1. Analysis of Public Company
Reports
Basic Accounting (FNBE0145)
Assignment
Tony Tang Lee Lung (0314002)
Wong YeongCherng (0313378)
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2. TABLE CONTENT
Cover page
Background
information
Recent development
Profitability Ratio
Calculations
Financial Stability
Ratio and P/E Ratio
Calculations
Profitability Ratio
Interpretation
Financial Stability
P/E Ratio
Interpretation
Investment
Recommendation
Appendix
References
1
3
4
5
6
7
8
9
10
11-14
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3. Background information of Dutch Lady Malaysia Industry Bhd
In the 1950s, Dutch Lady Milk Industry Berhad (Dutch Lady Malaysia)
is a manufacturer of dairy products in Malaysia. In 1963, it was
incorporated and became the first milk company in Malaysia to be listed on
Bursa Malaysia, the local stock exchange in 1968. Royal
FrieslandCampina, a Dutch multinational corporation and one of the largest
milk companies in the world is its holding company.
Dutch Lady Malaysia produces and sells their products to the home
and export market such as Growing-up Milk, Powdered Milk, Condensed
Milk, UHT Milk, Sterilized Milk, Pasteurized Milk, Cultured Milk, Infant
Formula, Yoghurt and Fruit Juice Drinks.
The Company believes in product innovation and is well supported by
Royal FrieslandCampina. The Company continually strives to improve its
processes in order to deliver nutritious products of high quality to its
consumers. Meanwhile, it was the first company in the world to introduce a
growing up milk powder specifically formulated for children from ages one
to three, which are Dutch Lady 123 and Dutch Lady 456.
Since 1995, the company has continually been accredited with ISO
9001 certification. The strong emphasis is also placed on food safety with
HACCP (Hazard Analysis Critical Control Point) System covering all its
plants. Also, the company also has in place ISO 14001 Environment
Management System and OHSAS 18001 (Occupational Health and Safety
Assessment Series). The Company’s products are all halal-certified.
The company’s factory is located in Petaling Jaya. Recently, Dutch
Lady Malaysia is the market leader in key milk categories such as UHT
milk, Sterilized milk and Growing-Up Milk.
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4. Recent Development
Year 1995
Dutch Lady Malaysia been accredited with ISO 9001
certification
Year 1995
The Hazard Analysis and Critical Control Point
(HACCP) certification has been awarded to Dutch
Lady Malaysia for all its processing and packaging
plants.
Year 1999
Dutch Lady Malaysia attained certification under the
new OHSAS 18001 which contribute to the protection
of employees, visitors and contractors from hazards
Year 2004
Dutch Lady Malaysia attained certification under the
new ISO 14001
Year 2004
Dutch Lady Malaysia received the “NPC productive”
Awards.
Year 2007
Dutch Lady Malaysia received “The Reader’s Digest
Superbrands Gold” Awards.
Year 2010
Dutch Lady Malaysia received the “Putra Brand”
Awards.
Extra
award
Dutch Lady Malaysia receives the “Halal certification
for local and international markets” and the halal
certificate issued by JAKIM is renewed every two
years.
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5. Profitability Ratio
(ROE)
Return on
Equity
(NPM)
Net Profit
Margin
(GPM)
Gross Profit
Margin
(SER)
Selling
Exp.Ratio
2012
= 123380
x100
%
237644
= 51.9%
= 123380
x100
%
882179
= 14.0%
= 346704
x100
%
882179
= 39.3%
= 120676
x100
%
882179
= 13.7%
(GER)
General Exp.
Ratio
(FER)
Financial
Exp. Ratio
2011
= 108082
228313
x100%
= 47.3%
= 108082
810647
X100%
= 13.3%
= 304472
810647
X100
%
= 37.6%
= 106180
810647
X100%
= 13.1%
= 27472
x100
%
882179
= 3.1%
= 2862
x100
%
882179
= 0.3%
= 26134
810647
= 3.2%
= 919
810647
= 0.1%
5
X100%
X100%

6. Financial Stability Ratio
2012
Working
Capital
Total Debt
(IT)
Stock
Turnover
(DT)
Debtor
Turnover
(IC)
Interest
Coverage
2011
=
308510
161786
= 1.91
= 1.91: 1
= 166640
382774
= 43.5%
= 365 days
=
x100%
=
=
=
=
=
(535475/90114.5)
= 61.4 days
= 365 days
324466
135309
2.4
2.40: 1
139360
398514
35.0%
365 days
(506175/83085)
(882179 /26445)
= 10.9 days
= 59.9 days
= 365 days
(810647 /
55945)
= 25.2 days
= 6056+123380
= 3104+108082
3104
6056
= 21.4 times
= 35.8 times
Price/Earning
Current share
Ratio
= price
Earnings per
share
= 46.76
2.03
= 23.09
6
x100%

7. Interpretation
During the year 2011-2012 periods, the ROE has
ROE increased from 47.3% to 51.9%. This means that
the owner is getting more return on his capital.
During the year 2011-2012 periods, the NPM has
NPM increased from 13.3% to 14.0%. This means that
the owner is getting more profit from the sales.
During the year 2011-2012 periods, the GPM has
increased from 37.6% to 39.3%. This means that
GPM
the business is getting better in controlling the cost
of goods sold.
SER
During the year 2011-2012 periods, the SER has
increased from 13.1% to 13.7%. This means that
the business is getting worse in controlling the
selling expenses.
During the year 2011-2012 periods, the GER has
decreased from 3.2% to 3.1%. This means that the
GER
business is getting better in controlling the general
expenses.
FER
During the year 2011-2012 periods, the FER has
increased from 0.1% to 0.3%. This means that the
business is getting worse in controlling the financial
expenses.
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8. Interpretation
Working
Capital
During the year 2011-2012 periods, the WCR
has decreased from 2.40: 1 to 1.91: 1. The
business ability to pay off current liabilities is
getting worse. In addition, it does not reach the
minimum 2: 1 ratio.
Total
Debt
During the year 2011-2012 periods, the TDR
has increased from 35.0% to 43.5%. The Total
Debt has increases. However, the debt level is
still lower than 50% limit.
During the year 2011-2012 periods, the stock
Stock
turnover has increased from 59.9 days to 61.4
Turnover days. The business sells the inventory become
slower.
During the year 2011-2012 periods, the debtor
Debtor turnover has decreased from 25.2 days to 10.9
Turnover days. The business is more effective in
collecting the debts.
During the 2011-2012 periods, the interest
coverage has decreased from 35.8 times to 21.4
Interest
times. The business ability to pay its interest has
Coverage
decreased. Thus, it has already satisfied the
minimum ratio of 5 times.
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9. Interpretation
P/E ratio measures how expensive a share is. The
higher the P/E ratio, the more expensive a share is,
and vice versa. According to the value that was
P/E counted, the P/E of 23.09 means that an investor
Ratio will need to wait for 23.09 years to recoup his
investment. A conservative investor will normally
pay no more than ratio of 15 for a share that he
likes.
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10. Investment Recommendation
Dutch Lady Milk Industry Berhaddid not demonstrated good
profitability and strong financial stability. However, its shares are
available at a cheap price.
In our opinion, we think that Dutch Lady Malaysiaat 2012 is not
that profitable as the year 2011. Thus, we think that it would be
wise to not invest in the company.
According to the ratio calculations above, in terms of the
profitability ratios, the Return on Equity (ROE), Net Profit Margin
(NPM), Gross Profit Margin (GPM), and General Expenses Ratio
(GER) are getting better at 2012 compare to 2011. The company
is using more expenses and getting even worse at controlling
their expenses at 2012 compare to the previous years.
The other factors that Dutch Lady Malaysia (Dutch Lady Malaysia) is
not recommended to be invest is because its working capital, total
debt, stock turnover, debtor turnover, and interest coverage from
the financial stability ratios are getting worse compare to the
previous years.
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11. 11

12. 12

13. 13

14. 14

15. References
 Dutchlady.com.my (1963). Dutch Lady::The Company:
Company Profile. [Online] Retrieved on 7 November 2013. At
http://www.dutchlady.com.my/en/home.asp?page=compan
y&subpage=comp_profile
 Dutchlady.com.my (1963). Dutch Lady: TheCompany:
Introduction To Dutch Lady. [Online] Retrieved on
7November2013. Available at Introduction To Dutch Lady. At
http://www.dutchlady.com.my/en/home.asp?page=compan
y&subpage=intro_dutch
 Huang, S. (2011). Dutch Lady Annual Report 2011. [Online]
Retrieved on 7 November 2013 At
http://www.dutchlady.com.my/sharedfiles/financial/files/DL
_AnnualReport_2011.pdf
 Huang, S. (2012). Dutch Lady Annual Report 2012. [Online]
Retrieved on 7 November 2013 At
http://www.dutchlady.com.my/sharedfiles/financial/files/DL
_AnnualReport_2012.pdf
 Dutchlady.com.my (1963). Dutch Lady: The Company:
Introduction To Dutch Lady. [Online] Retrieved on 7November
2013. Available at Introduction To Dutch Lady.
Athttp://www.dutchlady.com.my/en/home.asp?page=comp
any&subpage=success
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