Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Attempt: 1
ANGLIA RUSKIN UNIVERSITY
Assignment Coversheet
STUDENT DETAILS
Student Number:
1641504
ASSIGNMENT DETAILS
Module Code / Occ / Year MOD001112
Module Title Business Analysis Project
Module Element 010- Individual Assignment, 3000 Words
Dr Ismail Nizam Submission date (by
To be marked by 14/08/2016
2p.m.)
Submission of this assignment agrees to the following:
I understand that the piece of work submitted will be considered as the final and complete
version of my assignment of which I am otherwise the sole author. I understand both the
meaning and consequences of plagiarism and that my work has been appropriately attributed
unless otherwise stated. I have not knowingly allowed another to copy my work.
Mitigation if there are matters or circumstances which have had a serious adverse effect on
your performance in any assessment (eg: illness), you should consider using our mitigation
process. You are advised to seek advice from a Faculty Student Adviser. Mitigation forms are
available from the iCentre or on-line at www.anglia.ac.uk/mitigation.
WORD COUNT 3,598 Disk included (tick)
ASSESSMENT FEEDBACK - LECTURER TO COMPLETE
% Mark
(Un-moderated)
Signature of Marker _______________________ Date ________________
STRATEGIC MANAGEMENT
1
MODULE CODE : MOD001115
___________________________________________________________________________
1.0 Introduction 3
1.1 Purpose of Study 3
1.2 Case Context of Analysis 3
1.3 Company Background 4
1.3.1 IJM Plantation 4-5
1.3.2 Samling Group 5-6
1.3.3 Felda Global Ventures 6
1.4 Key Issues 7
1.5 Rationale for the Selection of Companies 8
5.0 Recommendations 18
6.0 Conclusion 18 - 19
7.0 References 19 - 20
1.0 INTRODUCTION
1.1 Purpose of Study
This study will analyse the competitive position of IJM Plantations Berhad, a Malaysian
conglomerate with interests in oil palm agribusiness. In this study, IJM Plantations will
2
be benchmarked with two other organisations engaged in the similar business namely
Samling Group and Felda. These organisations are operating in an environment and an
industry which is in a sunset industry in which the industry is undermined by low prices
and growing structural challenges (BMI Research). According to a report by
FundSupermart.com (18 December 2015), earnings growth for plantation companies may
show a tepid trend in 2016 due to weak crude palm oil (CPO) prices. This is on the back
of the recent El Nino weather effects which has led to a respite in CPO prices, however
the rising momentum of the CPO prices is likely to subside in the near future. The report
indicates that the economic outlook for the plantation sector is anticipated to remain
bleak on record-high stockpiles, ebbing external demand as well as higher input costs
(FundSupermart.com, 18 December 2015). As Malaysia moves towards a knowledge
economy, IJM Plantation has to invest greater efforts into staying relevant in the
Malaysian economy.
3
company now operates seven folds of that amount to its current land-bank of
close to 30,000 hectares in the regions of Sandakan and Sugut in Sabah, Malaysia.
The Group has also spread its wings into Indonesia for oil palm cultivation.
Today, the Group owns and operates 11 oil palm estates, which are supported by
four oil mills with a capacity to process over one million tonnes per year and a
palm kernel crushing plant. The companys mills and kernel crushing plant
consistently produce outstanding returns which are above the industrys average.
The Group has made significant investments in the fields of research,
development and training in an effort to sustain the Groups competitive
advantage. The Group has a Quality, Training and Research centre in Sijas Estate
in Malaysia which is testament to the Groups commitment towards R&D in an
effort to upkeep its competitive edge moving forward. The Group is the proud
producer of its own quality oil palm hybrid seeds which has been given the
accreditation by SIRIM with the MS157: 2005 certification. IJMP today is listed
on the Main Market of Bursa Malaysia Securities Berhad since July 2003. IJMP is
one of the five key divisions of the diversified conglomerate, IJM Group. The
companys core products include palm oil products such as CPO, crude palm
kernel oil (CPKO), palm kernel expeller (PKE); agri-services such as plantations
agro-technical and advisory services; and, planting materials such as IJM DxP
Hybrid seeds planting materials (IJM Plantations Berhad).
The Groups Vision is to be a leading regional plantation group and its mission
is to uphold the highest standards of performance in our plantations and agri-
businesses. The Groups corporate culture is driven by 5 basic tenets, which read
as follows (IJM Plantations Annual Report 2015):
4
1.3.2 Samling Group
Samling Group is a Malaysian company with diverse business interests which
include forest management to oil palm plantation, property development and
automotive business in various countries across the world (Samling Group). The
company was established in 1963, with its headquarters located in the East
Malaysian state of Sarawak (Samling Group). The Groups oil palm plantation is
managed by its subsidiary Glenealy Plantations Sdn Bhd which has oil palm
plantations in Malaysia, Indonesia and Papua New Guinea. Glenealy has been in
operations for over 50 years (Samling Group). As at March 2015, Glenealy has
68,679 hectares of plantable area. The Group owns three palm oil mills located in
Belaga and Lana in Sarawak as well as Lahad Datu in Sabah (Samling Group).
The mills are equipped with state-of-the-art milling technology and is
professionally managed by a pool of experts. The company is guided by its parent
companys vision and mission which is Samling Group (Samling Group). The
vision and mission of the group is as follows (Samling Group):
5
1.3.3 Felda Global Ventures
Felda Global Ventures Holdings Berhad (FGV) is one of Malaysias leading
global agribusiness and is the worlds largest producer of crude palm oil (CPO)
(Felda Global Ventures). The company has operations in more than 10 countries
across Asia, North America and Europe. FGV is listed on Malaysias Stock
Exchange and has six core business interest which include palm upstream and
downstream, rubber, sugar, research and development (R&D) and Agri-services,
Trading and Marketing, Logistics & Others (Felda Global Ventures). As at 31
December 2015, the company reported a market capitalization of RM16.6 billion
(Felda Global Ventures). FGV is the worlds largest crude palm oil (CPO)
producer and the second largest palm oil refiner in Malaysia (Felda Global
Ventures). The company employs more than 19,000 employees and aspires to be
one of the top 10 agri-business conglomerate globally by 2020 (Felda Global
Ventures). The companys vision is to be the leading globally diversified
integrated agri-business. The companys mission is to be a global leader by
creating value through our human capital; championing our locally invested
culture; building an integrated value chain advantage; and cultivating
diversification in commodities and geography (Felda Global Ventures).
6
original projections (RHB Investment, 17 April 2014).
Concentration of plantation land in Sabah means any
extreme weather conditions there will lead to a
significant effect on productivity (RHB Investment,
17 April 2014).
Lower commodity prices and lack of demand from
regional and global customers due to various global
effects (RHB Investment, 17 April 2014).
Samling Samlings business interest is not focused and is
diversified across different sectors (FMT, 15 March
2016).
Pressure from international groups such as the Forest
Stewardship Council (FSC) for failing to support the
local timber industry (FMT, 15 March 2016).
Felda Global Ventures Declining CPO prices, stagnant production figures and
(FGV) lower annual earnings leading to a fall in FGVs
market value (The Star, 30 July 2016).
A series of landbank acquisitions and major related
party transactions have led to a substantial depletion in
FGVs IPO cash proceeds (The Star, 30 July 2016).
The majority of FGVs total planted landbanks
consists of low-yielding old trees or plants that are
more than 20 years old (The Star, 30 July 2016).
7
2.0 FINANCIAL ANALYSIS
2.1 Revenue Analysis
Companies Operating Revenue Analysis (2013 2016)
(RM000)
REVENUE ANALYSIS
2016(Forecast) 2015 2014 2013
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
IJM Samling FGV
IJM Plantation has shown a steady increase of 33% and 31.9% between 2013 and 2014 as
well as 2014 and 2015 respectively. On the back of declining commodity prices, the
company has forecasted a 12.03% increase in its revenue for 2016.
Samling Group saw significant revenue growth between 2013 and 2014 at 25.27% whilst
revenue growth from 2014 to 2015 was at 1.5% on the back of declining regional and
global economies as well as declining commodity prices. In 2016, revenue has been
forecasted at an optimistic rate of 22.85% as the company is confident that it will be able
to navigate in the challenging economy with good strategies.
8
FGV revealed a revenue growth of 20.37% from 2013 2014, whilst revenue growth
declined at 1.97% between 2014 and 2015. In 2016, Samling is aiming to achieve 9.26%
of revenue growth from 2015 on the back of challenging economic conditions.
9
Market share
IJM Samling FGV
26%
24% 23%
IJM market share grew steadily between 2013 and 2015 from 11.7%, 13.2% and 13.7%.
In 2016, the company is aiming to achieve market growth of 14.2%.
Samlings market share also increased steadily albeit at a slower pace than IJM at 10.6%
in 2013, to 11.1% in 2014, to 11.7% in 2015. In 2016, the company is aiming at
achieving market share growth to 12.3%.
FGVs market increased steadily at more nominal rates from 7.8% in 2013, to 8.2% in
2014 and 8.8% in 2015. In 2016, the company is aiming at achieving market share at
9.3%.
2.3 Profit Margins
Companies Profit Margin (2013 2016)
(RM000)
10
Profit Margin
2016(Forecast) 2015 2014 2013
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
IJM Samling FGV
Profit margins for IJM increased from 2013 to 2014 by 22% and from 2014 to 2015 to
43.57%. In 2016, IJM is expecting a profit margin increase of 18.76%.
Profit margins for Samling increased from 2013 to 2014 by 19.03% and from 2014 to
2015 to 5.4%. In 2016, Samling is expecting a profit margin increase of 6.32%.
Profit margins for FGV increased from 2013 to 2014 by 5.16%, and from 2014 to 2015 to
7%. In 2016, FGV is expecting a profit margin increase of 7.5%.
11
EARNINGS PER SHARE
$1.60
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
FY 2013 FY 2014 FY 2015
debt ratio
IJM Samling FGV
26%
24% 23%
15% 15%
14% 15%
13% 14%
12
The Debt ratio analysis for IJMs debt levels are considerably lower than its counterparts,
Samling and FGV, which reveals that the companys debts are much lower than its
income.
13
31 March 2015). From manufacturing to distribution
or technical expertise, Malaysia has ample
opportunities and capabilities across the value chain
(ETP). The country is located at the heart of ASEAN
with a regional market of over 600 million people
and a regional GDP of USD2 trillion (ETP).
Social Malaysia has a diverse population comprising three
major ethnic races which are Malays, Chinese and
Indians longside other minorities (FT View, 31 March
2015). The country poses ample supply of knowledge
workforce, however for plantations, the country
largely imports foreign workers from neighbouring
countries in the region (FT View, 31 March 2015).
The country has a thriving economy with low poverty
rates and relatively well-balanced disposable income
levels (FT View, 31 March 2015). Lately due to
various reasons, the country has been facing a
shortage of foreign workers in the construction and
plantation industry due to disputes on foreign worker
policies by exporting nations and cases of abuse
encountered in Malaysia (FT View, 31 March 2015).
Technology As an industrialised nation, Malaysias technological
advancement has been very good with the country
embracing technology in various fields (FT View, 31
March 2015). However in the plantation sector,
automation has always been at a minimum and it is
operated based on a very manual approach that is
labour intensive. This requires large numbers of
workers (FT View, 31 March 2015). Although
Malaysia is one of the most technologically
developed countries in ASEAN, the country still
relies on manual labour for the plantation industry,
14
which has been experiencing shortage of workers
over the last few years (FT View, 31 March 2015).
15
activities to cease oil profit margins profit margins
palm plantations thatdown. down.
are said to cause Lack of momentum Lack of momentum
16
4.2 Limitations of Conventional Models
Conventional financial models rely on ratio analysis which include accounting, stock
market, and management related limitations (Boundless.com). Ratios are usually
hampered by potential limitations with accounting and the data in the financial statements
itself (Boundless.com). These include errors alongside accounting mismanagement which
may include doctored data used to derive financial ratios (Boundless.com).
5.0 RECOMMENDATIONS
In improving its business operations the following recommendations are made for IJM
Plantation:
1. Forming collaborations with competitors in the market to expand market share.
Forming collaborations with competitors in the market such as Samling and FGV,
may be a strategic move in capturing market share. Leveraging on the market share of
both competitors is a good measure to consider in expanding market share. In
addition to that, IJM can also improve government relations through ties with FGV
which is a government-linked company.
17
plantation business. This will enable the company to plug its expenses, provide better
returns to stakeholders and tighten its operations to enable more sustainable and
profitable returns in the future.
6.0 CONCLUSION
This report has provided an overview of IJM Plantations and its operations in comparison
to 2 other industry players/ competitors. The report provides a comprehensive outlook on
the industry and has analysed the environment in which these companies operate using
the PEST analysis. Internal operations has been analysed using the SWOT analysis.
Recommendations have been provided to help IJM tighten and strengthen its operations
to remain profitable and garner sustainable returns.
7.0 REFERENCES
IJM Plantations Berhad Annual Report 2015. Retrieved on 4 July 2016 from:
http://www.ijm.com/web/ijmplt/download/arc_structure_ijmplt_ar_2015_1.pdf.
18
RHB Investment, 17 April 2014. IJM Plantation: Reduced Downside Risks. Retrieved on 29 July
2016 from: file:///C:/Google%20Downloads/IST26595.pdf.
FMT, 15 March 2016. Sarawak timber giant Samling under fire from Kiwis. Retrieved on 1
August 2016 from: http://www.freemalaysiatoday.com/category/nation/2016/03/15/swak-timber-
giant-samling-under-fire-from-kiwis/.
The Star, 30 July 2016. Reinventing Felda Global Ventures. Retrieved on 31 August 2016 from:
http://www.thestar.com.my/business/business-news/2016/07/30/reinventing-felda-global-
ventures/.
FT View, 31 March 2015. The Political Risks in Malaysia Are Growing. Retrieved on 30 July
2016 from: http://www.ft.com/cms/s/0/8ceb5f68-d7ac-11e4-849b-
00144feab7de.html#axzz4G7RjOhIU.
Economic Transformation Programme (ETP). Why Malaysia? Retrieved on 30 July 2016 from:
http://etp.pemandu.gov.my/Invest_In_Malaysia-@-Why_Malaysia%5E.aspx.
Financial Times, 3 April 2011. Financial Models Useful But Limited. Retrieved on 30 July 2016
from:http://www.ft.com/cms/s/0/b78d47d4-5c9c-11e0-ab7c-
00144feab49a.html#axzz4G8kvM9qg
19