Account Assignment report Fnbe

School of Architecture, Building and Design

Foundation in Natural and Built Environment

Basic Accounting (ACC 30205)Assignment: Financial Ratio Analysis

Company Name : LBS Bina Group Berhad

Lecturer : Ms.Tay Shir Men

Group MembersCarol Tang Ngie Bing (0323963)Sulaiman Idris (0321087)Tey Cheng Fern ( 0323912 )Mohammad Harris Bin Haji Abdul Aziz (0323219)

Table of Content

NO. CONTENT PAGE NUMBER1. History of LBS Bina 32. Recent development 73. Profitability Ratio 94. Stability Ratio 115. Price Earning Ratio 126. Share Price 137. Investment Recommendation 168. Appendix 189. Reference 29

Background History

LBS builds homes that meet the needs of Malaysians. For over 20 years, LBS has carefully nurtured a reputation for delivering properties with unsurpassed quality that inspire and enrich. By insisting on continually improving not only construction technologies but the very latest in architectural trends, LBS lives up to its belief that Malaysians deserve homes of the finest workmanship.

LBS Bina Group Berhad has been providing golf course consultation and construction services in Malaysia since 1983. It is a registered Class A contractor with Pusat Khidmat Kontraktor where the Company is allowed to plan projects of unlimited value. LBS began with one man’s vision. In the 1960s, Dato’ Seri Lim Bock Seng founded a construction business in Petaling Jaya. Within a few years, LBS’ scale of projects established it as a reputable property developer. Several of its well publicised accomplishments were Taman Perindustrian Bukit Serdang Seksyen 14 in Selangor, jointly developed with the 1992 Thomas Cup champions, Taman Pinggiran Putra, Serdang and the township project at Bandar Saujana Putra. This trend of growth has seen LBS become a

dominant player in Malaysia’s property sector, and spread its wings across the seas to China.

Today, the Company has constructed more than 40 golf courses in Malaysia, Singapore, Brunei, China and Indonesia. The Group also carries out package design and build projects and has to-date completed more than 17 design and built golf course projects. In 1994, the Company invested through Lamdeal Holdings Ltd, a 51% owned subsidiary to construct a 36 hole golf course, a Grand Prix Circuit, 4,500 units of mixed residential housing and two hotels on 888 acres of prime development land in Zhuhai, China, bordering Macau.

LBS Bina Group Berhad, formerly known as Instangreen Corporation Berhad, is a publicly quoted company. Together with its subsidiaries, the company is engaged in the development of residential, commercial, and hotel properties. It is also involved in investment holding, property management, turfing and landscape contracting, insurance agent, trading of building materials and selling of membership cards covering personal insurance, property development. The company was incorporated in 2000 and has its registered head office in Petaling Jaya, Malaysia. Its shares are listed on Kuala Lumpur Stock Exchange with the ticker symbol 5789.

LBS Bina Group is engaged in a number of projects which include, Taman Balakong Taya, which comprises more than

2,400 units of shop apartments, apartments, single and double storey terrace houses, shop houses, light industrial lots and terrace light industrial factories; and Taman Pinggiran Putra, which has approximately 190 acres in size.

LBS Bina Group aims to gain recognition as a responsible and reputable property developer. It has other offices located in Pahang Darul Makmur, Perak Darul Ridzuan, and Perak Darul Ridzuan, as well as overseas in Beijing, China.The Group is affiliated to the ‘Ground Maintenance Association of America’ which is the technical authority on landscape design, construction and maintenance. The Group operates one of the turf farms in Malaysia with more than 100 acres of land planted with turfgrass of the various popular varieties. In addition, it operates three landscape nurseries in Mantin, Beranang and Kajang in Malaysia which comprise a total land area of approx. 90 acres. The acquisition of SPJ Construction Sdn Bhd in February 1995 has enabled the Group to diversify into the specialized field of civil engineering. SPJ Construction is a class ‘A’ civil engineering contractor and has successfully completed more than RM150m worth of projects. It is presently

carrying out projects which are worth more than RM7m.

Recent DevelopmentLBS Bina recently gave a media briefing, presented by their Managing Director, Tan Sri Lim Hock San. LBS Bina's latest offering in the affordable category. BSP21 is the name of the master development, and many smaller projects are sccattered across BSP21. Rumah Selangorku Bandar Saujana Putra is a joint development between the Selangor government and LBS Bina Group Berhad.

D'Island Residence is a leasehold development launched in year 2011 located in Puchong. The centrepiece of the development is a huge lake with plenty of recreational activities prepared for its habitants. The lake comes landscaped with aquatic features and recreational facilities. Parks and jogging tracks surrounding the lake, and a commercial area is in the works as well. Residential units offered in this development range from condominiums to bungalows, and everything in between. D'Island is well situated within the rapidly developing enclave of Puchong, 15 minutes from Kuala Lumpur City Centre.

Skyvilla is located at the heart of D' Island Residence, Skyvilla is a 17-storey condominium with unit prices. There are a total of two blocks, and units comes with a built-up range of 1,026 to 1,218 sf. The development is low density, and units come with 3 bedrooms and 2 bathrooms. Skyvilla is well equipped, and comes with over 30 facilities comprising of gyms, pools, gardens, and playgrounds.

Corallia 4 comprise of the semi-detached units within D'island Residence. Phase one of Corallia 4 would consist of 86 units of double-storey semi-detached homes with 14-foot high-volume ceilings. Land size is generous, and measures 40ft x 80ft. Units come with 5+1 bedrooms, and 6 bathrooms, and approximate

built-up for each of the units is 3,968 sf. Going prices are at RM1.7 million as of 5/1/2016.

Nautulis is part of D'island Residence, consisting of triple-storey superlink houses. The architecture and desing is inspired by Scandinavian elementsThe development is characterized by picturesque forests, sparkling water enclosures and coastal island charm. There are two land areas offered in Nautilus, coming in either 24ft x 100ft, or 24ft x 80ft. Most of Nautilus have been sold at the time of the event, with only a few units remaining from unapproved loans.

Desiran Bayu, Puchong is located right next to D' Island Residence, LBS's premier development located at Puchong. Desiran Bayu is most notably, built on Malay Reserve Land, e. A total of 598 units are planned for Desiran Bayu, with unit types ranging from Double-storey cluster-link, double-storey semi-detached units, and double-storey terrace. Prices start from RM420,000 for a terrace unit, RM600,000 for Cluster-link units, and up to RM820,000 for semi-detached units. Apart from the residential offerings within Klang Valley, LBS also has plans for industrial developments. One of them is located in Telok Gong, Klang. Telok Gong is known as an industrial area among the locals, and anyone who has been to the area will not use the words "organized" to describe it. With this problem in mind, LBS has conceptualized a modern industrial zone with systematic layouts and incorporated functional design elements into its architecture. The result is versatile, light industrial workspaces which can be converted into a logistics hub, a warehouse, or a service centre. The project spans over 60 acres, and a total of 96 units are planned for the development. Three unit types would be offered, including Single-storey low cost factory, 1½-storey bungalow factory, and 1½-storey semi-detached factory. The low cost units are already sold out, and semi-detached factory units start from RM3.5 million.

Profitability RatioThe following table shows the profitability ratio calculation

and interpretation for LBS Bina in the year of 2012 and 2013.

Profitability Ratios

2012 2013 Interpretation

Return On Equity Ratio(ROE)

39,003,430,000 516,690,656,500

x 100 %

=7.5%

397,323,654,000699,735,858,000

x 100 %

= 56.8 %

The ROE in the year 2013 is higher compared to the year of 2012. The ratio has increase from 7.5% to 56.8 %. This shows that LBS Bina is earning higher capital in 2013.

Net Profit Margin Ratio(NPM)

39,003,430,000509,644,355,000

x 100 %

= 7.7 %

397,323,654,000533,532,722,000

x 100 %

= 74.5 %

The increase of NPM in 2013 is a positive sign and it shows that LBS Bina kept the expenses lower than 2012. The ratio increase from 7.7% to 74.5%. The higher NPM gives more profit to the business. This prove that the business is able to control the expenses than the year before.

Gross Profit Margin Ratio (GPM)

19,215,796,000509,644,355,000

x 100 %

= 3.8 %

168,577,154,000533,532,722,000

x 100 %

= 31.6 %

The increase ratio of GPM from 3.8% to 31.6% in the year 2012 to 2013 shows that LBS Bina is able to control their COGS. The higher the GPM , the better manage of COGS in the business.

General Expenses Ratio(GER)

67,470,147,000509,644,355,000

x 100 %

= 13.2 %

85,596,945,000533,532,722,000

x 100%

= 16.0%

GER of LBS Bina increase the ratio of 2012 in 13.2% to 16.0% in 2013. The higher ratio in 2013 shows that the business more likely lead to a lower NPM.

Financial Expenses Ratio(FER)

18,457,247,000509,644,355,000

x 100 %

=3.6 %

15,170,850,000509,644,355,000

x 100 %

= 3.0 %

The FER of LBS Bina decrease from 3.6% to 3.0% during the period from 2012 to 2013. the finance expenses spent in 2013 is lower than 2012. A lower financial expenses spent in 2013 leads to a higher NPM in the year 2013.

Liquidity Ratio

Liquidity Ratio 2012 2013 Interpretation

Working Capital Ratio (WCR)

927,829,389 (TCA) ÷ 520,720,661 (TCL)= 1.8 (1.781817889)

925,492,766 (TCA) ÷ 609,599,483 (TCL)= 1.5(1.518198082)

WCR indicates the company’s short term assets to cover its short term debt.Below value of 1 indicates negative W/C and above 2 means that the company is not investing in excess assets.

Stability Ratio

Stability Ratios

2012 2013 Interpretation

Total Debt Ratio (TDR)

Group:908,176,834 ÷ 1,435,008,317= 0.6328721745 × 100%= 63% (63.3%)

Group:1,137,172,437 ÷ 2,009,812,670= 0.565810164 × 100%= 57% (56.6%)

The company’s TDR decreased from years 2012 from 63% to 57% in 2013. This means that the company is less dependent of leverages such as loans or borrowing money from other parties.

Inventory Turnover Ratio

(ITR)

Group:13,593,510 (yr.2012) + 17,850,045 (yr.2011)= 31,443,555 ÷ 2= 15,721,777.5 (Avg. Inv.)

363,416,449 (COGS) ÷ 15,721,777.5 (Avg. Inv.)= 365 ÷ 23.115480994= 15.8 (15.79028358)

Group:22, 575, 116 (yr.2013) + 13,593,510 (yr.2012)= 36,168,626 ÷ 2= 18,084,313 (Avg. Inv.)

364,955,568(COGS) ÷ 18,084,313 (Avg. Inv.)= 365 ÷ 20.18078143= 18.2 (18.23517098)

The company’s TDR increased from 15.8 in 2012 to 18.2 in 2013. This ratio shows how many times the company's inventory is sold and replaced over the year. The increased in ITR may indicate an increase in business activity.

Interest 5,735,301 (Interest 4,626,563 (Interest ITR shows a

Coverage Ratio (ICR)

Expense) + 39,003,430 (Net Profit)= 44,738,731 ÷ 5,735,301= 7.8 (7.800589891)

Expense) + 397,323,654 (Net Profit)= 401,950,217 ÷ 4,626,563= 86.9 (86.87879469)

company’s ability cover its debts expenses. The lower the ITR more debts the company has to burden. Though, as long as the ratio is above 1.5, the company’s ability to repay debts should remain uncompromised.

P/E Ratio

Group:Market Value per share of stock = 1.35 (yr.2016.Feb.2nd)Earnings per share of stock = 9.70 (yr.2012)1.35 ÷ 9.70 = 0.14 (0.139175257)P/E Ratio = 0.14 (0.139175257)

Group:Market Value per share of stock = 1.35 (yr.2016.Feb.2nd)Earnings per share of stock = 96.09 (yr.2013)1.35 ÷ 96.09 = 0.01 (0.014049328)P/E Ratio = 0.01 (0.014049328)

Interpretation:A high P/E generally means that investors are anticipating growth in the future.Seeing that the P/E ratio decreased from year 2012 to 2013 may indicate lack of growth in the future.

Share PriceFTSE BURSA MALAYSIA KLCI(^KLSE)

LBS BINA GROUP BERHAD

Based on the graph above, it shows that the share price for LBS Bina Group Berhad and index for FTSE Bursa Malaysia KLCI. Before determining whether to invest in either in a company or an overall market share KLCI, which company has a better percentage over the time period from January 2015 to December 2015 must be understand. Hence, 4 different points of time will be viewed to determine the performance of both graphs.

First point of time, the share price for LBS Bina Group Berhad is 1.5900 on 23 January 2015, and the index for FTSE Bursa Malaysia KLCI is 1803.00. At 23 February 2015, the share price decrease to 1.5600 and the index increase to 1809.39.

The decrease of share price is -1.89%, whereas the index changes is 0.35%. This is to say that the performance of the company is worse than the index.

For the second point, the share price for LBS Bina Group Berhad is 1.500 on 09 April 2015, and the index for FTSE Bursa Malaysia KLCI is 1849.39. At 08 May 2015, the share price increase to 1.6200 and the index decrease to 1807.65. The increase of share price is 8%%, whereas the index changes is 2.26%. As such, the performance of the company is better than the index this time.

For the third point, the share price for LBS Bina Group Berhad is 1.4800 on 06 August 2015, and the index for FTSE Bursa Malaysia KLCI is 1694.64. At 23 September 2015, the share price increase to 1.5100 and the index decrease to 1613.17. The increase of share price is 2.03%, whereas the index changes is 4.94%. This is to say that the performance of the company is worse than the index.

For the final point of the graph, on 17 November 2015 which the share price is 1. for LBS Bina Group Berhad and the index for FTSE Bursa Malaysia KLCI is 1661.53. At 28 December 2015, the share price increase to 1.4100 and the index increase to 1670.73. The increase of share price is 2.92%, whereas the index changes is 0.554%%. Hence the performance of the company is better than the index this time.

By comparing LBS Bina Group Berhad with the overall market share KLCI, LBS Bina Group Berhad is increasing, while FTSE Bursa Malaysia KLCI is instability. Furthermore, the 4 point of time that has been calculated shows that LBS Bina Group Berhad is recommended for investing in.

Investment RecommendationAccording to LBS bina profitability ratio, the return on

equity (ROE), net profit margin (NPM) and gross profit margin (GPM) has improved and showed positive signs for the business. The ROE in the year 2013 is higher compared to the year of 2012. The ratio has increase from 7.5% to 56.8 %. This shows that LBS Bina is earning higher capital in 2013. The increase of NPM in 2013 is a positive sign and it shows that LBS Bina kept the expenses lower than 2012. The ratio increase from 7.7% to 74.5%. The higher NPM gives more profit to the business. This prove that the business is able to control the expenses than the year before. The increase ratio of GPM from 3.8% to 31.6% in the year 2012 to 2013 shows that LBS Bina is able to control their COGS. The higher the GPM , the better manage of COGS in the business. This shows a positive feedback and is good for investors as this company has an ascending progress for ROE, NPM and GPM.

As for the liquidity ratio for this company, LBS bina has a ratio of 1.8 in the year 2012 and 1.5 in 2013. This shows a decrease in ratio that is bad but not as bad as it is still in between 1.5 and 2. Since a ratio below 1 is not safe for the company, this means the company is still safe for it to convert their short term current assets into money to pay short term current debts. LBS Bina’s ability to pay off its current liabilities had slightly decreased from 1.8 to 1.5 and has not satisfied the 2:1 ratio of staying within the borderline of borrowing.

Besides, The company’s Inventory Turnover Ratio(TDR) decreased from years 2012 from 63% to 57% in 2013. This means that the company is less dependent of leverages such as loans or borrowing money from other parties. This ensures that the company will not have as much debts as in 2012 and will effect the company positively. The company’s TDR increased from 15.8 in 2012 to 18.2 in 2013. This ratio shows how many times the company's inventory is sold and replaced

over the year. The increased in Inventory Turnover Ratio (ITR) may indicate an increase in business activity. This as well will ensure that the business will be getting an increase in business performance. As for the company’s ITR , it has increased drastically from 7.8 to 86.9. This shows that the company is able to pay of all their debts expenses. This shows that the safety of the company is ensured from being bankrupt. The share price for this business is available at a cheap price at 1.35.

Although the P/E ratio has decreased from 0.14 to 0.01 LBS Bina is still a good investment for investors. The only downside is that the decrease in P/E ratio will or may indicate lack of growth in the future and may increase the time for investor to claim back his original principal.

However in 2015, the graph from LBS Bina and KLCI shows that the business, LBS Bina is making profit. On the other hand, the market, KLCI is also decreasing in profit. As such, LBS Bina is recommended to invest in now based on the graph from 2015.

AppendixStatements of Financial Position 2012

Statements of Financial Position 2012



Statements of Comprehensive Income 2012






Share Price Calculation

Reference

http://www.lbs.com.my/

http://finance.yahoo.com/echarts?s=%5EKLSE+Interactive#{"range":"1mo","allowChartStacking":true

http://finance.yahoo.com/echarts?s=5789.KL+Interactive#{"range":"1mo","allowChartStacking":true

http://www.lbs.com.my/investor-relations/financial-reports/2012/

http://www.lbs.com.my/investor-relations/financial-reports/2013/

http://listofcompanies.co.in/lbs-bina-group-berhad/

http://www.lbs.com.my/property-collections/latest-launches/

http://www.thesundaily.my/news/1375620

https://www.cloudhax.com/property/news/LBS-Bina,-Plans-for-2016

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Account Assignment report Fnbe