1.

0 Background of the company

1.1 Apollo Food Holdings Berhad
The company was opened on March 5, 1994 and is headquarter of this company is
in Johor Bahru, Malaysia. The Executive Chairman for Apollo Food Holdings
Berhad is Mr. Chiang Heng Liang, 68 years old. The group structure of this company
can be divided into two section which is Apollo Food industries (M) Sdn Bhd
(189274-V) and Hap Huat Food Industries Sdn Bhd (29228-W). The objective or aim
for this company is to always fulfill the customers’ requirements by using the modern
technologies and equipment.

Apollo Food Holdings Berhad is a holding company, engaged in providing

management services to its subsidiaries. It operates in two segments which is
Investment holding, manufacturing, marketing and distribution, involved in
manufacturing, marketing and distribution in chocolate compounds, chocolate and
chocolate products. Apollo products are mainly divided into two main categories:
I) Chocolate Wafer Products
II) Layer cakes, Chocolate Layers and Swiss roll products

As the leading manufacturer of Confectionery Chocolate and Cake Layer products

in Malaysia, Apollo products are distributed in Malaysia and other overseas markets
located in Singapore, Indonesia, Thailand, Philippines, Vietnam, China, Hong Kong,
Taiwan, Japan, India, Middle East, Mauritius, and the Maldives.

Every company have their own strengths as well as Apollo Food Holdings Sdn
Bhd. Their quality and standards or innovation are one of their strengths where their
organization are very determine and provided the resources that needed to achieve the
target that has been set. List of ways that the company has been provided to make
sure the objective of the company will be achieved;
I) Implement and maintain a quality management system and continuously
improve its effectiveness.
II) Produce the product with a good quality of raw and packaging materials.
III) Using world-class wafers and plywood-making machinery from Europe and
continues to improve and it's better to stay competitive.
IV) Enhance the customer satisfaction by meeting customer requirements.
V) Introducing the independence packaging to recognize the customer needs
VI) Make sure the company had accredited with halal.
2.0 Industry Outlook and Information

Malaysian food and beverage (F&B) industry can be categorize as an industry that have a
fast-growing industry and it can be characterized by a large export market. Malaysia’s most
important F&B exports are in the oil and fat category, especially palm oil-based products,
where the country is one if the two largest exporters in the world. In 2017, the exports in
Malaysia accounted for 9.8%.

The Malaysian food industry is a diverse as the culture in Malaysia with various foods
processed with Asian flavors. The industry is largely Malaysia, dominated by a small and
medium sized enterprises (SMEs). Apart from SMEs, there are well known foreign
companies and MNCs that produce processed food products in Malaysia. It covers sectors
such as cocoa and chocolate products and cakes. For example, The Apollo Food Holding Sdn
Bhd. The Apollo produce their product based on chocolate compounds, chocolate and
chocolate products. Apollo products are mainly divided into two main categories which is
Chocolate Wafer Products, Layer cakes, Chocolate Layers and Swiss roll products.

Each of company has its own vision and goals to reach a certain peak. So, these
companies have set their goals especially for the next few years which is in order to gain
more revenue and profits. Firstly, for Ajinamoto (Malaysia) Berhad, their company’s vision is
to be the most trusted and beloved food company in Malaysia,by contributing to the society
through more joyful and healthier diet,providing No.1 delicious product and services with
pride of our staff. Their company already proved that they can became the most trusted food
company in Malaysia for a decades, by being one of the essential ingredients in every
household. On the other hand, even though they know that their brand are well known among
the consumers, Ajinomoto (Malaysia) Berhad still constantly been committed to improve and
develop new brand name that provide a wide range of food and seasoning to the people of
Malaysia and industry.

Next, Nestle (Malaysia) Berhad. Nestle can be categorized as the world’s largest food and
beverage manufacturer. The company’s headquartered is in Switzerland and they have 191
branches in this countries around the world. Nestle vision is to enhancing the quality of life
and contributing to a healthy future. They want to help the world to be in a better shape and
more healthy. The company also want to inspire people to have a healthier lives and this is
what they do to make sure the long-term success for their company. The brands and products
that they produced are MILO, MAGGI, NESCAFE and KITKAT.

Moreover, Spritzer Bhd. Spritzer was formed and known as one of

the top sellers of natural mineral water in Malaysia. Their company
are specialized in producing drinking water, carbonated fruit-
flavored water, non-carbonated fruit-flavored water, natural mineral
water, sparkling natural mineral water, functional water,
toothbrushes, packaging bottles and preforms. Their vision is about to
be recognized and respected as premier and best mineral water producer. Since they are one
of the biggest company that specialized in distributing and manufacturing that eight
subsidiaries.

Furthermore, Dutch Lady’s mission is to help Malaysia to move forward in life with
trusted nutrition. As we know, Dutch Lady Milk Industries Berhad is one of the leader that
produced quality branded of dairy milk in Malaysia. It was incorporated in 1963 and the first
dairy milk company that have been listed in Bursa Malaysia. The vision for this company is
to further strengthen their position as the leading dairy company, driving growth.

Lastly, Power Root is a leading company that develop and upholds herbal energy drinks
liven up with two main rainforest herb. Their company mission is to produce high quality
products that exceed customer’s expectations on their product which will help the quality of
its customer’s lifestyle. Other than that, Power Root also want their brand name to be a
household name globally.
3.0 SWOT- Ananlysis
SWOT-analysis can be divided into four which is strengths, weaknesses, opportunities and
threats analysis. It is a framework for identifying and analyzing the internal and external
factors that have an impact on the viability of a project, product, place or person. This
analysis will help the manager of the company to make a decision.

i) Strengths
Strengths can be defined as internal attributes and resources that support a successful
income into the company. One of the strength that Apollo Food Holding Sdn Bhd
have is the company established household brand names which are popular among
school children. The brand of their products that have been produced are very popular
among the students especially students from the primary school. It is because, most of
the students love to eat foods that taste really sweet and based on chocolate. By
chance, the Apollo Food Holding Sdn Bhd produce foods that using chocolate as their
main ingredients.

Other than that, hands-on management team. A hands-on manager are actively
invoved in a number of task that similar to those of their employees. He was never
separated from his daily needs and operations. A hands-on manager will take the time
to train the team and colleagues and actively in their progress. For example, the
manager of Apollo Food Holding Sdn Bhd can access to more ideas that he gained
from the customers and employees. By using this way, it can work in the manager’s
favor when he approached with an open mind.
ii) Weakness
Weakness can be defined as a particularly part or quality of someone or something
that is not effective or good. There is a lot of weaknesses in every company but the
one that effect the company performance is vulnerability to raw material price
fluctuations. When the price of raw materials that the Apollo Food Holding Sdn Bhd
use to produce their product is increase, it will decrease the profit that they gain from
their sales. This is because, the price of the product cannot be change easily even
though the price of raw materials that they use are increase.

Moreover, weak pricing power is also one of the main weaknesses in Apollo Food
Holding Sdn Bhd. Pricing power is something that can be describes the effect of
product price change in a company on the quantity demanded of the product. For
example, if Apollo Food Holding Sdn Bhd increase the price of their products, the
tendency is that the demand of their products will go down because people will look
into cheaper alternatives.

iii) Opportunity
Opportunity can be defined as a time or a set of circumstances that make it we are
possible to do something that we want. Apollo Food Holding Sdn Bhd need to know
on how to grab the opportunity that might help their company to growing. One of the
opportunity is diversification into new product lines. Product diversification are one
of the way on how to expanding the original market for a product. Apollo Food
Holding can use this type of strategy to increase the sales of their existing product
line. For example, resizing their product like repackaged into a different size or
selling quantity.

Furthermore, mergers and acquisitions. If the Apollo Food Holding Sdn Bhd, use this
opportunity they can improving the purchasing power that might help in negotiate
bulk orders and lead to cost efficiency. The reduction in staff reduces the salary cost
and will help to increase the margins.
iv) Threats
Threats can be defined as an external factors that may affect the success of the entity.
As we all know, Apollo Food Holding Sdn Bhd has been in this industry for a long
time and being known among the consumers or buyers. One of the threat that the
company might face is competition from new entrants into the market. There is a lot
of company that enter the food and beverages industries where the buyers prefer to
eat products that follow the new trend.

Lastly, fluctuations in input costs. Input cost can be defined as a cost that incurred in
process to produce a product. Example of this cost is direct materials, direct labour,
and factory overhead. If the price of the direct materials that the Apollo Food Holding
Sdn Bhd used increase, it will lower the profit that they gained for their sales.
4.0 Financial Statement Analysis

Trend-analysis – Apollo Food Holdings Sdn Bhd

Profitability Ratios

1) Gross Profit margin

= Gross Profit
X100%
Revenue

2017 2018

= RM42,503,002.00 = RM40,255,355.00
X100 X100
RM208,918,294.00 RM190,818,447.00

= 20.34% = 21.10%

For every RM 1 of revenue earned by the Apollo Food Holding Sdn Bhd, it has earned RM
0.2034 in 2017 and RM0.211 in 2018 of gross profit to cover its operating expenses after
providing for its own cost of sales. It is show that there is an increase from 2017 to 2018.
This is because the company have a good control in the cost of its stock in 2018 compared
to 2017.
 2) Net Profit Before Tax
= Profit Before Tax
X100%
Revenue

2017 2018

= RM24,663,555.00 = RM14,725,879.00
X100 X100
RM208,918,294.00 RM190,818,447.00

= 11.81% = 7.72%

For every RM 1 of revenue earned by the Apollo Food Holdings Sdn Bhd, the revenue that
they gained is enough to cover up to RM 0.1377 in 2017 and RM 0.1229 in 2018 of the
company total operating expenses. It shows that decrease of operating profit margin from
2017 to 2018. In 2018, the company are able to cover their operating expenses but a little bit
lower compare than 2017.
 3) Operating Profit Margin
= Operating Profit
X100%
Revenue

2017 2018

= RM28,768,891.00 = RM23,459,013.00
X100 X100
RM208,918,294.00 RM190,818,447.00

= 13.77% = 12.29%

For every RM 1 of revenue that Apollo Food Holdings Sdn Bhd earned it earned a total of
net profit before tax is RM 0.1377 in 2017 and RM 0.1229 in 2018.This shows that the
amount of revenue are remain in the company in 2017 for the distribution for their
shareholders as a dividend is more compared to 2018.
Liquidity Ratio

1) Current Ratio
= Current Asset

Current Liabilities

2017 2018

= RM159,304,907.00 = RM142,915,465.00

RM10,219,036.00 RM8,003,356.00

= 15.59 times = 17.86 times

Current ratio of Apollo Food Holdings Sdn Bhd in 2017 is 15.59 times meaning that there
are 15.59 more of current asset than current liabilities. While the current ratio in 2018 is
17.86 times show that there are 17.86 more of current asset than the current liabilities. But,
the current ratio in 2017 is more favourable compare to 2018 because they can pay the
current debt more easily.

2) Acid Test Ratio

 = Current Asset

Current Liabilities

2017 2018

= RM159,304,907.00 = RM142,915,465.00 – RM14,902,914.00

-RM15,847,951.00
RM8,003,356.00
RM10,219,036.00
= 16.0 times
= 14.04 times

In 2017, the acid test ratio is 14.04 times AND 16.0 times in 2018 in which disregard the
inventory that included in current asset. This track shows that in 2018 there are more asset to
cover up the current liabilities compared than the total of asset in 2017. This is because,
Apollo Food Holdings Sdn Bhd seen to be keeping too much cash on hand.

3) Inventory Turn Over Ratio

 = Cost of Sales = Stock
X365 days
Stock Cost of Sales

2017 2018
= RM 166,415,292.00 = RM150,563,092.00

RM15,847,951.00 RM14,902,914.00

= 10.50 = 10.10

= RM15,847,951.00 = RM14,902,914.00
X365 X365
RM166,415,292.00 RM150,563,092.00

= 34.76 = 36.13

In 2017, the Apollo Food Holdings Sdn Bhd on average, takes 34.76 days to sell its stocks
of product, hence requiring it to be replenished 10.50 times in a year. While for 2018, it’s
takes 36.13 days to sell its stocks of product and need 10.10 times in a year to be replenish.
This shows that company have an adequate inventory supplies to meet the customer’s
demand in 2018 compared to 2017.

4) Account Receivable Turn Over Ratio

= Credit Sales
 Trade Debtor

2017 2018

= RM166,415,292.00 = RM150,563,092.00

RM 37,934,506.00 RM 29,553,782.00

= 4.39 times = 5.09 times

Account receivable turnover ratio in 2017, on average its takes 83.20 days for the account
receivable renewed or collected 5.95 times in a year. For 2018, there is on average 5.09
times in a year and takes 71.65 days to collect the account receivable. This shows that in
2018, can indicate that a company’s collection of accounts receivable is efficient and has a
high proportion of quality customers that pay their debts more quickly compared to 2017.

5) Account Payable Turn Over Ratio

= Credit Purchase

Trade Creditor
2017 2018

= RM164,114,841.00 = RM149,618,055.00

RM27,934,506.00 RM29,553,782.00

= 5.87 times = 5.06 times

For 2017, the account payable turnover ratio of Apollo Food Holdings Sdn Bhd is 5.87
times in which on average the company can pay back their vendor around 62.13 days while
in 2018 the account payable turnover ratio is 5.06 times and pay back in 72 days to its trade
creditors. This show that in 2017 has a higher ratio that shows the suppliers and creditors
that the company pay the bills frequently and regularly.

Leverage Ratio

1) Debt Ratio
= Total Liabilities
 Total Asset

2017 2018

= RM23,407,417.00 = RM19,918,536.00

RM276,657,841.00 RM263,534,358.00

= 0.08 = 0.07

Apollo Food Holdings Sdn Bhd debt ratio for 2017 is 0.08 and 0.07 in 2018. It is showing
the decrease from 2017 to 2018 which is 0.01. It shows that the ratio is less than 1 for both
years. The result showed that the Apollo Food Holdings Sdn Bhd concerned has more assets
than liabilities and it is less risky it would be for the debt provider.

2) Interest Cover Ratio

= Earnings before interest and tax

Interest Payment
2017 2018

= RM24,663,555.00 = RM14,725,879.00

RM9,340,740.00 RM5,884,314.00

= 2.64 times = 2.50

In 2017, the interest cover ratio is 2.64 times in which means the company can cover up its
existing interest expense for 2.64 times. While for 2018, the ratio is higher than ratio in 2017
which is 2.50 times. The result showed that, Apollo Food Holdings Sdn Bhd are having
more debt expense in 2017 compared to 2018. For 2018, the company still have the chance
to have additional borrowings.

Efficiency Ratio

1) Earnings Per Share

= Earnings attribute to ordinary shareholder
X100sen
Number of ordinary share in issue
2017 2018

= RM1,783,200,000.00 = RM1,107,200,000.00

RM80,000,000.00 RM80,000,000.00

= 22.99sen = 13.84sen

Earrning per share for Apollo Food Holdings in 2017, the company earn higher which is
22.99 sen than in 2018 13.84 sen of income,where their company distribute more of it as a
dividend to ordinary shareholder or to keep in company as retained earnings in 2017
compared to 2018.

2) Return of Capital employed (ROCE)

= Earnings before interest and tax
X100%
Capital employed
2017 2018

= RM24,663,555.00 = RM14,725,879.00
X100 X100
RM20,820,062.00+ RM24,038,799.00+
RM253,250,424.00 RM243,615,822.00

= RM0.090 = RM0.0550

Return on capital employed ratio that showed above conclude that for every RM 1of funding
provided to the management of Apollo Foods Holding Sdn Bhd,. This is proved that the
company is able to earn a return of RM0.090 in 2017 and RM 0.0550 in 2018. From the
result above, it showed that the return in 2017 is higher than 2018 and the company is more
efficient in management the company in 2017 than 2018.

3) Return on Equity (ROE)

= Profit after tax
X100%
Total Shareholder Equity

2017 2018
= RM17,833,000.00 = RM11,071,000.00
X100% X100 %
RM253,250,424.00 RM243,615,822.00

= RM0.0704 = RM0.0454

Apollo Food Holdings Sdn Bhd has the return on equity of RM 0.0704 in 2017 and RM
0.0454 in 2018 for every RM 1 of the fund that the company used to invest to other firm.
The investment of company in 2017 is more satisfactory compared to 2018 because of the
lower return of equity.

Market Ratio

1) Price Earnings Ratio

= Price per Share

Earnings per Share

2017 2018
= 25 = 30

22.29 sen 13.84 sen

= 1.12 = 2.17

Apollo Food Holdings Sdn Bhd sell for 1.12 times of its earnings or the shares in 2017 and
2.17 times in 2018. This shows that the price selling of share is more on 2018 compared to
2017. There is more profit earn by the company in 2018 and have the bright future prospect
than 2017.

2) Market to Book Ratio

= Price per Share

Book Value per Share

2017 2018

= 25 = 30
 3.17 3.05

= 7.89 = 9.84

Market to book ratio of the Apollo Food Holdings Sdn Bhd, both year have exceed 1 for the
result of the ratio. For 2017, is 7.89 and 2018 is 9.84. There is small difference which is
1.95. This mean that the company have created the valued for its shareholders but it is more
in 2018 than 2017. Because the market to book ratio is higher in 2018 than 2017.
Cross-sectional analysis (2017 & 2018) – Market Ratio

For the market ratio, it can be divided into two type of ratio which is price earnings ratio
and market-to-book ratio. In 2017, price earnings ratio for Apollo is 1.12 times, Dutch Lady
is 0.75 times, Nestle is 1140.67 times, Power Root is 0.56 times, Ajinamoto is 0.12 times,
and Spritzer is 19.98 times. Among these six companies, Nestle is the highest company that
have positive future performance which is 1140.67 time where it shows that the investor are
willing to pay more for the company shares.

While in 2018, price earnings ratio for Apollo is 2.17 times, Dutch Lady is 1.01 times,
Nestle is 1140.84 times, Power Root is 0.12 times, Ajinamoto is 1.79 times, and Spritzer is
18.77 times. In this year, Nestle still prove to be a rich investment among that six companies.

The seond ratio in market ratio is market-to-book ratio. In 2017, the market-to-book ratio
for Apollo is 7.89, Dutch Lady is 2.87, Nestle is 1.02, Power Root is 3.14, Ajinamoto is 4.63,
and Spritzer is 1.35. From the data given, it shows that the market ratio of the six companies
are above 1 indicates that shows all of their investors are willing to pay more for the
company that its net assets. But the highest ratio among the six companies is Apollo and this
indicate that the Apollo has a healthy future profit and the investor are willing to pay a
premium for that possibility.

In 2018, the market-to-book ratio for Apollo is 9.84, Dutch Lady is 3.16, Nestle is 1.05,
Power Root is 3.42, Ajinamoto is 23.08, and Spritzer is 1.17. For this year, all the market-to-
book ratio for all the companies show almost the same like last year and Apollo still be the
highest ratio. And it proves that the Apollo Food Holding Sdn Bhd has a really healthy future
profit projections.
5.0 Corporate issues and recent news

Every company have their own corporate issues so do Apollo Food Holding Sdn Bhd.
One of the corporate issue that they have been face is challenging outlook. The management
expects higher material costs and fluctuations in forex to continue to pose challenges in a
competitive market environment. However, it expects to maintain its market position by
implementing prudent measures and improving operational efficiency. We expect that the
massive growth trend will continue, moving forward, as we are not informed of any major
expansions plans.

Next, flattish growth trend expected to continue for Apollo Food Holding Sdn Bhd.
Apollo Food Holdings Sdn Bhd still maintain the neutral with a lower target price (TP) of
RM3.59. The results that they get are below their expectations due to the lower-than-
expected sales in local and export markets. From the results, they cut their financial year
2019 (FY19) and FY20 earnings forecast by 11% and 13& to reflect their conservative sales
growth. Despite weak sales growth and lack of growth drivers, they believe that it is
generous dividend payments, supported by strong balance sheet, will continue to support
stock prices.

Apollo Food Holdings Sdn Bhd also had their recent news where they posted a strong set
of result in their financial statement on April 30, 2019 with the net profit that raise by 59% to
RM17.60 million but it remained constant due to the some of the cost which is raw materials.
The confectionery producer announced on Thursday that revenue increased from RM11.07
million a year ago. The revenue of Apollo Food Holding Sdn Bhd decreased by 1% to
RM188.83 million from RM190.81 million. It recommends a dividend of 20 cents per share.

Other than that, managing director (MD) of Apollo Food Holdings Sdn Bhd, Liang
Chiang Heng has been change to be as an executive chairman of the company. In a Bursa
Malaysia today, Apollo told that their executive director, Liang Kim Poh 56, would take over
the managing director position. Their net profit was recorded decline of 11.09% to RM3.82
million in the second quarter ended October 31, 2017 (2QFY18) from RM4.29 million a year
due to the lower foreign exchange gain.
6.0 Companies’ stock performance (2017 & 2018)

6.1 Index Comparisons

The data showed about the graph line of stock performance using monthly
basis. From the data given, it shows that the highest level of stock is on August 2019
which is RM4.04 million while the lowest data is on October 2019 which is RM3.83
million. From the data given, it is show that in 2019, Apollo Food Holding Sdn Bhd
had been faced the situation where they need to face two months of decreasing in the
data showed. This situation happened because the investor of the company want to
sell their stock because the price of the existing stock is fall.
6.2 Stock Cycle

According to the stock quote table, Apollo Food Holding Sdn Bhd is one of the
company that have a lot of investor and listed in the main market. This show that
Apollo Food Holding Sdn Bhd has a bigger capital in this food and beverages (F&B).
The price of the stock remain the same at RM3.890 and the volume shows the
number of shares traded by Apollo Food Holding Sdn Bhd at 100 shares.
A total of 5,000 shares were sold at that time (Buy Volume) at a price where the
investors buy for one unit. The price to buy for one unit share of Apollo is RM3.870.
Meanwhile, the number of shares sold was 500 lots only and it cost for average price
that calculated for the investor who want to seel it for a unit is RM3.8990.