Last Updated 20 Apr 2022

Ioi Corporation Case Study

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1. IOI strong growth was achieved through

a. Good plantation management practice

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  • Continues improvements on yields performance
  • Maximize output from plantation and factories and minimize input to achieve a low-cost supply chain

b. Diversified business base in palm oil industry, from downstream sector to upstream sector

2. IOI opportunities and threats

c. Opportunity

  • Continues growth on palm oil in edible oils & fats market globally
  • Increase in non-food industry demand, like biofuel.

Now, market is focus on renewable energy. Palm oil has been identified as one of the efficient and clean biofuel

  • Crude palm oil price getting higher and stable year-on-year.
  • Sales of properties at prime area especially in Singapore have been encouraging
  • Expansion in Indonesia with recent planting permit approval to the group’s directly owned plantations d. Threat
  • Major revenue is come from export markets to Europe and US. Weak economic situation affect the demand on palm oil. With limited land bank in Malaysia
  • Unfavorable weather condition
  • Shortage of estate workers
  • Fierce competition from Sime Darby and Indonesia and upcoming markets like Africa and Brazil are catching up

3. Internal organization capabilities and it weakness.

  • e. Top 3 executive directors are family members. Decisions making are among family members, higher chances in power abusing and lack of transparency f. Has operations in many countries, expose to foreign exchange risk

4. Change and unchanged

g. Change Family based share holders lack of transparency. Need to maintain good relationship with stakeholders to increase the efficiency of the group h. Unchanged

  • Tissue culture research, leading to cultivation of clonal palms with superior traits
  • Continuous improvement in productivity and efficiency of its operations
  • Sustainable environmental friendly practices

IOI Financial Analysis

FY2012 1. Current liquidity ratio = Current asset / Current liability 2012 (RM’000)| 2011 (RM’000)| 9,185,620 / 2,202,499= 4. 7| 7,703,105 / 2,288,028= 3. 36| The group ratio increased in year 2012

2. Total debt to total asset = (short term debt + long term debt) / total asset 2012 (RM’000)| 2011 (RM’000)| 10,148,965 / 23,064,868= 0. 44| 7,393,721 / 19,655,119= 0. 37| Total funds that are provided by creditors is increasing in year 2012

3. Total asset turnover = Sales / total asset 2012 (RM’000)| 2011 (RM’000)| 15,640,272 / 23,064,868= 0. 67| 16,154,251 / 19,655,119= 0. 82| 4. Profitability = net income / sales 2012 (RM’000)| 2011 (RM’000)| ,828,529 / 15,640,272= 0. 11| 2,290,513 / 16,154,251= 0. 14| After tax profits decreased per ringgit of sales

5. Market value * EPS = 0. 2785 * P/E = 18. 2047

Price per share = 5. 07

(Current assets – current liabilities) / ordinary shares = (9,185,620 - 2,202,499) / 6,419,174 = 1. 08

Fair value = (5. 07 / 2) + (1. 08 / 2) = 2. 535 + 0. 54 = 3. 075 IOI group’s profit is decreased on year 2012. The market fair value is much lower than the actual price per share. The option is to sell the share instead of buying it.

Ioi Corporation Case Study essay

Related Questions

on Ioi Corporation Case Study

Who is IOI Corporation Berhad?

IOI Corporation Berhad (IOI) is a leading global integrated and sustainable palm oil player. We are listed on the Main Market of Bursa Malaysia Berhad and trading as MYX: 1961. Our palm oil business consists of upstream plantation in both Malaysia and Indonesia; and downstream resource-based manufacturing business.

What does IOI mean?

IOI is one of Malaysia's biggest conglomerates. It ventured into property development in 1984, followed by oil palm plantations and refineries in 1985. IOI was listed on the Kuala Lumpur Stock Exchange (KLSE)—now known as Bursa Malaysia—in 1980.

How many employees does IOI Group have?

, IOI Group employed more than 30,000 persons from more than 25 countries. IOI Group's fiscal year runs from 1 July YYYY to 30 June of the following year. : 6 Palm oil plantations are IOI's biggest income generator.

What does IOI Corp audit mean for Malaysian palm oil industry?

Malaysian palm oil giant IOI Corp will undergo an audit to assess the compliance of its labour policies and working conditions at its plantations, the firm said on Friday, following a report by a human rights group alleging violations.

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