Assignment 2 FIN 430 Company Analysis PDF

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Warning: TT: undefined function: 32 Warning: TT: undefined function: 32 Warning: TT: undefined function: 32FACULTY OF BUSINESS ADMINISTRATIONBACHELOR OF BUSINESS ADMINISTRATION (HONS) FINANCEFIN 430INTRODUCTION TO CORPORATE FINANCEDIGI COMPANY SDN BHDPREPARED BY:NAME IDLUQMANUL HAKIM BIN JOHARI 2020...

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DIGI COMPANY SDN BHD

FACULTY OF BUSINESS ADMINISTRATION BACHELOR OF BUSINESS ADMINISTRATION (HONS) FINANCE FIN 430 INTRODUCTION TO CORPORATE FINANCE

DIGI COMPANY SDN BHD PREPARED BY: NAME LUQMANUL HAKIM BIN JOHARI MUHAMMAD NUR AFFANDI BIN JA’AFFAR MUHAMMAD NAQIB BIN ZAINUDDIN MUHAMMAD NURIZZ HAKIM BIN RAZALI

CLASS: JBC2422B

PREPARED FOR: HUSNIZAM HOSIN

SUBMISSION DATE: 1st July 2020

ID 2020982915 2020970549 2020964523 2020974333

DIGI COMPANY SDN BHD ACKNOWLEDGEMENT

The success and outcome of this report required a lot of guidance and assistance from many people and we are extremely fortunate to have got this all along the completion of our report work. Whatever we have done were only due to such guidance and we would like to express our gratitude and appreciation to all those who gave us the possibility to complete this report. A special thanks to our lecturer, Sir Husnizam Hosin, whose help in stimulating suggestions and encouragement in helping us to coordinate every tasks especially in writing this report and also providing us all support which make completion of the report on-time was possible and we were very grateful for all the assistance as your guidance and kind supervision given to us throughout the course were more than helpful. Finally, many thanks go to each of the group members, whose have given full effort in guiding each other in achieving the goal and to maintain the progress of the works and the report itself to be on track. We also would like to acknowledge our indebtedness and deep sense of gratitude to all our friends whose directly and indirectly involved in the process of completing this report.

DIGI COMPANY SDN BHD TABLE OF CONTENTS 1.0 INTRODUCTION ............................................................................................................... 1 2.0 COMPANY ANALYSIS ..................................................................................................... 2 2.1 COMPANY BACKGROUND ......................................................................................... 2 2.1.1 MISSION, VISION, VALUES AND OBJECTIVES ................................................... 4 2.2 BOARD OF DIRECTOR PROFILES ............................................................................. 6 2.2.1 MANAGEMENT PROFILES....................................................................................... 7 2.3 LIST OF THE PRODUCTS SOLD, OR SERVICES PERFORMED ............................. 8 2.4 DATE OF FINANCIAL STATEMENT ........................................................................ 13 2.5 SWOT ANALYSIS ........................................................................................................ 18 2.6 COMPANY’S STRATEGY .......................................................................................... 30 3.0 RATIO ANALYSIS........................................................................................................... 35 3.1 LIQUIDITY RATIOS .................................................................................................... 35 3.2 ACTIVITY RATIOS...................................................................................................... 37 3.3 LEVERAGE/ DEBT RATIOS ....................................................................................... 40 3.4 PROFITABILITY RATIOS ........................................................................................... 42 3.5 MARKET RATIOS........................................................................................................ 45 4.0 CONCLUSION AND RECOMMENDATION................................................................. 48 5.0 REFERENCES .................................................................................................................. 49 6.0 APPENDIX ........................................................................................................................ 50

FACULTY OF BUSINESS MANAGEMENT UNIVERSITI TEKNOLOGI MARA, MALAYSIA GROUP ASSIGNMENT RUBRICS Course Name: INTRODUCTION TO CORPORATE FINANCE Course Code: FIN430

Criteria

Marks Allocated

Analytical Skills

Writing Skills a) Content

b) Organization

c) Language

Student’s ID & Name: 1. LUQMANUL HAKIM BIN JOHARI BIN JOHARI

2020977427

2. MUHAMMAD NUR AFFANDI BIN JA’AFFAR

2020970549

3. MUHAMMAD NAQIB BIN ZAINUDDIN

2020964523

4. MUHAMMAD NURIZZ HAKIM BIN RAZALI

2020974333

Lecturer’s Name: Husnizam Hosin

Group: JBC2422B

Marks (M)

Weighted Marks Obtained

1

2

3

4

5

20%

Not able to analyze the given task

Minimal ability to analyze the given task

Some ability to analyze the given task

Able to analyze the given task

Able to analyze with good illustration

M/5 x 20% =

20%

The content was minimally relevant to the given task.

The content was quite relevant to the given task.

The content was relevant to the given task.

The content was highly relevant to the given task.

The content was highly relevant and interesting.

M/5 x 20% =

10%

The paper was poorly organized and lacked supporting evidence. Generalization was a problem

The organization of the paper was weak and support was insubstantial or unconvincing

The organization of the paper was good and generally supported with little evidence

The organization of the paper was well supported with evidence

The paper was extremely well organized and supported through the use of examples in detail

M/5 x 10% =

10%

Writing lacks sentence variety and few grammatical errors

Sentences were somewhat varied, and some were inappropriate with minimal grammatical errors

Sentences were correctly constructed

Sentences were correctly constructed and well articulated

Sentences were well written and expressed

M/5 x 10% =

C

P

A

C

P

A

1

FACULTY OF BUSINESS MANAGEMENT UNIVERSITI TEKNOLOGI MARA, MALAYSIA

Criteria

Marks Allocated

Knowledge Skills

40%

Overall Assessment

100%

Marks (M) 1

2

3

4

5

Student demonstrates some grasp of the subject knowledge

Student demonstrates moderate level of the subject knowledge

Student demonstrates sufficient level of the subject knowledge

Student demonstrates sound subject knowledge

Student demonstrates excellent understanding subject knowledge

2

Weighted Marks Obtained

M/5 x 40% =

DIGI COMPANY SDN BHD 1.0 INTRODUCTION The purpose of this report is to analyze the performance of a company known as DIGI for a time period within 2017 and 2018. The performance data was obtained through 5 ratio analysis which includes liquidity ratios, leverage ratios, activity ratios, market ratios and profitability ratios. There were several calculations made from the data extracted through the company’s annual report. The calculations were including the current ratio, quick ratio and net working capital for liquidity ratios; debt ratio, debt to equity ratio and times interest earned for leverage ratios; inventory turnover, average collection period (days), fixed assets turnover and total assets turnover for activity ratios. For the market ratios, the calculations that were made include the earnings per share, dividend per share, dividend pay-out ratio, dividend yield and price earnings ratio while for profitability ratios, the calculations were gross profit margin, operating profit margin, net profit margin, return on assets and return on equity. We also provided the SWOT analysis which analyze the company’s strength, weakness, opportunities and threats in order to have overview of the competitiveness of the company in competing with its rivalry. All the data evaluations were extracted from the annual report and for the ratios specifically, the data were extracted from the balance sheet and income statement from the report. The calculations made were precise and easily understandable by many people for them to have deep sense of the current performance of the company itself.

1

DIGI COMPANY SDN BHD 2.0 COMPANY ANALYSIS 2.1 Company’s Background

Digi Telecommunications or Digi.Com Berhad (Company No. 199701009694 (425190-X)) was a telecommunications and internet services provider in Malaysia. Its largest shareholder is Telenor ASA of Norway with 49% of share. On 24 May 1995 Digi became the first telco in Malaysia to launch and operate a fully digital cellular network and become the first digital mobile communications service in Malaysia. They were also the first to offer GPRS (2.5G) and later EDGE (2.75G) in Malaysia on 14 May 2004. Digi primarily uses the 1800 MHz band for GSM with the network code of 502-16. As at 31 Dec 2018 Digi has 11.3 million Malaysians on our advanced 4G+ network and 9.2 million mobile Internet subscribers. DIGI

headquarters

located

at

Shah

Alam

Selangor.

The

official

website

is

http://www.digi.com.my/. Digi is a Publicly traded company that listed on the Bursa Malaysia under the Infrastructure category act. It was traded as DIGI (6947) on Bursa Malaysia stock market. It was acknowledged as shariah shares. Currently, DIGI has market capital valued at 34.987 billion with 7.775 billion shared was issued in Bursa Malaysia. As at 31 December 2018, DIGI net profit recorded at RM1.48 billion, while its revenue recorded at RM 6.4 billion.

2

DIGI COMPANY SDN BHD In 2018 Digi won three out of the eight of Malaysian Communications and Multimedia Commission (MCMC) Rating Award categories for the ‘Best Mobile Network Operators (MNO) Provider’, ‘Best Consumer Satisfaction’ and ‘Best Quality of Service’ awards, respectively. This carry a meaning of they comply with driving Malaysia’s growth by offering every of their customers the best mobile internet environment in access to mobile internet services and application. For instance, they try to give the best usage experience to their customers by offering value pricing to them. Moreover, they attempt to provide customers best satisfaction with tagline “Lets Inspire” with the right combination of device such as the constantly come out with different kind of mobile plans. “Changing the Game” is the vision of the Digi. This carry the meaning of they ensure that there will be a constantly changing as well improving in all part of their business especially the services to customers. By the way, they will also frequently be defining a new standard for their business and pushing the business into all part of the boundaries.

3

DIGI COMPANY SDN BHD 2.1.1 MISSION, VISION, VALUES AND OBJECTIVES

VISION •

To be stars in excellent customer experience by enhancing communications to improve customers’ quality of life, at home, work and play.

MISSION •

Delivering Internet for all as part of our commitment to building a connected

•

Offering customers, the right combination of devices and value pricing, as well as

Malaysia - enabling access to mobile internet.

the best usage. •

It’s offering customers specific solutions to meet individual need and has provided an environment where our employees can grow and be fulfilled in position. However, Digi has provided superior returns to shareholders and contribute to improving life in Malaysia.

VALUES •

Keep Promises

Take ownership for delivering on our goals and responsibilities and pride ourselves on driving quality into everything we do. •

Make It Easy

Aim for simplicity in the way we work, and in offering products and services that are easy to understand and easy to use. •

Be Respectful

We are open-minded and professional in our conduct, and appreciate differences in cultures, opinions, and outlook. •

Be Inspiring

Bring passion, energy, and creativity into everything we do, and make every effort to constantly drive change and continuous

4

DIGI COMPANY SDN BHD OBJECTIVE Digi long term objectives is to create long-term shareholder value through providing innovative, easy-to-use and best value telecommunications services in the Malaysian market. Besides that, Digi try to get market share in Malaysia. •

Demographic

Digi will increase their telecommunication network coverage in urban and rural area and provide cheaper services to respond the increasing in competition due to the increasing of population. •

Economic

Digi will provide cheaper services and improving on their products and services to respond on the competitive market and to gain more market share in telecommunication sector. •

Education

Digi will provide Digi free internet, call and SMS for educational purpose such as at library and University for students.

5

DIGI COMPANY SDN BHD 2.2 BOARD OF DIRECTORS’ PROFILES

Key to Committee membership:

Member

Haakon Bruaset Kjoel

B

Non-Independent

N

Non-Executive Director

A R

Member

B

R

Committee Chair

Yasmin Binti Aladad Khan Tan Sri Saw Choo Boon

Independent Non-Executive Director

Senior Independent Non-Executive Director

Member

Member

B

N

B

N

A

R

A

Anne Karin Kvam Vimala V.R. Menon

Non-Independent Non-Executive Director

Independent Non-Executive Director

Member

Member

B

B

A

Lars Erik Tellmann Non-Independent Non-Executive Director

Torstein Pedersen Non-Independent Non-Executive Director

B

Member

A

R

6

B

DIGI COMPANY SDN BHD

2.2.1 MANAGEMENT PROFILES

Albern Murty

Inger Gløersen Folkeson

Chief Executive Officer

Chief Financial Officer

Loh Keh Jiat

Eugene Teh

Chief Marketing Officer

Chief Business Officer

Joachim Rajaram Praveen Rajan

Chief Corporate Affairs Officer

Chief Digital Officer

7

DIGI COMPANY SDN BHD 2.3 LIST OF THE PRODUCTS SOLD, OR SERVICES PERFORMED •

Phone package

8

DIGI COMPANY SDN BHD

9

DIGI COMPANY SDN BHD •

Post-paid Plan

Borderless Plan = A roaming inclusive Post-paid plan to keep you connected both at home and abroad, at no extra cost.

10

DIGI COMPANY SDN BHD •

Digi Postpaid Infinite = Enjoy total freedom with this online exclusive plan with no caps on Internet from only RM100/month.

•

Digi Jom Start Postpaid = All access Internet. No Data Splits. Only Bonuses!

11

DIGI COMPANY SDN BHD • Prepaid Plan Digi 30 Days Unlimited Always Active Internet

12

DIGI COMPANY SDN BHD 2.4 DATE OF FINANCIAL STATEMENT 31/12/2017 & 31/12/2018

13

DIGI COMPANY SDN BHD

14

DIGI COMPANY SDN BHD

15

DIGI COMPANY SDN BHD

16

DIGI COMPANY SDN BHD

17

DIGI COMPANY SDN BHD 2.5 SWOT ANALYSIS SWOT analysis is an assessment technique to analyse strengths and weaknesses comprising of positive and negative internal influences; and opportunities and threats which are positive and negative external influences of an organisation. An accurate SWOT analysis is important for effective organisational planning and goal

18

DIGI COMPANY SDN BHD STRENGTH 1. The largest Telco in term of market share subscriber base

2018 Market Share Subcribers Based

29%

37%

34%

Digi

Maxis

Celcom

Figure 1: https://www.theedgemarkets.com/ Digi has the highest market share in term of consumer subscription in Malaysia. It has 37% market share compare to 34% obtain by Maxis and 29% by Celcom. Prepaid segment mainly the major contribution toward this achievement. Reason for Digi customer subscription was due to Digi strong brand reputation, good telco coverage, strong partnership with media company such as Astro, YouTube, Spotify and phone purchase plan. Digi maintained this achievement for 2 consecutive years 2017/2018.

Figure 1: heedgemarkets.com 19

DIGI COMPANY SDN BHD 2. Great value phone instalment plan. Digi offered phone purchase plan that was Digi Phone Freedom 365. This plan features offered free upfront payments; free interest rates combine with great post-paid plan. Digi has better phone purchase plan compare to other competitor such as Maxis and Celcom. This led to customer preferable towards Digi compare to other competitors. The table below illustrates Digi plan compare to Celcom and Maxis price comparison for the iPhone 11. (https://technave.com/)

20

DIGI COMPANY SDN BHD 3. Strong brand reputation Digi.com is the third largest mobile operator in Malaysia. Digi became the first telco in Malaysia to launch and operate a fully digital cellular network. In this case, compared to UMobile which is launched in 2007. Digi Company exist in this market is relatively longer compared to UMobile. Digi did enter this industry or market early than UMobile did. Through the company personification, the “Yellow Man” with the well-known slogan “I will follow you” had made a huge impact to get local customer’s attention and recognition. Besides that, Digi also awarded “Most Effective Use of Advertising” in Asia. This helps Digi to achieve a higher level of their brand name. In 2018 Digi won three out of the eight of Malaysian Communications and Multimedia Commission (MCMC) Rating Award categories for the ‘Best Mobile Network Operators (MNO) Provider’, ‘Best Consumer Satisfaction’ and ‘Best Quality of Service’ awards, respectively.

Figure 2: https://www.mcmc.gov.my/en/media/press-releases/mcmc-meraikansyarikat-telekomunikasi-cemerlang-pa

21

DIGI COMPANY SDN BHD 4. Established good relations with other partners. Digi established good business relation with its partner such as Grab. This partnership gives benefits for both parties in term of marketing strategy. Partnership with Grab that was Southeast Asia’s leading ride-hailing platform enhanced Digi telco to gain more subscribers and possession in Malaysia telco market.

Digi also launch music and video freedom pass with establishing partnership with world top music services such as Spotify, Joox, JOOX, Smule, Hitz FM, ERA FM and top video streaming apps services such as YouTube, Viu and Netflix. This partnership allows Digi subscribers to have free access toward those entertainment services without having quota deduction. This marketing ...