FACULTY OF BUSINESS MANAGEMENT

DIPLOMA IN BUSINESS STUDIES

GROUP REPORT WRITING

FUNDAMENTALS OF FINANCE
(FIN 242)

COMPANIES NAME:
SUNWAY GROUP BERHAD

PREPARED BY:
NAME STUDENT ID
AMIRULLAH BIN HAMDAN 2021115565
NUR AKMAL BIN MOHD AZIZ 2021108927
MUHAMMAD UWAIS BIN HUSSAINI 2021126715
MUHAMMAD AQLAN BIN ZAIRULADIRA 2021107465
MUHAMMAD AMZAR BIN KAMARUNZAMAN 2021116107
MUHAMMAD AMIRUL HASIF BIN BADRUL EHWAN 2021116081

CLASS:
MBA1114B

SUBMITTED TO:
MR. SYAHIRU BIN SHAFIAI

DATE OF SUBMISSION:
5 FEBRUARY 2023

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ACKNOWLEDGMENT

First and foremost, we would want to express our gratitude to everyone who contributed to
this project because it would not have been possible without their support and direction. The
project was highly labour-intensive, but we think that we couldn't have completed it without
the help and direction of some very significant individuals. We value Mr. Syahiru Bin
Shafiai, our lecturer for FIN242 who continual inspiration was. He inspired us to work on this
assignment without pausing to think it over and encouraged us to think imaginatively. He
offered us her full assistance and the various teaching tools we needed to finish this
assignment. Even when we were unable to believe it, he had faith in us.

We are also thankful to every member of this group. It was each and every individual’s
contribution that made this assignment a success. We were always there to lift each other up,
and that was what helped us stay together till the end. We also want to express our gratitude
to our parents for their unwavering belief in us and for encouraging us to never give up until
our goals are accomplished. We appreciate the willingness and help of all our classmates as
well who offered moral support in creating the project. They all played an important role
when it came down to giving motivation at times whenever we need.

Above all, we are grateful to the Al – Mighty God for being with us and providing us with the
knowledge and skills necessary to complete this assignment. They assisted us with the
project, which we greatly appreciate. We say goodbye to our assignment with a heavy heart
because it was one of the most difficult yet rewarding experiences of our lives and careers as
students. It has been a long and strenuous assignment, but we have finally reached the finish
line with our final completion. The completion of such a challenging assignment with support
from many people gave us a very mixture feeling, which are satisfy, happy and full of
thankful for sure.

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 TABLE OF CONTENT

NO. CONTENT PAGE

COVER PAGE
1

ACKNOWLEDGMENT 2
TABLE OF CONTENT
3
1.0 INTRODUCTION

1.1 BACKGROUND OF COMPANY 4-5

1.2 PRODUCTS OR SERVICES AVAILABLE

2.0 FINANCIAL ANALYSIS

2.1 FINANCIAL RATIOS

6-14
2.2 SHORT TERM FINANCING
2.3 LONG TERM FINANCING

3.0 CURRENT ISSUE

15
4.0 CONCLUSION AND SUGGESTION
16
5.0 REFERENCES
17-18
6.0 APPENDIX
19-22

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1.0 INTRODUCTION

1.1 BACKGROUND OF COMPANY

Tan Sri Dato' Seri Dr Jeffrey Cheah created the Sunway Group in 1974. It was founded in
1974 by a tin-mining firm with a paid-up capital of MYR 100,000. Since the year 2000,
Sunway Group has grown to become one of the most powerful property-construction
companies in the world, with a diverse portfolio of established businesses spanning 50
countries. Property, Construction, hotel, retail tourism, commercial, trading and
manufacturing, building material, quarrying, healthcare, education, and real estate investment
trust are among the 12 business divisions of Sunway Group. Sunway Group won the highly
sought "builder of the year" title at the Malaysian construction industry excellence award in
2014, and it also placed first in the globally renowned The Edge Top Property Developers
Awards 2014.

The 800-acre Sunway Resort City, an engineering tour force and Malaysia's first green
township recognised by Green Building Index, is the Sunway group's flagship development
that has earned global renown. It is located just 20 minutes from Malaysia's capital city of
Kuala Lumpur. Because it was actually resurrected from a tin mining wasteland, the township
stands as an icon for human labour, invention, and forwardness. Sunway Resort City offers
over seven million square feet of world-class facilities, allowing it to draw 42 million visitors
per year. It contains over 10,000 residential and commercial units and is still a highly sought-
after location where prosperous communities live, learn, work, and play while remaining
healthy and safe.

Sunway's Vision is to be a leading company that provides world-class and competitive

products and services that increase the value of shareholders. Sunway's aim is to create
innovative, high-quality products and services that exceed client expectations. In addition,
human capital must be consistently attracted, retained, and developed. After that, the Sunway
Group aims to attain market leadership and operational excellence in all business segments.
Sunway Group has evolved into what it is now because to visionary leadership, insightful and
transparent corporate practises, and synergistic cooperation. A steadfast leader in all areas in
which he specialised. Sunway is the only Malaysian business in the Asia Pacific area to be

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placed sixth in the Hewitt-Fortune-RBL Top Companies for Leaders for its unwavering
dedication to human capital management.

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1.2 PRODUCTS OR SERVICES AVAILABLE

As one of the biggest Southeast Asia’s conglomerates founded in Malaysia, Sunway Group
had involved in various business portfolio from development of properties and invesment
program. This is diversified into several subsidiaries such as real estate, construction,
education, healthcare, malls, hospitality, leisure, digital, manufacturing and many others. The
core success of profitability had always been construction as their expertise had always been
prioritized in this area.

The real estates fall in Sunway Properties that carries the corporate’s images through the
project of Sunway City Kuala Lumpur, Malaysia’s first fully-integrated green township
certified by Green Buling Index (GBI) which cover up to 800 acres. This sustainable city
locate Malaysia’s first ever themed shopping centre and entertainment mall, Sunway
Pyramid. One of the most iconic amusement park in Malaysia is set on the heart of city called
Sunway Lagoon. It has multiple rides and themed park.

Sunway Education Group is responsible to offer superior education quality for everyone.
Pioneering the birth of private education in Malaysia, Sunway managed to build Sunway
University, Sunway College and Sunway International School in which every institutions are
owned under Jeffrey Cheah Foundation (JCF). Scholarships and research grant are channelled
to fuel the corporate’s dream to create non-profit structure which ensure education systems’
prosperity of quality and balances.

Across Malaysia, Cambodia and Vietnam, Sunway Hotels and Resorts in one of the leading
hospitality developer internationally which accumulated up to 12 hotels and resorts. This
includes Sunway Resort, Sunway Putra and hotels in both Sunway Pyramid and Sunway
Lagoon. These hotel could hold up to 4 000 guest rooms to provide unforgettable experiences
for tourist domestically and worldwide, providing eminence retreats and private services.
They also provide hundreds of meeting rooms, make it versatile for various occasions such as
exhibitions and conventions.

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2.0 FINANCIAL ANALYSIS

2.1 FINANCIAL RATIOS

i) LIQUIDITY RATIO

CURRENT RATIO Current Assets

Current Liabilities

8,002,212,000
6,705,570,000

= 1.19 Times

QUICK RATIO (Current Assets – Inventories)

Current Liabilities

(8,002,212,000 – 2,423,004,000)
6,705,570,000

= 0.83 Times

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ii) ACTIVITY RATIO

AVERAGE COLLECTION PERIOD Account Receivables x 360

Total Sales

2,483,840,000 x 360
3,714,168,000

= 240 Days
INVENTORY TURNOVER Cost of Goods Sold
Inventories

3,569,065,000
2,423,004,000

= 1.47 Times

FIXED ASSETS TURNOVER Sales

Fixed Assets

3,714,168,000
17,084,702,000

= 0.22 Times

TOTAL ASSETS TURNOVER Sales

Total Assets

3,714,168,000
25,086,914,000

= 0.15 Times

iii) LEVERAGE RATIO

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 DEBT RATIO Total Liabilities
Total Assets

11,963,432,000
25,086,914,000

= 0.48 x 100% = 48%

DEBT TO EQUITY RATIO Long Term Debt

Total Equity

5,257,862,000
13,123,482,000

= 0.40 Times

TIME INTEREST EARNED Profit Before Interest & Tax

Interest

2,648,207,000
205,959,000

= 12.86 Times

LONG TERM DEBT RATIO Long Term Debt

Total Assets

5,257,862,000
25,086,914,000

= 0.21 x 100% = 21%

iv) PROFITABILITY RATIO

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 GROSS PROFIT MARGIN Gross Profit
Sales

327,082,000
3,714,168,000

= 0.088 x 100% = 8.8%

NET PROFIT MARGIN Net Profit

Sales

3,387,086,000
3,714,168,000

= 0.91 x 100% = 91%

RETURN ON ASSETS Net Profit

Total Assets

3,387,086,000
25,086,914,000

= 0.135 x 100% = 13.5%

RETURN ON EQUITY Net Profit

Total Equity

3,387,086,000
13,123,482,000

= 0.258 x 100% = 25.%

2.2 SHORT TERM FINANCING

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My company is planning an expansion project for their existing plant in Malacca. It is
estimated that the project takes 10 months to complete and generate additional income for the
firm. My firm needs RM 3,714,168,000. Additional financing and below are the alternatives:

Alternatives 1

A 10-month short-term loan from Maybank with an annual interest of 7 percent on a

discounted basis and the bank requires a compensating balance of 5 percent.

P = 3,714,168,000
r = 7%
t = 10 month

i) Interest = Prt
= RM 3,714,168,000 x 7% x (10/12)
= RM 2,166,598,000

Compensating Balance
= 5% x 3,714,168,000
= RM 185,708,400

Effective Interest Rate = interest/(P – Interest – Compensating Balance) x (12/n)

= 2,166,598,000/(3,714,168,000 -2,166,598,000 - 185,708,400) x (12/10)
= 0.079 x 100%
= 7.9%

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Alternatives 2

A credit facility of RM 3,788,541,360 with MBSB Bank with an annual interest of 10 percent
and a commitment fee of 3% on any unused amount.

P = 3,788,451,360
r = 10%
t = 10 month

i) Interest = Prt
= RM 3,788,451,360 x 10% x (10/12)
= RM 315,704,280

Commitment Fee
= (3,788,451,360 - 3,714,168,000) x 3%
= RM 2,228,500.8

Compensating Balance = RM 185,708,400

Effective Interest Rate = (Interest + Commitment Fee / P – Compensating Balance) x

(12/n)
= (315,704,280 + 2,228,500.8/3,788,451,360 - 185,708,400) x (12/10)
= 0.016 x 100%
= 10.6%

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Alternatives 3

Issued commercial paper with a face value of RM70,000 each with a promised return of 7.5
percent annually. The cost of issuing these papers is estimated at RM2,500 each.

P = 3,714,168,000
r = 7.5%
t = 10 month

i) Interest = Prt
= RM 3,714,168,000 x 7.5% x (10/12)
= RM 232,135,500

No of paper
= 3,714,168,000/70,000
= 53,060

Placement Fee
= 2,500 x 53,060
= 132,650,000

Effective Interest Rate = (interest/P – interest – placement fee) x (12/n)

= (232,135,500/3,714,168,000 - 232,135,500 - 132,650,000) x (12/10)
= 0.083 x 100%
= 8.3%

Therefore, Sunway Berhad should choose the first alternative (Maybank) because it has the
lowest effective interest rate(EIR).

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2.3 LONG TERM FINANCING

PAST YEAR QUESTION (JUNE 2018: SECTION B QUESTION 3)

i) Bond

Coupon– 10% / 0.1

Floatation cost – RM20
Issuance of bond discounted – RM30
Market price – RM1,000 minus discount RM30 = RM970
Maturity period – 10 years
Tax rate – 40% / 0.4
Par value – RM1,000

Coupon payment (I) = percent of coupon payment x par value

Coupon payment (I) = 10 / 100 x RM1,000
Coupon payment (I) = RM100

Value of bond (Bo) = market price – floatation cost

Value of bond (Bo) = RM970 – RM20
Value of bond (Bo) = RM950

Yield to maturity (YTM) = [ I + (FV – Bo / n) ] / [ FV + Bo / 2 ]

Yield to maturity (YTM) = [ RM100 + (RM1,000 – RM950) / 10 ] / [ RM1,000 +
RM950 / 2]
Yield to maturity (YTM) = 105 / 975
Yield to maturity (YTM) = 10.77%

Kd after-tax cost of bond =

Kd (1 – percent of tax)
Kd after-tax cost of bond = 10.77 (1 – 0.4)
Kd after-tax cost of bond = 6.46%

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ii) Preferred stock

Dividend payment (D) – 11% / 0.11

Par value – RM100
Current price / market price / selling price – RM96 per share

Proceed (Po) = market price – percent of floatation cost

Proceed (Po) = RM96 – none
Proceed (Po) = RM96

Required rate of return (Kps) = D / Po

Required rate of return (Kps) = (11 / 100 x RM100) / RM96
Required rate of return (Kps) = 11.46%

iii) Common stock

Dividend payment (D1) – RM6.00

Current market price – RM76
Floatation cost – RM4 Growth rate –6% / 0.06

Proceed (Po) = market price – floatation cost

Proceed (Po) = RM76 – RM4 Proceed (Po) = RM72

Required rate of return (Kcs) = (D1 / Po) + g

Required rate of return (Kcs) = (RM6.00 / RM72) + 0.06
Required rate of return (Kcs) = 14.33%

The best source of financing for PEMADAM Manufacturing is alternative 1 which bond
because it have the lowest cost of capital that only consists 6.46%.

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3.0 CURRENT ISSUE

The birth on Covid-19, a deadly virus was first recorded on 25 th January 2020 and every had
changed ever since. The government introduced Movement Control Order (MCO) had put
everyone in life crisis to save their life. Sunway Group's numerous divisions planned how to
contribute and aid the needy, the displaced, the unwell, and the imprisoned as well as the
overworked front-line professions attempting to contain the pandemic's consequences. As the
pandemic's toll became apparent in Malaysia, the divisions of Sunway sought to lessen the
negative financial, social, and emotional repercussions across the nation.

Results for the fourth quarter of the fiscal year that concluded on December 31, 2019, or
4QFY19, were as expected but better than anticipated. Fiscal year for the fourth quarter 2019
property sales were around RM1.13 billion. Even though management increased the sales
goal for this year to RM 2 billion, Sunway are wary that some projects would get put on hold
because of worries over the Covid-19 outbreak. However, earnings from other business
segments should more than make up for the company's property development's shortfall.
Despite the currently difficult environment, corporate believe earnings will remain stable.

With the exception of manufacturing, trading, and construction, All divisions' earnings
recorded positive growth. The segment of real estate development recognised development
revenues from Sunway's Tianjin project. Despite an optimistic performance, Sunway Medical
Centre Velocity's start-up losses offset some of the revenue for the healthcare segment. In
Singapore, several projects would likely to be postponed as the virus outbreak had severely
affected the countries’ condition. In spite of challenging times, Sunway Group deeply
believed the management could set higher forecast in future and remain confident during
recovery periods.

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4.0 CONCLUSION AND SUGGESTION

4.1 FINANCIAL RATIO

Current Ratio for Sunway Berhad is 1.19 Times. The higher the ratio, the greater the ability
for the Sunway Berhad to pay off its current obligations. Quick Ratio for Sunway Berhad is
0.83 Times. The higher the ratio, the greater the ability for the Sunway Berhad to pay off its
current obligation with the most liquid assets.

Average Collection Period for Sunway Berhad is 240 Days. Higher ACP is not desirable as it
indicates poor sales and slow collections or a very lenient collection policy. Inventory
Turnover for Sunway Berhad is 1.47 Times. The higher the ratio, the more efficient Sunway
Berhad is in its inventory management. A high inventory turnover can signal better sales or
tighter management control. Fixed Assets Turnover for Sunway Berhad is 0.22 Times. The
higher ratio indicates the Sunway Berhad is efficient in generating sales from the available
fixed assets. Total Assets Turnover for Sunway Berhad is 0.15 Times. The higher ratio for the
Sunway Berhad indicates better efficiency in managing its total assets.

Debt Ratio for Sunway Berhad is 48%. The higher the ratio for the Sunway Berhad, the
greater the debt level, the greater the amount of other people’s money being used to generate
profit. Debt To Equity Ratio for Sunway Berhad is 0.40 Times. The higher the ratio for the
Sunway Berhad the greater the debt level. Time Interest Earned for Sunway Berhad is 12.86
Times. The higher ratio indicates the Sunway Berhad is in the position to continue making
payment on its interest obligation without difficulty. Long Term Debt for Sunway Berhad is
21%. The higher the ratio the greater the debt level.

Gross Profit Margin for Sunway Berhad is 8.8%. Higher ratio shows the Sunway Berhad is
efficient in controlling its Cost of Goods Sold. Net Profit Margin for Sunway Berhad is 91%.
Higher ratio indicates higher ability of the Sunway Berhad to obtain profit from the given
level of sales. Return on Assets for Sunway Berhad is 13.5%. Higher ratio indicates higher
ability of the firm to obtain profit from the given level of assets. Return on Equity for Sunway
Berhad is 25.8%. Higher ratio indicates higher ability of the Sunway Berhad to obtain profit
from the given level of equity.

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4.2 SHORT TERM FINANCING

Therefore, Sunway Berhad should choose the first alternative (Maybank) because it has the
lowest effective interest rate(EIR).

4.3 LONG TERM FINANCING

The best source of financing for PEMADAM Manufacturing is alternative 1 which bond
because it has the lowest cost of capital that only consists 6.46%.

4.4 SUGGESTION

Based on their debt ratio which is 48%, we suggest to this company to decreased their debt by
using advantages of profit that their earn. Meanwhile for their net profit margin which is
91%, we suggest that they can hire more workers to improve their performance rate and
efficiency. Other than that we also suggest that the company to invest in rural areas, such as
building a Sunway Hospital that can give benefits to others this is because their company
focus more on city area only, at the same time they can increased their assets.

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5.0 REFERENCE

RHB research institute. (2020, February 27). Sunway earnings seen to stay resilient amid
challenges. The Edge Markets. https://www.theedgemarkets.com/article/sunway-earnings-
seen-stay-resilient-amid-challenges

Richard Wong. Sunway group. Leading in Challenging Times. Retrieved February 2, 2023,
from https://leadinginchallengingtimes.com/sunway-group

SUNWAY. (2015). Sunway. Sunway Group. https://www.sunway.com.my/

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6.0 APPENDIX

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