UNIVERSITI UTARA MALAYSIA

KUALA LUMPUR
COLLEGE OF BUSINESS
THIRD SEMESTER 2020/2021 (A203)
BWFN 5013 INVESTMENT (KL)

INDIVIDUAL ASSIGNMENT 1
COMPARISON ON THE POTENTIAL OUTLOOK OF
PUBLIC-LISTED COMPANIES

PREPARED FOR:
ASSOC. PROF. DR. RASIDAH MOHD RASHID

PREPARED BY:

NO. FULL NAME MATRIC NO.

1 NADHIRAH BINTI ABD RAHMAN 828380
TABLE OF CONTENT

INTRODUCTION......................................................................................................................2

FINANCIAL PERFORMANCE................................................................................................3

I-BERHAD.............................................................................................................................3

MAH SING GROUP BERHAD............................................................................................3

STOCK PERFORMANCE........................................................................................................5

I-BERHAD.............................................................................................................................5

MAH SING GROUP BERHAD............................................................................................5

RISK...........................................................................................................................................6

I-BERHAD.............................................................................................................................6

MAH SING GROUP BERHAD............................................................................................6

CONCLUSION ON TARGET PRICE......................................................................................7

REFERENCE.............................................................................................................................8

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INTRODUCTION

The stocks chosen are I-Berhad and Mah Sing Group Berhad (“MSGB”). Both companies are
listed on the Main Market of Bursa Malaysia Securities Berhad and come from the property
industry.

I-Berhad, previously known as Sanyo Industries (Malaysia) Sdn. Bhd., was established in
1967. It used to specialise in manufacturing of commercial and industrial electronics and
appliances. It changed its name to I-Berhad in 1999 and in 2005, the business directions of
the company changed to property development. Today, the Group is involved in property
development, property investment and leisure.

MSGB began as plastics trading firm in 1965 and expanded its business into property
development in 1994. Starting from 2000, the Company launched developments in Johor,
Klang Valley, Penang, and other states of Malaysia. In 2020, the Group diversified into the
healthcare industry by venturing into glove manufacturing business.

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FINANCIAL PERFORMANCE

I-BERHAD

The Group recorded revenue of RM84.6 million and net profit of RM3.3 million for the
financial year ended 31 December 2020. However, in the prior year, it recorded revenue of
RM172.0 million and net profit of RM25.8 million. This indicated that the revenue and net
profit of the Group has declined in FY2020 by 50.8% and 87.3% respectively. This was due
to impairment losses recognised in retail inventories held by the Group, on top of the
pandemic of Covid-19 that severed the operating landscape of the Group and the aftereffects
of the Sino-US trade tensions that had weakened Malaysia’s economic wellbeing.

The Group reported revenue of RM13.2 million and net loss of RM4.5 million in the first
quarter of the current financial year 2021 (“Q1 2021”). In comparison, the corresponding
financial quarter ended 31 March 2020 (“Q1 2020”) showed that the Group had revenue and
net profit of RM28.7 million and RM1.1 million, respectively. The decline was contributed
by lower sales made due to no new projects launched since 2018, share of losses in
associates, and the Movement Control Order (“MCO 2.0”) imposition.

MAH SING GROUP BERHAD

The Group recorded revenue of RM1,531.0 million and net profit of RM63.0 million for the
financial year ended 31 December 2020. However, in the previous year, it recorded revenue
of RM1,810.0 million and net profit of RM117.0 million. This indicated that the revenue and
net profit of the Group has reduced in FY2020 by 21.5% and 65.5% respectively. This was
caused by the Covid-19 pandemic that forced the Group to conduct its daily operations
remotely from home, construction of projects to be halted during MCO, delays in housing
loans and closure of sales galleries.

The Group reported revenue of RM413.3 million and net profit for the period of RM43.9
million in Q1 2021. In comparison, the Q1 2020 showed that the Group had revenue and net
profit of RM371.1 million and RM31.2 million, respectively. The increase was contributed
by the inclination in progressive revenue recognised during the period from ongoing projects

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and the cost savings recognised from the finalisation of construction contracts. Also, last
year’s results were impacted by the MCO in March 2020.

COMPARISON

To compare, MSGB showed better financial performance than I-Berhad for FY2020 and Q1
2021. The future prospect also indicated that MSGB would outperform I-Berhad due to
property projects expected to attract more potential buyers due to strategic locations and
affordable prices. Moreover, the former has plans for new projects to be launched in 2021. Its
new subsidiary of glove manufacturing has also commenced operations recently and is
expected to be a contributor to the Group’s earnings for the current financial year 2021. In
contrast, I-Berhad’s focus is only on its development in i-City Golden Triangle (“IGT”) that
will offer new opportunities to investors.

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STOCK PERFORMANCE

I-BERHAD

The Group’s current share price stands at RM0.30 for each of the 1,135.6 million shares. The
target price of the share is expected to be RM0.26 per share, a reduction of 13.3%. The
market capitalisation is RM340.7 million. Earnings per share (“EPS”) in FY2020 was 1.4
cents and forecasted to be 0.2 cents in FY2021. Furthermore, the price to earnings (“PE”)
ratio for FY2020 was 21 and is expected to increase significantly to 150. The dividend per
share (“DPS”) for FY2020 showed 0.6 cents while forecasted to be 0.1 cents in FY2021.

MAH SING GROUP BERHAD

The Group’s current share price stands at RM1.00 for each of the 2,427.7 million shares. The
target price of the share is expected to be RM1.05 per share, an increase by 5%. The market
capitalisation is RM2,427.7 million. Earnings per share (“EPS”) in FY2020 was 1.7 cents and
forecasted to be 7.6 cents in FY2021. On the other hand, the price to earnings (“PE”) ratio for
FY2020 was 59 and is expected to reduce to 13. The dividend per share (“DPS”) for FY2020
showed 1.7 cents while forecasted to be 3.0 cents in FY2021.

COMPARISON

To compare, MSGB has larger number of shares compared to I-Berhad. The former has
performed steadily with marginal reduction in revenue and profits for the past 12 months in
FY2020 that enables it to have a dividend payout to its investors of 1.7 cents, which is higher
than the latter. Also, the significant value of 150 PE ratio for I-Berhad in comparison to
MSGB’s may indicate that its investors may expect higher earnings growth in FY2021 within
the Group. Moreover, this may be unrealistic given the circumstances that I-Berhad is relying
solely on its development on IGT in FY2021.

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RISK

I-BERHAD

The current mall operations for the Group relies highly on consumer sentiment which has
caused higher declining revenue and profits than anticipated. A new project is anticipated to
be launched in 2021. However, since in Selangor, Enhanced MCO (“EMCO”) is
implemented, this plan remains uncertain. There is also the lingering effects of Sino-US trade
tensions that the Group still has yet to recover from.

MAH SING GROUP BERHAD

The Group is affected mostly by the prolonged uncertainty in economic growth due to Covid-
19 pandemic whereby new virus strains could potentially increase number of positive cases.
Due to MCO too, projects could take longer completion time and may be costly to the Group.
Strict lending requirements imposed by banks pose as a threat to the Group where it could
affect the sales in property.

COMPARISON

Both Groups are affected by the pandemic since property sales could potentially cause the
decline or slow growth in revenue and profits for FY2021. It seems that this is dependent on
the strategies implemented to curb these risks for both Groups.

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CONCLUSION ON TARGET PRICE

The target share price for I-Berhad is RM0.26 while MSGB targeted to be RM1.05. One
shows a decline of 13%, another an increase by 5%.

After considering the risk factors, future prospects, historical and future data mentioned
above, it can be concluded that both target share prices are relevant. This is because I-
Berhad’s performance is subjected to Malaysia’s current pandemic situation where it depends
on its development on IGT, whereas MSGB could cope with the potential decline in property
sector due to its diversification in various businesses such as plastics and glove
manufacturing.

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REFERENCE

Ching Weng Jin, PublicInvest Research Results Review, PP17686/03/2013(032117) (Kuala

Lumpur: Public Investment Bank Berhad (20027-W), 28 May 2021).

Lum Joe Shen l, Mah Sing Group Berhad Research By Kenanga, PP7004/02/2013(031762)
(Kuala Lumpur: Kenanga Investment Bank Berhad (15678-H), 5 May 2021).

I-Berhad, Interim Financial Report 31 March 2021, (Kuala Lumpur: I-Berhad (7029-H), 27
May 2021).

Mah Sing Group Berhad, Interim Financial Report 31 March 2021, (Kuala Lumpur: Mah
Sing Group Berhad (230149-P), 31 May 2021).

Puan Sri Tey Siew Thuan & Goh Yeang Kheng, Annual Report 2020, (Kuala Lumpur: I-
Berhad (7029-H), 12 May 2021).

Tan Sri Dato’ Seri Siti Norma binti Yaakob & Datuk Ho Hon Sang, Annual Report 2020,
(Kuala Lumpur: Mah Sing Group Berhad (230149-P), 25 February 2021).