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Sarawak Oil Palm Berhad(7949-M)
FNCE3000 Corporate FinanceSemester 1, 2015IntroductionSarawak Oil Paim Berhad (SOPB) is a listed plantation company on Kuala Lumpur StockExchange (Bursa Malaysia) since 1991. SOPB was founded by Tan Sri Datuk Ling ChiongHo and the principal activities involved are the cultivation of oil palm and the operation ofpalm oil mills. As a leading plantation company in Malaysia, SOPB is currently having63,530 hectares of planted oil palms and it distributes under 22 estates in Sarawak. Theprospect 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 PalmBerhad 2013)1. Throughout this case study, it will discuss about the major shareholders of the company andtheir impact on company prospect. On the second part of this case study, it will analyze therisk 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 andreturn of the company will be includes in order for a better understand of the company’sstatus. On the third part of the case study, it will discuss about the cost of capital of thecompany. Calculation of return on equity and return on asset will be show and discuss inorder 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.pdfPage | 2
FNCE3000 Corporate FinanceSemester 1, 20151.0Shareholder AnalysisWith reference to the annual report of Sarawak Oil Palm Berhad, the largest shareholder asrecorded at May 2014 was AMMB Nominees (Tempatan) Sdn. Bhd, which hold 103,064,478number of shares (23.48%). The beneficial shareholder of the nominees is Shin YangPlantation Sdn. Bhd., one of the subsidiaries of Shin Yang Group of company. As AMMBNominees (Tempatan) Sdn. Bhd, an institutional investor, is a financial services subsidiariesthat under AmBank Group. It is assumable that they are well-diversified investor becausethey are more expertise in investing. The second largest shareholder of the SOPB is Pelita Holding Sdn. Bhd., with respect of20.44% of share. Pelita Holding Sdn. Bhd. is a subsidiary company that owned by LandCustody and Development Authority. The objective of Pelita Holding Sdn. Bhd is acting asthe catalyst in land development in Sarawak (About Pelita 2015)2. The third and the fourthlargest shareholder are UOBM Nominees (Asing) Sdn. Bhd. and State Financial SecretarySarawak, accounting for 9.46% and 7.95% of shares respectively. Both of them are alsoinstitutional 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 founderand the group executive chairman of SOPB. Besides, he is also the chairman of Shin YangGroup of company, a well-diversified company that involving in shipping, hypermarket,