Analysis of Financial Performance in Malaysian Retail Sector

Running head: ANALYSIS OF FINANCIAL PERFORMANCE
Analysis of Financial Performance
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1ANALYSIS OF FINANCIAL PERFORMANCE
Executive Summary:
The report is prepared for evaluating the investment opportunities in the Malaysian retail sector for which
two organisations listed in Bursa Malaysia are chosen. These organisations include Atlan Holdings
Berhad and Hai-O-Enterprise Berhad. It has been found out that Hai-O-Enterprise Berhad has better
financial condition than Atlan Holdings Berhad because of improved profitability, efficiency and leverage
positions. On the other hand, it is found that Atlan is struggling to maintain its competitive position in the
Malaysian retail sector in contrast to Hai-O-Enterprise Berhad due to declining profitability and increased
blockage of working capital in the form of trade receivables. Moreover, the share price analysis clearly
indicates that Hai-O-Enterprise is a better investment opportunity for the investors, as investing in the
shares of the organisation would maximise their overall return on investment.

2ANALYSIS OF FINANCIAL PERFORMANCE
Table of Contents
Introduction:...................................................................................................................................................3
Analysis of the financial statements using ratio analysis:.............................................................................3
Changes in the capital structure:....................................................................................................................6
Evaluation of performance from the viewpoint of the creditors:...................................................................7
Suggestions to changes in financial strategy from the viewpoint of CFO:....................................................7
Share price analysis from the perspective of investors:.................................................................................8
Investment recommendation:.........................................................................................................................9
Conclusion:....................................................................................................................................................9
References:...................................................................................................................................................10
Appendices:..................................................................................................................................................12

3ANALYSIS OF FINANCIAL PERFORMANCE
Introduction:
The current report aims to analyse the financial markets and investment opportunities in
Malaysia. For meeting the purpose of this assignment, two listed companies in Bursa Malaysia have been
chosen and they include Atlan Holdings Berhad and Hai-O Enterprise Berhad. These two organisations
are operating in the Malaysian retail sector having sound reputation in the market. In order to analyse
investment opportunities, ratio analysis is used for evaluating the financial condition of the two selected
organisations. Based on the outcomes, they are evaluated further from the perspectives of the creditors
and capital structure. After such evaluation, suggestions are provided to both the organisations from the
viewpoints of their CFOs. Finally, share price analysis is conducted to provide investment
recommendations in the two organisations.
Analysis of the financial statements using ratio analysis:
For analysing the financial statements of Atlan Holdings Berhad and Hai-O-Enterprise Berhad,
ratio analysis technique is used, as it provides a complete picture of the financial condition of an
organisation (Brigham et al. 2016). The following types of ratios are used for evaluation of the financial
condition of the two above-mentioned organisations:
Liquidity ratios:
For assessing the liquidity position of Atlan Holdings Berhad and Hai-O-Enterprise Berhad, the
two liquidity ratios used include current ratio and quick ratio (Refer to Appendices, Appendix 5). It has
been found that current ratio is observed to increase from 1.89 in 2015 to 3.44 in 2018 for Atlan Holdings
Berhad, while the same tends to decline from 4.66 in 2015 to 3.28 in 2018. For Atlan, the ratio has
increased due to significant rise in cash and bank balances along with accounts receivable while trade and
other payables have fallen over the years (Atlan.com.my 2018). In case of Hai-O-Enterprise Berhad,
significant rise in trade and other payables is the main reason behind the fall in current ratio. However, it
is noteworthy to mention that the ratio for both companies is well above the ideal standard of 2