Sector : Consumer Products and Services
Sub Sector : Consumer Services
Focus : Trading and Distribution
Company
Profile:
HARISON is one of the largest sales, marketing,
warehousing, distribution and services organisation in Malaysia, especially in
East Malaysia. Besides that, HARISON also has a major presence in shipping
agency industry and travel industry in East Malaysia.
HARISON business are as follows:
a) East
Malaysia
- Marketing, sales, warehousing and
distribution of fast moving consumer goods, building materials, engineer
products and agriculture chemical.
- Operation of shipping and travel
agency in both Sabah and Sarawak.
b) Peninsular
Malaysia
- Marketing, sales, warehousing and
distribution of building materials, industrial and agriculture chemicals
- Import and distribute fine wine
- Freight forwarding and shipping
(Cruise Business)
HARISON business partner are Nestle, GAB, Malex,
Maersline, SCA Hygiene (Drypers), Reckitt Benckiser (Dettol, Shieldox), Kio,
Ngan Yin and Cocoin.
HARISON had venture into new retail business in 2018
after acquisition of Watts Harrison Sdn Bhd in Penisular Malaysia which
wholesales and retails Komonoya brand in Malaysia and The Famous Amos Chocolate
Chip Cookies Singapore Pte Ltd which wholesale and retails Famous Amos Cookies
in Singapore.
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Cons:
|
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·
Shipping agency and Travel agency would
be affect by Convid 19.
·
HARISON had close down 2 Komonoya
outlets in 2020 and plan to close another in 2021.
|
Revenue:
Below is the revenue and operating margin of HARISON.
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5 Years Annualise Growth of Revenue
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4.06 %
|
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10 Years Annualise Growth of Revenue
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5.26 %
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HARISON revenue had growth steadily every years, but
the operating margin had reduce from 4.35 % in 2010 to 2.53 % in 2019.
In year 2014 show almost 0% operating margin. This
is due to settlement of claim to KASTAM Malaysia of RM 31,500,000. Besides that
in 2014, HARISON also stop distributing Coca-Cola in Sabah.
Nett
Profit
Bar Chart below shows HARISON nett profit from 2010 –
2019.
HARISON had make a loss in 2014 due to the
settlement to KASTAM Malaysia as discussed previously which is consider a one
off event.
In 2016 nett income had increase by 41 % was due to
compensation of RM 3,088,000 awarded by Sibu Court for damage arising from a
fire in 2013 to a Sibu warehouse rented by Harrisons Sarawak Sdn Bhd.
|
Cons:
|
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· One
off settlement to KASTAM Malaysia RM 31,500,000
|
Assets
and Liabilities
HARISON liabilities had growth over the period of 10
years.
|
Cons:
|
|
· HARISON
liability had growth over the period of 10 years
|
Trade
Receivables
In 2018 and 2019 HARISON had over 60 % of their
trade receivables past due.
|
Cons:
|
|
· HARISON
had over 60 % of their trade receivables past due
|
Financial
Ratio
There would be few financial ratios to be look at
here:
1) Interest
Coverage Ratio (Green Bar Chart)
2) Cash
Ratio (Blue Line Chart)
3) Current
Ratio (Red Line Chart)
1) Interest Coverage Ratio
Interest coverage ratio measure how
capable the company pay off the existing debt. With an interest coverage ratio
above one mean the earnings before interest & tax (EBIT) is able to pay of
the full amount of the financial cost of the year.
HARISON Interest coverage ratio had
reduce over time from 53.35 in 2010 to 3.52 in 2019
2) Cash
Ratio
As cash is the most liquid assets
of the company, cash ratio is use to determine company ability to pay off short
term liabilities using cash. Cash ratio above one indicates that company able
to settle all current liabilities using available cash.
HARISON had low cash ratio of less
than 1 for the past 10 years.
3) Current
Ratio
Current ratio measures ability of
the company to pay off short term obligation (current liabilities). Current
ratio above one means the company able to pay off the current liabilities with
current asset.
HARISON had current ratio of more
than 1 for the past 10 years.
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Pro:
|
|
· HARISON
had current ratio of more than 1 for the past 10 years
|
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Cons:
|
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· HARISON
had low and decresing interest coverage ratio and below 1 cash ratio.
|
Turnover in Days
Let
look into three types of turn over as follow:
1) Inventory
Turnover (Blue Line)
2) Trade
Receivables Turnover (Red Line)
3) Trade
Payable Turnover (Green Line)
1) Days Sales of Inventory
10
Years Days Sales of Inventory Median (days) – 44.40
On average HARISON Days Sales of
Inventory is around the median 44.40.
2) Trade
Receivable Turnover (Days)
10
Years Trade Receivable Turnover (Days) – 59.40
HARISON trade receivable turnover
had a compound growth rate of 2.56 %
3) Trade
Payable Turnover (Days)
10
Years Trade Payable Turnover (Days) – 41.08
On Average HARISON had trade
payable turnover around the median of 41.08.
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Cons:
|
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· Increasing
Trade Receivable Turnover while stable trade payable turnover would made
HARISON need more cash flow to pay their debtors before collecting back the
money customers.
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Per Share Analysis
1) Earnings per share (sen) (Blue Bar)
2) Dividend per share (sen) (Red Bar)
3) Net total assets per share (Green Line)
1) Earnings
per share
In 2014 HARISON had negative
earning per shares due to settlement of claim to KASTAM Malaysia. After 2014
HARISON EPS had growth at CAGR of 13.02. In 2019 the EPS is just slightly
higher than EPS in 2013.
2) Dividends
per share
HARISON had inconsistence dividend
per shares. In 2011, HARISON DPS is higher than EPS.
3) Net
total assets per share
After 2014 HARISON net
total asset per share had a growth rate of 22.9 %.
Director’s Remuneration
Some
company paid high remuneration to director despite low profit. Let see how much
is HARISON director’s remuneration in comparison to staff fee and operating
profit.
If
2014 is taken out from the graph, HARISON percentage of director remuneration
against total salaries expense is low which around 4% and around 6.5 % of
operating income
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Pro:
|
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· HARISON
had low director remuneration it is just 4 % of total salaries expense and
6.5 % of the operating income.
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ESOS and Warrant
No
ESOS and Warrant
Material Ligation
HARISON
had no material ligation as of 27th November 2020.
Return on Equity
Return
of equity can be calculated through Du Point Analysis which uses:
- Net
Profit Margin to measure operating efficiency, how much money gets out from its
revenue
- Asset
Turn Over to measure asset efficiency, how effective the company make use of
its asset
- Equity
Multiplier measure of financial leverage.
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5 Years Return on Equity Average
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6.84 %
|
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10 Years Return on Equity Average
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7.66 %
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In 2019 ROE of HARISON
is much depend on Equity Multiplier which mean HARISON had high financial
leverage.
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Cons:
|
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· HARISON
ROE in 2019 is depends on Equity Multiplier
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Altman
Z Score
Companies with Altman Z
score < 1.8 is likely headed for bankruptcy while Z score > 3 is unlikely
headed for bankruptcy.
3A Altman Z-Score above
3 hence unlikely to headed for bankruptcy.
Convid
19
Convid 19 had affect
the retail segment of HARISON which their just venture into in 2018. Two
numbers of Komonoya outlets in Malaysia had close in 2020 and one more will be
closing in 2021.
Market
Research
No market research
IVKLS
Value
2.53
