RATIO ANALYSIS BETWEEN IJM AND GAMUDA

Group members: 1) Syahirah 2) Nordiana 3) Helmiza

Prepared for: Dr Noryati Ahmad

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Table of Content
IJM Background + Time Series Gamuda - Background + Time Series Cross Sectional IJM and GAMUDA Conclusion

1 2

3
4

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TYPES OF RATIO COMPARISONS

Crosssectional Analysis

Compare with other firm.

TimeSeries Analysis

Yearly Comparison.

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IJM CORPORATION BERHAD

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Background of the company IJM CORPORATION BERHAD

Listed on the KLSE in September 1986 The founder of Jurutama and Mudajaya At that point of time IGB Corporation-listed property company saw the synergy that a combination of IGB Construction, Jurutama and Mudajaya. In 1982, in a friendly takeover- IGB Corporation Bhd. Acquired all the share in Jurutama and Mudajaya.
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VISION AND MISSION

Vision To be an internationally competitive Malaysian builder of world class infrastructure and buildings. Mission To deliver the highest standards of performance in all ventures with the IJM Mark Of Excellence
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IJM CORE BUSINESS

Construction
IJM's merger with Road Builder (M) Holdings Berhad in early 2007 further bolstered the Group's construction prowess and enhanced its scale of operations.

Property
This Division was among the pioneers to enter into the privatized mass housing projects in Selangor and Penang in the early 80's.

Industry
Besides being one of Malaysia's largest quarrying groups, the Industry Division's expansion in steel fabrication plants, scaffolding rentals and the manufacture of prestressed concrete piles business has become a substantial contributor to the Group's activities.

Plantation
Incorporated in 1985, IJM Plantations Berhad has an extensive area of well-managed oil palm plantations of over 25,000 hectares of oil palms comprising of 11 estates in Sabah. It has also started expanding into Indonesia

Infrastructure
Merger with Road Builder (M) Holdings Berhad in early 2007, IJM fully owns and operates two urban toll concessions in Malaysia, namely the Sungai Besi Highway and New Pantai Highway.

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TIME-SERIES ANALYSIS

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IJM CORPORATION
LIQUIDITY RATIOS 2006 2007 2008 2009 2010

Current Ratio

2.32

3.69

4.20

3.26

2.86

Quick Ratio

1.64

3.60

4.01

3.16

2.68

IJM can cover about 29% of its existing 1-year debt obligations with their current liquid assets. Since the ratio is more that 1.0, it indicates that IJM has provide a larger fund of liquid assets to meet unexpected expenses.

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IJM CORPORATION
ACTIVITY RATIOS Total Asset Turnover Inventory Turnover 2006 0.34 4.75 2007 0.25 6.09 2008 0.16 5.88 2009 0.21 6.56 2010 0.17 6.84

Average Collection Period

51.58

29.29

91.40

128.71

135.70

Average Age Inventory

107.03

74.73

96.66

77.13

67.69

IJM is inefficient in using its assets but IJM is good in terms of inventory turnover.

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IJM CORPORATION
FINANCIAL LEVERAGE RATIOS 2006 2007 2008 2009 2010

Debt Ratio

0.70

0.45

0.48

0.46

0.62

Debt-to-Equity Ratio

0.57

0.82

0.85

0.79

1.55

Times Interest Earned

66.30

5.89

2.26

6.95

18.05

The firms degree of indebtedness is greater and IJM has more financial leverage. IJMs ability to make contractual interest payment is higher based on Times Interest Earned at 18.05.

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IJM CORPORATION
PROFITABILITY RATIOS 2006 2007 2008 2009 2010

Return on Assets
Return on Equity

5.2%
4.2%

2.9%
5.2%

-0.3%
-0.4%

3.5%
6.0%

1.4%
3.5%

Gross Profit Margin Net Profit Margin Operating Profit Margin Earnings per share (RM)

28.2% 15.3% 0.21 0.05

19.8% 11.6% 0.16 0.06

35.8% -1.6% 0.04 -0.01

27.9% 16.8% 0.20 0.07

21.2% 8.2% 0.12 0.06

IJM has a poor management of assets and unfavorable net profit margin.

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IJM CORPORATION
MARKET RATIOS 2006 2007 2008 2009 2010

Price Earning Ratio

69.69

73.50

-54.72

49.43

65.56

The investors are willing to pay RM65.56 for each RM1.00 of earnings. It shows that the high degree of confidence that investors have in the firms future performance.

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TREND ANALYSIS

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LIQUIDITY RATIO

2006

2007

2008 Current Ratio Quick Ratio

2009

2010

Current Ratio 2006 2007 2008 2009 2010 2.32 3.69 4.20 3.26 2.86

Quick Ratio 1.64 3.60 4.01 3.16 2.68

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ACTIVITY RATIO
14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2006 250.00 200.00 150.00 100.00 50.00 Average Age Inventory Average Collection Period 2007 2008 2009 2010

Total Asset Turnover Inventory Turnover Debtors Turnover

0.00
2006 2007 2008 2009 2010

Total Asset Turnover

Inventory Turnover

Debtors Turnover

Average Collection Period

Average Age Inventory

2006 2007 2008 2009 2010

0.34 0.25 0.16 0.21 0.17

4.75 6.09 5.88 6.56 6.84

7.08 12.46 3.99 2.84 2.69

51.58 29.29 91.40 128.71 135.70

107.03 74.73 96.66 77.13 LOGO 67.69

FINANCIAL LEVERAGE RATIO

2.00 1.50

1.00 0.50
0.00 2006 2007 Debt Ratio 2008 Debt-to-Equity Ratio 2009 2010

Times Interest Earned

100.00 50.00 0.00 2006 2007 2008 2009 2010

2006

2007

2008

2009

2010

Debt Ratio 2006 2007 2008 2009 2010 0.70 0.45 0.48 0.46 0.62

Debt-to-Equity Ratio 0.57 0.82 0.85 0.79 1.55

Times Interest Earned 66.30 5.89 2.26 6.95 LOGO 18.05

PROFITABILITY RATIO
100.0% 80.0% 60.0% 40.0% 20.0% Earnings per share (RM) Operating Profit Margin Net Profit Margin

Gross Profit Margin

Return on Assets 2006 2007 2008 2009 2010 Return on Assets

0.0%
-20.0% -40.0% -60.0%

Return on Assets 2006 2007 2008 2009 2010 5.2% 2.9% -0.3% 3.5% 1.4%

Return on Assets 4.2% 5.2% -0.4% 6.0% 3.5%

Gross Profit Margin 28.2% 19.8% -35.8% 27.9% 21.2%

Net Profit Margin 15.3% 11.6% -1.6% 16.8% 8.2%

Operating Earnings Profit per share Margin (RM) 0.21 0.05 0.16 0.06 0.04 -0.01 0.20 0.07 0.12 0.06

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MARKET RATIO

2006

2007

2008

2009

2010

Price Earning Ratio

Book Value

Market Book Value Ratio

Price Earning Ratio

Book Value

Market Book Value Ratio

2006 2007 2008 2009 2010

69.69 73.50 -54.72 49.43 65.56

1.67 1.39 1.37 1.46 1.42

2.04 3.00 4.35 2.48 2.73

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Background of the company

GAMUDA BERHAD
Gamuda was incorporated on 6 October 1976. Listed on the KLSE on August 1992 Strategies use are, concession agreement, Joint Venture and tariff agreement. July 2002, Gamuda signed a joint venture agreement with MMC Engineering to jointly undertake the construction of SMART - an integrated bypass tunnel-cum-motorway in Kuala Lumpur City. Gamuda was voted Best Asian Construction Company by Euromoney magazine.

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VISION AND VALUES

Vision
We deliver innovative world-class infrastructure and homes for our customers through our core businesses in infrastructure development and construction, operation and maintenance of public infrastructure concessions, and largescale urban township development.

Value
Innovation Responsible conduct Constant improvement Taking the long view LOGO

GAMUDA CORE BUSINESS

Engineering & Construction
Turnkey contractor - design and build Klang Valley Mass Rapid Transit (KVMRT)

Infrastructure Concessions
Develop, finance, operate and transfer SMART Tunnel

Township Development
Plan, design and develop large-scale townships and properties Jade Hills in Malaysia and Yen So Park in Hanoi, Vietnam

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GAMUDA BERHAD
LIQUIDITY RATIOS
Current Ratio 2006 2007 2008 2009 2010

2.20

1.93

1.54

1.88

2.30

Quick Ratio

2.15

1.79

1.44

1.81

2.23

Gamuda can cover about 24% of its existing 1-year debt obligations with their current liquid assets. Since the ratio is more that 1.0, it indicates that Gamuda has provide a larger fund of liquid assets to meet unexpected expenses.

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GAMUDA BERHAD
ACTIVITY RATIOS
Total Asset Turnover Inventory Turnover Average Collection Period Average Age Inventory 2006 0.47 16.30 45.57 11.76 2007 0.31 17.10 47.99 12.57 2008 0.30 12.08 42.19 20.24 2009 0.42 19.18 33.73 18.55 2010 0.46 25.83 28.27 16.20

Gamuda is efficiently used their assets to generate sales and has effectively managed its credit due to the shorter credit terms.

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GAMUDA BERHAD
FINANCIAL LEVERAGE RATIOS
2006 2007 2008 2009 2010

Debt Ratio

0.31

0.41

0.41

0.46

0.45

Debt-to-Equity Ratio

0.46

0.70

0.68

0.86

0.83

Times Interest Earned

22.90

8.91

8.42

12.92

4.10

Gamuda has financed close to 45% of its assets with the debt. Gamudas ability to make contractual interest payment is low based on Times Interest Earned at 4.10.

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GAMUDA BERHAD
PROFITABILITY RATIOS Return on Assets Return on Equity Gross Profit Margin Net Profit Margin Operating Profit Margin Earnings per share (RM) 2006 12.6% 13.3% 18.2% 19.4% 0.19 0.36 2007 7.1% 7.9% 9.5% 14.8% 0.11 0.21 2008 5.5% 7.5% 8.1% 14.8% 0.11 0.22 2009 8.2% 10.9% 11.6% 14.1% 0.13 0.16 2010 4.8% 6.4% 5.4% 7.5% 0.07 0.10

Gamuda Berhad generates profits at average level with respect to its level of sales, assets and owners investment.

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GAMUDA BERHAD
MARKET RATIOS
2006 2007 2008 2009 2010

Price Earning Ratio

6.11

9.36

18.83

16.76

27.37

The amount that investors are willing to pay for each RM of Gamudas earning is high level and boost up the confidence level among investors.

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TREND ANALYSIS

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LIQUIDITY RATIO
2.50 2.00 1.50 1.00

0.50
0.00 2006 2007 Current Ratio 2008 Quick Ratio 2009 2010

Current Ratio 2006 2007 2008 2009 2010 2.20 1.93 1.54 1.88 2.30

Quick Ratio 2.15 1.79 1.44 1.81 2.23

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ACTIVITY RATIO
60.00 50.00 40.00 30.00 20.00 10.00 0.00 2006 2007 2008 2009 2010 Inventory Turnover Debtors Turnover Average Collection Period Average Age Inventory

Total Asset Turnover

0.60

0.40
0.20 0.00 2006 2007 2008 2009 2010

Total Asset Turnover

Total Asset Turnover 2006 2007 2008 2009 2010 0.47 0.31 0.30 0.42 0.46

Inventory Turnover 16.30 17.10 12.08 19.18 25.83

Debtors Turnover 8.01 7.61 8.65 10.82 12.91

Average Collection Period 45.57 47.99 42.19 33.73 28.27

Average Age Inventory 11.76 12.57 20.24 18.55 LOGO 16.20

DEBT RATIO
1.00 0.80 0.60 0.40 0.20 0.00 2006 2007 2008 2009 2010 Debt Ratio Debt-to-Equity Ratio

Times Interest Earned

30.00 20.00 10.00 0.00 2006 2007 2008 2009 2010 Times Interest Earned

Debt Ratio

Debt-to-Equity Ratio

Times Interest Earned 22.90 8.91 8.42 12.92 LOGO 4.10

2006 2007 2008 2009 2010

0.31 0.41 0.41 0.46 0.45

0.46 0.70 0.68 0.86 0.83

PROFITABILITY RATIO
40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2006 Return on Assets Net Profit Margin 2007 2008 Return on Equity Operating Profit Margin 2009 Gross Profit Margin Earnings per share (RM) 2010

Return on Assets 2006 2007 2008 2009 2010 12.6% 7.1% 5.5% 8.2% 4.8%

Return on Equity 13.3% 7.9% 7.5% 10.9% 6.4%

Gross Operatin Net Profit Profit g Profit Margin Margin Margin 18.2% 9.5% 8.1% 11.6% 5.4% 19.4% 14.8% 14.8% 14.1% 7.5% 0.19 0.11 0.11 0.13 0.07

Earning s per share (RM) 0.36 0.21 0.22 0.16 LOGO 0.10

MARKET RATIO
30.00 25.00 20.00 15.00 10.00

5.00
0.00 2006 2007 2008 Book Value 2009 Market Book Value Ratio 2010 Price Earning Ratio

Price Earning Ratio

Book Value

Market Book Value Ratio 0.73 0.64 1.34 1.77 1.65 LOGO

2006 2007 2008 2009 2010

6.11 9.36 18.83 16.76 27.37

3.00 3.04 3.05 1.54 1.60

CROSSSECTIONAL ANALYSIS
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CROSS SECTIONAL FOR 2010

Profitability Ratio for 2010
25.0% 20.0%

15.0%
10.0% 5.0% 0.0% Return on Assets Return on Equity Gross Profit Margin Net Profit Margin Operating Profit Margin 0.07 0.12

GAMUDA IJM

4.8% 1.4%

6.4% 3.5%

5.4% 21.2%

7.5% 8.2%

Gamuda is better than IJM in managing its assets and equity to generate profits. The net profit margin of IJM is higher than Gamuda.

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Price Earning Ratio

70.00 60.00 50.00 40.00 30.00

20.00
10.00 0.00 Price Earning Ratio GAMUDA 27.37 IJM 65.56

Investors were paying higher in IJM at RM65.56 than Gamuda which is only at RM27.37 for each RM1.00.

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Financial Leverage Ratio for 2010

20.00
15.00 10.00 5.00 0.00

Debt Ratio 0.45 0.62

GAMUDA IJM

Debt-toEquity Ratio 0.83 1.55

Times Interest Earned 4.10 18.05

IJM is better than Gamuda in terms of financial leverage.

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Activity Ratio for 2010

140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 Total Asset Turnover 0.46 0.17 Inventory Turnover 25.83 6.84 Debtors Turnover 12.91 2.69 Average Collection Period 28.27 135.70 Average Age Inventory 16.20 67.69

GAMUDA IJM

Gamuda is much better than IJM in terms of managing its assets and inventory to generate sales. Gamuda is also taking shorter time for collection and payment period. LOGO

Liquidity Ratio for 2010

3.00 2.50 2.00 1.50 1.00 0.50 0.00 Current Ratio 2.30 2.86 Quick Ratio 2.23 2.68

GAMUDA IJM

Both companies, Gamuda and IJM have the ability to cover the debt obligations with their current liquid assets. As refer to the ratio, IJM is better than Gamuda in terms of liquidity.

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0.10

0.09
0.08 0.07 0.06 0.05 0.04

0.03
0.02 0.01 0.00 Earnings per share (RM) GAMUDA 0.10 IJM 0.06

The EPS in Gamuda is higher than IJM. EPS will be closely watched by investing public to indicate the successfulness of a company.

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CONCLUSION
Gamuda : 1. Profitability 2. Activity 3. Financial Leverage 4. Liquidity

Preferable Company: IJM

IJM : 1. Profitability 2. Activity 3. Financial Leverage 4. Liquidity

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