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Sector                 : Consumer Products and Services
Sub Sector         : Consumer Services
Focus                  : Trading and Distribution
 
Harrison Holding (M) Bhd (HARISON) and DKSH Holding (M) Bhd (DKSH) are the only two large trading and distribution public listed company in Malaysia. Both company are owned by foreign company HARISON major shareholder is Bumi Raya International Holding Company Limited which incorporate in Cayman Islands while DKSH major shareholder is Diethelm Keller Siber Hegner from Swizerland. Both company coincidentally owned Famous Amos, HARISON operate Famaous Amos in Singapore while DKSH owned Famous Amos in Malaysia. HARISON focus in East Malaysia while DKSH focus in Peninsular Malaysia.
 
This blog would compare the two companies in term of:
 
1)   Operating Segment
2)   Income Sheet Item
3)   Balance Sheet Item
4)   Market Ratio

Operating Segment

HARISON had separate it operation in three segment

i)                  Trading and Distribution

This Segment contribute 95 % of the 2019 profit. It comprised of trading and distribution of consumer products, building material and agricultural chemical products and liquor products.

ii)               Retail

This is a new segment for HARISON which show a separated reporting segment after acquisition of Watts Harrison Sdn Bhd in Penisular Malaysia which wholesale and retails Komonoya brand inMalaysia and The Famous Amos Chocolate Chip Cookies Singapore Pte Ltd which wholesale and retails the Famous Amos Cookies in Singapore.

iii)            Others

Other segment include engineering, insurance, shipping, travel agency service and rental of property.


DKSH had separate into three reported segment:

i)                  Marketing and Distribution

This segment includes Fast Moving Consumer Goods (“FMCG”) business and Performance Material business.

ii)               Logistics service

This segment includes the Healthcare business and supply chain focused telecommunication business

iii)            Other

The key business in this segment is the Famous Amos Chocolate Chip Cookies chain of retails outlets.


·     DKSH Marketing and Distribution Service and Logistics Services segment can be classified as Trade and Distribution Segment. Hence both company make almost all their profit from Trade and Distribution Segment.

·    Both company did not make much on the retail segment. HARISON only make 1% and DKSH is making loss in their retail segment for the year 2019.


Income Statement


Ratio

HARISON

DKSH

2018

2019

2018

2019

Gross Profit Margin

10 %

11 %

8 %

9 %

Operating Margin

2 %

3 %

1 %

2 %

Nett Profit Margin

1 %

2 %

1 %

1 %

Degree of Operating Leverage

 

2.23

 

5.83

 

·    Both companies had one percent higher gross profit margin and operating margin for the year 2019 compared to 2018.

·    DKSH nett profit margin did not increase for the year 2019 because of high financial cost for the year 2019.

·    DKSH financial cost had increase by 457 % for the year 2019.

·    HARISON had better gross profit margin, operating margin and nett profit margin compared to DKSH.

Balance Sheet


Ratio

HARISON

DKSH

2018

2019

2018

2019

Solvency Ratio

 

 

 

 

Current Ratio

1.63

1.59

1.39

1.48

Quick Ratio

1.07

1.09

0.91

0.97

Cash Ratio

0.22

0.22

0.07

0.02

Total Debt / Equity

0.65

0.46

0.10

0.85

Liquidity Ratio

 

 

 

 

Cash Conversion Cycle

76.50

60.02

27.73

36.28

Intangible to Book Value

2.50 %

2.41 %

0.03 %

63.51 %

Inventory to Sales

0.13

0.12

0.12

0.11


·    HARISON has better solvency ratio compared to DKSH

·    DKSH total debt to equity ratio had increase from 0.10 in 2018 to 0.85 in 2019

·    DKSH had lower cash conversion cycle (36.28 in 2019) compared to HARISON (60.02 in 2019)

·    DKSH had intangible to book value had increase from 0.03 % in 2018 to 63.51 % in 2019

·    Both HARISON and DKSH had similar inventory to sales ratio

Market Ratio

As of 19 November 2020

Ratio

HARISON

DKSH

Market Cap

253,000,000

563,000,000

P/E

11.03

12.24

Dividend Yield

5.41

2.80

Dividend Pay out

59.70 %

34.28%


·    HARISON is the smaller company in term of market cap compare to DKSH

·    HARISON had lower P/E ratio which is 11.03 compare to DKSH which is 12.24

·    HARISON had  higher dividend yield of 5.41 % compared to DKSH which is 2.8 %

·    HARISON had higher dividend payout compared to DKSH

Conclusion

Of the two company, HARISON is worth to further analysis.


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