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Reference:Sample- Special Report
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BASIC INFORMATION
Company: XXX (THAILAND) CO. LTD.
Address:203 MOO 5, BANGPA-IN INDUSTRIAL ESTATE,
T. KLONGIG, A. BANGPA-IN,
AYUDHYA13160, THAILAND
Telephone:(6635) 723-456, 789-101
Fax :(6635) 254-957, 297-584
E-mail:
SUMMARY
Started Year:1991
Legal Form:Private Limited Company
Status:Active
Registered Capital:THB 300,000,000
Paid-Up Capital:THB 225,000,000
Total Revenues:THB 6,659,977,963
EBIT:THB 976,511,792
Net Profit (Loss):THB 947,369,465
Chief Executive:Mr. Howard Schmidt
Senior Vice President (International)
Nature of Business:Manufacturer of Personal Computer Components
ISIC Code:3210
Employees:8,500
HISTORY/BACKGROUND
The subject was established on January 23, 1991 as a private limited company under the name XXX (THAILAND) CO. LTD.
A core production facility of XXX Corporation in California, U.S.A., a manufacturer of recording heads and head stack assemblies for disk drivers and magnetoresistive head for quarter-inch-cartridge tape drives. Besides the subject, XXX CO. LTD also operates in Philippines and Japan.
In 1991, received promotional privilege from the Board of Investment.
In May 1991, started producing personal computer components.
In March 1993, changed the operating status to a company operating in an export processing zone.
Award
ISO 9002 and 14001 certification for quality and environmental management systems
Excellent Safety Factory Award from the Ministry of Labor and Social Welfare – 1998
Prime Minster’s Award in the category of Outstanding Plant in Industrial Estates and Industrial Export Zone - 1997
PERSONNEL
Board of Directors
Mr. Choukiat Kijpatthana
Mr. Benjamin Alan Scott
Mr. Alberto Benedetti
Mrs. Kanokwan Munthorn
Mr. Simon O’Connell
Mr. Terrence Munier
Authorized Signatures
Any of the above directors can sign on behalf of the subject with seal affixed.
Management
Mr. Howard Schmidt (American, age 49): Senior Vice President – International
Education: B.Sc. (Computer Science), University of Sacramento, California State
Experience: Former Executive Director, Software & Service Business Unit, ABC
Group
Former Director, XXX Co. Ltd.
Mr. Choukiat Kijpatthana (Thai, age 52): Vice President and General Manager
Education: B.Sc. (Electrical Eng.), ChulalongkornUniversity
Experience: Former Executive Director, Systems Integration Strategic Business Unit,
ABC Group
Former Field Engineer Manager, XYZ (Thailand) Co. Ltd.
Mr. Surachai Rungrueng (Thai, age 40): Accounting Manager
Mrs. Kanokwan Munthorn (Thai, age 35): Financial Manager
Mr. Theerayudh Somprathana (Thai): Quality Assurance Manager
Mr. Sutham Sae-Lee (Thai): Senior Director - Human Resource
BUSINESS OPERATIONS
Business Activities
The subject operates as a manufacturer and exporter of Personal Computer Components. The core three products include Sliders, Head Gimbal Assemblies (HGAs) and Head Stack Assemblies (HSAs). Currently, HGAs are the main product of the subject.
The subject under the parent policy has a US$ 180 million expansion project in the pipeline to boost production capacity by 70% within three years. To be implemented in phases from 2000 to 2002, the project essentially involves the automation and modernization of equipment and plant in half of subject’s factory.
Brand Names
“XXX”
“YYY”
Production Capacity
Sliders: 40 million units
HGA: 30 million units
HSA: 5 million units
Purchasing/Import
95% of raw materials including wafer, flexure, PVC shoes, etc. are imported from the U.S.A., Hong Kong, Singapore and the Philippines, while the rest is purchased from local suppliers.
Major Suppliers
XXX Precision Co. Ltd. : Thailand
XXX Supply Co. Ltd. : Thailand
XXX Technical Services Co. Ltd. : Thailand
XXX Technology (Thailand) Ltd. : Thailand
Sales/Export
100% of its products are exported to the U.S.A. and Singapore.
Major Customers
ABC Technology : Singapore
ABC Electronic Corporation: Singapore
ABCD Electronic Corporation: U.S.A.
Credit
Purchasing Term
Local:Cash, 30-60-90 days
Import:L/C and Open Account
Sales Term
Local:-
Export:L/C, D/A, D/P, T/T and Open Account
Banking
Bangkok Bank Public Co. Ltd.: Sapanmai and Chaoprom Branches
Thai Farmers Bank Public Co. Ltd.: Bangpa-in Branch
Manpower
Office staff : 500
Factory workers: 8,000
Total : 8,500
Location
Registered address : Same as the heading address
Office and factory : Owns in an industrial area at the heading address.
Areas : 7 acres comprising of 2 buildings – 353,000 sq. ft.
Acquired an adjacent 97,000 sq. ft. facility.
Leased a 20,000 sq.ft. warehouse for storage.
RELATED PARTIES INFORMATION
Parent Company
XXX Corporation
Address : 55300 Osgood Rd., Fremont, CA94538, USA.
Tel : (510) 768-5326, Fax : (501) 856-9658
LITIGATION
(The litigation action is based on INRA’s database for bankruptcy and receivership cases only obtained from Legal Execution Department encompassing the last five years.)
Subject Check
No litigation action
Directors Check
No litigation action
recent operating development
Sales of HGAs dropped by 10%-15% during the first quarter of 2002 due to the slump in global computer market. Subject confirmed to maintain its core production base in Thailand due to the low labor cost and has no plan to switch its investment to China like other manufacturers. It also transferred R&D from the US to Thailand.
In 2002, subject has invested THB 200 million to kick off a new product “OPTICAL” with the annual production capacity of 2,000,000 pcs. Subject will in charge of the production while it will set up a new firm - ABCD to responsible for designing and export market. The production will be started in 3rd quarter of 2002. The new plant is located in the same compound as subject’s plant.
COMMENT & credit opinion
Thailand’s exports this year could shrink 2.6% in value if the economies of the US and Japan, major buyers of electronic products, remain dormant in the second half. Exports of computers and their parts as well as other electronic goods, could reduce overall export value to US$ 68 billion or THB3.09 trillion.
Thailand has become one of the world & largest production bases for HDD and related components. Thailand has clusters of firms producing large volumes of HDD, HSA, HGA, and spindle motor. Thailand is a production base of AAA, BBB, and CCC, which are the world's largest, third largest, and sixth largest HDD producers. These three companies' aggregate market shares are as much as 45% of world's market. However, we view that demand in the HDD and related components in this year will drop this year in line with the industrial trend.
Subject is the production base of XXX Corp. in the U.S.A. Subject is the major player in Slider Fabrication and HGA market with long experience in this business for 10 years. Based on the latest financial result for FY 2001, subject’s performance remained stable both in terms of sales and margin. Nevertheless, the lower obsolete assets expense and lower interest payment helped to boost subject’s net profit by 174% in FY 2001. Furthermore, subject could maintain its strong financial position. With strong support from its parent company, we view that subject could cope with this tough situation in electronic industry and maintain its strong financial condition. Therefore, we recommend credit proceeding for subject.
FINANCIAL INFORMATION
The capital was initially registered at THB 100,000.
Increases : THB 100,000,000 on August 8, 1991
THB 200,000,000 on September 23, 1991
THB 300,000,000 on April 14, 2002
The latest increase was divided into 3,000,000 shares of THB 100 each, with the paid-up capital of THB 225,000,000.
Shareholders Structure (as of June 14, 2002)
Nationality / No. of Shareholders / Shareholding / % of Total SharesThai(s) / - / - / -
Foreigner(s) / 8 / 3,000,000 / 100.00
Total / 8 / 3,000,000 / 100.00
List of Shareholders
Name / Nationality / Shareholding / PercentageXXX Corporation / American / 2,999,993 / 100.00
Mr. Alberto Benedetti / American / 1 / -
Mr. Benjamin Alan Scott / American / 1 / -
Mr. Simon O’Connell / American / 1 / -
Mr. Sean Petit / American / 1 / -
Ms. Florence Penn / American / 1 / -
Ms. Caroline Hewitt / American / 1 / -
Mr. Andre Shield / American / 1 / -
Auditor
Mr. Thanongsak Eaksomboon No. 3315
ABC Office Ltd.
BALANCE SHEET (BAHT) / 30/09/2002 / 30/09/2001 / 30/09/2000ASSETS
Cash & Bank / 166,359,629 / 171,157,249 / 113,343,233
Cost of Services / 78,056,340 / 277,465,513 / -
Accounts & Notes Receivable
Accounts Receivable / 32,776,608 / - / -
Affiliated Companies / 1,866,654,065 / 1,248,823,616 / 844,412,511
Inventories / 20,386,283 / 13,575,602 / -
Deposits & Prepaid Expenses / 34,465,977 / 27,374,976 / 9,741,112
Refundable Purchasing Tax / 16,953,987 / 45,465,976 / 26,833,129
Other Current Assets / 19,788,528 / 20,255,785 / 8,565,641
Total Current Assets / 2,235,441,417 / 1,804,118,717 / 1,002,895,626
Fixed Assets / 3,534,780,826 / 4,141,052,334 / 4,826,691,189
Advances / 30,366,148 / 14,731,787 / 16,057,139
Total Assets / 5,800,588,391 / 5,959,902,838 / 5,845,643,954
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts Payable / 644,075,306 / 675,178,464 / 929,887,529
Loans from Affiliated Companies / 1,641,810,373 / 2,923,862,277 / 2,679,091,517
Other Payables / 22,163,595 / 13,422,717 / 11,684,135
Current Portion of Long-term Loans due in 1 year / 82,267,800 / 175,441,491 / 319,671,463
Accrued Expenses / 433,151,971 / 450,752,258 / 366,675,672
Total Current Liabilities / 2,823,469,045 / 4,238,657,207 / 4,307,010,316
Long-term Debt / 308,504,250 / - / 162,744,879
Total Liabilities / 3,131,973,295 / 4,238,657,207 / 4,469,755,195
Shareholders' Equity
Share Capital / 200,000,000 / 200,000,000 / 200,000,000
Capital Paid / 200,000,000 / 200,000,000 / 200,000,000
Retained Earning (Deficit) - Unappropriated / 2,468,615,096 / 1,521,245,631 / 1,175,888,759
Total Shareholders' Equity / 2,668,615,096 / 1,721,245,631 / 1,375,888,759
Total Liabilities & Shareholders' Equity / 5,800,588,391 / 5,959,902,838 / 5,845,643,954
PROFIT & LOSS ACCOUNT / 30/09/2002 / 30/09/2001 / 30/09/2000
Revenues
Service Revenue / 6,495,565,449 / 6,797,262,790 / 6,159,228,252
Other Incomes
Gain (Loss) from Exchange Rate / 152,411,947 / - / -
Interest Income / 9,150,428 / 18,625,735 / 12,665,392
Others / 2,850,139 / 3,159,942 / -
Total Revenues / 6,659,977,963 / 6,819,048,467 / 6,171,893,644
Expenses
Cost of Services / 5,340,211,179 / 5,589,774,512 / 5,340,703,820
Selling & Administration / 68,204,597 / 75,777,747 / 75,177,768
Loss (Gain) on Foreign Exchange / - / 140,770,253 / 233,350,619
Obsolete Assets Expense / 275,050,395 / 627,962,170 / -
Total Expenses / 5,683,466,171 / 6,434,284,682 / 5,649,232,207
Earning (Deficit) before Interest & Income Tax (EBIT) / 976,511,792 / 384,763,785 / 522,661,437
Interest Paid / 27,117,199 / 34,999,246 / 40,900,341
Profit (Loss) before Income Tax & Ex. Items / 949,394,593 / 349,764,539 / 481,761,096
Income Tax / 2,025,128 / 4,407,667 / 2,911,364
Loss (Gain) on Foreign Exchange / - / - / 905,620,059
Net Profit (Loss) / 947,369,465 / 345,356,872 / (426,770,327)
Retained Earning (Deficit), Beginning of year / 1,521,245,631 / 1,175,888,759 / 1,602,659,086
Retained Earning (Deficit), End of year / 2,468,615,096 / 1,521,245,631 / 1,175,888,759
KEY FINANCIAL RATIOS
2002 / 2001 / 2000LIQUIDITY RATIO
Current Ratio / (Times) / 0.79 / 0.43 / 0.23
Quick Ratio / (Times) / 0.77 / 0.42 / 0.23
ACTIVITY RATIO
Receivable Turnover / (Times) / 3.42 / 5.44 / 7.29
Collection Period / (Days) / 107 / 67 / 50
Account Payable Turnover / (Times) / 8.30 / 8.30 / 5.74
Payment Period / (Days) / 44 / 44 / 64
Inventory Turnover / (Times) / 261.95 / 411.75 / -
Inventory Turnover Period / (Days) / 1 / 1 / -
Total Assets Turnover / (Times) / 1.12 / 1.14 / 1.05
PROFITABILIY RATIO
Cost of Goods Sold / (%) / 82.21 / 82.24 / 86.71
Selling & Administration / (%) / 1.05 / 1.11 / 1.22
Interest / (%) / 0.42 / 0.51 / 0.66
Gross Profit Margin / (%) / 17.79 / 17.76 / 13.29
Net Profit Margin before ex. Item / (%) / 14.62 / 5.15 / 7.82
Net Profit Margin / (%) / 14.58 / 5.08 / (6.93)
Return on Equity / (%) / 35.50 / 20.06 / (31.02)
Return on Asset / (%) / 16.33 / 5.79 / (7.30)
Earning per Share / (Baht) / 473.68 / 172.68 / (213.39)
LEVERAGE
Debt to Asset (or Debt Ratio) / (%) / 53.99 / 71.12 / 76.46
Debt to Equity / (Times) / 1.17 / 2.46 / 3.25
Time Interest Earned / (Times) / 36.01 / 10.99 / 12.78
GROWTH RATE
Sales / (%) / (4.44) / 10.36 / -
Cost of Sales / (%) / (4.46) / 4.66 / -
Selling & Administration / (%) / (9.99) / 0.80 / -
Net Profit (Loss) / (%) / 174.32 / 180.92 / -
Total Asset / (%) / (2.67) / 1.95 / -
Financial Analysis
Profitability and Annual Growth
Subject’s net services grew by 10.36% in FY2001 and declined by 4.44% in FY2002 from THB 6.16 billion in FY2000, THB 6.80 billion in FY2001 and THB 6.50 billion in FY2002. When compared all costs with sales, cost of sales was 86.71% in FY2000, 82.24% in FY2001 and 82.21% in FY2002 while selling and administration was 1.22% in FY2000, 1.11% in FY2001 and 1.05% in FY2002. Interest portion was 0.66% in FY2000, 0.51% in FY2001 and 0.42% in FY2002.
Gross Profit Margin was 13.29% in FY2000, 17.76% in FY2001 and 17.79% in FY2002. Net Profit Marginbefore extra. Item was 7.82% in FY2000, 5.15% in FY2001 and 14.62% in FY2002. The subject was suffered from loss on foreign exchange of THB 905.62 million in 2000, which made impact on subject’s income structure. After the subject had to pay income tax and extra item into account, Net Profit Margin was (6.93%) in FY2000, 5.08% in FY2000 and 14.58% in FY2002 or Growth Rate, net profit grew by 180.92% in FY2001 and 174.32% in FY2002. As a result, E.P.S. was THB 213.39 in FY2000, THB 172.68 in FY2001 and THB 473.68 in FY2002.
Liquidity Ratio
The subject’s current assets were about THB 1.00 billion in FY2001, THB 1.80 billion in FY2001 and THB 2.24 billion in FY2002. The major item was accounts and notes receivable. On the other hand, current liabilities were THB 4.31 billion in FY2000, THB 4.24 billion in FY2001 and THB 2.82 billion in FY2002, the major item was loans from affiliated companies.
Looking at liquidity ratio, Current Ratio, which is used to measure short-term debt paying ability was 0.23 times in FY2000, 0.43 times in FY2001 and 0.79 times in FY2002. Quick Ratio, which measured short-term liquidity was 0.23 times in FY2000, 0.42 times in FY2001 and 0.77 times in FY2002. As evident, both ratios were lower than one times, which indicated that the subject might be facing liquidity shortage.
Activity Ratio
Activity ratios are used to evaluate the efficiency with which the firm manages and utilises its assets, it indicated the speed with which assets are being converted or turned over into sales. This ratio involves a relationship between sales and assets.
The Collection Period was 50 days in FY2000 and 67 days in FY2001 and 107 days in FY2002 while Payment Period was 64 days in FY2000, 44 days in FY2001 and FY2002. Inventory Turnover Period was nothing in FY2000, 1 days in FY2001 and FY2002. Therefore, the subject should negotiate with its customer to pay back quickly for it cash flow.
Leverage
Debt to Asset, this measured the percentage of funds provided by creditors. This was due to the composition in its total liabilities and total assets, it was 76.46% in FY2000, 71.12% in FY2001 and 53.99% in FY2002, meant that its creditors have supplied more than half the firm’s total financing.
Debt to Equity, this ratio expressed the direct proportion between debt and owners’ equity, it was 3.25 times in FY2000, 2.46 times in FY2001 and 1.17 times in FY2002. This capital structure clearly implied that the subject was supported by more debt than equity.
Time Interest Earned is used to test the firm’s debt-servicing capacity. This was composition between its profit before interest and taxes and its interest charges. It was 12.78 times in FY2000, 10.99 times in FY2001 and 36.01 times in FY2002.
Overall financial status is considered fair, the subject improved its leverage which indicated sufficient capability to service debt and interest payment.
XXX (THAILAND) CO. LTD 1 / 14