bfe (cw)

SHARMILA PARTHIBANUOG ID : 0003820155

Introduction

“The purpose of this assignment is to recommendation the shareholder of SP Setia

Bhd named Mr. Thomson whether to continue financing in SP Setia Bhd or switch to

Glomac Bhd. This assignment is established on publicly available information as at

March 2013” (J. Kamile, 2012). “This assignment holds companies' cash flow statement,

income statement, and position statements”. “Furthermore, holds explore about the

business structure of the companies, components figuring out interest, marking

methodologies, legislature regulation, bookkeeping degrees, and association of both

companies' presentation” (C. Xie, 2013).

Answer for question (a)

“Monopolistic competition is a market structure in which a big number of small

seller sell close substitute products” (V. Devige & M. Karunagaran 2007., pg 176). In this

market, the goods produced and sold are different, but they close substitutes for each

other. “Monopolistic competition is a combination of perfect competition and monopoly”.

(V. Devige & M. Karunagaran 2007., pg 176).

According to (R. Taman, 2012., pg 112) S P Setia Bhd and Glomac Bhd is

monopolistic rivalry. “In this monopolistic rivalry, the business sector consist of several

purchasers and dealers who exchange over a level of costs as opposed to a solitary

business cost is called monopolistic rivalry” (R. Desish, 2012., pg 12-15). Other than that,

“a reach of value happens since sellers can dispersed their offers to purchasers” (Y.

David, 2013). “Sellers attempt to improve contrast by utilizing client portions, and

nevertheless cost, openly utilizes marking, promoting, and private offering to distinct

their offers” (Y. David, 2013).

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“In this business sector, the products managed and sold are diverse, yet they are close

substitutes for one another and for the sellers is raised rivalry yet for purchasers there are

more decisions” (T. Lim, 2012). “There are few suggestions of monopolistic rivalry

(T.K.Mannormani & P.Khanna, 2009, pg, 6)”. Moreover, “in monopolistic rivalry, the

firm produce products which are divided that is they are not same this furnishes mixture

for customer which will increase buyer fulfilment”. “Existence of many firms

contributing the business sector means the single company's offer of the business sector is

modest and there will limit control over the value of the harvest sold” (T.K.Mannormani

& P.Khanna, 2009, pg, 8).

“Elasticity of passage and passageway of firms in are not straightforward payable to

the item are separation” (T. Lim, 2012., pg 41-42). The unimpeded passage and retreat

includes that financial benefit in monopolistic rivalry is standard. “The interest bend is

descending slanting”. In this manner, it is honourably cost elastics (Y. David, 2013., pg

56-57).

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Answer for question (b) (i)

“It brings “the rule of interest states that the higher the value of an item, the more

level is the amount commanded for that item and this is brought as” “Contraction

popular”, “the bring down the value of an item, the higher is the amount commanded,

ceteris paribus” (T.K. Mannormani, & P.Khanna, 2009., pg 6 ) . This is transported as

“Extension sought after”. “However the variables that influence the interest for land are

the same as those that influence the interest for the most part different items, land

businesses are generally neighbourhood” “on account of the normal for fixed nature”

(Hasnid, & K.Geraid, 2004., pg 11-12).

“In graceful of this, neighbouring interest elements will effect in business. There are

few data that can affect the supply and interest of land” (D. Samid, 2012., pg 31). First

and leading is people it have to be evident that if the citizenry expansion so will the

interest for lodging. “Moreover, the amount of individuals, an additional major element is

the demographics of the populations present”. The term demographics suggests the

abilities of the populations present for example “family estimate, age dissemination, and

people developments” (D. Samid, 2012).

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Answer for question (b) (ii)

“Branding is the programme controlled in manufacture an excellent given name and

in addition amount for a property in the purchaser mentality” (Y. Ramif, 2012).

“Furthermore, principally all through the promoting fights near a solid start”. “Marking

additionally plans to start the paramount and separated participation in the business sector

with the proposition of draws in and holds reliable buyer” (Y. Ramif, 2012). For instance,

S P Setia and Glomac is progresses accommodation and gorgeous lands (real, 2013).

Besides, “concerned in land development, land organizations, structure

development, and park administration”(H. Raid, 2013). S P Setia is cabinets of up to date

expectancy for daily comforts. “A moderniser of discernment living, give agreeable-

sounding and quiet dominions with gated and ensured supervision which is a preference

to reach home as well”. “This both company's reason for existing is to make a middle of

consideration their buyer through beautiful marking in property” (H.Raid, 2013).

“Market division is drew as an improvement in which buyers are divided dependent

on partition groups dependent upon reported likes, detests and provisions” (H. Raid,

2013). According (marketing, 2013) “the most extreme deals, the business can target its

1deals on every specific assembly of buyer”. Furthermore, “this defend to decreasing the

risk of selecting where, when, how, and to whom an inspiration, analyze, or assortment

will be showcased” (P. Samid, 2013). For outline, “both SP Setia and Glomac Bhd

improving and manufacturing mixed bag lands for the client”. This provides the buyer the

choice to finish their requirements from selection suitable possessions to them.

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Answer for question (b) (iii)

According to (Riad, 2011) “S P Setia has higher their Innovative space organising

and green living is brought to new figures with imposing green and open space and

Parklands are made available prompt behind where nature stroll and instructive exercises

could be allowed”. “It's the ideal venue for family silly buffoonery, unwinding with

companions and hosting humble occasions, and consequently S P Setia Bhd was arranged

up the NO 1 artist in Malaysia at The Edge Malaysia Top Property Developers Awards

2012 for the seventh time” (A. Damen, 2012).

Other than that, Glomac (T. Lee, 2013) “for example the 6-8 storey business focus

were familiar with Glomac's growths for example Glomac Business Centre, Kelana

Business Centre and Kelana Centre Point finish with lifts and an underground stopping

range” (Business, 2012). “With admiration to towering-end private infrastructures,

Glomac gladly conveyed a first-of-its-caring gated and watched group in Petaling Jaya”.

“In terms of development S P Setia Foundation, a philanthropy trust made by S P Setia

Berhad welcomes fiscally poor and educationally meriting understudies to petition its

grants to follow full time certificate and progress recognition programmes at College

Tunku Abdul Rahman and degree programme at University Tunku Abdul Rahman” (S P

Setia. Com, 2013).

Moreover, “Glomac Bhd has improved abroad contract advance plans where

Malaysians will have a nearby contract advance office in Malaysian Ringgit for buys of

lands abroad for example in London” (W.Jaid, 2012).

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Answer for question (b) (iv)

“In Malaysia, Bank Negara Malaysia (BNM) or the Central Bank of Malaysia is

dependable in executing the legislature's financial arrangement”. Bank Negara Malaysia

is answerable for regulatory the business banks in Malaysia. “These rules may be cited as

the Housing Development (Control and Licensing) Regulations 1989 and shall come into

strength on the 1st April 1989 (Bank Negara Malaysia, 2013)”.

The Housing Designers “(Control and Licensing)” Regulations 1989. “Regulation

which in the abovementioned Regulations are implied as the "essential Regulations", are

corrected in statement 13 of Schedule G by embedding’s after that proviso this proviso

13A”. “Confinement against change of colour junction” (M. K Nathan, 2012).

Housing Development “Control and Licensing)” Act 1966. “A provision for the

reinstatement of a lodging planner's licence may be made when the date of expiry and the

Organizer may concede a reinstatement of the licence with or without joining conditions

thereto or decline to concede a reinstatement of such licence” (P. Kai, 2013).

“If the registration of the applicant's architect or engineer has been cancelled and has

not been restored under the Architects Act 1967 [Act 117]” or “the Registration of

Engineers Act 1967 [Act 138] at the time the application is made”.

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Answer for question (c)

“With a specific end goal to perform well, each accumulation or firm may as well

have certain destinations or plans to assurance the firm is composed and heading off to

the right way”. “For every S P Setia Bhd and Glomac Bhd 2012 Annual Reports, could be

basically stated that both land industry have lifelong-goals where it is expected destiny

(Annual report, 2013)”.

SP Setia Bhd

“The past objectives of this company was targets were to give teenagers between the

really long time of 5 and 12 with healthful exercises that attention inventive statement,

environmental mindfulness and neighbourhood life” (I. Panisah,2013). “Since the day of

stronghold the Company's for the most part goal was to take lifelong-worth to its

shareholders” (Star, 2012). “The company's successes and achievement were the outcome

of teamwork and innovativeness into their society”.

Moreover, “time to come targets and achievement the recompense bundles are

structured to incentivize and hearten innovativeness and improvement fitting for a

property, immoral and development company”. “Separated from that, S P Setia

additionally has future destination to attain RM5.5b deals in monetary year” 2013 (P. Kai,

2013).

Glomac Bhd

“The past target of the company was to get Gross Development Value of

RM2.6billion, the Group is heading off to be to a great degree gainful”. “In the past

Glomac's leader township infrastructure in Sungai Buloh was constrained on to produce

reasonable bargains of RM10 to RM12 million for every month (star, 2013)”. The

company's arrangement is to help improve the personal satisfaction by securing a better

place for all too live, work and play.

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“The company needs to be recognised by their clients, shareholders and legislatures

as a planet-class property planner. Also that, the company looks after exclusive

expectations of recruitment, advancement and maintenance of workers in the working

environment, for fate improvement of the company (Edge, 2012)”.

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Answer for question (d)

Glomac Bhd and S P Setia Berhad “an equity instrument is any contract that

evidences a residual interest in the assets of an entity after deducting all of its liabilities

(Annual report 2012)”. Equity instruments issued by the Group and the Company are

recognised at the incomes received, net of direct issue costs. Regular shares are equity

instruments. “Regular shares are recorded at the takings received, net of direct

attributable transactions costs”. Regular shares are classified as equity” (V. Pakir, 2013).

“Dividends on ordinary shares are recognised in equity in the period in which they are

declared”.

Both company which is “S P Setia and Glomac get and utilization its finances from

working exercises, contributing actions, and financing actions”. “There are different

sources and utilizations of trusts for the banks and a few samples of the aforementioned

sources and uses have been said beneath” (F. Ealit, 2012).

SP Setia Bhd

“The company runs under obligation financing on the grounds that the sum liabilities

is more than the sum values”. Below managing actions, the company gets cash from

rental salary and operation its cash for decline of lands. “Under contributing actions, it

gets cash from premium appropriated and rental accepted while utilizes the cash for buy

of lands.” “Under financing exercises, the company gets cash from premium while

operates the cash for yields to shareholders”. (B. Asing, 2012)

“The monies that the company utilized for certain purposes could improve its

exhibition”. For instance, “SP Setia Bhd has utilized some of its cash for its establishment

to. The company has opened its limbs in some Asian nations”. Moreover, “SP Setia has

Dividend Reinvestment Plan (DRP) where shareholders could choose whether to

acknowledge payments or reinvest”. By achievement this, SP Setia Bhd is prepared to

addition more cash and give more payments in intention (SP Setia Annual Report 2012).

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Glomac Bhd

“The company runs under value financing in light of the fact that the aggregate

liabilities is less than sum values”. “The trusts”. “Under managing actions, the company

gets cash from rental salary and utilization its cash for devaluation of lands”. Below

subsidising actions, it gets cash from premium accepted (R. Takai, 2013). While utilizes

the cash for buy of lands. “Under financing exercises, the company gets cash from

Drawdown of term advances and connecting credits for reimbursement of bonds”. “The

monies that the company utilized for certain purposes could upgrade its exhibition”.

“Case in point, Glomac Bhd has utilized some of its cash for its establishment to (Glomac

Annual Report 2012)”.

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According to table 1.1 in appendix

S P Setia operating profit margin has increased in 2012 than the margin in 2013 by

approximately 3.82%. This increase is mainly due to expansion of net income, good

financial controlling and potential efficiently in business during 2012. The greater margin

shows that the S P Setia is more systematic cost management. REC in 2012 is less

28.24% than REC in 2013. This indicates that 2013 has a great system for transforming

investor capital into profits than 2012. Earnings per share of S P Setia higher RM 0.04

million in 2012 than 2013. S P Setia price earnings ratio has increased 3.73 in 2013 which

suggests that investors may be looking favorably at S P Setia. Dividend yield of S P Setia

in 2012 is higher than 2013.

Dividend coverage ratio in 2013 is longer than in 2012. It indicates the number of

times an association is capable of paying disbursements to shareholders from the profits

earned. Current ratio of S P Setia has increased in 2013 if compare to 2012 which means

that the company has ability pay its liabilities. Gearing is higher in 2013 than in 2012,

0.21%. Interest coverage ratio of 2012 is higher 3.68% than 2011. It indicates that the

capacity of S P Setia to pay its interest obligations longer in 2012 than 2013.

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According to table 1.2 in appendix

Glomac operating profit margin has decreased in 2013 than the margin in 2012 by

approximately 2.14%. This decrease is mainly due to growth of net revenue, good cost

control and low productivity in company during 2013. This low margin reflects that the

Glomac is less efficient cost management. REC in 2013 is less 3.44% than REC in 2012.

This indicates that 2012 has a great system for transforming investor capital into profits

than 2013. Earnings per share of Glomac higher RM 4.17 in 2013 than 2012. Glomac

price earnings ratio has decreased 0.79 in 2013 which suggests that investors may be

looking less favorably at Glomac. Dividend yield of Glomac in 2012 is higher than 2013.

It shows that dividend paid by Glomac in 2012, RM 0.93 higher than in 2013.

Dividend coverage ratio in 2013 is longer than in 2012. It shows the number of times

an association is capable of paying disbursements to shareholders from the profits earned.

Current ratio of Glomac has increased in 2013 if compare to 2012 which means that the

company has ability pay its liabilities. Gearing is higher in 2013 than in 2012, 0.03%.

Interest coverage ratio of 2012 is less 7.61% than 2013. It indicates that the capacity of

Glomac to pay its interest obligations longer in 2012 than 2013.

Answer for question (e)

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In 2008, “the Malaysian economy developed emphatically, beating estimates”. Open

consumption builds more than needed to the finish of the year. “Open and private

company’s financings were towering (Annual Report 2008)”. “As per the Malaysian

Department of Statistics, the expansion rate or Consumer Price Index (CPI) of Malaysia

in 2008 expanded by 1.7% to 104.9 contrasted and that of 102.1 in 2008 (statistics,

2008)”. “Depending on if the expansion rate is elevated, hauling part could some way or

another addition and lose”. “Through expansion, costs of products and utilities will be

higher and consequently the benefits will be higher simultaneously” (Annual Report

2008)”.

“Because of this, S P Setia bhd and Glomac bhd shareholders will accept higher

profits”. “In any case, the worth of cash will drop and along these lines when property

accepted cash owed to them by clients, the legitimate worth of the cash will be less”.

“Together property could additionally lose their salaried labourers as their pay rates were

of fewer qualities (statistics, 2008)’.

“Malaysian unemployment rate in December 2008 was 2.9% where 259,000

individuals were unemployed (Annual Report 2008)”. This rate is not too very tall and

could be thought about under control. “Notwithstanding, if the unemployment rate is

heightened, the income that is gotten by legislature through earnings duties will drop

(bartering, 2008)”. “This will create the organization to control the administration's

consumptions which could decrease advancement actions of the economy”. Reasonable

budgetary development and flat yield will hasten further sorrow. “Lodging area will be

influenced as there will be fewer individuals included in the purchasing of the houses”

(Annual Report 2008)”.

“However, S P Setia Bhd and Glomac Bhd have their branches in other countries as

well such as in Singapore and India (blr 2008)”. “Furthermore, the foreign economic

climates are also necessary for the hauling to operate well”.

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Conclusion

“Every one of the discoveries of SP Setia Berhad and Glomac Berhad have been

stated and illustrated as one with the proportions figuring’s and fiscal explanations of

both company’s so as to support in choice making for contribution” (D. Menaid, 2013).

“S P Setia and Glomac have its particular systems of marking, business division and

feature advancement”. “Both company’s gained finances from different sources and

utilized those stores for different expenditures particularly for shareholder's share and the

advancement of the company”. “There are additionally some macro-financial elements

that will influence both company performance as elucidated in this report (Annual Report

2012)”. “In spite of the fact that both company have very nearly the same pros and cons,

there is one exclusive company that might be thought about the best as contrasted with

the other to invest into”.

Recommendation

“Based on the research that have been done on SP Setia Bhd and Glomac Bhd using

2012 and 2013 information, can be concluded that Glomac is a better company to invest

in as its return on capital employed, earnings per ordinary share, current price or earnings

ratio, dividend yield, and current ratio are higher than SP Setia (S P Setia. Com, 2012)”.

The dividend professed by Glomac to its shareholders was higher than that of SP Setia.

“Even though the dividend cover is lower as compared to SP Setia, Glomac has higher

earnings per ordinary share as compared to SP Setia which means that Glomac has high

profits which will be more than enough to cover the dividend to shareholders”.

“Therefore, it is recommended to Mr. Thamin to change investing in Glomac” (Glomac,

2013).

(2841 Words)

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Reference

Kamile,J. (2012). Introduction . Glomac BHD. 2 (3), p3.

Xie, C. (2013). Introduction to S P Setia. S P Setia DHD. 4 (6), p8.

Devige, V & Karunagaran, M. (2007). What is monopolistic competition.Monopolistic competition. 11 (6), p176.

Taman, R. (2012). Increasing Returns, Monopolistic Competition, and International Trade. Monopolistic Returns, and International Trade. 12 (5), p12.

Desish, R. (2012). Definition Monopolistic Competition. Monopolistic Competition. 15 (7), p12-15.

Devige, V & Karunagaran, M. (2007). What is monopolistic competition.Monopolistic competition. 11 (6), p176.

Taman, R. (2012). Definition Monopolistic Competition. Excess Capacity in Monopolistic Competition. 5 (9), p112.

David, Y. (2013). Implication . Two Theories of Monopoly and Competition: Implication. 16 (8), p9-15.

Manormani, T K & Khanna, P. (2009). What is implication of Glomac BHD.Glomac BHD. 7 (2), p6.

Manormani, T K & Khanna, P. (2009). What is implication of Glomac BHD.Glomac BHD. 7 (2), p8.

Lim, T. (2012). What is implication of S P SETIA BHD. Fundamental Analysis for S P SETIA BERHAD. 19 (11), p41-42.

Hasnid, r Geraid, K. (2004). Factors of demand and sales. Glomac BHD. 7 (1), p11-12.

Samid, D. (2012). Factors of demand and sales. S P Setia DHD. 13 (15), p31.

Ramif, Y. (2012). Branding of product. Glomac BHD. 12 (2), p90-92.

Raid, H. (2013). Branding of product of market segmentation. S P Setia DHD. 5 (7), p55.

Damen, A. (2012). Innovation of development. Glomac BHD. 6 (9), p64.

Lee, T. (2013). Innovation and new product of development. Glomac BHD. 5 (7), p23-32.

Jaid, W. (2012). what is RDN. S P Setia DHD. 21 (5), p11-19.

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Nathan, M K. (2012). Regulations of goverment. S P Setia DHD. 4 (1), p9-11.

Kai, P. (2013). Regulations of goverment i price. Glomac BHD. 14 (2), p33-39.

Panisha, I. (2013). what is objective near future. Glomac BHD. 31 (18), p14-19.

Pakir, V. (2012). Equity and Debts, long or short term. S P Setia DHD. 17 (8), p9-19.

Ealir, F. (2012). Equity and Debts, long or short term. Glomac BHD. 18 (14), p87-89.

Asiny, B. (2012). Effect of company for future performance. Glomac BHD. 9 (3), p19-28.

Lizza, P. (2012). Impact of micro-economic. S P Setia Annual Report. 20 (9), p68-76.

Menaid, D. (2012). Conclusion of the company. Annual Report. 17 (3), p6-14.

Panan, T. (2013). S P Setia.com. Available: http://topdevelopers2012.iproperty.com.my/developer/s-p-setia-berhad-group. Last accessed 12th March 2014.

Runners, T. (2012). Star.com. Available: http://www.thestar.com.my/. Last accessed 17th March 2014.

ACCOUNTING RATIO

RATIOS S P SETIA DHD GLOMAC BHD

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Operating Profit Margin

=

567,505,000

2,526,595,000

= 22.46 %

161,067,448

652,406,076

= 24.69%

Return on Capital Employed

=

567,505,000

(9,353,304,000 -2,950,244,000)

= 88.63%

161,067,448

(1,353,135,907 -323,298,466)

= 15.64%

Earnings Per Ordinary Share

=

387628000

1832738000

= RM 0.21

119,592,127

341992229

= RM 3.50

Current Price/Earnings Ratio

=

0.115

0.205

=0.56:1

0.800

0.1478

=5.41:1

Dividend Yield = 3.27

0.115

=RM28.43

0.985

0.800

=RM1.23

Dividend Cover =0.205

3.27

=RM 0.06

0.1478

0.985

=RM 0.15

Current Ratio

=

3,980,441,000

2,950,244,000

=1.35:1

722,322,728

323,298,466

=2.23:1

Gearing = 2363940000

4039120000

=0.59%

331,422,038

698,415,403

= 0.47%

Interest Payment Cover = 567,505,000

79,592,000

161,067,448

15,908,049

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=7.13% = 10.12%

Note: All the values from the ‘Accounting Ratio’ table have been taken from SP Setia

Annual Report 2012 and Glomac Annual Report 2012.

ACCOUNTING RATIO

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RATIOS S P SETIA DHD GLOMAC BHD

Operating Profit Margin

=

570,343,000

3,060,528,000

= 18.64 %

153,520,719

680,933,511

= 22.55%

Return on Capital Employed

=

570,343,000

(12,441,762,000-2,997,030,000)

= 60.39%

153,520,719

(1,596,153,770-338,114,807)

= 12.20%

Earnings Per Ordinary Share

=

419,287

2,458,712

= RM 0.17

108,257,310

14,118,509

= RM 7.67

Current Price/Earnings Ratio

=

0.50

108,257,310

=4.62:1

18.0

419,287

=4.29:1

Dividend Yield = 0.13

18.0

=RM 7.22

0.148

0.50

=RM 0.30

Dividend Cover =419,287

254,477

=RM 1.65

108,257,310

28,535,156

=RM 3.79

Current Ratio

=

6,110,736,000

2,997,030,000

=2.04:1

940,756,537

338,114,809

=2.78:1

Gearing = 3,920,035,000

5,524,697,000

=0.71%

419,848,891

838,190,072

= 0.50%

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Interest Payment Cover = 570,343,000

157,101,000

=3.63%

153,520,719

21,286,375

= 2.51%

Note: All the values from the ‘Accounting Ratio’ table have been taken from SP Setia

Annual Report 2013 and Glomac Annual Report 2013.

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bfe (cw)

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