Bloomberg - CWH:MK
Yahoo - 5007 .kl
Webpage - http://www.chinwell.com.my/
Summary of Industry Comparison
Yahoo - 5007 .kl
Webpage - http://www.chinwell.com.my/
Revenue
:
CHINWEL revenue consists are from two segment as
below.
1) Fastening
Products
Manufacturing and trading of
screws, nuts, bolts, steel bar and other fastening products.
2) Wire
Products
Manufacturing of precision
galvanised wire, annealing wire, bright wire, hard drawn wire, PVC wire, bent
round bar and grill mesh
Pie chart below shows CHINWEL revenue distribution
for financial year 2019.
From the pie chart above, CHINWEL main business focus
on manufacturing of fastening products.
Bar chart above shows revenue and operating margin
of CHIWEL from 2010 to 2019.
|
5 Years Annualise Growth of Revenue
|
7.00 %
|
|
10 Years Annualise Growth of Revenue
|
6.35 %
|
From the chart above year 2011 and year 2018 post
the highest revenue growth 24 % and 23 % respectively. In 2011 CHINWEL had high
revenue growth rate because of higher demand of the fasteners product in the EU
market. While in 2018 there is increase of steel bar product in the local
market.
The line chart above showed the operation margin for
CHINWEL. In the period of 2010 -2019 the operating margin of CHINWEL ranges
from 5.41 to 14.7 with the median of 10.62.
CHINWEL operating margin is mainly affected by the raw material cost.
Nett
Profit
Bar Chart below shows CHINWEL nett profit from 2010
– 2019.
|
5 Years Annualise Growth of Nett
Profit
|
5.22 %
|
|
10 Years Annualise Growth of Nett
Profit
|
63.01 %
|
The high 10 years annualise growth rate of nett
profit is mainly because high growth rate of from 2010 to 2012 period. 5 years
annualise growth rate of the company are more reasonable to use to predict the
growth rate of the company.
There is a significant drop in nett profit in 2013,
57%, this is mainly due to the competition of the fasteners product globally
which force CHINWEL to reduce the sale price. 2013 operating margin is 7.32
which is 3.05 lower than the median of 10.62.
Assets
and Liabilities
From the chart above, CHINWEL assets increase over
time while liabilities reduce over time. CHINWEL is able to increase the assets
(cash, properties, plants and equipment, trade receivables) on the other hand
reduce it liabilities (borrowings, trade payable).
Trade
Receivables
Let compared trade receivable of CHINWEL against
trade receivable past due every year.
From the comparison above, CHINWELL trade receivable
increase over time, the trade receivable past due increase as well. Around 30 %
to 40 % of trade receivables of CHINWEL are past due. If CHINWEL unable to
collect back the trade receivables past due, they would be impaired and cost a
loss in CHINWEL account.
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.
CHINWEL had lowest interest
coverage ratio which is 6.54 on 2010. In 2015 and 2017 the EBIT is almost 70
times the financial cost.
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.
CHINWEL cash ratio increase over
time and reach a cash ratio above one in 2016. CHINWEL cash ratio show it able
to pay off all short term debt using cash and in 2019 annual report show all
CHINWEL borrowings are short term. In 2019 CHINWEL had RM 89,163,518 of
borrowings and cash & equivalent of RM 124,216,804. CHINWEL borrowings in
2019, 62.73 % are in local currency, Ringgit Malaysia and 37.27 % in US Dollar.
Investors can have a piece of mind
and do not worries about strengthening of USD against Ringgit Malaysia would
increase the borrowings. This is because as of 30 June 2019 CHINWEL had cash in
term of US Dollar is USD 35,734,608 and borrowing in term of US Dollar is USD
33,232,678. This would remove the currency risk.
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.
CHINWEL had the current ratio above
one hence it able to pay off it current liabilities with current asset.
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) – 189
CHINWEL on average took 189 days to
sell their products. As we can see in 2013 the it took 219 days hence the
CHINWEL had to reduce the operating profit margin to sell their products.
2) Trade
Receivable Turnover (Days)
10
Years Trade Receivable Turnover (Days) – 91
On Average CHINWEL took 91 days to
collect back the money from credit sales
3) Trade
Payable Turnover (Days)
10
Years Trade Payable Turnover (Days) – 18
CHINWEL trade payable turnover is
decrease year by year. This means that CHINWEL need to pay their suppliers on
shorter credit term compare to the credit term given to the customer. CHINWEL
might have cash flow problem if this is not manage properly. CHINWEL unable to
get longer credit term from supplier might harm the business in long term.
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
CHINWEL earnings per share growth steadily
except for the year 2011 – 2012 where the earning is increase growth is 400 %
and 150 %. This growth mainly because of tariff ruling of European Union (EU)
where EU imposed a five year anti-dumping duty up to 85 % on imports of iron
and steel fasteners originating in China. This strong demand from EU has improve
operating margin of for 2012.
2) Dividends
per share
CHINWEL had pay dividend annually
for the past 10 year. From 2014 onward CHINWEL has dividend payout ratio of
around 40 %
3) Net
total assets per share
CHINWEL net total assets per share have
a linear growth rate.
Director’s Remuneration
Some
company paid high remuneration to director despite low profit. Let see how much
is CHINWEL director’s remuneration in comparison to staff fee and operating
profit.
CHINWELL
director’s remuneration average stands 10.53% of total salaries expense and
about 6.58 % on average of the operating profit.
Summary of Industry Comparison
