1. SCHOOL OF ARCHITECTURE, BUILDING & DESIGN
FOUNDATION IN NATURAL & BUILT ENVIRONMENT
August Intake 2014
Semester 2
Basic Accounting (FNBE0145)
Lecturer: Mr. Chang Jau Ho
Assignment: Financial Ratio Analysis
Company: BONIA COROPERATION Berhad
Name Student ID No
Ng Huoy Miin 0319097
Trace Gew Yee 0320269
2. Content
Title Page
Company Background
Recent Development
Ratio Analysis & P/E Ratio
Investment Recommendation
Appendix
Appendix A: Consolidated Balance Sheet
Appendix B: Consolidated Statements of Income
References
3. Company Background
With its strong presence in the Malaysian fashion scene for over 30 years, Bonia
moves its influence into international arena. Today, Bonia is a brand leader in fashion
products made from fine leather and high-quality accessories.
Bonia Corporation was incorporated on 28 August 1991 as private limited
company under the name of Premium Fashions Sdn Bhd. On 22 June 1993, the company
was converted into a public limited company and changed its name to Bonia Corporation
Berhad on 18 September 1993. The company was subsequently listed on the Second
Board of the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia) on 23
August 1994. On 23 April 2007, Bonia Corporation was transferred to the Main Board of
Bursa Malaysia. Bonia Group is principally engaged in manufacturing of leather goods /
shoes; designing, promoting and marketing of fashion products for the companyβs own
brands; and distributing fashion products for some International Brands.
The Bonia Group had its humble beginning in 1978 with the formation of Bonia
Trading Co., a partnership dealing in leatherwear and accessories. In 1989, the Group
established a manufacturing facility in Melaka to design and manufacture leather goods.
The company began its organic expansion strategies by positioning its products in
the domestic market and gradually into foreign territories. Even in those early years, the
bone management recognizes the importance of brand building as opposed to just selling
its product. The Bonia brand is associated with fashion, fine craftsmanship and quality.
28 years henceforth, the Bonia group can proudly reflect on its achievement of being the
leading Malaysian company with strong positioning as a quality leatherwear fashion
house.
Today, Bonia Corporation Berhad is one of Malaysia's leading local Leatherwear
manufacturers, enjoying a 28% market share of local products with 37 boutiques and over
200 counters within the department, retail and duty-free stores across Malaysia, carrying
product ranges from bags, wallets, shoes, apparels to accessories.
The group is gaining a strong foothold in the Middle East following the opening
of its flagship boutique in Jeddah, and three others in Saudi Arabia with more plans to
come. Bonus financial performance in FY2006 includes a 15% sales increase with
marginally higher operating profit margin while market capitalization was up by 122% at
RM 130 million.
4. Recent Developments
One of the most recent developments by Bonia Corporation is opening two
boutiques in Vietnam. The first one is in Crescent Mall, HCMC, Vietnam in January
2012 and the other one is in Hanoi, Vietnam in June 2012. Next, they opened another
boutique in Surabaya, Indonesia in July 2012. In November 2012, Bonia also launched
customisation services at Pavilion, Kuala Lumpur and Singapore. In the same month,
Bonia held the Pavilion, Kuala Lumpur Grand Launch.
Moreover, Bonia launched its own Instagram - @boniafashion in April 2013. In
May 2013, BONIA launched its First Pop-up Store at Singapore and announced Sonia
Sui, a famous model and actress in Taiwan, as its First International Brand Ambassador.
In addition, Bonia opened another boutique in Trans studio Mall, Bandung Indonesia in
Dec 2013.
Furthermore, Bonia opened another boutique in Indonesia located at Centre Point
Medan Indonesia in January 2014. In May 2014, Bonia launched customisation services -
Italian Trunk and Special Edition: The Sonia Bag. Besides, Bonia opened a boutique in
Skywalk Shopping Mall, Mandalay, Myanmar on 10th May 2014. Lastly, the opening of
boutique in AEON Mall, Phnom Penh, Cambodia on 8th August 2014.
6. Profitable Stability
Over the year 2013 and 2014, TheReturn Of Equity (ROE)has increased
from13.79% to 16.3%. This means the owner has received more return of
the capital compare to last year.
Over the year 2013 and 2014, Net Profit Margin(NPM) has increased from
6.54% to 7.97%.This means theability of controlling the expenses has
become better compareto last year.
Over the year 2013 and 2014,GrossProfit Margin (GPM) has increased
from60.98% to 61%.This means thebusiness has become better with the
ability of controlling the COGS expenses compare to last year.
Over the year 2013 and 2014,Selling ExpenseRatio (SER) has decreased
from30.2% to 29.6%.This means thebusiness has become better with the
ability of controlling the selling expense compare to last year.
Over the year 2013 and 2014,General ExpenseRatio(GER) has decreased
from19.3% to 18.98%.This means thebusiness has becomebetter with the
ability of controlling the general expense compareto last year.
Over the year 2013 and 2014,Financial ExpenseRatio (FER) has decreased
from1.18% to 1.17%.This means thebusiness has become better with the
ability of controlling the financial expense compare to last year.
8. Stability Ratios
Over the year 2013 and 2014, the Working Capita(WCR) has decreased
from2.6 to 2.4. This means the businessβ ability to pay back his/her current
liabilities weregetting worse. In addition, it does satisfy the 2:1 ratio.
Over the year 2013 and 2014, the Total Debt(TDR) has increased from36%
to 41.2%. This means the businessβ totaldebt has increased. However, it
does not exceed the maximum 50% limit.
Over the year 2013 and 2014, the Stock Turnover(STR) has increased from
143.7 days to 172.7 days. This means the business is selling the products
slower.
Over the year 2013 and 2014, the Debtor Turnover(DTR) has _______ from
____ days to ____ days. This means the business using _____ time to
collect the debt.
Over the year 2013 and 2014, the Interest Coverage(ICR) has decreased
from 1.074 times to 1.066 times. This means the businessβ ability to pay
his/her interest expenses is getting worse. In addition, it does not satisfy
the minimum requirement of 5 times.
9. Price EarningRatio (P/E Ratio)
BONIAβs current share price is $40.10 per share and its Earning Per Share (EPS) is $2.67.
P/E Ratio
=
πΆπ’πππππ‘ πβπππ πππππ
πΈππππππ πβπππ πππππ
=
This shows that the Price Earning Ratio (P/E Ratio) for BONIA is (). It means that an
investor who invests now will have to wait () years to recoup his investment.
10. Investment Recommendation
(a) Profitability
Based on the calculations and the information provided, Bonia Corporation had
experienced a good profitability since Return on Equity has increased from 13.79% to
16.3 %, it shows more return from investments which is good. Based on the Net Profit
Margin which has increased from 6.54% to 7.97%, the company is better at controlling
its expenses which is also a good thing. The Gross Profit Margin indicates that they are
getting better at controlling their Costs of Goods Sold which is good too. On the other
hand, Selling Expenses, General Expenses and Financial Expenses Ratio(FER)
increased 0.6%, 0.32% and 0.01% in the year. This means the business is getting better at
controlling the expenses.
(b) Stability
For the financial stability ratios of Bonia Corporation, the Working Capital Ratio has
decreased from 2.6 to 2.4 and it means that it does satisfy the ratio of 2:1 hence this is not
a good thing as the ability of this company to pay back its current liabilities has become
worse that the company is not able to pay back its current liabilities in a shorter time.
Moreover, the Total Debt Ratio has increased from 36% to 41.2% and this shows that
the business is now facing even more debt compare to last year. Furthermore, the Stock
Turnover Ratio has increased from 143.7 days to 172.7 days and this can be said that the
business is selling their products slower than last year. For Debtor Turnover Ratio ,it
has _______ from ____ days to ____ days as the using of time to collect the debt is
_____. Lastly, the Interest Coverage Ratio has a slight increase from 1.066 times to
1.074 times and this is good for the business because the ability to pay back their interest
expense has become better than the two years we compared but this still does not satisfy
the minimum requirement of 5 times.
11. In conclusion, the company is a good company to invest in. It is financially stable
and is able to make good profit at the same time. However, its Price Earning Ratio is 15
which mean that investors will have to wait for 15 years before recouping his investments.
If the investor is not conservative and is willing to wait for 15 years, then Microsoft is a
very good company to invest in.
