COMPANY BACKGROUND
Founder: Dato’ Azmir
Merican
Year of Establishment: 2007
Headquarters: Subang Jaya,
Selangor
Nature of business:
Investment Holding,
Property Development
and Provision of
Management Services
Major subsidiary
Number of Employees: 1,458
Total Revenue: RM 2,742.1m
(2022)
MISSION
Advancing real To develop, own
estate as a force and manage a
for collective thriving asset
progress, in portfolio,
harmony with the creating value
planet’s for all
resources. stakeholders.
The Edge Malaysia Property Excellence Awards 2022
BCI Asia Awards 2022
Putra Brand Awards – The People’s Choice Awards
2022
Malaysia Developer Awards 2022
British Malaysian Chamber of Commerce (“BMCC”)
Business Excellence Awards 2022
Star Property Awards 2022 – Real Estate Developer
TREND ANALYSIS
Sime Darby Property's current ratio The quick ratio increased from 2018
has been declining from 3.11 in 2018 to to 2020, indicating Sime Darby
1.88 in 2019, indicating a decreasing Property's improving ability to meet
ability to meet its short-term its short-term obligations. This ratio
obligations. However, this trend
stood at 0.69 in 2018, rose to 0.82 in
reversed in 2020, with the current ratio
2019, and further increased to 1.09
rising to 2.39, suggesting an improved
in 2020. However, in 2021, the quick
ability to pay short-term debts.
ratio declined to 0.90, suggesting a
Unfortunately, the positive trend did
reduced ability to pay short-term
not continue, as the current ratio
declined again in 2021 to 1.89 and debts. This trend reversed in 2022,
further dropped to 1.82 in 2022, as the quick ratio rebounded to
highlighting challenges in meeting 0.95, indicating an improved
short-term financial commitments. capacity to meet short-term
financial commitments.
The debt ratio exhibited an Debt to equity increased from
upward trend from 2018 to 2021, 0.21% in 2018, 0.26% in 2019, and
with values of 1.52%, 1.59%, 1.64%, 0.345 in 2020. This shows that
and 1.67% in those years Sime Darby Property is utilizing
too much debt relative to the
respectively. This suggests that
capital. However, in 2021 to 2022,
Sime Darby Property's debt
the value of debt to equity
management practices may need
decreased to 0.31% in 2021 and
improvement, as a rising debt
0.24% in 2022. This shows that
ratio could indicate increased Sime Darby Property is now able
financial risk. However, in 2022, to have debt that is not as high as
the debt ratio declined to 1.60%, or higher than the company's
indicating a potential positive shift capital
in debt management and a
possible reduction in financial risk.
TREND ANALYSIS
Net profit margin declined from 2018 to The return on asset (ROA) decreased
2020, falling from 27.20% in 2018 to from 2018 to 2020, from 4.38% in
18.82% in 2019 and -23.21% in 2020. This
2018 to 3.91% in 2019 to -3.15% in
indicates that Sime Darby Property's
2020. This decline indicates that Sime
profitability decreased during this
Darby Property's efficiency in
period, suggesting that the company
generating profits from its assets
was not maximizing shareholder value
deteriorated during this period.
effectively. However, net profit margin
However, ROA rebounded in 2021 to
rebounded in 2021 to 6.17% and further
0.91% and further improved to 2.07%
improved to 11.52% in 2022. This
in 2022. This recovery suggests that
recovery demonstrates that Sime
Sime Darby Property has taken
Darby Property has taken steps to
enhance its profitability and better serve
effective measures to enhance its
its shareholders. asset utilization and profitability.
Inventory turnover from 2018 to 2020 Fixed asset turnover increased steadily from
increased, with values of 0.37 in 2018, 2018 to 2019, rising from 3.02 in 2018 to 4.98
0.72 in 2019, and 0.92 in 2020. This in 2019. This upward trend indicates that
indicates that Sime Darby Property is Sime Darby Property is effectively utilizing its
plant and machinery to generate sales.
becoming more efficient in managing
However, fixed asset turnover experienced a
and utilizing its assets to generate
decline in 2020 to 3.27, suggesting a
sales. However, inventory turnover
temporary decrease in efficiency. In 2021 and
decreased in 2021 to 0.87, suggesting
2022, fixed asset turnover rebounded,
a temporary decline in efficiency. In
reaching 3.58 in 2021 and 4.56 in 2022. This
2022, inventory turnover rebounded recovery demonstrates Sime Darby
to 1.11, demonstrating Sime Darby Property's ability to manage and fully utilize
Property's exceptional ability to its assets effectively to generate sales.
generate sales from its inventory.
COMPANY BACKGROUND
Founder: Datuk Tan Kim
Leong
Year of Establishment:
2013
Headquarters: Putrajaya,
Malaysia
Nature of business:
Property Development,
Property Investments,
Hospitality and Leisure
Major subsidiary
Number of Employees:
2.65k
Total Revenue: RM 2.59bn
(2022)
VISION MISSION
To be a leading To be a leading
and sustainable and sustainable
Malaysian Malaysian
business business
corporation with corporation with
global presence. global presence.
AWARDS
AWARDS
Agoda Customer Review Awards 2022
Tripadvisor Certificate of Excellence 2022
StarProperty Awards 2022 – Real Estate
Developer
SGBC-BCA Leadership in Sustainability
Awards 2022
ASEAN Tourism Standards Award
Graduates’ Choice Award
TREND ANALYSIS
Based on the table and graph above, IOI Properties' quick ratio has fluctuated
IOI Properties' current ratio exhibits a from 2018 to 2022, indicating a variation
fluctuating trend from 2018 to 2022. In in its ability to manage and utilize its
2019, the ratio increased from 2.34x in assets effectively to generate sales. In
2018 to 2.90x, indicating an enhanced 2019, the quick ratio declined from 0.85x
ability to meet short-term obligations. in 2018 to 0.77x, suggesting a decrease
However, the ratio declined in 2020 in efficiency and utilization of assets for
from 2.66x to 3.11x, suggesting a sales generation. However, in 2020, the
reduced capacity to settle short-term quick ratio rebounded from 0.71x to
1.03x, demonstrating an improvement in
debts. The current ratio continued to
asset management and expense control.
decrease in 2022, reaching 0.47x, a
However, this positive trend was short-
significant drop compared to previous
lived, as the quick ratio plummeted to
years. This downward trend highlights
0.20x in 2022, significantly lower than
IOI Properties' potential challenges in
the previous year's levels. This sharp
fulfilling interest payment obligations
decline raises concerns about IOI
and facing a heightened risk of default
Properties' ability to meet short-term
obligations in the future.
According to the data, IOI Properties' debt IOI Properties' debt-to-equity ratio
ratio has been on a downward trend from in 2018 was lower than in 2019,
2018 to 2019, indicating prudent debt standing at 0.52% compared to
management practices. The debt ratio 0.54%, respectively. However, the
decreased from 1.79% in 2018 to 1.74% in
company's debt-to-equity ratio
2019, suggesting a reduced reliance on debt
experienced a significant decrease
financing and a lower risk of financial
in 2020, reaching 0.51%. This decline
distress. However, in 2020, the debt ratio
continued to decline, reaching 1.71%. This suggests that IOI Properties may
seemingly positive trend raises a concern, not have been effectively utilizing its
as a lower debt ratio may also imply a resources during that period.
decreased ability to meet short-term Conversely, the debt-to-equity ratio
obligations. In 2022, the debt ratio was higher in 2021 compared to
experienced a slight uptick to 1.93%, which, 2022, at 0.55% and 0.16%,
while higher than the previous year, still respectively. This indicates that the
remains relatively low. This increase could company's efficiency in managing
be attributed to various factors, such as its debt and equity may have been
investments in growth opportunities or a
suboptimal during those years.
strategic decision to optimize capital
structure.
TREND ANALYSIS
IOI Properties' net profit margin exhibits IOI Properties' return on total assets
an upward trend from 2018 to 2019, (ROA) has exhibited a declining trend
rising from 28.06% to 30.09%. This from 2018 to 2022, indicating a
improvement suggests that the decrease in the company's efficiency in
company has effectively controlled its utilizing its assets to generate profits. In
indirect costs and either increased its 2018, the ROA stood at 2.36%, but it
product prices or enhanced its operating dropped to 2.02% in 2019, suggesting
expense management. However, in that the company was not fully
2020, the net profit margin experienced exploiting its asset base to its full
a significant decline to 21.53%. This sharp potential. This downward trend
drop indicates that IOI Properties may continued in 2020, with the ROA
have faced challenges in managing its plunging to 1.39%. This sharp decline
debt and could potentially face highlights the company's challenges in
increased financial risk. Despite a slight effectively managing its assets to
recovery in 2021, with a net profit achieve sustainable profitability. While
margin of 26.53%, the company's there was a slight recovery in 2021, with
profitability continues to lag behind its the ROA reaching 1.99%, it further
previous peak in 2019. This persistent declined to 1.88% in 2022. This
decline suggests that IOI Properties may persistent downward trend in ROA
need to address inefficiencies in raises concerns about IOI Properties'
inventory management to regain its ability to meet its short-term
financial strength obligations effectively.
The inventory turnover of IOI Fixed Asset Turnover has been
Properties has inconsistent ratios. decreasing from 2.43x in 2018 to
The inventory turnover ratio in 2018 1.81x in 2019 and further to 1.58x in
decreased from 0.28x to 0.18x in 2020. This indicates that IOI
2019. This suggests that it may have
Properties is unable to effectively
dropped due to a lack of sales or
manage and fully utilize its fixed
insufficient marketing from IOI
assets to generate sales. The
Properties. However, from 2020 to
2022, the inventory turnover ratio downward trend continued in
increased significantly, reaching 2021 and 2022, with fixed asset
0.17x in 2020, 0.26x in 2021, and turnover decreasing from 1.69x to
0.37x in 2022, outperforming 2018 1.13x. This suggests that the
and 2019. This indicates that the company is inefficient in utilizing
company is performing well, its fixed assets, resulting in lower
generating more revenue per revenue per ringgit and reduced
ringgit spent, and maximizing shareholder value maximization
shareholder value.
CROSS SECTIONAL ANALYSIS
LIQUIDITY RATIOS
CURRENT 1.82x 0.47x
RATIO
QUICK 0.95X 0.20X
RATIO
INTERPRETATION
Sime Darby Property’s current ratio and quick ratio are higher than IOI
Properties’s current ratio and quick ratio. This shows that Sime Darby Property
is able to pay its short-term obligation in the future better than IOI Properties.
LEVERAGE RATIOS
DEBT 0.95% 1.93%
RATIO
DEBT TO
EQUITY 0.24% 0.16%
RATIO
INTERPRETATION
Sime Darby Property debt ratio is lower than IOI Properties debt ratio. With a lower debt ratio, it indicates
that Sime Darby Property is good in managing the company’s debt and may face lower financial risk
compared to IOI Properties. Meanwhile, IOI Properties debt to equity ratio is lower than Sime Darby
Property. It shows that IOI Properties is better in debt to equity ratio than Sime Darby Property. This is
because, IOI Properties are able to have a debt which the amounted is not as much or above the company’s
capital
CROSS SECTIONAL ANALYSIS
PROFITIBILITY RATIOS
NET PROFIT 26.51% 11.52%
MARGIN
RETURN ON
ASSEST
2.07% 1.88%
INTERPRETATION
For IOI Properties net profit margin is higher than Sime Darby Property. It shows that IOI Properties
earn more per RM and are able to maximize shareholders well compared to Sime Darby Property.
For Sime Darby Property returns on total assets are higher than IOI Properties. It shows that Sime
Darby Property earn more per RM and are able to maximize shareholder well compare to
IOI Properties
ACTIVITY RATIOS
INVENTORY
TURNOVER
1.11x 0.37x
FIXED ASSET
TURNOVER 4.56x 1.13x
INTERPRETATION
Sime Darby Property’s total asset turnover are higher than IOI Properties. For fixed asset turnover,
Sime Darby Property maintains higher than IOI Properties. This indicates that Sime Darby
Properties are able to manage and fully utilize the company’s assets very well to generate sales
compared to IOI Properties. In addition, Sime Darby Property is more efficient in using their
company’s plant and machinery to generate goods for sales compared to IOI Properties.
recommendation
Based on the analysis of Sime Darby property financial ratios which shows
bad performance of the company in the five recent years, some
improvements and solutions in financial management need to be taken in
order to overcome all the financial problem and can help the company to
recover from its bad position.
For investors to invest in both companies and gain their trust, both
companies must provide a strong financial record. IOI Properties
and Sime Darby Property need to perform a benchmarking as their
initial action. Sime Darby Property and IOl Properties should
evaluate their business performance against competitors and
related industries. Investors must keep an average cost or greater in
order to obtain a good understanding before making an investment.
This would increase the ratio of all businesses are able to work on
their future adjustments, consequently increasing the efficiency of
specific goods or services.
Moreover, we would advise both company to reduce their net asset
valuation values. They must use the asset to its greatest potential in
order to increase their Return of Asset rate. They must produce more
with the resource they have. Since they had strong management
abilities, they will be able to make appropriate use of the asset.
Every company wants to maintain an excellent rate and they will
determine which area requires improvement by the financial ratio with
a strong business efficiency success that can draw significant client
contributions that will help in the organization's development.
conclusion
To sum up, in every ratio, Sime Finally, the company must keep
Darby Property outperforms IOI the investor pleased by
Properties Group Berhad. IOI communicating effectively and
Properties Group Berhad must providing simple yet precise
step up its game in order to financial information. Sime Darby
ensure that it can achieve higher Property, in my opinion, operates
ratios in the future. Increasing better overall than IOI Properties
operational efficiency and Group Berhad, however it still
making the best use of needs to utilize caution and pay
inventory are two areas where a close attention to its current ratio,
company can focus to keep a which is still higher than the
healthy number of financial optimal ratio of 1. IOI Properties
ratios. Furthermore, the Group Berhad must analyze all of
company can improve its their plans in order to guarantee
management in other areas such that their business can be
as risk oversight, cost reduction, sustained and stable for an
debt control, and working with extended period of time.
capital.
