1. 0 Company Background 1. 1 IOI Properties Bhd IOI Properties Berhad, an investment holding company, engages in the property development and property investment in Malaysia. Its investment properties include commercial/ office buildings, and shopping malls. The company also develops residential, commercial, and industrial properties, as well as provides building maintenance and general contract services. In addition, IOI Properties Berhad involves in the cultivation of oil palm; and the management and operation of golf courses, as well as the provision of recreational services.
Further, it engages in the investment in office complexes and development of residential properties in Singapore. The company was formerly known as Lam Soon Huat Development Berhad and changed its name to IOI Properties Berhad in December 1994. IOI Properties Berhad is based in Putrajaya, Malaysia. IOI Properties Berhad is a subsidiary of IOI Corporation Berhad. Tan Sri Dato. Lee Shin Cheng is the Executive Chairman and Dato. Lee Yeow Chor and Dato’ David Tan Thean Thye are the Executive Directors. 1. 1. 1 CORPORAT OBJECTIVE
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IOI Properties’s vision is “Our Vision is to be a leading corporation in our core business by providing products and services of superior values and by sustaining consistent long term growth in volume and profitability. ” Corporate shall strive to achieve responsible commercial success by satisfying our customers’ needs, giving superior performance to our shareholders, providing rewarding careers to our people, cultivating mutually beneficial relationship with our business associates, caring for the society and the environment in which we operate, and contributing towards the progress of our nation. . 1. 2 CORPORATE SYMBOL In January 2008, IOI Properties (Singapore) Pte Ltd and Ho Bee had successfully jointly tendered for the Pinnacle Collection, a 5. 3-acre 99-year leasehold land parcel located at Sentosa Cove, Singapore for a total consideration of SCD1, 097,499,999 for a luxury condominium development. In May 2008, IOI Properties Bhd’s subsidiary Multi Wealth (S) Pte Ltd has acquired 53% interest in Mergui Development Pte Ltd. A joint-venture company that would buy of a freehold parcels at Mergui Land in Singapore and redevelop it into high-rise residential project.
In April 2009, IOI Properties Bhd launched IOI Privilege Card, the 1st community card in Malaysia on 18 April 2009, with the objective to encourage residents to shop and dine within the IOI townships and enjoy savings at the same time. It was launched by the Kinrara’s State Assemblyman YB Teresa Kok together with IOI Group Executive Director Dato’ Lee Yeow Chor. In the year of 2010, IOI Properties has been awarded as Malaysia’s Top Ten Property Developers Awards by The Edge Malaysia. While in year of 2009, it has been awarded National Annual Corporate Report Awards (NACRA) – Certificate of Merit by Malaysia Institute of Accountants (MIA).
The data of IOI Properties Bhd are as follows: Add:Two IOI Square, IOI Resort, Putrajaya, 62502, Malaysia. Tel:603-8947 8899 Fax:603-8947 8844 Homepage:www. ioiproperties. com. my JobStreet Corporation Bhd JobStreet Corporation Berhad is a Malaysia based company engaged in the provision of interactive marketing services and investment holding. The company’s subsidiaries include JobStreet. com Pte. Ltd. , JobStreet. com Sdn. Bhd. , JobStreet. com Philippines Inc and PT JobStreet Indonesia, which are involved in online recruitment and human resource management services.
JobStreet Corporation Berhad founded in 1996 by founder/CEO Mark Chang Mun Kee, Jobstreet Corporation Bhd successfully got itself listed on the MESDAQ before transfer its listing to the Main Board 3 years later. JobStreet business model is easily understandable. The principal activities of Jobstreet are providing jobs advertising services on the Internet. It created 2 virtual agents Siva and Lina to approach 2 difference sets of Employers and Jobseekers. Although the majority of its users are the jobseekers its actual source of incomes comes from the Employers.
It is important that JobStreet satisfies both sets customers even if its cash flow comes from only one source because Employers decide to post the ads base on the database size. In short, the larger the database sizes the more likely JobStreet of getting the deal. Besides that, it also work the other way around, as jobseeker will only use a job search site if it able to larger variety and more jobs offering. Well, this is where JobStreet’s strength lies. However, JobStreet business relies a lot on the general macroeconomics of the country it sets its foot in and also the world economy as, well like in Malaysia, most of its customers are MNCs.
Mark Chang is the Chief Executive Officer, Dr. Albert Wong is the Chief Product & Technology Officer, Suresh Thiru is the Chief Operating Officer, Greg Poarch is the Chief Financial Officer, Ng Kay Yip and Lim Chao Li are Director. 1. 2. 1 CORPORATE SYMBOL Online recruitment services increase transparency in the job market and the efficiency of intermediation through more accurate and daily matching between jobseekers and available jobs in the market. In a tough operating environment, the corporate top line contracted by 9. 8% with revenues of RM 92. 3 million compared with RM102. 3 million in 2008.
This was not unexpected as recruitment activities of our customers are highly correlated with the direction of the economy. Although on a year-on-year basis, sales from Jobstreet Essential, their online job posting service, decline by 13. 7% in 2009, it registered sequential growth on a quarter-on-quarter basis beginning from the second quarter onwards reflecting improving business confidence levels. Revenue from the corporate other services such as Jobstreet impact and Jobstreet Resource were not significantly affected by the economic downturn as these services have a stronger customer lock-in and a more resilient recurring revenue model.
In addition, the corporate profits were also positively contributed to by higher dividend income from the corporate overseas investments in quoted securities. The data of JobStreet Corporation Bhd are as follows: Add:Wisma JobStreet. com No. 27, Lorong Medan Tuanku 1 (Off Jalan Sultan Ismail), Kuala Lumpur, 50300 Malaysia. Tel:603-2176 0333 Fax:603-2711 1190 Homepage:www. jobstreet. com 2. 0 ANALYSIS PART A 2. 1 AVERAGE RATE RETURN Based on the information extracted, the average rate of return for stocks: IOI Properties and Jobstreet from 1st June 2009 until 30th June 2010 are 0. 39705 and 0. 237345 respectively. Judging by the historical rate of return for both stocks, it is better to invest more funds into Jobstreet than IOI Properties. R ? =(? -R_t )/T Where, R ? = Average rate of return R_t= Return at time t T = Number of time points Average Rate Return of IOI Properties = 0. 039705 Average Rate Return of Jobstreet = 0. 237345 Average Rate Return of KLCI = 0. 095438 2. 2 STANDARD DEVIATION Standard deviation is a measurement that tell us the historical volatility the stocks. A higher standard deviation means a higher risk for a stock.
Based on the data, the standard deviation of IOI Properties stock is 1. 129500 and Jobstreet stock is 1. 931149. Therefore Jobstreet stock has a higher risk than IOI Properties. ?=v(1/N ? _(i=1)^N-? (x_i-x ? )? ^2 ) Where, x_i= Return x ? = mean N = Number of variables Standard Deviation of IOI Properties = 1. 129500 Standard Deviation of Jobstreet = 1. 931149 Standard Deviation of KLCI = 1. 821575 2. 3 BETA Beta is a measure of the volatility, or systematic risk of a security or a portfolio in comparison to the market as a whole. Here, the KLCI stock index will be the proxy of the market.
A beta of 1 indicates that the security’s price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. The beta for IOI Properties’s stock is 0. 127536 and beta of Jobstreet’s stock is 0. 134492. These two stock are less volatile than the KLCI stock. The two stocks are move in positive direction which means when Jobstreet’s stock declines, the KLCI stock index will decline also and vice versa. ?_a=(COV (r_a,r_p))/(Var (r_p)) Where, ?_a = Beta for a security Cov = Covariance between the rates of return of a security and the portfolio
Beta of IOI Properties = 0. 127536 Beta of Jobstreet = 0. 134492 2. 4 RISKS The total risk of a security, as measured by its variance, can be split into two components which are market risk and company-specific risk. ?_i^2= ? _(i )^2 [? ^2 m]+ ? _ei^2 Risk = Market risk + Company-specific risk Total Risk of IOI Properties,1. 275771= (0. 127536^2)( 3. 318134) + = 1. 221800 Total risk of Jobstreet, 3. 729337 = (0. 134492^2)( 3. 318134) + = 3. 669318 2. 5 COVARIANCE Is a measure of the degree to which returns on two risky assets move in tandem.
A positive covariance means that asset returns move together. A negative covariance means returns move inversely. The covariance between IOI Properties and Jobstreet stocks is 0. 020391, which means the two stocks have positive relationship. Where covariance is: cov xy=1/N ? -? x_i y_i-? xy Covariance between IOI Properties and Jobstreet = 0. 020391 2. 6 CORRELATION Correlation is a statistical measure of how two securities move in relation to each other. The correlation coefficient between IOI Properties and Jobstreet stocks is 0. 009383, meaning they are positively correlated.
Where correlation coefficient is: ?_(x,y)= (Cov (x,y))/(?? _x? _( ) ? _y ) Correlation between IOI Properties and Jobstreet = 0. 009383 2. 7 Coefficient of Variation The coefficient of variation (CV) is used to measure the volatility which represented by the standard deviation to the expected return on an investment. The coefficient of variation allows investors to determine how much volatility (risk) they are assuming in relation to the amount of expected return from an investment; the lower the ratio of standard deviation to the mean return is, the better the risk-return trade-off is.
Note that if the expected return in the denominator of the calculation is negative or zero, the ratio will not make sense. Coefficient of Variation for IOI Properties is 28. 447394 while jobstreet is 8. 136452. Jobstreet is a better choice for investor because its coefficient of variation is lower than IOI Properties. This is equivalent with the definition which means lower coefficient of variation indicates a higher expected return with less risk. It is calculated as follows: Coefficient of variation=(Standard Deviation)/(Expected Return) 3. 0 PART B The stocks of IOI Properties Bhd. nd Jobstreet Corporation Bhd. have been combined and form a portfolio. The weightage is 50% for each stock. 3. 1 The Average Rate of Return of Portfolio The formula for computing rate of return of the portfolio where, Rp= rate of return for portfolio W1= portfolio weight for the first stock (IOI Properties Bhd. ) R1= rate of return for the first stock W2= portfolio weight for the second stock (Jobstreet Corporation Bhd. ) R2= rate of return for the second stock According to the calculation that attached in the attachments, the result is as follow: Portfolio=0. 138525 KLCI=0. 095438
The average rate of return of this portfolio is higher than market index. This shows that this combination is good to increase the return and is advisable to invest. 3. 2 Beta of Portfolio Beta measures a stock’s or a portfolio’s volatility, the degree to which its price fluctuates in relation to the overall market. Beta of a portfolio can be computed by the formula as follow: Bp= W1B1+W2B2 where, Bp= beta of portfolio W1= portfolio weight for the first stock (IOI Properties Bhd. ) B1= beta of the first stock W2= portfolio weight for the second stock (Jobstreet Corporation Bhd. B2= beta of the second stock The results are as follows: IOI Properties Bhd. =0. 127536 Jobstreet Corporation Bhd. =0. 134492 Portfolio=0. 131014 From the computation, beta of the portfolio shows the value of 0. 131014. Therefore, the portfolio is more volatile than the KLCI stock index. For example, if we expect the market to provide a return of 10% on an investment, we would expect the portfolio to return 13. 10%. 3. 3 Correlation Coefficient of Both Stocks Correlation coefficient measures the relative co movements between security returns and extent to which the returns are related.
The correlation coefficient between IOI Properties Bhd. and Jobstreet Corporation Bhd stocks is 0. 009383, which means they are positively correlated. When the returns of IOI Properties Bhd. increase, the returns of Jobstreet Corporation Bhd will increase also. The result is: Correlation Coefficient = 0. 009349 3. 4 Total Risk of Portfolio The total risk of a portfolio is the standard deviation of the return of the portfolio. From the calculation, the total risk of the portfolio is 1. 123153. Compared to the market index of 1. 821575, the value is lower by 1. 686658.
The risk is much lower to invest in this portfolio, compared to the market. The result obtained is as follows: IOI Properties Bhd. =1. 129500 Jobstreet Corporation Bhd. =1. 931149 Portfolio=1. 123153 KLCI=1. 821575 4. 0 Part C 4. 1 Markowitz Efficient Frontier (Graph) According to the graph above, the coordination of point A is (0. 980796, 0. 095044). The Point A, represents the global minimum-variance frontier because no other minimum-variance portfolio has a smaller risk. The efficient set, AB offers the risk-return combinations available to investors. For example: the investor choose point C which have excepted return of 0. 60266 and risk 1. 261520 because it is the maximum risk and return which investor can tolerance. He/She cannot afford risk more than the point. The risk tolerance is depend on each individual, some of them prefer more risk to gain more return and some of them just like normal return with the normal risk. While some people prefer low risk that with low return. 4. 2 Expected Returns of Portfolio The expected return on the portfolio is always a weighted average of the expected returns for individual assets in the portfolio. The formula is E(R_p)=? _(i=1)^n-W_i E(R_i) where,
E(R_p)=the expected return on the portfolio W_i=the portfolio weight for the ith security E(R_i)=the expected return on the ith security n=the number of different securities in the portfolio According to the Markowitz Efficient Frontier above, the expected return of this portfolio (Point A) is 0. 095044. This is lower than the return calculated at Part B, which is 0. 138525. 4. 3 Expected Risk of Portfolio The risk of a portfolio, as measured by the standard deviation of return, for the case of two securities, 1 and 2 (IOI Properties Bhd. and Jobstreet Corporation Bhd. ) is ?_p=[w_1^2 ? 1^2+w_2^2 ? _2^2+2(w_1 )(w_2 )(? _1,2 ) ]^(1/2) where, ?_p =the risk of a portfolio W_1 =the portfolio weight for the security 1 ?_1 =the standard deviation for the security 1 W_2 =the portfolio weight for the security 2 ?_1,2 =the covariance between securities 1 and 2 According to the Markowitz Efficient Frontier above, the expected risk of this portfolio (Point A) is 0. 980796. This is also lower than the risk calculated at Part B, which is 0. 134917. This shows that, the return will decrease if the risk decreases. Return and risk have positive relationship. 5. 0 Part D 5. Technical Analysis (Moving Average Line) Technical analysis is the analysis by using data such as past market shares or index price and trading volume trends to make predictions about the movement of stock prices or indices in the future. It is also known as “market or internal analysis” because the only use of data internal market only to predict the supply and demand for shares of stock or securities markets as a whole. Data market is usually referred to as data related to prices and total sales volume. In technical analysis conducted, moving average lines were used as technical indicators.
This moving average lines are shown in red and blue lines in the graph which refers to the average price of a stock or index at a certain period. In this analysis, the time period is used by 30 and 100 days. After moving average lines available, it will be compared with current prices to decide whether to buy or sell. Conditions to determine the “Buy Signal” and “Sell Signal” are as follows: “buy signal”:The price was below the moving average lines are at a high level of transaction volume “sell signal”:The price is above the moving average lines are at a high level of transaction volume 5. 2 IOI Properties Bhd 5. 2. Moving Average 30-day According to the daily IOI Properties Bhd. closing price data for one years starting from 1 June 2009 until 30 June 2010, it is revealed that there are nine “buy signal” and eight “sell signal” in the 30-day moving average. As shown in the graph, “buy signal” are located on the date of 13 July, 2 Sept, 5 Oct, 4 Nov, 14 Dec,23 Dec 2009, 19 Feb, 29 Mac and 17 Jun 2010. This is due to the closing price of IOI Properties (blue in colour) is below the moving average line on these days, and it will cut the moving average line (red in colour) from bottom. It shows that the price of IOI Properties Bhd. as going to exceed the average price of the stock. This signifies that the market is in good condition and is a best time to make investments. In addition, by referring to the moving average line, after the buy signals on 13 July, 2 Sept, 5 Oct and 4 Nov, the closing price is moving above the moving average line, and both lines are increasing. This is a phenomenon that also indicates that market conditions are good in the period after that time. On the other hand, for “sell signal”, there are eight points, namely at the date of 28 Aug, 1 Oct, 3 Nov, 20 Nov, 17 Dec 2009 and 20 Jan, 26 March, 26 April 2010.
Following additional conditions in the determination to “sell signal”, it was explained that “sell signal” exists even though the closing price is above the moving average line. This is due to the moving average line flattens out or declines. It gives an indication to investors that stock prices will fall. Accordingly, for some investors, they will still hold the stock because after the fall, the market showed increased “secondary trend” in a short period of time. For example, on the date 14 Aug 2009 the price fell until 8 Sept 2009, investors already have sufficient time to respond to this situation and sell their shares.
This was accompanied with a “sell signal” that exists according to the graph shown, on 2 Sept. Within this period, the KLCI was even increasing. So, this period can be considered that the response period for investors to sell the stocks. On the other hand, investors can still choose to hold the stocks, because the moving average line in increasing. This indicates that the market conditions are good, and it’s proven that, after the sell signal on 28 Aug, the stock’s price increase again. According to the plotted “buy signals” and “sell signals”, the profits earned by investors are as follows: 1. 3 July 09Buy:RM 4. 64 28 Aug 09Sell:RM 5. 04 TotalGain:RM 0. 40 2. 2 Sept 09Buy:RM 5. 03 1 Oct 09Sell:RM 5. 20 TotalGain:RM 0. 17 3. 5 Oct 09Buy:RM 5. 20 3 Nov 09Sell:RM 5. 34 TotalGain:RM 0. 14 4. 4 Nov 09Buy:RM 5. 34 20 Nov 09Sell:RM 5. 45 TotalGain:RM 0. 11 5. 14 Dec09Buy:RM 5. 44 17 Dec09Sell:RM 5. 46 TotalGain:RM 0. 02 6. 23 Dec09Buy:RM 5. 46 20 Jan 10Sell:RM5. 49 TotalGain:RM 0. 03 7. 19 Feb 10Buy:RM 5. 37 26 Mac 10Sell:RM 5. 39 TotalGain:RM 0. 02 8. 29 Mac 10Buy:RM 5. 40 26 Apr 10Sell:RM 5. 44 TotalGain:RM 0. 04 In total, the profits that can be counted in this 30-day moving average is RM0. 93. 5. 2. Moving Average 100-day In the 100-day moving average, found that there are two “buy signal” and three “sell signal”. As stated in the graph, “buy signal” is on the date of 24 Feb and 29 March in year 2010 because the IOI Properties closing price is lower than the moving average line, and it penetrates the moving average line from the top. Although the volume of transactions cannot be referred to in this analysis but it also can be supported by other reasons. After the buy signals, the moving average line has a little rise, this shows that the market is in good condition and is a correct time to make investments.
On the other hand, for “sell signal”, there are three points, namely at the date of 25 Jan, 11 Mac, 3 May, 2010. This happened because the closing price penetrates the moving average line from the top. For example, there is sell signal on 11 Mac. But, investors can choose to continue holding the stocks, because although the price drop and cut the moving average line, but the moving average line does not drop significantly, and just flattens out. This shows that the market condition was not too bad, and the price will rise shortly, and it reach another buy signal on 29 May 2010.
Profits earned by investors can be found in the following table. 1. 24 Feb 10Buy:RM 5. 40 11 Mac 10Sell:RM 5. 42 TotalGain:RM 0. 02 2. 29 Mac 10Buy:RM 5. 42 3 May 10Sell:RM 5. 42 TotalGain:RM 0. 00 The total profits that can be counted in 100-day moving average is RM0. 02. 5. 3 Jobstreet Corporation Bhd. 5. 3. 1 Moving Average 30-day According to the daily Jobstreet closing price data for one year starting from 1 June 2009 until the 30 June 2010, it is revealed that there are seven pairs of “buy signal” and “sell signal” in the 30-day moving average.
As shown in the graph, “buy signal” is on 13 July, 28 Aug, 31 Dec in 2009 and 17 Feb, 26 Apr, 10 May and 31 May in 2010 because on these all day, the closing price of the Jobstreet is below the moving average line, and it penetrates the moving average line from the bottom. In the period of 17 Feb 2010 to 21 Apr 2010, there is a “Bull Market” which the price and the average moving line is rising. This shows that the within this period, the market conditions are good, and the price will continue to decrease until it reach the following sell signal on 21 Apr 2010.
Start from 17 Feb, it is a good time to do investments on this stock. On the other hand, for “sell signal”, there are seven points, namely at the date of 24 Aug, 21 Dec in 2009 and 2 Feb, 21 Apr, 3 May, 21 May, 25 June in 2010. Sell signal is generated when the closing price cut the moving average line from the top. Although in the fifth (buy on 26 Apr and sell on 3 May) and sixth (buy on 10 May and sell on 21 May) pairs of buy signal and sell signals, the net profit is zero (buying price equals to selling price), but investors still can earn some profit if they are able to sell it off before the date of selling signal.
Besides that, investors also can choose to hold the stocks until the price moving up again. For example, for the sixth pair of buy signal and sell signal, investors can choose not to sell in this date of sell signal, but sell it on the next sell signal, which can make profit of RM0. 03. The profits earned according to this seven pairs of buy signal and sell signal, are as follow: 1. 13 July 09Buy:RM 1. 12 24 Aug 09Sell:RM 1. 20 TotalGain:RM 0. 08 2. 28 Aug 09Buy:RM 1. 21 21 Dec 09Sell:RM 1. 42 TotalGain:RM 0. 21 3. 31 Dec 09Buy:RM 1. 43 02 Feb 10Sell:RM 1. 48 TotalGain:RM 0. 5 4. 17 Feb 10Buy:RM 1. 50 21 Apr 10Sell:RM 1. 99 TotalGain:RM 0. 49 5. 26 Apr 10Buy:RM 2. 01 03 May 10Sell:RM 2. 01 TotalGain:RM 0. 00 6. 10 May 10Buy:RM 2. 01 21 May 10Sell:RM 2. 01 TotalGain:RM 0. 00 7. 31 May 10Buy:RM 2. 00 25 Jun 10Sell:RM 2. 03 TotalGain:RM 0. 03 The total profit earned according to this 30-day moving average is RM0. 86. 5. 3. 2 Moving Average 100-day According to the graph above, in the 100-day moving average, there are no any buy signal ans sell signal, becase there is zero intersection between the line of stocks closing price and moving average line.
The moving average line is increasing along the graph, indicates that the market conditions is good, the stocks’ price will keep on increasing, and investors can buy the stocks at any time and hold the stock until it reach a higher price. On the other hand, investors can sell the stocks whenever the stock price is higher than the buying price, to earn a short term profit. Most ordinary investors using technical analysis to analysis buy and sell signal which usually consists of those who invest in the short term and will move from the market when there is a “sell signal”.
Based on the views of Shleifer and Vishny’s model, they introduce these types of investors as “Noisy Trader” which invest in a short-term acting sensitive to signal market. 6. 0 Conclusion Based on the analysis of two stock price of IOI Properties Bhd and Jobstreet Corporation Bhd, these two stock have a high potential in earning revenue. Based on the data, the standard deviation of IOI Properties stock is 1. 129500 and Jobstreet stock is 1. 931149. Therefore Jobstreet stock has a higher risk than IOI Properties. The covariance between IOI Properties and Jobstreet stocks is 0. 020391, which means the two stocks have positive relationship.
Coefficient of Variation for IOI Properties is 28. 447394 while jobstreet is 8. 136452. Jobstreet is a better choice for investor because its coefficient of variation is lower than IOI Properties. In the other hand, on portfolio part, the average rate of return of this portfolio is higher than market index, which portfolio is 0. 138525 compare with KLCI index which is 0. 095438. This shows that this combination is good to increase the return and is advisable to invest. Beta of the portfolio shows the value of 0. 131014. Therefore, the portfolio is more volatile than the KLCI stock index.
The correlation coefficient between IOI Properties Bhd. and Jobstreet Corporation Bhd stocks is 0. 009383, which means they are positively correlated. When the returns of IOI Properties Bhd. increase, the returns of Jobstreet Corporation Bhd will increase also. The total risk of a portfolio is the standard deviation of the return of the portfolio. From the calculation, the total risk of the portfolio is 1. 123153. Compared to the market index of 1. 821575, the value is lower by 1. 686658. The risk is much lower to invest in the portfolio, compared to the market. 7. 0 References Book Charles P.
Jones, (2007). Investments Analysis and Management, 10th. Edition. John Wiley & Sons, Inc. Saiful Bahri Sufar, (2001). Pengurusan Kewangan, Cetakan Kedua. Dewan Bahasa dan Pustaka, Kuala Lumpur. Eugene F. Brigham, Joel F. Houston (2010). Essentials of Financial Management, 2nd Edition. Cengage Learning Asia Pte. Ltd. Website http://www. bursamalaysia. com http://www. ioiproperties. com. my/ http://www. jobstreet. com http://www. klse. com. my http://www. thestar. com. my http://finance. yahoo. com http://www. klstock. com/ http://www. bnm. gov. my http://biz. thestar. com. my/marketwatch