MARITIME INDUSTRY: THE COMPARATIVE ANALYSIS OF GLOBAL MARITIME

VENTURES BERHAD AND SELECTED COMPANIES IN THE MAIN BOARD OF BURSA MALAYSIA (2005- 2009)

By

AHMAD SYAIFULIZAN BIN ZULKEEFLY

Project Paper Submitted in Partial Fulfilment of the Requirement For the Degree of Master of Business Administration Graduate School of Management

International Islamic University Malaysia 2011

APPROVAL PAGE

I certify that I have supervised and read this Project Paper and that in my opinion it confonns to acceptable SlaDdards of scholarly presentation and is fully adequate, in scope and quality, as a Project Paper for the degree of Master of Business Administration.

L This Project Paper was submitted to the Graduate School of Management, IIUM and is accepted as partial fulfilment of the requirements for the degree of Master of Business Administration.

Dr. Turkhan Ali Abdul Manap Project Paper Examiner

This Project Paper was submitted to the Graduate School of Management, IIUM, and is accepted as partial fulfilment of the requirements for the degree of Master of Business Administration.

Prof. Dr. Arif Hassan Chairperson, Project Paper Committee Graduate School of Management IIUM

Master of Business Administration

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DECLARATION AND COPYRIGHT

Name Matric Number

Allmad Syaifulizau Bia Zulkeefty G0920237

I hereby declare that this research is the result of my own investigations, except where otherwise stated. Other sources are acknowledged by footnotes giving explicit references and a bibliography is appended.

Signature: Date: 12111 April 20 II

©Copyright by Ahmad Syaifulizan Bin Zulkeefly and International Islamic University Malaysia

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DEDICATION

This project paper is dedicated to my parents, my lovely wife and my new born baby girL The completion of this project paper would not have been possible without their understanding, love and support

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ACK:-.!OWLEDGEME:-IT

Firstly, this dissertation would not have been possible without the guidance and the help of my supervisor, Prof. Dr. ?1/asim Shah Shirazi who contributed and extended his valuable assistance in the preparation and completion of this study. His sincerity and encouragement has been my inspiration to overcome all the obstacles in the completion of this project paper.

Last but not the least, my parents, my lovely wife, my new born baby girl. and the one above all of us, Allah the Almighty, for giving me the strength to complete the project paper on time as per schedule. May God will give me strength to further into PhD in the future. Insha' Allah.

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TABLE OF CONTENTS

Approval Page

Declaration and Copyright Page

Dedication

Acknowledgements

Table of Contents

List of Figures

Li<t of Tables

List of Abbreviations

Abstract

I. INTRODUCTION

1.1. Objectives of the Study

1.2. Significance of the Study

1.3. Limitations of the Study

1.4. Organization of the Project Paper

2. Literature Review

2.1. Summary

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3. RESEARCH METHODOLOGY 22

3.1. Data Collection 22

3.2. Data Analysis 22

3.3. Data Interpretation 22

3.4. Data Collection Method 23

3.5. Sampling Data 24

3.6. Hypothesis 24

3.7. Research Design 26

4. PROFILE OF THE COMPANIES I SAMPLES 29

5. DATA A:--IALYSIS AND FINDINGS 46

5.1. Comparison of Return on Investment (ROI) 46

5.1.1. ROI Trend Analysis 47

5.2. Comparison of Return on Equity 47

5.2.1. ROE Trend Analysis 48

5.3. Comparison of Dividend per Share (DPS) 49

5.3.1. DPS Trend Analysis 50

5.4. Comparison of Earnings per Share (EPS) 50

5.4.1. EPS Trend Analysis 51

5.5. Hypotheses Testing and Findings 52

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6. CONCLUSIONS AND RECOMMENDATIONS

6. I. Conclusions

6.2. Recommendations

BIBLIOGRAPHY

APPE;..!DIX l

APPENDIX 2

APPENDIX 3

APPENDIX 4

APPENDIX 5

APPENDIX 6

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List of Tables

TABLE 1: ROI Averages for 5 Years

TABLE 2: ROE Averages for 5 Years

TABLE 3: DPS Averages for 5 Years

TABLE 4: EPS Averages for 5 Years

List of Figures

FIGURE I: Comparison of Return on Investment (ROI)

FIGURE 2: Comparison of Return on Equity (ROE)

FIGURE 3: Comparison of Dividend per Share (DPS)

FIGURE 4: Comparison of Earnings per Share (EPS)

List of Abbreviations

GMVB

RO!

ROE

DPS

EPS

Global Maritime Ventures Berhad

Return on Asset

Return on Equity

Dividend per Share

Earning per Share

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ABSTRACT

This paper provides comparative analysis of Global Maritime Ventures Berhad and selected companies in the main board of Bursa Malaysia over a period of five years -2005 to 2009. Global Maritime Ventures Berhad is an investment holding company created by the Malaysian government to give boost to the Malaysian maritime industry with a sum of RMSOO million funds. Few major profit performance ratios - Return on Investment, Return on Equity, Dividend per Share and Earnings per Share are used as indicators to evaluate the performance of maritime industry under study. The study finds that the GMV performances are better than the listed companies.

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CHAPTER!

1. INTRODUCTION

Global Maritime Ventures Berhad (GMVB) was established in 1993 with a sum of

RM 500 million to give boost to the maritime industry in Malaysia. Global Maritime

Ventures Berhad (GMVB) is a marine venture capital investment holding company

acts as the catalyst to the country's maritime industry by forming strategic alliances

with Malaysian partners through establishing a complete, high quality, competitive

and environmentally sea-secure transportation services.

Global Maritime Ventures Berhad's operation is to develop the national shipping

business sector through building strategic alliances with local partners to jointly

acquire vessels for domestic as well as international operations. The perception about

Global Maritime Ventures Berhad' s performance is generally good.

People believe that Global Maritime Ventures Berhad could act as a catalyst in

spearheading the physical and economic development of Malaysian maritime industry

through joint venture, in a professional, fair, efficient and transparent manner for all

the stakeholders. It is also considered as a premier venture capital provider in leading

the development of high quality and competitive maritime transportation services.

Nevertheless. there is lack of studies regarding the performance (in terms of profit

earning) of maritime industry in Malaysia. So far, no exact and detail research on its

achievement has been made. Therefore, this project paper is intended to fill the gaps

by focusing on profit performance as the subject matter.

Majority of previous researches have been focusing on the financial ratio as the tool

for analyzing company's performance. So we will also use these ratios for the

comparison purpose. The study will examine and evaluate fifthteen out of twenty­

two companies in the Main Board of Bursa Malaysia in term of their average profit

perfonnance between 2005 and 2009 which are under the maritime industry. The

companies are selected based on their year of listing between 2005 and 2009 and also

based on their paid-up capitals which are between RM I Million to RM I Billion.

At the same time, one private investment holding company, Global Maritime

Ventures Berhad, will also be used as a benchmark on perfonnance of Maritime

Industry in Malaysia since it is indirectly owned by the Malaysian Government

through Bank Pembangunan Malaysia.

The focus of the study will be on the profit perfonnance ratios which are ROI (Return

on Investment). ROE (Return on Equity). DPS (Dividend per Share) and EPS

(Earning per Share). The data for these will be gathered from companies· annual

reports. The data will be analyzed using Financial Ratio Analysis Method. Financial

ratios are widely used for modelling purposes both by practitioners and researchers.

The firm involves many interested parties, like the owners, management, personnel,

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customers. suppliers, competitors, regulatory agencies, and academics, each having

their views in applying financial statement analysis in their evaluations.

Practitioners apply financial ratios, for instance, to forecast the future success of

companies, while the researchers' main interest has been to develop models exploiting

these ratios. Many distinct areas of research involving financial ratios can be

discerned. Historically. one can observe several major themes in the financial analysis

literature. There is overlapping in the observable themes, and they do not necessarily

coincide with what theoretically might be the best founded areas. The existing themes

include the functional form of the financial ratios, i.e. the proportionality discussion,

distributional characteristics of financial ratios. classification of financial ratios,

comparability of ratios across industries, and industry effects, time-series properties

of individual financial ratios, bankruptcy prediction models, explaining (other) firm

characteristics with financial ratios, stock markets and financial ratios, forecasting

ability of financial analysts vs. financial models and estimation of internal rate of

return from financial statements. The history of financial statement analysis dates far

back to the end of the previous century by Horrigan (1968). Technically, financial

ratios can be divided into several. sometimes overlapping categories. A financial ratio

is of the form X!Y, where X andY are figures derived from the financial statements

or other sources of financial information. One way of categorizing the ratios is on the

basis where X andY come from which are stated by Foster (1978), pp. 36-37, and

Salmi. Virtanen and Yli-Olli (1990), pp. 10-11. In traditional financial ratio analysis

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both the X and the Y are based on financial statements. If both or one of them comes

from the income statement, the ratio can be called dynamic while if both come from

the balance sheet it can be called static. The concept of financial ratios can be

extended by using other than financial statement information as X or Y in the X/Y

ratio. For example, financial statement items and market based figures can be

combined to constitute the ratio.

l.l.Objectives of the Study

The main objective of the study is to determine whether the special investment

venture-capital company (Global Maritime Ventures Berhad), which is created by

the Malaysian government to boost the Maritime Industry in Malaysia, has been

successful in achieving its objectives. The study will also compare the

performance of the selected listed companies in the maritime industry in Malaysia

and the Global Maritime Ventures Berhad (GMVB). The study will use GMVB as

a benchmark.

1.2.Significance of the Study

This research has significance for many stakeholders:

l) Malaysian Government

This research can be used as a reference by the Malaysia Government to

assess its long-term planning to boost the Malaysian maritime industry in the

near future.

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2) Foreign and Domestic Investors

It can be used by the potential and existing mvestors both foreign and

domestic to analyze the profitability of investing in the Malaysian maritime

industry.

3) Banking and Financial Institution

Banking and Financial Institution can use the research as reference in gaining

the insight view of how effectively the maritime industry in Malaysia is

performing. so that they can provide more financing products to potential

clients involve in the maritime industry in Malaysia.

4) Academicians I Researchers

This research can be used by Academicians and Researchers as a base or

reference for future research to increase the efficiency of maritime industry in

Malaysia.

5) Civilians

Civilians can use the research as a guideline and reference to evaluate the

steps that the Malaysian Government has taken to improve the maritime

industry and thus create more job opportunities for the civilians.

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