FIN 420

FINANCIAL RATIO ANALYSIS

(FGV HOLDINGS BERHAD VS KL KEPONG BERHAD)

SUBMITTED TO:

MS AMIRAH HAZIMAH BINTI BORHANORDIN

PREPARED BY:

RIENAH BINTI SANARI

2019231122
BA2412A
 TABLE OF CONTENT

NO. CONTENT
PAGES

1 Introduction of The Company

1.1 Industry Sector 3
1.2 FGV Holdings Berhad 3
1.3 KL Kepong Berhad 4
2 Financial Ratio Analysis
2.1 Types of Ratio Comparison
a) Trend Analysis 5
b) Cross- Sectional Analysis

2.2 Trend Analysis for FGV Holdings Berhad

and KL Kepong Berhad 6-17
2.3 Cross-Sectional Analysis FGV Holdings
Berhad vs KL Kepong Berhad 18-19

3 Conclusion 20
4 Recommendation 21
5 References 22
6 Appendices 23-47

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1. INTRODUCTION
1.1) INDUSTRY SECTOR

Plantation can be best described as a large area where crops are grown for
gaining profit (Collinsdictionary, n. d,). In Malaysia, plantation area is being conquered
by 4 major crops which are oil palm, rubber, cocoa and paddy. Oil palms dominates
most of the cultivation area of plantation compared to other major crops with 4.49
million hectares of land. Malaysia produce 17.73 million tons of palm oil and 2.13 tons
of palm kernel oil and currently contributed 28 % of world palm oil production and 33
% of world exports (MPOC, n.d.). There are so many big companies that involved in
oil palm plantation. FGV Holdings Berhad and KL Kepong Berhad are the examples
of company that involved in producing palm oil.

1.2) FGV HOLDINGS BERHAD

FGV Holdings Bhd. is an investment company, which invests primarily in oil

palm plantation and its related downstream activities, sugar refining, trading, logistics,
marketing, rubber processing, research and development activities and related
agribusiness activities. It operates through the following segments like Plantation,
Sugar and Logistics and Support Business.

The Company's segments include Palm Upstream, engaged in Plantation estates

activities, including cultivation, harvesting and production of fresh fruit bunches (FFB),
and processing of FFB into crude palm oil and palm kernel (PK); Palm Downstream,
engaged in refining of crude palm oil (CPO), fractionation of refined bleached
deodorized palm oil and Palm Olein, crushing of Palm Kernel, processing and sales of
biodiesel products, production of oleochemicals, graphene and nanotubes, and
production of consumer bulk and packed products.

Sugar, engaged in sugar refining, and sales and marketing of refined sugar and
molasses; Trading, Marketing and Logistics (TML), engaged in trading and
transportation facilities, and Others, engaged in rubber processing, research and
development activities, fertilizers processing and production, sale of planting materials,
information technology, security and travel.

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 1.3) KUALA LUMPUR KEPONG BERHAD

Kuala Lumpur Kepong Berhad (“KLK”) is a company incorporated in Malaysia

and listed on the Main Market of Bursa Malaysia Securities Berhad with a market
capitalisation of approximately RM24.931 billion at the end of September 2019.

Started as a plantation company more than 110 years ago, plantations

(predominantly oil palm) still leads as KLK’s core business activity. Through various
strategic acquisitions and sound management, the Group’s total oil palm planted area
stands at 213,000 hectares spread across Malaysia (Peninsular and Sabah), Indonesia
(Belitung Island, Sumatra Central and East Kalimantan) and Liberia.

Since the 1990s, the Groups has diversified into resource-based manufacturing
(oleochemicals, derivatives and speciality chemicals) and vertically integrated both its
upstream and downstream businesses. The KLK Group expanded its manufacturing
operations through organic growth, joint ventures and acquisitions in Malaysia, the
Republic of China, Switzerland, Germany, The Netherlands, Belgium and Indonesia
resulting in international scale oleochemicals operations.

The 1990’s also saw the Group capitalising on the strategic location of its land
bank in Peninsular Malaysia by branching into property development. Since the dawn
of the 21st century, the Group has been in strong consolidation mode, in preparation for
bigger leaps into the future.

The company’s mission are “Strive For Excellence”. They strive to emerge as
a global force in the plantations and oleochemical arena and to continue building on the
Group’s century old legacy of excellence by, offering quality products and services at
competitive prices, being a good and responsible corporate citizen, earning a fair return
on investments, maintaining steady dividend payments and adequate dividend cover,
sustaining growth through re-investment of retained profits, maintaining a high
standard of business ethics and practices and fulfilling our social responsibilities in the
community in which we operate.

The values of Kuala Lumpur Kepong Berhad , they work by their founder’s
philosophy of Integrity, Loyalty and Humility. They also value Good Team Spirit,
Result Oriented Performance and Innovation to excel in satisfying their customers and
stakeholders.

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 2) FINANCIAL RATIO ANALYSIS

2.1) TYPES OF RATIO COMPARISON

Financial ratio can be defined as a method to compare and evaluate a company

financial statement account. The relationship between these accounts may help
investor, creditors and internal company management understand the company
performance by analysing the company’s profitability, liquidity, assumend risks as
well as financial stability ( Ratio analysis, 2019 )

a) Trend Analysis

Trend analysis is an analysis method for traders to predict future stock price
based on recently observed trend data (Hayes, 2019). Trend analysis can be
simplified as a method to predict future behaviors by examining past ones.
Given the overall trends of the market and particular indicators within the
market, trend analysis is based on historical data about the performance of
the stock of the company.

b) Cross-Sectional Analysis

Cross-sectional analysis is an analysis where a company being compared

with other companies in same sector over a focus time to identify the
strength of the company itself (Chen, 2019). Cross-sectional analysis is
often deployed as an attempt to assess performance and investment
opportunities using data points that are beyond the usual balance sheet
numbers.

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 2.2) TREND ANALYSIS FOR FGV HOLDING BERHAD AND KL
KEPONG BERHAD.

(a) LIQUIDITY RATIOS

Liquidity ratio measured the ability of the company to pay their short-
term liability using either current asset or current asset without
inventories and prepaid expenses. Liquidity ratio can be divided into 2
which are current ratio and quick ratio.

1. CURRENT RATIO ( CR )

Current ratio measured the ability of a company to meet their

financial obligations in short-term (Bragg, 2019). Current ratio can
be calculated by dividing current assets with current liabilities.

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝐶𝑅 =
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑖𝑒𝑠

2. QUICK RATIO ( QR )

Quick ratio measured the firm ability to pay its short-term

obligations without relying on inventories and prepaid expenses.
Quick ratio can be calculated by dividing current assets minus
inventories with current liabilities.

𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝑄𝑅 =
𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

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 1. CURRENT RATIO

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝐶𝑅 =
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑖𝑒𝑠

Year CR for FGV HOLDING BERHAD CR for KL KEPONG BERHAD

(RM ‘000) ( times ) ( times )
2017 𝑅𝑀 856,369 𝑅𝑀 775,921
𝐶𝑅 = = 1.16 𝑡𝑖𝑚𝑒𝑠 𝐶𝑅 = = 3.00 𝑡𝑖𝑚𝑒𝑠
𝑅𝑀 741,059 𝑅𝑀 259,504
2018 𝑅𝑀 759,610 𝑅𝑀 803,371
𝐶𝑅 = = 1.53 𝑡𝑖𝑚𝑒𝑠 𝐶𝑅 = = 4.99 𝑡𝑖𝑚𝑒𝑠
𝑅𝑀 497,110 𝑅𝑀 161,029
2019 𝑅𝑀 528,912 𝑅𝑀 2,720,812
𝐶𝑅 = = 1.77 𝑡𝑖𝑚𝑒𝑠 𝐶𝑅 = = 17.92 𝑡𝑖𝑚𝑒𝑠
𝑅𝑀 298,732 𝑅𝑀 151,794
Table 1 (a)

Graph 1 (a)
According to table 1 (a) and graph 1 (a), it shows that FGV Holding Berhad show a
good performance in 3 years which are 2017, 2018 and 2019 when the ratios are 1.16 times,
1.53 times and 1.77 times respectively. This means FGV Holding Berhad has ability to pay its
short-term liabilities using current asset. Nevertheless, KL Kepong Berhad shows a good
performance in 3 years when the current ratios for 2017 are 3 times, 2018 are 4.99 times and
2019 are 17.92 times. This result indicates that KL Kepong Berhad can pay its short-term
liabilities using current assets because higher current ratio is better for a company.

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 2. QUICK RATIO ( QR )

𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝑄𝑅 =
𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Year QR for FGV HOLDING QR for KL KEPONG BERHAD
( RM ’000) BERHAD (times) (times)
𝑅𝑀 856,369 − 𝑅𝑀 0 𝑅𝑀 775,921 − 𝑅𝑀39,891
𝑄𝑅 = 𝑄𝑅 =
2017 𝑅𝑀 741,059 𝑅𝑀259,504
= 1.16 𝑡𝑖𝑚𝑒𝑠 = 2.84 𝑡𝑖𝑚𝑒𝑠
𝑅𝑀 759,610 − 𝑅𝑀0 𝑅𝑀 803,371 − 𝑅𝑀50,579
𝑄𝑅 = 𝑄𝑅 =
2018 𝑅𝑀 497,110 𝑅𝑀 161,029
= 1.53 𝑡𝑖𝑚𝑒𝑠 = 4.67 𝑡𝑖𝑚𝑒𝑠
𝑅𝑀 528,912 − 𝑅𝑀0 𝑅𝑀 2,720,812 − 𝑅𝑀 63,996
𝑄𝑅 = 𝑄𝑅 =
2019 𝑅𝑀 298,732 𝑅𝑀 151,794
= 1.77 𝑡𝑖𝑚𝑒𝑠 = 17.50 𝑡𝑖𝑚𝑒𝑠

Table 2 (a)

Graph 2 (a)

According to table 2 (a) and graph 2 (a), it shows that FGV Holding Berhad show a
good performance in 3 years which are 2017, 2018 and 2019 when the ratios are 1.16 times,
1.53 times and 1.77 times respectively. This means FGV Holding Berhad has ability to pay
short-term obligations without relying on least liquid assets. Nevertheless, KL Kepong Berhad
shows a good performance in 3 years when the current ratios for 2017 are 2.84 times, 2018 are
4.67 times and 2019 are 17.50 times. This result indicates that KL Kepong Berhad can pay its
short-term obligations.

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 (b) ACTIVITY RATIO

Activity or turnover ratio measure the effectiveness of a firm to manage

their assets or resources. Examples of ratio under activity or turnover
ratio is total assets turnover and fixed assets turnover.

1. TOTAL ASSET TURNOVER (TATO)

Total asset turnover ratio measures the ability of a company to

produce sales efficiently. Formula to calculate total assets turnover
is

𝑆𝑎𝑙𝑒𝑠
𝑇𝐴𝑇𝑂 =
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

2. FIXED ASSET TURNOVER (FATO)

Fixed assets turnover is an efficiency ratio that indicates how well

or efficiently a business uses fixed assets to generate sales. Formula
to calculate fixed assets turnover is

𝑠𝑎𝑙𝑒𝑠
𝐹𝐴𝑇𝑂 =
𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡𝑠

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 1. TOTAL ASSETS TURNOVER (TATO)

𝑆𝑎𝑙𝑒𝑠
𝑇𝐴𝑇𝑂 =
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

Year TATO for FGV HOLDING TATO for KL KEPONG BERHAD

(RM ‘000) BERHAD ( times ) ( times )
2017 𝑅𝑀 419,077 𝑅𝑀 1,554,813
𝑇𝐴𝑇𝑂 = = 0.04 𝑇𝐴𝑇𝑂 = = 0.16
𝑅𝑀 9,699,310 𝑅𝑀 9,473,520
2018 𝑅𝑀 384,586 𝑅𝑀 1,367,519
𝑇𝐴𝑇𝑂 = = 0.04 𝑇𝐴𝑇𝑂 = = 0.15
𝑅𝑀 9,629,386 𝑅𝑀 9,393,199
2019 𝑅𝑀 629,111 𝑅𝑀 1,118,188
𝑇𝐴𝑇𝑂 = = 0.07 𝑇𝐴𝑇𝑂 = = 0.10
𝑅𝑀 9,670,528 𝑅𝑀 10,923,462

Table 3 (a)

Graph 3 (a)

According to table 3 (a) and graph 3 (a), it shows that FGV Holding Behad show a good
performance in year 2019 when the ratio is 0.07 compared both of ratios in years 2017 and
2018 which are 0.04. This means FGV Holding Berhad using all its resources or assets to
generate sales. While, KL Kepong Berhad indicates that 2017 and 2018 are more efficient in
generating sales in using all resources or assets compared to the year 2019. The better or more
effective is the company is using all its resources or assets to generate sales.

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 2. FIXED ASSETS TURNOVER (FATO)

𝑠𝑎𝑙𝑒𝑠
𝐹𝐴𝑇𝑂 =
𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡𝑠
Year FATO for FGV HOLDING FATO for KL KEPONG BERHAD
(RM ‘000) BERHAD ( times ) ( times )
2017 𝑅𝑀 419,077 𝑅𝑀 1,554,813
𝐹𝐴𝑇𝑂 = = 0.05 𝐹𝐴𝑇𝑂 = = 0.18
𝑅𝑀 8,842,941 𝑅𝑀 8,697,599
2018 𝑅𝑀 384,586 𝑅𝑀 1,367,519
𝐹𝐴𝑇𝑂 = = 0.04 𝐹𝐴𝑇𝑂 = = 0.16
𝑅𝑀 8,869,776 𝑅𝑀 8,589,828
2019 𝑅𝑀 629,111 𝑅𝑀 1,118,188
𝐹𝐴𝑇𝑂 = = 0.07 𝐹𝐴𝑇𝑂 = = 0.01
𝑅𝑀 9,141,616 𝑅𝑀 8,202650
Table 4 (a)

Graph 4 (a)

According to table 4 (a) and graph 4 (a), it shows that FGV Holding Berhad good
performance in year 2019 when the ratio is 0.07. However, fixed assets turnover decreased
from 2017 to 2018 when the ratio from 0.05 decreased to 0.04. This means in year 2019 are
more efficient in using fixed assets to generate sales. Nevertheless, KL Kepong Berhad show
a good performance in years 2017 and 2018 when the ratio are 0.18 and 0.16. However, fixed
assets turnover decreased to 0.01 in year 2019. This means in year 2017 and 2018 are more
efficient in using fixed assets to generate sales.

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 (c) LEVERAGE RATIO

Leverage ratio indicate the financial health in terms of the debt level of
a company to bank (Pettinger, 2017). Debt ratio and debt to equity ratio
are the two examples of ratio under leverage ratio.

1. DEBT RATIO (DR)

Debt ratio can be express as a relationship between total assets and

total liabilities of a company (Wilkinson, 2013). Debt ratio also
indicates the percentage of the total assets that is owed to creditors.
Formula to calculate debt ratio is

𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑅 = ( ) 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

2. DEBT TO EQUITY RATIO ( DER )

The debt to equity ratio is used to evaluate a company’s financial

leverage. The debt to equity ratio is calculated by dividing a
company’s total liabilities by its shareholder equity. Formula to
calculate debt to equity ratio is

𝑙𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡

𝐷𝐸𝑅 = ( ) 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

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 1. DEBT RATIO ( DR )

𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐷𝑅 = ( ) 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Year DR for FGV HOLDING BERHAD DR for KL KEPONG BERHAD
(RM ‘000) (%) (%)
𝑅𝑀 2,633,511 𝑅𝑀 2,883,641
2017 𝐷𝑅 = ( ) 𝑥 100 𝐷𝑅 = ( ) 𝑥 100
𝑅𝑀 9,699,310 𝑅𝑀 9,473,520
= 27.15 % = 30.44 %
𝑅𝑀 2,419,234 𝑅𝑀 2,785,629
2018 𝐷𝑅 = ( ) 𝑥 100 𝐷𝑅 = ( ) 𝑥 100
𝑅𝑀 9,629,386 𝑅𝑀 9,393,199
= 25.12 % = 29.66 %
𝑅𝑀 2,540,562 𝑅𝑀 4,932,889
2019 𝐷𝑅 = ( ) 𝑥 100 𝐷𝑅 = ( ) 𝑥 100
𝑅𝑀 9,670,528 𝑅𝑀 10,923,462
= 26.27 % = 45.16 %
Table 5 (a)

Graph 5 (a)

According to table 5 (a) and graph 5 (a), it shows that FGV Holding Berhad’s debt ratio
in 2017 is worse compared to the next two years. This means the higher the debt ratio is the
company risk. While, KL Kepong Berhad it shows that in 2019 is worse compared to the
previous two years. It means in the higher debt ratio in 2019 is the company risk.

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 2. DEBT TO EQUITY RATIO (DER)

𝑙𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡

𝐷𝐸𝑅 = ( ) 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
Year DER for FGV HOLDING DER for KL KEPONG BERHAD
(RM ‘000) BERHAD ( % ) (%)
𝑅𝑀 1,892,452 𝑅𝑀 2,624,137
2017 𝐷𝐸𝑅 = ( ) 𝑥 100 𝐷𝐸𝑅 = ( ) 𝑥 100
𝑅𝑀 7,065,799 𝑅𝑀 6,589,879
= 26.78 % = 39.82 %
𝑅𝑀 1,922,124 𝑅𝑀 2,624,600
2018 𝐷𝐸𝑅 = ( ) 𝑥 100 𝐷𝐸𝑅 = ( ) 𝑥 100
𝑅𝑀 7,210,152 𝑅𝑀 6,607,570
= 26.66 % = 39.72 %
𝑅𝑀 2,241,830 𝑅𝑀 4,781,095
2019 𝐷𝐸𝑅 = ( ) 𝑥 100 𝐷𝐸𝑅 = ( ) 𝑥 100
𝑅𝑀 7,129,966 𝑅𝑀 5,990,573
= 31.44 % = 79.81 %
Table 6 (a)

Graph 6 (a)

According to table 6 (a) and graph 6 (a), it shows that FGV Holding Berhad debt to
equity ratio in 2019 is worse compared to the previous two years. This means the higher the
debt to equity ratio is the company risk. While, KL Kepong Berhad it shows that in 2019 is
worse compared to the previous two years. It means in the higher debt ratio in 2019 is the
company risk.

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 (d) PROFITABILITY RATIO

Profitability ratios measured the ability of a company utilizes its assets

well or not to generate profit relative to revenue, assets, operating costs
and shareholder’s equity during a specific time period (Profitability
Ratios Definition, 2019). Return on assets and return on equity are two
examples ratio under profitability ratio.

1. RETURN ON ASSETS (ROA)

Return on assets ratio is a profitability ratio that measures net income

produced by total assets during a time period (Return on Assets
Ratio,n,d,). Formula to calculate return on assets ratio is

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
𝑅𝑂𝐴 = ( ) 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

2. RETURN ON EQUITY (ROE)

Return on equity is considered a measure of how effectively

management is using a company’s assets to create profits. ROE is
measure of financial performance calculated by dividing net income
by shareholders’ equity. Formula to calculate return on equity ratio
is

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
𝑅𝑂𝐸 = ( ) 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦

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 1. RETURN ON ASSETS (ROA)

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
𝑅𝑂𝐴 = ( ) 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Year ROA for FGV HOLDING ROA for KL KEPONG BERHAD
(RM ‘000) BERHAD ( % ) (%)
𝑅𝑀 120,769 𝑅𝑀 665,242
2017 𝑅𝑂𝐴 = ( ) 𝑥 100 𝑅𝑂𝐴 = ( ) 𝑥 100
𝑅𝑀 9,699,310 𝑅𝑀 9,473,520
= 1.25 % = 7.02 %
𝑅𝑀 143,954 𝑅𝑀 510,991
2018 𝑅𝑂𝐴 = ( ) 𝑥 100 𝑅𝑂𝐴 = ( ) 𝑥 100
𝑅𝑀 9,629,386 𝑅𝑀 9,393,199
= 1.49 % = 5.44 %
𝑅𝑀 80,094 𝑅𝑀 403,371
2019 𝑅𝑂𝐴 = ( ) 𝑥 100 𝑅𝑂𝐴 = ( ) 𝑥 100
𝑅𝑀 9,670,528 𝑅𝑀 10,923,462
= 0.83 % = 3.69 %
Table 7 (a)

Graph 7 (a)

According to table 7 (a) and graph 7 (a). it shows that FGV Holding Berhad show a
good performance in 2018 when the return on assets is 1.49%. This means more effective is
the company in generating net profit using total assets. Nevertheless, KL Kepong Berhad shows
a good performance in 2017 when the return on assets is 7.02% compared to the next two years.
It means more effective is the company in generating net profit using total assets.

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 2. RETURN ON EQUITY (ROE)

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
𝑅𝑂𝐸 = ( ) 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
Year ROE for FGV HOLDING ROE for KL KEPONG BERHAD
(RM ‘000) BERHAD ( % ) (%)
𝑅𝑀 120,769 𝑅𝑀 665,242
2017 𝑅𝑂𝐸 = ( ) 𝑥 100 𝑅𝑂𝐸 = ( ) 𝑥 100
𝑅𝑀 7,065,799 𝑅𝑀 6,589,879
= 1.71 % = 10.09 %
𝑅𝑀 143,954 𝑅𝑀 510,991
2018 𝑅𝑂𝐸 = ( ) 𝑥 100 𝑅𝑂𝐸 = ( ) 𝑥 100
𝑅𝑀 7,210,152 𝑅𝑀 6,607,570
= 2.00 % = 7.73 %
𝑅𝑀 80,094 𝑅𝑀 403,371
2019 𝑅𝑂𝐸 = ( ) 𝑥 100 𝑅𝑂𝐸 = ( ) 𝑥 100
𝑅𝑀 7,129,966 𝑅𝑀 5,990,573
= 1.12 % = 6.73 %
Table 8 (a)

Graph 8 (a)

According to table 8 (a) and graph 8 (a), it shows that FGV Holding Berhad show a
good performance in 2017 when the return on equity is 1.71%. The higher of return on equity,
the better or more effective is the company in generating net profit using total equity. This
means the company ability in generating net profits to its shareholders. Nevertheless, KL
Kepong Berhad shows a good performance in 2017 when the return on equity is 10.09%. The
higher of return on equity, the better or more effective is the company in generating net profit
using total equity. This means the company ability in generating net profits to its shareholders.

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 2.3) CROSS-SECTIONAL ANALYSIS

FGV HOLDING BERHAD and KL KEPONG BERHAD for the year 2019.

RATIO FGV KL INTERPRETATION

HOLDING KEPONG
BERHAD BERHAD
Current Ratio 1.77 4.99 Liquidity
KL Kepong Berhad has the greater
current and quick ratio compared to
FGV. KL Kepong is more liquid
Quick Ratio 1.77 17.50 compared to the FGV. Both ratios
indicate that KL Kepong has more
ability is paying its short-term
obligation compared to FGV.

Total Assets Turnover 0.07 0.16 Activity

KL Kepong Berhad has the greater total
assets turnover compared to FGV. Its
more effective is the company is using
all its resources or assets to generate
Fixed Asset Turnover 0.07 0.18 sales. KL Kepong Berhad also has the
greater fixed assets turnover compared
to FGV. The better or more effective is
the company in using fixed assets to
generate sales.

Debt Ratio 27.15 45.16 Leverage

Debt ratio of KL Kepong Berhad is
worse compared to FGV. Higher debt to
total assets shows that KL Kepong
Berhad uses higher level of debt to
finance its business compared to FGV.
Debt to Equity Ratio 31.44 79.81
Both of ratios indicate that KL Kepong

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 Berhad are the higher level compared to
FGV.
Return on Assets 1.49 7.02 Profitability
Return on assets and equity for KL
Kepong Berhad is greater than FGV

Return on Equity 1.71 10.09 indicates that KL Kepong Berhad has

the higher ability to obtain profit from
the given level of assets and equity
compared to FGV.

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3. CONCLUSION
In conclusion, trend analysis used to evaluate a firm’s performance over time while
cross-sectional area used to compare different firms at the same point in time. Higher ratios in
liquidity are better as KL Kepong Berhad represent higher ability to pay compared to FGV
Holding Berhad, which are the less liquid. It is because liquidity ratio to measure the ability of
a company to pay its short-term obligations using current assets.

Next, KL Kepong Berhad show a good performance in 2017 while FGV Holding
Berhad show a good performance in 2019 of total assets turnover. The both of company
indicates are more efficient in generating sales in using all resources or assets. This is because
activity ratio are to measure the firms ability to manage all of its resources to generate sales.

Then, Both of KL Kepong Berhad and FGV Holding Berhad shows the low risk in
2018. Thus, the lower the debt ratio, it is better for the company. It is because debt ratio to
measure a company’s level of debts and its ability to fulfil and pay for financial obligations.

Last but not least, KL Kepong Berhad are more profitability in 2017 while FGV
Holding Berhad are more profitability in 2018. This means that both of company has the higher
ability to obtain profit from the given level of assets on that year. It is also means more effective
is the company in generating net profit using total assets.

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4. RECOMMENDATION
From the analysis, FGV is not efficient to pay its short-term obligations using current
assets compared to KL Kepong Berhad. FGV Holding Berhad should paying off liabilities to
improves the liquidity ratio, as well as cutting back on short-term overhead expenses such as
rent, labor and marketing.

Next, FGV Holding Berhad shows that the assets turnover ratio lower than KL Kepong
Berhad. In my opinion, FGV Holding Berhad must to focus on increasing revenue. The assets
might be properly utilized, but the sales could be slow resulting in a low assets turnover ratio.
FGV Holding Berhad needs to increase its sales by more promotions and by quick movements
of the finished goods.

The high value of the debt to equity ratio does not necessarily indicate a high level of
bankruptcy risk for KL Kepong Berhad in the future. KL Kepong Berhad can take to reduce its
debt to equity ratio is that of increasing sales revenues and hopefully profits. This can be
achieved by raising prices, increasing sales or reducing costs. The extra cash generated can
then be used to pay off existing debt.

Return on equity ratio shows the huge different between FGV Holding Berhad and KL
Kepong Berhad which is FGV Holding Berhad has the lower ratio compared to KL Kepong
Berhad. To improve return on equity, the company must increase profit margins such as raise
the price of the product, reduce the company’s labor costs and reduce operating expense.

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 5. REFERENCES

1. https://www.malaysiastock.biz/Listed-Companies.aspx

2. http://www.bursamalaysia.com

3. http://www.fgvholdings.com

4.https://www.klk.com.my/

5. https://www.malaysiastock.biz/Corporate-Infomation.aspx?securityCode=5222

6. https://www.malaysiastock.biz/Corporate-Infomation.aspx?securityCode=2445

7.https://www.malaysiastock.biz/GetReport.aspx?file=AR/2018/4/30/5222%20-
%201301326778635.pdf&name=FGV%20-%20Annual%20Report%20Part%202.pdf

8.https://www.malaysiastock.biz/GetReport.aspx?file=AR/2019/4/29/5222%20-
%201032054010940.pdf&name=FGV%20-
%20Annual%20Integrated%20Report%202018.pdf

9.https://www.malaysiastock.biz/GetReport.aspx?file=AR/2020/4/28/5222%20-
%201252361328404.pdf&name=FGV%20Audited%20Financial%20Statements%202019.pd
f

10.https://www.malaysiastock.biz/GetReport.aspx?file=AR/2017/12/29/2445%20-
%201856534559139.pdf&name=KLK%20-
%202017%20Annual%20Report%20(Part%203).pdf

11.https://www.malaysiastock.biz/GetReport.aspx?file=AR/2018/12/31/2445%20-
%201725449780192.pdf&name=KLK%20-
%202018%20Annual%20Report%20(PART%202).pdf

12.https://www.malaysiastock.biz/GetReport.aspx?file=AR/2019/12/31/2445%20-
%201246332178728.pdf&name=KLK%20-
%202019%20Annual%20Report%20(PART%202).pdf

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 6. APPENDICES

FGV HOLDING BERHAD 2017

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27 | P a g e
FGV HOLDING BERHAD 2018

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32 | P a g e
33 | P a g e
FGV HOLDING BERHAD 2019

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KUALA LUMPUR KEPONG BERHAD 2017

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40 | P a g e
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KUALA LUMPUR KEPONG BERHAD 2018

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43 | P a g e
44 | P a g e
KUALA LUMPUR KEPONG BERHAD 2019

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