assignment 7 - Sarawak Oil Palm Berhad(7949-M FNCE3000 Corporate Finance Semester 1 2015 Introduction Sarawak Oil Paim Berhad(SOPB is a listed

assignment 7 - Sarawak Oil Palm Berhad(7949-M FNCE3000...

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Sarawak Oil Palm Berhad (7949-M)
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FNCE3000 Corporate Finance Semester 1, 2015 Introduction Sarawak Oil Paim Berhad (SOPB) is a listed plantation company on Kuala Lumpur Stock Exchange (Bursa Malaysia) since 1991. SOPB was founded by Tan Sri Datuk Ling Chiong Ho and the principal activities involved are the cultivation of oil palm and the operation of palm oil mills. As a leading plantation company in Malaysia, SOPB is currently having 63,530 hectares of planted oil palms and it distributes under 22 estates in Sarawak. The prospect of SOPB is expected to be challenging due to the turbulent global economic climate, operation costs increasing and unstable palm oil prices in global market (Sarawak Oil Palm Berhad 2013) 1 . Throughout this case study, it will discuss about the major shareholders of the company and their impact on company prospect. On the second part of this case study, it will analyze the risk and the return of the company by using several kinds of calculation like profit margin, return on asset (ROA), return on equity (ROE) and total return. A summary of the risk and return of the company will be includes in order for a better understand of the company’s status. On the third part of the case study, it will discuss about the cost of capital of the company. Calculation of return on equity and return on asset will be show and discuss in order to understand the efficiency of the company. 1 Sarawak Oil Palm Berhad. 2013. Annual Report 2013. - content/uploads/2014/06/Final-OP-2013-Set-18.compressed.pdf Page | 2
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FNCE3000 Corporate Finance Semester 1, 2015 1.0 Shareholder Analysis With reference to the annual report of Sarawak Oil Palm Berhad, the largest shareholder as recorded at May 2014 was AMMB Nominees (Tempatan) Sdn. Bhd, which hold 103,064,478 number of shares (23.48%). The beneficial shareholder of the nominees is Shin Yang Plantation Sdn. Bhd., one of the subsidiaries of Shin Yang Group of company. As AMMB Nominees (Tempatan) Sdn. Bhd, an institutional investor, is a financial services subsidiaries that under AmBank Group. It is assumable that they are well-diversified investor because they are more expertise in investing. The second largest shareholder of the SOPB is Pelita Holding Sdn. Bhd., with respect of 20.44% of share. Pelita Holding Sdn. Bhd. is a subsidiary company that owned by Land Custody and Development Authority. The objective of Pelita Holding Sdn. Bhd is acting as the catalyst in land development in Sarawak (About Pelita 2015) 2 . The third and the fourth largest shareholder are UOBM Nominees (Asing) Sdn. Bhd. and State Financial Secretary Sarawak, accounting for 9.46% and 7.95% of shares respectively. Both of them are also institutional investors and assumable to be classified as well-diversified investor. The only insider investor in the top thirty shareholders is Ling Chiong Ho. He is the founder and the group executive chairman of SOPB. Besides, he is also the chairman of Shin Yang Group of company, a well-diversified company that involving in shipping, hypermarket,
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