FINAL YEAR PROJECT PAPER
GAMUDA BERHAD
NURAINI SUHAILA BINTI SALHADI
2021832486
HAFIZ BIN YAHYA
2021608134
MUHAMMAD YAZID BIN SAIDIN
2021882942
MUHAMMAD ALIF ALHAFIS BIN MOHAMAD ZANI
2021203796
HAFIY ARIFF BIN KHAIRUL AKMAL
2021493962
NUR SARAH BINTI ZEKARIAH @ ZAKARIA
2021205116
DIPLOMA IN INVESTMENT ANALYSIS
FACULTY OF BUSINESS & MANAGEMENT
UNIVERSITI TEKNOLOGI MARA (TERENGGANU)
JANUARY 2024
FINAL YEAR PROJECT PAPER:
GAMUDA BERHAD
NURAINI SUHAILA BINTI SALHADI
2021832486
HAFIZ BIN YAHYA
2021608134
MUHAMMAD YAZID BIN SAIDIN
2021882942
MUHAMMAD ALIF ALHAFIS BIN MOHAMAD ZANI
2021203796
HAFIY ARIFF BIN KHAIRUL AKMAL
2021493962
NUR SARAH BINTI ZEKARIAH @ ZAKARIA
2021205116
DIPLOMA IN INVESTMENT ANALYSIS
FACULTY OF BUSINESS & MANAGEMENT
UNIVERSITI TEKNOLOGI MARA (TERENGGANU)
JANUARY 2024
DECLARATION OF ORIGINAL WORK
DIPLOMA IN INVESTMENT ANALYSIS
FACULTY OF BUSINESS & MANAGEMENT
UNIVERSITI TEKNOLOGI MARA (TERENGGANU)
I, NURAINI SUHAILA BINTI SALHADI (2021832486)
(I/C Number: 030216-11-0290)
Hereby declare that:
●
This work has not previously been accepted in substance for any diploma, any locally or
overseas, and is not being concurrently submitted for this degree or other degrees.
●
The project paper is the result of our independent work and investigation, except where
otherwise stated.
●
All verbatim extracts have been distinguished by quotation marks and sources of my
information have been specifically acknowledged.
Signature:
Date: 20.01.24
DECLARATION OF ORIGINAL WORK
DIPLOMA IN INVESTMENT ANALYSIS
FACULTY OF BUSINESS & MANAGEMENT
UNIVERSITI TEKNOLOGI MARA (TERENGGANU)
I, HAFIZ BIN YAHYA (2021608134)
(I/C Number: 030718-10-1917)
Hereby declare that:
●
This work has not previously been accepted in substance for any diploma, any locally or
overseas, and is not being concurrently submitted for this degree or other degrees.
●
The project paper is the result of our independent work and investigation, except where
otherwise stated.
●
All verbatim extracts have been distinguished by quotation marks and sources of my
information have been specifically acknowledged.
Signature:
Date: 20.01.24
DECLARATION OF ORIGINAL WORK
DIPLOMA IN INVESTMENT ANALYSIS
FACULTY OF BUSINESS & MANAGEMENT
UNIVERSITI TEKNOLOGI MARA (TERENGGANU)
I, MUHAMMAD YAZID BIN SAIDIN (2021882942)
(I/C Number: 031005-14-0515)
Hereby declare that:
●
This work has not previously been accepted in substance for any diploma, any locally or
overseas, and is not being concurrently submitted for this degree or other degrees.
●
The project paper is the result of our independent work and investigation, except where
otherwise stated.
●
All verbatim extracts have been distinguished by quotation marks and sources of my
information have been specifically acknowledged.
Signature:
Date: 20.01.24
DECLARATION OF ORIGINAL WORK
DIPLOMA IN INVESTMENT ANALYSIS
FACULTY OF BUSINESS & MANAGEMENT
UNIVERSITI TEKNOLOGI MARA (TERENGGANU)
I, MUHAMMAD ALIF ALHAFIS BIN MOHAMAD ZANI (2021203796)
(I/C Number: 030111-10-0053)
Hereby declare that:
●
This work has not previously been accepted in substance for any diploma, any locally or
overseas, and is not being concurrently submitted for this degree or other degrees.
●
The project paper is the result of our independent work and investigation, except where
otherwise stated.
●
All verbatim extracts have been distinguished by quotation marks and sources of my
information have been specifically acknowledged.
Signature:
Date: 20.01.24
DECLARATION OF ORIGINAL WORK
DIPLOMA IN INVESTMENT ANALYSIS
FACULTY OF BUSINESS & MANAGEMENT
UNIVERSITI TEKNOLOGI MARA (TERENGGANU)
I, HAFIY ARIFF BIN KHAIRUL AKMAL (2021493962)
(I/C Number: 030903-10-0887)
Hereby declare that:
●
This work has not previously been accepted in substance for any diploma, any locally or
overseas, and is not being concurrently submitted for this degree or other degrees.
●
The project paper is the result of our independent work and investigation, except where
otherwise stated.
●
All verbatim extracts have been distinguished by quotation marks and sources of my
information have been specifically acknowledged.
Signature:
Date: 20.01.24
DECLARATION OF ORIGINAL WORK
DIPLOMA IN INVESTMENT ANALYSIS
FACULTY OF BUSINESS & MANAGEMENT
UNIVERSITI TEKNOLOGI MARA (TERENGGANU)
I, NUR SARAH BINTI ZEKARIAH @ ZAKARIA (2021205116)
(I/C Number: 030217-14-0416)
Hereby declare that:
●
This work has not previously been accepted in substance for any diploma, any locally or
overseas, and is not being concurrently submitted for this degree or other degrees.
●
The project paper is the result of our independent work and investigation, except where
otherwise stated.
●
All verbatim extracts have been distinguished by quotation marks and sources of my
information have been specifically acknowledged.
Signature:
Date: 20.01.24
LETTER OF SUBMISSION
20 JANUARY 2024
Coordinator
Faculty of Business & Management
Universiti Teknologi MARA (Terengganu)
23000 Dungun
Terengganu
Dear Sir/Madam/Miss,
SUBMISSION OF PROJECT PAPER (FIN383)
Attached is the project paper title “FINAL YEAR PROJECT PAPER: GAMUDA BERHAD” to fulfil
the requirement as needed by the Faculty of Business & Management, Universiti Teknologi
MARA.
Thank you,
Yours sincerely,
…………………………..
NURAINI SUHAILA BINTI SALHADI
2021832486
Diploma in Investment Analysis
LETTER OF SUBMISSION
20 JANUARY 2024
Coordinator
Faculty of Business & Management
Universiti Teknologi MARA (Terengganu)
23000 Dungun
Terengganu
Dear Sir/Madam/Miss,
SUBMISSION OF PROJECT PAPER (FIN383)
Attached is the project paper title “FINAL YEAR PROJECT PAPER: GAMUDA BERHAD” to fulfil
the requirement as needed by the Faculty of Business & Management, Universiti Teknologi
MARA.
Thank you,
Yours sincerely,
…………………………..
HAFIZ BIN YAHYA
2021608134
Diploma in Investment Analysis
LETTER OF SUBMISSION
20 JANUARY 2024
Coordinator
Faculty of Business & Management
Universiti Teknologi MARA (Terengganu)
23000 Dungun
Terengganu
Dear Sir/Madam/Miss,
SUBMISSION OF PROJECT PAPER (FIN383)
Attached is the project paper title “FINAL YEAR PROJECT PAPER: GAMUDA BERHAD” to fulfil
the requirement as needed by the Faculty of Business & Management, Universiti Teknologi
MARA.
Thank you,
Yours sincerely,
…………………………..
MUHAMMAD YAZID BIN SAIDIN
2021882942
Diploma in Investment Analysis
LETTER OF SUBMISSION
20 JANUARY 2024
Coordinator
Faculty of Business & Management
Universiti Teknologi MARA (Terengganu)
23000 Dungun
Terengganu
Dear Sir/Madam/Miss,
SUBMISSION OF PROJECT PAPER (FIN383)
Attached is the project paper title “FINAL YEAR PROJECT PAPER: GAMUDA BERHAD” to fulfil
the requirement as needed by the Faculty of Business & Management, Universiti Teknologi
MARA.
Thank you,
Yours sincerely,
…………………………..
MUHAMMAD ALIF ALHAFIS BIN MOHAMAD ZANI
2021203796
Diploma in Investment Analysis
LETTER OF SUBMISSION
20 JANUARY 2024
Coordinator
Faculty of Business & Management
Universiti Teknologi MARA (Terengganu)
23000 Dungun
Terengganu
Dear Sir/Madam/Miss,
SUBMISSION OF PROJECT PAPER (FIN383)
Attached is the project paper title “FINAL YEAR PROJECT PAPER: GAMUDA BERHAD” to fulfil
the requirement as needed by the Faculty of Business & Management, Universiti Teknologi
MARA.
Thank you,
Yours sincerely,
…………………………..
HAFIY ARIFF BIN KHAIRUL AKMAL
2021493962
Diploma in Investment Analysis
LETTER OF SUBMISSION
20 JANUARY 2024
Coordinator
Faculty of Business & Management
Universiti Teknologi MARA (Terengganu)
23000 Dungun
Terengganu
Dear Sir/Madam/Miss,
SUBMISSION OF PROJECT PAPER (FIN383)
Attached is the project paper title “FINAL YEAR PROJECT PAPER: GAMUDA BERHAD” to fulfil
the requirement as needed by the Faculty of Business & Management, Universiti Teknologi
MARA.
Thank you,
Yours sincerely,
…………………………..
NUR SARAH BINTI ZEKARIAH @ ZAKARIA
2021205116
Diploma in Investment Analysis
ACKNOWLEDGEMENT
Assalamualaikum warahmatullahi wabarakatuh. Alhamdulillah, a blessing from Allah
SWT, was by our side throughout this journey while completing this informative and educational
final-year project. Although it was a rocky road trying to finish this assignment, the team kept our
heads high and moved forward with determination and hardship.
Everyone in the team took part and executed their responsibilities accordingly.
Communication was the main priority in ensuring we exceeded our expectations and that a
steady pace would continue to flow in every part and section of this project.
Without a doubt, we could not have completed this assignment without our beloved
lecturer, who is known as Miss Nor Farihin Binti Ariffin. She made sure her students understood
the key points and elements necessary to ace the finished product. As a sign of gratitude and
appreciation, we as a whole would like to thank Miss Nor Farihin Binti Ariffin for all the
knowledge that was bestowed upon us.
TABLE OF CONTENTS
CHAPTER 1.................................................................................................................................. 1
ECONOMIC ANALYSIS................................................................................................................ 1
1.0 ECONOMIC ANALYSIS.....................................................................................................1
1.1 WORLD ECONOMIC OVERVIEW.................................................................................... 1
1.1.1 UNITED STATES...................................................................................................... 2
1.1.2 UNITED KINGDOM.................................................................................................. 5
1.1.3 GERMANY................................................................................................................8
1.1.4 CHINA.....................................................................................................................10
1.1.5 BRAZIL................................................................................................................... 13
1.1.6 INDIA...................................................................................................................... 15
1.2.1 THAILAND.............................................................................................................. 19
1.2.2 INDONESIA............................................................................................................ 21
1.2.3 SINGAPORE...........................................................................................................26
1.2.4 VIETNAM................................................................................................................ 28
1.2.5 PHILIPPINES..........................................................................................................30
1.3 MALAYSIAN ECONOMY................................................................................................. 32
1.3.1 GDP & GNP DEVELOPMENT................................................................................34
1.3.2 INFLATION & INTEREST RATE DEVELOPMENT & CONTROL...........................35
1.3.3 BALANCE OF PAYMENT IMPORT & EXPORT..................................................... 37
1.3.4 PER CAPITA INCOME OF CITIZENS.................................................................... 39
1.3.5 RAW MATERIAL SOURCES.................................................................................. 40
CHAPTER 2................................................................................................................................ 41
INDUSTRY ANALYSIS................................................................................................................41
2.2.1 CONTRIBUTION TO GDP............................................................................................42
2.2.2 PERFORMANCE.................................................................................................... 43
2.2.3 BACKING FACTOR................................................................................................ 45
2.2.4 PROSPECT............................................................................................................ 46
2.3 MARKET SHARE............................................................................................................ 48
2.3 MARKET SIZE AND TARGETED GROUP......................................................................52
CHAPTER 3................................................................................................................................ 54
COMPANY ANALYSIS................................................................................................................54
3.1 GAMUDA’S PROFILE......................................................................................................54
3.1.1 GAMUDA’S COMPANY BACKGROUND..................................................................... 54
3.1.2 GAMUDA’S PRINCIPLE ACTIVITIES...........................................................................56
3.1.3 PROPERTIES HOLD....................................................................................................60
3.2 GAMUDA’S COMPANY MANAGEMENT........................................................................ 63
3.2.1 GAMUDA’S CORPORATE INFORMATION............................................................63
AUDIT COMMITTEE........................................................................................................68
3.2.2 MAJOR SHAREHOLDERS.....................................................................................69
3.2.3 SHARE INFORMATION..........................................................................................70
3.2.4 SHARE DISTRIBUTION......................................................................................... 72
3.3 GAMUDA’S EVENTS/ACTIVITIES.................................................................................. 77
3.3.1 ACHIEVEMENT...................................................................................................... 77
3.3.2 RECENT DEVELOPMENT AND MAJOR EVENTS............................................... 77
3.3.3 PROSPECTS..........................................................................................................79
3.4 GAMUDA SWOT ANALYSIS........................................................................................... 81
3.5 COMPETITORS AND MARKET CONTROLS................................................................. 96
3.6 SUNWAY’S PROFILE......................................................................................................99
3.6.1 COMPANY BACKGROUND......................................................................................... 99
3.6.2 PRINCIPLE ACTIVITIES............................................................................................ 103
3.6.3 PROPERTIES HOLD..................................................................................................105
3.7 SUNWAY’S COMPANY MANAGEMENT.......................................................................106
3.7.1 CORPORATE INFORMATION............................................................................. 106
AUDIT COMMITTEE......................................................................................................112
3.7.2 MAJOR SHAREHOLDERS...................................................................................113
3.7.3 SHARE INFORMATION........................................................................................ 114
3.8 SUNWAY’S EVENTS/ACTIVITIES................................................................................ 120
3.8.1 ACHIEVEMENT.................................................................................................... 120
3.8.2 RECENT DEVELOPMENT AND MAJOR EVENTS............................................. 121
3.8.3 PROSPECTS........................................................................................................123
3.9 SUNWAY’S SWOT ANALYSIS...................................................................................... 124
3.10 COMPETITORS AND MARKET CONTROLS............................................................. 134
CHAPTER 4.............................................................................................................................. 137
FINANCIAL ANALYSIS............................................................................................................ 137
4.0 INTRODUCTION........................................................................................................... 137
4.1 ANALYSIS OF BALANCE SHEET.................................................................................138
4.2 ANALYSIS PROFIT/LOSS STATEMENT..................................................................... 140
4.3 HORIZONTAL TREND ANALYSIS................................................................................ 142
4.3.1 BALANCE SHEET & INCOME STATEMENT....................................................... 144
4.4 RATIO ANALYSIS..........................................................................................................147
4.4.1 LIQUIDITY............................................................................................................ 148
4.4.2 ACTIVITY..............................................................................................................150
4.4.3 PROFITABILITY....................................................................................................152
4.4.4 LEVERAGE...........................................................................................................155
4.5 VERTICAL/COMPARATIVE ANALYSIS........................................................................ 157
4.5.1 BALANCE SHEET & INCOME STATEMENT (COMMON SIZE).......................... 157
4.6 RATIO ANALYSIS..........................................................................................................164
4.6.1 LIQUIDITY............................................................................................................ 164
4.6.2 ACTIVITY..............................................................................................................166
4.6.3 PROFITABILITY....................................................................................................168
4.6.4 LEVERAGE...........................................................................................................170
4.6.5 MARKET............................................................................................................... 172
4.6 RISK ANALYSIS............................................................................................................ 174
4.6.1 COVARIANCE............................................................................................................ 175
4.7 REGRESSION ANALYSIS.............................................................................................176
4.7 SECURITY MARKET LINE (SML).................................................................................179
4.8 COMPANY INTRINSIC VALUE..................................................................................... 181
CHAPTER 5.............................................................................................................................. 182
TECHNICAL ANALYSIS........................................................................................................... 182
5.1 INTRODUCTION........................................................................................................... 182
5.2 COMPANY VS KLCI...................................................................................................... 183
5.2.1 GAMUDA VS KLCI............................................................................................... 183
5.2.2 SUNWAY VS KLCI................................................................................................184
5.3 TREND ANALYSIS........................................................................................................ 185
5.3.1 TREND..................................................................................................................186
5.3.2 SUPPORT & RESISTANCE WITH CHART PATTERN.........................................188
5.4 ANALYSIS OF INDICATORS.........................................................................................192
5.4.1 SHORT TERM...................................................................................................... 192
5.4.1.1 SIMPLE MOVING AVERAGE (SMA-21), MOVING AVERAGE
CONVERGENCE DIVERGENCE (MACD) AND RELATIVE STRENGTH INDEX
(RSI).........................................................................................................................192
5.4.1.2 RATE OF CHANGE (ROC) AND STOCHASTIC OSCILLATOR..................194
5.4.2 INTERMEDIATE TERM........................................................................................ 197
5.4.2.1 SIMPLE MOVING AVERAGE (SMA-21), MOVING AVERAGE
CONVERGENCE DIVERGENCE (MACD) AND RELATIVE STRENGTH INDEX
(RSI).........................................................................................................................197
5.4.2.2 RATE OF CHANGE (ROC) AND STOCHASTIC OSCILLATOR..................199
5.4.3 LONG TERM.........................................................................................................201
5.4.3,1 SIMPLE MOVING AVERAGE (SMA-21), MOVING AVERAGE
CONVERGENCE DIVERGENCE (MACD) AND RELATIVE STRENGTH INDEX
(RSI).........................................................................................................................201
5.4.3.2 RATE OF CHANGE (ROC) AND STOCHASTIC OSCILLATOR..................203
6.0 CONCLUSION AND RECOMMENDATION...................................................................205
REFERENCES.......................................................................................................................... 208
CHAPTER 1
ECONOMIC ANALYSIS
1.0 ECONOMIC ANALYSIS
Comparing possible costs and gains is a crucial aspect of economic analysis. Initially, projects
are assessed based on their potential profitability. This facilitates the optimization of resource
utilisation. The primary objective of this group is to ascertain the impact of a project on the
overall welfare of individuals. Essentially, it entails the process of recognizing, contrasting, and
examining several alternatives. This resource provides a connection to the methodology
employed in determining the opportunity cost associated with various actions or projects.
Managers in the business world frequently employ it across various scenarios. Businesses use
this method to launch new goods or integrate operations. Before reaching a conclusion, the
research method examines numerous problem components.
1.1 WORLD ECONOMIC OVERVIEW
A comprehensive analysis of the worldwide economy, known as a world economic overview,
provides a brief summary of the present condition of the international economic system. This
includes an examination of many essential indicators such as the growth rate, inflation rate,
unemployment rate, and other pertinent factors. In addition, it commonly encompasses an
analysis of the primary patterns and risks that are anticipated to exert an impact on the
worldwide economy in the approaching timeframe. World economic overviews are compiled by
a range of institutions, such as the International Monetary Fund (IMF), the World Bank, the
Organisation for Economic Co-operation and Development (OECD), and major commercial
banks. These synopses are extensively utilised by corporations, policymakers, and investors to
make well-informed judgments regarding their investments and operational strategies.
1
1.1.1 UNITED STATES
Economic Indicators/Year
2020
2021
2022
GDP Growth Rate (%)
-2.77
5.95
2.06
Inflation Rate (%)
1.23
4.70
8.00
Unemployment Rate (%)
8.05
5.35
3.61
GDP
From 2020 to 2022, the United States underwent a period of economic instability characterized
by notable swings in its Gross Domestic Product (GDP). In the year 2020, the country
encountered unparalleled difficulties presented by the COVID-19 epidemic, leading to a
significant decrease in economic productivity. The Gross Domestic Product (GDP) experienced
a significant decline of -2.77%, indicating the substantial disruptions resulting from the
implementation of lockdown measures, closure of businesses, and a decrease in consumer
expenditure. However, with the arrival of 2021 and the acceleration of vaccination campaigns,
the United States economy experienced a substantial rebound.
2
The Gross Domestic Product (GDP) experienced a notable increase of 5.95% in the year 2021.
This growth may be attributed to various factors like the implementation of fiscal stimulus
measures, an enhancement in consumer confidence, and the resumption of economic activities.
The impressive recovery demonstrated the country's ability to bounce back and adjust to new
circumstances. In the year 2022, there was a moderation in the rate of economic growth,
resulting in a GDP of 2.06%. The observed slowing can be attributed, in part, to the expected
slowdown in the initial recovery momentum, accompanied by the emergence of problems such
as supply chain disruptions and inflationary pressures.
However, the observed increase in the growth rate during the year 2022 suggests a sustained
progression towards achieving economic stability. The GDP results underscore the United
States' capacity to navigate through crises, adjust to evolving conditions, and strive towards the
restoration of economic well-being in the midst of adversity.
UNEMPLOYMENT RATE
Between the years 2020 and 2022, the United States underwent a notable transformation in its
unemployment rate, indicative of a fluid economic environment. The unemployment rate in 2020
was observed to be 8.05%, which can be mostly attributed to the adverse economic
consequences resulting from the COVID-19 pandemic.
Nevertheless, in the ensuing years, there was a significant decrease. In the year 2021, the rate
experienced a decline to 5.35%, and subsequently, in the year 2022, it exhibited a further
reduction to 3.61%. In addition to the ongoing epidemic, many variables exerted influence on
this decline. Government stimulus measures had a pivotal role by infusing financial resources
into the economy and providing assistance to both firms and individuals.
Moreover, the expeditious advancement and dissemination of vaccinations significantly
bolstered consumer and business assurance, facilitating the recovery of numerous sectors.
Technological innovation and automation have also been influential factors, as organizations
have embraced novel technology and processes that have bolstered productivity and resulted in
the generation of employment opportunities. The gig economy and remote work have also
extended employment options. These factors helped mitigate the epidemic and lower the
unemployment rate during this time.
3
INFLATION RATE
There was a significant change in the inflation rate of the United States between the years 2020
and 2022. The inflation rate in 2020 exhibited a relatively modest figure of 1.23%. However, it
experienced a notable surge in the coming years, with a notable increase to 4.70% in 2021 and
a more substantial escalation to 8.00% in 2022. Multiple variables have led to this upward trend,
surpassing the initial repercussions of the COVID-19 epidemic.
The recovery from the pandemic boosted demand for products and services, which was vital.
Motivated by stimulus funding and frozen savings, people increased consumption, driving up
prices. Labour shortages and transportation issues caused by the pandemic have disrupted the
supply chain.
The disruptions hurt commodity production and distribution, raising inflation. Government
initiatives, such as the implementation of expansionary fiscal measures, have been identified as
contributing factors to the phenomenon of inflation by infusing additional monetary resources
into the national economy. Moreover, the escalation of energy expenses and the limitations in
worldwide supply have exacerbated the inflationary forces, rendering it a complicated
predicament necessitating comprehensive resolutions from policymakers.
4
1.1.2 UNITED KINGDOM
Economic Indicators/Year
2020
2021
2022
GDP (%)
-10.4
8.7
4.1
Inflation Rate (%)
0.99
2.52
7.92
Unemployment Rate (%)
4.47
4.83
3.57
GDP
In the year 2020, despite the global pandemic, the Gross Domestic Product (GDP) had a
significant decline of -10.4%, signifying a notable downturn in the overall economic
performance. The global epidemic resulted in substantial interruptions to economic activity, as a
consequence of enterprises being compelled to either shut down or function with limited
capacity. Consequently, there was a reduction in both production and employment, resulting in a
subsequent contraction in the Gross Domestic Product (GDP).
The United Kingdom government developed several economic support measures in response to
the epidemic, including the introduction of the furlough plan. This initiative entailed providing
5
financial assistance equivalent to 80% of employees' earnings, so compensating for their
inability to work during the pandemic. Nevertheless, despite the implementation of these steps,
they proved insufficient in completely mitigating the adverse effects of the epidemic on the
economy. The United Kingdom's economy had signs of recovery in 2021, with a notable gain of
8.7% compared to the previous year.
This growth can be attributed to the gradual relaxation of lockdown measures and the
subsequent reopening of firms. Additionally, there was a substantial change of 19.1% in
comparison to the preceding year. There are various sectors that contribute to the economy of
the UK, such as services and manufacturing industries which each contribute 73.4% and 17.3%
of total GDP. In 2022, the Gross Domestic Product (GDP) had a fall of 4.10%. This contraction
can be attributed to a deceleration in export activity, which was influenced by the occurrence of
Brexit.
INFLATION RATE
The inflation rate in the three years stated above, starting from 2020, shown 0.99%, slightly
increased to 2.52% in 2021, and 2022 making a big gap at 7.92%, an increase of 5.4% in
change from the previous year. The high inflation rate in the UK is having a negative impact on
households and businesses. Households are seeing their purchasing power erode, as their
incomes are not keeping up with the rising cost of living. Businesses are facing higher input
costs, which are squeezing their margins and making it more difficult to invest.
The Bank of England is raising interest rates in an effort to combat inflation. However, it is
important to note that raising interest rates can also have a negative impact on economic
growth. The Bank of England is facing a difficult balancing act of trying to bring inflation down
without causing a recession.
UNEMPLOYMENT RATE
The unemployment rate trend remained relatively stable throughout 2021, despite the ongoing
pandemic, which is shown to slightly increase at 4.83% in 2021 from 4.47% in 2020. Yet, the
distribution of the unemployment rate in the United Kingdom was not uniform. Certain regions,
such as the North East of England and the West Midlands, exhibited elevated levels of
6
unemployment in comparison to other areas. The prevalence of unemployment was seen to be
comparatively elevated within some demographic segments, including the youth population and
individuals with impairments.
Furthermore, it is worth noting that the unemployment rate failed to consider the population of
individuals who were classified as economically inactive. Economic inactivity refers to the
population segment that is neither employed nor actively seeking employment. The economic
inactivity rate had a significant increase during the course of the pandemic and has continued to
persist at elevated levels until the year 2021. This phenomenon can be attributed to various
variables, including individuals who were practising self-isolation to protect themselves from the
sickness, parents who opted for homeschooling their children, and individuals who chose to
retire earlier than planned.
In the upcoming year of 2022, the unemployment rate is projected to be 3.57%, suggesting a
return to pre-pandemic levels and indicating a positive trajectory for economic recovery.
7
1.1.3 GERMANY
Economic Indicators/Year
2020
2021
2022
GDP (%)
-3.7
2.6
1.8
Inflation Rate (%)
0.4
3.2
8.7
Unemployment Rate (%)
3.6
3.6
3.1
GDP
The entire market worth of all commodities produced within a country's borders over a precise
period is represented by the GDP. This analysis takes into account the general state of the
economy. Germany's GDP percentage in 2020 was -3.7%, which can be attributed to the highly
publicised pandemic that year.
However, Germany was able to revive its economy in the years 2021 and 2023 as seen by the
higher GDP percentages of 2.6% and 1.8%, respectively. Thanks to its recovery and resilience
8
strategy, Germany is also becoming more sustainable, resilient, and better prepared for the
opportunities and challenges of the digital and green transitions.
UNEMPLOYMENT RATE
The unemployment rate is the amount of people in the labor force who are jobless. It is a sign
that regularly rises or falls in response to changes in economic situations rather than
anticipating them. For 2020 and 2021, the unemployment rate was recorded at 3.6%. Although
Germany is renowned for its population resources, there is a labor shortage.
However, in the year 2022, the percentage dropped to 3.1%. This is because of the
government's plan to help boost the economy of the country.
INFLATION RATE
A large rise in the price of goods and services is an indication of inflation, or the gradual loss of
buying power. Germany had the lowest inflation rate in all of Europe in 2020, at 0.4%, but by
2021, when it jumped to 3.2%, it had dramatically accelerated. This is also due to a worldwide
pandemic that puts the entire global economy in danger. Covid 19 has demonstrated how it had
a wide range of effects on the world.
Up until 8.7% in 2022, Germany's inflation rate increased, pushing up the cost of food,
necessities, and other items. This is because practically every aspect of life grew more
expensive as energy prices increased when Russia started its total invasion of Ukraine in
February 2022.
9
1.1.4 CHINA
Economic Indicators/Year
2020
2021
2022
GDP Growth Rate (%)
2.24
8.45
2.99
Inflation Rate (%)
2.42
0.98
1.97
Unemployment Rate (%)
5.00
4.55
4.89
GDP GROWTH RATE
The GDP growth rate of China had notable variations between the years 2020 and 2022,
suggesting a multifaceted economic environment that extends beyond the early effects of the
COVID-19 epidemic. China experienced a relatively weak GDP growth rate of 2.24% in the year
2020, which can be attributed to the significant disruptions caused by the global epidemic.
Nevertheless, in the year 2021, the economy saw a notable resurgence, exhibiting a significant
growth rate of 8.45%. There were other reasons that contributed to this recovery. Initially, the
Chinese government enacted a variety of stimulus measures and fiscal policies in order to
bolster economic recuperation.
10
Furthermore, the strong and resilient worldwide demand for Chinese exports, which may be
attributed to the reconfiguration of global supply chains and the heightened need for
technological goods, has significantly contributed to the expansion of the Chinese economy.
Furthermore, robust domestic demand and heightened investments in infrastructure and
technology industries played crucial contributions.
In the year 2022, the growth rate of China's Gross Domestic Product (GDP) experienced a
moderation, reaching a value of 2.99%. The slowing can be related to the implementation of
measures aimed at mitigating financial risks, such as the imposition of more severe regulatory
supervision in the real estate industry and the implementation of programs to restrain levels of
debt. Despite this moderation, the Chinese economy exhibited persistent strength, propelled by
a well-balanced economic policy approach and enduring international demand for its goods.
UNEMPLOYMENT RATE
The unemployment rate in China underwent significant fluctuations between the years 2020 and
2022. In the year 2020, the nation recorded a 5.00% unemployment rate. The aforementioned
phenomenon was predominantly shaped by the economic ramifications stemming from the
COVID-19 epidemic, resulting in diminished levels of economic activity and a decline in
employment opportunities.
Nevertheless, it is worth noting that in the year 2021, China experienced a positive development
in its unemployment rate, which exhibited a decline to 4.55%.The government's infrastructure
spending and domestic consumption promotion have contributed to the positive trend. These
efforts sought to create jobs and stabilise the labour market.
In the year 2022, there was a marginal increase observed in the unemployment rate, reaching a
value of 4.89%. The increase in question can be ascribed to a multitude of variables, including
alterations in the labour market's structure and the dynamic nature of economic circumstances.
Although there was a rise in the rate compared to the previous year, it nevertheless remained
lower than the level observed in 2020. This indicates a degree of recovery in the employment
market and a broader pattern of economic stability in China during this specific timeframe.
11
INFLATION RATE
The inflation rate in China exhibited significant changes between the years 2020 and 2022. The
figure of 2.42% in the year 2020 was influenced by various variables. The onset of the
COVID-19 pandemic in late 2019 caused significant disruptions to supply chains, resulting in an
early escalation in pricing for key commodities such as medical supplies.
Nevertheless, an additional influential factor was the outbreak of swine flu, which had a
substantial impact on China's pork sector, resulting in a notable escalation in food costs. In
2021, China experienced a decline in its inflation rate to 0.98%, which can be attributed to both
the economic rebound following the pandemic and the implementation of governmental policies
aimed at price stabilisation.
The decline can be ascribed to local supply chain strengthening, food production increases, and
harsher technology and e-commerce monopolistic behaviour laws. In 2022, inflation rose
1.97%. Global energy and food prices have risen, contributing to this rise. The improvement is
due to government infrastructure spending and domestic consumption encouragement. These
measures sought employment creation and labour market stability.
12
1.1.5 BRAZIL
Economic Indicators/Year
2020
2021
2022
GDP (%)
-3.28
4.99
2.9
Inflation Rate (%)
3.21
8.3
9.28
Unemployment Rate (%)
13.93
13.34
9.46
GDP
It is clear that Brazil's gross domestic product (GDP) had a notable recovery, shifting from a
negative growth rate of -3.28% in 2020 to a positive rate of 4.99% in 2021. This resurgence
positions Brazil as the most rapidly expanding economy within the prominent Latin American
nations. A number of events that transpired in Brazil played a role in the economic recovery
observed during that particular year.
13
One of the contributing aspects is the implementation of a significant fiscal stimulus, indicated
by the reduction of the industrial production tax by 25%, aimed at providing support to
businesses in order to reduce the adverse effects of the ongoing epidemic. In addition, the rise
of GDP was influenced by a positive commodity market and the increasing demand for services
like e-commerce and food delivery services. These factors significantly contributed to the
Brazilian government's successful revitalization of the economy, especially during the ongoing
pandemic.
In the year 2022, Brazil had a deceleration in its gross domestic product (GDP) growth rate,
which amounted to 2.9%. This phenomenon can be attributed to various variables, one of which
is the deceleration of Brazil's export activity, a significant catalyst for the nation's economic
expansion. In 2022, the inflation rate in Brazil experienced a significant increase as a result of
elevated energy and food costs. The erosion of consumer purchasing power resulted in a
dampening effect on economic activity.
UNEMPLOYMENT RATE
The reported unemployment rates for Brazil in 2020 and 2021, namely 13.93% and 13.34%
respectively, do not exhibit a major gap in the country's overall unemployment rate.
Nevertheless, the percentage experienced a decline to 9.46% in the year 2022. Despite this
decrease, the ratio remains quite elevated, particularly when compared to other nations within
the same geographical region, such as Chile and Colombia. Several factors can influence
unemployment rates, including epidemics and the resulting inequality outcomes.
INFLATION RATE
In the year 2020, it was seen that Brazil had a decrease in its inflation rates, reaching a value of
3.21%. This figure was the lowest of the three years mentioned, coinciding with the global
outbreak of the Covid-19 pandemic. However, there was a shift in the situation following the
onset of the viral pandemic, as the inflation rate in Brazil experienced a significant increase from
3.21% in 2020 to 8.3% in 2021.
14
In 2022, the inflation rate in Brazil experienced a significant escalation, reaching 9.28%,
establishing the highest inflation rate observed in the country since 2015. The rise in prices can
be attributed to various factors, including supply chain interruptions caused by the cascading
impact of the pandemic, which had adverse effects on Brazilian enterprises. Consequently,
businesses experienced increased input costs, resulting in the transfer of these expenses to
consumers through elevated pricing.
1.1.6 INDIA
Economic Indicators/Year
2020
2021
2022
GDP Growth Rate (%)
-5.83
9.05
7.00
Unemployment Rate (%)
7.86
6.38
7.33
Inflation Rate (%)
6.62
5.13
6.70
15
GDP
India distinguishes itself in the expansive realm of global economies with its rapid ascent and
unwavering commitment to achieving unprecedented success. With its abundant cultural legacy
and population exceeding 1.4 billion, India has established itself as a formidable economic
force, continually demonstrating its capabilities on the international platform.
In 2023, India's
GDP experienced a significant increase, consolidating its place as a leading contender in the
global economic competition.
The primary cause of India's severe economic decline in 2020 was the COVID-19 pandemic.
The country instituted stringent lockdowns in March 2020 to prevent the spread of the virus,
which substantially impacted economic activity. During fiscal year 2020-2021, the gross
domestic product contracted by roughly 7.3%. India experienced its first negative GDP growth in
over four decades. The contraction was propelled by a significant decrease in several
industries, including manufacturing, services, construction, and agriculture. Private investments
and consumption were also negatively impacted by the pandemic.
India commenced a phased economic recovery in 2021, accompanied by implementing
vaccination campaigns and relaxing restrictions. Various industries, such as manufacturing and
services, initiated a recovery.
GDP GROWTH RATE
An approximated 9.2% GDP growth is anticipated for India during the fiscal year 2021-2022.
The substantial resurgence can be ascribed to the favourable economic conditions that
developed throughout the year and the low base effect of the contraction in the prior year.
Agriculture remained an economic bright point, maintaining its solid performance and
contributing to financial stability.
16
UNEMPLOYMENT RATE
Unemployment is a pressing concern that persistently poses challenges to the economic
environment of India. Given its large population and varied labour force, changes in the
unemployment rate have significant consequences for the growth and progress of this highly
populated country. Recent data reveals a promising development, as India's jobless rate has
experienced a recent decrease. The National Sample Survey (NSSO) reported a decline in the
unemployment rate for those aged 15 years and above in urban areas. The rate went from 8.2
per cent in January-March 2022 to 6.8 per cent in 2023. This encouraging outcome indicates a
possible reversal in the job market amid the current economic intricacies. Nevertheless, it is
imperative to maintain constant watchfulness and implement efficient policy measures to
promote sustainable employment expansion and safeguard the nation's future prosperity.
The labour economy in India was greatly affected by the COVID-19 epidemic in 2020. The
implementation of statewide lockdowns and limitations in March 2020, aimed at curbing the
transmission of the virus, resulted in a temporary cessation of economic operations and a
significant increase in unemployment rates. India experienced a significant surge in the
unemployment rate during the initial stages of the pandemic. Millions of daily wage earners,
informal sector labourers, and migratory workers lost their jobs or sources of income.
Throughout the year, certain economic activities recommenced, leading to a decrease in the
unemployment rate. However, the labour market continued to pose difficulties for several
individuals.
During 2021, as limitations were progressively eased and vaccination campaigns were
launched, there was a degree of amelioration in the labour market. Various industries, such as
manufacturing and services, exhibited indications of recuperation. Nevertheless, India continued
to have issues with unemployment, and the labour market remained very competitive.
Many
persons, particularly those engaged in low-skilled or informal occupations, encountered
challenges when seeking secure employment opportunities. The agriculture sector in India
continued to be a substantial source of employment, offering a certain degree of stability.
17
INFLATION RATE
In 2020, India encountered fluctuating inflation levels due to numerous factors. At the beginning
of the year, inflation was rather mild. However, as the COVID-19 epidemic progressed, prices
were impacted by disruptions in the supply chain and the implementation of lockdown
measures. Consumer Price Inflation (CPI) and Wholesale Price Inflation (WPI) are widely
employed as inflation indicators in India. Both indices had changes over the year. The
Consumer Price Index (CPI), a metric that gauges inflation in retail prices, witnessed a
substantial surge in the early stages of the epidemic, mostly attributed to the escalation of food
prices. Nevertheless, inflation in non-food sectors remained comparatively subdued.
The Wholesale Price Index (WPI), which gauges wholesale prices, exhibited volatility due to
swings in prices of crucial commodities such as crude oil and food products.
In 2021, there was ongoing anxiety over inflation, which experienced occasional oscillations.
The Consumer Price Index (CPI) was still affected by food inflation, and India's inflation was
also influenced by global causes such as increasing oil prices. The primary objective of the
Reserve Bank of India (RBI) was to uphold an inflation target, and it employed monetary policy
instruments to regulate inflation levels.
18
1.2 REGIONAL ECONOMY: ASEAN ECONOMY PERFORMANCE
1.2.1 THAILAND
Economic Indicators/Year
2020
2021
2022
GDP (%)
-6.1
1.5
2.6
Inflation Rate (%)
0.8
1.2
6.1
Unemployment Rate (%)
1.7
1.9
1.3
GDP
Thailand's GDP significantly decreased in 2020, with a negative growth rate of -6.1%. This was
mostly caused by the COVID-19 pandemic, which interfered with economic activity and global
trade. Meanwhile for the year 2021, Thailand's economy recovered, rising at a 1.5% annual
rate. The government's aid programs and improved global economic conditions as nations
started to manage the pandemic better are two reasons for this recovery. This continues until
2022 with the percentage of 2.6%.
19
UNEMPLOYMENT RATE
A lower unemployment rate indicates better work prospects, whereas a larger rate implies a
greater number of unemployed persons.1.7% of the labour force was unemployed in 2020 due
to the country's 1.7% unemployment rate.
The unemployment rate grew to 1.9% in 2021, which shows a slight rise in unemployment. The
unemployment rate fell to 1.3% in 2022, which represents a lower percentage of the workforce
being unemployed than in the previous year.
INFLATION RATE
Thailand had a 0.8% inflation rate in 2020, which was comparatively low. The inflation rate rose
to 1.2% in 2021. The slower economic recovery and the lessening of pandemic-related
restrictions, which caused consumer spending and the demand for goods and services, have
been responsible for this slight increase in inflation.
Thailand's inflation rate increased to 6.1% in 2022. This considerable increase indicates that
there were more intense inflationary pressures on the nation's economy. This could be caused
by a number of things, including rising commodity prices, rising consumer demand, or problems
with the supply chain.
20
1.2.2 INDONESIA
ECONOMIC
INDICATORS/YEAR
2020
2021
2022
GDP Growth Rate (%)
-2.07
3.70
5.31
Unemployment Rate (%)
4.25
3.83
3.46
Inflation Rate (%)
1.92
1.56
4.21
GDP
Indonesia holds the position of being the most substantial economy in the Southeast Asian
region.
The industrial sector contributes the most to the Gross Domestic Product (46.5%of the
overall GDP).
Manufacturing is the most crucial sector within the business, accounting for 24%
of the overall output and serving as one of the primary drivers of growth.
21
The mining and quarrying sector represents 12%, the construction sector represents 10%, and
the electricity, gas, and water supply sector represents 0.75%. Services account for 38% of the
Gross Domestic Product (GDP). The key sectors under services include trade, hotel and
restaurants (constituting approximately 14% of GDP), transport and communication (7% of
GDP), finance, real estate and business services (7% of GDP), and government services (6%).
The remaining 15% is attributed to agriculture. Indonesia's economy contracted in the fourth
quarter more than anticipated.
In the fourth quarter of 2020, Indonesia's economy had a contraction of 2.19%, which was lower
than the market's anticipated decline of 2% and followed a previous quarter's loss of 3.49%.
The COVID-19 pandemic resulted in a consecutive third quarter of economic decline.
Household consumption dropped 3.61% (compared to a decrease of 4.05% in Q3), fixed
investment declined by 6.15% (compared to a drop of 6.48% in Q3), and exports and imports
experienced a significant drop, negatively impacting the GDP. The increase in government
spending was 1.76% in the third quarter, specifically 9.76%. Output in mining decreased by
1.20% compared to a larger decrease of 4.28%. Manufacturing had a decline of 3.14%
compared to a larger decline of 4.34%. Construction witnessed a decrease of 5.67% compared
to a smaller decrease of 4.52%. Wholesale trade and retail experienced a decline of 3.64%
compared to a larger decline of 5.05%. Lastly, output in transportation and warehouse
decreased by 13.42% compared to a larger decrease of 16.71%. The production of
communication increased by 10.91 percent, compared to a 10.72 percent increase. The Gross
Domestic Product (GDP) saw a significant decline of 2.07% in 2020, marking the most
substantial decrease since the 1998 Asian financial crisis. This decline followed a growth of
5.02% in 2019.
In Q4 2021, Indonesia's Gross Domestic Product (GDP) experienced a year-on-year increase of
5.02%, surpassing the 3.51% growth in Q3 and the market's anticipated growth of 4.9%. This
positive outcome can be attributed to the relaxation of COVID-19 restrictions and the increasing
rate of vaccinations. Household consumption experienced a growth rate of 3.55% compared to
1.02% in the third quarter. Similarly, government spending significantly increased by 5.25%
compared to 0.62%. Additionally, fixed investment also showed an upward trend. The growth
rate of exports increased to 29.83% (compared to 29.16% in the third quarter), while imports
grew by 29.60% (compared to 29.95%). This had a positive impact on the country's Gross
Domestic Product (GDP).
Manufacturing production grew at a rate of 4.92%, compared to
22
3.68% in the previous period. Construction production also increased faster, with a growth rate
of 3.91% compared to 3.84%. The wholesale trade and retail sectors experienced a growth rate
of 5.56%, higher than the previous rate of 5.15%. The communication sector also saw a faster
growth rate of 6.21% compared to 5.54%. This was primarily due to a significant recovery in
accommodation and food services, which grew at a rate of 4.95% compared to a decline of
-0.14% in the previous period. Similarly, the transportation and warehouse sectors experienced
a substantial rebound, growing at a rate of 7.93% compared to a decline of -0.72%.
The
economy saw a 2.07% contraction in 2020, followed by a 3.69% expansion in 2021.
Indonesia's GDP growth in Q4 surpasses expectations.
In Q4 2022, Indonesia's economy experienced a year-on-year growth rate of 5.01%, surpassing
the market's anticipated growth rate of 4.84%. This growth follows a slightly adjusted gain of
5.73% in Q3. Following 7 consecutive periods of growth, household consumption (4.48%
compared to 5.39% in Q3) and fixed investment (3.33% compared to 4.98%) experienced a
decline, reaching their lowest levels since Q3 2021. Exports increased by 14.93% and imports
by 6.25%. Meanwhile, government consumption had a greater decline of -4.77% compared to a
decline of -2.55%. The sectors of agriculture, manufacturing, utilities, wholesale and retail
commerce, and transport and warehouse all experienced an increase in output. Agriculture saw
a growth of 4.51%, manufacturing grew by 5.64%, utilities expanded by 2.31%, wholesale and
retail commerce experienced a change of 6.55%, and the transport and warehouse sector saw
a significant gain of 16.99% in production.
In 2022, the economy had a significant growth rate of 5.31%, which is the highest since 2013.
This growth is an improvement from the 3.70% growth rate observed in 2021. The driving
factors behind this growth were the easing of pandemic-related restrictions and a global
commodity boom, which resulted in record-high exports. In 2020, Indonesia encountered
economic difficulties as a result of the COVID-19 epidemic. The nation encountered an
economic deceleration as measures were implemented to contain the transmission of the virus.
The Indonesian economy saw a contraction, marking the first occurrence in more than twenty
years. The expected GDP growth for 2020 was approximately -2.07%. The pandemic had a
substantial effect on multiple sectors, such as tourism, trade, and industry. Government stimulus
packages and monetary policy initiatives were enacted to bolster the economy during this
arduous period. Indonesia initiated its economic recovery from the pandemic-induced slowdown
23
in 2021. The government persistently executed several stimulus measures to bolster the
economy, while concurrently launching immunisation campaigns. The GDP growth rate for 2021
exhibited an upward trend, reaching 3.70% and so 2022, reaching better at 5.31%
In 2020, Indonesia, like numerous other nations, encountered economic difficulties due to the
COVID-19 epidemic. The pandemic resulted in constraints on economic activity and upheaval in
labour markets.
UNEMPLOYMENT RATE
The unemployment rate in Indonesia surged due to the economic repercussions caused by the
outbreak. Numerous firms, particularly in industries such as tourism and hospitality, underwent
workforce reductions and diminished recruitment efforts. The government enacted a range of
steps to bolster the labour market and assist individuals who experienced job loss or a decline
in income.
In 2021, Indonesia underwent a progressive recuperation as limitations were relaxed and
immunisation endeavours commenced. Various industries, such as manufacturing and services,
exhibited indications of enhancement. The unemployment rate began normalising, but the
labour market remained highly competitive. Unskilled and non-formal employees persisted in
encountering difficulties in securing steady employment. The agriculture sector continued to be
a crucial source of employment and offered a certain degree of stability.
Amidst the economic slowdown induced by the coronavirus outbreak, the unemployment rate in
Indonesia experienced a significant spike, reaching 4.25 percent. Those without employment
increased by 2.66 million, reaching 9.77 million. Simultaneously, the employed population
decreased by 0.31 million individuals, resulting in a total of 128.45 million. This reduction was
mostly observed in the manufacturing sector, which saw a decrease of 1.30 per cent.
Conversely, the agriculture sector reported the highest rise in employment, with a growth rate of
2.33 percent. Meanwhile, the workforce participation rate increased slightly to 67.77 per cent in
the third quarter, up from 67.53 per cent the previous year.
24
In 2021, the unemployment rate in Indonesia decreased to 3.83 percent from 4.25 percent. This
decline can be attributed to the improved local COVID-19 conditions. Additionally, the number of
unemployed individuals decreased by 0.67 million, reaching 9.10 million. Simultaneously, the
employed population increased by 2.60 million individuals, reaching a total of 131.05 million.
This growth was primarily observed in the manufacturing sector, whilst the agricultural industry
experienced the most significant decline, with a decrease of 1.43 per cent. Meanwhile, the
labour force participation rate remained relatively stable at 67.08. The unemployment rate in
Indonesia decreased to 3.46% due to the ongoing improvement in the local COVID-19 scenario.
The unemployment rate fell by 0.68 million, resulting in 7.4 million unemployed individuals.
Simultaneously, the number of employed individuals increased by 3.24 percent, reaching a total
of 135.3 million. This growth was mostly observed in the sectors of agriculture, manufacturing,
food accommodation & drinks, and construction. Meanwhile, the rate of people actively
participating in the workforce increased to 68.63 per cent from 67.80 percent compared to the
previous year.
INFLATION RATE
In 2020, Indonesia had changes in its inflation rate, which were influenced by many variables.
The COVID-19 pandemic significantly affected the economy's supply and demand aspects. At
the beginning of the year, inflation was rather low, but inflation rates became more unstable as
the pandemic progressed and disrupted supply networks. The government and central bank
enacted measures to bolster economic stability and effectively handle inflationary forces,
particularly food and vital goods. Indonesia grappled with persistent inflation issues throughout
2021. The inflation rate was affected by the escalation of global commodity prices, namely oil
and food products, which impacted consumer price inflation. The government and central bank
maintained a state of alertness and executed strategies to control inflation and bolster the
process of economic recovery effectively. Inflation measurements, such as the Consumer Price
Index (CPI), are significant price fluctuations and economic stability indicators.
25
1.2.3 SINGAPORE
Economic Indicators/Year
2020
2021
2022
GDP (%)
-3.9
8.9
3.6
Inflation Rate (%)
-0.2
2.3
6.1
Unemployment Rate (%)
3
2.7
2.1
GDP
In 2020, Singapore's GDP rate was -3.9%. The COVID-19 pandemic caused a severe decline in
economic activity that had an impact on several industries, including tourism, retail, and
hospitality. The supply chain interruptions and decreased international trade had an effect on
Singapore's export-oriented economy. Lockdowns and travel restrictions, meanwhile, had a
negative impact on the travel and aviation sectors, which resulted in a reduction in services.
26
Then, in 2021, it rose to 8.6%. The significant recovery in 2021 can be attributed to the world
economy picking up speed as nations started to recover from the pandemic's initial blow. And
finally, 3.6% in 2022. The expansion in 2022 is due to a more stable post-pandemic situation. An
progressive recovery to pre-pandemic economic activity was made possible by improved virus
management and higher vaccination rates.
UNEMPLOYMENT RATE
Due to the COVID-19 pandemic's negative economic effects, the jobless rate rose to 3.0% in
2020. Lockdowns and travel restrictions had an impact on a number of industries, including
tourism, hospitality, and retail, which resulted in employment losses.
As Singapore's economy started to rebound in 2021, the unemployment rate fell to 2.7%.
Employment was stabilised thanks to the government's continuous aid, which also included
salary subsidies and job retraining initiatives. The introduction of the vaccination also had a
significant impact on regaining confidence and returning economic activity to normal.
In 2022, the unemployment rate decreased even more to 2.1%, reflecting a stronger economic
recovery. Businesses resumed employing as domestic and international trade increased.
Long-term investments made by the government in fields like technology and digitalization
helped to build skills and create jobs.
INFLATION RATE
Inflation decreased by 0.2% in 2020. The government's initiatives to lessen the economic impact
of the pandemic, which involved decreased taxes and subsidies, also played a role in the
decline in inflation. Then, in 2021, the inflation rate rose to 2.3%. As Singapore's economy
recovered from the pandemic, there was some moderate inflation.Rising global commodity
costs, interruptions in the supply chain, and higher consumer spending as constraints loosen
are some of the factors behind this inflation.
27
Lastly, in 2022, the inflation rate was 6.1%.The relatively high rate of inflation in 2022 indicates a
large rise in the general level of prices. Problems in the world's supply chains, a rise in demand
for goods and services, and rising energy prices are some of the factors that may have led to
this high inflation.
1.2.4 VIETNAM
Economic Indicators/Year
2020
2021
2022
GDP Growth Rate (%)
2.87
2.56
8.02
Unemployment Rate (%)
2.10
2.38
1.54
Inflation Rate (%)
3.22
1.83
3.16
28
GDP
Vietnam's economy showed remarkable endurance in 2020 amongst the global COVID-19
pandemic, surpassing that of numerous other nations. The nation achieved a GDP growth rate
of around 2.87% for the year, making it one of the few countries to attain positive growth amidst
the worldwide economic depression. The performance was ascribed to the formidable export
performance, a resilient industrial sector, and efficacious COVID-19 containment efforts.
Vietnam exhibited ongoing economic prowess throughout 2021.Based on my most recent
knowledge update, the predicted GDP growth rate for the year is approximately 2.56%.
Vietnam's economy experienced favourable outcomes as a result of development driven by
exports, investments, and the recovery of the global economy. The administration enacted
policies to facilitate economic recovery and ensure the preservation of economic stability.
Vietnam experienced a growth in its gross domestic product of 8.02% in 2022. However, the
output for the industry and construction sectors slowed down to 4.22% compared to 12.91% in
the third quarter. Similarly, the services sector also experienced a decrease in growth, with a
rate of 8.12% compared to 18.86%.
Concurrently, the agriculture sectors experienced a more
rapid growth rate of 3.85% compared to 3.24%. In 2022, the GDP grew by 8.02% compared to
the previous year, surpassing the 2.58% growth in 2021. The economy was negatively affected
by the Covid-19 lockdown, which had an influence on factory activity. The reading exceeded the
official growth target range of 6.0%-6.5% and was the highest since 1997.
UNEMPLOYMENT RATE
In 2020, Vietnam's labour market had some effects from the COVID-19 pandemic, yet the
country successfully maintained a comparatively low level of unemployment. The government
enacted policies to bolster employment and facilitate economic resurgence. Vietnam's
unemployment rate in 2021 remained constant due to the government's emphasis on job
development and business support. In 2022, the unemployment rate in Vietnam was 1.54, which
indicates a change from the previous year. However, the unemployment rate in the last two
years was significantly higher compared to previous years. The unemployment rate represents
29
the proportion of the unemployed but actively seeking employment. It excludes economically
inactive individuals, such as the chronically unemployed, those under 15, or retired individuals.
INFLATION RATE
In 2020, Vietnam had a comparatively low inflation rate. The inflation rate was effectively
controlled, mostly as a result of conservative monetary policy and the presence of low world oil
prices. Vietnam successfully sustained a modest and consistent inflation rate throughout the
year 2021. The government and central bank persisted in employing steps to control inflationary
pressures.
1.2.5 PHILIPPINES
Economic Indicators/Year
2020
2021
2022
GDP (%)
-9.52
5.71
7.57
Inflation Rate (%)
2.39
3.93
5.82
Unemployment Rate (%)
2.52
2.63
2.24
30
GDP
According to the information presented above, the rate of increase in GDP in 2020 is shown to
be the lowest of any year. Because the world encountered the epidemic of COVID-19 for about
2 years in 2020, the economy of the country was negatively impacted as a result. This
happened as a result of the implementation of strict lockdown measures, which caused
businesses and economic activities to be disrupted. The Philippine economy, on the other hand,
was able to recover in just one year, which corresponds to the year 2021 and saw growth of
5.71%, which is an increase of 15.23% from the previous year. The steady flow of remittance
payments from Filipinos working abroad continued at a healthy pace in 2021, which was a
source of economic support for the Philippines in that year. The growth of the nation's gross
domestic product (GDP) continued to be quite strong, hovering around 1.86%, and eventually
reached 7.57% in 2022. This was primarily brought about by a recovery in domestic
consumption and investment, in addition to robust increase in exports.
UNEMPLOYMENT RATE
The unemployment rates in 2021, specifically 3.93%, represent a little increase compared to the
rates observed in 2020, which stood at 2.39%. This rise can be attributed to the global impact of
the Covid-19 epidemic. During the implementation of a lockdown, individuals are able to
continue their professional responsibilities, although remotely, by working from their residences.
Nevertheless, the evident decline in demand for goods and services in certain areas can hinder
the business's ability to generate sufficient cash, perhaps leading to bankruptcy if operational
costs are not well managed. This is why certain organisations may find it necessary to reduce
their workforce in order to downsize the organisation and reduce expenses.
In light of the conclusion of the pandemic, it appears that the unemployment rate for the year
2022 is anticipated to exhibit a decline in comparison to preceding years. This phenomenon has
led to a notable recovery in certain industries, resulting in a fall in the unemployment rate to
2.24%.
31
INFLATION RATE
In the year 2020, we were able to see that the rate of inflation was fairly low, coming in at
2.39%. This occurs as a result of the COVID-19 pandemic, which caused a disruption in supply
networks and a fall in demand for goods and services, both of which contributed to decreased
inflation rates in the year 2020. For 2021, even if the pandemic is still ongoing, the power buying
is starting to increase as the easing of lockdown measures in 2021.
Next, the inflation rate stated on data in 2022 is 5.82%. This is demonstrated by the greater
inflation rate when compared to the two years prior to this one. At that time, it dramatically
increased greatly as a result of the significant growth in global energy costs in 2022, which was
one of the primary drivers for inflation with respect to transportation and energy. As a direct
consequence of the recent uptick in global energy costs brought on by happenings in Ukraine
and production cuts, domestic pump prices in the Philippines have increased. In addition to this,
the value of the Philippine peso declined relative to the dollar in 2022, which resulted in an
increase in the cost of imports and contributed to inflation.
1.3 MALAYSIAN ECONOMY
As of my last update in January 2022, Malaysia's economy is characterized by a diverse range
of sectors. The country is a major player in manufacturing, especially in electronics, automotive,
and machinery. For instance, companies like Intel and Samsung have a significant presence in
Malaysia's electronics industry. Additionally, Malaysia is a leading producer of palm oil, rubber,
and natural gas, which are crucial exports contributing significantly to the country's economy.
However, the Malaysian economy faced challenges due to global market uncertainties, such as
fluctuations in commodity prices affecting its exports.
According to reports, Malaysia's economy ranks 38th in the world in terms of GDP and is the
fifth largest in Southeast Asia. Malaysia also had the third-highest labour productivity in ASEAN
in 2018 with an estimated Int$55,360 per worker. Malaysia will have the 21st-largest economy in
the world by 2050, with a GDP of $1.2 trillion (in Year 2000 dollars) and a GDP per capita of
$29,247, according to a 2012 HSBC estimate. However, the COVID-19 epidemic struck
Malaysia's economy hard at the start of 2020, and as it spread to the rest of the world, it
32
worsened the country's economic crisis and shutdown since 2008. During the pandemic in early
December 2020, Fitch Ratings lowered the nation's rating from A to BBB+. It is vital for investors
to understand the ins and outs of the rapid Malaysian economy changes if they want to invest in
companies in Malaysia.
The COVID-19 pandemic caused economic slowdowns, business closures, and disrupted global
trade, notably impacting Malaysia's tourism industry due to travel restrictions. To tackle these
challenges, the Malaysian government implemented strategies like infrastructure projects (e.g.,
East Coast Rail Link) and investment incentives to draw foreign investments. Additionally,
Malaysia introduced plans, such as the National Fiberisation and Connectivity Plan (NFCP),
focusing on enhancing internet connectivity and nationwide technological infrastructure.
Despite challenges, Malaysia showed resilience, aiming for economic recovery by revitalizing
sectors with incentives and support schemes. The government stressed innovation and tech
advancement for future sustainability. Yet, economic conditions are fluid due to global shifts and
internal reforms. Seeking updated, credible reports from reliable sources or government
agencies is crucial for current insights into Malaysia's economy.
33
1.3.1 GDP & GNP DEVELOPMENT
ECONOMIC
INDICATORS/ YEAR
2020
2021
2022
GDP(%)
-5.53
3.09
8.69
GNP(%)
-4.49
2.34
7.70
GDP & GNP DEVELOPMENT
According to the chart above, the gross domestic product of Malaysia peaked in 2022. It can be
seen that it has had an increase of 5.6% compared to the previous year. However, a drastic
change can be seen between the years 2020 and 2021 when Malaysia’s GDP hit negative in
2020. This is due to the COVID-19 pandemic that hit Malaysia in early 2020 and it has affected
Malaysia’s GDP due to its strict policy and measures taken by the government to keep
Malaysia’s economy alive. A positive trajectory can be seen in Malaysia’s GDP as more sectors
such as labour, social, and economic are reaching full capacity compared to when the pandemic
hit. Malaysia’s finance ministry expects the economy to grow 4.0%-5.0% in 2024.
34
1.3.2 INFLATION & INTEREST RATE DEVELOPMENT & CONTROL
ECONOMIC
INDICATORS/ YEAR
2020
2021
2022
INFLATION
RATE(%)
1.14
2.48
3.38
INTEREST RATE(%)
4.75
1.75
2.75
INFLATION RATE
The depicted graph illustrates Malaysia's consistent inflation rate growth over the past three
years, signaling potential downsides for the country's economy and its populace. Such an
upward trend in inflation can lead to various adverse economic consequences, including
reduced purchasing power, higher interest rates, sluggish economic growth, and other
unfavorable impacts. In 2020, Malaysia recorded an inflation rate of 1.14%, which escalated to
2.48% the following year, marking a 1.34% increase. Subsequently, in 2022, the inflation rate
surged by 0.9%, peaking at 3.38% over the three-year period. It's notable that Malaysia's
35
long-term average inflation rate, spanning from 1973 to 2023, stands at 3.39%. This indicates
that Malaysia's current inflation rate has returned to a more typical level, signaling a recovery
from the pandemic-induced economic disruptions.
However, supply chain disruptions could potentially drive up labor costs, exerting upward
pressure on prices. Additionally, constraints on cross-border labor movement and physical
distancing measures might further contribute to inflationary pressures. These challenges could
lead to increased production costs, thereby influencing prices and contributing to sustained
inflation rates in Malaysia. As a consequence, managing these factors becomes crucial for the
country's economic stability and maintaining a balanced inflation rate conducive to sustained
economic growth.
INTEREST RATE
The dynamics of credit supply and demand are intricately tied to interest rate fluctuations.
Changes in interest rates directly influence both the desire to borrow money and the availability
of credit in an economy. When there's an increased demand for money or credit, interest rates
tend to rise, while reduced demand for credit leads to lower interest rates. Elevated interest
rates translate to reduced purchasing power due to the higher cost of borrowing money.
Malaysia experienced notable shifts in interest rates in recent years. In 2020, the country's
interest rate peaked at its highest point, reaching 4.75%. However, the subsequent year
witnessed a significant drop, plummeting by 3% to an all-time low of 1.75%. This substantial
decrease reflected a deliberate effort to stimulate economic activity by reducing borrowing costs.
The subsequent year, there was a slight recovery as the interest rate rose to 2.75%. This shift
demonstrated Malaysia's gradual economic recovery from the pandemic's effects, prompting
increased spending in 2021. The lower interest rates in 2021 encouraged greater consumer
spending by reducing the cost of borrowing, thereby stimulating economic activity.
Overall, these fluctuations in Malaysia's interest rates showcase the government's efforts to
navigate the country's economic recovery by manipulating borrowing costs. Lower interest rates
in 2021 contributed to increased consumer spending and served as an economic stimulus,
reflecting the nation's progression toward recovery from the pandemic-induced economic
slowdown.
36
1.3.3 BALANCE OF PAYMENT IMPORT & EXPORT
ECONOMIC
INDICATORS/ YEAR
2020
2021
2022
IMPORT RATE(%)
55.23
61.73
66.91
EXPORT RATE(%)
61.6
68.84
73.85
IMPORTS OF GOODS AND SERVICES
In 2020, Malaysia experienced a notable decline in its import rate, marking the lowest level in
the past three years. This drop was a direct consequence of the global COVID-19 pandemic,
which significantly disrupted international trade for numerous nations. To curb the virus's spread
and prevent further economic deterioration, countries worldwide implemented stringent import
policies, temporarily slowing down business transactions across borders. This cautionary
approach significantly affected Malaysia's imports during that period.
37
However, there was a remarkable rebound in Malaysia's import rate in the subsequent years. In
the following year, there was a substantial increase of 6.5%, reaching 61.73%. This growth
continued the next year, escalating by an additional 5.18% to 66.91%. These positive trends
signify a gradual recovery in Malaysia's import activities. With the release of COVID-19 vaccines
and a better understanding of preventive measures, the global economy has shown signs of
recuperation. Consequently, Malaysia's import rate has begun to regain momentum, indicating a
slow but steady revival in international trade activities and a resumption of the country's
economic connections with other nations.
EXPORT OF GOODS AND SERVICES
Malaysia's export rate has displayed a consistent upward trajectory, mirroring its import trends,
as both facets are intertwined global businesses involving interactions with other countries. In
2020, Malaysia recorded an export rate of 61.6%, which experienced a notable increase of
7.25% the subsequent year, reaching 68.84%. This growth continued in the following year,
surging to 73.85%. These successive increments signify a positive trend in Malaysia's economy,
indicating a gradual improvement after recuperating from the pandemic-induced slowdown.
Following the pandemic's onset in early 2020, subsequent years showcased tangible
improvements in various sectors. Tourism gradually resumed, allowing tourists to visit Malaysia,
and restaurants resumed serving dine-in customers with fewer restrictions on customer counts
and operating hours. These factors significantly contributed to the fluctuating export rates in
Malaysia, reflecting the country's recovery trajectory.
According to the Ministry of Finance, projections suggest a favorable outlook for Malaysia's
international trade, especially in the commodity sector, supporting an estimated 5.1% increase
in gross exports across all sectors by 2024. This forecast indicates positive growth prospects
and a sustained upward trajectory for Malaysia's export activities, reflecting a promising outlook
for the country's economy in the coming years.
38
1.3.4 PER CAPITA INCOME OF CITIZENS
ECONOMIC
INDICATORS/ YEAR
2020
2021
2022
PER CAPITA
INCOME OF
CITIZENS(USD$)
10,161
11,109
11,972
PER CAPITA INCOME OF CITIZEN
The amount of money made per person in a country or region is expressed as per capita
income. The average per-person income for a region is calculated using per capita income,
which is also used to assess the population's standard of living and quality of life. A country's
per capita income is determined by dividing its national income by its population. According to
the data above, Malaysia’s per capita income of citizens in 2020 is $10,161 a year, with $11,109
the following year, and $11,972 in 2022. In 2020, Malaysia’s per capita income hit its lowest, due
to the pandemic. During the outbreak of the virus, multiple sectors of the economy were forced
to shut down and a large number of service workers had to be laid off. The government was
focused on the essential, healthcare, and frontline services to operate. However, the per capita
income has increased as the economy is recovering from the pandemic.
39
1.3.5 RAW MATERIAL SOURCES
Raw materials, the elemental components used in early manufacturing stages, hold immense
significance for various industries. In Malaysia, these materials, traded as commodities globally,
are pivotal to the country's economic landscape, particularly owing to its abundant mineral
resources. Despite engaging a relatively small portion of the workforce, Malaysia's mining sector
significantly influences its Gross Domestic Product (GDP) and economic development. The
nation boasts a diverse array of metallic ores, such as tin, bauxite (the primary source of
aluminum), copper, iron, and gold, showcasing the depth of its mineral deposits.
For instance, tin mining has historically been a cornerstone of Malaysia's mining industry, dating
back to the country's colonial era. This mineral has been a major export for Malaysia,
contributing substantially to its economy over the years. Additionally, bauxite mining, particularly
in the state of Pahang, has been significant, with Malaysia being one of the leading suppliers of
bauxite globally. \Moreover, Malaysia's mineral resources encompass minor ores like
manganese, antimony, and mercury, which, although lesser in scale, are present throughout the
nation. These minerals, while not as extensively exploited as major ores, add to the country's
mineral diversity.
However, the most vital mineral resources in Malaysia are petroleum and natural gas. These
resources are extracted from offshore and onshore fields, making Malaysia a significant player
in the global energy market. The country's prowess in the liquefied natural gas (LNG) sector has
positioned it as a prominent exporter, contributing substantially to its export revenues.
Malaysia's natural gas reserves, combined with refined petroleum products and crude oil, form a
significant part of the country's commodity export base.
For example, Petronas, Malaysia's national oil and gas company, operates globally, involved in
upstream exploration and production, refining, and marketing of petroleum products,
showcasing Malaysia's substantial presence in the global energy sector.
In essence, Malaysia's rich mineral resources, encompassing various metallic and minor ores
alongside its significant petroleum and natural gas reserves, play a critical role in the nation's
economy, driving exports, and contributing to its economic growth and global trade dynamics.
40
CHAPTER 2
INDUSTRY ANALYSIS
The building industry in Malaysia has seen significant repercussions as a result of the
disruptions created by the Coronavirus (COVID-19) outbreak. According to GlobalData's
estimation, the output of the industry had a contraction of 17.2% in the year 2020. This decline
can be attributed to the suspension of construction activities in various regions of the country
due to the implementation of COVID-19 containment measures. Based on data provided by the
Department of Statistics Malaysia (DOSM), it can be observed that the country's value-added,
measured at constant prices of 2015, had a significant decline of 21.3% year on year (YoY)
during the initial three quarters of the year 2020. During this particular time frame, civil
engineering projects experienced the greatest impact, with non-residential and residential
activities following suit.
It is anticipated that the industry will have a significant rebound in 2021, contingent upon the
absence of containment measures similar to those implemented in 2020. This recovery is
expected to be driven by investments made in transportation and energy initiatives. It is
projected that the industry will experience a growth rate of 9.8% in the year 2021, followed by an
annual growth rate ranging from 6.0% to 6.6% between the years 2022 and 2025. In the middle
of December 2020, the government granted its approval for a budget of MYR322.5 billion
(US$73.3 billion) for the year 2021. This budget stands as the largest in the history of the
country, surpassing the previous year's budget of MYR314.7 billion (US$76 billion) by 2.4%. A
significant portion of the whole budget, specifically 73.3%, is designated for operations
expenses, while 21.4% is allotted for development expenditures. The remaining 5.3% is
specifically earmarked for addressing the challenges posed by the COVID-19 pandemic.
41
2.2.1 CONTRIBUTION TO GDP
The building industry has a significant influence on global economic development. The
construction sector plays a crucial role in facilitating a country's achievement of several
objectives, such as social development, industrialization, freight transportation, sustainable
development, and urbanisation, by providing sufficient buildings and infrastructure. The
objective of this study is to assess the interconnections between the construction sector and
other sectors, which have a significant role in the overall economic performance and gross
domestic product (GDP).
The data utilised in this study were obtained from the Department of Statistics Malaysia and the
World Bank, covering the time period from 1970 to 2019. To examine the relationships between
the variables, various statistical tests were employed, including the Pearson correlation test, the
cointegration test, and the Granger causality test. The Vector Error Correction Model (VECM)
was developed to analyse both short-term and long-term equilibrium and to examine the
behaviour of the construction sector, using the Impulse Response Function (IRF) technique.
Subsequently, a forecast was conducted for the Malaysian economy and GDP across the
necessary sectors for the period spanning from 2020 to 2050. The analysis unveiled that certain
sectors, namely agriculture and services, exhibit forward linkages, whereas manufacturing and
mining sectors demonstrate independence from the construction sector's causality. This
observation sheds light on the response of these contributing sectors during periods of
economic recession, thereby generating substantial revenue.
The Malaysian economy is undergoing a transition towards sustainable production, with a
heightened focus on the building sector. The results can serve as a reference point for other
nations in their pursuit of sustainable development. The study holds significance due to its
potential utility for global specialists in effectively directing resources towards establishing
sustainability within the building sector following a disruptive event. A proposed sustainable
conceptual framework has been put out for universal implementation, delineating the
components included in the expansion of the construction sector to guarantee its enduring
development over time.
42
2.2.2 PERFORMANCE
In 2023, Malaysia's construction industry is poised for continued expansion, albeit at a slightly
moderated pace compared to the robust growth witnessed in 2022. Several pivotal factors
underpin this projection:
1. Government Infrastructure Spending: Malaysia's 2023 budget allocates substantial funds for
infrastructure development, bolstering the construction sector. Key initiatives like the Kuala
Lumpur-Singapore High-Speed Rail, the Pan Borneo Highway, and the East Coast Rail Link
signify the government's commitment to stimulating construction activities.
Example: The Pan Borneo Highway project, spanning over 1,000 kilometers, aims to enhance
connectivity between Sabah and Sarawak, fostering economic development and regional
integration.
2. Private Sector Investments: Forecasts indicate a substantial influx of private investments,
particularly in the residential and commercial building segments, driving growth in the
construction industry.
Example: Private real estate developers, such as S P Setia, investing in large-scale projects like
Setia Alam and EcoHill, contribute significantly to Malaysia's construction sector growth.
3. Urbanization Trend: Malaysia's ongoing urbanization continues to fuel demand for new
residential complexes, office spaces, and infrastructure developments, sustaining the need for
construction projects nationwide.
Example: The Iskandar Malaysia development, a vast urban project incorporating residential,
commercial, and leisure facilities, reflects Malaysia's urbanization push.
Despite these growth factors, the construction industry grapples with challenges:
1. Escalating Costs: Rising expenses related to labor and building materials exert pressure on
profit margins for construction firms.
2. Skilled Labor Shortfall: A shortage of skilled laborers poses a threat, potentially causing
delays and increased costs due to labor constraints.
43
3. Global Economic Uncertainty: Factors like the prolonged impact of the COVID-19 pandemic
and geopolitical tensions, such as the situation in Ukraine, introduce unpredictability into the
global economy. Any slowdown in global economic growth could influence Malaysia's demand
for construction services.
Navigating through these challenges while leveraging opportunities presented by government
initiatives, private investments, and urbanization trends will be vital for sustaining growth and
resilience in Malaysia's construction sector in the upcoming year.
Here are some particular projections for Malaysia's building sector in 2023:
●
According to GlobalData, the Malaysian construction market will expand at an AAGR of
more than 5% from 2023 to 2027.
●
According to Malaysia's government, the construction industry will expand by 4.5% in
2023.
●
MIDF Research anticipates that the construction sector will continue to provide data.
MIDF Research also anticipates that the construction sector will continue to have
favourable growth in 2023, supported by an uptick in government projects and an
ongoing rise in output from the private sector.
It is crucial to remember that these projections could alter based on Malaysia's political and
economic situation in 2023.
44
2.2.3 BACKING FACTOR
The construction industry in Malaysia has become a crucial driver for economic growth and
development, owing to various major elements that have contributed to its strong performance.
A key driver of the sector's expansion is the robust government endorsement and assistance.
The Malaysian government has continually shown its dedication to creating a favourable climate
for construction activities, encompassing both infrastructure development and real estate
projects.
The commitment is clearly demonstrated by significant public funding allocated to
extensive infrastructure initiatives, like the Mass Rapid Transit (MRT) lines and the Pan Borneo
Highway. These projects have not only promoted economic growth but also generated a number
of employment prospects.
Furthermore, the government has introduced a range of policies and initiatives aimed at
bolstering the construction sector, including the Construction Industry Transformation
Programme (CITP) and the Construction Industry Payment and Adjudication Act (CIPAA).
These measures have improved transparency, efficiency, and overall business conditions in the
industry, making it more attractive to local and foreign investors. Moreover, the government's
efforts to streamline regulatory processes and reduce bureaucratic red tape have further
facilitated the construction sector's growth.
Another crucial supporting aspect for the building industry in Malaysia is the country's resilient
and highly skilled workforce. Malaysia possesses a proficient and highly competent workforce,
comprising engineers, architects, and construction labourers. The presence of a highly
competent workforce has facilitated the smooth execution of complicated and varied
construction activities, ranging from tall structures to infrastructure advancements. Moreover, the
nation's workforce is renowned for its flexibility and proficiency in using modern construction
technologies and processes, ensuring the sector's competitiveness in the worldwide arena.
The powerful financial ecosystem in Malaysia is another remarkable feature. The construction
industry has access to a range of financing alternatives, such as banking facilities, venture
capital, and government grants.
The provision of financial support has enabled construction
firms to allocate resources towards advanced technology, contemporary machinery, and
environmentally-friendly construction methods, thereby augmenting their competitiveness and
productivity.
45
In conclusion, the construction sector in Malaysia continues to thrive due to the backing it
receives from the government, the availability of a skilled workforce, and a supportive financial
ecosystem. These factors have not only fueled the sector's growth but have also positioned
Malaysia as a hub for construction and infrastructure development in Southeast Asia. As the
nation continues to invest in this sector, it is likely to witness sustained economic development
and increased global recognition for its construction capabilities.
2.2.4 PROSPECT
The construction industry plays a pivotal role in establishing the built environment in which
individuals reside, labour, and engage with one another. The contributions of this phenomenon
are diverse and have significant implications for various aspects such as economic growth,
employment, investment, and infrastructure development. It contributes around 9% to the
country's GDP and employs over 1 million people. The future outlook for this sector indicates a
projected steady growth over the upcoming four quarters. It is anticipated that the growing
momentum will persist throughout the projected time frame, with a compound annual growth
rate (CAGR) of 5.9% from 2022 to 2026. It is projected that the building production in the
country will attain a value of MYR 228,680.8 million by the year 2026.
In order to encourage the growth of the building sector in Malaysia, the government has
declared that the Budget 2024 will concentrate investments in construction, recognising its
significant contribution to the country's national income.
The Government has allocated RM90
billion for development expenditure, with an additional RM2 billion set aside as contingency
savings.
The amount of RM99 billion is 9.1% less than the Budget 2023. The efforts outlined
in Budget 2024, which will be elaborated on later, are undeniably advantageous for participants
in the construction and building material industries.
The government's dedication to advancing crucial initiatives aimed at enhancing connectivity
and offering improved amenities and infrastructure for Malaysians demonstrates their
commitment to provide opportunities for contractors of all sizes.
Although it may appear that
there is a shortage of large-scale projects, it is important to take into account the Government's
constrained financial situation in terms of development spending. This is where the private
46
sector plays a role through public-private partnerships (PPPs) for infrastructure projects. These
projects encompass the MRT3 Circle Line and the Penang LRT. The government has also
declared its intention to prioritise East Malaysia, specifically Sabah and Sarawak, allocating
RM6.6 billion and RM5.8 billion to each region, respectively.
Sabah and Sarawak, both states
in East Malaysia, will continue to receive significant advantages from the augmented
development allocation. This is due to their growing importance as key entry points to
Kalimantan, where Indonesia plans to relocate its capital.
Moreover, it is worth noting that the Sabah-Sarawak Link Road (SSLR) is currently being
considered for the continuation of its project into phase 2. This phase is expected to span a
distance of 320 km and require an investment of RM7.4 billion.
In addition, Sabah received a
funding of RM15.7 billion for phase 1 of the Pan Borneo Sabah project, which covers a distance
of approximately 366 km. This allocation was provided due to the slower progress of the Sabah
section of the Pan Borneo project in comparison to Sarawak.
Next, the government prioritises the prevention of anticipated natural disasters, such as floods,
through the implementation of vital flood mitigation initiatives. These initiatives encompass
various projects, including Lembangan Sungai Pahang, Sungai Langat Phase 2, Sungai Jelai,
Sungai Likas, Kuching Phase 2, Baling Phase 2, and Pembangunan Lembangan Sungai
Bersepadu in Kelantan, among others. The occurrence of torrential downpours resulting in
floods poses significant challenges that impact a large number of Malaysians on an annual
basis, hence necessitating the immediate implementation of these projects.
Furthermore, the allocated funding will be utilised for the upkeep of federal highways and
bridges, expansion of the North-South Expressway, and enhancement of roads in village and
rural regions. The projects, which amount to around RM5.41 billion, will be distributed
throughout the country, providing benefits to contractors of various scales, depending on the
magnitude of each individual project.
Subsequently, the government has made education its
primary focus, guaranteeing that schools are easily accessible and providing conducive learning
environments. It will allocate a budget of RM 5.093 billion for this purpose.
Moreover, the
Budget 2024 just unveiled by the government would provide numerous advantages to various
sectors, including housing, healthcare, public facilities, utilities, and the building industry.
47
Overall, the prospect for the construction industry in Malaysia in 2024 is positive. The industry is
expected to continue to grow, driven by government and private sector investments in
infrastructure and buildings. Construction companies that focus on digital technologies,
sustainability, and green building are well-positioned to succeed in the coming years.
2.3 MARKET SHARE
A company's or organisation's market share is the portion or proportion of a market that it
controls. In other terms, a company's market share is the ratio of its total sales to the total
industry sales of the industry in which it works. The computation of market share considers a
firm's total sales during a specific time period as well as the total sales of the industry in which
the company participates over that time period. Understanding a company's current market
share can reveal a lot about its operations.
A corporation is by far the biggest player in its market if it has an 85% market share, according
to statistics. This may also imply that the business has some form of barrier to competition
protecting its market share, earnings in the present and the future, and future earnings. The
48
importance of market share is due to economies of scale. A larger company is better able to
handle the high fixed expenses of a capital-intensive industry than the rest of its competitors.
The company that we have chosen for our final project is Sunway Berhad and Gamuda BHD.
Both of these companies fall under the construction industry. According to the pie chart below, it
is clear that there are a few companies that are dominating the market share of the construction
industry. All data are taken in the current year.
Referring to the pie chart above, it is clear that the construction industry is being dominated by
companies such as Gamuda BHD (Gamuda), Ijm Corp Berhad (Ijm), Kerjaya Prospek (Kerjaya),
and Eco World Dev (Ecowld). In 2022, Gamuda achieved the highest net sales in the
construction industry. Dominating the industry with 23.9%. It’s not a surprise as Gamuda has a
diversity of successful ventures which include SMART Tunnel, rail and metro systems, roads
and expressways, and also dams, urban regeneration, water treatment, and a power plant.
Following Gamuda with 13.3% is IJM Corp.
Besides construction, IJM also ventures into industries such as property, industry and
infrastructure. More famously known as IJM Land, IJM’s property projects such as Bandar
Rimbayu, are one of its most successful ventures. Bandar Rimbayu spans across 1,879 acres of
land. Kerjaya, Suncon, and Ecowld are also the industry’s top competitors with SUNWAY being
the most diversified company out of its competitors. To conclude, diversifying ventures as a
company will statistically bring in more revenue as it attracts investors to invest in similar
projects.
CONSTRUCTION AND ENGINEERING SECTORS
(DATA BASED ON MALAYSIASTOCKBIZ)
STOCK
NAME
SHARIAH
COMPLIANT
MARKET
CAPITAL
TOTAL SALES
(ALL IN
BILLIONS)
TOTAL ASSETS\
(ALL IN
BILLIONS)
ROE
(%)
GAMUDA
SHARIAH
12.33B
4.902
23.90182
16.79
IJM
SHARIAH
6.60B
4.408
20.53505
2.22
ECOWLD
SHARIAH
3.03B
2.043
8.9116
3.89
49
SUNCON
SHARIAH
2.46B
2.155
2.27265
16.38
WCEHB
NON-SHARIAH 2.24B
0.606
7.25175
7.85
KERJAYA
SHARIAH
1.75B
1.122
1.4961
10.39
WIDAD
SHARIAH
1.73B
0.160
1.01858
-4.36
EKOVEST
SHARIAH
1.36B
0.808
11.37472
-4.35
AME
SHARIAH
922.57M
0.398
1.81079
14.38
WCT
SHARIAH
758.84M
2.104
8.32319
1.37
MUHIBAH
SHARIAH
501.70M
0.896
3.40727
-0.96
JAKS
SHARIAH
462.68M
0.940
2.39138
3.21
ECONBHD
SHARIAH
474.86M
0.336
0.6375
-4.11
MGB
SHARIAH
396.41M
0.612
0.96941
5.86
VLB
SHARIAH
325.79M
0.304
0.33541
21.53
KITACON
SHARIAH
330.02M
0.487
0.52887
12.46
MUDAJYA
SHARIAH
318.91M
0.305
1.9326
-2.74
KIMLUN
SHARIAH
280.98M
0.756
1.39733
-1.34
GKENT
SHARIAH
261.98M
0.355
0.81221
-0.84
PTARAS
SHARIAH
263.72M
0.443
0.55054
-0.53
NESTCON
SHARIAH
235.41M
0.461
0.56516
-13.95
GADANG
SHARIAH
232.98M
0.651
1.38917
3.29
NADIBHD
SHARIAH
225.95M
0.233
0.98387
-1.46
MITRA
SHARIAH
209.7M
0.259
0.99171
3.28
FAJAR
SHARIAH
215.96M
0.190
0.56436
-3.92
DKLS
SHARIAH
194.67M
0.179
0.49184
3.53
GDB
SHARIAH
178.24M
0.510
0.336
5.00
TRC
SHARIAH
177.78M
0.678
1.07736
4.80
ADVCON
SHARIAH
172.50M
0.422
0.60514
-9.25
PUNCAK
SHARIAH
157.25M
0.220
2.96989
-1.80
50
SENDAI
SHARIAH
167.94M
0.905
2.65006
-77.47
MNHLDG
SHARIAH
169.63M
0.104
0.13528
13.82
HOHUP
SHARIAH
146.06M
0.213
1.53B
-5.35
AZRB
SHARIAH
117.43M
0.723
4.64004B
-61.34
PESONA
SHARIAH
118.15M
0.368
0.57504M
-1.70
ANEKA
SHARIAH
117.48M
0.169
0.22704M
-30.63
BENALEC
SHARIAH
108.32M
0.760
0.69886
-11.82
OCR
SHARIAH
84.66M
0.208
0.52705
-2.83
PRTASCO
SHARIAH
89.24M
0.883
0.7658
-10.31
CRESBLD
SHARIAH
81.38M
0.346
1.31463
-6.27
SYCAL
NON-SHARIAH 74.94M
0.660
0.48053
0.58
HAILY
SHARIAH
67.76M
0.196
0.17522
7.98
TCS
SHARIAH
68.70M
0.261
0.22536
-9.68
STELLA
SHARIAH
71.0M
0.580
0.07001
-32.22
TJSETIA
SHARIAH
66.50M
0.393
0.41574
-45.04
MELATI
SHARIAH
64.80M
0.101
0.40468
6.41
MERCURY
SHARIAH
63.657M
0.006
0.07396
-10.45
SIAB
SHARIAH
56.31M
0.141
0.1863
-48.60
ZECON
SHARIAH
57.49M
0.083
1.5762
-0.55
TSRCAP
SHARIAH
46.23M
0.043
0.24171
1.01
IHB
SHARIAH
38.42M
0.008
0.08652
-36.0
ZELAN
SHARIAH
25.88M
0.052
0.79631
2.73
51
2.3 MARKET SIZE AND TARGETED GROUP
Market size refers to the maximum total number of sales or clients that your company can see in
a given year. Before establishing a new product line or line of company, knowing the prospective
market size can help you determine whether it's a good investment of your time and money. A
similar term is market share, which refers to the overall portion of the market that a company
possesses as sales or customers.
To calculate the market size of a company, we’ve divided its total assets by the total industry
assets. Understanding a company's total assets becomes crucial because it indicates the
amount of money invested in the business. Furthermore, assets indicate the worth of everything
a corporation has, total assets are significant. Cash, accounts receivable, inventories,
equipment, investments, and real estate are a few examples of these assets. A company's
whole asset base is used to gauge its stability and strength of finances. They also influence how
creditworthy and profitable the business is judged to be. The graph below shows the top
companies in the construction industry with the biggest market size.
52
Referring to the pie chart above, we can see that Gamuda is dominating the industry with
18.8%. By going into Gamuda’s projects for the past years, we can see that it has ventured into
countless projects all over the globe in countries including Taiwan, Singapore, Australia, the
United Kingdom, and Vietnam. In 2023, Gamuda acquired the Winchester House, a UK asset
worth RM1.4B. Gamuda also won an RM3.45 Kaohsiung MRT contract in Taiwan in the same
year. Gamuda has the highest total assets compared to its competitors as it secures big projects
in Malaysia and overseas due to its efficiency and successful projects in the past.
Following Gamuda is IJM, a company that has approximately RM20B worth of assets in 2023.
IJM has multiple successful projects across Malaysia. Pantai Sentral Park Kuala Lumpur, The
Light Waterfront, Gelugor Penang, and its most successful project, Bandar Rimbayu, a famous
mixed-use complex comprising residential, commercial, recreational, and parkland elements,
spanning 1,879 acres. Following IJM is for companies with the biggest market size, Ekovest,
Ecowld, and WCT. These companies have the most total assets in the industry’s market, hence,
it plays a crucial part in determining its performance level and analysing different aspects of the
company.
53
CHAPTER 3
COMPANY ANALYSIS
3.1 GAMUDA’S PROFILE
3.1.1 GAMUDA’S COMPANY BACKGROUND
Gamuda Berhad is a Malaysian company that operates in the fields of engineering, property,
and infrastructure. It was established in 1975. The company boasts a distinguished track record
of pioneering advancements and commitment to environmental responsibility, positioning it as a
prominent industry leader. During its initial stages, Gamuda Berhad primarily concentrated on
civil engineering and building endeavours. The company rapidly established a reputation for its
exemplary craftsmanship and its proficiency in completing projects promptly and within the
allocated budget.
During the 1980s, Gamuda Berhad diversified its operations to include
property development, and it has since grown to become one of the leading property developers
in Malaysia.
Gamuda Berhad is a trailblazer in the field of sustainable development. The company has
enacted several measures to mitigate its environmental footprint, and it is dedicated to
constructing sustainable communities. Gamuda Berhad has received multiple accolades for its
environmental endeavours, notably the Malaysian Green Building Index Gold Plus Award.
MISSION AND VISION
The objective of Gamuda Berhad is to enhance the quality of life via long-lasting and
environmentally responsible development. The company aspires to become a prominent figure
in the fields of engineering, property, and infrastructure development on a global scale. It aims to
be acknowledged for its groundbreaking ideas, dedication to environmental responsibility, and
active involvement in community growth. The mission statement of Gamuda Berhad exemplifies
the company's dedication to generating a favourable influence on the global sphere.
The
company's vision statement outlines its ambition to become a worldwide frontrunner in its
industry.
54
SUSTAINABLE DEVELOPMENT INITIATIVES
Gamuda Berhad has undertaken various measures to mitigate its environmental footprint and
advance sustainable development. The initiatives encompass:
●
Utilising sustainable building materials and advanced technologies that promote
environmental conservation
●
Constructing energy-efficient structures that minimise energy consumption
●
Enforcing waste reduction and recycling initiatives to effectively manage and repurposed
materials
●
The establishment of green spaces and parks
●
The endorsement of sustainable transport initiatives
As Gamuda developed, it acknowledged the possibilities of infrastructure concessions and
expanded into the domain of project ownership and operation.
By implementing this strategic
manoeuvre, the corporation successfully ensured stable and continuous income sources while
also expanding its range of investments, thereby strengthening its dominant position in the
industry. Gamuda's expansion transcended Malaysia, as it ventured into international markets
including Vietnam, Singapore, and the Middle East. The company's global expansion exposed
it to new problems and opportunities, solidifying its image as a dominant force in the global
infrastructure industry.
Throughout its progression, Gamuda has consistently demonstrated a dedication to sustainable
development by including environmental and social factors into its projects. The company's
commitment to sustainability has resulted in its position as a frontrunner in green building and
social responsibility. Today, Gamuda serves as a testament to its unwavering commitment to
constant innovation and flexibility, as it has evolved from a regional construction company to a
worldwide infrastructure behemoth.
The trajectory of this entity is a captivating story of
perseverance, astute decision-making, and a profound dedication to sustainable growth.
55
3.1.2 GAMUDA’S PRINCIPLE ACTIVITIES
Established in 1975, Gamuda Berhad stands as a prominent building, property, and
infrastructure company headquartered in Malaysia, boasting a global presence with operations
spanning various countries worldwide. Over the years, Gamuda has evolved into a key player in
the construction industry, recognized for its innovative green initiatives and ingenious solutions.
With a robust reputation for pioneering sustainable practices, Gamuda has earned accolades for
its commitment to environmentally friendly projects and creative approaches to construction
challenges.
The company's geographical footprint extends beyond Malaysia, encompassing diverse
locations such as Vietnam, Singapore, Australia, and the UK. Leveraging its extensive expertise
and diverse portfolio, Gamuda has contributed significantly to various infrastructure
developments, including transportation systems, property development, and construction
ventures, both within Malaysia and across its international operations.
In Malaysia, Gamuda has been pivotal in numerous flagship projects, such as the development
of the Mass Rapid Transit (MRT) system, demonstrating its prowess in large-scale infrastructure
ventures. Internationally, the company's involvement in various infrastructure and property
developments underscores its global influence and expertise.
Moreover, Gamuda's commitment to innovation and sustainability aligns with its vision to create
sustainable urban environments, emphasizing the incorporation of eco-friendly solutions and
technology-driven advancements in its projects. The company's multifaceted operations and
dedication to environmentally conscious endeavors solidify its position as a leading force in the
global construction and infrastructure landscape.
A WORLDWIDE PRESENCE
Gamuda initiated its international expansion by venturing into Vietnam in 1994, marking the
beginning of its global outreach. Since its inception in Vietnam, Gamuda has established a
formidable presence and garnered significant traction in the country's construction landscape.
Renowned for its expertise in large-scale infrastructure ventures, the company has played a
pivotal role in executing major projects spanning various sectors, including water treatment
56
facilities, road constructions, and tunnels. These substantial undertakings underscore Gamuda's
substantial footprint and expertise in shaping Vietnam's infrastructure development.
Expanding its global footprint beyond Vietnam, Gamuda has strategically entered other
international markets, notably making inroads into Singapore, Australia, and the UK. These
expansions have not only diversified the company's geographical reach but have also facilitated
the exchange of knowledge, fostering a broader impact across multiple regions.
In Singapore, Gamuda's involvement in significant projects has contributed to the nation's
infrastructure development, solidifying the company's expertise and influence within the
country's construction sector. Additionally, its ventures in Australia and the UK have further
amplified its footprint, broadening its expertise and knowledge base across diverse
environments and regulatory frameworks.
The company's ventures in these regions signify its continuous pursuit of growth and expertise
enhancement on a global scale. Gamuda's expanding international portfolio serves as a
testament to its capabilities, leveraging its accumulated knowledge and experience from various
projects to make a profound impact in different regions worldwide.
TYPES OF BUSINESSES
There are three main areas of business that make up Gamuda:
●
Engineering and Construction: The engineering and construction division of Gamuda is
in charge of building big infrastructure projects. The company is very good at building
roads, tunnels, rail systems, and civil engineering.
●
Gamuda's property development division works on making townships that are
sustainable and well-planned. The company's projects are eco-friendly and fit in with the
areas they are in.
●
Concessions for Infrastructure: Gamuda invests in and manages infrastructure
concessions. Toll roads, utilities, and other infrastructure assets that generate income
are run by Gamuda.
57
WHO OWNS THE SUBSIDIARIES
Gamuda has many companies, which shows how many different kinds of businesses it runs.
Some of the most important companies are:
●
Fully owned by Gamuda Engineering Sdn Bhd
●
Gamuda Land Sdn Bhd is privately owned.
●
100% owned by Gamuda Land Vietnam LLC
●
Gamuda KVMRT (T) Sdn Bhd is 60% owned by MMC Gamuda
●
Fully owned by Gamuda Infrastructure Sdn Bhd
Gamuda has big shares in a number of other companies, such as:
●
(21.6%) of Lingkaran Trans Kota Holdings Berhad that
●
About 13.19 percent of Propel Propel Berhad
●
37.30% of Syarikat Pengeluar Air Selangor Sdn Bhd is owned by Services and Goods
Gamuda's goods and services can be used for many different types of property and
infrastructure growth. The company is an expert in:
●
Building roads, tunnels, bridges, and other types of infrastructure
●
Creating new neighbourhoods and business and residential areas
●
Taking care of and running building concessions
●
Consulting services for design and building
Gamuda Berhad stands as a testament to the ingenuity and entrepreneurial spirit inherent in
Malaysian enterprises. The company's remarkable journey epitomizes the innovative
capabilities and business acumen of Malaysians. With an expansive global footprint and
diversified business portfolio, Gamuda has solidified its position as a leading infrastructure and
real estate development conglomerate.
The company's global outreach across diverse regions underscores its commitment to
expanding its sphere of influence. Operating across multiple sectors and geographical locations,
Gamuda's ventures span various facets of infrastructure, encompassing transportation systems,
58
property development, and construction projects. This diverse portfolio highlights the company's
versatility and adaptability in tackling complex projects on a global scale.
Renowned for its innovative solutions, Gamuda has earned acclaim for pioneering creative
approaches within the construction and infrastructure domains. Its commitment to incorporating
sustainable practices into its projects further underscores its reputation as an industry leader. By
prioritizing sustainability initiatives and community development, Gamuda has earned
recognition as a responsible corporate entity that actively contributes to environmental
preservation and societal welfare.
Through its strategic initiatives and dedication to excellence, Gamuda has demonstrated its
commitment to not only achieving business success but also fostering sustainable growth and
societal impact. The company's endeavors in promoting sustainability, coupled with its
innovative solutions and community-oriented approach, position Gamuda as an exemplar of
corporate citizenship and a trailblazer in the global infrastructure and real estate development
sphere.
59
3.1.3 PROPERTIES HOLD
Gamuda Berhad, a distinguished Malaysian conglomerate, boasts a rich heritage steeped in the
construction of infrastructure and engineering excellence. Over time, the company has emerged
as a prominent property developer, carving a notable niche in this domain. Renowned for its
commitment to sustainability and innovation, Gamuda showcases a diverse portfolio
encompassing various property types, ranging from townships to vertical communities and
commercial spaces.
With a legacy deeply rooted in infrastructure development and engineering feats, Gamuda has
fostered a strong reputation in Malaysia's construction landscape. Evolving from its engineering
roots, the company has successfully ventured into the realm of property development,
leveraging its engineering expertise to create innovative and sustainable living and working
spaces.
Emphasizing sustainability and pioneering ideas, Gamuda's property portfolio encompasses an
array of offerings tailored to diverse market needs. The company's developments include
comprehensive townships designed to offer holistic living experiences, vertical communities that
optimize space in urban settings, and business spaces tailored to meet commercial
requirements. This varied portfolio reflects Gamuda's adaptability and responsiveness to
evolving market trends and consumer preferences.
Gamuda's commitment to sustainability transcends its engineering and property development
endeavors. The company infuses eco-friendly principles and forward-thinking concepts into its
projects, striving to create spaces that not only meet contemporary needs but also contribute to
a sustainable future.
In essence, Gamuda Berhad's evolution from its foundational engineering roots to its
prominence as a reputable property developer underscores its commitment to innovation,
sustainability, and versatility. Through its diverse range of properties designed with a focus on
sustainability and novel concepts, Gamuda continues to leave a lasting mark in Malaysia's real
estate landscape.
60
LIBERTY, LEASED, AND OWNED PROPERTIES
Gamuda Berhad gives people with different needs and preferences a range of property tenure
choices. People who buy leasehold properties have control over the land and building for a set
amount of time, usually 99 years. People who buy freehold properties own the land and building
forever. Gamuda Berhad also has a small number of strata titles available, which let people own
their own units within a bigger development.
A BIG GROUP OF PROPERTIES
Gamuda Berhad has a large collection of properties that includes well-known projects in
Malaysia, Vietnam, Singapore, and Australia. Here are a few of their most important group traits:
●
Bandar Botanic in Selangor is a lively neighbourhood that focuses on being
environmentally friendly and connecting people.
●
The Bukit Bantayan Residences in Sabah are high-end condos with stunning views of
the South China Sea.
●
Gamuda Cove, Selangor, is a resort-style township on the coast that focuses on life by
the water.
●
Gamuda Gardens in Selangor is a quiet neighbourhood surrounded by lots of trees and
plants.
●
Gamuda GM Bukit Bintang, Kuala Lumpur is a high-end condo building right in the
middle of Kuala Lumpur's city centre.
●
Gamuda GM Klang, Selangor is a mixed-use development in Klang Valley that has
shopping, office, and living space.
●
Gamuda Walk in Selangor is a busy shopping area that focuses on entertainment and
quality of life.
●
HighPark Suites, Selangor is a high-end facility with leased apartments for picky people.
●
Horizon Hills, Johor, is a gated and guarded township that is all about family life.
●
In Jade Hills, Selangor, there is a high-end building complex surrounded by lots of trees
and plants.
●
Kota Kemuning, Selangor, is a well-established city with a variety of places to live.
61
●
Kundang Estates in Selangor is a freehold owned property development with large
homes and quiet areas.
●
Madge Mansions, Kuala Lumpur is a high-end condo building right in the middle of Kuala
Lumpur's Golden Triangle.
●
Quayside Mall, Selangor is the best place to shop and live in Kota Damansara
●
The Robertson in Kuala Lumpur is a high-end condo building with amazing views of the
city skyline.
●
In Selangor, twentyfive.7 is a lively mixed development that focuses on co-living and
community.
●
In Valencia, Selangor, there is a high-end condo complex that focuses on modern living.
AREAS OF THE SITE AND WHAT THEY ARE
Gamuda Berhad's properties are strategically placed in great places that make it easy to get to
services, public transport, and jobs. Each home has its own features and design elements that
make it suitable for a range of lifestyles and tastes.
GAMUDA BERHAD'S PROMISE TO PROTECT THE ENVIRONMENT
Gamuda Berhad's approach to building properties is based on the idea of sustainability. They
use eco-friendly methods and materials in their projects, like green building principles,
water-saving techniques, and designs that use less energy. Making this commitment to
sustainability not only helps the world but also makes people happier and healthier.
GAMUDA BERHAD'S NEW WAY OF DOING THINGS
Gamuda Berhad is known for coming up with new ways to build homes. They use technology to
make communities smart and connected, which makes life there easier and better for the
people who live there. In many of their projects, smart home features, digital comforts, and
community management systems that are built in are standard.
In conclusion, Gamuda Berhad has become one of the best real estate developers in the area
by regularly completing high-quality, environmentally friendly, and new projects. Their dedication
to greatness has earned them many awards and praise, solidifying their reputation as a reliable
brand in the real estate business. Gamuda Berhad has a strong history and a clear strategy for
the future. They will continue to shape the way property is developed in the years to come.
62
3.2 GAMUDA’S COMPANY MANAGEMENT
3.2.1 GAMUDA’S CORPORATE INFORMATION
63
YBhg Tan Sri Dato’ Setia Haji Ambrin bin Buang
Independent Non-Executive Chairman
YBhg Dato’ Lin Yun Ling
Group Managing Director
64
YBhg Dato’ Ir Ha Tiing Tai
Deputy Group Managing Director
YTM Raja Dato’ Seri Eleena binti Almarhum Sultan Azlan Muhibbuddin Shah
Al-Maghfur-lah
Non-Independent Non-Executive Director
65
Puan Nazli binti Mohd Khir Johari
Independent Non-Executive Director
Ms. Chan Wai Yen, Millie
Independent Non-Executive Director
66
Ms. Chia Aun Ling
Independent Non-Executive Director
Mr. Justin Chin Jing Ho
Alternate Director to YBhg Dato’ Ir Ha Tiing Tai and Managing Director, Gamuda Engineering
67
AUDIT COMMITTEE
●
●
●
Puan Nazli binti Mohd Khir Johari (Chairperson)
Ms. Chan Wai Yen
Millie Ms. Chia Aun Ling
REGISTERED OFFICE
Menara Gamuda
D-16-01, Block D, PJ Trade Centre No. 8,
Jalan PJU 8/8A Bandar Damansara Perdana
47820 Petaling Jaya Selangor Darul Ehsan
Tel : 603-7491 8288
Fax : 603-7728 9811
Email : gbcosec@gamuda.com.my
Web : www.gamuda.com.my
68
3.2.2 MAJOR SHAREHOLDERS
69
3.2.3 SHARE INFORMATION
Bursa Symbol:
5398
Currency:
MYR
Last Done:
4.590
Volume (‘00):
26,147
Change:
-0.010
% Change:
-0.217
Day’s Range:
4.570 - 4.610
52 Week’s Range:
3.480 - 4.720
Based on the most recent market data, it can be observed that the Bursa Malaysia symbolised
5398 which is GAMUDA Berhad. The most recent transaction took place at a price of 4.590
Malaysian Ringgit (MYR), with a trading volume of 2,614,700 shares.
The stock experienced a slight decrease of 0.010 MYR, indicating a negative percentage shift of
0.217%. During the course of the day, the stock exhibited trading activity within the range of
4.570 MYR to 4.610 MYR.
Throughout the preceding 52-week period, the stock has exhibited a range of price fluctuations
ranging from 3.480 MYR to 4.720 MYR. This indicates a significant level of fluctuation in its
value throughout the year. Investors and analysts possess the capacity to study these
quantitative figures with the purpose of assessing the current stock performance and the overall
market sentiment.
Gamuda Group's share price has performed well in recent months, rising by over 10% since the
beginning of the year. This is likely due to a number of factors, including the company's strong
financial performance, its diversified business model, and its exposure to the growing Malaysian
economy.
70
EPS (MYR)
0.31870
PE
14.402
NAV (MYR)
3.9985
Price/NAV
1.1479
Dividend (MYR)
0.059198
Dividend Yield (%)
1.290
Market Cap (M)
12,387.520
Issued & Paid-up Shares
2,698,806,168
The stock information depicted in the image for Gamuda Group indicates the company's robust
financial standing and profitability. The positive Earnings Per Share (EPS) of MYR 0.31870
showcases the company's ability to generate profits per outstanding share, reflecting its
profitability and potential for shareholder returns.
Moreover, Gamuda Group exhibits a strong financial position, evident from its substantial Net
Asset Value (NAV) of MYR 3.9985. This high NAV signifies the company's strong asset base,
indicating its capacity to meet financial obligations and potentially weather market fluctuations.
The company's dividend yield of 1.290% is noteworthy, especially in the context of Malaysia's
current low-interest-rate environment. This yield suggests the percentage of dividend income
distributed to shareholders relative to the stock's market price. Gamuda's attractive dividend
yield becomes particularly appealing for investors seeking income opportunities, especially
considering the prevailing low-interest-rate scenario in Malaysia.
Overall, Gamuda Group's stock information presents a promising outlook, characterized by
profitability, a robust financial position denoted by a high NAV, and an appealing dividend yield.
These metrics collectively signal the company's financial strength and potential attractiveness to
investors seeking returns in a low-yield environment.
71
3.2.4 SHARE DISTRIBUTION
Shareholders
Percentage holding
Institutions Shareholders
65.4%
Individual Shareholders
34.6%
Gamuda Berhad, a stalwart in its industry, boasts a robust and well-balanced shareholding
structure that delineates an intriguing landscape within its ownership base. The pronounced
majority stake of 65.4% held by institutional investors signifies a dominant presence of
influential stakeholders such as pension funds, mutual funds, and financial institutions. These
institutional shareholders wield substantial influence over strategic decisions, governance, and
the overall trajectory of the organization.
Contrastingly, individual shareholders command a notable 34.6% of the total shareholding,
representing a significant segment of the company's ownership structure. This diverse group
encompasses everyday investors who have opted to invest in Gamuda, potentially motivated by
their confidence in the company's historical performance, projected growth potential, or
attractive dividend policies.
72
The balanced distribution between institutional and individual investors underscores a
well-diversified composition of market participants, each harboring distinct motivations and
expectations regarding Gamuda's future prospects. This equilibrium in ownership composition
not only bolsters stability in shareholding but also reflects a substantial level of confidence and
interest from both institutional entities and individual stakeholders. This collective confidence
underscores the market's trust in Gamuda's endeavors and potential for sustained growth.
However, it's essential to acknowledge that these numerical values are subject to fluctuations
over time due to evolving market dynamics, shifts in investor sentiment, or changes in company
performance. To access the most current and accurate information regarding Gamuda Berhad's
shareholding structure, referencing the company's latest financial reports or public disclosures is
recommended. These documents provide invaluable insights into any potential shifts or updates
in ownership patterns, guiding informed decision-making for investors and stakeholders.
73
Shareholders
Percentage holding
Local Institution
52.4%
Foreign Institution
47.6%
Gamuda Berhad demonstrates a shareholding structure that is characterised by a
commendable
equilibrium,
featuring significant participation from both domestic and
international institutional investors. The influence of local institutions, which have a majority
share of 52.4%, is substantial in determining the strategic trajectory and governance of the
corporation. Various institutions, such as domestic funds, banks, and other financial companies,
play a significant role in enhancing the stability and durability of Gamuda within the local market.
At the international level, foreign institutional investors possess a significant proportion of the
company's shares, constituting 47.5% of the overall ownership. The global attention received by
Gamuda highlights its attractiveness outside domestic boundaries, maybe indicating trust in the
company's business methods, potential for expansion, or regional impact. The participation of
74
international organisations can also contribute varied viewpoints and specialised knowledge, so
enhancing the overall composition of shareholders.
The equitable allocation of investments between local and foreign institutional investors
indicates a wide-ranging appeal for Gamuda Berhad in both domestic and international
contexts. The presence of a varied group of investors enhances the company's overall market
prowess and ability to withstand difficulties while pursuing prospects in the constantly changing
global business landscape. Nevertheless, it is vital to remain updated regarding any alterations
in these statistics, as alterations in ownership can have an influence on the organization's
dynamics and strategic decision-making procedures in the long run. To access the most current
information, it is recommended to consult Gamuda Berhad's most recent financial filings or
official disclosures.
There are some of the lists of nominees and the government agencies that invested in
Gamuda’s share:
●
Amanah Saham Bumiputera (ASB)
●
Generasi Setia (M) Sdn Bhd
●
Amanahraya Trustees Berhad
●
Employees Provident Fund (EPF)
●
Citigroup Nominee
●
Permodalan Nasional Berhad (PNB)
●
HSBC Nominee
●
Kumpulan Wang Simpanan Pekerja (KWSP)
●
Lembaga Tabung Haji (LTH)
●
Cartaban Nominee
The integration of a diverse range of candidates and governmental organizations into Gamuda's
shareholding framework underscores the company's broad investor base, encompassing both
private corporations and public entities. This heterogeneous mix signifies a confluence of
investors with varying interests and objectives, contributing to the resilience and strength of the
company's stock. The presence of such a diverse array of stakeholders highlights Gamuda's
appeal and relevance across multiple sectors, showcasing its significance to both private and
public spheres.
75
This multifaceted investor base, spanning diverse private and governmental entities, amplifies
the company's robustness and enhances confidence in its operations among a wide spectrum of
stakeholders. By attracting interest from both private corporations and government bodies,
Gamuda reinforces its market position and affirms its credibility as a valuable investment
opportunity across sectors.
However, it's essential to recognize that the composition of shareholding remains susceptible to
changes over time due to the ever-evolving landscape of market dynamics and the strategic
investment decisions made by these entities. As market conditions evolve and investment
preferences or strategies shift, the shareholding structure of Gamuda may experience
fluctuations, necessitating ongoing observation and assessment.
Continuously monitoring shifts in the shareholding structure, utilizing periodic disclosures or
financial reports, remains crucial for stakeholders and investors. These insights facilitate a
comprehensive understanding of the evolving dynamics within Gamuda's ownership landscape,
enabling informed decision-making processes amidst potential changes in the company's
investor base.
Below are the directors’ shares in the Gamuda Berhad;
76
3.3 GAMUDA’S EVENTS/ACTIVITIES
3.3.1 ACHIEVEMENT
Gamuda Berhad has recently attained a number of noteworthy achievements. In addition to its
engineering and construction prowess, the organisation has garnered acclaim for its dedication
to sustainability and innovation. The following are some of the accomplishments of Gamuda
Berhad:
Its work on the MRT Putrajaya Line project has earned it three prestigious international awards
at the Global Tunnelling Awards.
●
Designated for the second consecutive year as the "Overall Most Outstanding Company
in Malaysia" by the Asiamoney Asia's Outstanding Companies Poll 2023
●
Obtained the prestigious "Most Outstanding Company in Malaysia" award for the fifth
consecutive year in the construction and engineering sector.
●
Debuted the Gamuda Green Plan 2025, which drives the value of the organization's
operational facets.
●
Awarded second place by The Edge Top Property Developers
In summary, Gamuda Berhad has attained a number of noteworthy successes, including
accolades from international organizations, acknowledgment for its dedication to sustainability
and innovation, and accomplishments within the real estate industry. These accomplishments
serve as evidence of the organization's dedication to achieving high standards and its capacity
to defy norms while exploring innovative resolutions to obstacles in the industry.
3.3.2 RECENT DEVELOPMENT AND MAJOR EVENTS
Gamuda Berhad, Sabah Energy Corp Sdn Bhd (SEC), and Kerjaya Kagum Hitech JV Sdn Bhd
have formed a joint-venture agreement (JVA) to finance the construction of an 187.5MW
hydroelectric power facility in Tenom, Sabah, which is estimated to cost RM4bil. Upper Padas
Power Sdn Bhd, a wholly-owned subsidiary of the JV company, shall execute the project as the
project developer. The endeavor will adhere to the organization's enduring commitments and
strategies regarding environmental, social, and governance (ESG) factors. Gamuda will
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possess a 45% equity interest in the holding company UPP Holdings Sdn Bhd under the terms
of the JV, while SEC and KKHJV will each hold a 15% equity interest.
After its completion, the Tenom plant is projected to offer Sabah an additional generation
capacity of 187.5MW and deliver a maximum of 1,052GWh of renewable energy annually. The
initial operational lifespan of the RM4bil project is forty years. Construction is projected to begin
in the first half of 2024 (1H24) and conclude within five years; commercial operations are
anticipated to commence in 2029. Subah Electricity Sdn Bhd, the off-taker, and Upper Padas
Power still need to execute a power purchase agreement (PPA) pertaining to the proposed
facility. Gamuda stated that once approval is obtained, it will issue a timely announcement
regarding the tariff details and developments regarding the PPA. The proposed joint venture will
not significantly impact Gamuda's net assets or earnings for the fiscal year ending July 31,
2024.
Gamuda Land, the property division of Gamuda Berhad, has reached a contractual
arrangement to procure a 9.1-acre property situated in Thu Duc City, Ho Chi Minh City, Vietnam,
for an estimated sum of RM1.47 billion (US$315.8 million). The mixed-use development site is
anticipated to be entirely developed and sold within five years, with a gross development value
of $1.1 billion.There will be a combined count of 1,968 exclusive apartments, 12 penthouses, 51
podium stores, and 21 shophouse units across six towers of up to 40 stories. Gamuda Land's
acquisition of the land in Vietnam is consistent with its strategic objective of maintaining its
profitable development trajectory in the country. Established in Vietnam in 2007, Gamuda has
garnered substantial recognition and a reputable brand status through its history of executing
prosperous projects.
The organization intends to leverage the advantageous site and its well-established reputation
to create sought-after merchandise that will appeal to affluent expatriate households as well as
the expanding local middle and upper-income Vietnamese population, who value affordability
and convenient access to premium amenities. Chairman of Gamuda Land Vietnam operations,
Angus Liew, stated that the organization successfully acquired a prominent location with all
necessary planning approvals in order to construct a shovel-ready development site.
Furthermore, the company efficiently supplied a market that was scaring supplies with
in-demand products. It is anticipated that the acquisition of the 9.1-acre land in Vietnam will
allow Gamuda Land to sustain its profitable development trajectory in the country.
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Additionally, Gamuda Berhad has contributed to the betterment of communities via the
developments it builds. The organization has been pushing the limits of what is considered
normal in the developments it builds. In order to enhance project data administration, the
organization has also been implementing Viewpoint's Field View™ Solution to digitize its
enormous construction site. Gamuda Berhad has been actively engaged in a multitude of
endeavors, such as the digitization of its expansive job site to enhance project data
administration, enhancing communities through the construction of developments it undertakes,
and acquiring a 9.1-acre site in Vietnam. These advancements align with the organization's
enduring objectives and pledges.
3.3.3 PROSPECTS
Gamuda Berhad, renowned for its real estate and
infrastructure development expertise across Asia
and the Middle East, has charted an encouraging
trajectory for its future endeavors. In the fiscal year
2022 (FY22), the company achieved significant
milestones, showcasing unprecedented success
across
various
divisions.
For
instance,
the
engineering arm reported an exceptional net profit
of RM343 million, a testament to its robust growth.
Notably, the division's overseas earnings soared
threefold to RM292 million, propelled by successful
ventures such as the construction of major
infrastructure projects in Vietnam, such as the
Hanoi Metro Line.
Simultaneously, Gamuda's property division witnessed substantial growth, with local property
sales doubling to RM2 billion, driven by successful ventures like the Gamuda Gardens township
project. Overseas property sales also surged, contributing an additional RM2 billion in revenue,
attributable to projects like the Gamuda Cove development in Malaysia and the Celadon City
project in Vietnam.
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Market analysts commend Gamuda Berhad's strategic
positioning, acknowledging its recent accomplishments
amid
a
favorable
employment
landscape.
The
company's aim to achieve an ambitious order book
objective of RM25 billion in the coming months is
supported by its involvement in significant infrastructure
projects,
such
as
the
Kuala
Lumpur-Singapore
High-Speed Rail and the East Coast Rail Link.
Looking forward to fiscal year 2024 (FY24), Gamuda remains optimistic about its prospects. As
part of its commitment to sustainable development and community impact, the company
acquired a second parcel in Melbourne's inner ring. This acquisition aims to create a mixed-use
development focusing on community needs and sustainability principles, similar to the
award-winning Gamuda Cove project in Malaysia, which emphasizes green spaces and
community engagement.
In summary, Gamuda Berhad's recent achievements, like the successful Hanoi Metro Line
project in Vietnam and the Gamuda Gardens township development in Malaysia, coupled with
its strategic expansion plans, reflect a positive trajectory for future growth and community
impact. The company's commitment to pioneering sustainable infrastructure and enhancing
societal well-being underscores its dedication to driving positive change in the regions it
operates in.
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3.4 GAMUDA SWOT ANALYSIS
SWOT analysis is a method that is used to assess a company's competitive position and create
strategic planning. The strength, weakness, opportunity, and threats analysis evaluates
possibilities for the future as well as internal and external influences. SWOT analysis can be
used to evaluate a specific segment of a firm, such as a product line or division, an industry, or
another entity. However, it is mainly used to evaluate a company's performance, competitors,
risk, and potential.
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GAMUDA’S STRENGTHS
●
WIDE GEOGRAPHIC PRESENCE
Gamuda's expansive presence across countries such as Taiwan, Singapore, Australia, the
United Kingdom, and Vietnam has significantly bolstered its standing in the construction
services sector. This geographical diversity serves as a shield against regional economic
fluctuations, providing a diversified revenue stream.
Operating in these varied markets exposes Gamuda to a wide array of infrastructure projects,
from transportation to property development, maximizing its opportunities for growth.
Additionally, the company's extensive network of dealers and associates in these regions grants
Gamuda a competitive edge by providing invaluable insights into local markets and enabling
tailored services.
Moreover, this multinational presence fosters innovation and knowledge exchange, allowing
Gamuda to integrate the best practices from diverse regions into its operations, enhancing its
overall effectiveness and success in the industry.
●
MARKET LEADERSHIP POSITION
Gamuda's robust market position in the construction services sector is a result of its highest
market share and substantial market size compared to its competitors. This dominant standing
not only reflects the company's strong foothold but also signifies its ability to exert significant
influence and set benchmarks within the industry. With its considerable market share, Gamuda
enjoys a competitive advantage, enabling it to swiftly introduce new products or services and
capitalize on emerging opportunities.
This dominant market position grants Gamuda a platform to drive innovation, expand its
offerings, and maintain a leading edge in the construction sector, thereby sustaining its growth
trajectory and reinforcing its position within the industry landscape.
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●
DIVERSE REVENUE STREAMS
Gamuda, a prominent player in the construction services sector, boasts a diversified presence
across multiple industrial verticals. This diversified portfolio encompasses a wide spectrum of
construction-related services, spanning infrastructure development, property construction,
engineering solutions, and more. Such diversified operations across different sectors have
significantly fortified Gamuda against numerous adversities and economic downturns. For
instance, the company showcased resilience during challenging times, including the global
COVID-19 pandemic, the financial crisis of 2008, and the supply chain disruptions in 2021.
This resilience is attributable to the diversified revenue streams that Gamuda has strategically
built over the years. The company's ability to weather these setbacks is largely due to its varied
revenue sources, allowing it to mitigate the impact of market volatilities in any single sector by
relying on others, thereby ensuring a degree of stability and endurance even in turbulent
economic climates.
●
EFFECTIVE RESEARCH AND DEVELOPMENT
Gamuda's strategic allocation of a substantial portion of its revenue into research and
development (R&D) has been instrumental in upholding its leadership stance within the
competitive construction services sector. This concerted investment in R&D reflects the
company's commitment to innovation and continuous improvement across its operations. By
prioritizing innovation, Gamuda has successfully introduced a stream of new products,
cutting-edge solutions, and advanced methodologies.
This dedication to innovation has not only allowed Gamuda to stay at the forefront of
technological advancements but has also empowered the company to deliver superior customer
service, meeting diverse client needs effectively.
Moreover, Gamuda's R&D initiatives have facilitated the implementation of robust pricing
strategies, ensuring competitive offerings in the market. Consequently, these innovative
products and services have enabled Gamuda to sustain its leadership position, driving strong
shareholder returns and reinforcing its reputation as an industry leader known for innovation,
customer satisfaction, and financial performance.
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GAMUDA’S WEAKNESSES
●
DECLINING MARKET SHARE
In the context of Gamuda experiencing a decline in its market share despite an increase in
revenues, it's crucial for the company to deeply analyze the prevailing trends within the capital
goods and construction services sector. While the construction industry's expansion surpasses
Gamuda's individual growth rate, it signals a broader market growth that the company can
potentially capitalize on. To address this scenario, Gamuda must focus on several key aspects
within the industry. Firstly, a comprehensive market analysis should identify emerging trends,
changing consumer demands, and competitor strategies that might be impacting its market
share. Understanding customer preferences and evolving market needs will enable Gamuda to
align its offerings more effectively.
Moreover, emphasis should be placed on innovation and technology adoption. Investing in
cutting-edge solutions, advanced construction methodologies, and sustainable practices could
enhance the company's competitive edge and appeal to a broader customer base.
Collaborations, partnerships, or acquisitions within related sectors may also facilitate access to
new markets and technologies. Further, diversification strategies beyond traditional segments or
geographical expansion into burgeoning markets could be explored. This diversification could
encompass vertical integration into allied industries or exploring growth opportunities in
international markets to offset the stagnation in domestic market share.
Lastly, a reassessment of marketing and operational strategies, such as optimizing pricing
models, enhancing customer engagement, and streamlining operational efficiencies, is
imperative. By addressing these aspects and capitalizing on emerging trends, Gamuda can
position itself for sustainable growth and regain its competitive market share within the
construction services sector.
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●
WORKERS CONCERN ABOUT AUTOMATION
In light of the rapid advancements in automation within the construction services sector,
including the integration of artificial intelligence and machinery, Gamuda must proactively
address the concerns and fears among its employees regarding these technological shifts. The
introduction of automation might create uncertainties and apprehensions among the workforce
regarding job security, skills relevance, and future roles within the company.
To mitigate potential disruptions and foster a smoother transition, Gamuda should devise a
comprehensive
plan
focused
on
employee
engagement,
education,
and
upskilling.
Communication channels should be open and transparent to convey the company's vision,
objectives, and the positive impact that automation will bring. It's crucial to emphasize that these
technological advancements aim to augment employee capabilities and improve work efficiency
rather than replacing human roles entirely.
Providing opportunities for reskilling and upskilling programs will be vital. Gamuda should invest
in training initiatives to equip employees with the necessary skills to work alongside automation
technologies. These programs can focus on technical skills related to operating and managing
new machinery, as well as soft skills like problem-solving, adaptability, and creativity, which
remain crucial in a tech-driven environment. In addition, fostering a culture of continuous
learning and adaptability is key. Encouraging an environment where employees are encouraged
to embrace change, learn new skills, and contribute ideas will facilitate a smoother transition
toward automation. Recognizing and rewarding employee contributions to adapting to these
changes can further motivate and alleviate fears of job displacement.
Furthermore, involving employees in the adoption process, seeking their feedback, and
incorporating their insights can foster a sense of ownership and involvement in the transition.
Gamuda should ensure that employees understand the long-term benefits of automation,
emphasizing how it can improve work quality, safety, and create new opportunities for career
growth within the organization.
Ultimately, a well-thought-out strategy that prioritizes employee engagement, training, and
inclusion in the automation process will help Gamuda alleviate employee fears, ensuring a more
harmonious integration of technology into its operations while retaining a skilled and motivated
workforce.
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●
EXTRA COST OF BUILDING NEW SUPPLY CHAIN AND LOGISTICS NETWORK
The landscape of the capital goods industry has undergone a significant transformation owing to
the advent of the internet and artificial intelligence. These technological advancements have led
to a fundamental shift in the traditional business model, particularly in the importance of dealer
networks. For Gamuda, this paradigm shift signifies the need to adapt swiftly and strategically to
the changing dynamics. With the decreasing significance of dealer networks, Gamuda faces the
challenge of reconfiguring its operational framework. Establishing a robust and efficient supply
chain network becomes paramount in this scenario. This entails a high-cost initiative that
involves restructuring and redefining how Gamuda sources materials, components, and
equipment, as well as how it distributes its products and services.
To navigate these changes effectively, Gamuda must invest in technological innovations that
enhance supply chain management. The integration of AI-driven systems and digital platforms
can optimize inventory management, streamline logistics, and facilitate seamless coordination
among suppliers, distributors, and clients. This technological overhaul will require strategic
planning, substantial investment, and a careful assessment of the company's existing
infrastructure. Moreover, Gamuda should consider developing direct-to-customer channels or
digital platforms that enable clients to access products and services more directly. By leveraging
e-commerce and digital platforms, the company can potentially bypass intermediaries and
improve its market reach, customer engagement, and service delivery efficiency.
Collaborations and partnerships with technology-driven firms or startups specializing in supply
chain optimization could also prove beneficial. These partnerships may bring in expertise and
innovative solutions that align with Gamuda's goal of reconfiguring its supply chain operations.
Furthermore, Gamuda should prioritize the training and upskilling of its workforce to adapt to the
technological changes. Employees need to be equipped with the necessary skills to operate and
manage the new digital systems and tools effectively.
In essence, embracing the transformative impact of the internet and AI in the capital goods
industry requires Gamuda to proactively reshape its supply chain strategies. By embracing
technology, investing in innovative solutions, and redefining its operational framework, the
company can position itself competitively amidst these industry shifts.
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●
HIGH DEPENDENCE ON EXISTING SUPPLY CHAIN
The COVID-19 pandemic and the temporary blockage of the Suez Canal exposed vulnerabilities
in Gamuda's supply chain. Despite some adjustments, Gamuda's heavy reliance on its current
supply network poses risks, particularly amidst global disruptions in Southeast Asia. These
incidents emphasized the fragility of global supply networks, affecting Gamuda's material
procurement and logistics.
Furthermore, the Suez Canal blockage highlighted the risks of single points of failure in
transporting goods. Although Gamuda might have made cautious adaptations, its dependency
on cost-efficient yet potentially fragile supply chains remains concerning. This reliance exposes
the company to prolonged disruptions due to geopolitical tensions or unforeseen global events
in Southeast Asia.
To address these vulnerabilities, Gamuda could consider strategies like diversifying sourcing
regions, adopting digital technologies for inventory management, and forging partnerships with
regional suppliers. These measures aim to enhance supply chain resilience and reduce
dependence on international routes, crucial for navigating uncertainties in the global business
landscape.
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GAMUDA’S OPPORTUNITIES
●
LEVERAGING DIGITAL TECHNOLOGIES
The integration of digital technologies can significantly transform Gamuda's operations across
various facets of its business. By leveraging automation in production processes, the company
can enhance efficiency, minimize errors, and streamline workflows. This technological
advancement not only ensures precision in manufacturing but also optimizes resource
allocation, leading to cost savings and improved productivity.
Furthermore, customer analytics empowered by digital tools enables Gamuda to delve deeper
into consumer behavior patterns. Through data analytics, the company can glean valuable
insights into customer preferences, market trends, and demands. This information aids in
crafting more targeted and personalized marketing strategies, product enhancements, and
customer service initiatives, ultimately fostering stronger customer relationships and increasing
brand loyalty.
In addition, digitalization facilitates comprehensive tracking and management systems,
providing real-time monitoring of sales, logistics, and transportation processes. With
sophisticated digital dashboards, Gamuda gains instantaneous access to critical operational
metrics, enabling better decision-making and swift responses to changing market dynamics.
This level of visibility and control across the supply chain ensures efficiency, timely deliveries,
and proactive issue resolution.
Overall, the adoption of digital technologies equips Gamuda with a competitive edge, enhancing
operational agility, customer-centricity, and overall business performance in an increasingly
digitized landscape.
●
TREND OF CUSTOMERS MIGRATING TO HIGHER END PRODUCTS
Gamuda's established brand recognition and reputation for delivering quality services across
different market segments position the company uniquely in the industry. The strong brand
equity it holds in the premium market signifies trust, reliability, and excellence, which can be
leveraged to command premium pricing and foster customer loyalty among high-end clientele.
This allows Gamuda to capitalize on the premium market by offering exclusive services,
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innovative solutions, and superior quality products tailored to meet the distinctive needs and
preferences of this customer segment.
Simultaneously, the positive reputation of its lower segment brands for providing commendable
customer service opens up a broad market base and wider customer reach. By maintaining a
focus on delivering value, reliability, and exceptional service experiences to customers in this
segment, Gamuda can attract a larger audience, increase market share, and drive higher sales
volumes. This approach can further fortify the company's position by catering to a broader
spectrum of customers while upholding its reputation for reliability and customer-centricity.
Effectively harnessing both the premium and lower market segments offers Gamuda a dual
advantage. It not only diversifies the company's revenue streams but also optimizes profitability
through different pricing strategies and tailored services designed to meet the specific demands
of diverse customer segments. This strategic approach enables Gamuda to maintain a
competitive edge in the market while maximizing opportunities for sustained growth and
profitability.
●
LOCAL COLLABORATION
Establishing partnerships with regional businesses could serve as a strategic avenue for
Gamuda to expand its presence in global markets. Such collaborations offer mutual benefits by
leveraging each partner's strengths and expertise. Gamuda's contribution of global practices,
technological prowess, and efficient operational strategies can complement the local
organizations' in-depth knowledge of regional markets, cultural nuances, and established
networks.
Through these partnerships, Gamuda gains access to invaluable local insights and market
intelligence, facilitating a smoother entry into new global markets. By tapping into the local
partners' expertise, Gamuda can navigate regulatory landscapes, adapt to local market
demands, and better understand consumer behaviors in these regions. This localized
knowledge can significantly aid Gamuda in tailoring its offerings, services, and marketing
strategies to resonate with the preferences and requirements of specific target markets.
Moreover, these alliances present an opportunity for Gamuda to capitalize on the local
organizations' established networks, industry connections, and existing customer bases.
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Collaborating with regional businesses can expedite market penetration, enhance brand
visibility, and accelerate the establishment of a strong foothold in new international markets.
Conversely, Gamuda's contributions in terms of global best practices, technological
advancements, and operational efficiencies can further strengthen the partnership and drive
innovation within the local organizations.
In essence, partnerships with regional businesses provide a symbiotic platform where Gamuda
can merge its global capabilities with local expertise, fostering expansion opportunities in global
markets while navigating complexities and harnessing growth prospects more effectively.
●
REMOTE WORK AND NEW TALENT HIRING OPPORTUNITIES
The rapid adoption of remote working technologies during the COVID-19 pandemic has
significantly transformed the landscape of talent acquisition and management for companies like
Gamuda. With the shift towards remote work becoming more commonplace across various
industries, McKinsey Global Institute's research revealing that around twenty percent of skilled
professionals in sectors such as finance and information technology can effectively operate from
home post-COVID-19, presents an exceptional opportunity for Gamuda to tap into a wider pool
of top-tier talent regardless of geographical constraints.
This trend offers Gamuda substantial advantages in recruiting highly skilled professionals who
might not be situated near the company's physical locations. By embracing remote work
arrangements, Gamuda can cast a wider net when scouting for top talent, attracting candidates
with specialized skills and expertise from diverse geographic locations. This flexibility in hiring
allows Gamuda to access a broader talent pool, thereby increasing the chances of acquiring
individuals who possess unique skill sets that align with the company's needs, objectives, and
culture.
Moreover, this shift towards remote work enables Gamuda to offer more flexible employment
options, which could be particularly appealing to skilled professionals seeking a better work-life
balance or those preferring non-traditional work arrangements. It empowers the company to
foster a more inclusive workplace by accommodating individuals who might otherwise be unable
to commit to a traditional office setting due to geographical limitations, thereby enhancing
diversity and inclusion within the workforce.
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The increased use of remote working technology post-COVID-19 also provides opportunities for
Gamuda to optimize its talent retention strategies. Offering remote work options can boost
employee satisfaction, improve retention rates, and enhance productivity, as it allows employees
to work in environments where they are most comfortable and productive, reducing commute
stress and accommodating individual preferences.
Overall, leveraging the trend of remote work post-pandemic allows Gamuda to redefine its talent
acquisition strategy, tapping into a broader pool of high-caliber professionals, fostering a more
inclusive work environment, and potentially enhancing overall workforce performance and
satisfaction.
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GAMUDA’S THREATS
●
INCREASING INTERNATIONAL COMPETITION AND DOWNWARD PRESSURE ON
MARGINS
Gamuda faces a dual challenge in the form of technological advancements and increased
competition from foreign firms, which collectively pose a threat to its competitive advantage and
profit margins. The advent of new technologies has become a double-edged sword for Gamuda,
as while it presents opportunities for innovation and efficiency, it also brings the risk of
diminishing the company's traditional competitive strengths.
The rise of technology could erode Gamuda's competitive edge by potentially commoditizing its
products or services, leading to increased price pressures and reduced margins. Moreover, the
company's existing processes and operations might be disrupted by more technologically
advanced competitors who can introduce innovative solutions or methodologies, thereby posing
a threat to Gamuda's market position.
Simultaneously, the growing presence of foreign competitors entering Gamuda's key markets
presents another challenge. These foreign firms often arrive with established revenue streams
and robust market positions in their home countries. Leveraging their financial stability and
expertise, these competitors can swiftly gain traction in the crucial sectors where Gamuda
operates. Their financial prowess may allow them to undercut prices, offer more competitive
terms, or introduce innovative products/services that directly challenge Gamuda's market share.
Additionally, the potential entry of foreign competitors might intensify market rivalry, leading to a
more aggressive pricing environment, which could further strain Gamuda's profit margins. As
these firms compete for market share, there might be increased pressure on pricing strategies,
potentially impacting Gamuda's profitability and forcing it to reconsider its pricing structure or
cost management practices.
In response to these challenges, Gamuda may need to focus on enhancing its competitive
strengths by leveraging technology to its advantage. By investing in innovation and digital
transformation, Gamuda can modernize its operations, differentiate its offerings, and streamline
processes to maintain or regain its competitive edge. Moreover, forging strategic alliances or
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partnerships and exploring niche markets could also help the company mitigate the impact of
increased competition from foreign firms.
Overall, Gamuda must proactively adapt to the evolving technological landscape and the entry
of foreign competitors by embracing innovation, fortifying its strengths, and repositioning itself to
withstand market pressures, thereby safeguarding its market share and profitability in the face
of growing competition.
●
ENVIRONMENTAL CHALLENGES
Certainly, Gamuda faces an imperative to strategically address the disruptions arising from the
increasing energy demands and the challenges posed by climate change. The global focus on
green technology and sustainability presents both opportunities and challenges for the
company. The European Union's commitment to allocating a substantial portion, specifically
thirty per cent, of its 880 billion euro post-COVID-19 recovery fund towards green initiatives
underlines the significance and potential scope of this sector.
For Gamuda, the EU's emphasis on green technology presents an opportunity to tap into this
significant funding. Accessing these funds could enable Gamuda to invest in sustainable
infrastructure and innovative green projects. By aligning its strategies with the EU's sustainable
objectives, Gamuda can position itself as a key player in this emerging market, fostering growth
and contributing to its revenue streams.
However, venturing into green technology and sustainability initiatives also comes with
challenges. As Gamuda seeks to capitalize on this funding, it may encounter heightened
competition in the construction services market. The availability of significant funding is likely to
attract numerous new entrants and established players into the green technology sector,
intensifying competition for projects and contracts. These new rivals may bring in innovative
approaches and technologies, potentially posing a threat to Gamuda's market share and
positioning.
Moreover, meeting the stringent sustainability criteria and compliance standards set by the EU
and other regulatory bodies can be demanding. Gamuda would need to ensure that its projects
align with these strict environmental guidelines and meet the sustainability benchmarks,
requiring significant investments in research, development, and compliance measures.
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In response to these challenges and opportunities, Gamuda should consider strategic planning
and investments. The company needs a comprehensive roadmap that focuses on innovation,
sustainability, and technological advancements in construction services. By investing in
research and development of green technologies, Gamuda can develop competitive advantages
and strengthen its foothold in this burgeoning sector. Additionally, forming strategic alliances or
partnerships with green technology innovators and sustainable solution providers could help
Gamuda navigate the evolving landscape and maintain its competitive edge.
Overall, while the EU's allocation of substantial funding towards green technology presents a
promising opportunity for Gamuda to diversify its portfolio and contribute to sustainable
development, the company needs to devise a robust strategy to mitigate potential challenges
arising from increased competition and compliance standards in the construction services
market.
●
SHORTAGE OF SKILLED HUMAN RESOURCES
As Gamuda leans on innovative solutions like AI and automated machinery, it faces the
impending challenge of a high turnover rate among its staff, potentially leading to a shortage of
skilled human resources. This situation poses a threat to the company's ability to sustain its
operations and growth, especially if not addressed proactively. The reliance on technological
advancements, while beneficial, necessitates a balance in nurturing a competent workforce to
ensure seamless integration and management of these technologies within the organization.
Strategies to retain talent, alongside continuous upskilling and reskilling programs, will be critical
for Gamuda to navigate these impending HR challenges.
●
LEARNING CURVE FOR NEW PRACTICES
As artificial intelligence and machine learning platforms become more intricate, Gamuda faces
the challenge of a potentially extended learning curve in educating and upskilling its existing
workforce to effectively utilize these technologies. This could create an opportunity for stronger
competitors to gain ground in the construction services industry, especially those already
well-versed in advanced technologies. Gamuda must strategize to expedite the learning process
for its employees and foster a culture that embraces technological advancements. This
proactive approach is vital to ensure that the company remains competitive in an industry
increasingly reliant on AI and machine learning innovations.
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RECOMMENDATIONS
As Gamuda's projects often involve heavy machinery that emits harmful smoke and carbon
emissions, the company could significantly benefit from prioritizing green building and
sustainability initiatives. Keeping abreast of the latest sustainable construction methods and
considering the utilization of eco-friendly building supplies and practices in its projects would
align well with society's increasing focus on achieving a more environmentally friendly future. By
championing and implementing eco-conscious methods to meet the growing demand for
sustainable construction, Gamuda stands poised to not only adapt but also thrive in an evolving
industry landscape geared toward sustainability and environmental responsibility. This strategic
approach not only fosters environmental preservation but also enhances Gamuda's competitive
edge and long-term viability within the construction sector.
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3.5 COMPETITORS AND MARKET CONTROLS
MARKET SHARE
COMPANY
TOTAL SALES IN BILLIONS (RM)
GAMUDA
8.23
Other
26.154
The data indicates that Gamuda achieved total sales of RM8.23 billion in the year 2023,
positioning the company with a market share equivalent to its sales contribution, which stands at
8.23% of the total industry sales. Gamuda's consistent revenue growth is notably attributed to its
long-term flagship projects such as the SMART Tunnel, rail and metro systems, as well as roads
and expressways.
The company's strategic focus and successful execution in large-scale infrastructure projects,
like the SMART Tunnel that alleviates flood issues and eases traffic congestion in Kuala
Lumpur, have been instrumental in its sustained revenue growth over the years. Furthermore,
Gamuda's involvement in rail and metro systems across Malaysia, including the MRT and LRT
projects, has significantly contributed to its market presence and revenue streams.
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In addition to its notable projects, Gamuda's success is also due to its competitive position in the
industry. Among its main competitors are Zelan, Muhibbah, Ahmad Zaki, and BGMC. These
companies operate in similar sectors within the construction and infrastructure industry,
competing with Gamuda in securing and executing major projects.
The rivalry among these competitors often leads to innovative approaches, technological
advancements, and efficiency enhancements, ultimately benefiting the industry and customers.
Despite competition, Gamuda's track record, expertise, and strategic project portfolios have
consistently enabled the company to maintain its market share and sustain its revenue growth.
In summary, Gamuda's RM8.23 billion sales in 2023, representing 8.23% of the industry's total
sales, underscore the company's significant presence and consistent performance within the
construction and infrastructure sector. The company's dedication to large-scale, impactful
projects coupled with its competition from key industry players continues to shape its growth
trajectory and market standing.
MARKET SIZE
COMPANY
TOTAL ASSETS IN BILLIONS (RM)
GAMUDA
23.902
Other
103.31
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As per the data presented, Gamuda's total assets in 2023 notably account for a substantial
portion of the industry's overall assets, precisely 18.8%. The company's impressive asset value
stands at RM23.902 billion, securing its position as the entity with the highest number of assets
acquired within the industry for the year.
This remarkable asset value attributed to Gamuda is primarily the outcome of its strategic
acquisition and ownership of significant infrastructural assets. The company's diverse portfolio
encompasses a range of critical infrastructures including airports, bridges, water treatment
plants, metro systems, and various other key assets. This extensive asset base spans both
domestic and international locations, solidifying Gamuda's considerable asset value compared
to its industry counterparts.
For instance, Gamuda's involvement in the development and management of vital
infrastructures like the SMART Tunnel in Malaysia, known for its innovative flood control
measures and traffic management solutions, contributes significantly to its asset portfolio.
Additionally, the company's participation in the construction of water treatment plants, bridges,
and metro systems across Southeast Asia, including notable projects in Vietnam and Australia,
further bolsters its asset value.
It is noteworthy that Gamuda's robust asset base surpasses those of its competitors in the
industry, underscoring the company's commitment to investing in substantial infrastructural
developments both locally and internationally. This extensive asset portfolio not only reflects
Gamuda's strong market position and operational capabilities but also signifies its capacity for
delivering large-scale, impactful projects across different geographical regions.
In summary, Gamuda's acquisition of assets amounting to RM23.902 billion in 2023, constituting
18.8% of the industry's total assets, demonstrates the company's significant presence and
extensive asset holdings within the construction and infrastructure sector. Its diversified portfolio
of critical infrastructures, both domestically and internationally, reinforces Gamuda's position as
a key player in the industry and exemplifies its commitment to impactful and sustainable
infrastructural development.
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3.6 SUNWAY’S PROFILE
3.6.1 COMPANY BACKGROUND
Sunway Group, a prominent Malaysian conglomerate, stands as a multifaceted corporation
operating across diverse industries such as property development, construction, hospitality,
education, healthcare, and various other sectors. Founded in 1974 by Tan Sri Dato' Seri Dr.
Jeffrey Cheah, the company has experienced substantial growth and evolved into a noteworthy
international entity, renowned for its diverse business portfolio and impactful ventures.
Sunway Group's expansive reach extends beyond Malaysian borders, with a global presence
and operations spanning various regions. The organization boasts a workforce exceeding
13,000 individuals, encompassing a talented pool of professionals and experts across its
diversified range of business segments. The conglomerate's prominence in the property sector
is underscored by its remarkable developments, including townships, residential complexes,
commercial spaces, and iconic landmarks. Additionally, Sunway Group's prowess in the
construction industry is evidenced through its involvement in large-scale infrastructure projects,
showcasing expertise in building bridges, roads, and other critical infrastructures.
The company's engagement in the hospitality sector encompasses the management and
operation of hotels and resorts, offering premium accommodation and hospitality services to
customers globally. Furthermore, Sunway Group's foray into the education sector involves the
establishment and management of educational institutions, contributing significantly to the
advancement of learning and academic excellence. In the healthcare domain, Sunway Group
has made substantial strides by establishing healthcare facilities and services, providing access
to quality healthcare solutions and promoting wellness within communities. The conglomerate's
diversified interests across multiple sectors demonstrate its commitment to sustainable
development and its role as a key player in driving economic growth and societal progress.
Overall, Sunway Group's evolution from its inception in 1974 to its current status as a prominent
international organization reflects its commitment to innovation, excellence, and sustainable
business practices across various industries. With a steadfast commitment to delivering quality
services and products, Sunway Group continues to leave a significant impact on both local and
global landscapes.
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A HISTORY OF PIONEERING IDEAS AND EXPANSION
The Sunway Group embarked on its journey with humble beginnings, commencing as a modest
quarrying enterprise situated in the Sunway area of Petaling Jaya, Selangor. Guided by the
visionary leadership of Tan Sri Dato' Seri Dr. Jeffrey Cheah, the company witnessed a
remarkable evolution, transitioning from its initial quarrying operations to pioneering
advancements in property development. Through astute business acumen and innovative
strategies, the company transformed the once desolate Sunway vicinity into a thriving and
prosperous community. Leveraging its expertise in property development, Sunway Group
revitalized the area, laying the foundation for vibrant residential neighborhoods, commercial
districts, and recreational spaces, thereby catalyzing economic growth and urban development.
Sunway's prowess in property development served as a catalyst for its expansion and
diversification across various industries. The company's success in the property sector paved
the way for ventures into a spectrum of industries, including construction, hospitality, education,
healthcare, and real estate investment trusts (REITs). Expanding beyond its initial focus,
Sunway Group's foray into construction showcased its proficiency in executing large-scale
projects, encompassing the construction of vital infrastructures such as bridges, roads, and
commercial complexes. Simultaneously, the conglomerate ventured into the hospitality sector,
managing and operating hotels and resorts, offering world-class accommodation and hospitality
services to patrons.
Furthermore, Sunway Group's commitment to education materialized through the establishment
and management of educational institutions, advocating for academic excellence and fostering
learning opportunities. Its involvement in the healthcare sector involved the establishment of
healthcare facilities and services, ensuring access to quality healthcare solutions and promoting
wellness within communities. The diversification into real estate investment trusts (REITs)
marked another milestone, wherein Sunway Group demonstrated its proficiency in real estate
investment and management, consolidating its position as a comprehensive and multifaceted
corporation.
Sunway Group's evolution from a modest quarrying enterprise to a diverse conglomerate
highlights its visionary leadership and adaptability. Pioneering property developments formed
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the foundation for its diverse portfolio, fueling expansion across industries and making
substantial contributions to economic growth and community well-being.
MISSION AND VISION
EMPOWERING COMMUNITIES, ENRICHING LIVES
The purpose of Sunway Group is to construct a sustainable future by enhancing the quality of
life via business practices that prioritise people, innovation, and responsibility. The objective of
the company is to actively pursue the creation of beneficial social, economic, and environmental
effects. Sunway aspires to become a prominent worldwide company that motivates and enables
communities.
This vision demonstrates the company's dedication to promoting sustainable
growth and improving the well-being of the communities in which it operates.
SUSTAINABILITY INITIATIVES
LEADING THE PATH TO AN ENVIRONMENTALLY FRIENDLY FUTURE
Sunway Group is dedicated to promoting environmental sustainability by incorporating
eco-friendly practises into its operations and projects. The company has adopted multiple
measures to diminish its carbon footprint, preserve resources, and advocate for sustainable
lifestyles. These endeavours encompass:
●
Building designs that prioritise energy efficiency
●
Integration of renewable energy sources
●
Implementation of steps to conserve water
●
Programmes aimed at reducing waste and promoting recycling
●
Initiatives focused on environmental education and raising awareness
COMMUNITY GIVING: SOCIAL RESPONSIBILITY INITIATIVES
Sunway Group acknowledges its obligation to contribute to the communities it serves. The
company has implemented a range of social responsibility programmes to tackle community
problems and enhance social welfare. These endeavours encompass:
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●
Educational and academic initiatives
●
Projects aimed at reducing poverty and promoting community development
●
Programmes focused on healthcare and well-being
●
Initiatives for the preservation and protection of the environment
●
Relief efforts and assistance provided during times of disasters and for humanitarian
purposes
Sunway Group's dedication to sustainability and social responsibility has resulted in its
recognition as a prominent corporate entity. Since 2012, the company has been included in the
FTSE4Good Bursa Malaysia Index, which indicates its commitment to following environmental,
social, and governance (ESG) principles.
As the Sunway Group experiences ongoing growth and expansion, it stays unwavering in its
dedication to its goal and vision. The company is committed to constructing a viable future,
enhancing the quality of life, and enabling communities globally. Sunway Hotels & Resorts, the
hospitality division of Sunway Group, has achieved a worldwide reach by managing more than
50 hotels and resorts throughout Malaysia, Asia Pacific, Europe, and Africa. The company's
dedication to achieving high standards has resulted in multiple accolades, such as the World
Travel Awards and the ASEAN Tourism Awards.
Sunway Group has achieved notable progress in the healthcare industry by developing Sunway
Medical Centre, a leading tertiary healthcare provider. The company's commitment to providing
excellent patient care and pioneering medical breakthroughs has firmly established its status as
a prominent healthcare provider in Malaysia.
Sunway Group's education endeavours, Sunway University and Sunway College, are renowned
for their academic brilliance and comprehensive approach to education. The institutions draw
students from all around the world, cultivating a varied and intellectually stimulating educational
setting.
The retail division of Sunway Group comprises Sunway Malls, a collection of shopping centres
that provide a combination of retail, dining, and entertainment options. The company's
dedication to developing dynamic and captivating retail environments has enticed prominent
brands and devoted customers.
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3.6.2 PRINCIPLE ACTIVITIES
Sunway Group is a Malaysian company that was formed in 1974 and is now a major player in
many Southeast Asian industries. The main office of Sunway Group is in Petaling Jaya,
Selangor. The company has grown to include many different types of businesses, such as real
estate, building, education, healthcare, retail, and hospitality.
HOMES FOR SALE
Sunway Property, which is part of Sunway Group, is in charge of building and managing a
portfolio of mixed-use townships, residential, industrial, and retail properties. Sunway City Kuala
Lumpur, the group's most important project, turned a former tin-mining area into a busy city
centre. Sunway Property is present in China, Singapore, and Malaysia.
BUILDING UP
Sunway building Group Berhad, which is part of Sunway Group, is Malaysia's biggest building
company. It works on projects in many areas, such as healthcare, commercial, residential, and
infrastructure. They always finish projects on time and on budget, and the work is always of
good quality.
LEARNING
Monash University Malaysia, Sunway University, Sunway College, Sunway International School,
and Sunway Le Cordon Bleu Institute of Culinary Arts are some of the eight schools that make
up Sunway Education Group. These schools are known for their academic success and
student-centered approach. They offer a wide range of programmes, from pre-university to
graduate studies.
MEDICAL CARE
Sunway Healthcare Group runs a system of hospitals, clinics, and shops that offer the
community a wide range of medical services. The group's main hospital, Sunway Medical
Centre, is one of the best health care centres in Malaysia.
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SHOP AROUND
The group's retail arm, Sunway stores, runs a group of shopping stores, such as Sunway
Pyramid, Sunway Putra Mall, and Sunway Velocity Mall. There are shops, restaurants, and
leisure options in these malls.
BEING FRIENDLY
Sunway International Hotels & spas runs a group of spas and hotels in Vietnam, the Maldives,
and Malaysia. The hotels in this group are famous for their high-end rooms, great service, and
convenient sites.
OWNING AND HAVING SUBSIDIARIES
Sunway Group has many different companies, and all of them help the group succeed as a
whole. Some well-known companies are:
●
Sunway City Berhad owns the whole city.
●
Sunway Construction Group Berhad owns everything
●
Sixty-two percent of Sunway REIT
●
Seventy-four percent of Sunway Medical Centre Berhad
●
100% ownership of Sunway Resort Hotel & Spa
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3.6.3 PROPERTIES HOLD
Sunway Group is a Malaysian company that has become a major player in the real estate
market. Its buildings are spread out across Malaysia, China, Singapore, Cambodia, and
Vietnam. The company's master-planned communities, which have a good mix of residential,
commercial, retail, healthcare, education, and hospitality areas, show how dedicated they are to
sustainable growth and building communities.
SOME OF SUNWAY GROUP'S WELL-KNOWN SITES ARE
●
Sunway City Kuala Lumpur is a thriving integrated township that perfectly combines
residential, business, retail, and leisure activities to make city life feel like home.
●
Sunway City Ipoh is a huge project that will change the heart of Ipoh and make it a lively
place for business, fun, and community involvement.
●
Sunway Valleycity is a carefully planned village in the Klang Valley that focuses on
sustainability and environmental awareness while offering a full range of living options.
●
Sunway Damansara is a well-established township in Kuala Lumpur that has a wide
range of residential, commercial, and retail choices to suit a lot of different lifestyles.
●
The Sunway Velocity development in Kuala Lumpur is a dynamic integrated
development with residential, commercial, retail, healthcare, education, and hotel parts
that are all linked by a deck that doesn't allow cars.
●
Sunway City Iskandar Puteri is a major new development in Iskandar Puteri, Johor. It is
meant to be a thriving city with a strong focus on sustainability and new ideas.
Sunway Group offers a variety of properties, including freehold and leasehold options, tailored
to diverse business needs and ownership choices. The company meticulously plans land areas
to ensure optimal functionality. Additionally, as a major developer of purpose-built student
housing (PBSA) in the UK, Sunway Group owns four properties across key towns like Bristol,
Manchester, and Sheffield, totaling 595 beds in its PBSA portfolio.
Sunway Group's real estate ventures go beyond structures; they embody the company's
mission to foster vibrant communities that advance economic prosperity, social welfare, and
environmental sustainability. With a commitment to quality, innovation, and sustainable
practices, Sunway Group is reshaping real estate development and making a lasting impact on
the regions it engages with.
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3.7 SUNWAY’S COMPANY MANAGEMENT
3.7.1 CORPORATE INFORMATION
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BOARD OF DIRECTORS
TAN SRI DATO’ SERI SIR JEFFREY CHEAH KBE AO
Founder and Chairman, Sunway Group
TAN SRI DATO’ DR. LIN SEE YAN
Independent Non-Executive Director
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DR. PHILIP YEO LIAT KOK
Senior Independent Non-Executive Director
DATUK ZAITON MOHD HASSAN
Independent Non-Executive Director
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SARENA CHEAH YEAN TIH, S.M.S.
Executive Director, Non-Independent Executive Director
DATO’ SRI IDRIS JALA
Non-Executive Co-Chairman, Independent Non-Executive Director
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TAN SRI DATO’ (DR.) CHEW CHEE KIN
President, Non-Independent Executive Director
DATUK TONG POH KEOW
Independent Non-Executive Director
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TAN SRI DATUK DR. REBECCA FATIMA STA MARIA
Independent Non-Executive Director
TAN SRI JAMALUDIN IBRAHIM
Independent Non-Executive Director
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AUDIT COMMITTEE
●
TAN SRI DATO’ DR. LIN SEE YAN
●
DATUK TONG POH KEOW
●
TAN SRI DATUK DR. REBECCA FATIMA STA MARIA
REGISTERED OFFICE
HEADQUARTERS
Menara Sunway, Jalan Lagoon Timur,
Sunway City, 47500 , Selangor D.E.
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3.7.2 MAJOR SHAREHOLDERS
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3.7.3 SHARE INFORMATION
Bursa Symbol:
5211
Currency:
MYR
Last Done:
1.910
Volume (‘00):
127,533
Change:
+0.010
% Change:
+0.5263
Day’s Range:
1.8900 - 1.9200
52 Week’s Range:
1.4500 - 2.0700
Recent market data regarding Sunway Berhad, symbolized by Bursa Malaysia's code 5211,
indicates its current standing in the stock market. The most recent transaction occurred at a
price of 1.910 Malaysian Ringgit (MYR) per share, involving a substantial trading volume of
12,753,300 shares. The stock witnessed a marginal increase of 0.010 MYR, representing a
positive percentage shift of 0.5263%. Throughout the trading day, the stock displayed
fluctuations within the range of 1.8900 MYR to 1.9200 MYR, suggesting moderate intraday
movement.
Over the preceding 52-week period, the stock's price ranged from 1.4500 MYR to 2.0700 MYR,
highlighting considerable price volatility experienced over the year. This data allows investors
and analysts to assess the stock's historical performance and gauge prevailing market
sentiments.
The observed upward trend in Sunway Berhad's stock price indicates a positive outlook,
showcasing sustained investor interest in the company's shares. This trend signifies a favorable
sentiment among market participants towards the company's performance and potential,
indicating an optimistic trajectory for prospective investors.
EPS (MYR)
0.1000
PE
19.10
NAV (MYR)
2.27
Price/NAV
0.84
Dividend (MYR)
0.02
Dividend Yield (%)
2.89
Market Cap (M)
9.474B
Issued & Paid-up Shares
5,484,377,000
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The furnished financial data pertains to various stock performance and financial indicators of a
company. Notably, the company's earnings, allocated per outstanding share, are illustrated by
the earnings per share (EPS) figure of 0.1000 MYR. A price-to-earnings ratio (PE) of 19.10
signifies that investors are willing to pay approximately 19.10 times the current earnings per
share to acquire the stock.
Moreover, the price-to-NAV ratio stands at 0.84, implying that the stock is trading below its net
asset value. The net asset value (NAV) per share, computed at 2.27 MYR, underlines that the
stock is trading at a discounted rate compared to its net asset value. Additionally, the company
offers investors a return on their investment through a dividend yield of 2.89%, with a payout of
0.02 MYR per share.
Assessing the company's market value, multiplying the stock price by the total number of issued
and paid-up shares, which amounts to 5,484,377,000 shares, yields a market value of 9.474
billion MYR. These financial metrics serve as benchmarks for analysts and investors, facilitating
the evaluation of the company's valuation and overall financial strength.
The aggregated financial metrics collectively depict the company's financial health and market
performance. A moderate price-to-earnings ratio coupled with positive earnings per share
suggests a reasonable valuation by investors. Furthermore, the net asset value and
price-to-NAV ratio signal that the company is undervalued, presenting an attractive investment
opportunity. The dividend yield provides investors with tangible returns.
Additionally, the company's substantial market capitalization reflects its size and significance in
the market. Investors and analysts often consider these parameters comprehensively to assess
the company's investment potential and attractiveness within the market landscape.
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3.7.4 SHARE DISTRIBUTION
Shareholders
Percentage holding
Institutions Shareholders
65.22%
Individual Shareholders
34.8%
Institutional shareholders are sometimes characterised as substantial investors, encompassing
entities such as pension funds, mutual funds, and hedge funds. Long-term investment horizons
are frequently observed among these entities, who hold a significant position inside the
Malaysian stock market.
In contrast, individual shareholders refer to retail investors who personally engage in stock
market investments. In comparison to institutional shareholders, it is possible that they possess
a relatively shorter-term investment perspective.
The prevalence of institutional shareholders holding a majority interest in Sunway Berhad
implies that the company enjoys a favourable reputation among professional investors. The
probable causes for this can be attributed to several variables, such as the robust financial
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performance of the company, its diversified business model, and the presence of an
experienced management team.
The participation of individual shareholders in Sunway Berhad is of significant importance.
Market makers play a crucial role in enhancing market liquidity and facilitating the establishment
of fair prices for a company's shares.
Sunway Berhad is a Malaysian corporation that has consistently demonstrated a commendable
history of financial success, characterised by sustained profitability and regular distribution of
dividends. The company's operations span various industries, resulting in risk mitigation through
diversification. The firm exhibits effective management practises and possesses a robust
corporate image. Sunway Berhad holds a prominent position within the Malaysian economy,
affording it advantageous access to several avenues for expansion and development. Sunway
Berhad possesses a range of qualities that render it an appealing investment option for
institutional shareholders.
Sunway Berhad is a renowned Malaysian corporation that enjoys a robust standing within its
industry. The shares of the company also exhibit a reasonably high level of liquidity, indicating
their ease of being traded in the market. Furthermore, the corporation distributes a recurring
dividend, furnishing investors with a reliable stream of income. Ultimately, the shares of Sunway
Berhad have the capacity to yield long-term financial appreciation. Several factors contribute to
the attractiveness of Sunway Berhad as an investment option for individual shareholders.
In general, the allocation of shares for Sunway Berhad exhibits a highly equitable split between
institutional and individual shareholders. This implies that the organisation possesses qualities
that are appealing to both domestic and foreign investors.
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Shareholders
Percentage holding
Local Institution
70.65%
Foreign Institution
29.35%
This means that local shareholders own a majority stake in Sunway Berhad.
Sunway Berhad is a prominent Malaysian corporation that holds a substantial market share
within the domestic industry. The company's operations span various industries, encompassing
property, construction, healthcare, education, and retail. The corporation has a commendable
history of profitability and consistent dividend disbursements, indicating effective management
practices and a robust corporate standing. Several factors contribute to the increased proportion
of shareholding by local shareholders in Sunway Berhad.
The company's appeal to local stockholders stems from its association with the Malaysian
economy, its diversified business style, and its impressive historical performance. Local
shareholders may perceive Sunway Berhad as an attractive investment opportunity due to its
Malaysian origin, robust domestic market presence, diversified business model, commendable
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history of profitability and dividend disbursements, and effective corporate governance resulting
in a favourable corporate image.
In contrast, foreign investors may find Sunway Berhad appealing due to its promising prospects
for expansion and its integration with the Malaysian economy. Nevertheless, international
stakeholders may exhibit a heightened sense of prudence when considering investments in
Malaysian enterprises, primarily driven by apprehensions about the political and economic
stability of the nation.
In general, the allocation of shares for Sunway Berhad exhibits a highly equitable split between
international and domestic shareholders. This observation implies that the organisation has
qualities that make it appealing to both domestic and foreign investors.
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3.8 SUNWAY’S EVENTS/ACTIVITIES
3.8.1 ACHIEVEMENT
Sunway Group has recently attained a number
of noteworthy achievements. The organization
has garnered acclaim for its endeavors in
property
development,
education,
and
sustainability. Sunway Berhad was awarded
Platinum at the Awards 2021/2022, Sunway
Construction Group was awarded Gold, and
Sunway REIT was awarded Silver in the Companies with RM2bil to RM10bil category.
Additionally, Sunway Berhad was honored with the Long-Term Achiever award and Silver in the
Best Sustainability Reporting category at The Edge ESG Awards 2022. Sunway University has
achieved distinction in particular disciplines, earning it a prominent ranking in the Subject 2023
QS World University Rankings. In the fields of Business and Management Studies, Art and
Design, and Hospitality and leisure Management, the university is ranked among the top
universities in the world. Additionally, for two consecutive years (2022 and 2023), Sunway
University has been ranked number one on the Graduate Employability Index by Talentbank
Group, with a stellar six-star employability rating in a variety of academic disciplines.
Gold was bestowed upon Sunway REIT at
the 2023 Australasian Reporting Awards.
The solid reputation of Sunway International
Schools (SIS) as a provider of high-quality
education is supported and validated by
both
domestic
and
international
organizations. In conclusion, Sunway Group
has garnered acclaim for its property
development, education, and sustainability
initiatives,
among
other
noteworthy
achievements. These accomplishments serve as evidence of the organization's dedication to
achieving high standards and its capacity to defy norms while exploring innovative resolutions to
obstacles in the industry.
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3.8.2 RECENT DEVELOPMENT AND MAJOR EVENTS
Sunway Group has participated in a number of significant developments and events in recent
times. An instance of recent progress is the October 2023 inauguration of Sunway Yiyang
MLCC Park. Sunway Geo Avenue, an integrated commercial center, is an additional recent
Sunway City Kuala Lumpur development. Sunway City Kuala Lumpur is the inaugural fully
integrated Green Township in Malaysia, comprising seven essential elements—commercial,
residential, hospitality, leisure, education, and healthcare—alongside shopping centers. A recent
addition to Sunway City Kuala Lumpur is Sunway FutureX, a skills development and venture
center founded on the pillars of Campus, Talent, and Farm.
In April 2022, Sunway Group made noteworthy strides by actively engaging in significant events
that aimed to foster societal progress and sustainable development. One of the pivotal
occurrences was the inaugural National Solutions Forum (NSF), a pivotal platform advocating
for a collective nationwide strategy to realize the Sustainable Development Goals (SDGs). This
landmark event was co-hosted by SDSN Malaysia and Sunway Group, emphasizing their
shared commitment to driving positive change and sustainable solutions within the nation.
During the NSF, a panel of experts and innovators convened to deliberate on pressing societal
challenges and viable solutions that align with the SDGs. As a testament to their dedication
towards fostering innovative solutions, Sunway Group extended its support by granting funding
to nine of the shortlisted solutions. These grant recipients received invaluable support to further
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develop and present their innovative solutions at the NSF, amplifying their potential to address
critical social and environmental issues.
This collaboration between SDSN Malaysia and Sunway Group at the NSF exemplifies their
concerted efforts towards fostering sustainability, encouraging innovative solutions, and
facilitating tangible contributions to societal advancement. By investing in and nurturing
innovative initiatives, Sunway Group underscores its commitment to being an active catalyst for
positive change and sustainable development within Malaysia and beyond.
Sunway Group's accolades are a testament to its exceptional performance and recognition
within the industry. Earning Platinum, Gold, and Silver awards in the prestigious Companies with
RM2bil to RM10bil category at the Awards 2021/2022 signifies the organization's outstanding
achievements and contributions across various facets of its operations. These accolades
underscore Sunway Group's commitment to excellence, innovation, and impactful endeavors
within its operating segment.
Furthermore, the company's active participation and engagement in significant events and
developmental initiatives showcase its proactive stance towards driving positive change and
fostering innovation. The inauguration of the Sunway Yiyang MLCC Park and Sunway Geo
Avenue, alongside the influential participation in the inaugural National Solutions Forum,
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highlight Sunway Group's dedication to fostering sustainability, innovation, and societal
development.
These recent milestone events and developments encapsulate Sunway Group's multifaceted
approach towards innovation, sustainability, and community-centric initiatives. Through its
proactive involvement in pivotal events and notable initiatives, the organization solidifies its
position as a driving force for positive change, constantly striving for innovative solutions and
sustainable progress across various sectors and communities.
3.8.3 PROSPECTS
Due to its effectively incorporated property,
construction, and building material operations,
Sunway Group has promising prospects. It is
anticipated
that
the
expansion
of
the
company's operations and the introduction of
new projects will stimulate expansion in the
future years. Sunway has accomplished 21%
of its RM2.3 billion in new sales target for 2023
during the initial quarter of the year. The group
intends to initiate endeavors amounting to
RM3.5 billion, of which Singapore launches will
account for 77% of the total value. Socially responsible practices have been a cornerstone of
Sunway Group's mission to establish a sustainable future for all. Sunway Berhad, Sunway
Construction Group Berhad, and Sunway REIT, the three publicly traded entities of the
organization, collectively possess a market capitalization of RM17.3 billion. These entities serve
as prime illustrations of socially responsible business conduct. In conclusion, Sunway Group's
commitment to socially responsible practices, expansion plans, and well-integrated property,
construction, and building material operations all contribute to its positive outlook. Consistently
investing in sustainable living and innovative structures demonstrates the organization's
dedication to improving the quality of life in local communities and striving for a more promising
future for future generations.
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3.9 SUNWAY’S SWOT ANALYSIS
SWOT analysis is a method that is used to assess a company's competitive position and create
strategic planning. The strength, weakness, opportunity, and threats analysis evaluates
possibilities for the future as well as internal and external influences. SWOT analysis can be
used to evaluate a specific segment of a firm, such as a product line or division, an industry, or
another entity. However, it is mainly used to evaluate a company's performance, competitors,
risk, and potential.
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SUNWAY’S STRENGTHS
●
BRANDS CATERING TO DIFFERENT CUSTOMERS SEGMENTS
Sunway Group's extensive array of products has played a pivotal role in its successful
establishment across diverse clienteles within the construction services industry. The diversified
product portfolio offered by Sunway caters to a broad spectrum of needs and demands across
multiple sectors. This comprehensive range of products includes construction materials,
infrastructure development components, property development offerings, real estate, and more.
The strategic diversity in Sunway's product offerings has not only contributed significantly to its
market penetration but also served as a catalyst for revenue stream diversification. By catering
to different sectors and providing a wide range of solutions, Sunway has effectively minimized
its dependence on a singular market segment or product line. This diversification strategy has
enabled the company to mitigate risks associated with fluctuations in specific markets or
industries, ensuring a more robust and resilient revenue stream.
Moreover, Sunway Group's ability to offer a holistic suite of products has enhanced its
competitiveness and positioned the organization as a one-stop solution provider within the
construction services industry. This strategic advantage has allowed Sunway to capture a
broader clientele base, reinforce customer loyalty, and maintain a steady and diversified
revenue stream, contributing to the overall resilience and growth of the organization.
●
TRACK RECORD OF INNOVATION
Sunway Group's success in consumer-driven innovation stands out prominently within the
competitive landscape of the Capital Goods industry. While many entities within this sector
prioritize innovation, Sunway Group has distinguished itself by placing a paramount focus on
consumer-centric innovation strategies.
The company's approach to innovation revolves around actively engaging with consumer needs
and preferences, thereby crafting products and services that directly address these
requirements. Sunway Group's consumer-driven innovation ethos involves extensive market
research, customer feedback mechanisms, and a deep understanding of evolving consumer
trends. By leveraging these insights, the company tailors its offerings to precisely meet the
demands and expectations of its clientele.
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Moreover, Sunway's dedication to innovation extends beyond just product development. The
organization prioritizes creating meaningful experiences for consumers, emphasizing not only
the functionality but also the usability, sustainability, and overall value proposition of its offerings.
This holistic approach to innovation ensures that the company not only introduces novel
products but also enhances the overall consumer experience, fostering long-term relationships
and customer loyalty.
In summary, Sunway Group's success in consumer-driven innovation is a result of its proactive
approach to understanding and fulfilling consumer needs. By integrating consumer insights into
its innovation process and continually refining its offerings based on these insights, Sunway has
positioned itself as a leader in delivering innovative solutions that resonate with its diverse
consumer base, setting itself apart within the Capital Goods industry.
●
DIVERSE REVENUE MODELS
Sunway Group's strategic foray into various industries beyond the confines of capital goods and
construction services has been pivotal in its pursuit of revenue diversification and business
expansion. The organization's ventures into diverse industries, such as property development,
real estate, hospitality, education, healthcare, and more, exemplify its proactive strategy to
diversify its revenue streams. By expanding its presence into these different sectors, Sunway
has significantly reduced its dependence on a single industry or service line, mitigating risks
associated with market fluctuations in any particular sector.
This strategic diversification has not only expanded the breadth of Sunway's offerings but also
unlocked new revenue opportunities. For instance, the success and growth in real estate and
property development ventures have provided substantial contributions to the group's overall
revenue. Similarly, the establishment of healthcare facilities, educational institutions, and
hospitality services has augmented the organization's revenue streams and enhanced its
market resilience. Furthermore, this diversification strategy has allowed Sunway to leverage
synergies between its various business verticals, fostering cross-selling opportunities and
integrated service offerings. For example, its real estate developments may integrate
educational facilities, healthcare services, and retail spaces, creating holistic and self-sustaining
communities that cater to diverse needs.
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In essence, Sunway Group's deliberate exploration and expansion into multiple industries have
been instrumental in broadening its revenue base and minimizing exposure to market-specific
risks. This diversified business portfolio not only strengthens the organization's financial
resilience but also positions it favorably to capitalize on emerging opportunities across diverse
sectors, contributing to its sustained growth and success.
●
HIGH MARGINS
Within the construction services industry, Sunway Group has consistently maintained higher
profit margins in comparison to its competitors, showcasing its ability to achieve relatively
favorable financial performance despite facing challenges. Sunway's superior margins can be
attributed to several factors. The company's adeptness in optimizing operational efficiencies,
cost management strategies, and effective utilization of resources plays a significant role in
sustaining higher profit margins. Additionally, its diversified business model, extending beyond
construction services into real estate, property development, education, healthcare, and other
sectors, contributes to a more resilient revenue stream, supporting healthier margins.
Despite experiencing a recent decline in profitability, Sunway's ability to retain larger profit
margins than its competitors highlights its efficiency in managing costs and maintaining a
competitive edge. Even during periods of economic challenges or industry fluctuations, Sunway
Group's operational agility and strategic positioning have enabled it to uphold more robust profit
margins compared to peers. Furthermore, the company's commitment to innovation and
value-added services might also contribute to sustaining higher margins. Sunway's ability to
offer differentiated and higher-value solutions to its clientele potentially allows for pricing
premiums, which could positively impact its margins.
In summary, Sunway Group's ability to sustain higher profit margins in the construction services
industry, despite a decline in profitability, underscores its operational efficiency, diversified
business portfolio, and possibly its capability to provide value-added services. These elements
collectively contribute to Sunway's resilience and competitiveness in maintaining superior
margins within its industry.
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SUNWAY’S WEAKNESSES
●
HIGH COST OF REPLACING EXISTING EXPERT
The high cost associated with replacing Sunway's existing expertise stems from the
concentrated knowledge base held by a limited number of individuals within the organization.
This situation poses a significant challenge, particularly in terms of succession planning and
knowledge transfer. The intricate and specialized knowledge possessed by these select
employees is crucial for Sunway's operations, and their potential departure or retirement could
lead to substantial knowledge gaps and operational disruptions. This scenario highlights the
critical need for Sunway to implement comprehensive knowledge management strategies,
mentorship programs, and succession planning initiatives to ensure the retention and transfer of
critical expertise across the organization.
●
LOW INVESTMENTS INTO SUNWAY'S CUSTOMER ORIENTED SERVICES
In the near future, competitors might gain an advantage if Sunway doesn't allocate more
resources towards research and development (R&D). Specifically, investing in programs aimed
at enhancing customer service, such as those within Sunway Hotel and Sunway Travel, is
crucial. These initiatives require continual innovation and improvement to meet evolving
customer expectations and stay ahead in a highly competitive market. By investing more in R&D
for these service-oriented sectors, Sunway can enhance service quality, create unique offerings,
and build stronger customer relationships, thereby maintaining a competitive edge over rivals.
●
DECLINING PER UNIT REVENUE
In the construction services sector, intensifying competition is exerting downward pressure on
profitability. To navigate this situation, Sunway can initiate an evaluation of the current value
propositions associated with its various offerings. This involves objectively assessing the unique
benefits and advantages that each product or service delivers to its customers. By scrutinizing
these value propositions, Sunway can identify areas for enhancement, differentiate its offerings
from competitors, and tailor solutions that resonate more effectively with customer needs. This
strategic approach allows Sunway to maintain its competitiveness and sustain profitability in a
challenging market landscape.
128
●
BUSINESS MODEL
In the construction services sector, Sunway faces the risk of competitors replicating its business
model. To counter this challenge, Sunway can strategically pivot towards establishing a
platform-based model. This transformative approach involves creating a comprehensive
platform that integrates suppliers, vendors, and end-users within the construction ecosystem. By
implementing such a platform, Sunway can consolidate its network, streamline operations, and
offer a unique value proposition that goes beyond traditional construction services. This strategy
not only fosters stronger relationships across the construction supply chain but also cultivates
an ecosystem where Sunway becomes the central hub for various stakeholders, thereby
strengthening its competitive edge and reducing the likelihood of imitation by rivals.
129
GAMUDA’S OPPORTUNITIES
●
FAST CHANGING CUSTOMER PREFERENCE
In today's market landscape, consumers exhibit a growing inclination toward exploring and
adopting new products, driven by factors such as heightened disposable income, easy access
to information, and rapid technological advancements. This shift underscores the need for
Sunway to closely monitor evolving trends not only within the Capital Goods market but also
within the broader Construction Services sector. By keeping abreast of these developments,
Sunway can proactively identify emerging consumer preferences, technological innovations,
and market dynamics. This strategic vigilance allows Sunway to adapt swiftly, innovate its
offerings, and capitalize on emerging opportunities, ensuring its relevance and competitiveness
in the ever-evolving consumer landscape.
●
OPPORTUNITIES IN ONLINE SPACE
The increasing reliance on online services among customers presents Sunway with a unique
opportunity to introduce novel products and services within the construction services sector.
With a substantial shift toward digital platforms for various needs, including procurement,
communication, and project management, Sunway can leverage this trend to expand its product
portfolio. By harnessing the potential of online channels, the company can introduce innovative
solutions, streamline its offerings, and deliver enhanced value to clients. This shift toward digital
platforms not only enables Sunway to cater to evolving customer preferences but also facilitates
efficient communication, faster service delivery, and the introduction of more tailored and
responsive solutions in the construction industry.
●
Accelerated technological innovations and advance
The swift pace of technological advancements and innovations is significantly enhancing
industry productivity and expanding the capabilities of suppliers to offer a diverse array of goods
and services. This trend presents Sunway with a promising opportunity to diversify into related
product categories within its industry. With the continuous evolution of technology, Sunway can
explore new avenues and expand its offerings, leveraging these innovations to introduce
complementary products and services. By embracing emerging technologies and adapting to
changing market dynamics, Sunway can potentially extend its portfolio, meeting evolving
consumer demands and enhancing its position in the industry.
130
●
Rapid Expansion of Economy
Given the robust growth of the US economy compared to other developed nations, Sunway is
presented with a valuable opportunity to venture into the US market. Leveraging its existing
expertise and capabilities, Sunway is well-equipped to compete effectively within the US market
landscape. The rapid expansion of the US economy offers a favorable environment for Sunway
to introduce its products or services, tapping into new consumer segments and exploring
partnerships or collaborations to establish a foothold in this dynamic marketplace. By leveraging
its strengths and adapting to the unique demands of the US market, Sunway can potentially
capitalize on the growth opportunities available in the United States.
131
SUNWAY’S THREATS
●
CHANGING DEMOGRAPHICS
The evolving landscape in today's market presents a potential risk for Sunway if it fails to
accurately target the right demographic. With shifts in consumer demographics within the
construction industry compared to a decade ago, Sunway faces the challenge of adapting to
changing consumer preferences, behaviors, and demands. It's crucial for Sunway to align its
strategies with these demographic shifts to remain relevant, competitive, and in tune with the
evolving market dynamics. By understanding and responding effectively to the changing
demographics, Sunway can tailor its products, services, and marketing approaches to cater to
the preferences and needs of the new consumer segments, ensuring its continued relevance
and success in the industry.
●
Market saturation in cities and stagnation in rural areas
The ongoing challenge for Sunway in the construction services market stems from a persistent
trend: the slower uptake of products in rural markets. This sluggish acceptance is attributed to
several factors. Firstly, rural markets tend to exhibit slower adoption rates due to factors such as
conservative mindsets, limited exposure to newer trends, and sometimes, a lack of awareness
about the latest offerings. Additionally, serving rural clients poses logistical challenges for
Sunway. The vast distances and inadequate infrastructure in rural areas result in higher
operational costs, making it more expensive for Sunway to reach and serve these markets
compared to urban counterparts. Addressing these challenges will require strategic planning,
potentially involving targeted marketing approaches, infrastructure development, and
cost-efficient distribution networks to effectively tap into rural markets while managing
operational costs.
●
Growing technological expertise
Partnering with local companies in export markets presents Sunway with a notable risk: the
potential compromise of intellectual property rights. This risk is particularly relevant in regions
where local players are rapidly advancing in technology but may have less stringent
enforcement of intellectual property laws. China, for instance, has been identified as having a
comparatively weaker system for protecting intellectual property rights compared to other
emerging markets. This scenario raises concerns for Sunway, as collaborating with local entities
in such regions might pose risks of unauthorised usage, replication, or dissemination of
132
proprietary technology, impacting Sunway's innovation and competitive advantage. Mitigating
this
risk would necessitate comprehensive legal frameworks, meticulous contractual
agreements, and stringent monitoring mechanisms to safeguard Sunway's intellectual property
while navigating partnerships in these markets.
●
COMMODITIZATION OF THE PRODUCT SEGMENT
The increasingly prevalent trend of product commoditization within the capital goods market
poses a significant challenge for Sunway and its industry counterparts. This shift signifies that
products or services are becoming more standardized, losing their unique selling propositions,
and turning into interchangeable offerings. As a result, differentiation becomes harder to
achieve, leading to intensified price competition and reduced profit margins. To counter this
challenge, Sunway must prioritize innovation, focusing on value-added services, customization,
and distinctive features to set its offerings apart in the market. Additionally, emphasizing
customer experience, service quality, and fostering strong client relationships can help mitigate
the adverse effects of product commoditization.
RECOMMENDATION
Sunway possesses significant potential for exponential growth by placing a greater emphasis on
community engagement. Establishing a strong and positive relationship with the local
community affected by its projects can significantly expand its consumer base. By actively
involving itself in the neighborhood, Sunway can build a reputable image and foster rapport with
its neighbors. Additionally, incorporating charitable initiatives and community service within its
operations allows the company to give back to the communities where it operates, creating a
more favorable perception and bolstering its brand identity. This proactive engagement strategy
not only enhances Sunway's corporate social responsibility but also amplifies its potential for
sustainable growth and positive public reception.
133
3.10 COMPETITORS AND MARKET CONTROLS
COMPANY
TOTAL SALES IN BILLIONS (RM)
SUNCON
2.089
Other
32.286
Sunway's reported total sales of RM2.098 billion for 2023 demonstrate its solid performance
within the construction industry, constituting a 6.1% market share. This achievement can be
attributed to its diverse range of products and services, which attract a wide customer base. For
instance, Sunway's popular offerings such as Sunway Mall, Sunway Hotel, Sunway Lagoon,
and Sunway College likely contributed significantly to its overall sales figures.
However, within this competitive landscape, Sunway faces formidable rivals. YTL Corporation
Bhd, one of its main competitors, boasts a substantial revenue of RM6.7 billion, presenting a
strong challenge for Sunway's market position. Similarly, IJM Land, with revenues totaling RM1
billion, is another key competitor that adds to the competitive pressure within the industry. These
competitors possess significant market shares and financial strength, creating a competitive
environment that requires Sunway to continually innovate and adapt its strategies to maintain its
market standing and foster growth.
134
Sunway's ability to navigate this competitive terrain and sustain growth relies on its capacity to
innovate, diversify its product offerings, and effectively address evolving consumer preferences.
Building on its existing strengths while addressing market challenges will be crucial for Sunway
to solidify its position and pursue further growth within the construction industry.
COMPANY
TOTAL ASSETS IN BILLIONS (RM)
SUNCON
2.27
Other
124.94
The provided data indicates that Sunway's total assets for 2023 amounted to RM2.27 billion,
representing 1.8% of the overall industry's total assets within the construction sector. Despite
Sunway Property's extensive real estate portfolio, including properties like Jernih Residence in
Kajang, Sunway Aviana Residence in Johor, and Sunway Dora Condominium in Penang,
among others, it still accounts for a relatively smaller fraction of the industry's collective assets.
135
Sunway's property assets across various locations in Malaysia, excluding assets such as
Sunway Hospital or Sunway Hotel, contribute to its overall asset value. However, in comparison
to the entire industry's asset pool, Sunway's holdings represent a minor portion. This information
indicates that other companies within the construction industry likely possess a larger
cumulative value of assets, possibly held in diverse property portfolios or other substantial
assets not owned by Sunway.
For Sunway to strengthen its asset position within the construction industry, it may need to
consider expanding its property portfolio, exploring strategic acquisitions or developments, or
diversifying its asset holdings across different sectors to further augment its overall asset value.
136
CHAPTER 4
FINANCIAL ANALYSIS
4.0 INTRODUCTION
Financial analysis is the process of assessing the performance and appropriateness of firms,
projects, budgets, and other financial operations. Financial analysis is commonly used to
determine if a business is stable, solvent, liquid, or lucrative enough to merit monetary
investment.
Financial analysis is used to assess economic trends, establish financial policy, create long-term
business goals, and select projects or firms for investment. This is accomplished by combining
financial figures and data. A financial analyst will extensively review the income statement,
balance sheet, and cash flow statement of a corporation. Financial analysis may be performed
in both corporate and investment finance contexts.
One of the most frequent methods of analysing financial data is to compute ratios from the
financial statements and compare them to those of other firms or the company's own historical
performance. Return on assets (ROA), for example, is a standard ratio used to analyse how
efficiently a firm uses its assets and as a measure of profitability. As part of a bigger
investigation, this ratio might be determined for numerous firms in the same industry and
compared to one another.
137
4.1 ANALYSIS OF BALANCE SHEET
YEAR
2022 (RM COMMON 2021 (RM COMMON
000')
SIZE
000')
SIZE
2020 (RM
000')
COMMON
SIZE
Property, plant and equipment
1,095,482
5.40%
960,687
5.21%
1,058,979
5.69%
Land held for property development
3,793,291
18.41%
3,305,083
17.92%
3,169,911
17.05%
Investment properties
691,494
3.41%
711,524
3.86%
459,588
2.47%
Right-of-use assets
79,441
0.39%
99,361
0.54%
15,138
0.08%
Expressway and water expenditure
-
-
-
-
1,355,472
7.29%
Concession development expenditure
137,123
0.68%
1,228,026
6.66%
-
-
Interests in associated companies
20,083
0.10%
780,426
4.23%
952,787
5.12%
Interests in joint ventures
942,940
4.65%
1,044,555
5.66%
1,197,117 1
6.44%
Other investments
7,802
0.04%
812
0.0044 %
812
0.0044 %
Deferred tax assets
64,934
0.32%
57,775
0.31%
40,665
2.19%
Receivables and other financial assets
286,682
1.41%
354,816
1.92%
890,806
5.12%
Property development costs
1,726,416
8.52%
2,060,166
11.17%
1,826,549
9.82%
Inventories
655,437
3.23%
808,562
4.38%
917,734
4.94%
Receivables and other financial assets 2,478,060
12.22%
1,748,409
9.48%
2,148,873
11.56%
Contract assets
2,692,783
13.28%
1,694,143
9.19%
1,726,280
9.28%
Tax recoverable
20,383
0.10%
47,814
0.26%
44,056
0.24%
Investment securities
700,782
3.46%
881,337
4.78%
644,467
3.47%
Cash and bank balances
2,794,348
13.78%
2,656,658
14.41%
2,147,194
11.55%
Assets classified as held for sale
2,086,265
10.30%
-
-
-
-
TOTAL ASSETS
20,273,746
100%
18,440,154
100%
18,596,428
100%
3,723,167
18.36%
3,620,949
19.64%
3,620,946
19.47%
GAMUDA BALANCE SHEET
ASSETS
Non-current assets
Current assets
EQUITY AND LIABILITIES
Share capital (Note 3)
138
Reserves
6,177,642
30.47%
5,542,608
30.06%
4,920,146
26.46%
Non-controlling interests
349,059
1.72%
352,145
1.91%
426,502
2.29%
TOTAL EQUITY
10,249,868
51%
9,515,702
52%
8,967,594
48%
Payables
206,556
1.02%
211,879
1.15%
238,391
1.28%
Contract liabilities
21,486
0.11%
25,621
0.14%
50,255
0.27%
Provision for liabilities
99,262
0.49%
105,968
0.57%
111,309
0.60%
Deferred tax liabilities
104,979
0.52%
296,154
1.61%
335,904
1.81%
Long term Islamic debts
1,950,000
9.62%
2,645,000
14.34%
-
-
Long term conventional debts
1,294,727
6.39%
1,130,631
6.13%
-
-
-
-
-
-
2,952,171
15.87%
Short term Islamic debts
1,000,000
5%
790,000
4.28%
-
-
Short term conventional debts
535,337
2.64%
662,164
3.59%
-
-
2,512,960
13.51%
Non-current liabilities
Long term borrowings
Current liabilities
Short term borrowings
-
-
Payables
2,677,136
13.20%
1,745,593
9.47%
2,036,680
10.95%
Contract liabilities
1,429,953
7.05%
1,028,619
5.58%
1,131,106
6.08%
Provision for liabilities
160,434
0.79%
186,443
1.01%
174,329
0.94%
Tax payable
84,361
0.42%
96,380
0.52%
85,729
Liabilities classified as held for sale &
distribution
459,647
2.27%
-
-
-
-
TOTAL LIABILITIES
10,023,878
49%
8,924,452
48%
9,628,834
52%
TOTAL EQUITY AND LIABILITIES
20,273,746
100%
18,440,154
100%
18,596,428
100%
139
4.2 ANALYSIS PROFIT/LOSS STATEMENT
Year
2022
RM’000
COMMON
SIZE
2021
RM’000
COMM
ON
SIZE
Revenue
1,832,065
100%
1,837,441
100%
1,526,170
100%
Other income
166,636
9.10%
187,667
10.21%
203,266
13.32%
Construction contract costs recognised
as contract expenses
-1,185,642
64.73%
-825,519
44.92% -961,966
63.03%
Staff costs
-102,868
5.62%
-56,511
3.08%
-71,353
4.68%
Depreciation
-6,302
-0.34%
-6,637
0.36%
-7,092
0.46%
Other operating expenses
-50,842
2.78%
-71,648
3.89%
-2,164
0.14%
Impairment of cost of investment in
SMART Holdings
-49,500
2.70%
-
-
-285,000
-
Profit from operations
603,547
32.94%
1,064,793 57.95%
686,861
45%
Finance costs
-102,217
5.58%
-120,639
6.57%
-136,133
8.92%
Profit before tax from operations
501,330
27.36%
944,154
51.38%
265,728
17.41%
Income tax expense
-30,838
1.68%
-50,366
2.74%
-27,644
1.81%
Profit for the year from operations
470,492
25.68%
893,788
48.64%
-
-
Profit from discontinued operations, net
of tax
106,514
5.81%
77,511
4.22%
265,728
17.41%
Profit for the year
577,006
31.49%
971,299
52.86%
238,084
15.60%
INCOME STATEMENT GAMUDA
2020
RM’000
COMMON
SIZE
Continuing operations
Discontinuing operations
Gamuda's income from ongoing operations grew in comparison to the previous year, suggesting
that underlying growth was favourable. The operating margin of the business, or operating
income divided by revenue, was indicating effective cost control.
Relative stability in finance costs suggests effective management of financial leverage.
The ongoing operations' effective tax rate stays within the usual range for Malaysian
businesses.In addition, Gamuda disclosed a substantial one-time profit from the sale of highway
140
concessions, which is not included in earnings from ongoing business activities. Investors
seeking a comprehensive understanding of Gamuda's financial performance should take into
account both the one-time gain and income from ongoing operations.Deeper insights into
Gamuda's operational efficiency and future prospects can be obtained by further analysing
revenue growth, profitability margins, and cost structure.
In comparison to 2020, Gamuda saw a notable increase in earnings in 2021, both profit before
and profit after taxes. The slow recovery from the epidemic and the start of construction activity
were blamed for this surge. Gamuda's increased success was also aided by its expansion into
real estate and infrastructure concessions. The tax rate somewhat dropped but the company's
profit margin stayed consistent throughout the years.
Gamuda Berhad, has achieved strong financial results lately. The corporation saw an
unexpected decrease in earnings in 2022 following a steady upward trajectory in profits from
2020 to 2021. The year 2021, Gamuda efficiency measures had successfully reduced costs and
streamlined its operations, which increased profitability and enhanced operational effectiveness.
Following good government policies to further promote Gamuda's commercial operations, the
Malaysian government implemented policies that were favourable to the building and real estate
industries.
However, the decline in 2022 was because of the project completion cycle that caused the
revenue to fall, especially from the highway segments, when large construction projects were
completed and turned over. This had an effect on Gamuda's total profitability even though other
areas of the company were still active.And the global economic slowdown due to the
combination of geopolitical unpredictability and a decline in investor sentiment and company
confidence, there has been a decline in demand for several types of real estate.
141
4.3 HORIZONTAL TREND ANALYSIS
YEAR
2022
TREND
(%)
2021
TREND
(%)
2020
BASE TREND
(%)
Revenue
120.04
120.40
100
Other income
81.98
92.33
100
Construction contract costs recognised as contract
expenses
123.25
85.82
100
Staff costs
144.17
79.20
100
Depreciation
88.86
93.58
100
Other operating expenses
2,349.45
3,310.91
100
Impairment of cost of investment in SMART Holdings
17.37
0.00
100
Profit from operations
87.87
155.02
100
Finance costs
75.09
88.62
100
Profit before tax from operations
188.66
355.31
100
Income tax expense
111.55
182.20
100
Profit for the year from operations
0.00
0.00
100
Profit from discontinued operations, net of tax
40.08
29.17
100
Profit for the year
242.35
407.96
100
INCOME STATEMENT GAMUDA
Continuing operations
Discontinuing operations
Gamuda's income statement for 2022 reflects a compelling financial performance characterized
by noteworthy shifts in various financial indicators compared to preceding years. The revenue
from continuing operations showed consistent growth, registering a 20.04% increase in 2022
and a similar 20.40% rise in 2021, relative to the base year of 2020. Conversely, other income
saw a dip of 18.02% in 2021 before rebounding modestly by 12.33% in 2022.
Costs linked to construction contracts exhibited significant fluctuations, climbing by 23.25% in
2022 after a notable decrease of 85.82% in 2021. Similarly, staff costs mirrored this pattern,
142
surging by 44.17% in 2022 following a 79.20% decline in 2021. Other operating expenses
displayed remarkable volatility, soaring by an extraordinary 2,349.45% in 2021 before steadying
at a substantial 3,310.91% increase in 2022.
Despite these challenges, the profit from operations demonstrated resilience, decreasing by
only 12.13% in 2021 and then witnessing a remarkable surge of 87.87% in 2022 compared to
the base year. In contrast, finance costs saw a reduction of 24.91% in 2021 and a further
11.38% in 2022. The pre-tax profit from operations showed a remarkable upward trend, soaring
by 88.66% in 2021 and a substantial 188.66% in 2022. However, income tax expenses also
surged, with an increase of 11.55% in 2021 and a significant 182.20% in 2022.
In discontinuing operations, the profit from discontinued operations, net of tax, increased by
40.08% in 2021 and 29.17% in 2022. Overall, Gamuda's profit for the year surged remarkably,
rising by 242.35% in 2021 and an exceptional 407.96% in 2022. This highlights the company's
resilient financial performance and significant recovery in the latter year, despite facing
challenging market dynamics and cost fluctuations.
143
4.3.1 BALANCE SHEET & INCOME STATEMENT
YEAR
2022
TREND
(%)
2021
TREND
(%)
2020
BASE TREND
(%)
Property, plant and equipment
103.45%
90.72%
100
Land held for property development
119.67% 104.26%
100
Investment properties
150.46% 154.82%
100
Right-of-use assets
524.78% 656.37%
100
GAMUDA BALANCE SHEET
ASSETS
Non-current assets
Expressway and water expenditure
-
-
100
Concession development expenditure
-
--
100
2.11%
81.91%
100
-
-
100
Interests in associated companies
Interests in joint ventures
Other investments
960.84% 100.00%
100
Deferred tax assets
159.68% 142.08%
100
Receivables and other financial assets
32.18%
39.83%
100
Property development costs
94.52%
112.79%
100
Inventories
71.42%
88.10%
100
Receivables and other financial assets
115.32%
81.36%
100
Contract assets
155.99%
98.14%
100
Tax recoverable
46.27%
108.53%
100
Investment securities
108.74% 136.75%
100
Cash and bank balances
130.14% 123.73%
100
Current assets
Assets classified as held for sale
TOTAL ASSETS
-
-
100
109%
99%
100
EQUITY AND LIABILITIES
Share capital (Note 3)
102.82% 100.00%
100
Reserves
125.56% 112.65%
100
Non-controlling interests
81.84%
100
82.57%
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TOTAL EQUITY
114.30% 106.11%
100
Payables
86.65%
88.88%
100
Contract liabilities
42.75%
50.98%
100
Provision for liabilities
89.18%
95.20%
100
Deferred tax liabilities
31.25%
88.17%
100
Long term Islamic debts
-
-
100
Long term conventional debts
-
-
100
Long term borrowings
-
-
100
Short term Islamic debts
-
-
100
Short term conventional debts
-
-
100
Short term borrowings
-
-
100
Payables
131.45%
85.71%
100
Contract liabilities
126.42%
90.94%
100
Provision for liabilities
92.03%
106.95%
100
Tax payable
98.40%
112.42%
100
Non-current liabilities
Current liabilities
Liabilities classified as held for sale & distribution
-
100
TOTAL LIABILITIES
104.10%
92.68%
100
TOTAL EQUITY AND LIABILITIES
109.02%
99.16%
100
Gamuda's balance sheet for the year 2022 depicts significant trends in various asset, equity,
and liability categories compared to the base year of 2020. In terms of non-current assets, the
company experienced growth in property, plant, and equipment, reaching 103.45% in 2022 from
90.72% in 2021. Land held for property development and investment properties also saw
increases of 119.67% and 150.46%, respectively, in 2022. Notably, right-of-use assets surged to
524.78%, showcasing a substantial rise from the previous year.
145
In contrast, interests in associated companies declined to 2.11%, and other investments
decreased to 960.84% in 2022, indicating fluctuations in investment portfolios. Deferred tax
assets increased by 159.68%, and receivables and other financial assets grew by 32.18% in the
same period.
Current assets also exhibited notable changes, with property development costs at 94.52%,
inventories at 71.42%, and receivables and other financial assets at 115.32% in 2022. Cash and
bank balances increased to 130.14%, while assets classified as held for sale remained stable.
The total assets for Gamuda increased by 9% in 2022 compared to the previous year and
showed a 100% trend from the base year, indicating a steady overall growth.
Turning to equity and liabilities, share capital increased by 102.82%, reserves by 125.56%, and
non-controlling interests by 81.84% in 2022. The total equity experienced a 14.30% growth
compared to 2021 and demonstrated a 100% trend from the base year.
Non-current liabilities saw mixed trends, with payables decreasing by 86.65%, contract liabilities
by 42.75%, and deferred tax liabilities by 31.25% in 2022. On the other hand, current liabilities
showed increases in payables (131.45%), contract liabilities (126.42%), and provision for
liabilities (92.03%). The total liabilities increased by 4.10% in 2022 compared to the previous
year and showed a 100% trend from the base year.
In summary, Gamuda's balance sheet for 2022 reflects a dynamic financial landscape, with
varying trends in different asset and liability categories contributing to an overall growth in total
assets and equity, showcasing the company's resilience and adaptability in a changing
economic environment.
146
4.4 RATIO ANALYSIS
Financial ratios are significant indicators that provide insights into a company's performance and
overall financial position. The calculation of most ratios can be derived from the financial
statements provided. Financial ratios are frequently utilised in the examination of patterns and
the establishment of comparisons between the financial statements of a company and those of
other companies. In some cases, the application of ratio analysis possesses the capacity to
predict forthcoming insolvency. Five economic statistics are frequently utilised in various
contexts: liquidity, efficiency, leverage, profitability, and market.
The liquidity ratio refers to the ability of a corporation to meet its daily operational expenses and
short-term obligations promptly. This underscores the significance of a company having
adequate cash and other efficiently convertible assets to rapidly satisfy its short-term debt
obligations and complete its operating needs. The efficiency ratio is a crucial indicator utilised in
corporate performance evaluation to gauge the effectiveness of a firm in using its assets. It
accomplishes this by comparing the company's sales to various asset categories. Hence, an
evaluation will be carried out to ascertain the effectiveness of the organisation's resource
management.
The leverage ratio is a quantitative measure used to assess a company's financial structure,
offering valuable information regarding the degree to which debt is utilised to support business
activities and the company's ability to meet its debt commitments. The heightened risk presents
a notable concern for potential investors and lenders since it is directly associated with an
augmented financial risk. The profitability ratio is a metric to evaluate a company's financial
performance by establishing a correlation between its profits and its sales, assets, or equity. The
perception of a company's overall success is positively correlated with its profitability level.
147
4.4.1 LIQUIDITY
LIQUIDITY
RATIOS
YEAR
2020
2021
2022
Quick Ratio
1.15
1.57
1.68
Current Ratio
1.62
2.21
2.10
Net working capital
RM1,127,227,000
RM1,908,477,000
RM2,017,762,000
Liquidity and working capital are crucial aspects of a company's financial health. They indicate
the company's ability to meet its short-term obligations and fund its ongoing operations. This
analysis examines Gamuda Berhad's performance in these areas from 2020 to 2022, comparing
its ratios to industry averages and its own historical performance.
Gamuda Berhad maintained a quick ratio above 1 until 2022, indicating sufficient liquid assets to
cover its immediate liabilities. However, the decreasing trend suggests a slight decline in its
immediate liquidity. Gamuda Berhad's performance in 2020 and 2021 was above the average,
while 2022 dipped slightly below. Current ratio measures the ability to meet short-term liabilities
using all current assets (including less liquid assets like inventory). Gamuda Berhad has a
strong ability to cover its short-term liabilities with all its current assets. This shows good overall
liquidity and financial stability. Gamuda Berhad's performance has been consistently above the
average, demonstrating its strong financial position.
148
Net working capital represents the difference between current assets and current liabilities.
Gamuda Berhad maintained a positive net working capital throughout the period, indicating
sufficient current assets to cover its current liabilities and fund its operations.
However, a significant decrease occurred in 2022, suggesting a reduction in its working capital
buffer. Gamuda's Berhad's NWC has increased significantly in 2021 and 2022. The increase in
2022 was larger than the increase in 2021, suggesting a possible acceleration in the growth of
net working capital. These increases are likely due to a combination of factors like increased
sales, improved collection efficiency, increased operating cash flow, and reduced debt levels.
149
4.4.2 ACTIVITY
ACTIVITY
YEAR
RATIOS
2020
2021
2022
Inventory Turnover
1.10
0.94
1.51
Account Receivable Turnover
1.47
1.41
1.50
Fixed Asset Turnover
0.37
0.35
0.38
Total Asset Turnover
0.20
0.18
0.25
Average Collection Period
248 days
258 days
243 days
Activity ratios assess how efficiently a company utilises its assets to generate revenue. This
analysis focuses on Gamuda Berhad's performance in inventory turnover, account receivable
turnover, fixed asset turnover, total asset turnover, and average collection period from 2020 to
2022, comparing it to industry averages and its own historical performance.
Inventory turnover measures how often inventory is sold and replaced within a year. Gamuda
Berhad's inventory turnover remained relatively stable between 1.45 and 1.52. A higher
150
inventory turnover indicates efficient inventory management, as it suggests faster sales and less
risk of obsolescence.
Gamuda Berhad's performance has been consistently above the average, demonstrating
efficient inventory management compared to its peers. Account receivable turnover measures
how often accounts receivable are collected within a year Gamuda Berhad's account receivable
turnover has been relatively stable, ranging between 1.41 and 1.50. A higher turnover indicates
faster collection of receivables and improved cash flow. Gamuda Berhad's performance has
been consistent with the average, suggesting efficient collection of receivables compared to its
peers.
Fixed asset turnover measures how efficiently fixed assets are used to generate revenue.
Gamuda Berhad's fixed asset turnover has been relatively stable, ranging from 0.35 to 0.38.
This suggests a moderate utilisation of fixed assets for revenue generation. Gamuda Berhad's
performance has been slightly below the average, indicating a room for improvement in utilising
its fixed assets more efficiently.
Total asset turnover measures how efficiently all assets are used to generate revenue. Gamuda
Berhad's total asset turnover has been relatively stable, mirroring the fixed asset turnover trend.
This suggests a moderate utilisation of all assets for revenue generation. Gamuda Berhad's
performance has been slightly below the average,indicating a room for improvement in utilising
its assets more efficiently.
Average collection period measures the average time it takes to collect accounts receivable.
Gamuda Berhad's average collection period has fluctuated between 243 and 259 days. A
shorter collection period indicates faster cash flow generation. The average collection period for
construction companies in Malaysia is around 300 days. Gamuda Berhad's performance has
been consistently below the average, demonstrating efficient collection practices compared to
its peers.
151
4.4.3 PROFITABILITY
PROFITABILITY
YEAR
RATIOS
2020
2021
2022
Gross Profit Margin
17.19
17.64
14.60
Operating Profit Margin
15.56
16.63
12.60
Net Profit Margin
10.28
13.91
14.81
Return on Asset
2.03
2.47
3.75
Return on Equity
4.41
4.96
7.61
152
Profitability ratios are financial metrics used to assess a company's ability to generate earnings
from its operations and resources. They measure the relationship between a company's profits
and its various financial elements, like revenue, assets, and equity.
Gross Profit Margin measures the percentage of revenue remaining after deducting the direct
cost of goods sold. Gamuda Berhad's gross profit margin has shown a positive trend, increasing
from 17.19% in 2020 to 14.60% in 2022. This indicates a consistent improvement in cost
management and pricing strategies. The average gross profit margin for construction
companies in Malaysia is around 15%. Gamuda Berhad's performance has been consistently
above the average, demonstrating its ability to generate higher profits from its sales.
Operating Profit Margin measures the percentage of revenue remaining after deducting all
operating expenses. Gamuda Berhad's operating profit margin has fluctuated slightly between
12.60% and 15.56%. This suggests that the company managed its operating expenses
relatively effectively. The average operating profit margin for construction companies in Malaysia
is approximately 5%. Gamuda Berhad's performance has been consistently above the average,
indicating its efficient operation management.
Net profit margin measures the percentage of revenue remaining after deducting all expenses
and taxes. Gamuda Berhad's net profit margin has been relatively stable, ranging from 10.28%
to 14.81%. This suggests that the company consistently generates a modest profit after
accounting for all financial obligations. The average net profit margin for construction companies
in Malaysia is around 3%.
The average ROA for construction companies in Malaysia is approximately 3%. Gamuda
Berhad's performance has been consistently above the average, demonstrating its efficient
asset utilisation compared to its peers. Return on asset rises from 2.03% to 3.75% from 2020 to
2022. Return on equity measures the amount of profit generated per dollar of shareholder equity
invested. Gamuda Berhad's ROE has shown a slight fluctuation, ranging from 4.41% to 7.61%.
This indicates a consistent return on investment for shareholders. The average ROE for
construction companies in Malaysia is around 5%. Gamuda Berhad's performance has been
consistently above the average, demonstrating its ability to generate attractive returns for
shareholders.
153
Gamuda Berhad demonstrates strong profitability and financial efficiency. Its profitability ratios
have consistently exceeded industry averages, indicating effective cost management, pricing
strategies, and operational efficiency. Additionally, the company generates a consistent return
on both assets and equity, demonstrating its ability to utilise resources effectively and create
value for shareholders. Based on the analysis, Gamuda Berhad exhibits strong financial
performance.
154
4.4.4 LEVERAGE
LEVERAGE
YEAR
RATIOS
2020
2021
2022
Debt Ratio
0.30
0.28
0.24
Debt to Equity
0.64
0.57
0.48
Long Term Debt to Equity
0.35
0.41
0.33
Time Interest Earned
42.80
279.81
11.52
155
The leverage ratios for Gamuda Bhd over the years 2020 to 2022 reflect a dynamic financial
landscape with notable changes in the company's capital structure and debt management.
In 2020, the Debt Ratio was 0.30, indicating that 30% of the company's total assets were
financed through debt. The Debt to Equity ratio was 0.64, illustrating that for every dollar of
equity, there was 64 cents in debt. The Long-Term Debt to Equity ratio stood at 0.35, signifying a
moderate reliance on long-term debt. Remarkably, the Time Interest Earned ratio was high at
42.80, suggesting a robust ability to cover interest expenses.
By 2021, Gamuda Bhd exhibited a reduction in its leverage. The Debt Ratio decreased to 0.28,
reflecting a lower reliance on debt in financing assets. The Debt to Equity ratio also dropped to
0.57, indicating a more conservative capital structure. However, the Long-Term Debt to Equity
ratio increased slightly to 0.41, suggesting a relative uptick in long-term debt. Notably, the Time
Interest Earned ratio experienced a substantial surge to 279.81, signifying a significantly
improved capacity to cover interest obligations.
In 2022, the trend of reduced leverage continued. The Debt Ratio decreased further to 0.24,
suggesting a continued focus on decreasing debt reliance in financing assets. The Debt to
Equity ratio reached 0.48, indicating a balanced mix of debt and equity. The Long-Term Debt to
Equity ratio declined to 0.33, signifying a prudent approach to long-term debt management.
However, the Time Interest Earned ratio decreased to 11.52, indicating a still reasonable but
reduced ability to cover interest expenses compared to the previous year.
Overall, Gamuda Bhd's leverage ratios over the three years demonstrate a strategic effort to
reduce debt and maintain a balanced capital structure, ensuring financial stability while also
managing interest obligations. The fluctuation in the Time Interest Earned ratio may warrant
further investigation to understand the company's changing financial dynamics and risk
management strategies.
156
4.5 VERTICAL/COMPARATIVE ANALYSIS
4.5.1 BALANCE SHEET & INCOME STATEMENT (COMMON SIZE)
2022
SUNWAY BALANCE SHEET
RM ('000)
Common Size (%)
Property, plant and equipment
1,265,122
4.86
Intangible assets
63,217
0.24
Investment properties
2,443,181
9.38
Inventories
1,839,757
7.06
Investments in associates
2,690,651
10.33
Investments in joint arrangements
6,651,437
25.53
Goodwill
378,134
1.45
Deferred tax assets
53,873
0.21
Trade receivables
454,000
1.74
Other receivables
44,978
0.17
Amount due from an associate
492
0.00
Amounts due from joint ventures
1,420,892
5.45
Derivatives
2,086
0.01
Rock reserves
4,819
0.02
Other investments
402,392
1.54
Biological assets
322
0.00
Inventories
3,279,520
12.59
Trade receivables
1,241,553
4.76
Other receivables
512,530
1.97
Contract assets
532,172
2.04
Derivatives
1,572
0.01
Amounts due from joint ventures
176,202
0.68
Amount due from an associate
39,000
0.15
Other investments
535,540
2.06
Tax recoverable
65,257
0.25
Cash and bank balances
1,958,054
7.51
ASSETS
Non-current assets
Current assets
157
8,341,400
32.01
26,056,753
100%
Share capital
5,393,897
20.70
Irredeemable convertible preference shares
977,779
3.75
Treasury shares
-74,335
-0.29
Equity contribution from a joint venture
51,654
0.20
Merger reserve
-1,192,040
-4.57
Reserves
7,383,800
28.34
12,540,755
48.13
Non-controlling interests
1,031,780
3.96
TOTAL EQUITY
13,572,535
52.09
Borrowings
5,360,834
20.57
Trade payables
1,312,309
5.04
Other payables
1,094,153
4.20
Contract liabilities
19,907
0.08
Amounts due to associates
4,100
0.02
Amounts due to joint ventures
79,885
0.31
Hire purchase and lease liabilities
32,788
0.13
Derivatives
35,238
0.14
Tax payable
66,101
0.25
8,005,315
30.72
Borrowings
3,094,910
11.88
Perpetual sukuk
600,000
2.30
Deferred tax liabilities
185,424
0.71
Other payables
203,675
0.78
Amounts due to joint ventures
28,537
0.11
Long term liabilities
514
0.00
Hire purchase and lease liabilities
91,245
0.35
Derivatives
274,598
1.05
4,478,903
17.19
TOTAL LIABILITIES
12,484,218
47.91
TOTAL EQUITY AND LIABILITIES
26,056,753
100%
TOTAL ASSETS
EQUITY AND LIABILITIES
Current liabilities
Non-current liabilities
158
Sunway's balance sheet for the year 2022 reveals a comprehensive overview of the company's
financial structure and the distribution of assets, equity, and liabilities. In terms of non-current
assets, the company exhibits a diverse portfolio, with notable holdings in property, plant, and
equipment, investments in associates and joint arrangements, as well as significant inventories
and investment properties. The total non-current assets amount to RM 26,056,753, representing
100% of the total assets.
Current assets, contributing 32.01% to the total assets, include substantial inventories, trade
and other receivables, and cash and bank balances. Sunway's total assets highlight a
well-rounded mix of both non-current and current assets, reflecting the company's investment
diversity and liquidity.
Examining the equity and liabilities section, Sunway's equity structure shows a healthy
composition. The common size percentages offer insights into the proportion of each
component relative to the total equity. Share capital, irredeemable convertible preference
shares, and reserves constitute a significant portion of the equity, totaling 48.13% of the total
equity. Non-controlling interests contribute an additional 3.96%, resulting in a total equity of
52.09% of the total liabilities and equity.
The current liabilities section illustrates the company's short-term obligations, with borrowings,
trade and other payables, and contract liabilities being prominent components. These liabilities
constitute 30.72% of the total liabilities and equity, reflecting Sunway's financial obligations and
commitments in the near term.
Non-current liabilities, totaling 17.19% of the total liabilities and equity, consist of borrowings,
perpetual sukuk, deferred tax liabilities, and other long-term obligations. This section
demonstrates Sunway's long-term financial commitments and debt structures.
In summary, Sunway's balance sheet showcases a well-diversified asset portfolio, a balanced
equity structure, and a mix of short-term and long-term liabilities. The company's strategic
allocation of resources indicates a robust financial position and prudent financial management
practices.
159
2022
GAMUDA BALANCE SHEET
RM 000'
Common Size (%)
Property, plant and equipment
1,095,482
5.40%
Land held for property development
3,793,291
18.41%
Investment properties
691,494
3.41%
Right-of-use assets
79,441
0.39%
Expressway and water expenditure
-
-
Concession development expenditure
137,123
0.68%
Interests in associated companies
20,083
0.10%
Interests in joint ventures
942,940
4.65%
Other investments
7,802
0.04%
Deferred tax assets
64,934
0.32%
Receivables and other financial assets
286,682
1.41%
Property development costs
1,726,416
8.52%
Inventories
655,437
3.23%
Receivables and other financial assets
2,478,060
12.22%
Contract assets
2,692,783
13.28%
Tax recoverable
20,383
0.10%
Investment securities
700,782
3.46%
Cash and bank balances
2,794,348
13.78%
Assets classified as held for sale
2,086,265
10.30%
TOTAL ASSETS
20,273,746
100%
Share capital (Note 3)
3,723,167
18.36%
Reserves
6,177,642
30.47%
Non-controlling interests
349,059
1.72%
TOTAL EQUITY
10,249,868
51%
ASSETS
Non-current assets
Current assets
EQUITY AND LIABILITIES
Non-current liabilities
160
Payables
206,556
1.02%
Contract liabilities
21,486
0.11%
Provision for liabilities
99,262
0.49%
Deferred tax liabilities
104,979
0.52%
Long term Islamic debts
1,950,000
9.62%
Long term conventional debts
1,294,727
6.39%
-
-
Short term Islamic debts
1,000,000
5%
Short term conventional debts
535,337
2.64%
Long term borrowings
Current liabilities
Short term borrowings
-
Payables
2,677,136
13.20%
Contract liabilities
1,429,953
7.05%
Provision for liabilities
160,434
0.79%
Tax payable
84,361
0.42%
Liabilities classified as held for sale & distribution
459,647
2.27%
TOTAL LIABILITIES
10,023,878
49%
TOTAL EQUITY AND LIABILITIES
20,273,746
100%
2022
SUNWAY INCOME STATEMENT
(RM'000)
Common Size (%)
Revenue
5,194,949
100%
Cost of sales
-3,953,791
-76.11
Gross profit
1,241,158
23.89
Other income
282,845
5.44
Administrative expenses
-485,716
-9.35
and contract assets
-36,879
-0.71
Selling and marketing expenses
-168,817
-3.25
Other expenses
-249,123
-4.80
Net (impairment losses)/ reversals of
impairment losses on financial assets
161
Operating profit
583,468
11.23
Finance and other distribution income
187,679
3.61
Finance costs
-202,150
-3.89
Share of results of associates, net of tax
119,270
2.30
net of tax
231,784
4.46
Profit before tax
920,051
17.71
Income tax expense
-166,951
-3.21
753,100
14.50
Share of results of joint ventures,
Profit for the financial year
from continuing operations
2022
GAMUDA INCOME STATEMENT
(RM'000)
Common Size
Revenue
1,832,065
100%
Other income
166,636
9.10%
Construction contract costs recognised as contract expenses
-1,185,642
64.73%
Staff costs
-102,868
5.62%
Depreciation
-6,302
-0.34%
Other operating expenses
-50,842
2.78%
Impairment of cost of investment in SMART Holdings
-49,500
2.70%
Profit from operations
603,547
32.94%
Finance costs
-102,217
5.58%
Profit before tax from operations
501,330
27.36%
Income tax expense
-30,838
1.68%
Profit for the year from operations
470,492
25.68%
Discontinuing operations
Profit from discontinued operations, net of tax
106,514
5.81%
Profit for the year
577,006
31.49%
162
In the year 2022, Gamuda's balance sheet portrays a detailed breakdown of its assets, equity,
and liabilities. Non-current assets are diverse, with property, plant, and equipment contributing
5.40%, land held for property development at 18.41%, and investments in joint ventures
representing 4.65% of the total assets. Current assets, constituting 32.01% of the total assets,
include property development costs, inventories, and cash and bank balances, showcasing a
well-rounded mix. The equity structure is robust, with share capital, reserves, and
non-controlling interests contributing to 51% of the total equity. Non-current liabilities are
comprised of various elements, such as long-term Islamic and conventional debts, totaling
17.19% of the total liabilities. Current liabilities, constituting 30.72% of the total liabilities, include
short-term debts and payables.
Comparatively, Sunway's income statement for 2022 illustrates a common-size view of its
revenue and expenses. Revenue is 100%, with cost of sales accounting for -76.11%, resulting in
a gross profit of 23.89%. Operating expenses, such as administrative expenses, selling and
marketing expenses, and other expenses, are outlined as percentages of revenue. The
finance-related items, including finance and other distribution income and finance costs,
contribute to the financial structure. The income statement reflects a profit before tax of 17.71%,
with income tax expense and profit from continuing operations presented as a percentage of
revenue.
In contrast, Gamuda's income statement for 2022 reveals a similar common-size view. Revenue
is presented as 100%, with other income, construction contract costs, staff costs, and various
operating expenses detailed as percentages of revenue. Finance costs are also shown,
contributing to the overall financial structure. The profit before tax from operations is 27.36%,
with income tax expense and profit for the year from operations outlined as percentages of
revenue. Discontinuing operations, including profit from discontinued operations, net of tax,
contribute to the total profit for the year, presented as 31.49% of revenue.
Both companies showcase a common-size perspective, allowing for a detailed understanding of
their financial structures and performance indicators in relation to revenue and expenses.
163
4.6 RATIO ANALYSIS
SUNWAY BHD
4.6.1 LIQUIDITY
LIQUIDITY
RATIOS
SUNWAY
GAMUDA
2022
Quick Ratio
0.63
1.68
Current Ratio
1.04
2.10
Net working capital
RM336,085,000
RM2,017,762,000
The liquidity ratios for Sunway and Gamuda in 2022 provide insights into their short-term
financial health and ability to meet their current obligations. Starting with the quick ratio, Sunway
has a ratio of 0.63, indicating that for every RM1 of current liabilities, Sunway has RM0.63 in
liquid assets that can be quickly converted to cash. On the other hand, Gamuda boasts a higher
quick ratio of 1.68, suggesting a more robust ability to cover its short-term liabilities with readily
available assets. A quick ratio above 1 is generally considered favorable as it implies a
company's ability to meet its short-term obligations without relying on the sale of inventory.
Moving to the current ratio, which assesses the overall liquidity position, Sunway has a ratio of
1.04, indicating that its current assets are just sufficient to cover its current liabilities. In contrast,
Gamuda has a higher current ratio of 2.10, suggesting a more comfortable liquidity position with
164
current assets more than double its current liabilities. A current ratio above 1 is generally
considered favorable as it indicates the company's ability to cover its short-term obligations.
Net working capital, representing the difference between current assets and current liabilities, is
RM336,085,000.00 for Sunway and RM2,017,762,000.00 for Gamuda. Sunway's positive net
working capital indicates that it has sufficient current assets to cover its current liabilities,
providing a buffer for short-term obligations. Gamuda, with a relatively low net working capital,
may need to manage its short-term obligations carefully.
In summary, Gamuda demonstrates stronger liquidity positions than Sunway in both the quick
ratio and current ratio, implying a more robust ability to meet short-term obligations. Sunway,
while still maintaining a current ratio above 1, may need to manage its current liabilities carefully
to ensure liquidity. The positive net working capital for Sunway indicates a healthy short-term
financial position, while Gamuda's low net working capital suggests a need for vigilance in
managing short-term obligations. Investors and stakeholders may consider these liquidity ratios
when assessing the short-term financial health and risk profiles of these companies.
165
4.6.2 ACTIVITY
ACTIVITY
RATIOS
SUNWAY
GAMUDA
2022
Inventory Turnover
1.39
1.51
Account Receivable
Turnover
10.41
1.50
Fixed Asset Turnover
4.1
0.38
Total Asset Turnover
0.21
0.25
Average Collection Period
35 days
243 days
The activity ratios for Sunway and Gamuda in 2022 shed light on their efficiency in managing
various aspects of their business operations. Starting with the inventory turnover ratio, Sunway
has a ratio of 1.39, indicating that the company turns over its inventory approximately 1.39 times
during the year. Gamuda, with a slightly higher inventory turnover of 1.51, demonstrates a
relatively quicker inventory conversion cycle. Generally, a higher inventory turnover is
considered favorable as it suggests efficient management of inventory.
Moving to the accounts receivable turnover ratio, Sunway has a much higher turnover at 10.41,
implying that it collects its receivables multiple times throughout the year. In contrast, Gamuda
166
has a lower accounts receivable turnover of 1.50, suggesting a longer collection period.
Sunway's more frequent turnover of receivables is generally viewed positively as it indicates a
more effective credit and collection policy.
Examining the fixed asset turnover, Sunway boasts a significantly higher ratio of 4.1, implying
that the company generates four times its revenue from fixed assets. Gamuda, with a lower
fixed asset turnover of 0.38, suggests a less efficient utilization of fixed assets in generating
revenue. A higher fixed asset turnover is typically considered more favorable as it reflects better
asset utilization.
The total asset turnover ratio, which measures a company's ability to generate revenue from its
total assets, is 0.21 for Sunway and 0.25 for Gamuda. While both ratios are relatively low,
indicating a slower asset turnover, Gamuda demonstrates a slightly higher efficiency in utilizing
its total assets to generate revenue.
Lastly, the average collection period, which calculates the number of days a company takes to
collect its receivables, is 35 days for Sunway and 243 days for Gamuda. Sunway's shorter
collection period is indicative of a more prompt collection of receivables, whereas Gamuda's
longer average collection period may suggest a need for improvement in its credit and collection
practices.
In summary, Sunway generally outperforms Gamuda in inventory turnover, accounts receivable
turnover, and fixed asset turnover, indicating better efficiency in managing these aspects of their
business operations. However, Gamuda demonstrates a slightly higher total asset turnover.
Sunway's shorter average collection period is also a positive indicator compared to Gamuda's
longer collection period, suggesting more effective credit management. Investors and
stakeholders may consider these activity ratios to assess the operational efficiency and financial
health of the two companies.
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4.6.3 PROFITABILITY
PROFITABILITY
RATIOS
SUNWAY
GAMUDA
2022
Gross Profit Margin
25.25
14.60
Operating Profit Margin
9.25
12.60
Net Profit Margin
12.80
14.81
Return on Asset
2.65
3.75
Return on Equity
5.51
7.61
The profitability ratios for Sunway and Gamuda in 2022 provide a comprehensive view of their
operational efficiency and overall financial performance. Starting with the gross profit margin,
Sunway exhibits a higher margin at 25.25%, indicating that it retains a greater proportion of
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revenue after accounting for the cost of goods sold. In contrast, Gamuda has a gross profit
margin of 14.60%, suggesting a comparatively lower ability to generate profits from its core
business activities.
Moving to the operating profit margin, which assesses profitability after considering operating
expenses, Gamuda outperforms Sunway with a margin of 12.60%, while Sunway has an
operating profit margin of 9.25%. This implies that Gamuda is more effective in managing its
operational costs relative to its revenue, leading to a higher operating profit margin.
Analyzing the net profit margin, which accounts for all expenses including taxes, interest, and
other non-operating costs, Gamuda maintains a higher margin at 14.81%, indicating a more
efficient overall cost management. Sunway, with a net profit margin of 12.80%, shows a slightly
lower efficiency in converting revenue into net profit.
Return on assets (ROA) measures how efficiently a company utilizes its assets to generate
profits. In this context, Gamuda outperforms Sunway with a ROA of 3.75%, indicating that
Gamuda is more effective in generating profits relative to its total assets. Sunway, with a ROA of
2.65%, demonstrates a lower efficiency in asset utilization.
Moving to return on equity (ROE), which assesses the profitability of shareholder equity,
Gamuda again shows higher efficiency with an ROE of 7.61%, indicating that it generates more
returns for its shareholders relative to their equity investment. Sunway, with an ROE of 5.51%,
demonstrates a slightly lower return for shareholders.
In summary, Gamuda generally outperforms Sunway in terms of profitability ratios across gross
profit margin, operating profit margin, net profit margin, return on assets, and return on equity.
These ratios suggest that Gamuda has a more efficient cost structure, better asset utilization,
and a higher return for its shareholders compared to Sunway in the year 2022. Investors and
stakeholders may consider these profitability indicators when assessing the financial health and
performance of these companies.
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4.6.4 LEVERAGE
LEVERAGE
RATIOS
SUNWAY
GAMUDA
2022
Debt Ratio
0.35
0.24
Debt to Equity
0.74
0.48
Long Term Debt to Equity
0.30
0.33
Time Interest Earned
5.69
11.52
The leverage ratios for Sunway and Gamuda in 2022 provide valuable insights into their
respective financial structures and abilities to meet their debt obligations. The debt ratio, which
measures the proportion of assets financed by debt, is 0.35 for Sunway and 0.24 for Gamuda.
This implies that 35% of Sunway's assets are funded by debt, while Gamuda has a lower
reliance on debt, with 24% of its assets being debt-financed. A lower debt ratio is generally
considered favourable as it indicates lower financial risk.
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Examining the debt-to-equity ratio, which assesses the proportion of financing from debt relative
to equity, Sunway has a ratio of 0.74, suggesting that for every dollar of equity, the company has
74 cents in debt. On the other hand, Gamuda has a lower debt-to-equity ratio of 0.48, indicating
a more conservative capital structure with less reliance on debt financing. A lower debt-to-equity
ratio is often perceived as a sign of financial prudence and stability.
The long-term debt-to-equity ratio focuses specifically on long-term debt. Sunway's long-term
debt-to-equity ratio is 0.30, indicating that a significant portion of its long-term financing comes
from equity. Gamuda, with a long-term debt-to-equity ratio of 0.33, also demonstrates a
conservative approach to long-term financing. Both companies appear to have a balanced mix
of long-term debt and equity in their capital structures.
The time interest earned ratio, which measures a company's ability to cover its interest
expenses, is 5.69 for Sunway and 11.52 for Gamuda. Gamuda's higher time interest earned
ratio suggests a stronger capacity to meet its interest obligations comfortably compared to
Sunway. A higher time interest earned ratio is generally considered more favourable as it
indicates a higher degree of financial security.
In summary, the leverage ratios paint a picture of Sunway and Gamuda as having distinct
approaches to financing. Sunway, while having higher debt ratios, may carry a comparatively
higher level of financial risk. In contrast, Gamuda exhibits a more conservative financing
structure with lower debt ratios and a stronger ability to cover its interest obligations. Investors
and stakeholders may consider these ratios when evaluating the financial health and risk
profiles of these companies.
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4.6.5 MARKET
MARKET
RATIOS
SUNWAY
GAMUDA
2022
Earning Per Share
0.12
0.32
Dividend Per Share
0.06
0.18
Dividend Yield (%)
3.40
4.80
Price To Earnings
15.53
11.86
Dividend Payout Ratio (%)
47.66
56.50
In 2022, Sunway and Gamuda, two prominent companies in the market, exhibited varying
financial performance as reflected in key market ratios. Starting with Earnings Per Share (EPS),
Sunway reported a value of 0.12, while Gamuda demonstrated a higher EPS of 0.32. This
indicates that Gamuda generated more earnings per outstanding share compared to Sunway,
suggesting potentially stronger profitability for Gamuda shareholders.
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Moving on to the Dividend Per Share metric, Sunway declared a dividend of 0.06, whereas
Gamuda distributed a higher dividend per share at 0.18. This implies that Gamuda was more
generous in returning profits to its shareholders in the form of dividends, possibly attracting
income-focused investors.
Considering Dividend Yield, which represents the dividend income as a percentage of the
stock's current market price, Gamuda displayed a higher yield of 4.80% compared to Sunway's
3.40%. Investors seeking income may find Gamuda more appealing due to its higher dividend
yield, assuming all other factors remain constant.
Examining the Price to Earnings (P/E) ratio, Sunway had a P/E ratio of 15.53, while Gamuda's
P/E ratio was comparatively lower at 11.86. A lower P/E ratio for Gamuda suggests that
investors were willing to pay less for each unit of earnings, indicating a potentially better
valuation or market sentiment compared to Sunway.
Lastly, exploring the Dividend Payout Ratio, Sunway had a ratio of 47.66%, indicating that
approximately 47.66% of its earnings were distributed as dividends. In contrast, Gamuda had a
higher Dividend Payout Ratio at 56.50%, suggesting a larger proportion of earnings allocated to
dividends. This may imply a more aggressive dividend distribution strategy by Gamuda.
In summary, Gamuda demonstrated stronger performance in terms of higher Earnings Per
Share, Dividend Per Share, Dividend Yield, and a lower Price to Earnings ratio in 2022
compared to Sunway. However, Sunway had a lower Dividend Payout Ratio, which could signify
a more conservative approach to dividend distribution. Investors may use these ratios to assess
and compare the financial health and attractiveness of these companies for investment.
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4.6 RISK ANALYSIS
Risk analysis in investment involves a comprehensive process of identifying, assessing, and
managing potential risks associated with investment opportunities. This process encompasses
recognizing various types of risks such as market volatility, economic uncertainties, regulatory
changes, and company-specific factors that may impact investment outcomes. Investors assess
these risks by evaluating their potential impact on investment returns and the likelihood of
occurrence. Mitigation strategies are then implemented to manage or reduce these risks,
aligning investment choices with an investor's risk tolerance and financial objectives. Regular
monitoring and adaptation to changing risk factors are integral to making informed investment
decisions and minimising potential losses.
Measures of Risks
GAMUDA
SUNWAY
Expected Return (ER)
10.0265%
2.1072%
Variance (VAR)
4.9036%
3.0612%
Standard Deviation (SD)
2.2144%
1.7496%
Coefficient of Variation (CV)
54.0361
203.1491
The metrics of risk that have been presented for Gamuda and Sunway provide useful insights
into the investing profiles of these two companies. Sunway has a somewhat lower expected
return of 0.0086%, however Gamuda has a higher expected return of 0.041%. In terms of
expected return, Gamuda has a higher forecasted return. Gamuda, on the other hand, exhibits a
higher level of volatility when risk is taken into consideration, with a variance of 4.9036 and a
standard deviation of 2.2144. This is in contrast to Sunway, which has a lower variance of
3.0612 and a standard deviation of 1.7496. A further improvement of this study is provided by
the coefficient of variation, which reveals that Sunway offers a risk-adjusted return that is
significantly larger (203.1491) in comparison to Gamuda (54.0361). In essence, whereas
Gamuda may offer a potentially larger return, it is associated with a higher level of risk. On the
other hand, Sunway, which has a lower expected return, may be more tempting to investors who
are looking for a balance between return and risk, as seen by its good risk-adjusted
performance. There is a potential that Gamuda will be regarded as having superior performance
in the end.
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4.6.1 COVARIANCE
Covariance is a statistical measure that indicates the relationship between the movements of
two variables. It assesses how changes in one variable are associated with changes in another
variable. A positive covariance implies that the two variables move together, while a negative
covariance indicates they move in opposite directions. However, the magnitude of covariance
alone does not provide a clear understanding of the strength of the relationship between
variables, so normalization or scaling by standard deviations is often used to calculate
correlation, which provides a standardized measure of the relationship.
Companies
GAMUDA
SUNWAY
0.0950
0.1062
Covariance Between
Company and Market
(HPYcompany - AMcompany)
X (HPYKLCI - AMKLCI)
The covariance values offer insights into the relationship between the stock returns of Gamuda
and Sunway and the Kuala Lumpur Composite Index (KLCI). Both firms display positive
covariances with the market, indicating a tendency for their stock returns to move in the same
direction as the broader market. with other information such as predicted returns, standard
deviations, or other risk measures, it is tough to make a firm conclusion on which stock is
preferable. But, we can see that Gamuda has a higher positive covariance and from the data
previously shows better results on the additional information.
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4.7 REGRESSION ANALYSIS
Regression in investment refers to a statistical analysis used to model and predict the
relationship between a dependent variable (such as stock prices) and one or more independent
variables (like economic indicators or market factors). It helps to identify and quantify the impact
of these variables on investment performance. The regression analysis provides insights into
the potential influence of various factors on investment returns, aiding investors in making more
informed decisions and predictions about future market movements.
Regression Statistics
GAMUDA
SUNWAY
Multiple R
0.0329
0.0466
R Square
0.0011
0.0022
Adjusted R Square
-0.0003
0.0008
Standard Error
2.2162
1.7501
Observations
733
733
𝛼 Alpha Value
0.0407
0.0083
𝛽 Beta Value
0.0559
0.0625
GAMUDA REGRESSION GRAPH
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The regression study for Gamuda with respect to the Kuala Lumpur Composite Index (KLCI)
finds a modest linear link between Gamuda's stock returns and the KLCI. The Multiple R,
indicating the correlation, is 0.0329, suggesting a minimal link between the two variables. The
extremely low R Square of 0.0011 means that only a minute amount of the variance in
Gamuda's returns can be explained by variations in the KLCI. The negative Adjusted R Square
of -0.0003 further implies that the inclusion of the KLCI does not boost the model's explanatory
ability. The Standard Error, reflecting the average departure from the regression line, is rather
high at 2.2162, demonstrating a lack of precision in projecting Gamuda's returns based on the
KLCI. The Alpha (𝛼) and Beta (𝛽) values provide insights into the intercept and slope of the
regression equation, with Alpha at 0.0407 and Beta at 0.0559. However, these coefficients alone
may not strongly guide investment decisions. In conclusion, the regression analysis advises
caution in relying simply on the KLCI as a significant predictor for Gamuda's stock returns. A
more comprehensive analysis, incorporating additional parameters, is suggested for a thorough
assessment of Gamuda's performance in r966rrq7respect to the KLCI.
SUNWAY REGRESSION GRAPH
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The regression study for Sunway with respect to the Kuala Lumpur Composite Index (KLCI)
finds a modest linear link between Sunway's stock returns and the KLCI. The Multiple R,
indicating the correlation, is 0.0466, suggesting a minimal link between the two variables. The
extremely low R Square of 0.0022 means that only a minute amount of the variance in Sunway's
returns can be explained by variations in the KLCI. The negative Adjusted R Square of 0.0008
further implies that the inclusion of the KLCI does not boost the model's explanatory ability. The
Standard Error, reflecting the average departure from the regression line, is rather high at
1.7501, demonstrating a lack of precision in projecting Sunway's returns based on the KLCI.
The Alpha (𝛼) and Beta (𝛽) values provide insights into the intercept and slope of the regression
equation, with Alpha at 0.0083 and Beta at 0.0625. However, these coefficients alone may not
strongly guide investment decisions. In conclusion, the regression analysis advises caution in
relying simply on the KLCI as a significant predictor for Sunway's stock returns. A more
comprehensive analysis, incorporating additional parameters, is suggested for a thorough
assessment of Sunway's performance in respect to the KLCI.
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4.7 SECURITY MARKET LINE (SML)
Formula Required Rate of Return, Rj
RFR + βj (RM-RFR)
Market Return, Rm (%)
7.86%
Risk Free Rate (%)
4.01%
Market Risk Premium (%)
3.85%
Required Rate of Return for GAMUDA
RR GAMUDA = RFR + βGAMUDA (RM - RFR)
RR GAMUDA = 4.01% + 0.0559 ( 7.86% - 4.01%)
RR GAMUDA = 4.23%
When we compare GAMUDA’s required rate of return with its expected return:
4.23% < 10.0265%
❖ We can conclude that GAMUDA is worth investing in.
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Required Rate of Return for SUNWAY
RR SUNWAY = RFR + βSUNWAY (RM - RFR)
RR SUNWAY = 4.01% + 0.0625 ( 7.86% - 4.01%)
RR SUNWAY = 4.25%
When we compare SUNWAY’s required rate of return with its expected return:
4.25% > 2.1072%
❖ We can conclude that SUNWAY is not worth investing in
Capital Asset Pricing Model (CAPM) is an equation that equates the expected rate of return on
a stock to the risk-free rate plus a risk premium for the stock’s systematic risk. We can
determine whether the stock is undervalued, overvalued or fair valued. Based on the graph, the
expected return for GAMUDA is above the SML line which indicates that the company is
undervalued. Meanwhile for SUNWAY, the expected return is below the SML which indicates
that it is overvalued. As an investor, we shall invest in GAMUDA.
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4.8 COMPANY INTRINSIC VALUE
Intrinsic value serves as a fundamental yardstick in evaluating a stock's true worth, distinct from
its prevailing market price. This valuation represents an estimation of the underlying value of a
company's equity, meticulously calculated based on a comprehensive analysis of financial
metrics and fundamental indicators. Investors rely on this metric to gauge if a stock is trading at
an appropriate, overvalued, or undervalued level relative to its intrinsic value. By comparing the
calculated intrinsic value to the current market price, investors gain insights into potential
investment opportunities and make informed decisions about buying or selling stocks. This
evaluation is essential as it helps investors avoid overpaying for stock or missing out on
undervalued opportunities, contributing to prudent investment strategies.
GAMUDA
SUNWAY
STOCK PRICE
(EPS X PE RATIO)
RM0.946 X 16.8
= RM15.89
RM0.272 X 19.2
= RM5.22
MARKET VALUE
RM4.65
RM1.60
EVALUATION
Undervalued
Undervalued
DECISION
Buy
Buy
In the case of GAMUDA and SUNWAY stocks, there appears to be a significant difference
between their intrinsic and market values. GAMUDA's intrinsic value is estimated at RM15.89,
considerably higher than its current market value of RM4.65. Similarly, SUNWAY's intrinsic
value is assessed at RM5.22, whereas its market value stands at RM1.60. This disparity
suggests that both GAMUDA and SUNWAY stocks are undervalued relative to their perceived
intrinsic worth.
The undervaluation implies that these stocks are trading below their calculated intrinsic values,
indicating a potential opportunity for investors. An undervalued stock is often viewed as a
favourable investment prospect because there's the anticipation that the market may eventually
recognize and correct the price to align with the intrinsic value over time. Consequently,
investors might consider buying these undervalued stocks, expecting their market value to rise
closer to their intrinsic worth, thereby potentially yielding profitable returns.
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CHAPTER 5
TECHNICAL ANALYSIS
5.1 INTRODUCTION
Prior to delving further into technical analysis, it is imperative first to understand its definition.
Technical analysis refers to the study and interpretation of historical market data, such as price
and volume, in order to predict future price movements and make informed investment
decisions. Technical analysis is a trading methodology used to assess investments and detect
trading prospects by examining statistical patterns derived from trading activity, such as
changes in price and trading volume. Contrary to fundamental analysis, which aims to assess
the worth of a security by examining business outcomes like sales and earnings, the technical
analysis concentrates on analysing price and volume.
Technical analysis methods are utilised to analyse how the interaction between supply and
demand for an asset will impact fluctuations in price, volume, and implied volatility. It is based on
the premise that analysing the historical trading activity and price fluctuations of security, along
with suitable investment or trading strategies, can provide essential insights about the asset's
future price movements. It is commonly employed to produce immediate trading indications from
diverse charting instruments. Still, it may also enhance the assessment of a security's potency
or vulnerability compared to the overall market or one of its sectors. This data assists analysts in
improving their comprehensive valuation estimation. The inception of contemporary technical
analysis can be attributed to Charles Dow and his introduction of the Dow Theory during the late
1800s.
Notable researchers, including William P. Hamilton, Robert Rhea, Edson Gould, and John
Magee, made significant contributions to the development of Dow Theory, which helped
establish its foundation. Currently, technical analysis has advanced to encompass several
patterns and signals that have been created over many years of research.
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5.2 COMPANY VS KLCI
5.2.1 GAMUDA VS KLCI
The graph comparing GAMUDA and the Kuala Lumpur Composite Index(KLCI) reveals a story
of consistent outperformance by GAMUDA from June 2023 to December 2023. The green line
representing GAMUDA's price consistently stays above the orange line of the KLCI, indicating
that GAMUDA has been doing better than the broader market. There was a brief
underperformance by GAMUDA in April to May 2022, but starting from June 2022, it has been
on a positive trend, widening the outperformance gap. Despite a temporary dip, GAMUDA has
showcased resilience and commendable performance, making it a notable performer that
consistently outperforms the market, according to the graph. This information is valuable for
investors and analysts assessing the relative strength of GAMUDA compared to the broader
market index.
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5.2.2 SUNWAY VS KLCI
This graph compares the performance of SUNWAY and the Kuala Lumpur Composite Index
(KLCI). The orange line represents KLCI, and the green label shows the SUNWAY price. The
goal is to see if SUNWAY performs better or worse at the same level. As of December 2023,
SUNWAY has consistently outperformed since July 2023. From April 2023 to June 2023,
SUNWAY had a slight underperformance. However, starting in July 2023 until December 2023,
the outperformance gap increased. When SUNWAY's price is above the KLCI line, it signifies
outperformance. In summary, SUNWAY has generally outperformed market returns.
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5.3 TREND ANALYSIS
Trendlines are frequently employed to identify trends by connecting a sequence of high points
(in a downtrend) or low points (in an uptrend). Uptrends are formed by increasing low points,
supporting future price changes. Downtrends are created by linking a sequence of decreasing
peaks, which establishes a barrier to potential price fluctuations in the future. Aside from
providing support and resistance levels, these trendlines also indicate the general trajectory of
the trend.
Although trendlines effectively indicate the general direction, they frequently require redrawing.
During an uptrend, it is possible for the price to temporarily drop below the trendline without
revealing the conclusion of the trend. The price could dip below the trendline and, after that,
resume an upward trajectory. If such an occurrence occurs, it may be necessary to revise the
trendline to represent the updated price movement accurately.
Reliance solely on trendlines for trend determination is not advisable. Additionally, professionals
commonly analyse price activity and utilise several technical indicators to ascertain the
conclusion of a trend. In the given illustration, a decline below the trendline does not
automatically indicate a sell signal. However, if the price also falls below a previous swing low
and technical indicators exhibit bearish tendencies, it could be considered a sell signal.
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5.3.1 TREND
GAMUDA
Long term: December 2022 - December 2023
Intermediate: March 2023 - May 2023
Short Term: August 2023 - September 2023
The primary trend, sometimes the long-term trend, is the bullish or bearish trend that persists for
more than a year. Based on the chart above, the long-term trend is the uptrend that occurred
from the middle of December 2022 until early December 2023. This indicates that there has
been a bullishness in the price movement of GAMUDA, whereby the demand is more than the
supply.
The correction in the primary trend is depicted as the secondary trend, also known as the
intermediate trend. It shows that the intermediate trend is sideways from 17 March 2023 until 30
May 2023. This indicates that the prices of GAMUDA have been constant, whereby the demand
and supply forces in the market are equal in that range of time.
The short-term trend is the erratic price movements that last less than three weeks. We can see
that there has been a short-term downtrend from 28 August 2023 to 14 September 2023. Some
investors would want to begin selling the stock in this period.
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SUNWAY
Long-term: June 2023 - December 2023 and ongoing
Intermediate: December 2022 - July 2023
Short Term: September 2023 - October 2023
The primary trend, sometimes the long-term trend, is the bullish or bearish trend that persists for
more than a year. Based on the chart above, the long-term trend is uptrend and occurs from the
middle of June 2023 until December 2023. This indicates that there has been a bullishness in
the price movement of SUNWAY, whereby the demand is more than the supply.
The correction in the primary trend is depicted as the secondary trend, also known as the
intermediate trend. It shows that the intermediate trend is the downtrend and occurs from the
early of December 2022 until the end of July 2023 before breaking out the trend movement into
uptrend. This indicates that the prices of SUNWAY have been slowly down, whereby the
demand has lower forces in the market in that range of time.
The short-term trend is the erratic price movements that last less than three weeks. We can see
that there has been a short-term downtrend from 21 September 2023 until 11 October 2023.
Some investors would want to begin selling the stock in this period.
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5.3.2 SUPPORT & RESISTANCE WITH CHART PATTERN
GAMUDA
Support can manifest as either a specific price level on a chart or a broader range of prices.
License, in the context of a price chart, refers to a particular area that indicates the readiness of
buyers to purchase. At this stage, the demand typically surpasses the supply, leading to a
cessation and reversal of the price fall. Based on the chart above, we can see that the support 1
is in the level of price 4.539 and support 2 is 4.362.
Resistance is the contrary of support. Prices increase due to a higher demand compared to the
available supply. As prices rise, there will be a threshold where the urge to sell surpasses the
urge to acquire. This occurs due to a multitude of factors. Traders may have concluded that
prices are excessively elevated or have reached their desired level. Buyers may be hesitant to
enter new holdings at high valuations. It could be due to various factors. However, a trader will
quickly identify on a price chart a point at which the amount of supply surpasses the amount of
demand. This represents resistance. Similar to support, it can refer to either a level or a zone.
Based on the chart above, the resistance shows in the level of 4.651 and 4.767.
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We found that there is a bullish pennant pattern occured at the end of February until June 2023.
A pennant is a specific form of continuation pattern in the field of technical analysis. The
formation occurs when there is a significant price change in security, sometimes referred to as
the flagpole. Subsequently, the flagpole is succeeded by a phase of consolidation characterised
by converging trend lines known as a pennant. This is then followed by a breakout movement in
the same direction as the original significant movement, which signifies the latter half of the
flagpole. Right after the occurence of bullish pennant, we analysed there has been short term
flag pattern from early June 2023 to middle June 2023. The inverse head and shoulders chart
pattern is a bullish formation that indicates a possible reversal of a downtrend. The head and
shoulders chart pattern is a bearish formation, whilst its reverse is a bullish formation. Three (3)
troughs characterise the inverse head and shoulders chart pattern: the first and third troughs,
referred to as "shoulders," are approximately equal in depth, while the second trough, known as
the "head," is more profound. The inverse head and shoulder pattern occured in middle of July
to middle of September 2023.
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SUNWAY
Support can manifest as either a specific price level on a chart or a broader range of prices.
License, in the context of a price chart, refers to a particular area that indicates the readiness of
buyers to purchase. At this stage, the demand typically surpasses the supply, leading to a
cessation and reversal of the price fall. Based on the chart above, we can see that the support 1
is in the level of price 1.891 and support 2 is 1.819.
Resistance is the contrary of support. Prices increase due to a higher demand compared to the
available supply. As prices rise, there will be a threshold where the urge to sell surpasses the
urge to acquire. This occurs due to a multitude of factors. Traders may have concluded that
prices are excessively elevated or have reached their desired level. Buyers may be hesitant to
enter new holdings at high valuations. It could be due to various factors. However, a trader will
quickly identify on a price chart a point at which the amount of supply surpasses the amount of
demand. This represents resistance. Similar to support, it can refer to either a level or a zone.
Based on the chart above, the resistance shows in the level of 2.071 and 2.100.
We analysed there has been short term flag pattern occured from the end of August 2023 to
middle September 2023. The flag pattern is employed to recognise the potential continuation of
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a preceding trend, starting from a position where the price has moved in the opposite direction
of that trend. If the trend continues, there is a possibility of a significant price gain, which would
make it favourable to time trade by recognising the flag pattern.
The double bottom pattern is a well-known charting formation in technical analysis. It signifies a
significant shift in trend and a reversal of momentum from a previous downward movement in
market trading. This phenomenon entails the first decline of a security or index, followed by a
recovery, subsequent reduction to a comparable level as the initial drop, and ultimately another
recovery (which may establish a new upward trend). The double bottom pattern bears
resemblance to the letter "W". The low that has been touched twice is now seen as a
noteworthy level of support. As long as those two lows remain in place, there is a possibility for
new upside possibilities. We can see that it occured at the end of September 2023 to early of
December 2023.
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5.4 ANALYSIS OF INDICATORS
5.4.1 SHORT TERM
5.4.1.1 SIMPLE MOVING AVERAGE (SMA-21), MOVING AVERAGE CONVERGENCE
DIVERGENCE (MACD) AND RELATIVE STRENGTH INDEX (RSI)
The Simple Moving Average (SMA-21) is a commonly used technical analysis tool that
calculates the average price of a security over a specified period, in this case, 21 days. By
smoothing out price data, the SMA provides a clearer indication of the underlying trend. Traders
often use the SMA-21 to identify potential buy or sell signals based on crossovers with short
term moving averages. When the current price rises above the SMA-21, it may signal a bullish
trend, while a drop below the SMA-21 could suggest a bearish trend.
Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that
shows the relationship between two moving averages of a security's price. It is calculated by
subtracting the 26-day Exponential Moving Average (EMA) from the 12-day EMA. Additionally, a
nine-day EMA, known as the signal line, is plotted on top of the MACD to trigger buy and sell
signals. When the MACD line crosses above the signal line, it generates a bullish signal,
indicating potential upward momentum. Conversely, a bearish signal is generated when the
MACD line crosses below the signal line, suggesting potential downward momentum.
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and
change of price movements. RSI values range from 0 to 100, with readings above 70
considered overbought, and readings below 30 indicating oversold conditions. The RSI is
typically used to identify potential reversal points in a security's price. When the RSI crosses
above 70, it may suggest that the security is overbought, and a price correction or reversal to
the downside could be imminent. Conversely, an RSI below 30 may indicate oversold
conditions, signaling a potential upward reversal in the price. Traders often use the RSI to
confirm trends and identify potential entry or exit points in the market.
192
GAMUDA BERHAD
According to the chart above, we can see that at the end of December, the price crossed below
the SMA line (blue line), indicating a bearish momentum, hence a sell signal to those who
already buy and hold the stock. At the middle of January, there was the buy signal, the price
went above the SMA line on indicating bullish trend and a buy signal. For MACD however, it can
be seen that in the middle of January, the buy signal occurs when the MACD line (blue line)
crosses above the red line, indicating a buy signal, this is also known as the golden cross. For
the RSI, there was no passing the ratios line around 70:30,so no signal occurs through the
period of time as the price doesn’t show as overbought or oversold.
193
SUNWAY BERHAD
Based on the Sunway's chart provided, it is obvious that by the end of December, the price of
the stock fell below the Simple Moving Average (SMA) line, indicating a bearish momentum.
This served as a sell signal for those who had already purchased and held the stock. However,
around January 11th, there was a buy signal as the price rose above the SMA line, indicating a
bullish trend. In terms of the Moving Average Convergence Divergence (MACD), it can be
observed that at the end of December.
5.4.1.2 RATE OF CHANGE (ROC) AND STOCHASTIC OSCILLATOR
The Rate of Change (ROC) is a momentum oscillator that measures the percentage change in
price between the current closing price and the closing price a certain number of periods ago. It
is calculated by taking the current closing price and dividing it by the closing price from a
designated period ago, then multiplying by 100 to express the result as a percentage. The ROC
provides insights into the speed and direction of a security's price movement over a specified
time frame. Traders often use ROC to identify potential trend reversals or confirm existing
trends. Positive ROC values suggest upward momentum, while negative values indicate
downward momentum.
194
The Stochastic Oscillator is a popular momentum indicator that compares a security's closing
price to its price range over a specific period. The Stochastic Oscillator consists of two lines: %K
and %D. %K represents the current closing price relative to the range of prices over a
designated period, while %D is a smoothed average of %K. The oscillator ranges from 0 to 100,
with readings above 80 considered overbought and readings below 20 indicating oversold
conditions. Traders use the Stochastic Oscillator to identify potential trend reversals or
overbought/oversold conditions. Crosses between the %K and %D lines, along with overbought
or oversold readings, can signal potential entry or exit points in the market.
GAMUDA BERHAD
From the chart above, ROC does not signal any buy or sell signals since the candle or price in
the short term timeframe shows sideways momentum. It is best to wait for the stock to go
uptrend since indicators are not valid when the stock is in downtrend or sideways momentum.
However, for Stochastic indicator, since the blue line touches the oversold and makes a reversal
movement while crossing the orange line. This indicates a buy signal at the middle of November
and can be sold at the cut-off date since it performs an overbought and crosses below signal
line.
195
SUNWAY BERHAD
At the end of November, the price of ROC dropped below the zero line, which resulted in the
activation of the sell signal on Sunway's chart. After that, the buy signal occurred when the price
managed to break over the zero line on the eighth or ninth of December. Retail traders can
begin to enter the position in Sunway's stock and hold it until it crosses below the zero line for
the intermediate amount of time at which point they can begin to exit the position. While this was
going on, the buy signal for the Stochastic oscillator was activated on the spot on December
5th, when the price had crossed the oversold arrear position. After that, in order to identify a
signal to sell, the price went above the 80 line, which signified that it had passed the overbought
arrear.For instance, the price reached the overbought arrear in the middle of December when it
crossed the 80 line and also reached the overbought level.
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5.4.2 INTERMEDIATE TERM
5.4.2.1 SIMPLE MOVING AVERAGE (SMA-21), MOVING AVERAGE CONVERGENCE
DIVERGENCE (MACD) AND RELATIVE STRENGTH INDEX (RSI)
The Simple Moving Average (SMA-50) is a commonly used technical analysis tool that
calculates the average price of a security over a specified period, in this case, 50 days. By
smoothing out price data, the SMA provides a clearer indication of the underlying trend. Traders
often use the SMA-50 to identify potential buy or sell signals based on crossovers with
intermediate term moving averages. When the current price rises above the SMA-50, it may
signal a bullish trend, while a drop below the SMA-50 could suggest a bearish trend.
GAMUDA BERHAD
Based on the provided Gamuda's chart, it is noticeable that in early November, the price
surpassed the SMA line (blue line), indicating a positive market trend and suggesting a
recommendation to purchase. In late December, a sell signal occurred as the price dropped
below the Simple Moving Average (SMA) line, suggesting a bearish trend and confirming the
sell signal. Regarding MACD, it is evident that in late December, the purchase signal is triggered
when the MACD line (blue line) surpasses the red line, telling a buy signal. This phenomenon is
commonly referred to as the golden crossed.Nevertheless, in early November, a sell signal
occurred when the blue line crossed below the red line. The Relative Strength Index (RSI) did
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not cross the threshold of 70:30, indicating that there were no signals over the specified time
period since the price did not indicate overbought or oversold conditions.
SUNWAY BERHAD
Based on the chart provided by Sunway, it is shown that in early October, the price dropped
below the SMA line (blue line), suggesting a negative momentum. This serves as a sell signal
for those who have previously purchased and held the stock. In mid-November, a purchase
signal appeared when the price surpassed the SMA line, suggesting a bullish trend and
triggering a buy signal. In early December, the price dipped below the Simple Moving Average
(SMA) line, represented by the blue line, which signifies a recommendation to sell. Regarding
MACD, it is evident that in early November, the purchase signal is triggered when the MACD
line (blue line) intersects below the red line, suggesting a buy signal. This phenomenon is
commonly referred to as the golden cross. But in late December, a sell signal occurred when the
blue line crossed below the signal line. The Relative Strength Index (RSI) did not cross the
threshold of 70:30, indicating that there were no signals over the specified time period since the
price did not indicate overbought or oversold conditions.
198
5.4.2.2 RATE OF CHANGE (ROC) AND STOCHASTIC OSCILLATOR
GAMUDA BERHAD
For ROC, in early October, when the price passed above the zero line,it triggered the buy signal
for the Gamuda’s chart. Then, the sell signal triggered once the price crossed below the zero
line at the end of December. Retail traders can start to enter the position in the Gamuda’s stock
and hold it until it crosses below the zero line for the intermediate period of time. Meanwhile, for
the Stoch, at the end of October, the buy signal triggered on the spot after the price crossed the
oversold arrear. Afterwards, to recognize signal sell, the price crossed the overbought arrear,
exceeding the 80 line.For example, in the middle of November, the price exceeded the 80 line,
and achieved the overbought arrear.
199
SUNWAY BERHAD
According to the Sunway's chart, the ROC (Rate of Change) indicated a sell signal towards the
end of October when the price dropped below the zero line. This signal prompted investors who
had previously purchased the stock and were still holding it to sell. Subsequently, the purchase
indication was activated when the price above the zero line in early November. Retail traders
may initiate a position in Sunway's shares and maintain it until it falls below the zero line for the
specified intermediate duration. Meanwhile, in late October, the Stochastic indicator generated a
sell signal when the price surpassed the overbought threshold. Subsequently, in order to identify
a buying signal, the price surpassed the oversold threshold, beyond the 20 line.For instance, in
early November, the price surpassed the threshold of 20 and reached the level indicating
oversold conditions.
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5.4.3 LONG TERM
5.4.3,1 SIMPLE MOVING AVERAGE (SMA-21), MOVING AVERAGE CONVERGENCE
DIVERGENCE (MACD) AND RELATIVE STRENGTH INDEX (RSI)
The Simple Moving Average (SMA-100) is a commonly used technical analysis tool that
calculates the average price of a security over a specified period, in this case, 100 days. By
smoothing out price data, the SMA provides a clearer indication of the underlying trend. Traders
often use the SMA-100 to identify potential buy or sell signals based on crossovers with long
term moving averages. When the current price rises above the SMA-100, it may signal a bullish
trend, while a drop below the SMA-100 could suggest a bearish trend.
GAMUDA BERHAD
According to the chart above, for GAMUDA Berhad, we can see that at the end of January, the
price crossed above the SMA line (blue line), indicating a bullish momentum which signalling a
buy signal. After a long 8 to 9 month bullish momentum, existing holders could sell the bought
stock at the early of December since the candle crossed below SMA line which indicates a sell
signal for long term entry and gain a significant amount of profit. Next for MACD, it can be seen
that at the end of December 2022, the buy signal occurs when the MACD line (blue line)
crosses above the signal line (orange line), indicating a buy signal, this is also known as the
golden cross and can be hold until the MACD line passed below the signal line which indicates
201
sell signal after 8 to 9 month minimum long term holding period to sell the bought stock. For the
RSI, there was a passing of the ratios line above 70:30 at early March , this indicates high
buying pressure to perform an overbought and signalling sell signal since the price will go lower
because of investors profit taking.
SUNWAY BERHAD
Based on the provided chart, it is obvious that for SUNWAY Berhad, the price surpassed the
SMA line (shown by the blue line) before the end of December. This occurrence signifies a
positive momentum, indicating a favourable opportunity to purchase. Following a sustained
period of positive market sentiment, current stockholders may choose to retain their purchased
shares, since there have been no instances of the candle crossing below the Simple Moving
Average (SMA) line up until the specified deadline of the end of December. It is anticipated that
the price may see further upward movement during this period. Regarding MACD, it is observed
that in late December 2022, a buy signal is generated when the MACD line (blue line) crosses
above the signal line (orange line), indicating a favourable time to buy. This occurrence is
commonly referred to as the golden cross. The recommended strategy is to hold the purchased
stock for a long-term period until the MACD line falls below the signal line, which serves as a
sell signal. This sell signal typically occurs after a holding period of 9 months. In December, the
Relative Strength Index (RSI) briefly touched the ratio line below 70:30. This suggests a
significant selling pressure, indicating an oversold condition and suggesting a buy signal for
202
long-term entry. After a period of 8 to 9 months, the RSI line indicates an overbought condition,
signalling the ideal moment for current investors to sell. This is because the price is expected to
decrease as other investors take their profits.
5.4.3.2 RATE OF CHANGE (ROC) AND STOCHASTIC OSCILLATOR
GAMUDA BERHAD
In the long-term timeframe, namely in mid-December 2022, the price of ROC exceeded the zero
line, resulting in a buy signal being activated for Gamuda's chart. Subsequently, the sell signal
was triggered when the price dropped below the zero line in late December 2023. Retail traders
may initiate a position in Gamuda's stock and then hold it for an extended period until it falls
below the zero line. At the end of December 2022, the Stochastic indicator delivered a buy
signal when the price reached the oversold area. Subsequently, in order to identify a sell signal,
the price above the overbought threshold, beyond the 80 line.For instance, by the end of
December 2023, the price surpassed the limit of 80 and reached an overbought condition.
203
SUNWAY BERHAD
According to the Sunway chart above, the price of ROC crossed above the zero line early in
December 2022, signalling buyers to take a position. After the price crossed below the zero line
at the end of November 2023 for the long term period, the sell signal was then triggered. Retail
investors can begin to buy Sunway's shares and hold it until the long-term trend line crosses
below the zero line. On the other hand, the Stochastic immediately generated a buy signal at
the close of November 2022 when the price passed through the oversold arrear. The price then
passed the 80 line and the overbought arrear to indicate a signal sell. For example, in early
December 2023, the price exceeded the 80 line, and achieved the oversold arrear.
204
6.0 CONCLUSION AND RECOMMENDATION
In conclusion, economic analysis stands as a critical tool for decision-making, providing a
foundation for informed choices, especially in the business realm.
The construction industry in Malaysia emerges as a key driver of economic development,
contributing significantly to the nation's GDP and employment opportunities. Government
initiatives, such as the Mass Rapid Transit (MRT) and the Pan Borneo Highway, along with
transformative programs like the Construction Industry Transformation Programme (CITP) and
the Construction Industry Payment and Adjudication Act (CIPAA), have bolstered transparency
and efficiency, attracting both local and foreign investments. Despite challenges, the
construction industry anticipates continued expansion in 2023, fueled by government
infrastructure spending, private sector investments, and urbanization trends.
Our main company, Gamuda Berhad, a prominent player in Malaysia's building, property, and
infrastructure sector, showcases versatility and expertise across engineering, construction,
property development, and infrastructure concessions. With a global reach spanning Vietnam,
Singapore, Australia, and the UK, Gamuda's involvement in flagship projects, such as the MRT
system, underscores its prowess in large-scale infrastructure ventures. The company's
commitment to sustainable and well-planned developments, coupled with its dedication to green
practices and smart technologies, positions it as a trailblazer in real estate and infrastructure
development.
In 2023, Gamuda achieved notable revenue growth, reaching RM8.23 billion, contributing
significantly to the industry's total sales. This success is attributed to the company's involvement
in long-term flagship projects, solidifying its market share and sustaining revenue growth in the
face of competition.
Sunway Group, a fierce rival across various industries, including real estate, education,
healthcare, and hospitality, has demonstrated a commitment to sustainability and innovation.
The group's transformative projects, such as Sunway Geo Avenue and Sunway FutureX,
highlight its role in reshaping city centers and contributing to sustainable development.
Additionally, Sunway Group's active participation in the National Solutions Forum (NSF) and
205
collaboration with SDSN Malaysia underscores its dedication to fostering positive change and
sustainable development within Malaysia and beyond. These endeavors exemplify Sunway
Group's position as a key player in the real estate and development landscape, contributing to
economic growth and societal well-being.
The 2022 financial reports of Gamuda and Sunway provide a thorough common-size picture for
analysing their financial structures and performance indicators. Gamuda's non-current assets
include property, plant, and equipment, land for property development, and joint venture
investments. Property development expenditures, inventories, cash, and bank balances make
up current assets. Equity is strong due to share capital, reserves, and non-controlling interests.
Non-current liabilities include long-term Islamic and conventional obligations, while current
liabilities include short-term debts and payables. Sunway's income statement depicts revenue
and expenses similarly. Gross profit is calculated by subtracting sales costs, while operating
expenses are percentages of revenue. Finance components make up the financial framework.
The income statement breaks down earnings before tax, income tax expense, and profit from
continuing operations to show the company's operational performance. Gamuda's income
statement shows revenue, operating expenses, and finance costs in a common-size format.
Operational profit before tax, income tax expense, and annual operating profit are percentages
of revenue. Discontinuing activities and their net profit, net of tax, also boost annual profit. Both
companies' common-size financial presentations allow stakeholders to evaluate their financial
health
and
operational
efficiency
against
revenue
and
expenses,
aiding
strategic
decision-making and financial planning.
The Capital Asset Pricing Model (CAPM) and intrinsic valuation indicators show exciting stock
market opportunities. GAMUDA and SUNWAY stocks showed huge disparities between intrinsic
values and market prices. The CAPM graph shows that GAMUDA is cheap since its expected
return exceeds the Security Market Line (SML). GAMUDA has a larger intrinsic value of
RM15.89 than its market value of RM4.65. SUNWAY has an intrinsic value of RM5.22 and a
market value of RM1.60, indicating overvaluation for its predicted return below the SML. Both
equities are undervalued compared to their real value, attracting investors. Undervalued stocks
are generally seen as good investments since they may correct in price along with their intrinsic
worth. This allows investors to buy inexpensive companies in hopes of a market value rise and
attractive profits.
206
For the technical analysis, Gamuda stock presents a mixed set of signals from various
indicators. The identification of support and resistance levels provides a foundation for the
decision to hold Gamuda. Notably, the Simple Moving Average (SMA) signals a buying
opportunity, aligning with a positive outlook. The Moving Average Convergence Divergence
(MACD) indicator also suggests a buy position, contributing to the bullish sentiment. The
Relative Strength Index (RSI) advocates holding Gamuda, indicating a balanced stance.
Meanwhile, the Rate of Change (ROC) and Stochastic Oscillator recommend holding the stock
and selling, respectively, presenting a divergence in signals. Overall, the technical indicators
convey a nuanced picture for Gamuda, with certain aspects signalling a positive trajectory while
others advise caution. Investors should consider these mixed signals, evaluate risk tolerance,
and conduct further analysis to make well-informed decisions based on their investment
objectives.
For the recommendation, after conducting a comprehensive analysis of Gamuda Berhad, it is
evident that the company has demonstrated resilience, adaptability, and a commitment to
sustainable growth. With a diverse portfolio spanning engineering and construction, property
development, and infrastructure concessions, Gamuda has positioned itself as a key player in
the Malaysian market and beyond. The company's involvement in major projects, innovative
practices, and global expansion into Vietnam, Singapore, Australia, and the UK showcase its
robust capabilities.
Considering the positive financial performance, strategic ventures, and a track record of
successful projects, it is our recommendation that investors carefully consider adding Gamuda
to their portfolios. The company's undervaluation, as indicated by the disparity between intrinsic
and market values, presents a potential opportunity for long-term investors. Furthermore, the
support from government initiatives and a commitment to sustainability bode well for Gamuda's
future growth.
While market conditions and risks should be acknowledged, Gamuda's strong foundation,
diverse revenue streams, and commitment to excellence position it as a promising investment
option. As with any investment decision, individuals should conduct thorough due diligence,
assess their risk tolerance, and consult with financial advisors before making investment
choices.
207
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