1.

Company Analysis
1.1 Discuss the selected company’s background and describe its business
nature, especially on the sources of the company’s revenue.

POWER ROOT (M) SDN. BHD. is a company well-known for promoting and
developing herbal energy drinks fortified with two main rainforest herbs: Labisia Pumilia and
Pathoina or "Kacip Fatimah" and Eurycoma longifolia Jack or commonly known as "Tongkat
Ali". This company was founded on 23 July 1999 in Johor Bahru, Johor. And is now a
subsidiary of a public listed company: POWER ROOT BERHAD, which is a company that
have been listed in the main market of Bursa Malaysia Securities Berhad.

They established a marketing branch in March 2001 in Kuala Lumpur as to better

coordinate their logistics and to serve their clients more effectively. Two years later, they
started their very own manufacturing plant in Johor Bahru to cater for the growing needs. An
18-acre phase 1 manufacturing facility is desired to be done early 2008, incorporating modern
production technology to cater for the strong market needs locally, business development
opportunities abroad and new formulations development.

With the determination to facilitate these local products into the international markets,
Power Root has invested heavily in development and research of these traditional herbs to
create its own brand of products. With its entrepreneur spirit, Power Root promised to
provide their customers with the ultimate choice of high-quality products [ CITATION Pro \l
1033 ].

Power Root company’s financial statement is actually considered as not stable

because from the reports in year 2015 to 2019, they only have their revenue increased in year
2016 and 2019. Their revenue decreased in the other remaining three years. Their earnings
are not stably increasing and if they wish to, they should pay more effort in promoting or
producing new products. Revenue is measured based on the consideration specified in a
contract with a customer in exchange for transferring goods or services to a customer,
excluding amounts collected on behalf of third parties.
1. Company Analysis

1.2 Perform financial statement analysis on the selected company.

Current Ratio

According to my research from the financial statement of Power Root Company for
the past five years, the current ratio is being decreased from 2.90 times in 2015 to 2.22 times
in 2019 [ CITATION The20 \l 1033 ]. From here we can know there is an issue in collecting
the debts and the company’s current liability is increasing these few years. However, the
financial of the company still remain healthy because it has the ability to pay back all the
current debts if there are any unforeseeable circumstances occur. In every year, Power Root
company may have more than RM 2 of current assets to cover every RM 1 of its current
liabilities.

Profitability Ratio & Return of Equity (ROE)

Besides that, we use profitable ratio to measure how is the performances of its
business where using the profit from the operation and deduct all the expenses operating.
According to these few year annual reports of Power Root company, it has increase in the net
profit margin where the figure average of the past 5 years is 9.66% and it increase up to
13.38% in this recent year [ CITATION Inv20 \l 1033 ]. The company was improved their
operational to more efficiency and productivity that lead them increase in the sales
performance. Moreover, the company was doing great with the international sales with the
countries such as Singapore, China, and the Middle East and North Africa. Also, the ROE of
Power Root company in 2015 is 3.72%, 5.38% in 2016, 2.79% in 2017, 3.21% in 2018 and
4.9% in 2019 [ CITATION Inv201 \l 1033 ]. As we can see that Power Root company has
very low ROE where less than 10% for the past five years. We can know that the company is
not effectively in making profit since the company could not utilise its assets to expend it
business or make it more profitable.

Inventory Turnover Ratio

On the other hand, the inventory of Power Root company may turnover for 7.8 times
in 2015, 7 times in 2016, 8.1 times in 2017, 5.6 times in 2018 and 5.1 times in 2019 which is
the slowest year that the company selling its inventories. According to the news [ CITATION
Sur18 \l 1033 ], the revenue in 2018 had drop 12% to RM 80.58 million from RM 91.6
million in the 4 quarter of 2017. It stated that the company sales drop mainly due to the
decrease in overseas sales. The company said that the losses were due to the lower sales
recorded and adverse sales mix.

Time Interest Earned Ratio

According to the analysis of a website, the Power Root Company has a great time
interest earned ratio for every year where in 2015, the time interest earned is 68 times, 95
times in 2016, 113 times in 2017, 120 times in 2018 and 154 times in 2019 [ CITATION
Chr17 \l 1033 ]. It showed that the company had a fabulous income than the annual interest
expenses and the Power Root company has the ability to pay the interest expenses on the new
loan. The company will have the lowest risk in applying for new loans so that they could
borrow money from the bank for business expansion or save for emergency issue of the
company.

Market Value (Earning Per Share)

The EPS ratio is to measure the net income earned by the investors for each share of
common stock after a period of time. The EPS ratio of Power Root company is RM2.90 per
share in 2015, RM4.10 per share in 2016, RM 2.00 per share in 2017, RM 1.80 per share in
2018, and RM 3.20 per share in 2019 [ CITATION KLS20 \l 1033 ]. As we can see the result
in 2018 has the lowest profit which is RM 80.58 million and cause the share price drop to
RM 1.38 per share. However, Power Root had indicated that they are expecting better growth
with their new strategies in 2019. They are expending their business to China with the online
store as the online spending over there is huge. Moreover, the company would like to cut cost
on their production operations and plant automation in order to improve their profitable
[ CITATION The191 \l 1033 ].

Cross Sectional Analysis

Based on the financial statement of Power Root company and Nestle company, the
ways that they operating their business are different. According to the current ratio recorded
of both company in 2019, Power Root company has the desire record where the company has
2.22 times of current ratio and Nestle company only has 0.86 times [ CITATION Mac20 \l
1033 ]. From this ratio, we can know that Power Root company is more liquidated and able to
turn their inventories or other assets into cash within one year. However, it is not a good view
for the investor because the investors may think the company is not using their asset or short-
term financing facilities efficiently. On the other hand, nestle company is considering less
risky where their ratio is nearest to one although their liability is exceeded than the asset.
Nestle company should control their account payable RM 1,321,407,000 which cause their
liability went high.

Besides that, the profitability of both companies is tending to increase in these few
years. Based on the profit margin of both companies, they are having the same rate which is
13% in 2019. Both of the company are making a profit where Power Root company increased
from 9% in 2018 to 13% in 2019 while Nestle company increase from 11% in 2018 to 13% in
2019. These two companies are efficient at converting their sales into actual profit by using
their own strategy way. Next, the return of equity (ROE) of both companies is having an
obvious gap where the Power Root only has 4.9% of ROE and Nestle company has a 24% of
ROE. Many of the investors will look for the ROE at 15% as their standard ratio. It can show
the Power Root company could generate only 4.9% profit on every RM 1 of the investor
while Nestle company could generate 24% profit for RM 1 to the investor.

Further, the price-per-earnings ratio (P/E) are different for both companies. Power
Root company has 24.68 while Nestle company has 23.61. The ratio of Power Root might be
slightly higher than Nestle. However, this could mean that Nestle company is under-valued
and should be brought by the investors because they may believe that Nestle company may
be doing well in the future while Power Root company is over-valued and it should have sold
or shorted in this period in order to earn the capital gain.
1. Company Analysis
1.3 Use an appropriate valuation model to determine the intrinsic value
of the selected company

Formula

Dividend valuation model - Zero growth

In this method, we will forecast the annual dividend and Required Rate of Return
(RRR) to calculate the value of a share of stock. When doing the prediction of RRR have
related to another three figure that need to do calculation, which is risk free rate, stock’s beta,
and market return. The reason that we will choose this model is, we will know more
information about the company.

Forecast Risk of Rate = 2.5%

Forecast stock’s beta = 1.05

Forecast Market return = 22.11%

Required Rate of Return = 23.09%

Forecast annual dividend = 0.305 (cents)

Value of a share of stock = 0.035/23.09%

 = 1.3209 (MYR) ~ 1.321

The reason that will predict the annual dividend figure 0.305 (cents), because from the
previous profitability ratio shown that company had earning profit and the given dividends
were maintain around 0.3 (cents). Even if our nation in a covid-19 disease spread situation
now, but it won’t causing the net sales or net profit of company have a fluctuation. Besides,
the products that Power Root produce for Malaysian are inseparable, which is Alicafe, AH
HUAT coffee, Oligo and many more.

The current price in 2019 is 1.790 (MYR), compare to the estimated price 1.321
(MYR), the current price definitely is overvalued. The current share price of Power Root will
be overvalued than estimated price, because Power Root had a better goodwill and brand, and
the citizen believe that purchase the share of Power Root Berhad can get more dividend or
capital gain. The supply of share is limited, most of the shares were holding by the company
or someone else, left lack of ordinary share in market. In a way, it will be causing the increase
of share prices.
2. Industry Analysis

Part of the report stated that Power Root Berhad conducted a SWOT analysis to
achieve its goals. It involves specifying the target of the company’s business and identifies
the various factors that are favourable and unfavourable to achieve the objectives.

First of all, Power Root Berhad’s advantage lies in having healthy products on the
market. One of the healthy products from Power Root Berhad is ‘Kopi Tongkat Ali and
Ginseng No. 1’, which has a lot of nutrients like Tongkat Ali and Ginseng herbs. These herbs
help to strengthen the body’s immunity, increasing androgenic hormone levels for higher
energy level, combating fatigue and help in the healing of wounds because of its anti-bacteria
properties [CITATION Ann19 \p 20 \l 17417 ]. Not only that, Power Root Berhad is a well-
known brand around the world. It has tie-ups with foreign distributors in the countries where
its products are marketed. They have been participated in ‘Gulf Food Exhibition 2020 at
Dubai World Trade Centre in February which attract many of them from different countries.
They are continuing doing their marketing campaign in Singapore, China and the Middle East
countries like Egypt. Hence, this are few reasons why Power Root is world famous brand in
promoting their products [CITATION Ann \p 17 \l 17417 ].

In addition, Power Root Berhad has almost no weaknesses, that is, lack of exposure
and lack of promotion around Malaysia. This company has been conducting very few
awareness campaigns around local areas such as ‘Senang Jer Menang 2019’, Velocity Motor
Show 2019, Penetrate Heartland Roving’, and Ah Huat Promotional Events where doesn’t
bring much awareness around the local community. There is not enough of exposure to reach
the local people, which gives the impact on the revenue for the past few years. Next, lack of
promotion in local areas like featuring only 6 banners in public areas in May 2019, promoting
their products in mass media with 3 ambassadors and doing promotion campaign only for one
month from March to April 2019, which does not give the biggest impact promoting their
product. Briefly, those weaknesses are from Power Root Berhad, which can be improve in
coming years to achieve their goals.
 Furthermore, Power Root Berhad’s opportunity is to open up new markets abroad.
New market development as exporting the products to overseas countries like Singapore,
China, Indonesia, Qatar, Saudi Arabia, Taiwan, North Africa, South Korea and the Middle
East. They could start a production facility in the United Arab Emirates (UAE) to support
growth and cut back delivery internal in the African regions and Middle East countries like
Egypt. Moreover, raising awareness of active lifestyles is one of t Power Root Berhad’s
opportunities. They might give awareness campaign on traditional ingredients that they used
in their products and should encourage the youth generation to drink the healthy drinks.
Therefore, if Power Root Berhad takes advantage of its huge opportunities in a better way,
they may raise the standards of their products.

The threat of Power Root Berhad has a strong competitor in Malaysia. Strong
competitors, such as Nestle Berhad, Oldtown Berhad, Super Group Limited, and more
competitors are comparable to Power Root Berhad in terms of marketing their products.
Power Root Berhad is the top instant coffee maker and famous for their merchandise. Power
Root’s rise in 2009 has flopped earlier days, but the corporate has expanded its brands and
diversified its revenue base by heading into Middle East [ CITATION Tan15 \l 17417 ]. The
sales for export are increase very quickly from 2010 until now. Power Root is a very well-
known brand in Middle East countries. The domestic demand is continuing to remain weak,
but they were very much focusing in their international marketing strategy and they are the
top among other competitors. Hence, Power Root Berhad is becoming one of the stronger
competitors for other Food and Beverages companies in all around the world [CITATION
The15 \l 1033 ].

Briefly, SWOT analysis provides guidance for companies to increase their strength,
reduce threat, and maximize their potential to deal with future obstacles.
3. Economic Analysis

IT has not been a simple year for shopper merchandise organizations as buyer slant
has been feeble. Be that as it may, Power Root Bhd, which makes the popular Tongkat Ali
and Kacip Fatimah beverages, stands out for its flexibility and income development. Power
Root Bhd could see earnings growth of over 6% in the next two years as its export sales
should grow after global lockdowns introduced to curb the spread of Covid-19 are lifted. The
research house raised its earnings forecast for Power Root’s financial year ended March 31,
2020 (FY20), FY21 and FY22 by 6.7%, 6.2% and 5.5% respectively[ CITATION Asi20 \l
1033 ].

The general state of the company is positive view is fully expecting strong earnings
recover. The beverage company's scarcity premium for exposure to the instant coffee segment
likewise assumes a job as it's "the nearest to an unadulterated play in the segment" and having
a not too bad assessed profit yield of 4.5% to 5.8% from FY20 to FY22. The company's
neighbourhood and fare deals are accepted to have profited by alarm purchasing that
happened during the beginning phases of the MCO, just as lockdowns executed in the
gathering's fare markets, for example, China, Singapore and the Middle East and North
Africa (MENA) for the firm from streamlining of costs and expected growth in sales abroad.

Going ahead, as the lockdowns end and business exercises begin to get in China and
the MENA district, the gathering's fares deals are required to improve. We gauge the
gathering's edges to develop around four rate focuses year-on-year in FY20. Power Root's net
benefit significantly increased to RM28 million in FY19 from RM9.11 million the year
earlier, despite the fact that income tumbled to RM338 million from RM392.78 million
already[ CITATION Ann20 \l 1033 ].

Its trade filings during the time ascribed the expansion in income to good deals blend
lower debilitation on property, plant and commercial and advancement spending; and lower
working and staff costs. For the third quarter ended Dec 31, 2019, the organization's net
benefit took off 87.4% to RM13.08 million from RM6.98 million the year earlier, as income
hopped to RM101.37 million from RM81.87 million beforehand.[ CITATION Foc20 \l 1033 ]

4. Recommendation

Year Basic Earnings Per Share Prices (Cents)

2015 14.43
2016 14.55
2017 14.18
2018 2.82
2019 7.12

The table shows the basic earnings per share price of Power Root Berhad from year 2015 to year 2019
[CITATION Ann191 \l 17417 ]

In company analysis, from financial statement, they are paying much effort in
launching new products to increase revenue. Its current liabilities are still growing but the
company is able to pay off the current debts. The net profit margin of company also growth
and it improves the operational production with boost the local and international sales of
products. Power Root is gaining high incomes than the annual interest expenses and able to
pay off the interests of new loan. At the side of EPS, the share price has dropped with the
lowest profit in year 2018. The company is expecting a better growth in year 2019 with new
strategies, which is expanding the business to foreign country such as China online stores. In
P/E ratio, it shall have to sold in this short period to earn capital gain because it is overvalued.

In the dividend valuation model of zero growth, the goodwill and brands of Power
Root which outcome the overvalued (current price > estimated price) has make the
consumers believe that they can get more dividend and capital gain if they sold the Power
Root’s shares.

In the industry analysis, the SWOT is using to make decision. From strength, this
company was concerned on producing healthy products and develop in foreign distributors.
From the weakness, they were lack of exposure and promotion in local community. From the
opportunities, they tried to open up new market and raising awareness of active lifestyle with
focus in traditional ingredients. From threat, they had strong competitors in marketing area.
Since they are more focus in international trade, their export sales increase.

In the economics analysis, the lockdowns mode is ongoing in year 2020, but this
company has its popular products such as Tongkat Ali and Kacip Fatimah beverages to
maintain its flexibility and income development. There are having confidence on instant
coffee segment which can recover with strong earnings. As the lockdowns come to an end,
they can start their business with lower debilitation on property, plant and commercial
expenses and lower the working and staff costs.

Since the share price of Power Root Berhad had a rapidly dropped from year 2017 to
year 2018, but it highly increases to a better figure in year 2019. Although it considered as an
overvalued stock and not a good buy to investor, this company is still trying to expand its
business in international market to attract more new consumers. They also reduce cost in
production and labors to achieve their profitable growths.

In our recommendation, the investor should hold this company’s shares.

Individual Part:

Name: Nyanamalar A/P Mutaragan

Student ID: 19WBR12095

a) Trading Decision:

Position: Short

Selected Company and Stock Code: PW Root (7237)

Amount (RM): 40,000

(max RM 100,000)

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(adjusted for capital invested)

b) Justification:

Technical Analysis

According to technical analysis, the price range of Power Root Berhad is good compared to
other food and beverage companies. The price range has been increased from RM 2.050 to
RM 2.650 from September 2019 to August 2020. There is no much changes in the price range
except for the month March 2020. The price range has been drop to RM 1.660 and it was
increased to RM 2.370 after a month. The changes happens because of investors start selling
their shares at the pendemic time. If more peoples are started to sell stock rathan than buying
it, there would be bigger provide than demand, and therefore the price range will fall. I think
that, the most important factor that affects the stock price range is the earning of the
company. When a earning is no longer run on a company, the company face inflation and it
cause the business not run in good way. This is why invester start selling back their shares
and not having interest in buying the shares. Therefore, this two factors happen to Power
Root Berhad in their previous years and it was happen 4 months ago also.

The diagram shows the price range from September 2019 to August 2020
[ CITATION Bur20 \l 1033 ].

Fundamental Analysis

According to fundamental analysis, I think that Power Root Berhad has a stable financial
analysis over past 5 years. One of the important elements are the stable level of share price
for past one year. The share price was started up with RM 1.46 in 2019 until it was increase
up to RM 2.65 in Jun 2020. Even though they have some ups and downs in previous years but
for the past 3 months their share price was stable as well as predictable and there is no price
volatility in their share price. Moreover, the company revenue is increased up to RM 48.09M
different from March 2019 until March 2020. Not only that, the net income has been
increased the highest income from all the previous years [ CITATION Inv202 \l 17417 ]. In
2017. the net income for Power Root Berhad is RM 43.53M followed by RM 9.11M in 2018
and for the year 2019 it was increased up to RM 28M and lastly it was increased to the peak
up to RM 51.45M in 2020. This clearly shows that the company putting effort to establishing
their product not only in Malaysia but they were selling in few other overseas countries like
Singapore, China, Indonesia, Qatar, Saudi Arabia, Taiwan, North Africa, South Korea and the
Middle East. This is one of the reasons to have better revenue in Power Root Berhad.
Furthermore, the company has better value on its Price to Earnings Ratio which is 16.8 times
compared to Malaysian Food and Beverage industry is 22.9 times as well as compared to
Malaysian Market is 16.9 times for this year. The company is increasing their export and
more focusing launching new products on coming years to beat the Malaysian market value.
Lastly, the current ratio for Power Root Berhad is 2.22 and also the debt to equity ratio is
2.9% in 2019. Each of the ratios are almost at the same range and most importantly, the debt
for short term and long term are becoming less for every year. [ CITATION Sim20 \l 1033 ]

Sentimental Analysis

In my point of view, I think that Power Root Berhad is an upcoming company in food and
beverage industry. At the beginning stages, Power Root has been flopped in their business in
2009 and they started to bring up their company by exporting their products to few overseas
countries. Currently, Power Root is very well-known product in Middle East countries, South
Korea, Singapore, China, Indonesia and many more countries in their list. Even though, their
products are well-known in overseas countries but there are many of them from local are not
aware of Power Root products. Moreover, the worldwide are facing the pandemic right now
which gives the biggest impact for all kind of business especially for industry like food and
beverages. The price of stock for Power Root Berhad is not very stable because of current
situation. As I notice for the past 6 months, the price is dropping for each month around week
3 and 4. So I think that, for the assumption on 17 august, the price might be decrease but
don’t have much differences in their closing price.
Individual Part:

Name: Tang Kai Sheng

Student ID: 19WBR12657

a) Trading Decision:

Position: Long

Selected Company and Stock Code: Power Root Bhd (PWROOT 7237)
Amount (RM): RM 50,000
(max RM 100,000)

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(adjusted for capital invested)

b) Justification

Technical analysis

I would like to say that the shares which are from 10 August to 17 August will increase
because I have seen there is an uptrend from 20 July. This means that the value of the shares
will increase in this period of time and it is the right timing to buy the shares. I have used the
7-days moving average as my preferences to show whether the share price on the movement
is healthy or not (Appendix 1). When I see the candlesticks are above the 7-days moving
average line, it will tell me that the shares price is in a healthy area and it will show an
uptrend and the opposite when the candlesticks are below the 7-days moving average line
will tell me that it is an unhealthy area and show a downtrend on the chart. After I know there
is an uptrend on the chart, I will find the entry trigger where is after 28 July. Why will I
choose to buy in after that time? Because there is a bullish engulfing pattern where a sign of
strength that the buyers are in control of the market and many investors will come and join in
and cause the share price increase after that.

Appendix 1

Fundamental analysis

From the past history earning of Power Root company, I can see that the earning in 2017 and
2018 were dropped to RM 28 million and RM 13 million. According to the news and report
[CITATION Placeholder1 \l 1033 ], it stated that Power Root company was trying to expand
its business to foreign countries such as Mena, China, and Singapore and they needed a lot of
money in the advertising, purchasing raw of materials and also promotion spending. The
company was focusing on the growth in Mena rather than local because they found that Mena
seems brighter compared to the local scene. Therefore, the company had invested a lot of
money in there and cause expenses from there. Moreover, it was also causing a foreign
exchange loss of RM 3 million during that period. However, the earning in 2019 had
increased to RM 43 million and cause the share prices to rally with increasing 30% of the
share price[CITATION The19 \l 2052 ]. Power Root company had launched new products,
restructured distribution channels, and adopting new technology and increased the annual
growth rate to 13%. The management of the company was putting a lot of effort to assist the
company in increasing its value by solving the problems that resist the growth of the
company. On the other hand, I had done research on Power Root company’s valuation where
the price to earnings (PE) ratio is 17.1 times and it’s considered as a good value compared to
the beverage industry average which is 23.3 times. The company is expanding its business
worldwide and may continuously launch new products in order to attract more consumers to
increase its popularity worldwide. In the future, the PE ratio may catch up to the beverage
industry average figure and increase its value. Besides that, the current ratio of the company
in 2019 is 2.22 and the debt to equity ratio is 2.9%. Both of the ratios are considered
satisfactory and it also showed the debts of the company are reducing from the past 5 years.

Sentimental analysis

Based on my knowledge of Power Root company, their products are unfamiliar for me and
my family is rarely purchase to its products. There are a lot of brands and products such as
Alicafe, Alitea, Oligo, Ah Huat, Power Root Extra, and so on. The first product that I know
from the company is the Ah Huat white coffee that my mother brought a few years ago when
the products just launched. This product is well received by the various market and the sale
on this product was increased. However, some of the consumers had classified power root
products as low class based on its low price compared with Nestle’s and Starbuck’s products.
Therefore, some of the consumers may be influenced by this though, and refuse to purchase
its company product any more. In conclusion, I may have a neutral feeling in this investing
because I was unfamiliar with the products that Power root company manufacture and the
perception of the consumer are not strong.
Individual Part:

Name: Loh Yan Heng

Student ID: 19WBR12017

a) Trading Decision:

Position: Not to invest at all

Selected Company and Stock Code: Power Root (PWROOT 7237)

Amount (RM): NIL

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(adjusted for capital invested)

b) Justification:

Fundamental analysis

1. Earnings Per Share (EPS): 12.25

EPS is basically the profit that the company has made over the previous year divided by how
many shares are on the market.[ CITATION Kri \l 1033 ] It is worth to invest in a company
that their EPS is increasing for the past five years. From the quarter reports of Power Root
Berhad, it shows that the EPS of this company is not increasing year by year. Instead, their
EPS is going up and down at each quarter of year and shows unstable changes.

2. Price to Earnings Ratio (P/E Ratio): 18.04

From some of the companies in the same sector with Power Root Berhad, there are 1/3
companies’ P/E Ratio is lower than this company. A high P/E ratio usually shows that the
investor is paying more for the share.[ CITATION Kri \l 1033 ] So, it is better to invest in a
company that their P/E ratio is lower than the companies from the same sector.

3. Return on Equity (ROE): 19.76

ROE measures a firm’s profitability by disclosing how much profit a firm produce with the
money shareholders has invested.[ CITATION Kri \l 1033 ] This means that it shows how
good a company is paying back to their shareholders for their investment. It usually should be
greater than 20% because investors invest is wish to get a great pay back form the company,
they invest to earn extra money.

4. Dividend Yield: 5.79%

Dividend yield is a measure to relate dividends to share price on a percentage basis. It shows
the rate of current income earned on the investment. Dividend yield of Power Root Berhad is
considering good because a typical yield will be in between 4 and 6 percent.

5. Current ratio
From the financial reports of Power Root Berhad in year 2015 to 2019, we can see that the
current ratio of this company is decreasing. This means that company's ability to pay short-
term responsibilities in a year is not good. The current ratio has decreased from 2.90times in
year 2015 to 2.22 times in year 2019.
Technical analysis

Date Open High Low Close

2019-08-12 1.81 1.87 1.76 1.86
2019-08-19 1.87 1.98 1.78 1.96
2019-08-26 1.95 2.04 1.89 2.04
2019-09-02 2.04 2.12 2.02 2.07
2019-09-09 2.07 2.11 1.97 1.98
2019-09-16 1.98 2.1 1.95 2.05
2019-09-23 2.05 2.1 2.02 2.09
2019-09-30 2.1 2.14 2.08 2.12
2019-10-07 2.12 2.14 2.09 2.1
2019-10-14 2.08 2.18 2.07 2.18
2019-10-21 2.17 2.24 2.13 2.18
2019-10-28 2.18 2.2 2.15 2.2
2019-11-04 2.2 2.2 2.06 2.16
2019-11-11 2.13 2.2 2.06 2.19
2019-11-18 2.18 2.32 2.18 2.32
2019-11-25 2.33 2.45 2.3 2.42
2019-12-02 2.42 2.44 2.35 2.37
2019-12-09 2.35 2.37 2.3 2.34
2019-12-16 2.34 2.45 2.34 2.42
2019-12-23 2.45 2.45 2.39 2.4
2019-12-30 2.4 2.42 2.17 2.3
2020-01-06 2.3 2.35 2.2 2.35
2020-01-13 2.36 2.36 2.26 2.3
2020-01-20 2.3 2.3 2.23 2.28
2020-01-27 2.28 2.32 2.1 2.13
2020-02-03 2.1 2.22 2 2.22
2020-02-10 2.22 2.4 2.16 2.4
2020-02-17 2.4 2.4 2.3 2.37
2020-02-24 2.36 2.36 2.08 2.23
2020-03-02 2.22 2.23 2.14 2.15
2020-03-09 2.11 2.11 1.89 1.89
2020-03-16 1.8 1.83 1.52 1.77
2020-03-23 1.65 1.91 1.65 1.88
2020-03-30 1.85 1.95 1.83 1.9
2020-04-06 1.9 1.95 1.87 1.91
2020-04-13 1.9 2.34 1.89 2.27
2020-04-20 2.34 2.37 2.16 2.21
 2020-04-27 2.21 2.33 2.18 2.27
2020-05-04 2.23 2.31 2.2 2.22
2020-05-11 2.22 2.31 2.22 2.28
2020-05-18 2.29 2.33 2.19 2.22
2020-05-25 2.22 2.65 2.22 2.61
2020-06-01 2.68 2.69 2.48 2.49
2020-06-08 2.49 2.52 2.2 2.35
2020-06-15 2.33 2.33 2.21 2.26
2020-06-22 2.26 2.29 2.19 2.23
2020-06-29 2.22 2.38 2.2 2.33
2020-07-06 2.35 2.35 2.2 2.21
2020-07-13 2.21 2.24 2.15 2.17
2020-07-20 2.16 2.16 2.05 2.1
2020-07-27 2.1 2.19 2.05 2.19
2020-08-03 2.23 2.28 2.13 2.17
2020-08-10 2.18 2.2 2.15 2.16

The table shows the Historical data of Power Root Berhad on weekly basis (Historical Price).

The diagram shows the Historical Chart for one year (August 2019 - August 2020)

From the table above we can see that the 52-week price range of Power Root Berhad will be
in 1.5200 - 2.6900. The lowest price in one year will be 1.52 and the highest will be 2.69. The
gap between the lowest and highest price from previous 52 week is 1.1700. Although the
price gap in the previous year is 1.17, but their average price mostly stays in 2.1 to 2.3.
Sentimental analysis

From all of the statistics and data above, I feel that it is not worth to invest in Power Root
Berhad. This company is not paying much dividends to the shareholders and their price rate is
not increasing. In the whole period, the price is just going slightly up and down and not
increasing much. For me, I will not choose a company like this to invest because it is better to
invest in a company that can help me to earn more comparing in a same period. From the
chart of the closing price, the line came out very stable not like other company that is worth
to invest, their chart will show a line slopping upwards. If I invest in this company, I will not
earn very much or don’t even earn any. The chart is going up and down at a certain area and it
is not only happening in a year, it also shows in the chart that draws 5 years’ prices. In
conclusion, I will not be going to invest in this company for now.

Individual Part:

Name: Kong Chen Leng

Student ID: 19WBR11385

a) Trading Decision:

Position: Long

Selected Company and Stock Code: (PWROOT 7237)

Amount (RM): 20,000

(max RM 100,000)

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(adjusted for capital invested)

b) Justification:

Technical Analysis
Technical Analysis is the study of various forces at work in the marketplace to evaluate
investment and identify trading opportunities by using price movement and volume.
[ CITATION Ada20 \l 1033 ]

Diagram shows PWROOT Historical chart for three months [CITATION Placeholder2 \l
1033 ]

With using past three months historical share prices chart from Power Root, the bear trend
had occurred. A bear trend is formed when the market volumes goes down in the analysis of
supply and demand for common stocks. It also shown when the declined of outnumber
advances in number of stock prices. May 29, according to theedgemarket.com, it stated that
the trading volumes is getting higher with high annual profits. It was double more than the
200-day average trading volume of 486, 831. [CITATION Placeholder3 \l 1033 ] This
company’s share price has potentials to rise.
The share prices movement is observed from 4 weeks’ records before 10 August. From 13
July – 17 July, in between RM 2.160 to RM 2.220. In 20 July – 24 July, in between RM 2.090
to RM 2.140. From 27 July – 30 July, in between RM 2.070 to RM 2.190. While in 3 August
– 7 August, in between RM 2.170 – RM 2.200. [ CITATION KLS201 \l 1033 ] In the past
weekly opening and closing prices, they were not stable. However, the changes of share
prices in 3 August – 7 August show a trend which maintain its stability with not decrease or
increase too much.

With speculation, the opening prices in 10 August might reach in around RM 2.160 to RM
2.190, while the closing prices in 17 August might be in between RM2.190 to RM 2.220.

Fundamental Analysis

Fundamental Analysis is a method that most demanding to measure intrinsic value with
economics and financial factors like liquidity, activity, leverage, profitability, and common
stock.

On 31 March 2020, from the liquidity ratio, the current ratio is 2.42 times higher than year
2019, 2.22 times. [CITATION Placeholder4 \l 1033 ] It means every RM 1 of current
liabilities that the firm has, and it has RM2.42 worth of current assets. This shows a high
current ratio with strong and safe liquidity position. For activity ratio, the inventory turnover
is 3.7 times which is lower than in year 2019, 5.1 times. [CITATION Placeholder5 \l 1033 ]
Its sales performance might drop due to the pandemic of Covid-19. In leverage ratio, total
debt to equity ratio is lower at 0.0334 (3.34%) compared to 0.515 in year 2019. [CITATION
Placeholder4 \l 1033 ] The ability to pay off its debt obligations is getting stronger. In
profitability ratio, its return on equity is 19.76% higher than 12.83% in year 2019.
[ CITATION Ste20 \l 1033 ] It shows high efficiency of management at using the
stockholders’ funds to make profitable and its ability in utilizing assets to expand business.
For common stock ratio, the firm’s EPS is RM 12.25 per share is higher than RM 3.20 per
share in year 2019. [ CITATION KLS201 \l 1033 ] The higher EPS in year 2020 shows the
investors are willing to pay more for them to earn high profits.
Besides, its intrinsic value of RM 1.321 of year 2020 is lower than the current price (RM
1.790) in year 2019. It shows an overvalued result. It is not stable in share prices, but I predict
that Power Root has strengths to outcome profitable through new opportunities and markets
to attract more customers. I choose the long position because I expect it will rise from 10
August to 17 August.

Sentimental Analysis

Sentimental Analysis is the overall attitude such as feeling and emotion of investor toward a
particular security and financial market. [ CITATION Tim19 \l 1033 ]

In year 2020, Power Root launched new products, Warung and Frenche Toast which the
attractive points to local consumers. They also sell and export their products to UAE and
KSA. They have set up two subsidiaries in China to improve their online business and supply
chains of goods. Moreover, they do explorations to countries that other than MENA.
[ CITATION Pow20 \l 1033 ] The lock mode is affected the business performance, but it
almost came to an end. Power Root can start up their business after the MCO. I have a
positive foresight on its share prices.

Power root shows an overvalued result in intrinsic value, many investors might sell to gain
more capitals and dividends. Since they are launching new products and discover new
business opportunities in foreign markets to increase its revenue and profits, so I choose to
have long position which expect the share price will be rising. I expect the share price will
increase from 10 August to 17 August.
Individual Part:

Name: Sae Yng Jong

Student ID: 19WBR12080

a) Trading Decision:

Position: Long

Selected Company and Stock Code: PWROOT (7237)

Amount (RM): 5,000

(max RM100,000)

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(adjusted for capital invested)
b) Justification:

Fundamental Analysis

According from the quarterly report, Power Root had six consecutive quarter earned profit,
since the last quarter of 2018 until the first quarter of 2020. And from the annual report of
2020 March, the profit after tax had a slightly increased compare to 2019 March, it is about
23million (RM). The earning per share had obviously increased from 7.12(RM) to 12.83
(RM). On the other hand, the performance of inventory turnover ratio in 2019 March is only
5.1 times, compare to previous year had reduced 0.5 times. And this figure is the least among
2015 to 2019. Besides, the current ratio had also decreased from 2.90 times to 2.22 times, in
2015 to 2019.

Even though, Power Root had earned profit in this recent quarter, but the liquidity ratio and
inventory turnover ratio like a down wave sloping keep going decreased. The analysis ratio
doesn’t possess anything good enough to overpass the downsides it brings, but it doesn’t
mean the bad part are overwhelming, it became something more neutral in nature. It has both
bad and good in it. This is the main reason that I didn’t invest at all.

Technical Analysis

From the line chart, the share price started going down from RM2.65 per share in 2 Jun 2020,
until 29 Jul 2020 RM 2.08 per share. The share price gets better in 30 Jul, up to RM2.19.
Even the chart shown that the price has a bit better, RM2.33 in 3 Jul, but after it the price still
falling. Besides, the largest trading volume had happened in 29 May, after 23 March. I predict
the share price won’t going down anymore, so it is the time to invest in 10 Aug RM2.16.

While, I also used the Box theory to predict the price going. In using this theory, I set the
higher price (2 Jun) as point A be the top of box, and set (27 Jul) as point B be the bottom of
box. When the share price hit the bottom of box, the next share price will be rising up, and
this is the best time to invest before the price getting higher.
The diagram shows the line chart for the share price for Power Root Berhad for last 6 months.

Sentimental Analysis

After I saw the news that is about the fourth quarter of Power Root Berhad’s net profit has
rose almost 156%, because the overall improvement in sales, strengthening of the US dollar
which contributed to higher foreign exchange gain and a one-off impairment on trade
receivables provided in the previous year’s corresponding quarter (The Star, 2020). This
recent years, Power Root Berhad were more focus on overseas market, which is China, the
US American, Europe, and so on. However, the recent sugar tax hike in the Middle East and
the Covid-19 outbreak in China might be dampen the export sales. But the company already
have solutions, reduce our reliance on the affected countries and pay more focus in other
countries. It said in a filing with Bursa Malaysia (The Star, 2020).
From those news and updates I predict the share price will rising up, even in the Covid-19
disease situation and it is almost going end. As we know Power Root Bhd is a company that
produce food and beverage, which is Alicafe coffee and it is the daily necessities that our
citizen needed. Nowadays, their sales area was also extend to overseas already, not only in
Malaysia. So in my prediction the share price of Power Root Bhd will rising up or the share
will maintain in around RM 2.10 to RM2.25, won’t have a huge fluctuation happen soon.
Individual Part:

Name: Devaganesh A/L Sattigamurti

Student ID: 19WBR12019

a) Trading Decision:

Position: Long

Selected Company and Stock Code: Power Root Bhd, PWROOT (7237)

Amount (RM): 80,000

(max RM 100,000)

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(adjusted for capital invested)

b) Justification:

Fundamental Analysis

Power Root Berhad, through its auxiliaries, takes part in the assembling and dispersion of
drink items principally in Malaysia. It gives Ready-To-Drink (RTD) espresso, RTD tea, RTD
chocolate malt drinks, RTD grain, and caffeinated drinks. The organization showcases its
items basically under the Alicafe, Perl Cafe, Oligo, Alitea, and Power Root brand names. It
additionally circulates wellbeing and magnificence items. In the course of the last five
Financial Year (FY), Power Root's income has a smooth expanding pattern from RM 217
million in FY2012 to RM 383 million in FY2015 however experience a drop in FY2016 to
RM 367 million. This means a normal year to year development of 14%.

Net benefit shrewd, Power Root has a smooth increment from RM 16 million in FY2012 to
RM 43 million in FY2016 and the drop-in income didn't obstruct its benefit increment. This
speaks to 2.6 occasions increment or a normal year to year increment of 27.67% inside the 5-
money related year window. Net revenue shrewd, Power Root scores a high 11.81%, which is
a somewhat better than expected for an assembling organization. What's more, Power Root's
Return On value (ROE) is acceptable at 18.31%.

On company’s debt, Power Root has very low total debt to equity ratio at 0.05, meaning only
5% of its company’s value are from long- and short-term borrowings. The company’s current
ratio and cash ratio are also of very healthy value at 2.94 and 0.86 respectively, considering
the fact that its products are all fast-moving consumer goods. In terms of dividend, Power
Root pays a highly satisfying 5.31% dividend yield. However, its dividend pay-out ratio is on
the high side at 0.753, meaning that the company only retains 25% of its net profit for capital
expenditure.

In conclusion, Power Root is a little size venture with great basics with expanding income
and net benefit pattern in the course of recent years and monetarily solid by having
practically immaterial debt. The drop in income in FY2016 may show that the expansion in
piece of the pie for Power Root will be trying in the forthcoming years because of the serious
rivalry over the RTD items (Ready to Drink) market, subsequently more effort in promotion
and advertising activities be led to build its piece of the overall industry, which will probably
mean more expense and more slender edges.

Technical Analysis

Power root Berhad share cost possibly encountering further increment from a valuation even
as it makes up for lost time to the area normal. Based on my reading the price the share will
increase between August10 to 17. The recent share price spiked up approach a historical high
level. I believe there’s a room for a valuation. I would buy more shares in the upcoming week
to enjoy high earning growth and more attractive profit. With increase foreign exchange and
commodity prices trend, it should have solid earnings growth moving forward Since it’s a
beverage sector, I believe it will be good benchmark for investors to invest in this particle
shares.

Appendix 1
Sentimental Analysis

Based on my experience, I have grown by using most of the power roots product. Especially
the Alicafe and Ahhuat coffee. As a Malaysian I would invest in this company and support
them in growing more bigger in future and worldwide. Furthermore, their share price is not
really expensive compare to other companies, its affordable. Most of my friends has made
profit by investing in Power root. It's really good energy products and we can get it
anywhere in Malaysia.

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