SHARMILA PARTHIBAN

UOG 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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UOG ID : 0003820155

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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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 agreeablesounding 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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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 embeddings 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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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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SHARMILA PARTHIBAN
UOG ID : 0003820155

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
companys 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 figurings and fiscal explanations of
both companys 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 companys 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), p1112.
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.

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

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.

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ACCOUNTING RATIO
RATIOS
Operating Profit Margin

S P SETIA DHD
567,505,000
2,526,595,000

= 22.46 %

Return on Capital Employed

=

GLOMAC BHD
161,067,448
652,406,076
= 24.69%

567,505,000

161,067,448

(9,353,304,000 -2,950,244,000) (1,353,135,907 -323,298,466)

= 88.63%

= 15.64%

Earnings Per Ordinary Share

387628000

119,592,127

1832738000

341992229

= RM 0.21

= RM 3.50

0.115

0.800

0.205

0.1478

=0.56:1

=5.41:1

3.27

0.985

0.115

0.800

=RM28.43
0.205

=RM1.23
0.1478

3.27

0.985

=RM 0.06
3,980,441,000

=RM 0.15
722,322,728

2,950,244,000

323,298,466

=1.35:1

=2.23:1

2363940000

331,422,038

4039120000

698,415,403

=0.59%

= 0.47%

Current Price/Earnings Ratio

=

Dividend Yield =

Dividend Cover =

Current Ratio
=
Gearing =

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UOG ID : 0003820155

Interest Payment Cover =

567,505,000

161,067,448

79,592,000

15,908,049

=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.

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SHARMILA PARTHIBAN
UOG ID : 0003820155

ACCOUNTING RATIO
RATIOS
Operating Profit Margin

S P SETIA DHD
570,343,000
3,060,528,000

=
Return on Capital Employed

= 18.64 %

GLOMAC BHD
153,520,719
680,933,511
= 22.55%

570,343,000

153,520,719

(12,441,762,000-

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

2,997,030,000) = 60.39%

= 12.20%

Earnings Per Ordinary Share

419,287

108,257,310

2,458,712

14,118,509

= RM 0.17

= RM 7.67

0.50

18.0

108,257,310

419,287

=4.62:1

=4.29:1

0.13

0.148

18.0

0.50

=RM 7.22
419,287

=RM 0.30
108,257,310

254,477

28,535,156

=RM 1.65
6,110,736,000

=RM 3.79
940,756,537

2,997,030,000

338,114,809

=2.04:1

=2.78:1

3,920,035,000

419,848,891

5,524,697,000

838,190,072

=0.71%

= 0.50%

Current Price/Earnings Ratio

=

Dividend Yield =

Dividend Cover =

Current Ratio
=
Gearing =

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Interest Payment Cover =

570,343,000

153,520,719

157,101,000

21,286,375

=3.63%

= 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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