Fm report template

TAYLOR’S UNIVERSITY | SABD | BQS
FINANCIAL MANAGEMENT | FIN60203
1
SCHOOL OF ARCHITECTURE, BUILDING & DESIGN
BACHELOR OF QUANTITY SURVEYING(HONOURS)
FINANCIAL MANAGEMENT
FIN60203
MK LAND HOLDINGS BERHAD
GROUP ASSIGNMENT: BUSINESS AND FINANCIAL ANALYSES AND FORECAST
LECTURER: TAY SHIR MEN
STUDENT NAME STUDENT ID
LAU MAO HUA 0320249
LEE KAILYN 0320273
LEE SHZE HWA 0320053
LIEW POH KA 0320424
LIM ZI SHAN 0320372
SANDRABROOKE GOH CHIUNG LANG 0329884

2
TABLE OF CONTENT
Item Content Page Number
1 Brief Background 3 - 5
2 Principal Activities 6
3 Analysis of Revenue Contribution 7 - 11
4 Current State of the Industry 12 - 14
5 Strengths and Weaknesses 15 - 16
6 Company’s Strategic Plans 17 - 18
7 Major Capital Investment and Sources of Funding 19 - 22
8 Analysis of Financial Condition 23 - 33
9 Conclusion and Recommendations 34
10 Reference List 35 - 36
11 Appendices 37-50

3
1. A brief background of the company and its development
1.1 Establishment of Company
MK Land Holding Berhad was founded by Mustapha Kamal bin Abu Bakar and Kasi K.
L. Palaniappan on 2 August 1978 and based in Shah Alam, Selangor. On 27 August 1999, MK
Land Holdings Berhad, made its debut on the Main Board of Bursa Malaysia as a result of a
reverse takeover of a Second Board manufacturing company. The company is currently
headquartered in Petaling Jaya and operates in three states in Malaysia, with the significant
projects in Selangor, Perak and Kedah.
1.2 Vision and Mission
MK Land Holding Berhad’s strategy is to continue to build affordable housing and
depending on the market situation also to build high end products and purpose build buildings.
MK Land Holdings Berhad’s vision is to be a reliable organization that delivers quality products
and services on timely basis and within cost. MK Land shall always strive towards excellence in
providing quality products and services through teamwork for betterment of the organization,
society and nation. Their endeavor shall be based on self-awareness, conscience, independent
will and imagination that shall always be guided by correct principles and values.
1.3 Company’s subsidiaries
With the injection of nine (9) privately owned property companies by the founder, MK
Land became one of the largest capitalised property companies with a paid-up capital of about
RM1.2 billion. MK Land Holding Berhad fully subsidies 26 companies which are BML
Management Sdn. Bhd., Bukit Merah Resort Sdn. Bhd., Centralpolitan Development Sdn. Bhd.,
Dominant Star Sdn. Bhd., Duta Realiti Sdn. Bhd., Golden Precinct Sdn. Bhd., M K Land
Resources Sdn. Bhd., M K Land Ventures Sdn. Bhd., M.K. Development Sdn. Bhd., Medan
Prestasi Sdn. Bhd., Melur Unggul Sdn. Bhd., M.K. Training & Consultancy Sdn. Bhd.,

4
Paramoden Sdn. Bhd., Paramount Innovation Sdn. Bhd., Plato Construction Sdn. Bhd., Profil
Etika(M) Sdn. Bhd., Prominent Valley Bhd., Pujaan Pasifik Sdn. Bhd., Ritma Mantap Sdn. Bhd.,
Saujana Triangle Sdn. Bhd., Segi Objektif(M) Sdn. Bhd., Sumbangan Berkat Sdn. Bhd., Tema
Teladan Sdn. Bhd., Vast Option Sdn. Bhd., Vibrant Leisure Sdn. Bhd., and Zaman Teladan Sdn.
Bhd.
1.4 Principal Activity
MK Land Holding Berhad is an investment holding company, which is engaged in the
provision of investment, development, management, and rental of properties services in
Malaysia. The Company's segments include Property Development and Related Activities,
Leisure, Investment Holding and Education.
MK Land Holding Berhad’s main significant projects are Damansara Perdana,
Damansara Damai, Taman Bunga Raya and Cyberia in Selangor; Bukit Merah Laketown,
Bandar Technopolis Perdana, Taiping Resort, Klebang Putra and Meru Perdana in Perak; and
Ombak Villa in Langkawi, Kedah. The resorts within the Group which located in Langkawi,
Kerian and Taiping had contributed significantly growth to the tourism industry in Malaysia from
both foreign and domestic tourists.
1.5 Company’s Organization
MK Land Holdings Berhad has been firmly entrenched as one of the key players and is
synonymous with the property development industry under the helm and leadership of the
Chairman, YBhg Tan Sri Datum (Dr.) Hj Mustafa Kamal bin Hj Abu Bakar. Boards of Directors
are consists of Pn. Hjh Felina Binti Tan Sri Datuk (Dr.) Hj. Mustapha Kamal as Executive
Chairman; Mr. Hong Hee Leong as Senior Independent Non-Executive Director; YBhg Tan Sri
Datuk (Dr.) Hj. Mustapha Kamal Bin Hj. Abu Bakar and YBhg Datuk Kasi A/L K.L. Palaniappan
as Non-Independent Non-Executive Director; Ms. Anita Chew Cheng Im, Pn. Hjh Juliana
Heather Binti Ismail and YBhg Dato’ Tan Choon Hwa@ Esther Tan Choon Hwa as Independent
Non-Executive Director and Mr. Lau Shu Chuan as Executive Director. Key Management Team
of MK Land Holding Berhad are consists of Mr. K.Mohanachandran A/L K.R. Kunjan as Group
Chief Executive Director; Mr. Charles Duncan, En. Mustafa Kamal Bin Hawari, Pn. Norida Binti
Abu Kassim and Dr. Zulkifli Mohd Isa as Senior General Manager; Mr. Sudhev A/L/ Sreetharan

5
and Tn. Hj Zulkifli Sidin as Group Senior General Manager; and Mr. Chin Kok Siong as Acting
Group Financial Controller.
Organization Chart for MK Land Holdings Berhad
1.6 Company’s Shareholders
As at 29 September 2017, MK Land Holding Berhad had issued 1,204,589,984 shares to
10,947 shareholders. The top five shareholders as at 29 September 2017 are MKN Holdings
Sdn. Bhd. (39.772%), Kasi A/L K.L. Palaniappan (15.843%), PB Trustee Services Berhad
Emkay Trust (7.601%), Lembaga Tabung Haji (2.617%) and Ung Yoke Hong (0.608%).

6
2. The principal activities of the company
MK Land Holdings is a group that involved in not just property development but also in
investments, leisure, and educational operations mainly in Selangor, Kedah and Perak. Most of
their revenue originates from these operations and has helped to maintain the company’s
position for all these years. Analysis has been done to further understand on how these
operations contributed to the company’s annual income.
MK Land Holdings are mainly involved in property development and other relevant
activities where they have gained a total of RM 166,578,000 which covers about 79% of the
total revenue in Year 2017. The sales of completed properties such as Meru Perdana,
Damansara Perdana and Residensi Suasana @ Damai, occupies about 5% of the total revenue
throughout the Year 2017. Some of the subsidiaries that are associated with property
development are Medan Prestasi Sdn Bhd, M.K Development Sdn. Bhd., Paramoden Sdn. Bhd.
and etc.
MK Land Holdings also operates their own resorts and hotels such as Ombak Villa
Resort, Bukit Merah Laketown Resort and MK Hotels and Resort. These resorts also provide
entertainment such as theme parks and golf courses which is quite popular among their visitors.
These operations are one of their principal activities due to the fact that sales that are generated
from these leisure operations are about 11% of total revenues of the group in 2017.
MK Land Holdings managed to obtain 9% of the total revenue by obtaining rental income
from leasehold land and building and also receiving dividends from their subsidiaries where they
possessed 100% effective interest in equity of their subsidiaries such as Dominant Star Sdn.
Bhd., Medan Prestasi Sdn. Bhd., MK Land Resources Sdn. Bhd. and etc.
Apart from making investments, MK Land Holdings provides educational services under
Lakeview College. They receive education fees from students enrolled in the college and
occupies about 1% of total revenue sales in 2017.

7
3. Analysis of the revenue contributions of the different segments of the company.
3.1 Revenue Contributions for the Year 2015
Figure 3.1: Revenue Contribution for the Year 2015
Figure 3.2: Analysis of Revenue Contribution for the Year 2015
Based on the annual report of MK Land Holdings Berhad in Year 2015, MK land had a
total revenue amount of RM488,316,000 in 2015. It has deducted the elimination amount of
RM34,464,000. One of the main segment that generate most of the revenue in 2015 is property
development segment. It had generated a revenue amount of RM451,312,000 which occupied
86% of overall revenue. It has increased 1% from last year 85% to this year 86%. Next, the
revenue come from leisure which had generated a revenue amount of RM35,511,000 which

8
occupied 7% of overall revenue. It has decreased 1% from last year 8% to this year 7%. In
addition, the education segment has generated a revenue amount of 1,493 and it is weighed
0.30% of overall revenue which remains the same percentage as last year. Lastly, the
investment holding had generated a revenue amount of RM34,464,000 which occupied 7% of
overall revenue. It has remains the same percentage as the previous year.
Based on annual report from MK Land Holding Berhad in Year 2016, MK land had a total
revenue amount of RM295,062,000 in 2016. It has deducted the elimination amount of

9
RM59,141,000. One of the main segment that generate most of the revenue in 2016 is property
development segment. It had generated a revenue amount of RM287,391,000 which occupied
81% of overall revenue. It has decreased 5% from last year 86% to this year 81%. Next, the
revenue come from leisure which had generated a revenue amount of RM27,626,000 which
occupied 8% of overall revenue. It has increased 1% from last year 7% to this year 8%. In
addition, the education segment has generated a revenue amount of 1,493 which occupied
0.50% of overall revenue. It has increased 0.20% from last year 0.30% to this year 0.50%.
Lastly, the investment holding had generated a revenue amount of RM37,388,000 which
occupied 11% of overall revenue. It has increased 4% from last year 7% to this year 11%.

10
Based on MK Land Holdings Berhad annual report 2017, MK Land had total revenue of
RM192,360,000 in Year 2017. The total revenue had deducted the elimination amount which
comprehend the external revenue amounted RM10 and inter-segment revenue amounted
RM19,345,000 from investment holding to avoid counting the revenue “twice” on a consolidated
basis. As shown in the pie chart, property development contributed the most revenue to the
company which amounted RM166,578,000. However, the revenue contribution of property
development in Year 2017 had decreased to 79% from 81% compared to Year 2016. Besides,
the revenue amounted RM23,858 had contributed by leisure segment and occupied 11% of the
overall revenue which raised from 8% in Year 2016. Moreover, investment holding had
contributed revenue amounted RM19,355,000 which occupied 9% of overall revenue. It is
decreased from 11% to 9% compared to last year. Lastly, the education had contributed
revenue amounted RM 1,914,000 and occupied 1% of the overall revenue.
3.4 Revenue Contributions from the Year 2015 to Year 2017

11
Figure 3.7: Analysis of Revenue Contribution form the Year 2015 to Year 2017
As refer to the bar chart above, property development segment is the significant revenue
contribution of MK Land Holdings Berhad. However, the overall revenue of property
development segment had gradually declined from 86% to 79% in Year 2015 to Year 2017. The
declination may due to the uncertainty of global economic and the inception of 6% Goods and
Service Tax (GST) as referred to MK Land Holdings Berhad Annual Report 2015 (Page 17).
The second most revenue contribution segment is leisure segment which gradually increase
from 7% to 11% in Year 2015 to Year 2017. The improvement of the overall revenue may due to
the increase of tourism from China and India at the popular travel spots such as Langkawi (MK
Land Holdings Berhad – Annual Report 2017; Page 35). Besides, the third most revenue
contribution segment is investment holding and follow by education. The investment holding is
increased from 7% to 11% in Year 2015 to Year 2016 but it slightly drops to 9% in Year 2017.
Lastly, education segments contributed the least revenue which occupied only 0.3% and 0.5%
of the overall revenue in Year 2015 and Year 2016 respectively, nonetheless it slightly inclined
to 1% in Year 2017.
4. Current state of the main industry of the company

12
4.1 Current Size of the Market
MK Land is one of the largest capitalized property companies in Malaysia with a paid-up
capital of about RM1.2 billion. It diversified portfolio projects had ingrained as a key player in the
property development industry.
Damansara Perdana is the flagship development of MK Land Holdings Berhad. It is a
remaining township that reserved their natural terrain. Its strategic location provided a good
accessibility to all areas in Klang Valley which connected to several highway such as Lebuhraya
Damansara Puchong, NKVE, Penchala Link and Sprint Highway. Armenee Terrace
Condominium (Block B) also known as Armenee II launched in year 2017 had become one of
the most popular property in Petaling Jaya. Armanee II is a 2-storey duplex condominium
development which combine the luxury of space and privacy to fulfil the modern families today.
The terrace of each unit had about 20% is tiled and the remaining is covered with 20-25cm thick
soil to allow the resident to design and build their own garden which fulfill their marketing
statement of "Your Garden in The Sky".
Based on The Malaysian Reserve (2017) K Mohanachandran, CEO of MK Land said
that Rafflesia phase 2 of semi-detached homes launched in the end of year 2017 was estimated
to worth RM100 million sits on a 2.02ha site and each unit would be sold between price of
RM3.5 million to RM4 million. Rafflesia is the first landed property development by MK Land. It
is constructed at the one of the highest areas in PJ and provided a serene living environment
with an award-winning landscaped lake.
According to The Malaysian Reserve (2018), MK Land through its subsidiary Medan
Prestasi Sdn Bhd (MPSB) announced the officially commencement of construction of Residensi
Suasana Tower B at Damansara Damai. The location of the project had high accessibility which
connected to various main access such as Lebuhraya Duta – Ulu Kelang (DUKE), North South
Expressway (PLUS), Lebuhraya Damansara – Puchong (LDP), Jalan Kepong – Sungai Buloh
and Jalan Lingkaran Tengah 2 (MRR2). The high accessibility and the easy access though MRT
system had allow the Residensi Suasana achieved 70% take up rate and Tower A had sold out
whilst Tower B is selling fast now. Based on Encik Mustafa Kamal Hawari, Senior General
Manager of MPSB said that the Residensi Suasana commands a Gross Development Value
(GDV) approximately RM400 million and comprising total 780 units spread over 3 towers. It
offered 3 different types of units with build-up areas of 1,015 to 1451 square feet and priced

13
from RM 450,300 affordably. The construction of Tower A had completed 50% at April 2018 and
is expected to complete at September 2019.
Besides, MK Land also providing affordable houses in Ipoh area such as Taman
Klebang Putra Township. According to MK Land Annual Report 2017, there are total 189 units
was under construction and 109 units had launched for sale in Taman Klebang Putra. There are
505 units of houses and shops will be launched for sale progressively until year 2019.
Furthermore, there are 2 parcels of land located at Meru Perdana under MK Land and known as
Meru Perdana 1 and 2. Meru Perdana 1 with an area of 92 acres had launched successfully
with good sales and had 67 units of shops on hold for further demand. While for Meru Perdana
2 with area of 98 acres, 517 units of houses and shops had been handed over, 93 units are
under construction and more than 265 units will be launched in future.
4.2 Prospects for Future Growth
Nowadays, the land price and construction material cost are getting higher and cause
the price range of houses increase rapidly. As majority of the homebuyers in the market now are
young people, it become more difficult for them to own a house without the assist from their
parents. Therefore, there is a high demand of affordable house.
In the light of that, MK Land will be offering more affordable house to cope with the
demand of the market. Based on The Malaysian Reserve (2017), K Mohanachandran said that
MK Land are having more affordable housing in the years to come as they have land in Bukit
Berunting, Rawang which has potential to build affordable houses with the infrastructure
supports. Furthermore, MK Land also will offer more affordable houses in the northern state of
Perak such as Klebang Putra and Meru Perdana.
According to The Malaysian Reserve (2017), MK Land had RM100 million unsold units
from Armanee Terrace and RM600 million semi-detached units from the remaining phases of
Rafflesia. From MK Land Annual Report 2017 stated that MK Land will emphases on the sales
of their completed unsold stock in Damansara Perdana, Damansara Damai and Taman Bunga
Raya through marketing such as advertisements, roadshows and sales campaigns at site and
sales offices.

14
Besides, MK Land will also maximize their revenue and profit by focusing on the sales of
the residential unit such as launched Suasana Project in Damansara Damai and Meru Perdana
and Klebang Putra in Ipoh as the commercial development were oversupplied.
4.3 Challenges Facing the Industry
One of the challenges that MK Land currently faced is the changing of the demand
housing market. The high-end property such as Armanee Terrace and Rafflesia still remain
many completed unsold unit. Although, MK Land had come out the solution by accentuating the
marketing on those completed unsold unit, but the demand and the requirement of homebuyers
now are preferred to superlink houses and the pricing also play a major focus to the
homebuyers. Moreover, the older houses will be more difficult to sell compared to new launched
houses. Therefore, it will be more challenges to sell out all the completed unsold units. Also, MK
Land will be incurring costs if the completed unsold units still carried by them.
The Malaysian Reserve (2017), K Mohanachandran said that MK Land is looking at
large parcels of land outside Klang Valley and near to Transit Oriented Developments (TOD) as
it is a known fact that cannot get a cheap landbank in Klang Valley. It became difficult to launch
affordable houses if buy a land which is ready for development. Hence, finding a large parcel of
land near to TOD may become a challenge to MK Land in developing affordable houses.
Besides, the competition in the property development industry had become fiercer as a
lot of developers coming into the industry especially listed companies. MK Land may face the
challenge to create their competitive advantage which allow them to attract more homebuyers to
purchase their properties.
Furthermore, there will also be a challenge to MK Land on planning and managing the
volume of property launch in the market. As more developers are coming to the industry and it
cause the increase of housing supply in the market. Therefore, MK Land always need to remain
cautious in the supply of the housing market to prevent oversupply.
5. Analysis of the company’s strengths and weaknesses.
5.1 Strength

15
The strength of MK Land Holdings Berhad is they have strong brand recognition and
corporate awards. The achievements of corporate awards were Malaysian Top Corporate
Directory Award, Top 10 Property Developers Award 2003, Top 10 Property Developers Award
2004, FIABCI International Corporate Ordinary Member, Superbrands Status 2003 & 2004,
Business Superbrands Status 2006, FIABCI Membership Certification, Reader Digest Trusted
Brand 2006 and KPMG Shareholder Value Award 2003.
According to the Star online, EMKAY Group’s former chief operating officer
K.Mohanachandran a/l K.R. Kunjan has been appointed the new group chief executive officer
(CEO) of MK Land Holdings Berhad on 1st
February 2017. Mohan has an honours degree in
civil engineering from University Malaya. Mohan has been in the property development industry
for 31 years since 1986.
MK Land provides good quality products. The group promise will continue to plan and
offer quality products, banking on strategic locations and innovative designs to suit the demand
of the market. In addition, the group will continue plan to better understand buyers’ wants and
needs when they design their products and future launches to ensure the products meet the
expectations of their customers. With their proven strategies and execution capabilities, an
established brand name, and right portfolio of products, MK Land has the flexibility and is well-
positioned to deliver satisfactory performance.
The group has large land bank which about 4,908 acres of undeveloped land bank in the
Klang Valley, Perak and Kedah. Based on thestaronline (2016), the founder Tan Sri Mustapha
Kamal Abu Bakar of MK Land stated that their group is ready to help any state government that
wants to implement affordable housing projects. In addition, they had worked with the Selangor
and Perak governments to provide assistance in terms of expertise and experience in the
construction of affordable housing. They had also found a lot of land in several states that could
be developed to carry out affordable housing projects in assisting home buyers to own houses.
There are several resorts launched by the group which are Ombak Villa and Kuala Melaka
Inn located at Langkawi, Bukit Merah Laketown Resort located at Kerian and Taiping Resort in
Taiping have contributed significantly to the growth of tourism in Malaysia. The focus for Ombak
Villa has been the foreign tourist, especially the Middle East tourist, while the other two resorts
in Perak are mainly focus to domestic tourist. In addition, this means that the growth of tourism
may positively affect economic growth and development for several reasons like increase
imports, facilitate the use of resources that are in line with country's factor endowment, provide

16
employment opportunities, promote infrastructure improvements, transfer new technology and
managerial skills into the economy, and create positive linkages with other sectors in the
economy. Therefore, growth in the tourism sector is expected to increase economic growth in
the country.
5.2 Weaknesses
A company weakness is any resource or process that your business lacks, limiting your
company's ability to reach its full potential. Even successful companies have their own
weaknesses. Based on the star online (2017), due to expectations of weaker earnings in the
absence of meaningful new launches, “a shot in the arm of sorts” has come in the form of a land
sale by the company. The group is raising the cash to improve its financial position by selling off
nine parcels of leasehold land total about 195.84 acres in Kamunting, Perak. For the financial
year ended June 30, 2016, it made a net profit of RM16.3mil, down from RM53.9mil in year
2015. Meanwhile, its first-half of 2017 net profit, it came in at RM8.5mil around 31% of Public
Invest’s full-year estimate. Its current borrowings stand at RM33.95mil, out of RM27.42mil is
long-term in nature. Although positive on the land sale, the research firm feels that MK Land’s
core earnings will remain weak with no meaningful new launches.
Based on the annual report, the group has low inventory turnover over the past three
years. Generally, if the inventory turnover is low, this means that demand for the product is low
or not enough targeted customers know about the product. Low inventory turnover is also
sometimes due to pricing or quality issues such as if customers find the product overpriced or of
a low quality they won’t buy. Low inventory turnover means that products are sitting in the
warehouse unsold for too long, which is costly for a business.
6. The company’s strategic plans for seizing opportunities and for facing challenges
in its industry.
A strategic plan is a significant contribution for a company which the company plans is to
simply achieve its mission successfully. It's commonly known that strategies planning are used
to create a common framework for decision making in the organization and this can help to

17
increase confidence in the business direction. It is important to have an efficient strategic
planning for a company. MK Land Holdings Berhad has its own strategy plans for seizing
opportunities to benefit the company and organisation in the industry. The group has served to
be reliable organisation that delivers quality products and services on a timely basis within the
costs and with quality. In any financial year, the fluctuations of the group’s revenue, profit and
operating cash flow is usually depending on the sales performance, value and construction
progress of the projects undertaken of each year.
There will always face challenges in any kind of business. In MK Land Holding Berhad,
the challenges faced by the Group is weaker consumer sentiments. This is due to market on
property has slow down for the past few years which is affected by the economic in Malaysia
ever since 2014. The reasons behind this are cause by the cooling measures put in place in
2013 by Bank Negara and the implication of a 6% Goods and Services Tax (GST) in April 2014.
MK Land Holding Berhad has strong branding with strategically located land banks will strive for
the best for the Group. They will measure to address the competition risk in regards with any
competitor challenges, market challenges, financial management and etc, in order to overcome
the issues faced by the group. They will carry out market studies to understand buyer’s needs,
monitoring and adjusting products and marketing strategies in response to weak consumer from
the markets.
MK Land Holding Berhad’s main mission is to provide quality products and services
through teamwork for the betterment of the government, society and nation. The Group aim to
seize the opportunity to improve the company’s profit and revenue with new strategic plan. It is
well known that public transport networks had played a major role that cause a huge
transformative style of living. It also gave a great changes in construction industry too. MK Land
Holdings Berhad had took the initiative and look forward to the completion of MRT network in
which the Group acknowledge the benefit of public transport network could strategically boost
the value of their projects. The Group will remain focused their strategies in the core property
development segment to further their growth in the immediate future. They anticipated
sustainable growth and minimise the risk of unforeseen circumstances in the future when
knowing the growth opportunities in future will increase due to the demand from markets. Lastly,
the Group take this opportunity to ease the burden of Malaysian who wanted to be a
homeowner by offering more affordable homes.

18
7. Identify the company’s major capital investments during its last three financial
years and the major sources of funding for these investments.
7.1 Major Capital Investment
In the past three years, MK Land Holdings Berhad had been investing its capitals in
purchasing property, plant and equipments. In 2015, they mostly invested in purchasing building
and resort properties with the amount of RM195,359,000. Furthermore, they have purchased
buildings and resort properties worth RM201,938,000 in 2016. In 2017, they invested slightly
higher amount of money to buildings and resort properties which valued RM 202,781,000.
Apart from buildings and resort properties, MK Land Holdings Berhad had invested a
total amount of RM 164,990,000 in others for the past three years. The “Others” segment
consists of motor vehicles, renovation, furniture, fittings and equipment. However, they have
spent slightly higher in 2017 compared to the past two years where most part of their investment
went into renovation worth RM 40,202,000.
They’ve also placed part of its funds into fixed deposits where the amount they invest
gradually decrease each year. From the statement of cash flow, we can see that MK Land
Holdings had been investing their money in money market fund and by the year 2015, they
begin to receive their return.
Figure 7.1 Statements of Cash Flows for the Financial Year Ended 30 June 2015

19
7.2 Sources of Funding
The sources of the funds that were used in investments of MK Land Holdings Berhad
includes loans from banks, its withdrawal from the money market funds. They also used money
obtained from the sales of their property, plant and equipment as the funds for their
investments.
Based on MK Land Holdings Berhad annual report, they obtained their funds generally
from share capital. From 2015, the amount of share capital of MK Land Holdings Berhad was
worth RM 1,207,262,000. However in 2017, the share capital had increase RM 9,034,000 and
became RM 1,216,296,000.
Furthermore, the funding sources of this company also includes bank borrowings and in
2015, they received a total borrowings of RM 76,409,000 regardless of its short term or long
term borrowings. In 2016, their total borrowing are RM 44,382,000 and in 2017, the borrowings
are totaled up as RM 54,856,000. The borrowings that was acquired includes term loans, hire
purchase payables and bank overdraft.

20
Figure 7.4 Statement of Financial Position for the Financial Year as at 30 June 2015

21

22
8. Analysis of financial condition
8.1 Liquidity
Liquidity 2017 2016 2015
Current Ratio 1.62 : 1 1.44 : 1 1.33 : 1
Quick Ratio 0.79 : 1 0.71 : 1 0.82 : 1
Current Ratio is used to compare a firm’s current assets to its current liabilities. MK Land
Holdings Berhad is having enough current assets to repay the current liabilities. In Year 2017,
MK Land had RM1.62 for every RM1 of current liabilities. MK Land’s performance for current
ratio is getting better from Year 2015 to Year 2017 which increase from 1.33 to 1.62 per RM1 of
current liabilities. The bigger the ratio in current ratio represented that the ability of the firm to
repay the current liabilities with current assets is good.
Quick Ratio is used to compare a firm’s liquidity to repay the current liabilities without
selling off the inventory and withdraw the project development costs. In Year 2017, MK Land
have only RM0.79 of liquidity current assets to pay RM1 of current liabilities which is not a good
sign of performance. In between Year 2015 and Year 2016, MK Land Holdings is having tough

23
time where the quick ratio’s performance is getting worse which drop from 0.82 to 0.71 per RM1
of current liabilities. From Year 2016 to Year 2017, MK Land is getting better performance which
rises from 0.71 to 0.79 per RM1 of current liabilities. The bigger the ratio in quick ratio
represented the ability of the firm to repay debt with liquidity assets is good.

24
8.2 Activity
Activity 2017 2016 2015
Inventory Turnover 0.66 Times 1.10 Times 1.76 Times
Average Collection Period 182.60 Days 182.28 Days 215.71 Days
Average Payment Period 829.61 Days 489.21 Days 622.80 Days

25
Inventory Turnover is used to monitor how many times the company is turning its
inventory during the year. MK Land sold his inventory 1.76 times, 1.10 times and 0.66 times in
2015, 2016 and 2017 respectively. The ability of MK Land to sell its inventory is getting bad from
Year 2015 to Year 2017. MK Land sells its inventory or property is getting slower from Year
2015 onwards which may due to low market demand. The higher the inventory turnover ratio
represented the ability of the firms to sell its inventory is good.
Average Collection Period is used to examine how fast a firm can collect its debts from
the debtors. MK Land required 215.71 days to collect its debts from debtors in Year 2015,
182.28 days in Year 2016 and 182.60 days in Year 2017. MK Land’s ability to collect its debt
from its debtors is getting better in the recent year which reduced from 215.71 days to 182.60
days. MK Land required less time to collect its debt from debtors which is a good performance.
Average Payment Period is used to examine how fast a firm can repay its debt to the
debtors. MK Land took 622.80 days in Year 2015, 489.21 days in Year 2016 and 829.61 days in
2017 to pay its debt to its debtors. The ability to repay the debt by MK Land is getting better in
Year 2015 to Year 2016 while in Year 2016 to Year 2017, the ability to repay the debt is getting
worse. 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.

26
8.3 Debt
Debt 2017 2016 2015
Debt Ratio 29% 36% 40%
Times Interest Earned 6.87 Times 4.39 Times 8.27 Times
Fixed Payment Coverage Ratio 0.80 Times 0.51 Times 2.56 Times

27
Debt Ratio is used to indicate the percentage of the firm’s assets that are financed by
debt. MK Land finance its assets by 40% of debts in Year 2015, 36% in Year 2016 and 29% in
Year 2017. The total debts of MK Land is reduced every year from Year 2015 to Year 2017
which is a good performance that the amount of debts to finances the assets is reduced. The
lower the percentage of the debt ratio represented the firms is getting good performance where
the total debts of the firms is reduced to finance the total assets.
Times Interest Earned is used to examine the amount of the operating income that are
available to service the interest payments. MK Land’s ability to pay the interest expenses by
using the operating profits in Year 2015 is 8.27 times, in Year 2016 is 4.39 times and in Year
2017 is 6.87 times. The ability to pay the interest expenses is dropped from Year 2015 to Year
2016 while the ability to repay interest is raised from Year 2016 to Year 2017. The bigger the
ability of the firms to repay interest expenses with operating profits, the better the performance
of the firms in terms of managing the debt’s interest.
Fixed Payment Coverage Ratio is used to measure the firm’s ability to pay all fixed-
payment with its operating profits. In Year 2015, MK Land’s ability to pay its fixed expenses by
using operating profit is 2.56 times; whereas in Year 2016 and Year 2017, the ability to pay fixed
expenses is dropped to 0.51 times and 0.80 times respectively. The greater the ratio of the fixed

28
payment coverage ratios represented the ability of the firms to pay the fixed payment by using
operating profits is well-managed.

29
8.4 Profitability
Profitability 2017 2016 2015
Gross Profit Margin 59% 49% 43%
Operating Profit Margin 23% 14% 17%
Net Profit Margin 9% 6% 11%
Return on Total Assets 1% 1% 3%
Return on Common Equity 2% 1% 5%
Total Assets Turnover 0.12 Times 0.16 Times 0.25 Times
Gross Profit Margin is used to measure the percentage of each sales ringgit remaining
after the firm has paid for its good. Gross Profit Margin of MK Land is 43%, 49% and 59% in the
Year 2015, 2016 and 2017 respectively. MK Land performance in gross profit margin is getting
better from Year 2015 to Year 2017. The ability of the firm to manage the cost of sales is getting
better from Year 2015 to Year 2017. The higher the gross profit margin represented the firm is
doing well in managing its cost of sales.
Operating Profit Margin is used to examine how effective the company in managing its
cost of sales and the operating expenses. MK Land’s Operating Profit Margin in Year 2015 is

30
17%, in Year 2016 is 14% and in Year 2017 is 23%. The performance of firm to manage the
operating expenses and cost of sales is getting worse in Year 2015 to Year 2016 which dropped
from 17% to 14%. In between Year 2016 and 2017, the firm’s ability to manage the cost of sales
and operating expenses is getting better which rises from 14% to 23%. The higher the
percentage in operating profit margin showed that the ability to manage the cost of sales and
operating expenses is good.
Net Profit Margin is used to monitor how well the firm control its overall expenses. Net
Profit Margin of MK Land in Year 2015, Year 2016 and Year 2017 is 11%, 6%, and 9%
respectively. The ability to manage the overall expenses of MK Land is dropped from 11% to
6% in between Year 2015 to Year 2016 and it’s getting better from Year 2016 to Year 2017
which rises from 6% to 9%. The higher the percentage in net profit margin showed that the
ability of the firm to manage the cost of sales and operating expenses is good.
Return on Total Assets is used to measure the overall effectiveness of management in
generating profits with its available assets. In between Year 2015 to Year 2016, the Return on
Total Assets of MK Land is dropped from 3% to 1% and it maintained at 1% during Year 2017.
The higher the percentage of Return on Total Assets can show that the ability of the firm to
manage assets to generate profit is good.
Return on Common Equity is used to examine the amount of net income that the
company can earn on every investment by the shareholders. The Return on Common Equity of
MK Land in Year 2015, 2016 and 2017 is 5%, 1% and 2% respectively. In Year 2015, every
single ringgit that the shareholders invest in the firm will generate 5 sen of net income while in
Year 2016 and Year 2017 only generate 1 sen and 2 sen respectively. The higher the return on
common equity showed that the company is generating high income with the money invested
from the shareholders. The higher the return on common equity is showed that it is worth to
invest in the firm.
Total Assets Turnover is used to measure how efficiently a firm is using its assets to
generate sales. The Total Assets Turnover of MK Land in Year 2015, 2016 and 2017 is 0.25
times, 0.16 times and 0.12 times respectively. Every single ringgit of assets will generate 25 sen
in sales in Year 2015. The performance on the Total Assets Turnover had gone through drop
and rise situation during the Year 2015 to Year 2017. The higher the value of the total assets
turnover it showed that the firm is generating more income based on the total assets.

31
8.5 Market Performance
Market Performance 2017 2016 2015
Earnings Per Share 0.02 : 1 0.01 : 1 0.04 : 1
Price/Earnings Ratio 13.75 Times 32 Times 9.5 Times
Price/Book Ratio 0.27 Times 0.32 Times 0.38 Times

32
Earnings per Share is served as an indicator of firm’s financial health and profitability.
Earnings per Share of MK Land in Year 2015, 2016 and 2017 is 4 sen, 1 sen and 2 sen
respectively per RM1 of share. Earnings per share indicate the value of the money that the
shareholders will get on the every RM1 they had invested. The higher the earning per share
indicate the higher the return of the share and it is worth to invest.
Price/ Earning Ratio measures how much the investors are willing to pay for every single
ringgit of reported earning. The investors had to pay 9.5 times in Year 2015, 32 times in Year
2016 and 13.75 times in Year 2017. 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.
Price/Book Ratio is used to compare the market value of the stock to the book value per
share of the reported equity on the balance sheet. The Price/Book Ratio for MK Land in Year
2015, Year 2016 and Year 2017 is 0.38 times, 0.32 times and 0.27 times respectively. The
lower the price/book value indicated that the stock is undervalued.

33
9. Conclusion & Recommendation
Based on the analysis we had done previously, we can concluded that most of the
revenue contribution of this firm is mainly contributed by property development segment. MK
Land aims to build affordable housing and depending on the market situation also to build high
end products and purpose build buildings.
MK Land have various properties around the whole nation. MK Land had built affordable
housing and also high end buildings. Damansara Perdana is a high end project in the town
which result in low market demand due to high price of the property. As a property development
players in the industry, it is very crucial that the property that had been built is able to sell it off to
generate income to sustain the company. MK Land is suggested to reduce the selling prices of
that property so that the income received will be able to sustain the company’s daily operation.
Based on the financial analysis, we can concluded that MK Land is having a tough time
during the Year 2015 to Year 2016 and it is getting better starting from Year 2016 to Year 2017.
From the analysis, we can see that the current liabilities of MK Land is reduced since Year
2015. The company’s ability to repay the current liabilities is still capable by using current
assets. Based on the Gross Profit Margin and Operating Profit Margin, we can observed that
about 30% of net sales is used for the operating expenses. The Market Performance of MK
Land is quite unsatisfied when compare with other industry players.
In the nutshell, MK Land is advisable to change the strategy plan of the company to
focus on the aim of the company which to build affordable housing for the market. Besides that,
MK Land is also advisable to build the reputation of the company first so that it can bring
beneficial to the company in the long run. MK Land is advisable to review its company
expenditure to reduce the operating expenses in the future. As for an investor, we would like to
recommend that it is not a suitable time for an investor to invest in MK Land’s share. It’s
recommended to invest in MK Land when the company is financial stable and the company’s
reputation in the market is reputable.

34
References
IZZAT, R. (2018). Reinventing MK Land and unlocking opportunities - The Malaysian Reserve.
Retrieved from https://themalaysianreserve.com/2017/06/16/reinventing-mk-land-and-unlocking-
opportunities/
IZZAT, R. (2017). Reinventing MK Land and unlocking opportunities - The Malaysian Reserve.
Retrieved from https://themalaysianreserve.com/2017/06/16/reinventing-mk-land-and-unlocking-
opportunities/
MKLAND.MY Company Profile & Executives - MK Land Holdings Bhd - Wall Street Journal. (2018).
Retrieved from https://quotes.wsj.com/MY/MKLAND/company-people
MKLAND Holdings Berhad. (2018). Retrieved from http://www.mkland.com.my/co_about-history.html
Company Overview Mk Land Holdings Berhad. (2018). Retrieved from
https://www.emis.com/php/company-profile/MY/Mk_Land_Holdings_Berhad_en_1662342.html
MK Land Holdings Bhd ready to help state governments on affordable housing projects |
iProperty.com.my (2016). Retrieved from
https://www.iproperty.com.my/news/mk-land-holdings-bhd-ready-to-help-state-governments-on-
affordable-housing-projects/342/
MKLAND (8893): MK LAND HOLDINGS BHD - Overview | I3investor. (2018). Retrieved from
https://klse.i3investor.com/servlets/stk/8893.jsp
M K Land Holdings Berhad: Private Company Information - Bloomberg. (2018). Retrieved from
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=8088255
MK Land may sell properties en bloc to minimise risks | EdgeProp.my. (2016). Retrieved from
https://www.edgeprop.my/content/mk-land-may-sell-properties-en-bloc-minimise-risks
M K Land's Residensi Suasana @ Damai recorded overwhelming response. (2018). Retrieved from
https://themalaysianreserve.com/2018/04/09/m-k-lands-residensi-suasana-damai-recorded-
overwhelming-response/
Property Review in Armanee Terrace II for Sale / for Rent | Propwall Malaysia. (2018). Retrieved from
https://www.propwall.my/insight/1240/armanee_terrace_ii

35
Review for Armanee Terrace II, Damansara Perdana. (2018). Retrieved from
https://www.propsocial.my/property/1143/damansara-perdana/armanee-terrace-ii
Shalini, K. (2017). MK Land works to improve investor perception. Retrieved from
http://www.focusmalaysia.my/Mainstream/mk-land-works-to-improve-investor-perception
Shot in the arm for MK Land | The Star Online (2017). Retrieved from
https://www.thestar.com.my/business/business-news/2017/05/15/shot-in-the-arm-for-mk-land/
Yahoo Finance (2018). Retrieved from
https://finance.yahoo.com/quote/8893.KL/history?period1=1467302400&period2=1501516800&interval
=1mo&filter=history&frequency=1mo

36
Appendix

37
Statement of Financial Position for the Financial Year as at 30 June 2015
Statement of Changes in Equity for the Financial Year as at 30 June 2015

38

39
Statement of Cash Flows for the Financial Year as at 30 June 2015

40

41

42

43

44

45
Market Share Price as at 1 July 2015

46

Fm report template

More Related Content

What's hot

Similar to Fm report template

More from Shze Hwa Lee

Recently uploaded

Fm report template