Business Analysis Project

This project analyzes the financial health and performance of Eversendai in comparison to its competitors. It examines profitability ratios, liquidity ratios, leverage ratios, and efficiency ratios. The project also provides recommendations for success in the competitive business environment.

Business Analysis Project

TABLE OF CONTENTS
1. INTRODUCTION.......................................................................................................................3
1.1 Purpose..................................................................................................................................3
1.2 Case analysis..........................................................................................................................3
1.3 Background of the organization.............................................................................................3
1.4 Key issues..............................................................................................................................3
1.5 Rationale behind the selection of company...........................................................................4
2.1 RATIO ANALYSIS..................................................................................................................4
2.1.1 Profitability ratio analysis...................................................................................................4
2.1.2 Liquidity ratio analysis.......................................................................................................7
2.1.3 Financial health: leverage ratio...........................................................................................9
2.1.4 Efficiency ratios................................................................................................................10
3. STRATEGIC ANALYSIS.........................................................................................................11
3.2 Competitive analysis............................................................................................................12
3.2.1 Porter five force analysis..................................................................................................12
3.2.2 New forces in construction industry.................................................................................14
3.3 Operations and organisation analysis..................................................................................14
3.4 Key success factors:.............................................................................................................14
3.5 Operations visibility:...........................................................................................................14
Balance score card.....................................................................................................................15
5.0 Limitation of financial models and conventional analysis..................................................16
5.2 Limitation of financial models in analysing the performance.............................................17
6.0 Conclusion...........................................................................................................................17
6.1 Recommendation.................................................................................................................17
REFERENCES..............................................................................................................................18

1. INTRODUCTION
1.1 Purpose
The main purpose behind carry out such study is to shed light on the financial health and
performance of Eversendai in against to the competitors like Muhibbah & Sunway. Besides this,
it will also provide deeper insight about the key issues and condition of external market. Further,
report will also depict about the manner in which financial models and conventions helps in
doing suitable analysis of business. It will also include the details about recommendation through
which Eversendai can attain success in the competitive business environment.
1.2 Case analysis
Eversendai is one of the leading organizations that is operated in the construction
industry of Malaysia. Portfolio of the company includes wide range of services such as long span
and roof structure, high rise building, plant & construction, oil & gas etc (Eversendai Malaysia,
2017). Further, Eversendai has expertise in including innovation aspect in construction project
through including composting infrastructure.
1.3 Background of the organization
Eversenadi is one of the leading business organizations of Malaysia which is known for
turnkey projects, oil & gas upstream & downstream as well as infrastructure and composite
structures. Company has employed 15000 people and having attractive portfolio of more than
300 accomplished projects over 14 different countries of the world. With the motive to maximize
the level of productivity and profitability Eversendai makes focus on safety, quality and client
satisfaction to a great extent (Eversendai Malaysia, 2017).
1.4 Key issues
To assess the issues and measure the level of competition following analysis has been
done:
Basis of difference Eversendai ( main
company)
Muhibbah (rival firm) Sunway group
Compliance with safety High Follow to the moderate Moderate

level
Adherence to quality High Moderate Moderate
Focus The main focus of the
organization is to meet
the client’s requirement
to a great extent.
It lays emphasis on the
maximization of
profitability.
Sunway group makes
focus on increasing the
level of profit margin
rather than client’s
satisfaction.
1.5 Rationale behind the selection of company
The main reasons behind the selection of Eversendai are that it was operated in the
construction industry of Malaysia from several years. Besides this, company is recognized for
the quality and safe projects offered by it to the customers. Hence, by analyzing the financials of
latest accounting years scholar would become able to present the fair solution of issue.
2.1 RATIO ANALYSIS
2.1.1 Profitability ratio analysis
Return on invested capital (in %)
Particulars 2012 2013 2014 2015 2016
Return on Invested Capital
%
Eversendai 13.93 4.12 4.03 4.43 -13.26
Muhibbah -10.73 9.41 6.99 5.74 8.47
Sunway 6.06 20.14 8.85 7.41 5.25

2012 2013 2014 2015 2016
-15
-10
-5
0
5
10
15
20
25
Graph 3: Return on Invested Capital %
Eversendai
Muhibbah
Sunway
Percentage (%)
Interpretation: Tabular and graphical presentation clearly shows decreasing trend in the
level of Eversendai and Sunway groups ROI from 2012 to 2016. This is not good because it
shows company failed to develop suitable framework or financial policies. On the contrary to
this, Muhibba’s ROI moved from negative trend to the positive one. Thus, it can be presented
that profitability aspect of Eversendai is not good, in the financial year 2016, as compared to the
competitors such as Muhibbah and Sunway. Thus, Eversendai is required to make suitable
modifications in existing strategic framework as per market and competitors trend.
Net profit margin (in %)
Particulars 2012 2013 2014 2015 2016
Net Margin %
Eversendai 11.9 3.38 3.73 3.1 -17.62
Muhibbah -3.55 4.46 4.7 5.33 5.5
Sunway 17.34 7.21 15.47 14.07 16.34

2012 2013 2014 2015 2016
11.9
3.38 3.73 3.1
-17.62
-3.55
4.46 4.7 5.33 5.5
17.34
7.21
15.47 14.07 16.34
Graph 1: Net Margin %
Eversendai Muhibbah Sunway
Interpretation: By doing ratio analysis, it has been assessed that NP margin of
Eversendai declined from 11.9% to negative 17.62%. Thus, it can be presented that business
unit failed to exert effectual control on indirect and other expense level. On the other side, NP
ratio of Muhibbah engineering inclined from -3.55% to 5.5% at the end of 2016. Besides this, net
profit ratio of Sunway group accounts for 16.34% at the end of 2016. Thus, as compared to the
competitors net margin of Eversendai is poor.
Return on assets (in %)
Particulars 2012 2013 2014 2015 2016
Return on Assets %
Eversenda
i 8.38 2.01 1.99 2.37 -9.85
Muhibbah -3.26 3.15 2.82 2.56 2.76
Sunway 4.46 14.84 6.13 5.08 3.37

2012 2013 2014 2015 2016
-15
-10
-5
0
5
10
15
20
Graph 2: Return on Assets %
Eversendai
Muhibbah
Sunway
Percentage (%)
Interpretation: From graphical presentation, it can be depicted that ROA of Eversendai
was -13.26% respectively that is worst for the company. On the other side, from 2012 to 2016,
Muhibbah’s and Sunway’s group was fluctuated. It reflects that, as compared to rival firms,
Eversendai failed to generate suitable return through making use of assets.
2.1.2 Liquidity ratio analysis
Current ratio
Particulars 2012 2013 2014 2015 2016
Current Ratio
Eversendai 1.94 2.17 1.91 1.62 1.26
Muhibbah 0.96 1.02 0.99 1.05 1.09
Sunway 1.24 1.19 1.38 1.21 1.2

2012 2013 2014 2015 2016
0
0.5
1
1.5
2
2.5
Graph 4: Current Ratio
Eversendai
Muhibbah
Sunway
Ratio (CL: CA)
Interpretation: Graphical presentation shows that current ratio of all the selected
companies were fluctuated during the period of 5 years. In the year of 2016, current ratio of
Eversendai, Muhibbah and Sunway group implies for 1.26:1, 1.09:1 & 1.20:1 significantly. It
shows that over the competitors Eversendai has enough current assets for meeting obligations.
However, current ratio performance of the targeted company is less than the ideal ratio such as
2:1 (Babalola and Abiola, 2013). Thus, firm is required to make focus on maintaining current
assets in line with the ideal ratio to strengthen the liquidity position.
Quick ratio
Particulars 2012 2013 2014 2015 2016
Quick ratio
Eversendai 1.65 1.94 1.71 1.48 1.16
Muhibbah 0.86 0.89 0.86 0.91 0.98
Sunway 0.77 0.73 0.87 0.69 0.66

2012 2013 2014 2015 2016
0
0.5
1
1.5
2
2.5
Graph 5: Quick Ratio
Eversendai Muhibbah Sunway
Muhibbah
Sunway
Ratio (CL: CA)
Interpretation: From financial statement analysis, it has been found that quick ratio of
Eversendai was within the range of 1.16:1 to 1.94:1 from 2012 to 2016. On the other side, quick
ratio of Muhibbah and Sunway group at the end of financial year 2016 was 1.09:1 & 1.20:1
respectively. Thus, it can be depicted that all such companies have enough quick assets that can
be converted into cash for meeting the obligations as compared to standard ratio such as .5:1.
Thus, it can be said that firm should make focus on investing money in other profitable activities
which in turn aid in the growth and success of firm (Robinson and et.al., 2015).
2.1.3 Financial health: leverage ratio
Particulars 2012 2013 2014 2015 2016
Financial Leverage
Eversendai 1.89 2.09 2.19 2.39 3.43
Muhibbah 6.24 4.71 4.86 4.34 4.2
Sunway 2.51 2.08 2.17 2.44 2.51

2012 2013 2014 2015 2016
0
1
2
3
4
5
6
7
Graph 6: Financial Leverage
Eversendai
Muhibbah
Sunway
Ratio (Debt to Capital)
2.1.4 Efficiency ratios
Days sales outstanding ratio
Particulars 2012 2013 2014 2015 2016
Days Sales Outstanding
Eversendai 191.38 155.45 229.89 239.42 349.5
Muhibbah 101.11 187.96 243.95 317.11 214.21
Sunway 124.98 86.97 92.04 111.83 121.21
2014 2015 2016
0
50
100
150
200
250
300
350
400
Graph 7: Days Sales Outstanding
Eversendai
Muhibbah
Sunway
No. of days
Inventory turnover ratio (in days)

Particulars 2012 2013 2014 2015 2016
Inventory Days
Eversendai 77.07 70.46 58.91 37.22 43.11
Muhibbah 31.91 43.97 60.31 79.24 61.97
Sunway 99.25 71.75 70.22 77.43 81.31
2012 2013 2014 2015 2016
0
20
40
60
80
100
120
Graph 8: Inventory Days
Eversendai
Muhibbah
Sunway
No. of Days
Interpretation: The above depicted table shows that inventory turnover ratio of
Eversendai, Muhibbah & Sunway was 43.11, 61.97 & 81.31 days at the end of 2016. Thus, it can
be presented that efficiency of the rival firms is good as compared to Eversendai. Thus, company
should make assessment of its existing strategies and do changes in the same for getting the
desired level of outcome.
3. STRATEGIC ANALYSIS
3.1.1 PESTLE analysis
 Political factors: High corruption related activities and growing level of political crisis
may influence the smooth functioning or activities of construction sector.
 Economical factors: In the recent years, high level of decrease has been noted down in
the prices of crude oil from USD $42.56 to USD $10. This in turn may result into rise in
the consumer price index and inflation rate. Hence, such inflationary trend will closely
influence the purchasing power of customers.

 Social factors: Now, individuals make more focus on living luxurious and quality life.
Further, population level is also increasing in Malaysia with the very high pace. By
considering such trend, it can be presented that there is an opportunity for construction
sector to provide customers with innovative building and generate high margin.
 Technological factors: In the recent times, firms that are involved in the construction
projects lay high level of emphasis on using latest technologies. It includes 3D BIM
modelling, energy saving buildings and integrated mobile technology and information etc
which in turn provides high level of assistance in carry out activities more effectually.
 Legal factors: In Malaysia, for creating distinct image in the mind of target market and
others Eversendai is required to comply with Competition Act 2010, Data protection Act
2010, Construction industry payment and adjudication etc (Weisheng and et.al., 2013). In
addition to this, firm is also needed to follow all the acts that are related to the aspect of
employment when developing policy framework.
 Environmental factors: From assessment, it has been identified that there are several
issues which are facing by Malaysia regarding deforestation and pollution. Activities
which are performed by the individuals in construction industry may result into high
pollution (ANDREI and PRISECARU, 2014). Thus, Eversendai is required to perform all
the activities in an eco-friendly manner that contributes in the green environment.
3.2 Competitive analysis
3.2.1 Porter five force analysis
Porters five force model is one of the best way to analyse the external environment so that
factors which are impacting the organisation can be identified.
The buyer power
The bargaining power of buyer is one of the most dependent factor as it is not easy to find out
that buyer power is strong always or weak. Hence it can be stated that buyer power is fluctuated.
Further the developer who have large portion of their business in markets with weaker buyer
bargaining power will obviously lead to higher return.
Supplier power

There are three type of suppliers for the residential developer that is construction contractors,
land sellers and capital provider. Therefore, the bargaining power of supplier it depend on the
location of sale and nature of sale.
Threat of new entrant
There are high barriers to enter in this market it is so because of technology, legal authorization,
capital and expertise. There are many organisations who are using new and advanced technology
to develop their product and lots of capital is required in construction so it is tough for new
company to enter in this market.
Threat of substitute
There are different type of product which are develop in real state that is office, retail and
residential. Further there is high demand of real estate for the utilitarian value. The risk of
substitution can be lowered by the developer who can offer different types of product through
quality, type and location.
Competitive rivalry
As compare to other companies the intensity of rivalry among developers in development
of residential is low. One of the key factor is that residential property is sufficiently differentiable
as compare to other competitors.
Conclusion of porter five forces analysis
3.2.1 Porter five force analysis
Five force Level of forces Impact of industry
attractiveness
Bargaining power
of buyer
Moderate Neutral
Bargaining power
of supplier
moderate favourable
Threat from new
entrants
low Neutral
Threat from
substitute products
Moderate favourable
Competitive rivalry low Neutral

3.2.2 New forces in construction industry
Except Porters five forces there are many other forces which can affect the construction industry
that is digitalization. Here it can be state there is change in old economy due to which lead to
fundamentally increase in digitalization (Jardat, 2017.). There is internet facility available on
the client can easily get information related to different companies, price and product. Due to
increase in information technology it provides different options to the company to make its
product different from its competitor.
3.3 Operations and organisation analysis
The organisation has taken many new methods so that it can easily deal with operational
and challenges which they face in industry. To create good position in market company can take
benefit from the project management culture. These emphases on the meeting the deadline of the
project which is effective for the firm. There are most of the companies who have empowered of
project manager to take the command of the particular operations. Further strategic planning is a
thrive on the organisation at the first stage (Koks, and Kilika, 2014). To organise the scope of
project which lead to spiralling out of controls and limits the add which create delay. Along with
this the Eversendai also need to stress the need for dealing with risk management day to day.
There are many risk which is physical. Therefore, the management of construction company
need to make sure that it can easily deal with employees who are working on site must be safe
and secure. Along with this different types of risk such as economic downstairs, environmental
damage and delay in project can be focused on the management of the construction company.
3.4 Key success factors:
With the improvement in economy it leads to growth of construction company. There
many company who take advantage of economic environment and others try to come up from the
effect of the recession. There are some factors for the Eversendai to become successful.
3.5 Operations visibility:
Visibility provide manager of the firm a complete view of daily work and activities in the
business. Further it assists leaders to evaluate the progress of active project. Through this firm
can make appropriate decision so that it can easily address the issues which are identified in the

project. Through open communication it becomes easy to take views of employees on
development.
Embrace technology:
Use operations and organisation analysis of new technology is one of the significant factor which
assist company to develop good position in market. There are many new technology which
Eversendai can used and it lead which help in cost saving. However old employees take time to
accept the new technology a compare to new employees. It is so because they do not have idea of
using new technology so they avoid it (Chiang, Chen and Ho, 2016). Further through providing
training facility it becomes easy for the firm to make use of new technologies easily.
Managing complexity:
There are many construction project which are complex and affect the organisation. It is not easy
to take responsibility of managing the complex project. For this purpose company can use
different software so that it can easily manage the project. There are some benefits of using such
technology that is generate accurate estimates
Balance score card
Through the personal observation it is identified that there are different parts of employee
management and customer involvement which need to improved. Balance card is one of the
effective tool which can be used by the firm for improving its various internal functions. Further
it can be used by the firm to measure and provide feedback to organisation. Therfore, it can be
stated that it is one of the effective way to measure the performance.
Ansoff matrix for Eversendai
The Ansoff growth matrix was founded by H. Igor Ansoff. As per to him this matrix is one of the
tools that activity the business firms to promote their and market growth (Kuimov and Kuimov,
2017). This matrix also referred to as the product market growth, matrix or product market grid
where the growth is directly dependence on the new product and exiting at new market place or
exiting.
This matrix divided into four different quadrants such as:-

Market penetration:- The first strategy Eversendai is looking to adapts for increasing their sales
and profit. Marketing strategy of the organization to offers their current products in the current
market place is called penetration strategy (Nguyen, 2017). It is the best path to do this to attract
competitors, customers, and looking for potentials customer's for the exiting market.
Market development:- Developing a new market for the exiting organization products is called
market development strategy. In this process the company find-out new geographical location for
the new product launching and increasing sales or profit. It depends on the they introduce new
product or launch exiting product in new geographical area.
Product development:- Developing or modification in new product and offering to the existing
market is called product strategy. This strategy is expansive and time consuming. Marketing
manager of Eversendai must conduct a detailed survey whereas, it is possible with proper
research and survey about the market as well as customer preference or choice about the product
line.
Diversification:- it is last strategy where the business market its new product into new market. It
means expansion of product into new market place (Takata, 2016). This is risky strategy as
compare to other strategy of Ansoff matrix because in this strategy business enter into the new
market with-out any kind of knowledge and experience. High marketing cost of entering into
new market.
5.0 Limitation of financial models and conventional analysis
To analyse the performance of the company conventional analysis is used. There are
different number of limitation related to this analysis. Here it can be stated the model which is
used for external analysis that is porters five is out of dated and there are many industries where
it is modified and updated so that business goal can be accomplished. Further it can be stated that
digitalization, deregulation and globalisation are the factors that are helpful in changing the
structure of industry (McDonald and Wilson, 2016). Apart from this there are some other
restriction related to conventional analysis for instance PESTLE analysis which can only analysis
the macro factors. While it do not measure the resources and capabilites.

5.2 Limitation of financial models in analysing the performance
To use different financials tool there are many limitations which are associated with it.
Financial model lead to impact the internal events such as new products which affect the
organisation. However, some time models failed to give right interpretation which lead to impact
the organisation performance and changes that is government legislation and taxation.
6.0 Conclusion
From the above report it can be concluded that return on investment of the firm is not
good. The net profit margin of the firm is declined which show that company is not earning
profit. Further,from the five porter model it is identified that company need to focus on
implementing new technology so that it can easily make good position in market. Further it can
be concluded company can make product different from its competitor in respect to gain good
position in market.
6.1 Recommendation
It is recommended that though the use of new technology company can easily manage its
complex project and keep record of its project. Further, company can trained its employees so
that they can easily use new technology effectively and efficiently.

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[Accessed on 12th August 2017].