TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

Bachelor of Finance and Investment (Honours)
(Semester 3, Year 2020/2021)

BBMF2063 INVESTMENT & FINANCIAL ANALYSIS

Company : Ajinomoto (Malaysia) Berhad
D&O Green Technologies Berhad

PROG. / YEAR/SEM/TUTORIAL GROUP : RFI2 SEM3 G12  

LECTURER/TUTOR NAME                         : Mr Yau Sue Meng

STUDENT’S NAME I.D NO

LEE KAH ZHUN 20WBR07491
PARK SEUNG HYUN 20WBR07555
SOW THIAM LOONG 20WBR07568
TAN YEE LING 20WBR07584
TONG MENG HUI 20WBR07605

*For reviewer use only:

Name of examiner
Name of reviewer
Signature of reviewer
Date
 FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS
COURSEWORK FEEDBACK FORM FOR WRITTEN REPORT
COURSE CODE/ COURSE TITLE: BBMF2063 INVESTMENT & FINANCIAL ANALYSIS
NAME OF STUDENT(s): ID No:
1) LEE KAH ZHUN, 8,4,2 20WBR07491
2) PARK SEUNG HYUN, 8,4,2 20WBR07555
3) SOW THIAM LOONG, 8,4,2 20WBR07568
4) TAN YEE LING, 8,4,2 20WBR07584
5) TONG MENG HUI, 8,4,2 20WBR07605
PROGRAMME: RFI
YEAR OF STUDY:   2                           SEMESTER: 3 ACADEMIC YEAR: 20/21
GROUP NO: 12
COURSEWORK NO: 1/2/3 NATURE OF COURSEWORK: MARKS
(e.g. presentation,Q& ALLOCATED:
A,individual/group
assignment etc) 86/100

COMMENTS :
- Good and detailed findings about the business background / current products. Good
discussion for the company’s profitability.
- Too high growth rate used for the P/E model in calculation of intrinsic value for D&O.
Student’s Date: Lecturer/Tutor’s Signature: Date:
Acknowledgement:

ASSESSMENT CRITERIA FOR COURSEWORK 

BBMF 2063 INVESTMENT & FINANCIAL ANALYSIS

NO CRITERIA MAXIMUM MARKS REMARKS

MARKS AWARDED

Group Assignment:
1 Discussion of business nature & 25 23
performance.
2 Calculations of returns, standard 15 15
deviations, beta, portfolio returns, and
portfolio risk.
Submit excel file for this part.

3 Calculations of intrinsic value. Justification 20 15

for the inputs used.

4 Discussion of the applicability and 20 16

suitability of DDM & P/E.

5 Report structure in form of appropriate 10 7

format, relevant charts, tables, diagrams
and figures.

6 Team members involvements 10 10

Total marks 100 86
 Group Member Appraisal Form

The basis of this evaluation is your group member’s commitment to completing the assignment and to
their regard for other members of the group. It should be based on the contribution given by each member
and his or her involvement in this assignment.

Group members should be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted the group in
advance and came to an alternative arrangement that the majority of group members were
happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative arrangements with
other group members.
 Group member assigned tasks were only partly completed or poorly completed.
 Group member did not contribute to the group effort or volunteer for tasks.
0%  Group member attended few meetings and made no contribution to the assignment.

Name of student: Lee Kah Zhun

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise each of the
members in your group by circling one of the totals shown below (i.e. 100%, 50% or 0%)

Group Member
1. Park Seung Hyun 100% 50% 0%
2. Sow Thiam Loong 100% 50% 0%
3. Tan Yee Ling 100% 50% 0%
4. Tong Meng Hui 100% 50% 0%

Note:
Failure to submit a Group member appraisal Form will result in a zero appraisal being recorded against
your name
 Group Member Appraisal Form

The basis of this evaluation is your group member’s commitment to completing the assignment and to
their regard for other members of the group. It should be based on the contribution given by each member
and his or her involvement in this assignment.

Group members should be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted the group in
advance and came to an alternative arrangement that the majority of group members were
happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative arrangements with
other group members.
 Group member assigned tasks were only partly completed or poorly completed.
 Group member did not contribute to the group effort or volunteer for tasks.
0%  Group member attended few meetings and made no contribution to the assignment.

Name of student: Park Seung Hyun

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise each of the
members in your group by circling one of the totals shown below (i.e. 100%, 50% or 0%)

Group Member
1. Lee Kah Zhun 100% 50% 0%
2. Sow Thiam Loong 100% 50% 0%
3. Tan Yee Ling 100% 50% 0%
4. Tong Meng Hui 100% 50% 0%

Note:
Failure to submit a Group member appraisal Form will result in a zero appraisal being recorded against
your name
 Group Member Appraisal Form

The basis of this evaluation is your group member’s commitment to completing the assignment and to
their regard for other members of the group. It should be based on the contribution given by each member
and his or her involvement in this assignment.

Group members should be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted the group in
advance and came to an alternative arrangement that the majority of group members were
happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative arrangements with
other group members.
 Group member assigned tasks were only partly completed or poorly completed.
 Group member did not contribute to the group effort or volunteer for tasks.
0%  Group member attended few meetings and made no contribution to the assignment.

Name of student: Sow Thiam Loong

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise each of the
members in your group by circling one of the totals shown below (i.e. 100%, 50% or 0%)

Group Member
1. Lee Kah Zhun 100% 50% 0%
2. Park Seung Hyun 100% 50% 0%
3. Tan Yee Ling 100% 50% 0%
4. Tong Meng Hui 100% 50% 0%

Note:
Failure to submit a Group member appraisal Form will result in a zero appraisal being recorded against
your name
 Group Member Appraisal Form

The basis of this evaluation is your group member’s commitment to completing the assignment and to
their regard for other members of the group. It should be based on the contribution given by each member
and his or her involvement in this assignment.

Group members should be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted the group in
advance and came to an alternative arrangement that the majority of group members were
happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative arrangements with
other group members.
 Group member assigned tasks were only partly completed or poorly completed.
 Group member did not contribute to the group effort or volunteer for tasks.
0%  Group member attended few meetings and made no contribution to the assignment.

Name of student: Tan Yee Ling

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise each of the
members in your group by circling one of the totals shown below (i.e. 100%, 50% or 0%)

Group Member
1. Lee Kah Zhun 100% 50% 0%
2. Park Seung Hyun 100% 50% 0%
3. Sow Thiam Loong 100% 50% 0%
4. Tong Meng Hui 100% 50% 0%

Note:
Failure to submit a Group member appraisal Form will result in a zero appraisal being recorded against
your name
 Group Member Appraisal Form

The basis of this evaluation is your group member’s commitment to completing the assignment and to
their regard for other members of the group. It should be based on the contribution given by each member
and his or her involvement in this assignment.

Group members should be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted the group in
advance and came to an alternative arrangement that the majority of group members were
happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative arrangements with
other group members.
 Group member assigned tasks were only partly completed or poorly completed.
 Group member did not contribute to the group effort or volunteer for tasks.
0%  Group member attended few meetings and made no contribution to the assignment.

Name of student: Tong Meng Hui

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise each of the
members in your group by circling one of the totals shown below (i.e. 100%, 50% or 0%)

Group Member
1. Lee Kah Zhun 100% 50% 0%
2. Park Seung Hyun 100% 50% 0%
3. Sow Thiam Loong 100% 50% 0%
4. Tan Yee Ling 100% 50% 0%

Note:
Failure to submit a Group member appraisal Form will result in a zero appraisal being recorded against
your name
 Faculty of Accountancy, Finance & Business

Plagiarism Statement

Read, complete and sign this statement to be submitted with your written work.

We confirm that the submitted work are all our own work and are in our own words.

     Name (Block Capitals)           Regn. No. Signature

1. LEE KAH ZHUN             20WBR07491                        Lee

2. PARK SEUNG HYUN     20WBR07555     park

3. SOW THIAM LOONG   20WBR07568     loong

4. TAN YEE LING           20WBR07584 ling

5. TONG MENG HUI 20WBR07605       hui

Programme : Bachelor of Finance and Investment (Honours)

Tutorial Group : 12

Date : 27 March 2021

TURNITIN REPORT
 INDIVIDUAL PRESENTATION ASSESSMENT FORM 

Date: 4 April 2021 Week: 12

Programme: RFI2S3 Tutorial Group No: 12

Name of Presenter: SOW THIAM LOONG

Presentation Group No: 5 Presentation No: 1 / 2 / 3 / 4 / 5 / 6 

The assessment of this tutorial presentation is based on the following criteria (to be filled in by
tutor):
Criteria  Excellent  Good  Average  Poor  Marks

Content  Demonstrated   Demonstrated   Demonstrated adequate Demonstrated  

(9 marks) outstanding   good mastery mastery of content &   superficial  
mastery of of content application.  handling of content
content & & application. (3 – 4 marks) & application. 
application.  (0 – 2 mark)
(7 - 9 marks) (5 – 6 marks)

Structure  Consistently   Generally Organisation was Disorganised

&  concise and concise and adequate, but weak.  and rambled too
Visual   wellorganise well organised.  (0 - 1 mark)  much.
Aids  d.  (1 - 2 marks)  (0 - 1 mark) 
(4 marks) (2 marks)  Generally clear Marginally  
Simple, clear & easy to acceptable &   Poor quality
& easy to read. read.   difficult to read. visual aids (or
Well- Adequate  none).  
coordinated Generally well- coordination with Poor coordination
with content, coordinated content.  with content. 
used very with content.  (0 - 1 mark) (0 - 1 mark)
effectively.  (1 - 2 marks)
(2 marks)

Adaptation  Good audience   Acceptable   Several No attempt to  

to   attention. audience distracting mannerisms relate to audience.
audience   Active attempt attention. Little attempt to relate Unprepared. 
(2 marks) to engage and Student is aware to audience. 
involve   of and (1 mark) (0 mark)
audience.  responsive to
(2 marks) audience. 
(1 mark)

TOTAL MARKS  / 15
marks
 INDIVIDUAL PRESENTATION ASSESSMENT FORM 

Date: 4 April 2021 Week: 12

Programme: RFI2S3 Tutorial Group No: 12

Name of Presenter: PARK SEUNG HYUN

Presentation Group No: 5 Presentation No: 1 / 2 / 3 / 4 / 5 / 6 

The assessment of this tutorial presentation is based on the following criteria (to be filled in by
tutor):
Criteria  Excellent  Good  Average  Poor  Marks

Content  Demonstrated   Demonstrated   Demonstrated adequate Demonstrated  

(9 marks) outstanding   good mastery mastery of content &   superficial  
mastery of of content application.  handling of content
content & & application. (3 – 4 marks) & application. 
application.  (0 – 2 mark)
(7 - 9 marks) (5 – 6 marks)

Structure  Consistently   Generally Organisation was Disorganised

&  concise and concise and adequate, but weak.  and rambled too
Visual   wellorganise well organised.  (0 - 1 mark)  much.
Aids  d.  (1 - 2 marks)  (0 - 1 mark) 
(4 marks) (2 marks)  Generally clear Marginally  
Simple, clear & easy to acceptable &   Poor quality
& easy to read. read.   difficult to read. visual aids (or
Well- Adequate  none).  
coordinated Generally well- coordination with Poor coordination
with content, coordinated content.  with content. 
used very with content.  (0 - 1 mark) (0 - 1 mark)
effectively.  (1 - 2 marks)
(2 marks)

Adaptation  Good audience   Acceptable   Several No attempt to  

to   attention. audience distracting mannerisms relate to audience.
audience   Active attempt attention. Little attempt to relate Unprepared. 
(2 marks) to engage and Student is aware to audience. 
involve   of and (1 mark) (0 mark)
audience.  responsive to
(2 marks) audience. 
(1 mark)

TOTAL MARKS  / 15
marks
 INDIVIDUAL PRESENTATION ASSESSMENT FORM 

Date: 4 April 2021 Week: 12

Programme: RFI2S3 Tutorial Group No: 12

Name of Presenter: TONG MENG HUI

Presentation Group No: 5 Presentation No: 1 / 2 / 3 / 4 / 5 / 6 

The assessment of this tutorial presentation is based on the following criteria (to be filled in by
tutor):
Criteria  Excellent  Good  Average  Poor  Marks

Content  Demonstrated   Demonstrated   Demonstrated adequate Demonstrated  

(9 marks) outstanding   good mastery mastery of content &   superficial  
mastery of of content application.  handling of content
content & & application. (3 – 4 marks) & application. 
application.  (0 – 2 mark)
(7 - 9 marks) (5 – 6 marks)

Structure  Consistently   Generally Organisation was Disorganised

&  concise and concise and adequate, but weak.  and rambled too
Visual   wellorganise well organised.  (0 - 1 mark)  much.
Aids  d.  (1 - 2 marks)  (0 - 1 mark) 
(4 marks) (2 marks)  Generally clear Marginally  
Simple, clear & easy to acceptable &   Poor quality
& easy to read. read.   difficult to read. visual aids (or
Well- Adequate  none).  
coordinated Generally well- coordination with Poor coordination
with content, coordinated content.  with content. 
used very with content.  (0 - 1 mark) (0 - 1 mark)
effectively.  (1 - 2 marks)
(2 marks)

Adaptation  Good audience   Acceptable   Several No attempt to  

to   attention. audience distracting mannerisms relate to audience.
audience   Active attempt attention. Little attempt to relate Unprepared. 
(2 marks) to engage and Student is aware to audience. 
involve   of and (1 mark) (0 mark)
audience.  responsive to
(2 marks) audience. 
(1 mark)

TOTAL MARKS  / 15
marks
 INDIVIDUAL PRESENTATION ASSESSMENT FORM 

Date: 4 April 2021 Week: 12

Programme: RFI2S3 Tutorial Group No: 12

Name of Presenter: TAN YEE LING

Presentation Group No: 5 Presentation No: 1 / 2 / 3 / 4 / 5 / 6 

The assessment of this tutorial presentation is based on the following criteria (to be filled in by
tutor):
Criteria  Excellent  Good  Average  Poor  Marks

Content  Demonstrated   Demonstrated   Demonstrated adequate Demonstrated  

(9 marks) outstanding   good mastery mastery of content &   superficial  
mastery of of content application.  handling of content
content & & application. (3 – 4 marks) & application. 
application.  (0 – 2 mark)
(7 - 9 marks) (5 – 6 marks)

Structure  Consistently   Generally Organisation was Disorganised

&  concise and concise and adequate, but weak.  and rambled too
Visual   wellorganise well organised.  (0 - 1 mark)  much.
Aids  d.  (1 - 2 marks)  (0 - 1 mark) 
(4 marks) (2 marks)  Generally clear Marginally  
Simple, clear & easy to acceptable &   Poor quality
& easy to read. read.   difficult to read. visual aids (or
Well- Adequate  none).  
coordinated Generally well- coordination with Poor coordination
with content, coordinated content.  with content. 
used very with content.  (0 - 1 mark) (0 - 1 mark)
effectively.  (1 - 2 marks)
(2 marks)

Adaptation  Good audience   Acceptable   Several No attempt to  

to   attention. audience distracting mannerisms relate to audience.
audience   Active attempt attention. Little attempt to relate Unprepared. 
(2 marks) to engage and Student is aware to audience. 
involve   of and (1 mark) (0 mark)
audience.  responsive to
(2 marks) audience. 
(1 mark)

TOTAL MARKS  / 15
marks
 INDIVIDUAL PRESENTATION ASSESSMENT FORM 

Date: 4 April 2021 Week: 12

Programme: RFI2S3 Tutorial Group No: 12

Name of Presenter: LEE KAH ZHUN

Presentation Group No: 5 Presentation No: 1 / 2 / 3 / 4 / 5 / 6 

The assessment of this tutorial presentation is based on the following criteria (to be filled in by
tutor):
Criteria  Excellent  Good  Average  Poor  Marks

Content  Demonstrated   Demonstrated   Demonstrated adequate Demonstrated  

(9 marks) outstanding   good mastery mastery of content &   superficial  
mastery of of content application.  handling of content
content & & application. (3 – 4 marks) & application. 
application.  (0 – 2 mark)
(7 - 9 marks) (5 – 6 marks)

Structure  Consistently   Generally Organisation was Disorganised

&  concise and concise and adequate, but weak.  and rambled too
Visual   wellorganise well organised.  (0 - 1 mark)  much.
Aids  d.  (1 - 2 marks)  (0 - 1 mark) 
(4 marks) (2 marks)  Generally clear Marginally  
Simple, clear & easy to acceptable &   Poor quality
& easy to read. read.   difficult to read. visual aids (or
Well- Adequate  none).  
coordinated Generally well- coordination with Poor coordination
with content, coordinated content.  with content. 
used very with content.  (0 - 1 mark) (0 - 1 mark)
effectively.  (1 - 2 marks)
(2 marks)

Adaptation  Good audience   Acceptable   Several No attempt to  

to   attention. audience distracting mannerisms relate to audience.
audience   Active attempt attention. Little attempt to relate Unprepared. 
(2 marks) to engage and Student is aware to audience. 
involve   of and (1 mark) (0 mark)
audience.  responsive to
(2 marks) audience. 
(1 mark)

TOTAL MARKS  / 15
marks
1. Business nature and performance

Ajinomoto (Malaysia) Berhad

Ajinomoto is a household brand of food manufacturer that distributes a variety of trusted food
seasoning brands such as Monosodium glutamate (MSG) (Ajinomoto, 2020). It is one of the early
Japanese Companies that has been set up in Malaysia in 1961 and continues to grow until now with
a position of market leader that has a market share of 80% of Malaysia in 2019 (JF, 2019).
Ajinomoto is also an international business whereas Ajinomoto covers more than 130 countries.
There are two major segments of business nature for Ajinomoto which is the Retail business and
Industrial business.

Retail business refers to the individual consumer market that is the largest and most needed for the
products. Therefore, it brings about more than 50% of Ajinomoto revenue every year. There are a
lot of products in this business segment such as chicken stock, different menu seasoning for local
dishes, and so on. Ajinomoto has an expansion plan to enlarge the product range to strengthen
Ajinomoto unique development in halal-compliant products with a new plant in Seremban and
expected to complete in 2022 (Ajinomoto, 2019). Besides that, Ajinomoto is willing to continue the
research to improve the product with the changing behavior and needs of consumers. During July
2020, the new products aminoVITAL which kind of sport drinks product as shown in Appendix,
Picture-1 has been launched to provide a larger range of products (Ajinomoto, 2020).

The 2.6% increase in the revenue of 2019 is mainly contributed by the increase in sales volume and
better selling price of Ajinomoto products. However, Ajinomoto revenue in the industrial business
is decreasing due to the weakening of exchange rate in USD/MYR leading to a drop in export sales.
Fortunately, Ajinomoto has a huge improvement in the cost management with lower costs of
production and leads to an increase in profit before tax of 8.3%. Ajinomoto revenue is continuously
growing with 3.1% in 2020 which is mainly due to the improvement of sales activities in both
business segments. In the consumer business, the factor leading in the improvement is more export
sales to the Middle East. While the revenue of industrial business in 2020 is having rebound after
the drop in 2019 which is a 6.8% improvement due to the higher sales amount. Therefore, from that
we could conclude Ajinomoto performance is improving in these preceding years and also its pay
effort on managing the costs of production (Ajinomoto, 2020).
D&O Green Technologies Berhad

D&O is an investment holding company and provides management service for the customers. This
company provides services of Original Equipment Manufacturer (OEM), Original Design
Manufacturer (ODM) and Original Branding (OBM) in Opto semiconductor products cater for
automotive, general lighting, backlight unit and sensor applications. It is an international company
as it provides service not only to Asia but also Europe, United States of America and more
countries. Under this group, there are few subsidiaries focused on different fields which are Omega
Semiconductor Sdn. Bhd. as an investment holding company, Dominant Opto Technologies Sdn.
Bhd. as a manufacturing company of semiconductor components and machineries, Dominant Opto
Technologies Korea Inc which merchandises semiconductor components and etc (Reuters, n.d.).
D&O also expanded its business to include LED module design and manufacturing and integrated
circuit design and development for LED applications as there is an increase of customer’s demand
and change of industry trend (D&O, 2019). In 2021, it planned to expand by launching more smart
LED automotive products which will make up at least 10% of total production by 2025 (TheStar,
2021).

The Group’s revenue has shown its growth from 2017 to 2019. The profit before tax was increased
from RM45,717,000 (2017) to RM52,123,000 (2018) but decreased to RM47,070,000 (2019). In
2017, the Group was able to get this revenue because there was a growth of 18.75 in the
Automotive Segment; In 2018 is because of the success of the new business; In 2019, thanks to the
increased demand of LED. We can see that the profit before tax in 2017 actually has increased
more than 50% compared to 2016 because the net other expense decreased which means the
company managed its cost very well. In 2018, the growth of profit before tax did not grow as much
as last year because the Group started its research and development on new products. However, as
there was absence of government subsidies and no gain in litigation settlement, the profit before tax
dropped and meanwhile the financial cost also increased 46.3% due to the borrowings from the
bank (Table 2). When we looked at the statement of cash flow of 2017, 2018 and 2019, the Group
actually had increased cash outflows in investing activities due to the purchase of property, plants
and equipment. It might be due to the expansion of business (Appendix, Statement-2,3). Despite
this, the company still had enough cash ready for other business activities (D&O, 2019).
2. Calculation
3. Calculations of intrinsic value. Justifications for inputs used

Expected market return is 8.382% based on previous year average (refer excel).

Risk-free rate is a return that investors expect to earn on an investment with zero risk. The rate used
will be 1.75% Overnight Policy Rate (OPR) where fixed deposits (FD) of commercial banks are
around that rate (Tan, 2021). The reason for using FD rate and not Malaysia Government Securities
(MGS) or Malaysia Treasury Bills (MTB) is because not every retail investor has the ability to
purchase MGS, unlike fixed deposits, the minimum amount required is ranging from RM1000 to
RM100,000 (RinggitPlus, 2021). Standard transaction for MGS is RM10 million and MTB is
around RM5 million which is a relatively big difference compared to FD (ABMF, 2016). Fixed
deposits are also zero default risk and guaranteed by PIDM for accounts below RM250,000.
Ajinomoto (Malaysia) Berhad

Required rate of return [E(R)] is being computed by using the formula of Rf + 𝜷[E(Rm) - Rf ]. The
beta used is 0.88 which is a one year beta of Ajinomoto (Infront, 2021). This is because the risk-
free rate is 1.75% and it is expected to remain unchanged for not more than a year. If the economy
is on growth, then the risk-free rate will probably increase.

For estimating average earnings growth rate, the figures used is the latest 3-year net profit of
Ajinomoto. From 2018 to 2019, there was an increase of 0.56% while from 2019 to 2020, there was
an increase of 5.78%. Therefore, on average, there was a growth of 3.18% on earnings (Statement-
1). The reason why 2017 isn’t in calculations is because there is a one-off gain on the disposal of
land compulsory acquired by the government which will create a large dispersion on the average
rate (Ho, 2018).

The dividend payout ratio(DPR) will also be using the latest 3-years ratio which is 50.25% (2018),
50.50% (2019) and 50.08% (2020). It means that there is a minimum 50% payout ratio from
Ajinomoto every year. Therefore, a conservative average DPR used will be 50% (Statement 1).
For average dividend growth rate, 2018 to 2020 have growth rates of 3.57%, 1.08% and 4.9%
respectively which formed up an average of 3.18%. The special dividend declared in 2017 isn’t
taken into consideration for calculation for 2018 because it is not a usual dividend declared
(Statement 1).
D&O Green Technologies Berhad

As the current Beta of D&O is 1.39 which is expected to remain unchanged for one year period
(Marketwatch, 2021). The high beta of D&O is due to the high volatility in the share price and their
business nature.

The required rate of return of D&O should be:

Estimated growth rate of EPS:

As the EPS of each year shown in Section 1, Table 2, D&O have been growing recently in recent
years from 1.04 in 2015 to 2.80 in 2019. There is a drop of 8.5% in 2018 to 2019 while 96.49%
growth from 2016 to 2017, 36.61% growth in 2017 to 2018. Yet, D&O is expected to grow further
due to the economic recovery and the expansion mode of the new LED products (TheStar, 2021).
The estimated average growth rate of EPS will be around 41.53% or more.
Estimated growth rate of Dividend per share:

Referring to Table-3, D&O is considered quite unstable such as there is no dividend for several
years from 2009 to 2016, growth to 1 sen dividend per share in 2017 but suddenly drops 50% in
2018, increase of 100% in 2019 and now drops 35% in 2020. The estimated average dividend will
be 0.05 will 3 years average growth.

Moreover, according to the analysis checks on the dividend sector by Simplywall.st, the current
dividend payout of 16% is expected to drop into 6% in the near future (Simplywall.st, 2021).
4. Applicability and suitability of DDM & P/E

Ajinomoto (Malaysia) Berhad

In Section 3, we used DDM Constant Growth Model to calculate the intrinsic value of
Ajinomoto shares price. The model is not applicable to determine the intrinsic value of
Ajinomoto because it assumes that dividends will always grow at a constant rate over time. It is
not suitable for stocks with volatile dividend growth rate (Dividend.com, n.d.). We can see that
Ajinomoto’s net dividend per share is growing year by year but its growth rate is relatively
volatile. DDM is very sensitive to the changes of input such as dividend growth rates, the
intrinsic value will be not consistent when using an inconsistent input (growth rates).

The Price-to Earnings (P/E) method is applicable to determine the intrinsic value of
Ajinomoto. Ajinomoto is a stable company or can be considered as a defensive stock. Covid-19
pandemic and the overall bad economic conditions did not give much impact on Ajinomoto
earnings and share price. According to Section 1, Table 1, Ajinomoto’s revenue is kept on
increasing and maintaining stable growth, as well as their net profit and net earning per share
(Section 3, Statement-1). In addition, Ajinomoto will not need to worry about the warrants and
bonus issues will dilute their EPS, since Ajinomoto does not have warrants and the last time
bonus issues were in 2002 (Appendix, Statement-4,5). In conclusion, the Price-to Earnings (P/E)
method is suitable to calculate Ajinomoto’s intrinsic value due to Ajinomoto having a stable and
increasing revenue and EPS.
D&O Green Technologies Berhad

After our calculation of intrinsic value of D&O using DDM constant growth model and justified
P/E, it can be said that this price is very undervalued compared to market price around RM4.18.
However, there are some problems when we use this model to calculate its intrinsic value because
of its lack of sustainability.

DDM constant growth rate model is not the suitable tool to find the company’s intrinsic value.
The company stopped paying dividends after the FY2008 and resumed in the FY2017. Yet, the
growth rate of the dividend was not stable. Dividend in FY2017 was RM0.01 but it dropped to
RM0.005 in FY2018. After that, it repeated the up and down (Section 3, Table 3). This showed the
unstable growth of dividend and the growth rate is unpredictable. To use this model, one of the
inputs must be constant growth rate but D&O did not have that.

For the justified P/E, it is totally inapplicable to find intrinsic value of D&O. It shows negative
value. Quantitatively explaining, the required rate of return must be higher than the earnings growth
rate. Otherwise, the output would have no meaning because it will show negative value.
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APPENDIX

Picture 1: New products of Ajinomoto 2020

Source: Ajinomoto Annual Report 2020
Statement 2: D&O Statement of cash flow 2018
Source: D&O Berhad Annual Report 2018
Statement 3: D&O Statement of cash flow 2019
Source: D&O Berhad Annual Report 2019
Statement 4: Ajinomoto Bonus issues
Source: KLSE Screener

Statement 5: Ajinomoto Warrants

Source: KLSE Screener