BM056-3-5.2-FMGTIndividual AssignmentAsian Pacific
UniversityExecutive SummaryThis documentation provides two
companies within Bursa Malaysia (KLSE), representing two different
sectors. Astro Holdings Berhad is a leading integrated consumer
media entertainment group and is classified under the trading and
serve sector. Sunway Berhad is engaged in two businesses: property
and construction and is classified under the infrastructure sector.
Both companies financial sources/resource are obtained from Bank
loans and shareholders. In addition, Astro and Sunway Berhad have a
significant amount of debt however, Astro has a reduced debt amount
as compared to Sunway, with Astro sitting on RM3671 million while
Sunway sits on RM2.33 billion. Astros debt profile is categorized
into three (3) main contributors; USD term loan, RM term loan and
Finance lease. It seems that Astro and Sunway have different
challenges that are being faced. Astros operating expenses will
peak in FY14 as the company focuses on reinvesting for growth. On
the other hand, Sunways Groups balance sheet is expected to weaken
further as it gears up for property development and to build up its
investment properties portfolio. Sunway Berhads debts are projected
to rise between RM2.91 billion and RM3.30 billion in the next 1-2
years (according to RAM holdings Berhad 2012).This documentation
will included important figures and tables such as the companys
liabilities, Assets, debts profile, financial ratios, institutional
shareholders, financial summary and total debts of each of the
companies (Sunway and Astro Berhad).
Table of ContentsExecutive Summary11.0 Introduction31.1 Astro
Malaysia Holdings Berhad31.2 Sunway Holdings Berhad32.0
Definitions42.1 Capital Structure42.2 Financial ratios43.0
Financing sources Astro Malaysia Holdings Berhad43.1 Capital
structure63.1.1 USD term loan63.1.2 RM term loan73.1.3 Finance
lease74.0 Financing sources for Sunway Berhad84.1 Capital
Structure95.0 Evaluation of the financing sources between Astro
Holdings Berhad and Sunway Berhad105.1 Astro Holdings Berhad105.2
Sunway Berhad116.0 Conclusion127.0 References12
1.0 Introduction1.1 Astro Malaysia Holdings BerhadAstro Malaysia
Holdings Berhad is a leading integrated consumer media
entertainment group in Malaysia and Southeast Asia with operations
in four (4) key areas of business, namely Pat-TV, Radio,
Publications and Digital Media. Astro was founded in 1996 and is a
company incorporated in Malaysia with its principal of business at
the Administration Building of the All Asia Broadcast Centre,
located in Technology Park Malaysia. According to Astros official
website (2014) Company Background, the company has a customer base
of 3.8 million residential customers or fifty five (55) percent
penetration of Malaysian TV households. With reference to Astros
official website, the company offers 171 TV channels, including
sixty eight (68) Astro-created and branded channels and 39 HD
channels, delivered via Direct-To-Home satellite TV, IPTV and OTT
platforms. Astro provides HD, 3D, PVR, VOD and IPTV services
through Astro Beyond and Astro On-The-GO (Astro Holdings Berhad,
2014). According to Astro Malaysia Holdings Berhad by Cashbaa
directory (2014), Astro was awarded the brand of the year by The
Peoples Choice awards which was awarded at Malaysias Putra Brand
Awards 2012. The award in recognition of Astros efforts to
exemplify innovation, quality and strong corporate social
responsibilities. 1.2 Sunway Holdings BerhadSunway Berhad (Sunway),
previously Alpha Sunrise Sdn Bhd, is engaged in two businesses:
property and construction. According to Sunway Holdings 2014, the
Companys supplementary business divisions include quarry and
building materials, trading and manufacturing, hospitality,
leisure, and healthcare. The Company is a unique purpose company
formed for the acquisition of Sun City Business and the Sun
Business. According to Sunway BHD (SWB: Kuala Lumpur) by Bloomberg
Businessweek (2014), in its construction business, the Company
offers designing and building services in the field of building
construction, civil engineering, infrastructure, mechanical and
electrical engineering, machinery and site equipment rental,
precast, foundation and piling, and stone materials. Among the
companys top construction projects are the 800-acre Bandar Sunway
resort near Kuala Lumpur and the Kajang SILK highway in central
Malaysia. The companys operates throughout the Asia) Pacific region
and the Middle East. Sunway Holdings merged with affiliate Sunway
City in 2001. The combined company is controlled by chairman
Jeffery Cheah. 2.0 Definitions 2.1 Capital StructureAccording to
Investopedia (2014), capital structure is defined as a mix of a
companys long term debt, specific short-term debt, common equity
and preferred equity. The capital structure is how a firm finances
its overall operations and growth by using different sources of
funds. 2.2 Financial ratiosAccording to Business Dictionary (2014),
financial ratios are defined as a financial analysis comparison in
which certain financial statement items are divided by one another
to reveal their logical interrelationships.3.0 Financing sources
Astro Malaysia Holdings BerhadMost of Astros financial resources
are obtained from its shareholders and Bank loans. According to
Institutional Shareholders by markets (2014), Astro has numerous
institutional shareholders. Figure 1.0 shows the Institutional
shareholders of Astro. Permodalan Nasional Bhd holds the majority
of Shares with the Employees Provident Fund holding the least
shares as show in figure 1.0.
Figure 1.0 (Astros Institutional ShareholdersSource: Markets.ft
(2014)
According to Astros official website (2012) Astro double digit
revenue growth, in 2010, Astro generated a total revenue of RM3107
million. Its TV segment contributes to RM2959 millions of Astros
total revenues and RM106 million from its Radio segment, with a
remaining RM27 million and RM16 million from its Publishing and
Digital Services Segment respectively. A total of RM3525 million
was generated in 2011, with its TV segment contributing to RM3372
millions of its total revenue and RM104 million from its Radio
segment. Astros Publishing and Digital Services segment contributed
to RM33 million and RM16 million. In the year 2012, Astro generated
RM 3907 million in revenues, whereby, RM3759 million came from its
TV segment, RM117 million from its Radio Segment, and RM28 million
from its publishing segment with the remaining RM3 million from
Astros Digital Services segment.
3.1 Capital structure Astros total debt is recorded at RM3, 671
million. The breakdown of the Total borrowing of RM3671 million is
RM667 mil, 2000 mil and RM1042 mil for finance lease, term loan in
ringgit and term loan in USD. Nonetheless, part of the IPO proceeds
(RM500mil) will be used to pay down debts. Figure 2.0 shows Astros
total Debt profile. Figure 3.0 Shows Astros Group balance sheet
overview. Figure 2.0 (Astros debt profile)Source: Astro (2nd
quarter FY14 results) 2013
3.1.1 USD term loan Us dollar term loan of USD330mn swapped into
ringgit (RM1.0bn) 10 year tenor Back ended amortization schedule,
with average life of 7 years Fully hedged at exchange rate of
USD/RM3.0189
3.1.2 RM term loan Ringgit term loan of RM2.01bn, fully drawn on
10 June 2011. RM510mn of RM2.01 bn was repaid on November 2012,
leaving a balance of RM1.5 bn. Additional RM500mn was drawn down in
2012(additional RM500mn was still undrawn but left to voluntarily
lapse on November 2012). Balance outstanding of RM2.0bn has final
maturity date of May 2021 Back ended amortisation schedule, with
average life of 7 years3.1.3 Finance lease Payment arrangement for
the remaining contractual years have been redenominated into
Ringgit at USD/RM3.0445. Effective interest rate; 6.2% and 12% p.a
Average life: 15 years. Figure 3.0 (Astros Group balance sheet
overview) Source: Astro (3rd quarter Fy14 results) 2013
4.0 Financing sources for Sunway BerhadSunway Berhad obtains its
financial resources, or sources from its shareholders. Figure 4.0
shows Sunways Top institutional shareholders with GIC Pte Ltd.
(investing Management) maintaining most of the shares (8.74%),
while Singular Asset Management Sdn. Bhd obtains the least number
of shares with 0.17% as shown on figure 4.0. 19.05 percent of
shares are held by top holders. In addition, Sunway Berhad obtained
its financial sources from both OCBC Bank Berhad and RHB Bank
Berhad (loan).
Figure 4.0 (Sunway Institutional shareholders) Source:
Markets.ft (2014)
According to Sunway Group posts RM 1.5b in earnings in FY13 by
The Star Online (2014), The Sunway Group announced earnings results
for the year ended December 31, 2013. For the year, the company
reported that net profit increased to RM1.5 billion from RM 438.8
million in the previous year. Its annual revenue rose to RM4.7
billion versus RM4.1 billion recorded in 2012. For the full
financial year 2013, the companys core net profit surged thirty
eight (38) percent to RM 482.7 million from RM 350.7 million a year
ago. The companys strong financial results were due to improvement
in performance recorded by all its business divisions, with the two
(2) core businesses of property and construction leading the way.
4.1 Capital StructureThe Sunways Groups CCR is constrained by its
hefty debt burden and week debt coverage. Sunway Berhads total
debts, according to Ram Ratings reaffirms ratings of Sunways debt
issue by RAM Holdings Berhad (2012), as at end-September 2012,
amounts to RM2.33 billion (includes RM912.25 million of debt to
fund the cash portion of the offer). Translated into a moderately
high gross gearing ratio of 0.78 times. Its net gearing ratio was
more moderate at 0.49 times (figure 5.0 shows the gearing ratio),
aided by the Groups practice of maintaining a huge cash pile.
Figure 5.0 (Sound Balance Sheet) Source: Sunway Berhad 2013
The Groups balance sheet is expected to weaken further as it
gears up for property development and to build up its investment
properties portfolio. Sunway Berhads debts are projected to rise
between RM2.91 billion and RM3.30 billion in the next 1-2 years
(according to RAM holdings Berhad 2012), resulting in high gear
ratios of almost 1 time consequently, its operating cash flow debt
coverage is expected to be slightly weak, ranging between 0,10
times and 0.14 times. The Group is also exposed to the cyclicality
of the property and construction sectors, as well as the related
risks including fluctuating input prices and keen competition. Its
overseas operation also entail added risks given their different
regulatory and operating environments. Figure 6.0 Shows Sunway
Berhads Total Assets and Total Debt for the years 2010-2013.
Figure 6.0 (Sunways Total assets and Total Debt)Source;
Markets.ft (2014)
5.0 Evaluation of the financing sources between Astro Holdings
Berhad and Sunway Berhad5.1 Astro Holdings BerhadA significant
milestone in the history of the company was achieved on 19 October
2012 as the company witnessed the successful completion of their
IPO and the admission of their shares to the official list of the
Main Market of the Bursa Securities. The IPO received strong demand
from the investing community, both locally and outside Malaysia.
The total proceeds from the IPO were approximately RM4.5 billion,
of which the amount raised by Astro was approximately RM1.4
billion. Such an overwhelming response is a clear reflection of the
investing communitys trust and confidence in the company. Figure
7.0 shows the financial summary of Astro.
Figure 7.0 (financial summary of Astro)Source:
1-million-dollar-blog (2012)
Operating expenses for Astro will peak in FY14 as the company
focuses on reinvesting for growth. Continuous investment in content
offerings to provide an enriching experience for the companys
customers whilst managing content costs within 32-35 % of TV
revenue. Increase in operating expenses, particularly STB
depreciation, as well as selling, installation, distribution and
logistics costs driven by higher Astro B.yond STB conversions. 5.2
Sunway BerhadAccording to RAM Ratings assigns A2/P1 ratings to
Sunways proposed debt issues (2013), Sunways a2/Stable/P1 ratings
reflect the groups solid business profile, underscored by its
large-scale and vertically integrated business model, and its
diversified revenue and earnings based. Figure 8.0 shows the rating
of Sunways existing RM500 million CP/MTN facility. Figure 8.0
Rating of Sunways existing RM500 million CP/MTN facilitySource: RAM
Holdings Berhad 2013
The enhanced ratings of Tranches 1 and 2 reflect unconditional
and irrevocable bank guarantees extended by OCBC Bank Berhad and
RHB Bank Berhad. Sunways A2/p1 ratings reflect its solid business
position, underpinned by its large-scale and vertically-integrated
business model. The Groups profile is further supported by its
strong branded and established standing in the property and
construction sectors. Sunways unbilled property sales stood at a
robust RM2.41 billion as at end-September 2012, while the
successful replenishment of some RM1.7 billion of jobs in 2012 and
has boosted its outstanding construction order book to a high of
RM3.18 billion. These will provide revenue and earnings support
over the next 2-3 years. In addition, Sunway enjoys a stable stream
of dividend income and management fees through its associate stake
in Sunway Real Estate investment Trust, which will continue to
provide it with diversity and stability of earnings and cash flow.
6.0 Conclusion It can be seen while comparing the two companies
(Sunway and Astro), that Astro holds the least totaled debts
compared to Sunway Berhad, in this case, Astro seems to be more
stable with its financial positions. It seems, that the public or
investor community is pleased with the accomplishments of Astro.
Both these companies have created a strong image within the market
and have gained the hearts of consumers. It seems that both
companies have a strong capital structure with Sunway being able to
enjoy diversity and stability of earnings and cash flow while Astro
receives strong demand from the investing community, both locally
and outside Malaysia.[Word Count: 1994]7.0 ReferencesAstro (2013)
Astro annual report 2013, Available at:
http://www.astromalaysia.com.my/Portals/39/pdf/AMH-AR13-ENG.pdf
(Accessed: 2 November 2014)Sunway Berhad (2012) Sunway Berhad
Annual Report, Available at:
http://ir.chartnexus.com/sunway/doc/ar2012.pdf (Accessed: 2
November 2014)
haymarket (2014) ASTRO MALAYSIA HOLDINGS BERHAD, Available at:
http://www.casbaadirectory.com/regional/regional-mvpd-dth/astro-malaysia-holdings-berhad-s-783-c-19.html
(Accessed: 2 November 2014)
Astro (2014) Company Background, Available at:
http://www.astromalaysia.com.my/AboutUs.aspx (Accessed: 4 November
2014)
Bloomberg Businessweek (2014) Sunway Bhd (SWB:Kuala Lumpur),
Available at:
http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=SWB:MK
(Accessed: 4 November 2014)
markets.ft (2014) Astro Malaysia Holdings Bhd: Institutional
shareholders, Available at:
http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=ASTRO:KLS
(Accessed: 5 November 2014)
Astro (2013) ASTRO DOUBLE DIGIT REVENUE GROWTH; PAYS DIVIDENDS,
Available at:
http://www.astro.com.my/mediaroom/articles/art_12410.html
(Accessed: 5 November 2014)
The Star publications (2014) Sunway Group posts RM1.5b in
earnings in FY13, Available at:
http://www.thestar.com.my/Business/Business-News/2014/02/27/Sunway-Group-posts-RM1pt5b-in-earnings-in-FY13/
(Accessed: 7 November 2014)
Astro (2013) 3rd quarter FY14 results, Available at:
http://www.astromalaysia.com.my/Portals/39/pdf/AMH-3QFY14-analyst-presentation-UPLOAD.pdf
TAM Holdings Berhad (2013) RAM Ratings assigns A2/P1 ratings to
Sunways proposed debt issue, Available at:
http://www.ram.com.my/pressReleaseView.aspx?ID=696a6945-3ea0-4fad-b5f3-7f4a745a5385
(Accessed: 9 November 2014)
Astro (2013) 2nd quarter FY14 results, Available at:
http://www.astromalaysia.com.my/Portals/39/pdf/AMH-2QFY14-analyst-presentation-UPLOAD.pdf
(Accessed: 7 November 2014)