FIN420 CASE Study ANALYSIS OF CORPORATE FINANCIAL PERFORMANCE : A TREND AND COMPARATIVE STUDY OF ASTRO MALAYSIA HOLDINGS BERHAD AND MEDIA PRIMA BERHAD PDF

Preview

Summary

FACULTY OF BUSINESS AND MANAGEMENTFINANCIAL MANAGEMENT (FIN420)TITLE OF REPORT:“ANALYSIS OF CORPORATE FINANCIAL PERFORMANCE : A TRENDAND COMPARATIVE STUDY OF ASTRO MALAYSIA HOLDINGS BERHADAND MEDIA PRIMA BERHAD.”CLASS: BA2402APREPARED FOR:DR. CHUA MEI SHANSUBMISSION DATE:18 JUNE 2021TABLE OF CONTENT...

Description

FACULTY OF BUSINESS AND MANAGEMENT FINANCIAL MANAGEMENT (FIN420) TITLE OF REPORT: “ANALYSIS OF CORPORATE FINANCIAL PERFORMANCE : A TREND AND COMPARATIVE STUDY OF ASTRO MALAYSIA HOLDINGS BERHAD AND MEDIA PRIMA BERHAD.”

CLASS: BA2402A PREPARED FOR: DR. CHUA MEI SHAN

SUBMISSION DATE: 18 JUNE 2021

TABLE OF CONTENT 1.0 REASONS ON THE SELECTION OF ASTRO MALAYSIA HOLDINGS BERHAD AND MEDIA PRIMA BERHAD

2

2.0 FUNDAMENTAL INFORMATION 2.1 Astro Malaysia Holding Berhad 2.1.1 Company Background 2.1.2 Core Business 2.1.3 SWOT Analysis Astro Malaysia Holding Berhad 2.1.4 Financial History Astro Malaysia Holding Berhad 2.2 Media Prima Berhad 2.2.1 Company Background 2.2.2 Core Business 2.2.3 SWOT Analysis Media Prima Berhad 2.2.4 Financial History Media Prima Berhad

3 3 3 3 4 5 6 6 6 7 7

3.0 FINANCIAL PERFORMANCE 3.1 LIQUIDITY RATIO 3.2 ACTIVITY RATIO 3.3PROFITABILITY RATIO 3.4 LEVERAGE RATIO

8 8 12 16 20

4.0 COMPREHENSIVE ANALYSIS 24 4.1 WAYS TO IMPROVE CURRENT FINANCIAL BASED ON CALCULATED RATIO 24 4.2 SIGNIFICANCE AND IMPORTANCE 26 4.3 EXPECTATION ON THE FUTURE OUTLOOK OF ASTRO MALAYSIA HOLDING BERHAD & MEDIA PRIMA BERHAD 26 5.0 CONCLUSION

27

REFERENCES

28

APPENDIX

30

1

1.0 REASONS ON THE SELECTION OF ASTRO MALAYSIA HOLDINGS BERHAD AND MEDIA PRIMA BERHAD

In this case study, we are required to select two Malaysian public listed companies to construct a five years trend analysis and prepare a comparative analysis based on their liquidity, activity, profitability and leverage. Therefore, we chose Astro Malaysia Holdings Berhad and Media Prima Berhad for our case study. The reasons why we chose the companies are because both companies are listed in Bursa Malaysia as a public listed company. Both Astro Malaysia Holdings Berhad and Media Prima companies have similar commercial nature in business which is as entertainment company in Malaysia. Besides, both of the companies are well-known and have already been trusted by many people.

Astro Malaysia Holdings Berhad and Media Prima have been operating for over the past 10 years and continue to grow across to provide the best service. Therefore, it enables them to have a strong financial management and high sustainability in their business. As a media and entertainment company, both companies are also persistent in responding to market changes based on customers and market demand. Although there are many challenges to be faced, Astro Malaysia and Media Prima aim to improve their services in order to be the source of consumers’ entertainment needs and to create shareholder value by driving efficiencies and innovation throughout the business.

2

2.0 FUNDAMENTAL INFORMATION 2.1 Astro Malaysia Holding Berhad

2.1.1 Company Background Astro is one of the most famous television networks in Malaysia. Astro is also known as a leading entertainment company and leading content and consumer company. The success of Astro can be seen when they are serving 74% of all TV households in Malaysia or 5.7 million homes. Not only that, Astro serves 8,300 enterprises, 17 million weekly radio

listeners (FM and digital), 14 million digital monthly unique visitors (“MUV”) and 2.8million shoppers across its TV, radio, digital and commerce platforms as well. 2.1.2 Core Business Astro’s core business is in their value creation. Astro has created the seven Strategic Pillars which are content, customer, experience, digitalisation, talent, community and environment. The core business is basically in the second pillar which is the customer. The core business that has been stated are household, individuals, adex (advertisement expenditure) and commerce. (a) Household Astro has redefined their Pay-TV value proposition through broadband bundling and Astro Rewards while deepening penetration via NJOI. (b) Individuals Using OTT (Over-the-Top), digital brands, and radio, Astro extends their household reach into the individual's space. (c) Adex (advertisement expenditure) Astro provides 360° marketing solutions to advertisers by marrying their multi platform media reach, signature content, on-air talent, ground activation and analytics.

3

(d) Commerce Position Go Shop as a leading commerce brand offering a premium multi platform shopping experience. 2.1.3 SWOT Analysis Astro Malaysia Holding Berhad

Strengths

Weakness

●

Malaysia's largest pay-TV company

●

Superior content

●

High barriers of entry into the pay-TV industry due to high capex requirement

●

High depreciation and amortisation expenses for STBs have dampened its bottomline

Opportunities

●

The current 54 percent pay-TV household penetration rate suggests that there is still opportunity for growth.

●

Its market leadership might be strengthened through bundled services with key partners.

Threats

●

Escalating content costs may narrow its net margin

●

Weaker MYR will increase the cost of foreign content

4

2.1.4 Financial History Astro Malaysia Holding Berhad Annual Result of Astro Malaysia Holdings Berhad 2015

2016

2017

2018

2019

Total Current Assets

RM 2,306,684

RM 2,088,361

RM 1,706,949

RM 2,041,112

RM 1,541,587

Total NonCurrent Assets

RM 4,424,643

RM 4,812,611

RM 4,558,909

RM 4,806,835

RM 4,717,971

Total Assets

RM 6,731,327

RM 6,900,972

RM 6,265,858

RM 6,847,947

RM 6,259,558

Total Current Liabilities

RM 2,207,674

RM 2,281,445

RM 2,280,072

RM 2,403,645

RM 1,979,824

Total NonCurrent Liabilities

RM 3,809,438

RM 4,005,731

RM 3,355,974

RM 3,790,973

RM 3,600,826

Total Liabilities

RM 6,017,112

RM 6,287,176

RM 6,287,176

RM 6,194,618

RM 5,580,650

Total Equity

RM 714,215

RM 613,796

RM 629,812

RM 653,329

RM 678,908

Revenue

RM 5,231,444

RM 5,475,371

RM 5,612,647

RM 742,251

RM 5,479,048

Inventory

RM 12,989

RM 20,571

RM 20,366

RM 19,678

RM 16,284

Net Profit/Loss

RM 513,750

RM 607,961

RM 616,992

RM 763,976

RM 460,824

5

2.2 Media Prima Berhad

2.2.1 Company Background Media Prima Berhad is the leading fully-integrated media company with a complete repertoire of media-related businesses in television, print, radio, out-of-home advertising, content creation and digital media. Media Prima Berhad

2.2.2 Core Business Media Prima's business strategy is sustainable, allowing the company to concentrate on what it does best. This is the cornerstone of Odyssey's three-year transformation plan to become the world's top digital-first content and commerce organisation.

(a) Digital-First Under Odyssey's direction, Media Prima embraced new technology and took a "digital-first" approach to established media channels. As a result of the rising consumer demand for digital material, they were able to bridge

the

gap

in

their

audience.

(b) Commerce The investigation of commerce options by Media Prima resulted in income of about RM232.3 million in 2019. This is a tribute to their ability to maximise the reach of their audience. CJ Wow Shop, their home shopping section, is the most successful, with their broad television reach being one of the major factors in their success. (c) Intellectual Property and Beyond Malaysia Media Prima has been inspired by the Odyssey to dream large and beyond Malaysia's borders. They've put money into IPs that are popular with audiences and can move worldwide.

6

2.2.3 SWOT Analysis Media Prima Berhad

Strengths

●

Malaysia's only integrated media player

●

With a market share of more than 85%, monopolises the free-to-air (FTA) television market.

●

Its print media section caters to Malaysia's Malay community, which is the country's biggest ethnic group.

Weakness

●

Revenue is heavily on adex

Opportunities

●

Continued in investment in quality content to maintain its market leadership

Threats

●

The pay-TV adex is growing rapidly.

●

The cost of newsprint is anticipated to rise sooner than predicted.

2.2.4 Financial History Media Prima Berhad Annual Result of Media Prima Berhad 2015

2016

2017

2018

2019

Total Current Assets

RM 893,018

RM 782,560

RM 579,538

RM 533,720

RM 530,275

Total Non-Current Assets

RM 1,422,880

RM 1,352,676

RM 991,553

RM 782,528

RM 904,678

Total Assets

RM 2,315,898

RM 2,135,236

RM 1,571,091

RM 1,316,248

RM 1,434,953

Total Current Liabilities

RM 326,534

RM 596,001

RM 810,082

RM 456,141

RM 615,312

Total Non-Current Liabilities

RM 368,388

RM 69,563

RM 338,144

RM 41,222

RM 223,713

Total Liabilities

RM 694,922

RM 665,564

RM 810,082

RM 497,363

RM 839,025

Total Equity

RM 1,635,132

RM 1,486,213

RM 772,180

RM 814,387

RM 701,728

Revenue

RM 1,427,693

RM 1,289,008

RM 1,195,672

RM 1,185,737

RM 1,106,039

Inventory

RM 53,268

RM 55,244

RM 46,220

RM 36,900

RM 6,433

7

RM 138,708

Net Profit/Loss

RM (69,783)

RM (69,665)

RM 58,991

RM (185,488)

3.0 FINANCIAL PERFORMANCE 3.1 LIQUIDITY RATIO a) Current Ratio (CR)

CR =

Current Assets Current Liabilities

ASTRO

MEDIA PRIMA

2015

2015

CR = _________ 2,306,684 2,207,674 = 1.04 times

CR = ________ 893,018 326,534 = 2.73 times

2016 CR = ________ 2,088,361 2,281,445 = 0.91 times

2016

2017

2017

CR = _________ 1,706,949 2,280,072 = 0.75 times

CR = _________ 579,538 810,08 = 0.72 times

2018

2018

CR = _________ 2,041,112 2,403,645 = 0.85 times

CR = ________ 533,720 456,141 = 1.17 times

2019

2019 CR = ________ 530,275

CR = _________ 1,541,587 1,979,824 = 0.78 times

CR = ________ 782,560 596,001 = 1.31 times

904,678 = 0.59 times

8

Current Ratio (CR)

Company

2015

2016

2017

2018

2019

Astro Malaysia Holdings Berhad

1.04

0.91

0.75

0.85

0.78

1.17

0.59

Media

The current ratio (CR) is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. Based on the graph, Media Prima had the higher ratio two years in a row which is in 2015 and 2016. In 2018, Media Prima is once again able to pay the short-term obligations. That means, Media Prima has the ability to pay its short-term obligations using the current assets compared to Astro Malaysia Holdings Berhad.

9

b) Quick Ratio (QR)

QR =

Current Assets - Inventory Current Liabilities

ASTRO

MEDIA PRIMA

2015

2015

QR = ________________ 2,306,684 - 12,989 2,207,674 = 1.04 times

QR = ________________ 893,018 - 53,268 326,534 = 2.57 times

2016

2016

QR = ________________ 2,088,361 - 20,571 2,281,445 = 0.91 times

QR = ________________ 782,560 - 55,244 596,001 = 1.22 times

2017

2017

QR = 1,706,949 - 20,366 ________________ 2,280,072 = 0.74 times

QR = 579,538 - 46,220 ________________ 810,082 = 0.66 times

2018

2018

QR = ________________ 2,041,112 - 19,678

QR = 533,720 - 36,900 ______________ 456,141 = 1.09 times

2,403,645 = 0.84 times 2019

2019

QR = ________________ 1,541,587 - 16,284

QR = _____________ 530,275 - 6,433

1,979,824 = 0.77 times

615,312 = 0.85 times

10

Quick Ratio (QR)

Company

2015

2016

2017

2018

2019

Astro Malaysia Holdings Berhad

1.04

0.91

0.74

0.84

0.77

Media Prima Berhad

2.57

1.22

0.66

1.09

0.85

The quick ratio approach is assuming all existing assets as current liability coverage which differs from the current ratio approach. A greater ratio indicates the company's ability to meet short-term obligations without relying on stocks or prepaid expenses. This means the greater the ratio, the better the company's liquidity and financial stability. On the other hand, the lower the ratio, the more likely the company may have difficulty paying its debts. The graph shows that Media Prima Berhad has stronger capacity to pay its debts from the past four years in 2015-2016 and 2018-2019 compared to Astro Malaysia Holdings Berhad which has a weak ability to repay its debts.

11

3.2 ACTIVITY RATIO c) Account Receivables Turnover (ARTO)

ARTO =

Sales Account Receivables

ASTRO

MEDIA PRIMA

2015

2015

ARTO = __________ 5,231,444 826,676 = 6.33 times

ARTO = __________ 1,427,693 368,715 = 3.87 times

2016

2016

ARTO = __________ 5,475,371 955,392 = 5.73 times

ARTO = __________ 1,289,008 318,872 = 4.04 times

2017

2017

ARTO = __________ 5,612,647 858,488 = 6.54 times

ARTO = __________ 1,195,672

2018

2018

ARTO = _________ 5,530,753

ARTO = _________ 1,185,737

297,629 = 4.02 times

1,011,530 = 5.47 times

254,954 = 4.65 times

2019

2019

ARTO = _________ 5,479,048 808,430

ARTO = _________ 1,106,039 205,103 12

= 6.77 times

= 5.40 times

Account Receivables Turnover (ARTO) Company

2015

2016

2017

2018

2019

Astro Malaysia Holdings Berhad

6.33

5.73

6.54

5.47

6.77

Media Prima Berhad

3.87

4.04

4.02

4.65

5.40

Account Receivable Turnover (ARTO) measures the compatibility to collect debts or credit sales from customers. The higher the ARTO, the better or more effective the company is in collecting debts from customers. The lower the ARTO, the lower effective the company is in collecting debts from customers. According to the graph above, it shows that Astro Malaysia Holdings Berhad has done better in turnover ratio for five years in a row from 2015 to 2019. Media Prima Berhad has a low turnover ratio.

13

d) Average Collection Period (ACP)

ACP =

Account Receivables Sales

X 360

ASTRO

MEDIA PRIMA

2015

2015

ACP = 826,676 _________ x 360 5,231,444 = 56.89 days

ACP = 368,715 _________ x 360 1,427,693 = 92.97 days

2016

2016

ACP = __________ 955,392 x 360 5,475,371 = 62.82 days

ACP = __________ 318,872 x 360 1,289,008 = 89.06 days

2017

2017

ACP = __________ 858,488 x 360 5,612,647 = 55.06 days

ACP = __________ 297,629 x 360 1,195,672 = 89.61 days

2018

2018 ACP = __________ 254,954 x 360

ACP = __________ 1,011,530 x 360 5,530,753

1,185,737 = 77.41 days

= 65.84 days 14

2019

2019

ACP = ________ 808,430 x 360

ACP = ________ 205,103

5,479,048

1,106,039

= 53.12 days

= 66.75 days

Average Collection Period (ACP) Company

2015

2016

2017

2018

2019

Astro Malaysia Holdings Berhad

56.89

62.82

55.06

65.84

53.12

Media Prima Berhad

92.97

89.06

89.61

77.41

66.75

Average Collection Period (ACP) is the average number of days required to collect invoiced amounts from customers.Higher ACP indicates less efficiency of a company’s credit granting policies and collection efforts. In comparison to Astro Malaysia Holdings Berhad, Media Prima Berhad has a greater ACP ratio. A looser credit policy as a consequence of offering more credit to consumers, a worse economy, or a slowdown in collection attempts might all be factors in Astro Malaysia Holdings Berhad's ACP decline.

15

3.3PROFITABILITY RATIO e) Return On Asset (ROA)

ROA =

Net Profit Total Assets

X 100

ASTRO

MEDIA PRIMA

2015

2015

ROA = _________ 513,750 x 100 6,731,327

ROA = ________ 138,708 x 100 2,315,898 = 5.99 %

= 7.63 % 2016

2016

ROA = _________ 607,961 x 100 6,900,972

ROA = _________ (69,783) x 100 2,135,236

= 8.81 %

= -3.27 %

2017

2017

ROA = _________ 616,992 x 100 6,265,858

ROA = _________ 69,665 x 100 1,571,091 = 4.43 % 16

= 9.85 %

2018 ROA = _________ 763,976 x 100 6,847,947

2018 ROA = _________ 58,991 x 100 1,316,248

= 11.16 %

= 4.48 %

2019

2019

ROA = ________ 460,824 x 100 6,259,558 = 7.36 %

ROA = _________ (185,448) x 100 1,424,953 = -13.01 %

Return On Asset (ROA) Company

2015

2016

2017

2018

2019

Astro Malaysia Holdings Berhad

7.63

8.81