Table of Content

Heading Pages
1.0 Executive Summary 2

2.0 Background of the Companies 3-5

3.0 Ratio Analysis

3.1 Dutch Lady Milk Industries Bhd
3.2 Nestle Malaysia Berhad
3.3 AirAsia
3.4 Malaysia Airlines

4.0 Comparison between business sectors

4.1 Food and Beverage Industry
4.2 Airline Industry

5.0 Recommendations and Conclusion

6.0 References
1.0 Executive Summary

This report is aimed to provide the reader a thorough view on the two leading companies in two
different sectors which are; in the food and beverage industry (Nestle (Malaysia) Berhad and
Dutch Lady Milk Industries Berhad) and airline industry (Air Asia and Malaysian Airline). Apart
from presenting the background of the companies, an assessment on the companies’ ratio
analysis, some additional information and comparison between two industries are also prepared
in this report. Lastly, recommendations and conclusion are provided to both companies and
shareholders to serve as advice and also to conclude the report.
2.0 Background of the Companies

2.1 Dutch Lady Milk Industries Berhad

Dutch Lady Milk Industries Bhd, one of Malaysia’s leading dairy companies, is a major
contributor in the food and beverages industry and mainly focuses on dairy products. The
company's principal activity is manufacturing sweetened condensed milk, milk powder, dairy
products and fruit juice drinks for distribution in the home market and for export. The latest
products offered by the company are Shine and Yes!, in line with the increased awareness of the
health benefits of drinking milk, along with rising disposable income and growth of food retail
chains in Malaysia. The Company had been operating principally in Malaysia for more than 50
years, with 570 employees under it and a market capitalization of RM 736,000,000. It is the
largest local dairy products supplier, holding over 20% of the overall domestic dairy products
market.

2.2 Nestle (Malaysia) Berhad

Nestle (Malaysia) Berhad is an investment holding company that was established in

1912. It is the leading halal food manufacturer in Malaysia. The Company, together with its
subsidiaries, is engaged in the manufacture, marketing and sale of food products in Malaysia.
Nestle (M) Bhd employs over 5,000 people and had over 300 Halal products. The Company
offers brand names, such as MILO, NESCAFE, MAGGI, NESPRAY and KIT KAT. The
company had been listed on Bursa Malaysia since 1989. It is based in Petaling Jaya, Selangor
and owns 7 factories and 6 sales offices.

Both companies compete among each other as they embark on similar strategies to
expand their market share. Their ability to effectively apply marketing strategies has helped
them conquer the domestic dairy products market.
2.3 AirAsia

In Malaysia, Air Asia was often in the news for its low fares and fast growing operations
and it is one of the most successful airlines in the Southeast Asian region. Air Asia was
established on 12 December 2001 by Tony Fernandes, CEO of Air Asia.

Air Asia has successfully positioned itself in consumers’ mind and creates a new air
travel revolution in Asia by using a simple but extremely strong slogan “Now Everyone Can
Fly”. Air Asia’s business strategy which is concentrate on cost leadership play a crucial role in
the successful of Air Asia. The two main characteristic of Air Asia low cost business are
operation effectiveness and outstanding efficiency. This enables Air Asia builds and sustains its
competitive advantage by providing services at a price that is simply lower than competitors’
price.
The main objective of Air Asia is continuously searching areas for cost reduction, so that
Air Asia able to achieve bigger cost advantages than the competitors. It not only managed to
compete with major carriers like Malaysian Airlines (MAS) and Singapore International Airlines
(SIA), but it also became the benchmark for several other low-cost airlines in that market. In
addition, Air Asia also employs and trains staffs with superior interpersonal skills, and they
manage the entire creative process effectively.

2.3 Malaysian Airline System (MAS)

Malaysia introduced Malaysian Airline Limited, which was subsequently renamed

Malaysian Airline System or in short, Malaysia Airlines after its separation with Malaysia-
Singapore Airlines (MSA) in the year of 1973. Till today, it has been received more than 10
awards in the last 10 years because of it holds a lengthy record of service and best practices
excellence.

Unfortunately, Malaysia Airline faces difficulty during the year of 2005 because of the
changes of global economic climate, increasing competition and rising operational costs. After
appointed new Managing Director or CEO Dato' Sri Idris Jala in the year of 2006, he and his
new management team came out a Business Turnaround Plan (BTP) and using the Malaysian
Government Linked Company (GLC) Transformation Manual as a guide.

Management team able to achieved a profit of MYR 620 million in 2006 from the losses of
MYR 1.7 billion in 2005 and Malaysia Airline able to achieved achieving a profit of MYR 50
million in 2007 and a record profit of MYR 500 million in 2008.
3.0 Ratio Analysis
3.1 Dutch Lady Milk Industries Berhad
3.1.1 Short-Term Solvency and Asset Management Efficiency

3.1.1.1 Current Ratio

Formula 2007 2008 2009

1.41

3.1.1.2 Accounts Receivable Turnover

3.1.1.3 Inventory Turnover

3.1.1.4 Payables Turnover

3.1.1.5 Total Asset Turnover

3.1.2 Debt Financing & Coverage

3.1.2.1 Debt Ratio

3.1.2.2 Long-Term Debt to Capitalization Ratio

3.1.2.3 Debt to Equity Ratio

3.1.3.1 Net Profit Margin

3.1.3.2 Return on Total Assets

3.1.3.3 Return on Equity

3.1.3.4 Earnings Per Common Share

3.1.3.5 Dividend Payout