Financial Analysis of V.S. Industry Berhad (VS) and SKP Resources Berhad (SKP)

Running head: FINANCIAL ANALYSIS
Financial analysis
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1FINANCIAL ANALYSIS
Table of Contents
1.0 Introduction..........................................................................................................................4
2.0 Background of v.s. industry Berhad (vs).............................................................................5
2.1 Nature of core business....................................................................................................5
2.2 Future Outlook.................................................................................................................5
2.3 Key Challenges................................................................................................................5
3.0 Relative position in the industry..........................................................................................6
4.0 Ratios analysis of financial performance of VS vs SKP......................................................6
4.1 Background to ratio analysis............................................................................................6
4.2 Rationale for selecting VS and SKP for comparison.......................................................7
4.3 Profitability Analysis.......................................................................................................7
4.3.1 Background...................................................................................................................7
4.3.2 Table of Profitability ratios...........................................................................................8
4.3.3 Line Graph....................................................................................................................8
4.3.4 Interpretation...............................................................................................................10
4.4 Liquidity Analysis..........................................................................................................11
4.4.1 Background.................................................................................................................11
4.4.2 Table of Liquidity Analysis....................................................................................11
4.4.3 Line Graph..................................................................................................................12
4.4.4 Interpretations.............................................................................................................12

2FINANCIAL ANALYSIS
4.5 Efficiency Analysis........................................................................................................13
4.5.1 Background.................................................................................................................13
4.5.2 Table of Efficiency Ratio............................................................................................13
4.5.3 Line Graph..................................................................................................................14
4.5.4 Interpretation...............................................................................................................15
4.6 Solvency Analysis..........................................................................................................16
4.6.1 Background.................................................................................................................16
4.6.2 Table of Solvency ratios...........................................................................................16
4.6.3 Line Graph..................................................................................................................17
4.6.4 Interpretation...............................................................................................................17
4.7 Investors Analysis..........................................................................................................18
4.7.1 Background.................................................................................................................18
4.7.2 Table of Investors Ratios............................................................................................19
4.7.3 Line Graph..................................................................................................................19
4.7.4 Interpretation...............................................................................................................21
5.0 Identification of strategic and operational issues and recommendations...........................22
5.1 Profitability....................................................................................................................22
5.1.1 Strategic issue..............................................................................................................22
5.1.2 Recommendation.........................................................................................................22
5.2 Gearing strategy.............................................................................................................22
5.2.1 Problem.......................................................................................................................22

3FINANCIAL ANALYSIS
5.2.3 Recommendation.........................................................................................................22
6.0 Limitation analysis.............................................................................................................23
6.1 Limitation of ratio analysis............................................................................................23
6.2 Recommendation............................................................................................................23
Reference..................................................................................................................................24

4FINANCIAL ANALYSIS
1.0 Introduction
Main objective of the report is to focus on the financial performance and position of
V.S. Industry Berhad (VS) agisnt SKP Resources Berhad (SKP) for the last 5 years that is
from 2013 to 2017. For the purpose of analysis various ratios like profitability ratios, liquidity
ratios, efficiency ratios, solvency ratios and investor’s ratios. Further, the report will identify
the operational and strategic issues of both the companies and will provide recommendations
based on the findings. Finally, the report will provide the limitations of ratio analysis.
V.S. Industry Berhad is the Malaysian company that operates under electronic
components sector. It is an investment holding company that assembles, manufactures and
sells the electrical and electronic products, plastic molded parts and components in Malaysia,
Europe, Indonesia and various other countries. Various manufacturing solutions provided by
the company includes mold design, fabrication services, product design, electronics, final
assembly, testing and services related to supply chain management (Vs-i.com 2018).
On the other hand, SKP Resources Berhad is the investment holding company and is
engaged in delivering management services to the subsidiaries. Further, the company is
engaged in sub-assembly of electrical and electronic equipments and various other secondary
processes. It offers wide range of products that includes video accessories, computer
accessories, audio accessories and various other miscellaneous accessories (Skpres.com
2018).

5FINANCIAL ANALYSIS
2.0 Background of v.s. industry Berhad (vs)
V.S. Industry Berhad (VS) was founded in 1982 and listed on the Main Market of
Stock Exchange Malaysia in 1998. VS has been classified in the Industrial Products sector.
2.1 Nature of core business
The company’s principal activities are manufacturing, assembling and sale of
electronic and electrical products and plastic moulded components and parts such as speakers
and remote controls. It also markets, distributes, and sells plastic household products. VS also
operates a palm oil plantation. Geographically the company is spread across Malaysia, United
States of America, Europe, Indonesia and Taiwan.
2.2 Future Outlook
VS is a global leader in integrated Electronics Manufacturing Services (EMS) for
office and household electrical and electronic products. In the EMS sector, the rapid pace of
globalization and technological adoptions, as well as innovation-led product replacements,
are expected to fuel growth in manufacturing activity. Increasing collaboration between brand
owners and manufacturing partners in crucial phases of product development and delivery
will be ongoing. Therefore, EMS players with in-house R&D as well as integrated global
supply chain expertise, are well-positioned to gain an upper hand.
2.3 Key Challenges
Operating environment remains challenging such as rising cost of materials,
escalating wages and utility costs, fluctuation in currency exchange, juggling human
resources especially on the production floors and talent engineer. Also, balancing between
costs down pressures from customers and managing upward cost increase remain as key
challenge.