Ken Projects Sdn Bhd.
- Ken Link Sdn. Bhd.
- Sphere Supreme Sdn. Bhd.
- Support Capital Sdn Bhd.
- Ken TTDI Sdn. Bhd.
- Ken Holdings Bhd.
Tan Chek Siong Group Managing Director - Ken Holdings Bhd.
YAM Dato’ Seri Syed Azni
Ibni Almarhum Tuanku
Syed Putra Jamalullail
Independent Non-Executive
Director
- Ken Holdings Bhd.
Tan Moon Hwa Executive Director - Ken Property Sdn Bhd.
- Ken Holdings Bhd.
- Ken Grouting Sdn. Bhd.
- Jewel Estate Sdn. Bhd.
- Ken TTDI/ Genesis Nature Sdn.
Bhd.
- T.B.S. Management Sdn. Bhd.
- Ken Link Sdn. Bhd.
- Ken-Chec Sdn. Bhd.
- Ken Projects Sdn Bhd
Dato’ Ir. Dr. Ashaari bin
Mohamad
Independent Non-Executive
Director
- Ken Holdings Bhd.
Sha Thiam Lu Independent Non-Executive
Director
- Ken Holdings Bhd.
Lau Pek Kuan Executive Director -
Andrea Huong Jia Mei Secretary -
6.

1.7 Analysis of shareholdings as at 22nd March 2018
1.7.1 Analysis by Size of Shareholdings
Size of Shareholdings No. of
shareholders
% No. of share
held
%
Less than 100 shares 83 5.38 1,769 0.00
100 - 1,000 shares 115 7.45 46,311 0.03
1,001 - 10,000 shares 844 54.66 5,099,240 2.84
10,001 - 100,000 shares 429 27.78 12,472,160 6.95
100,001 to less than 5& issued shares 71 4.6 76,742,758 42.79
5% and above of issued shares 2 0.13 84,975,362 47.38
Total 1,544 100.00 179,337,600 100.00
7.

1.7.2 List of 30 largest shareholders
Name No. of shares held %
1. Kencana Bahagia Sdn. Bhd. 64,594,638 35.99
2. SJ Sec Nominees (Tempatan) Sdn. Bhd.
Budaya Dinamik Sdn. Bhd.
20,425,724 11.39
Pledged Securities Account for Seloka Aman Sdn. Bhd.
6,663,000 3.72
4. Tan Chek Siong 6,242,000 3.48
5. Tan Chek Een 6,000,000 3.35
6. Tan Chek Ying 6,000,000 3.35
7. Dato’ Tan Boon Kang 3,963,600 2.21
8. Tan Foo See 3,405,378 1.90
9. Kencana Bahagia Sdn. Bhd 3,300,000 1.84
10. Teo Kwee Hock 3,132,500 1.75
11. Yeoh Phek Leng 3,060,000 1.71
12. Maybank Nominees (Tempatan) Sdn. Bhd
Pledged Securities Account for Tan Kian Ling
2,640,000 1.47
13. CIMSEC Nominees (Tempatan) Sdn. Bhd.
CIMB Bank for Tan Kian Ling (MY2236)
2,500,000 1.39
14. To’ Puan Lau Pek Kuan 2,300,000 1.28
Pledged Securities Account for Adat Saga Sdn. Bhd.
2,095,300 1.17
16. I-Wen Morsingh 1,687,000 0.94
17. To’ Puan Lau Pek Kuan 1,617,000 0.9
18. Tan Chee Koon 1,530,800 0.85
19. Liew Yoon Yee 1,436,000 0.80
20. Low Siew Choong @ Liew Siew Meng 1,265,500 0.71
21. Tan Moon Hwa 1,202,680 0.67
22. DB (Malaysia) Nominee (Tempatan) Sendirian Berhad
Exempt An for Bank of Singapore Limited
1,131,700 0.63
23. CIMSEC Nominees (Tempatan) Sdn. Bhd.
CIMB Bank for Tan Kian Aik (PBCL-0G0496)
1,000,000 0.56
24. UOB Kay Hian Nominees (Tempatan) Sdn. Bhd 930,100 0.52
8.

Pledged Securities Account for Teo Siew Lai
25. Universal Trustee (Malaysia) Berhad
TA Islamic Fund
828,000 0.46
26. Liew Yoon Yee 700,500 0.39
27. Lim Pay Kaon 700,000 0.39
28. Cartaban Nominees (Tempatan) Sdn. Bhd.
AXA Affin General Insurance Berhad
632,300 0.35
29. Lau Chin Kok 632,000 0.35
30. Yeo Khee Huat 593,000 0.33
Total 152,154,720 84.85
9.

1.7.3 Substantial Shareholders
Name of substantial shareholders No. of ordinary shares
Direct % Indirect %
1. Kencana Bahagia Sdn. Bhd. 67,849,638 37.83 - -
2. Dato’ Tan Boon Kang 3,963,600 2.21 83,766,638[1] 46.71
3. To’ Puan Lau Pek Kuan 3,917,000 2.18 83,813,238[1] 46.73
4. Anton Syazi bin Ahmad Sebi - - 20,425,724[2] 11.39
5. Aryati Sasya binti Ahmad Sebi - - 20,425,724[2] 11.39
6. Budaya Dinamik Sdn. Bhd. 20,425,724 11.39 - -
1.7.4 Statement of Directors’ Shareholdings
Directors’ name No. of ordinary shares
Direct % Indirect %
1. Dato’ Tan Boon Kang 3,963,300 2.21 83,766,638[1] 46.71
2. Tan Chek Siong 6,242,000 3.48 - -
3. Tan Moon Hwa 1,202,680 0.67 - -
4. YAM Dato’ Seri Syed Azni Ibni
Almarhum Tuanku Syed Putra Jamalullail
- - - -
5. Dato’ Ir. Dr. Ashaari bin Mohamad - - - -
6. Sha Thiam Lu - - - -
Notes :
[1] Deemed interested by virtue of his / her substantial shareholdings in kencana Bahagia Sdn. Bhd. and
shareholdings of his / her spouse and children in the Company.
[2] Deemed interested by virtue of his / her substantial shareholdings in Budata Dinamik Sdb. Bhd.
10.

2.0 Principal Activities
KEN Holdings Sdn Bhd mainly focus on investment holding and provision of management
services. Whereas the subsidiary companies of KEN Holdings such as Ken Grouting Sdn. Bhd, Ken
Projects Sdn. Bhd, Ken Property Sdn. Bhd, Ken-Chec Sdn. Bhd and so on include in property holding,
investment and development, specialist engineering services, geo-technical, civil engineering and
building works,land reclamation, marine engineering, property management and car park management.
Notes 7 of the financial statement of KEN Holdings’ financial report stated there have been no
significant changes in the nature of principal activities of the Company and its subsidies.
No. Name of Company Principal Activities
1 Ken Grouting Sdn. Bhd. - Specialist engineering services
- Turnkey contracts
- Building and Civil Engineering works
2 Ken-Chec Sdn. Bhd. - Land reclamation
- Civil engineering
- Dredging engineering
- Marine engineering
3 Ken Projects Sdn. Bhd. - Investment holdings
4 Ken Highlands Sdn. Bhd. - Investment holdings
5 Ken TTDI Sdn. Bhd. - Investment holding
6 Ken Rimba Sdn. Bhd. - Property development
7 Ken Link Sdn. Bhd. - Property development
8 Ken JBCC Sdn. Bhd. - Property development
9 Ken Property Sdn. Bhd. - Property holding
10 Khidmat Tulin Sdn. Bhd. - Property holding
11 T.B.S.Management Sdn. Bhd. - Property management services
12 Genesis Nature Sdn. Bhd. - Property management services
13 Swift Frontiers Sdn. Bhd. - Property management services
14 Jewel Estate Sdn. Bhd. - Property management services
15 Ken Park Sdn. Bhd. - Car park management
11.

3.0 Analysis of the revenue contributions of the different segments of the company
3.1 Financial performance of the revenue contribution for year 2017
KEN Holdings Berhad achieved a commendable financial performance with higher revenue of
RM104.2 million for year 2017 as compared to RM92.8 million in the previous year 2016 due to the
higher sales and progressive revenue recognition which was contributed from the KEN Rimba
Condominium 1 project in Shah Alam. During the financial year under review, KEN Holdings Berhad
recorded a total revenue of RM104.2 million with an increase of 12.3% as compared to the previous
financial year. With the higher revenue registered, profit before tax also increased to RM62.9 million
during the year 2017.
Figure 3.1: Financial statistics for revenue between year 2013 to year 2017
Figure 3.2: Revenue contribution between year 2013 to year 2017
12.

3.2Revenue
(i) Property development
Revenue from property development is recognised when it is probable that future economic benefit
will flow to the Group, and by reference to the stage of completion of the development activity in
respect of development units sold. The stage of completion is measured by the completion of a
physical proportion of contract work to date. Revenue from the sale of completed development
properties is recognised net of discounts when transfer of risks and rewards has been completed.
(ii) Construction contracts
Revenue from construction contracts is accounted in accordance to the accounting policies as
described in Note 3(l) to the financial statements in the annual report 2017.
(iii) Management fee
Management fee is recognised on accrual basis when services are rendered.
(iv) Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of
incentives provided to lessees are recognised as a reduction of rental income over the lease term on a
straight-line basis.
(v) Interest income
Interest income is recognised on accruals basis using the effective interest method.
(vi) Dividend income
Dividend income is recognised when the Group’s right to receive payment is established.
(vii) Car park operations
Revenue from car park operations are recognised on an accrual basis.
13.

3.3 Segment information
KEN Holdings Berhad has two reportable segments, as described below, which are the Group’s
strategic business units. The strategic business units offer different products and services, and are
managed separately because they require different techniques and marketing strategies and industry
expertise. For each of the strategic business units, the Group’s Managing Director reviews internal
management reports at least on a quarterly basis. The following summary describes the operations in
each of the Group’s reportable segments:
Construction Specialist engineering services, turnkey contracts, building and
civil and engineering works, land reclamation, dredging, marine
and civil engineering
Property development Development of residential and commercial properties
Other non-reportable segments comprise operations related to the rental of investment property and the
provision of property management services.
14.

Figure 3.3: Revenue Contribution for Year 2015
Figure 3.4: Segment revenue for Year 2015
Year 2015
(RM'000)
2014
(RM'000)
Differences
(RM)
Percentage
(%)
Construction 70,522 58,114 12,408 21.4
Property
development
73,789 90,688 -16,899 -18.6
Management
fees
477 394 83 21.1
Figure 3.5: Analysis of the Changes from Year 2014 to 2015
Based on the annual report of KEN Holdings Berhad in Year 2015, Ken Holdings had a total
revenue amount of RM 144,788,000 in year 2015. The total revenue has deducted the elimination
amount of RM 70,522,000 from the inter-segment revenue. The major segment that had generated the
most revenue in year 2015 is property development. It had generated a revenue amount of RM
73,789,000 which occupied 51% of the overall revenue that decreases about 19% compared to revenue
amount of RM 90,688,000 in year 2014. Next, the revenue for construction had generated an amount of
15.

RM 70,522,000 which occupied 49% of the overall revenue that increase about 21% compared to
revenue amount of RM 58,114,000 in year 2014. Lastly, the revenue for management fees generated
with an amount of RM 477,000 which occupied 0.33% of the overall revenue which increases about
21% compared to revenue amount of RM 394,000 in year 2014.
Figure 3.6 Analysis of Revenue Contribution for Year 2015
16.

Figure 3.8: Segment revenue for Year 2016
Year 2016
(RM'000)
2015
(RM'000)
Differences
(RM)
Percentage
(%)
Construction 95,718 70,522 25,196 35.7
Property
development
92,492 73,789 18,703 25.3
Management
fees
324 477 -153 -32.1
revenue amount of RM 92,816,000 in year 2016. The total revenue has deducted the elimination amount
of RM 95,718,000 from the inter-segment revenue. The major segment that had generated the most
revenue in year 2016 is construction segment. It had generated a revenue amount of RM 95,718,000
17.

which occupied 51% of the overall revenue which increases about 36% compared to last year revenue
amount of RM 70,522,000 in year 2015. Next, the revenue for property development had generated an
amount of RM 92,492,000 which occupied 49% of the overall revenue which increases about 25%
compared to revenue amount of RM 73,789,000 in year 2015. Lastly, the revenue for management fees
generated with an amount of RM 324,000 which occupied 0.17% of the overall revenue which decreases
about 32% compared to revenue amount of RM 477,000 in year 2015.
Figure 3.10: Analysis of Revenue Contribution for Year 2016
18.

Figure 3.12: Revenue Contribution of Segment for Year 2017
Year 2017
(RM'000)
2016
(RM'000)
Differences
(RM)
Percentage
(%)
Construction 57,692 95,718 -38,026 -39.7
Property
development
101,555 92,492 9,063 9.8
Investment
properties
2,063
Management
fees
306 324 -18 -5.6
19.

Figure 3.14: Analysis of Revenue Contribution for Year 2017
revenue amount of RM 104,208,000 in year 2017. The total revenue has deducted the elimination
amount of RM 57,408,000 from the inter-segment revenue. The major segment that had generated the
most revenue in year 2017 is property development segment. It had generated a revenue amount of RM
101,555,000 which occupied 63% of the overall revenue which increases about 10% compared to
revenue amount of RM 92,492,000 in year 2016. Next, the revenue for construction contract revenue
had generated an amount of RM 57,692,000 which occupied 36% of the overall revenue which decrease
about 39.70% compared to revenue amount of RM 95,718,000 in year 2016. Next, the revenue for
investment properties had generated an amount of RM 2,063,000 which occupied 1.28% of the overall
revenue. However, there was no revenue generated for investment properties for year 2016. Lastly, the
revenue for management fees generated with an amount of RM 306,000 which occupied 0.19% of the
overall revenue which increase about 6% compared to revenue amount of RM 324,000 in year 2016.
20.

Figure 3.15: Analysis of Revenue Contribution from the Year 2015 to Year 2017
Based on the bar chart above, it shows the analysis of comparison of revenue contribution from
Year 2015 to 2017. As referring to the bar chart above shows that property development and construction
segment are the major segments of revenue contributions. Property development has the greatest
significant revenue to KEN Holdings Berhad which shows a slight decline from 51% to 49% from Year
2015 to 2016 but had a greater increase to 63% in Year 2017. The increase of revenue may be due to the
stage of completion of property development activities, including its obligations to contract variations
and claims as referred to KEN Holdings Berhad Annual Report 2017 (page 44). Next, the second most
revenue contribution segment is construction segment.
The overall revenue of construction segment had a gradual increase from 49% to 51% from
Year 2015 to Year 2016 but declined to 36% in Year 2017. This may also be due to stage of completion
of construction projects which reduces the revenue contribution from construction and the extent of
construction costs incurred due to completion as referred to KEN Holdings Berhad Annual Report 2017
(page 59). The third most revenue contribution segment is investment properties segment which
contributed 1.28% only in Year 2017. KEN Holdings Berhad is doing property investment in the Year
2017 due to the management forecasting there is an opportunity in it. The Group’s investment properties
represent a number of commercial properties that are partially tenanted and two pieces of vacant land.
The highest and best use of these properties and land is for rental generation as they are located in the
vicinity of the commercial area. Lastly, management fees segment contributed the least and smallest
revenue which occupied only 0.33%, 0.17% and 0.19% in Year 2015 to Year 2017 respectively.
21.

3.7 Profit and loss for investment properties
Profit and loss for investment properties in year 2015
Figure 3.16: Profit and loss for investment properties for year 2015
Year 2015
(RM'000)
Percentage
(%)
2014 (RM'000) Percentage
(%)
Rental
income
434 100.0 406 100
Operating
expenses
68 15.7 66 16.3
Profit 366 84.3 340 83.7
Figure 3.17: Analysis of changes for investment properties from year 2014 to year 2015
Based on the annual report of KEN Holdings Berhad shows the profit or loss of investment
properties in year 2015, Ken Holdings had generated a rental income of RM 434,000 in year 2015 which
increase compared to last year rental income of RM 406,000 in year 2014. However, the operating
expenses incurred for year 2015 is RM 68,000 which occupied about 16% of the total income compared
to last year operating expenses of RM 66,000 in year 2014. Although the outflow of operating expenses
for year 2015 is shown to be higher compared to year 2014, the investment properties in year 2015 still
manage to generate a higher profit of RM 366,000 which occupied about 84% compared last year profit
of RM 340,000 in year 2014 due to the lower amount of operating expenses incurred in year 2015.
22.

Year 2016
(RM'000)
Percentage
(%)
(%)
Rental
income
453 100.0 434 100
Operating
expenses
70 15.5 68 15.7
Profit 383 84.5 366 84.3
properties in year 2016, Ken Holdings had generated a rental income of RM 434,000 in year 2016 which
increases compared to last year rental income of RM 406,000 in year 2015. However, the operating
expenses incurred for year 2016 is RM 70,000 which occupied about 16% of the total income compared
to last year operating expenses of RM 66,000 in year 2015. Although the outflow of operating expenses
for year 2016 is shown to be higher compared to year 2015, the investment properties in year 2016 still
manage to generate a higher profit of RM 383,000 which occupied about 85% compared last year profit
of RM 366,000 in year 2015 due to the lower amount of operating expenses incurred in year 2015.
23.

Year 2017
(RM'000)
Percentage
(%)
(%)
Rental
income
3,667 100.0 453 100.0
Operating
expenses
584 15.9 71 15.7
Profit 3,083 84.1 382 84.3
properties in year 2017, Ken Holdings had generated a rental income of RM 3,667,000 in year 2017
which increases compared to last year rental income of RM 453,000 in year 2016. However, the
operating expenses incurred for year 2017 is RM 584,000 which occupied about 16% of the total income
compared to last year operating expenses of RM 71,000 in year 2016. However, investment properties
in year 2017 still manage to generate a profit of RM 3,083,000 which occupied about 84% of the total
income compared last year profit of RM 382,000 in year 2016 due to the higher amount of operating
expenses incurred in year 2016.
24.

Contribution for investment properties in year 2015 to year 2017
Year 2017 (%) 2016 (%) 2015 (%)
Rental income 100.0 100.0 100.0
Operating
expenses
15.7 15.5 15.9
Profit 84.3 84.5 84.1
Figure 3.18: Percentage of changes for investment properties from year 2015 to year 2017
Based on the percentage interpretation of profit or loss for investment properties from year 2015
to year 2017, the operating expenses for direct and indirect income incurred decreases at a higher rate
from 15.9% to 15.5% in year 2015 to year 2016 but had a slight increase to 15.7% in year 2017. Hence,
the profit earned for investment properties increase at a higher rate from 84.1% to 84.5% in year 2015
to year 2016 due to the reduction in the operating expenses but increased slightly in year 2017 which is
84.3% due to the slight increase of operating expenses in year 2017.
From the analysis above, this shows that investment properties are one of an important asset
to KEN Holding as the profit earned for investment properties is generated by earning rental income in
each year. The Group’s investment properties represent a number of commercial properties that are
partially tenanted and two pieces of vacant land. These properties and land contribute to rental
generation as they are located in the vicinity of the commercial area.
25.

4.0 Current state of the main industry of the company
4.1 Current Size of the Market
During the financial year under review, the Group recorded total revenue of RM104.2 million,
an increase of 12.3% as compared to the previous financial year. With higher revenue registered, profit
before tax also increased to RM62.9 million during the year. The higher revenue was mainly contributed
by the new sales registered and higher progress billings from the KEN Rimba Condominium 1 (KRC1)
project during the financial year. Net cash used in investing activities reduced to RM10.5 million as
compared to RM25.9 million last year mainly due to the completion of our corporate office tower,
Menara KEN TTDI in year 2016.
KEN Rimba Condominium 1 (KRC1) had been completed in year 2018 consists of 3 blocks
condominium which comprises of 653 units and 26 pool villa units. It is one of the KEN Rimba
Township which offers affordable green homes to the market. The condominium consists of 653
freehold units of 3 to 4 bedrooms apartments ranging from 1,076 to 2,367 square feet and 26 pool villas
of 2,615 square feet. Development progress of KRC1 is well on track for completion and hand over in
Q1 2018. Despite the cautious consumer sentiment, the take up rate of this project remains encouraging
at more than 80% as at end of year 2017, demonstrating that quality green rated homes offered at an
affordable price provide a good value proposition. KEN Rimba Condominium 1 (KRC1) were built to
create and promote healthy lifestyles and sustainable living among KRC1 residents, recreational
facilities and green features were invested within the development.
According to reviews by Group Managing Director of KEN Holding Berhad, Tan Chek Siong
said that Menara KEN TTDI, which was situated within the affluent vicinity of Taman Tun Dr Ismail,
Kuala Lumpur comprises of Platinum Grade office suites, a performing arts theatre, an art gallery, chains
of food and beverage outlets, a gymnasium, rooftop pool and sky bar. Menara KEN TTDI was completed
in year 2017 comprises of 13-storey which is approximately 3,600 to 28,000 square feet office spaces
and 3-levels of food and beverage outlets. As for the end of year 2017, Menara KEN TTDI has an
occupancy rate approximately 30% and KEN Holding Berhad will continue to focus on a having broader
tenant base of quality corporations with long lease periods in the coming year to improve occupancy
rate which in turn will translate to long term earnings visibility.
26.

4.2 Prospects for Future Growth
According to the statement by KEN Holding Berhad executive chairman, Dato’ Tan Boon
Kang said that the Malaysian property market in year 2017 remain 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. The outlook of the Malaysian economy is premised on resilient domestic demand which is
projected to grow between 5.0% and 5.5% in year 2018. Sentiments in the property market is expected
to remain lacklustre in year 2018 with the oversupplied position in certain sub-sectors.
KEN Holdings Berhad believe that offerings of affordable high rated green developments
coupled with KEN Holdings’ resonating brand and values will continue to appeal and attract buyers
particularly from the younger working groups and first-time buyers to engage in pursuing a property.
Given the slow growth operating environment, we recognise that demand for properties will likely to
remain subdued and therefore, KEN Holdings Berhad will place emphasis on growing its recurring
income base. Despite the challenges in the coming year, the Group is confident that it will remain
resilient in its performance in 2018.
According to reviews by Group Managing Director of KEN Holding Berhad, Tan Chek Siong
stated that property sentiment will continue to be challenging and as such will remain prudent in the
launching of new projects in the future. However, according to KEN Holding Berhad Annual Report
2017 stated that it will remain focused on completing their KEN Rimba Condominium 1 (KRC1)
project and look forward to achieving sustainable earnings for the Group by strengthening its long-
term recurring income from the rental of office and commercial spaces in Menara KEN TTDI as well
as conversion of the remaining inventories of the Group.
27.

4.3 Challenges Facing the Industry
KEN Holdings Berhad is current facing one of the major challenges due to the oversupply of
the properties which is a major concern in the Malaysian property market in year 2017. Besides, the
challenging economy in Malaysia also led to hike in the interest rates and also increase the cost of
living which influence the consumer becoming more cautious in spending and buying properties and
led to the dampening of demand and price of properties.
According to the statement by KEN Holding Berhad executive chairman, Dato’ Tan Boon Kang
said that the outlook of the Malaysian economy is premised on resilient domestic demand which is
projected to grow between 5.0% and 5.5% in year 2018. The performance of the economy in Malaysia
had been a major challenge as it not only influence the property market but the inflation rate also affects
the cost of materials for construction.
Besides, the property development in the market had become more competitive as more
developers are coming into the industry which is one of the major challenges. KEN Holdings Berhad
had to increase their competitive advantages by offering more affordable homes that provide a good
value proposition and facilities that create and promote a healthy lifestyles and sustainable living among
residents to attract more buyers to purchase their properties.
Based on the leading property consultant Knight Frank Malaysia said that “Malaysia’s property
market is expected to remain sluggish in the first six months of the year”. “The overall property market
performance is expected to remain lacklustre in the first half of year 2018, continuing from the weak
conditions in the second half of year 2017”, says Knight Frank Malaysia. In its report entitled, “Real
estate highlights for second half of 2017”, it said that property market remained weak during that period
due to the oversupplied position in the main sub-sectors such as high-end residential, office and retail.
Since year 2015, Malaysia’s housing market has suffered a downturn. Many of the property
development stocks have been affected with lower revenues, profits and higher inventories. Especially
for those who focused on the development of mid-to-high range of end housing properties in Malaysia.
According to BNM and some property analyst as reported in New Straits Times, the slow rate in
Malaysia’s housing market is due to several factors such as steady rise in land bank prices, stable
economic growth, a lower growth in income level and entries to the property market is also fairly easy.
This can be a challenge to KEN Holdings Berhad as the property market had become more competitive.
As a result, the affordability issue has led to many unsold housing units. As at first quarter 2017,
total unsold housing properties stood at 130,690 units. According to BNM, it’s the highest since year
2008.
28.

Figure 4.1 Total Unsold Residential Properties
29.

5.0 Company’s strengths and weaknesses
5.1 Company’s strengths
5.1.1 Financial performance
As shown in the profit or loss statements, the Group achieved a commendable financial
performance with higher revenue of RM 104,208,000 as compared to RM 92,816,000 in the previous
year which is an increase of 12.27% on the back of higher sales and progressive revenue recognition
from the KEN Rimba Condominium 1 project in Shah Alam. Thus, with the higher revenue registered,
profit before tax also increased to RM 62.9 million during the year. According to the statement of
financial position in the year 2017, the total assets of KEN Holdings is RM 357,716,000 which is 0.13%
higher than the previous year.
5.1.2 Responsibilities and confidence
As what stated in the company vision statement, they will aspire to deliver sustainable and
quality developments that exceed customers’ expectations. Also, they are responsible as a developer in
the communities that they have built and understand the promises that they make as they carefully,
mindfully seek to stay true to what they stand for. Moreover, they are proud of their brand and they keep
their promises to constantly improve their ability to contribute to customers. They value the precious
resources that they have and use them wisely, efficiently and effectively. Confidence is not a guarantee
of success but act as a thinking to improve your likelihood of success, to determine ways to make things
work.
5.1.3 Award and recognition
KEN Holdings has been awarded by several achievements of corporate awards. There are
Multimedia Super Corridor (MSC) Cybercentre Status, Carbon Neutral Status, Green RE Gold Award,
GreenRE Platinum Award, FIABCI Malaysia Property Award, USGBC LEED Platinum Award, BCA
Green Mark GOLDPLUS
Award, BCA Green Mark Platinum Award, BCA Green Mark Certified Award,
GBI Pilot Project for The GBI Township Tool, FuturArc Green Leadership Citation Award, PAM Silver
Award For Excellence in Architecture, New Straits Times SC Cheah Choice Award, GBI Certified
Award, and The Edge-PAM Green Excellence Award.
30.

5.2 Company’s weaknesses
5.2.1 Risk management and internal control
The Board is not absolute assurance against material misstatement of management and financial
information and records or against financial losses or fault. A documented risk management policy and
procedure which defined risk strategy and risk management policy on risk assignment, risk
communication and risk monitoring.
5.2.2 Increase in loans and borrowings
The short-term loans and borrowing of KEN Holdings in the year 2017 is RM 5,500,000 which
is increased by 175% from the year 2016 to 2017. Increase in the short-term loans and borrowings means
that the company has no enough cash flows in operating their working capital needs. The cash and cash
equivalents of this company in the year 2017 is RM 2,766,000. The short-term loans and borrowings
larger than cash and cash equivalents shows that the company may be in poor financial health and does
not have enough cash to pay off its short-term debts.
31.

6.0 Company’s strategic plans
6.1 Quality
The main mission of KEN Holdings Berhad is to deliver sustainable quality homes that are
efficiently planned and innovatively designed on scheduled that exceed customers’ expectations. They
are aimed to offer an affordable high rated green developments coupled with their resonating brand and
values to the buyers particularly from the younger working class and first-time buyers. Due to the
demand for properties will likely remain subdued, KEN Holdings will place emphasis on growing its
recurring income base. Hence, the most important thing is to focus on commitment to the highest
standards of quality where these qualities enable the company to consistently deliver outstanding work
and this is what distinguish them from other companies.
6.2 Environment
KEN Holdings Berhad is Malaysia’s first multiple award-winning green developer. The main
development they focused on is green development in order to provide the green environment and
preserve the environment for future generations. Where its mean environmental sustainability and eco-
friendliness of the used substances and materials. The challenges they faced is the sentiments in the
property market is expected to remain lacklustre in 2018 with the oversupplied position in certain sub-
sectors.
6.3 Shareholders’ investment
KEN Holdings Berhad aim to enhance shareholders’ value through sustainable resource
management and sound corporate governance that promotes steady earnings growth. They are
responsible to review of overall strategic direction and objective for the Group and overseeing the
business operation of the Group, evaluating whatever they are properly managed. The Board of Directors
is committed in ensuring that the highest standards of corporate governance are maintained throughout
the Group so that the affairs of the Group are conducted with integrity and professionalism with the
objective of safeguards shareholder’s investment and ultimately enhancing long term shareholder use.
32.

7.0 Company’s Major Capital Investments & Major Sources of Funding
7.1 Major Capital Investments
Capital investment is defined as the funds invested in a company for the purpose of furthering
or achieving its business objectives. Capital investment may also refer to a company’s acquisition of
capital assets or fixed assets that are expected to be productive over many years. KEN Holdings uses its
capital to invest in different types of long and short-term investment such as property, plant and
equipment.
In the year 2015, KEN Holdings has purchased RM 552,000 of property, plant and equipment
which included plant and machinery, office equipment, and furniture and fittings. Besides that, KEN
Holdings has invested RM 25,889,000 in the building and under construction project [Figure 7.1.1].
There is a significant ratio difference between 2 types of long-term investment undertaken by KEN
Holdings. there is only 2.11% of capital investment has been allocated in property, plant and equipment
whereas 98.87% have been used in properties investment [Table 7.1.3]. Thus, it is obvious that KEN
Holdings is greatly emphasized on property investment in the year 2015.
This company also has short-term investments such as liquid investment and deposits placed
with licensed banks in the year 2015 with the amount of RM 9,263,000 and RM416,000 respectively
[Figure 7.1.4]. The major short-term investment undertaken by the company is the liquid investments
which consist of 50.50% whereas the deposits with licensed banks only consist of 2.27% of the cash and
cash equivalent [Table 7.1.3]. The company’s cash and cash equivalents shows that they have no
undertaken liquid investments in the year 2014. The reason they highly invest in the liquid investment
in the year 2015 is that this investment can bring the readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
In the year 2016, KEN Holdings has purchased RM 708,000 of property, plant and equipment
which comprised of motor vehicles, plant and machinery, office equipment, and furniture and fittings.
Besides that, KEN Holdings placed RM 25,446,000 as their investment in the properties which is the
under construction project this year [Figure 7.1.5]. Same as the year 2015, the ratio of the funds allocated
between the 2 types of long-term investment has a significant difference which is 2.74% in property,
plant and equipment and 98.32% in the investment in property [Table 7.1.3]. Therefore, KEN Holdings
is also invested its majority of the funds in the property investment in the year 2016. This company also
has the short-term investments same as the year 2015 but with a lower amount which is the liquid
investment of RM 8,100,000 and deposits placed with licensed banks of RM 223,000 [Figure 7.1.8].
The major short-term investment undertaken by the company is the liquid investments which consist of
47.29% whereas the deposits with licensed banks only consist of 1.30% [Table 7.1.3].
33.

Refer to the Table 7.1.1, as compared to the year 2015, KEN Holdings has the allocated more
funds in the property, plant and equipment which is an increase of 28.26%, but a decrease of 1.71% in
the properties investment. Besides that, the total amount that the company allocated in the investment
activities is decreased by 1.16% from year 2015 to 2016. Even though the cash and bank balances of the
company is increased by 1.65%, but there is a drop in the liquid investment and deposits with licensed
banks which are 12.56% and 46.39% respectively.
In the year 2017, KEN Holdings has spent RM 447,000 to purchase the office equipment and
furniture and fittings which contributed 4.53% of the annual investment activities. Besides that, KEN
Holdings has invested 96.33% of its capital which is RM 10,138,000 in the properties [Figure 7.1.9,
Table 7.1.3]. The liquid investments in this year are relatively lower than the previous two year which
only consists of 3.62% of the total cash and cash equivalent with the amount of RM 100,000. The
deposits with licensed banks is RM 230,000 in this year and the effective interest rates and maturity
period of the deposits of this company as at the end of the reporting period is 3.15% (2016: 3.15%) per
annum [Figure 7.1.12, Table 7.1.3].
From the statement of cash flow, we can observe that KEN Holdings placed its funds into the
investment of properties are gradually decrease each year. Refer to Table 7.1.1, in the year 2017 as
compared to the year 2015, the funds allocated in the purchasing of the property, plant and equipment
is reduced 19.02% and the properties investment is dropped 60.84%. Not only the funding of the
investment is declined, the cash and cash equivalents has a significant decrease which is 84.92% in the
year 2017 as compared to year 2015.
Table 7.1.2 shows that there is a 32.63% of the decline in the acquisition of property, plant and
equipment in the year 2017 as compared to 2016 which is higher than when compared to the year 2015,
and the acquisition of investment properties is decreased 60.16%. Not only decreased in the funds
allocated to the investment, but the liquid investment is also decreased 98.77% while the deposits with
licensed banks is increased by 3.14%. Net cash used in investing activities reduced by 59.34% from the
year 2016 to 2017 which is RM10.5 million in the year 2017 and RM25.9 million in the year 2016. This
is mainly due to the completion of the company’s corporate office tower, Menara KEN TTDI in 2016.
34.

Figure 7.1.1 Statements of Cash Flows for the Financial Year Ended 31 December 2015
Figure 7.1.2 Note 3. Property, Plant & Equipment for the Financial Year Ended 31 December 2015
Figure 7.1.3 Note 5. Investment Properties for the Financial Year Ended 31 December 2015
35.

Figure 7.1.4 Cash and cash equivalents included in the Statements of Cash Flows for the Financial
Year Ended 31 December 2015
36.

37.

38.

Horizontal and Vertical Analysis of Statement of Cash Flow
2017 2017 2016 2016
Cash flow from investing activities Increase /
(Decrease)
(‘000)
% Increase /
(Decrease)
(‘000)
%
Acquisition of property, plant and equipment (105) (19.02) 156 28.26
Acquisition of investment properties (15,751) (60.84) (443) (1.71)
Interest received (125) (57.87) 58 26.85
Net cash (used in) / from investing activities (15,661) (59.81) (305) (1.16)
Cash and cash equivalents at the end of
the financial year
Cash and bank balances (6,228) (71.88) 143 1.65
Liquid investments (9,163) (98.92) (1,163) (12.56)
Deposits with licensed banks (186) (44.71) (193) (46.39)
Total (15,577) (84.92) (1,213) (6.61)
Table 7.1.1 Horizontal Analysis (2017 / 2016 / 2015 Base Year = 2015)
Cash flow from investing activities Increase / (Decrease)
(‘000)
%
Acquisition of property, plant and equipment (231) (32.63)
Acquisition of investment properties (15,308) (60.16)
Interest received (183) (66.79)
Net cash (used in) / from investing activities (15,356) (59.34)
Cash and cash equivalents at the end of the financial year
Cash and bank balances (6,371) (72.34)
Liquid investments (8,000) (98.77)
Deposits with licensed banks 7 3.14
Total (14,364) (83.85)
Table 7.1.2 Horizontal Analysis (2017 / 2016 Base Year = 2016)
39.

2017 2017 2016 2016 2015 2015
Cash flow from investing activities $ (‘000) % $ (‘000) % $ (‘000) %
Acquisition of property, plant and
equipment
(477) 4.53 (708) 2.74 (552) 2.11
Acquisition of investment properties (10,138) 96.33 (25,446) 98.32 (25,889) 98.87
Interest received 91 0.86 274 1.06 216 0.82
Net cash (used in) / from investing
activities
(10,524) 100.00 (25,880) 100.00 (26,185) 100.00
Cash and cash equivalents at the
end of the financial year
Cash and bank balances 2,436 88.07 8,807 51.41 8,664 47.23
Liquid investments 100 3.62 8,100 47.29 9,263 50.50
Deposits with licensed banks 230 8.32 223 1.30 416 2.27
Total 2,766 100.00 17,130 100.00 18,343 100.00
Table 7.1.3 Vertical Analysis (2017 / 2016 / 2015)
40.

7.2 Major Sources of Funding
KEN Holdings has three ways to raise its funds. The three ways are increasing the sales in
property, obtaining from share capital, and loans and borrowings.
7.2.1 Sales
KEN Holdings is a company that develops and sells the property. The revenue in the year 2015
is RM74,266,000 (Figure 7.2.1), RM 92,816,000 in the year 2016 (Figure 7.2.2), and RM 104,208,000
in the year 2017 (Figure 7.2.3). There is a significant increase in revenue from the year 2015 to 2017.
From Table 7.2.1, it shows that KEN Holdings 24.98% in the year 2016 and 40.32% in the year 2017
when their base year is 2015. There is an increase in 12.27% from the year 2016 to 2017 as shown in
Table 7.2.2.
From Table 7.2.3, it shows that the cost of sales is 45.65% of the revenue in the year 2015 and
it generated 42.97% of profit before tax. In the year 2016, the cost of sales increased to 53.36% but it
only made 39.80% of profit before tax. This may due to the failure in managing the cost of development
resulting in a high increase in the cost of sales There is a rebound against the profit before tax in the year
2017 which is 60.33% of the revenue and it only used 34.07% of revenue to generate the profit.
41.

Figure 7.2.1 Statement of Profit or Loss for the Financial Year Ended 31 December 2015
42.

Horizontal and Vertical Analysis of Statement of Profit or Loss
2017 2017 2016 2016
Statement of Profit or
Loss
Increase /
(Decrease) (‘000)
% Increase /
(Decrease) (‘000)
%
Revenue 29,942 40.32 18,550 24.98
Cost of sales 1,602 4.73 15,626 46.09
Gross profit 28,340 70.21 2,924 7.24
Other income 649 16.96 (293) (7.66)
Distribution expenses (166) (51.55) (109) (33.54)
Administrative expenses (2,267) (18.42) (2,347) (19.07)
Profit from operation 31,422 99.56 5,086 16.11
Finance income - - (53) (11.65)
Finance cost 12 11.43 0 0.00
Profit before tax 30,955 97.00 5,033 15.77
Statement of Profit or Loss Increase / (Decrease) (‘000) %
Revenue 11,392 12.27
Cost of sales (14,024) 28.32
Gross profit 25,416 58.71
Other income 942 26.66
Distribution expenses (58) (27.10)
Administrative expenses 80 0.80
Profit from operation 26,336 71.86
Finance cost 12 11.43
Profit before tax 25,922 70.16
43.

2017 2017 2016 2016 2015 2015
Statement of Profit or Loss $ (‘000) % $ (‘000) % $ (‘000) %
Revenue 104,208 100.00 92,816 100.00 74,266 100.00
Cost of sales (35,502) 34.07 (49,526) 53.36 (33,900) 45.65
Gross profit 68,706 65.93 43,290 46.64 40,366 54.35
Other income 4,475 4.29 3,533 3.81 3,826 5.15
Distribution expenses (156) 0.15 (214) 0.23 (322) 0.43
Administrative expenses (10,041) 9.64 (9,961) 10.73 (12,308) 16.57
Profit from operation 62,984 60.44 36,648 39.48 31,562 42.50
Finance income - - 402 0.43 455 0.61
Finance cost (117) 0.11 (105) 0.11 (105) 0.14
Profit before tax 62,867 60.33 36,945 39.80 31,912 42.97
44.

7.2.2 Debt (Loans and borrowings)
Short-term loans and borrowings is another way to raise the funds of the investment. The
company lending the money from licensed banks with the amount of RM 2,000,000 in the year 2015
and 2016 (Figure 7.2.4 & 7.2.5). There is an increasing in 175% (Table 7.2.4 & 7.2.5) of the borrowings
in the year 2017 which is RM 5,500,000 (Figure 7.2.6). From Table 7.2.6, we can see that the loans and
borrowings of this company only occupy a minor part of the total equity and liabilities. Even though it
is a small part, but it has an obvious grow from the year 2015 to 2017 which is from 0.60% to 1.54%.
Figure 7.2.4 Statement of Financial Position for the Financial Year Ended 31 December 2015
45.

46.

Horizontal and Vertical Analysis of Statement of Financial Position
2017 2017 2016 2016
Liabilities Increase /
(Decrease) (‘000)
% Increase /
(Decrease) (‘000)
%
Deferred tax liabilities
(Non-current liability)
(1,332) (7.60) (1,215) (6.93)
Trade and other payables (45,696) (58.30) 2,442 3.12
Amount due to contract
customers
- - - -
Loans and borrowings 3,500 175.00 0 0
Current tax liabilities (967) (24.23) (73) (1.83)
Total current liabilities (42,965) (50.92) 2,369 2.81
Total liabilities (44,297) (43.47) 1,154 1.13
Total equity and liabilities 23,960 7.18 23,498 7.04
Liabilities Increase / (Decrease) (‘000) %
(117) (0.72)
Trade and other payables (48,138) 59.56
Amount due to contract customers - -
Loans and borrowings 3,500 175.00
Current tax liabilities (894) 22.82
Total current liabilities (45,334) (52.26)
Total liabilities (45,451) (44.10)
Total equity and liabilities 462 0.13
47.

2017 2017 2016 2016 2015 2015
Liabilities $ (‘000) % $ (‘000) % $ (‘000) %
16,191 4.53 16,308 4.56 17,523 5.25
Trade and other payables 32,688 9.14 80,826 22.62 78,384 23.49
Amount due to contract customers 198 0.06 - - - -
Loans and borrowings 5,500 1.54 2,000 0.56 2,000 0.60
Current tax liabilities 3,024 0.85 3,918 1.10 3,991 1.20
Total current liabilities 41,410 11.58 86,744 24.28 84,375 25.28
Total liabilities 57,601 16.10 103,052 28.85 101,898 30.53
Total equity and liabilities 357,716 100.00 357,254 100.00 333,756 100.00
48.

7.2.3 Equity
KEN Holdings has the same amount of its share capital during these three years which is
RM95,860,000. They obtained their share capital by selling their shares and stocks. This is the major
sources of funding by this company. The company also reserved an amount of RM 135,957,000 (Figure
7.2.7), RM158,298,000 (Figure 7.2.8) and RM 209,575,000 (Figure 7.2.9) in the year 2015, 2016, and
2017 respectively. The main reason for the reserves is for the business operation. In the year 2017, the
company also distributed the treasury shares with an amount of RM 5,365,000.
From the Table 7.2.7, it is obvious that there is no any increase or decrease in the share capital
of this company. This may because of no new stocks or transfer of the shares during these three years.
Although the share capital has no any changes, the percentage of reserves of this company is increased
by 16.43% and 54.15% in the year 2016 and 2017 respectively with the base year of 2015. From this
analysis, we can assume that in the year 2017 this company may need more cash flow in operating its
business. From the Table 7.2.9, we can see that even the amount of the share capital has remained the
same in these years, but its percentage of total equity and liabilities is getting lower whereas the
percentage of the reserves is increasing gradually.
49.

50.

Horizontal and Vertical Analysis of Statement of Financial Position
2017 2017 2016 2016
Equity Increase /
(Decrease) (‘000)
% Increase /
(Decrease) (‘000)
%
Share Capital 0 0 0 0
Reserves 73,618 54.15 22,341 16.43
Equity attributable to
owners of the Company
68,253 29.44 22,341 9.64
Non-controlling interests 4 9.76 3 7.32
Total equity 68,257 29.44 22,344 9.64
Total equity and liabilities 23,960 7.18 23,498 7.04
Equity Increase / (Decrease) (‘000) %
Share Capital 0 0
Reserves 51,277 32.39
Equity attributable to owners of the Company 45,912 18.06
Non-controlling interests 1 2.27
Total equity 45,913 18.06
Total equity and liabilities 462 0.13
2017 2017 2016 2016 2015 2015
Equity $ (‘000) % $ (‘000) % $ (‘000) %
Share Capital 95,860 26.80 95,860 26.83 95,860 28.72
Reserves 209,575 58.59 158,298 44.31 135,957 40.74
Equity attributable to owners
of the Company
300,070 83.88 254,158 71.14 231,817 69.46
Non-controlling interests 45 0.01 44 0.01 41 0.01
Total equity 300,115 83.90 254,202 71.15 231,858 69.47
Total equity and liabilities 357,716 100.00 357,254 100.00 333,756 100.00
51.

8.0 Financial condition for FY2013, FY2014, FY2015, FY2016, FY2017
Analysis of financial condition
8.1 Liquidity
Liquidity 2013 2014 2015 2016 2017
A) Current
ratio
1.26x 1.77x 1.29x 1.19x 2.3x
B)Quick
ratio
0.58x 0.69x 0.62x 0.42x 0.72x
C) Inventory
turnover 0.38x 0.62x 0.60x 0.74x 0.54x
D)Average
collection
period 368.04 days 182.50 days 182.50 days 182.50 days 183.52 days
E)Average
payment
period 76.74 days 25.37 days 58.50 days 37.98 days 64.43 days
52.

Figure 8.1 The table show the current trend of Quick ratio and Current ratio from year 2013 to 2017
53.

CURRENT RATIO
Current Ratio is used to compare a firm’s current assets to its current liabilities. The higher the
current ratio the better, a healthy current ratio is 2 and above. However, a high ratio (over 3) could
indicate the company is not using its current assets efficiently and is not securing financing very well or
is not managing its working capital. KEN Holdings Berhad current ratio is 1.26, 1.77, 1.29, 1.19 and 2.3
in FY2013, FY2014, FY2015, FY2016 and FY2017 respectively. In Year 2013, KEN Holdings Berhad
had RM1.26 for every RM1 of current liabilities.
In FY2014, KEN Holdings Berhad current ratio increased compare to FY2013 by having
RM1.77 for every RM1 of current liabilities because of the current asset decreased at lower rate of 4%
compare to 32% of current lability. In FY 2015, KEN Holdings Berhad current ratio decreased compare
to FY2014 by having RM1.29 for every RM1 of current liabilities because of the current asset increased
at lower rate of 15% compare to 58% of current asset.
In FY 2016, KEN Holdings Berhad current ratio decreased further compare to FY2015 by
having RM1.19 for every RM1 of current liabilities because of the current asset decreased at 5%
compare to 3% increased in current liability. In FY 2017, KEN Holdings Berhad current ratio has been
improve significantly compare to FY2016 by having RM2.30 for every RM1 of current liabilities
because of the current asset decreased at a lower rate of 7% compare to 52% of current liability.
Conclusion, KEN Holdings Berhad liquidity are high enough to paying its obligations because
it has a larger proportion of current asset value relative to the value of its current liabilities. This also
mean the firm having sufficient current asset to settle the debt and it still have remaining current asset
even after settled the debt.
54.

QUICK RATIO
Quick Ratio is an indicator of a company’s short-term liquidity position and measures firm
ability to meet its short-term obligations with its most liquid assets. A quick ratio also use to measures
the ringgit amount of liquid assets available with the company against ringgit amount of its current
liabilities. A normal quick ratio is consider as 1, as it indicates the company are fully equipped with
sufficient assets that can be instantly liquidated to pay off its current liabilities. KEN Holdings Berhad
quick ratio is 0.58, 0.69, 0.62, 0.42 and 0.72 in FY2013, FY2014, FY2015, FY2016 and FY2017
respectively. In Year 2013, KEN Holdings Berhad had RM0.58 for every RM1 of current liabilities.
In FY2014, KEN Holdings Berhad quick ratio increased compare to FY2013 by having RM0.69
for every RM1 of current liabilities because of the current liability decreased at higher rate of 32%
compare to 20% of current asset. In FY 2015, KEN Holdings Berhad current ratio decreased compare
to FY2014 by having RM0.62 for every RM1 of current liabilities because of the current liability
increased at higher rate of 58% compare to 43% of current asset.
In FY 2016, KEN Holdings Berhad current ratio decreased further compare to FY2015 by
having RM0.42 for every RM1 of current liabilities because of the current liability increased of 3%
compare to 30% decreased in current asset. In FY 2017, KEN Holdings Berhad current ratio has been
improve significantly compare to FY2016 by having RM0.72 for every RM1 of current liabilities
because of the current liability decreased at a higher rate of 52% compare to 18% of current asset.
This show that the company ability to repay debt with liquidity assets is slightly improve year
on year but the quick ratio is still below the normal quick ratio that consider as 1, as quick ratio indicates
the company are fully equipped with sufficient assets that can be instantly liquidated to pay off its current
liabilities. This show that the KEN Holding Berhad inventory is not liquid enough.
55.

Figure 8.2 The table show the current trend of Inventory Turnover from year 2013 to 2017
56.

INVENTORY TURNOVER
Inventory turnover is an efficiency ratio that shows how effectively inventory is managed by
comparing cost of goods sold with average inventory for a period. This measures how many times the
company is turning over its inventory during the year. Inventory turnover is also use to measures of how
efficiently a company can control its merchandise and how liquid a company’s inventory is. The higher
the inventory turnover ratio represented the ability of the firms to sell its inventory is good. KEN
Holdings Berhad sold his inventory 0.38 times, 0.62 times, 0.60 times, 0.74 times and 0.54 times in
FY2013, FY2014, FY2015, FY2016 and FY2017 respectively. In Year 2013, KEN Holdings Berhad
inventory turnover is 0.38x during the year.
In FY2014, KEN Holdings Berhad Inventory turnover increased compare to FY2013 by having
0.62x to turning over its inventory during the year because the cost of good sold (cost of sales) increased
at higher rate of 78% compare to 9% of inventory. In FY2015, KEN Holdings Berhad Inventory turnover
slightly decreased compare to FY2014 by having 0.60x to turning over its inventory during the year
because of the cost of good sold (cost of sales) decreased at higher rate of 5% compare to 2% of
inventory.
In FY2016, KEN Holdings Berhad Inventory turnover increased significantly of 23% compare
to FY2015 by having 0.74x to turning over its inventory during the year because of the cost of good sold
(cost of sales) increased at higher rate of 46% compare to 18% of inventory. In FY2017, KEN Holdings
Berhad Inventory turnover decreased significantly of 27% compare to FY2016 by having 0.54x to
turning over its inventory during the year because of the cost of good sold (cost of sales) decreased at
higher rate of 28% compare to 2% of inventory.
The ability of KEN Berhad to sell its inventory improved from 2013 to 2016 due to its cost of
good sold had a higher increase rate than inventory. However, in Year 2017 there is a decrease in
performance due to the cost of good sold decreased higher rate than inventory. Conclusion, the inventory
turnover of KEN Holdings Berhad is in the normal rate as the inventory turnover for company such as
KEN Holdings Berhad that involve in property development and construction business is likely to have
a lower turnover with higher profitability as compare to fast moving consumer goods business company.
In addition, as KEN Holdings Berhad involve in property development, low inventory turnover can
assume as good things due to the price of property are going to appreciate from year over year. However,
a company is important to have a high turn. This shows the company does not overspend by over
purchase inventory and wastes resources by keeping not sales able inventory. Inventory is one of the
biggest assets reports on its balance sheet. If this inventory can’t be sold, it is worthless to the company.
57.

Figure 8.3 The table show the current trend of Average Collection Period and Payment Period from year 2013
to 2017
58.

AVERAGE COLLECTION PERIOD
Average collection period is the amount of time it takes for a business to receive payments owed
in terms of accounts receivable. The lower the ratio the better because it mean the times takes by
company to receive payment owed is faster. KEN Holdings Berhad average collection period is 368.04
days, 182.50 days, 182.50 days, 182.50 days and 183.52 days in FY2013, FY2014, FY2015, FY2016
and FY2017 respectively. In FY2013, KEN Holdings Berhad having 368.04 days to receive payments
owed in terms of accounts receivable.
In FY2014, KEN Holdings Berhad average collection period performance improved
significantly by 50% compare to FY2013 by having 182.50 days to receive payments owed in terms of
accounts receivable because of the daily credit sales decreased at a higher rate of 15% compare to
decreased at 58% of account receivable. In FY2015, KEN Holdings Berhad average collection period
performance is same compare to FY2014 by having 182.50 days to receive payments owed in terms of
accounts receivable but daily credit sales and account receivable both increased at the same rate by
122%.
In FY2016, KEN Holdings Berhad average collection period performance is same compare to
FY2015 by having 182.50 days to receive payments owed in terms of accounts receivable but daily
credit sales and account receivable both decreased at the same rate by 16%. In FY2017, KEN Holdings
Berhad average collection period performance slightly decreased by 0.56% compare to FY2016 by
having 183.52 days to receive payments owed in terms of accounts receivable because of the daily credit
sales increased at lower rate of 47% compare to 48% increase in account receivable.
Conclusion, the average collection had gone through rise and fall situation during the Year 2013
to Year 2017 but its overall ratio has been slightly improved. Average collection period is an important
ratio to monitor the collection period of the company. The lower the ratio will be better to a company as
it will affect the company cash flow. Effective accounts receivable management practices lead to timely
customer collection. However, tight credit policies have spill-over effects for the company's operations.
By improving the cash flows number enable KEN Holdings Berhad to obtain a lower interest
commercial loan and at the same time attract more investor.
59.

AVERAGE PAYMENT PERIOD
Average Payment Period is used to examine how fast a firm can repay its debt to the debtors.
The longer the time that the firms required to repay the debt represented the firm is having cash flow
problem to repay its debt and it also shown that the firm have to manage its cash flow wisely so that it
have better cash flow to pay the debts. KEN Holdings Berhad took 76.74 days, 25.37 days, 58.50 days,
37.98 days and 64.43 days in FY2013, FY2014, FY2015, FY2016 and FY2017 respectively to repay its
debt. In FY 2013, KEN Holdings Berhad took 76.74 days to pay its debt to debtors.
In FY2014, KEN Holdings Berhad took 25.37 days to repay its debt to debtors, this show an
improvement of 67% compare to FY2013 due to there is an decreased of 58% in account receivables
compare to increase of 28% in total purchase. In FY2015, KEN Holdings Berhad took 58.50 days to
repay its debt which saw decreased in performance compare to FY2014 mainly due to a big increase of
122% in account receivables but decreased of 4% in total purchase.
In FY2016, KEN Holdings Berhad took 37.98 days to repay its debt, this show an improvement of 35%
compare to FY2015 due to there is a decrease of 16% in account receivables and 29% increase in total
purchase. In FY2017, KEN Holdings Berhad took 64.43 days to repay its debt which saw decreased in
performance compare to FY2016 due to there is a significant increase of 48% in account receivables but
decrease of 13% in total purchase.
There is a rise and fall situation in Average Payment period of KEN Holdings Berhad. However,
the performance is getting slightly better compare to the previous year. This also mean that the ability
to repay debt is getting better and represent the cash flow is getting improved also.
60.

8.2 Activity
Activity 2013 2014 2015 2016 2017
Total asset
turnover 0.20 0.32 0.22 0.26 0.29
Figure 8.4 The table show the current trend of Total asset turnover from year 2013 to 2017
61.

Total asset turnover
Total asset turnover is used to measure how efficiently a firm using its assets to generate sales.
It often used as an indicator of the efficiency which a company is deploying its assets in generating
revenue. The total asset turnover of KEN Holdings Berhad is 0.20, 0.32, 0.22, 0.26 and 0.29 in FY2013,
FY2014, FY2015, FY2016 and FY2017 respectively. In FY2013, KEN Holdings Berhad are able to
generate RM0.20 for every single ringgit in asset.
In FY2014, KEN Holdings Berhad total asset turnover increased by 63% compare to FY2013
with the ability to generate RM0.32 for every single ringgit in asset because of the sales increased at
higher rate of 63% compare that way higher than the slightly increase of 1.18% in total assets. In
FY2015, KEN Holdings Berhad total asset turnover decreased by 31% compare to FY2014 by able to
generate RM0.22 for every single ringgit in asset because of the sales decreased at 19% compare to the
increase of 18% in total assets.
In FY2016, KEN Holdings Berhad total asset turnover increased by 17% compare to FY2015
by able to generate RM0.26 for every single ringgit in asset because of the sales increased at a higher
rate of 25% compare to the increase of 7% in total assets. In FY2017, KEN Holdings Berhad total asset
turnover increased by 13% compare to FY2016 by able to generate RM0.29 for every single ringgit in
asset because of the sales increased at a higher rate of 13% compare to the increase of 0.13% in total
assets.
There is a rise and fall situation between years 2013 to 2015, however after year 2015 the ratio
is increased steadily due to increase of sales year over year are more than increase of total assets. The
higher the value of the total assets turnover it showed that the firm is generating more income based on
the total assets. Conclusion, the efficient uses assets to generate sales of KEN Holding Berhad are getting
improved year over year, this shows that the company are on the right track on utilizing the assets to
generate revenue.
62.

8.3 Debt
Debt 2013 2014 2015 2016 2017
A)Debt ratio
34.30% 24.94% 30.53% 28.85% 16.10%
B)Times
Interest
Earned 108.82 229.52 300.59 349.03 538.32
Figure 8.5 The table show the current trend of Debt ratio from year 2013 to 2017
63.

Figure 8.6 The table show the current trend of Times interest earned from year 2013 to 2017
64.

Debt Ratio
Debt Ratio is used to indicate the percentage of the firm’s assets that are financed by debt. The
higher the debt ratio, the more leveraged a company is, indicated greater financial risk but sometimes
leverage is important tool for company to grow and many businesses find sustainable uses for debt. A
lower debt ratio usually means a more stable business with the potential of longevity, as lower ratio
companies also have lower overall debt. In FY2013, KEN Holdings Berhad debt ratio is 34.30% of
business assets is funded by liabilities.
In FY2014, KEN Holdings Berhad debt ratio decreased by 26% compare to FY2013 with
24.94% of business assets is funded by liabilities due to total liabilities has been decreased 27% and
increased of 1.18% in total assets. In FY2015, KEN Holdings Berhad debt ratio increased by 44%
compare to FY2014 with 30.53% of business assets is funded by liabilities due to total liabilities has
been increased 44% and increased 18% in total assets.
In FY2016, KEN Holdings Berhad debt ratio decreased by 6% compare to FY2015 with 28.85%
of business assets is funded by liabilities due to total liabilities has been increased 1.13% and increased
7% in total assets. In FY2017, KEN Holdings Berhad debt ratio further decreased by 44% compare to
FY2016 with 16.10% of business assets is funded by liabilities due to total liabilities has been decreased
44% and slightly increased of 0.13% in total assets. Conclusion, overall of the debt ratio has been drop
from year on year, this shows that the amount of debts to finances the assets is reduced from year on
year. This is a good sign for the company as it not rely much on the liabilities for the operation of
business. The debt ratio of KEN Holdings Berhad is considered healthy as the firm is involved in
properties sector which is a capital intensive business.
65.

Times Interest Earned
Times interest earned is used to determine proportional income that can be used to pay interest
expenses in future. In some extent, times interest earned considered as a solvency ratio because it
measures the company's ability to repay interest and debt service payments. The times interest earned
of KEN Holdings Berhad is 108.82, 229.52, 300.59, 349.03 and 538.32 in FY2013, FY2014, FY2015,
FY2016 and FY2017 respectively.
In between Year 2013 to 2017 the ratio is keep on rising, this mainly contribute by increase of
operating profit from year over year. Conclusion, KEN Holdings Berhad ratio indicate the amount of
operating income available to serve the interest expenses are always higher than the healthy ratio that
around 100, this show that the firm well afford to pay interest payments on debt easily with large amount
of extra earnings left over to make principle payments. This also shows that the company is low
possibility in default of interest payment and firm operations are producing enough cash to pay the bills.
Therefore, KEN Holdings Berhad is extremely liquid and the company should not have problem in
getting a loan to expand the business.
66.

8.4 Profitability
Profitability 2013 2014 2015 2016 2017
A) Gross profit
margin ratio
(GPM) 0.64 0.61 0.54 0.47 0.66
B) Operating
Profit Margin
(OPM) 0.51 0.48 0.43 0.40 0.60
C) Net Profit
Margin (NPM) 0.37 0.35 0.31 0.30 0.48
D) Return On
Total Asset 7.48% 11.30% 7.63% 7.76% 14.09%
E) Return on
common Equity
(ROE) 11.38% 15.05% 10.9
9%
10.91% 16.79%
67.

Figure 8.7 The table show the current trend of Gross profit margin, Operating profit margin and net profit
margin from year 2013 to 2017
Figure 8.8 The table show the current trend of Return On Common Equity and Total Asset from year 2013 to
2017
68.

GROSS PROFIT MARGIN
Gross Profit Margin is used to assess a company’s financial health and business model by
revealing the proportion of the percentage of each sales ringgit remaining after the firm has paid for cost
of goods sold. It measures how companies efficiently use their resources like materials and labor to
produce and sell products. Generally a healthy gross profit margin is above 10%. KEN Holdings Berhad
gross profit margin ratio is 0.64, 0.61, 0.54, 0.47 and 0.66 in FY2013, FY2014, FY2015, FY2016 and
FY2017 respectively.
The business gross profit margin is decreased from year on year in between Year 2013 to 2016
mainly caused by the increase of cost of sales which is the property development cost. However, there
is a rise for gross profit margin ratio in Year 2017 due to cost of sales has been reduced that contributed
to the gross profit increase by 59% compare to the previous year and follow by there is an increase in
sales at 12%. Conclusion, KEN Holdings Berhad average gross profit margin ratio is around 0.58 which
is considered very high compare to other company in the same industry, this also mean that KEN
Holdings Berhad can effectively produce and sell products. In other words, it shows the profitability of
the product is very good.
69.

OPERATING PROFIT MARGIN
Operating Profit Margin is to examine how effective the company manage its cost of goods sold
and operating expenses that determine the operating profit. It use to measures the percentage of each
sales ringgit remaining after all costs and expenses other than interest, taxes, and preferred stock
dividends are deducted. Generally a healthy gross profit margin is above 10%. KEN Holdings Berhad
operating profit margin is 0.51, 0.48, 0.43, 0.40 and 0.60 in FY2013, FY2014, FY2015, FY2016 and
FY2017 respectively.
The business operating profit margin is decreased from year on year in between Year 2013 to
2016 mainly caused by the increase of cost of sales which is the property development cost, distribution
expenses and administrative expenses. However, there is a rise in operating profit margin ratio in Year
2017 due to cost of sales is reduced, other income increase, distribution expenses and administrative
expenses decreased that contribute to the operating profit increase by 72% compare to the previous year
and follow by there is increase of 12% in sales. Conclusion, KEN Holdings Berhad operating profit
margin are improved year over year, this mean that the company are making enough money from its
ongoing operations to support the business. This performance of this company is considered more stable.
On the other hand, this company average operating profit margin is around 0.48 after operating expenses
have been paid. This means that 48 cents or 48% operating profit is left over to pay for the non-operating
expenses.
NET PROFIT MARGIN
Net Profit Margin (NPM) is the percentage of revenue remaining after all operating expenses,
interest, taxes and preferred stock dividends (but not common stock dividends) have been deducted from
a company's total revenue. Besides, it shows how good a company is able to convert its revenue into
profit available to shareholders. A higher NPM is more likely generate a higher ROE. Generally a
healthy gross profit margin is above 10%. The Net profit margin (NPM) is 0.37, 0.35, 0.31, 0.30 and
0.48 in FY2013, FY2014, FY2015, FY2016 and FY2017 respectively. This indicates that the firm
overall expenses are gradually increasing between the Year 2013 to 2016 and it gets lower in the Year
2017 due to the completion of KEN Rimba Condominium 1 in KEN Rimba township. Therefore, this
will result in higher net profit in Year 2017 and shows that KEN Holdings Berhad expenses has been
reduce in that particular year.
70.

Extra findings
Source: The edge market
KEN holdings profit margin are the highest among the developers in Malaysia as shown in the
table above. This is mainly contribute by the sales which are high enough and costs low in cost of sales.
From this ratio, KEN Holdings Berhad are very efficient in managing of the company expenses and at
the same time maximize the value of sales by set its selling price to optimum level.
RETURN ON ASSET
Return on assets (ROA) is an indicator of how profitable a company is relative to its total
assets. ROA gives a manager, investor, or analyst an idea to how efficient a company's management is
at using its assets to generate earnings. The ROA figure gives investors an idea of how effective the
company is in converting the money it invests into net income. The higher the ROA number, the
better, because the company is earning more money on less investment. In Year 2014 the return on
assets is about 11.30% which saw an increased from 7.48% in Year 2013. However, the ratio
decreased in Year 2015 to 7.63% and saw small amount of increased in Year 2016 to 7.76%. In year
2017 there is a significant increase to 14.09%. Overall, KEN Holdings Berhad return on assets (ROA)
has been keep growing in the past few year. This show that the firm is increase in efficient on utilize
its assets to generate profit.
71.

RETURN ON COMMON EQUITY
Return on common equity (ROE) is measure of profitability that calculates how many ringgit
of profit a company generates with each ringgit of shareholders' equity. ROE is sometimes called "return
on net worth” and it is more than measure of profit that measure of efficiency. It also indicates how well
a company's management is deploying the shareholders' capital. In other words, the higher the ROE the
better.
In Year 2014 the return on equity is 15.05% which saw an increased from 11.38% in Year 2013
mainly due to more than 50% increase in the net income. However, the ROE in Year 2015 been
decreased to 10.99 due to there is a decrease in net income and increase in total equity and the ROE is
further decreased to 10.91 in Year 2016 due to the increase of net income is less than the increase of
total equity. In Year 2017 the ROE has been increased significantly to 16.79% mainly due to 82%
increase in the net income. Conclusion, there is some problem with KEN Holdings Berhad between Year
2013 to 2016 as the ROE is decreasing from year on year but it is rising in Year 2017 due to the net
income being increased nearly double as compare to Year 2016. The possible problem in between Year
2013 to 2016 are the finance income are decreased and the expenses are increased. Generally, a normal
healthy level of Return on common equity of a company is more than 10%, thus KEN Holdings Berhad
return on common equity (ROE) considered as healthy performance.
72.

8.5 Market Performance
Market
Performance
2013 2014 2015 2016 2017
A)
Earnings per
Share (EPS) 0.22 0.17 0.13 0.14 0.26
B)
Price/Earnings
(P/E)
3.41 5.88 7.77 6.07 3.42
C)
Price/Book
Ratio (P/B) 0.39 0.90 0.83 0.64 0.57
Figure 8.9 The table show the current trend of Earnings Per Share and Price Book ratio from year 2013 to 2017
73.

Figure 8.10 The table show the current trend of Price/Earnings from year 2013 to 2017
Earnings Per Share (EPS)
Earnings per share measures the amount of net income earned per share of stock outstanding.
Basically it mean that the money earned for per share. In other words, this is the amount of money each
share of stock would receive if all of the profits were distributed to the outstanding shares at the end of
the year. Earnings per share is also a calculation that shows how profitable a company is on a shareholder
basis. Earnings per share of KEN Holdings Berhad in Year 2013, 2014, 2015, 2016 and 2017 is 0.22
sen, 0.17 sen, 0.13 sen, 0.14 sen and 0.26 sen respectively. Higher earnings per share is always better
than a lower ratio because this means the company is more profitable and the company has more profits
to distribute to its shareholders.
In FY2014 there is a decrease in EPS compare to 2013 due to the company undertook a share
split involving the subdivision of every one (1) existing Company’s share into two (2) split shares. Share
Split was completed on 19 May 2014. The issued and paid-up share capital of the company after the
share split was RM95,860,000 comprising 191,720,000 split shares (including 12,373,400 split shares
held as treasury shares). Due to share split, the issue share volume are increase thus net profit earned
will be divided into more share so that the earning per share is drop in Year 2014. However, earning per
share has been rise year on year after Year 2014 that mainly contributes by the increase in net income.
Conclusion, KEN Holdings Berhad shows improvement in the performance of earning per share in the
past few year due to the net income keep increase year over year. This mean that more income are
available for each common share.
74.

Price/Earning Ratio (P/E)
Price/Earning Ratio is for valuing a company that measures its current share price relative to its
earnings per share. Besides, it also measures how much the investors are willing to pay for every single
ringgit of reported earnings. The investors had to pay 3.41, 5.88, 7.77, 6.07 and 3.42 in Year 2013, 2014,
2015, 2016 and 2017 respectively. KEN Holdings Berhad P/E ratio increased in 2014 compare with
2013 due to there is a share split 1:2 take place in 2014 which contribute to lower earnings per share and
the market value per share is also increased.
In 2015 and 2016 there is an increased in price earnings ratio due to the net income is decreasing
compare to Year 2014. However, the P/E ratio has decreased in Year 2017 due to the earning per share
increase significantly mainly contribute by increase of net income and follow by some drop in the market
value per share. The higher the price/earning value indicated that the company is having positive future
performance opportunity and the investor will willing to pay more for the company’s share. A low P/E
ratio may indicate the company undervalued. However, a healthy level of price earnings (PE) ratio is
about 10. Conclusion, KEN Holdings Berhad is having a good price/earning (PE) ratio due to the P/E
ratio always below 10, this may indicated that KEN Holdings Berhad is undervalued and having a good
fundamental.
Price/Book Ratio
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. A lower P/B ratio could mean the stock is undervalued. The
Price/Book Ratio of KEN Holdings Berhad in Year 2013, 2014, 2015, 2016 and 2017 is 0.39, 0.90, 0.83,
0.64 and 0.57 respectively. According to the result, the ratio had been increase in 2014 and 2015 due to
there is an increased in the market value per share and also the equity book has been decreased compare
to Year 2013. However, the performance improved in Year 2016 and further improved in Year 2017
due to the market value per share been decreased and also the equity book has been increased.
75.

9.0 Conclusion and Recommendation
KEN Holdings is a company that involved in multiple segments which is construction, property
development, and investment properties. Construction and property development is the core business of
this company. From the analysis in the revenue of KEN Holdings, we can see that 36% and 63% of the
revenue contribution in the year 2017 is mainly from the construction and property development
respectively. From the year 2015 to 2017, the performance of KEN Holdings is getting better as we can
see it clearly in its profit or loss statement. In the year 2017, the company posted a profit before tax of
RM 62,867,000, which is the highest compared to the year 2015 and 2016. The reason for getting better
performance may due to the property market rebound in the year 2017 as there is a significant of number
of total sold units which results in considerable profits.
The getting better performance is not only shown in the profits of KEN Holdings, but the
liquidity of this company is also increasing from the year 2013 to 2017 based on the current ratio and
quick ratio. KEN Holding has met its financial obligation as the current liabilities is decreased 50.92%
from the year 2015 to 2017. Even that is an increase in the current liabilities from the year 2015 to 2016,
but it is considered a minor increase because it only rises by 2.81%.
Based on the financial analysis, we can conclude that KEN Holdings is having a tough time
during the year 2015 to 2016 but it is getting better from the year 2016 to 2017. From the analysis, we
can see that the current liabilities of MK Land is increased from the year 2015 to 2016 but decreased
from the year 2016 to 2017. This shows that this company is able to repay the current liabilities by using
the current assets. Based on the operating profit margin of KEN Holdings, we can observe this company
has a better management in its cost of goods sold and operating expenses in the year 2017 compared to
the year 2013 to 2016. The overall market performance of this company in the year 2017 is considered
better than the previous four years due to its gross profit margin is higher when compared the year 2017
to the previous four years. Higher gross profit margin shows that the company has more money
remaining after they have paid for their goods.
Moreover, KEN Holdings is recommended to attract more investors to invest in their company
to increase their market performance. Based on the price per earning ratio, the willingness of the
investors to pay for every dollar of earning per share in the year 2017 is lower than the previous years.
Besides that, KEN Holdings is also advisable to build the reputation of the company in order to bring
benefits to the company in the long run. Due to the negative cash flows from its operating activities,
KEN Holdings is recommended to review its company operating expenditure in order to reduce the
operating expenses in the future.
76.

In conclusion, KEN Holdings is still considered as a financially healthy company and it keeps
improving in the current year. Due to these reasons, it is still a company that worth to be invested.
77.

10.0 References
EdgeProp.my; Developers must cut profits to lower property prices-report; Retrieved from:
https://www.edgeprop.my/content/1428645/developers-must-cut-profits-lower-property-
prices-%E2%80%93-report
KEN Annual Report (2015); Retrieved from:
http://kenholdings.com.my/v2/wp-content/uploads/2016/04/AnnualReport2015.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
New Straits Times; Local property market continues to self-correct: Knight Frank Malaysia; Retrieved
from:
https://www.nst.com.my/business/2018/01/329939/local-property-market-continues-self-correct-
knight-frank-malaysia
Thomas Chua (2018); 4 Key Insights About Malaysia Housing Market 2018; Retrieved from:
https://klse.i3investor.com/blogs/valuestockresearch/144312.jsp
Yahoo finance; KEN Holdings Berhad historical data; Retrieved from:
https://finance.yahoo.com/quote/7323.KL/history?p=7323.KL
78.

11.0 Appendices
*Ratio calculation in excel file
79.

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