Assignment Group - Portfolio.docx

BWFN 5013: INVESTMENT ANALYSIS GROUP: CREATING AND MANAGING A PORTFOLIO

PREPARED TO: MR AFIRUDDIN TAPPA

PREPARED BY: SHAMINY GANESAN (824108) SHARALA NAIR ACHUDAN (824269) SHARMILA DEVI SUPPIAH (824090) FITRI MAHARANI BINTI NURDI (824425)

DATE OF SUBMISSION: 22 MARCH 2019

Table Of Contents Title Berjaya Food Berhad Dayang Enterprise Holdings Bhd Weibo Corporation Apple Inc Microsoft Corporation

Pages 1-13 14-27 28-38 39-46 47-61

BERJAYA FOOD BERHAD Company Background Berjaya Food Berhad (“BFood”) was incorporated in Malaysia on 21 October 2009. It was converted into a public limited company on 3 December 2009 and listed on The Main Market of Bursa Malaysia Securities Berhad on 8 March 2011. Berjaya Roasters (M) Sdn Bhd (“BRoasters”) was acquired as part of The Listing Scheme, and became a wholly-owned subsidiary of BFood in January 2011. On 19 July 2012, BFood completed the acquisition of 50% equity interest in Berjaya Starbucks Coffee Company Sdn Bhd (“BStarbucks”). The remaining 50% equity interest was held by Starbucks Coffee International, Inc (“SCI”). On 18 September 2014, BFood completed the acquisition of 50% equity interest in BStarbucks not owned by BFood for a total cash consideration of USD88,000,000 (equivalent to about RM279.52 million). On 7 December 2012, BFood acquired 100% equity interest in Jollibean Foods Pte Ltd, Singapore (“Jollibean Foods”) for a cash consideration of RM19.02 million. On 30 January 2018, the Company’s wholly-owned subsidiary, BFI completed the disposal of 5% equity interest in Jollibean Foods to Mr Sydney Lawrance Quays for a cash consideration of Singapore Dollar (“SGD”) 150,000 (equivalent to about RM445,020). On 7 October 2013, BFI entered into a Joint Venture Cum Shareholders’ Agreement with Deluxe Daily Food Sdn Bhd (“Deluxe”) for the subscription of 80% equity interest in Berjaya Food Supreme Sdn Bhd, a Brunei Darussalam-incorporated company to undertake the operations of “Starbucks Coffee” chain of cafes in Brunei Darussalam for a total cash consideration of about BND2.40 million (or about RM6.20million). The remaining 20% was subscribed by Deluxe.

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Corporate Structure

Top 10 Shareholders Information No.

Names of Shareholders

No. of

%

Ordinary Shares Held

1

RHB Capital Nominees (Tempatan) Sdn Bhd

29,400,000

7.80

2

Maybank Nominees (Tempatan) Sdn Bhd

19,580,000

5.20

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3

CIMB Group Nominees (Asing) Sdn. Bhd.

18,480,000

4.90

4

Maybank Nominees (Tempatan) Sdn Bhd

17,696,720

4.70

5

ABB Nominee (Tempatan) Sdn Bhd

16,400,000

4.35

6

Affin Hwang Nominees (Tempatan) Sdn. Bhd.

13,400,000

3.56

7

ABB Nominee (Tempatan) Sdn Bhd

13,333,333

3.54

8

Kumpulan Wang Persaraan (Diperbadankan)

12,633,000

3.35

9

CIMB Group Nominees (Tempatan) Sdn Bhd

12,300,000

3.26

10

Citigroup Nominees (Asing) Sdn Bhd

10,325,500

2.74

Economy Analysis Global Economy The global economy is expected to expand by 3.7% in the year 2018 and 2019 which is lower than the earlier expected rate 3.9%. This is due to the uncertainties of policy with several risks from the trade tension and outflow of capital from emerging economies. The global growth have become less synchronised with mixed development in advance economy while projection for emerging economies in developing Asia remain favourable. With the advanced economies the US is expected to record a strong growth by pro-cyclical fiscal stimulus and accommodative monetary policy. The euro, UK and Japan are forecasted to expand at moderate rate. Major economy in euro which is France and Germany are forecasted to expand moderately with the softer external demand and growth in productivity. In UK growth is weighed down because of more barriers to trade following Brexit, while Japan face decline labour force due to unfavourable demographics. 3|Page

The growth in emerging economies particularly developing Asia is expected to remain steady with the support from strong domestic demand led by India whereas China is expected to expand marginally slower because of regulatory tightening in financial and property sectors. On the other hand the fuel-exporting countries are expected to benefits from higher global oil prices. Growth in the other emerging economies such as Latin America and the Caribbean is forecasted to be lower due to dampening trade and investment activities and disruptions in the financial markets. Investment and industrial activities expected to slower down due to trade tensions. This will reduce the demand for capital and intermediate goods which contribute significantly to global trade. Global trade is projected to expand by 4.2% in the year 2018 and 4% in the year 2019 as compared with 5.2% in the year 2017. The global growth is expected to growth downward because of the tightening financial conditions, trade threats and risks of shifting towards protectionism as well as geopolitical tensions. Domestic Economy Malaysian economy remains resilient in the near term considerable external and domestic headwinds. Real GDP is projected to expand 4.8% and 4.9% in 2018 and 2019 respectively which is supported mainly by domestic demand. Private sector expenditure, household spending will remains as the main factor for the growth in GDP and also continuous increase in employment and wages. Meanwhile private investment will be supported by new and ongoing projects in the services and manufacturing sectors. Public expenditure is expected to growth marginally in 2018 and 2019 due to lower capital outlays by public corporations. From the supply side, the services sector is expected to remains as the largest contributor, such as wholesale and retail trade, finance and insurance as well as information and communication subsectors which is benefiting from steady consumer spending. The manufacturing sector growth is primarily driven by continuous demand for environment & ecology. Agriculture and mining sectors are expected to rebound in 2019 after recording a marginal contraction in 2018 following an increase in the production of crude palm oil (CPO) and liquefied natural gas (LNG). The construction sector is expected to growth moderately following the near completion of infrastructure projects as well as property overhang, particularly in the non-residential segment.

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Malaysia’s external position is projected to remains resilient in line with steady global economic and trade performances. However exports are expected to moderate due to slower global trade and investment activities. The current account surplus is expected to narrow following widening deficits in the services and income accounts. The monetary policy continues to be supportive of economic growth while ensuring price stability. In 2019 the monetary policy will remain accommodative and considerations for adjustments will depend on risks of domestic growth and inflation. The domestic financial systems remain stable and supported by deep and liquid financial market. Meanwhile, the domestic equity market is projected to continue recording gains despite external headwinds. Islamic banking is expected to remains favourable given strong demand from both households and businesses for Shariah-compliant financial products and services. Malaysia is expected to maintain its position as a global leader in Islamic finance.

Industry Analysis Growth Cycle of Industry There are five stages in the product life cycle. The first stage is product development, second stage is introduction, third stage is growth, fourth stage is maturity and the final stage is decline.

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Product development stage: The phase of development of new idea for a product. It also a pre-launched and early stage of any new product that passes through many research and tests. The product is being developed and shape into the needs and interest of consumers. The management of the company have to bear the pre-launched expenditure. The development and research expenditure will become loss for the company if the product fails to meet consumer’s expectations. Introduction stage: The product is distributed and available for sale. A launching of new product is very expensive for a company. The marketers will work hard to create sufficient demand for the new product in the market. The company must approach customers and encourage them to try their new product. There is no profit generated if the revenue the company gain is equal to the research and development cost of the product at development stage. Growth stage: The growth stage provides company with a strong growth in terms of sales volume and profit earned. The company will invest more in advertising and promotion of the product. If competition increases the price of the product might decrease. Mostly the price will remain same and the company will approach a new distribution channels to fulfil the increasing demand. Maturity stage: The product cost decreases due to learning curve and high production volume. The company should maintain the market share that they have achieved and the maintaining process is not easy for a company. Incentives should be given to marketing staff to sell the products and compete with competitors. Any new competitors introduce almost same products will affect the product pricing and profitability. Decline stage: Decline stage is the last stage of a product life cycle. The product is getting older and starts to shrink. One of the reasons for this situation is the saturated market due to competitors, product with new features and more advanced. This situation is unavoidable but the company still have many options. One of the options is upgrading the products by adding new features and makes it more attractive for the customers. If possible harvest the product and targeted at loyal customers.

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Competitive Position Fast food restaurant is fast growing and the most notable developments in the Malaysia foodservice industry. The fast food industry has grown at a rapid rate over the past 20 years and most lovable by Malaysian regardless of age. In any special occasion fast food restaurant will be the first choice of most Malaysian. Fast food has become a part of Malaysian culture and plays an important role in the society. Even though there is continuous debate in western countries about the fast food side effects the popularity of fast food among Malaysian cannot be cancelled out. The fast food industry is believed to be benefiting from the current local demographic trends, urbanization and changing lifestyles. AmInvestment Bank Bhd have pointed out that BJFood’s first nine months of FY19 (9MFY19) net profit exceed the expections and the group’s earnings growth to 59% for FY19 forecast which is contributed by stellar Starbucks brand. The strong performance was attributed to year-end festive promotions, school holidays and the Christmas season which boosted both beverages and merchandise sales. ‘

With the enhancement of current technology such as Grabfood make the life easier for fast food lovers. Berjaya Food also has implemented Grabfood services for fast food delivery. Through Grabfood consumers can place order and make payment through Grabpay and the food will be delivered to their doorstep. The customers no need to line up at fast food restaurant instead they just wait for the Grabfood driver to deliver to them the fast food that they ordered. Fast food industry rapid growing rate is influence by the enhancement of technology such as Grabfood, Foodpanda and many more application which can be downloaded from google play store in any smart phones. The choices of fast food restaurant are strongly influenced by the restaurant’s cleanliness, consistency of menu items and also the location. Berjaya food have been established with good image and trusted by many customers. To be an outstanding fast food restaurant the marketing strategies of the restaurant must have a sound understanding of consumer perceptions and preferences and how they differ across different cultures such as displaying health information of their food products.

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As the Consumer gets much health information they will have a good perception on Berjaya Food for providing them health updates. At the same time, the marketing strategies must take into consideration of the consumer interest and most importantly the message must clearly communicate. They must make sure the marketing strategies reached to large number of audiences. In order to survive in the fast food industry, every restaurant of fast food must be able to provide a good food and healthy with variety and upgraded menu of food. Research and development must be carried out on the food that they are selling according to the current market trend and needs. For example instead of selling hotdog the fast food restaurant can conduct research and development on the menu and sell hotdog cheese or hotdog corn instead of just hotdog in order to do attract more customers to their fast food restaurant. Financial Performance of BJFood and competitors during financial year 2018 Financial Revenue (RM) PBT (RM) PAT (RM) T. Asset (RM) T. Liabilities (RM) Market Cap Price (RM)

BJFood

Bornoil

Oversea

BJLand

Kbunai

BJToto

639,741,000 137,108,230

58,517,458

6,361,198

79,409,701

5,660,58 7

19,197,000

(1,589,165)

(3,566,454)

69,852

31,593,232

377,233

2 18,000

(5,897,919)

(4,859,668)

(118,188)

44,923,048

237,944

813,663,000 717,047,783

72,182,652

5,389,809

1,396,099,819

2 ,631,057

522,686,684

1 ,844,660

426,474,000

32,451,996

12,996,520

2,307,595

565 million

240 million

30 million

1.4 Billion 462 Million

1.60

0.05

0.12

0.28

0.09

1.3 Billion 0.25

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Fundamental Analysis The table below is showing the financial performance of Berjaya Food from the year 2014 to the year 2018.

Income Statement (RM’Mil)

Dec’18

Dec 17

Dec 16

Dec 15

Dec 14

Revenue

639,741

605,441

554,363

376,780

150,369

Profit/ (loss) Before Taxation

19,197

24,319

35,615

182,769

24,573

Profit/ (Loss) after taxation

2 18

6 ,332

17,542

171,099

20,113

Balance Sheet (RM’Mil)

Dec’18

Dec 17

Dec 16

Dec 15

Dec 14

Total Current Asset

94,341

89,806

115,944

107,175

43,310

Total Non-Current Asset

719,322

700,433

630,710

607,057

149,530

Total Assets

813,663

790,239

746,654

714,232

192,840

Short Term Borrowing

141,758

130,667

62,331

4,431

5,931

Long Term Borrowing

137,495

124,689

166,490

186,626

-

Total Debt

279,253

255,356

228,821

191,057

5,931

Total Equity

387,189

374,330

388,503

387,793

162,146

Cash Flows Statement (RM’Mil)

Dec’18

Dec 17

Dec 16

Dec 15

Dec 14

Cash Flows from operation

63,302

75,093

42,613

68,049

10,626

(49,469)

(78,624)

(51,357)

(280,045)

(12,848)

Cash flows from Investing Activities

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Cash flows from Financing Activities

(6,163)

(8,180)

8,551

225,403

2,015

Net Cash – Ending Balance

28,782

21,256

33,354

33,362

19,639

Berjaya Food net income has increased from the year 2014 to the year 2015 and then drastically decreased from the year 2016 to the year 2018. Even though their revenue for respective years has increase gradually from the year 2014 to the year 2018. During the year 2018 the net income after tax which is RM218,000 is the lowest among other recorded net income throughout the year 2014 to 2017. This may reflect the changes of ruling party and the implementation of Service Sales Tax (SST) to replace Goods Service Tax (GST) during the year 2018. Berjaya Food restaurant chains is improving and making more profits for the first two months of 2019. The acceptance of public on Berjaya food restaurant chains has increased steadily from the year 2014 to the year 2018. The increase in profit first two months of 2019 is contributed by their Starbucks coffee and also Kenny Rogers Roasters. The upgraded version of meals and combo food and variety of coffees also have help to boost Berjaya Food performance and revenue gained. The total debts of Berjaya Food are increasing from the year 2014 to the year 2018. Both short term and long term borrowing is increasing. This showing that the company is using short term and long term borrowing for their business expansions. Business expansion is a process of seeking out of additional options to generate more profits. The company is targeting a bigger group of customers by expanding their business. Customers play important role in determining the success of Berjaya Food business in the long runs. The increase in short term and long term borrowing will incur interest expense. The company have to bear the interest expense. Interest expense is a non-operating expense shown on the income statement of the company. The total equity of Berjaya Food increase from the year 2014 to the year 2016 and it decrease during the year 2017 and increase back in the year 2018. The company is using more equity financing than debt financing. Equity financing is good for the company as it does not bring any financial burden to the company. There is no monthly interest payment by using equity financing and the company will have more capital to invest for the business growth. 10 | P a g e

Through equity financing the shareholders is entitle for the dividend. But if the company doesn’t gain profit for the current year the payment of dividend can be brought forward to next financial year as a cumulative figure. Ratio Analysis of Berjaya Food The table below showing the ratio analysis of Berjaya Food from the year 2014 to the year 2018

Ratio Analysis

Dec 18

Dec 17

Dec 16

Dec 15

Dec 14

Gross Profit Margin

44.11%

43.51%

44.53%

44.87%

39.69%

Net Profit Margin

0.03%

1.05%

3.16%

45.4%

13.38%

0.34

0.32

0.64

0.84

1.70

Debt Ratio (%)

52.4%

52.6%

48%

45.7%

15.9%

Return on Asset (ROA)

0.03%

0.80%

2.35%

24%

10.4%

Return on Equity (ROE)

0.06%

1.69%

4.52%

44.1%

12.4%

Earnings Per Share

0.31

3.05

5.66

54.41

8.58

Current Ratio

The current ratio is a liquidity ratio that measures a company’s ability to pay their short term obligations which is less than a year. A ratio less than one indicate that the company may have difficulty in meeting their short term obligations as their current liabilities exceed their current assets. Berjaya food current ratio is less than one during the year 2017 and the year 2018. This shows that the company unable to meet their short term obligations.

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Return on Asset (ROA) is a profitability ratio that indicates how much profit a company is able to generate by using their assets. It’s also means that how efficient the company management in generating profits from their economic resources. The higher is the percentage the more efficient a company in using available resources in generating profits. Berjaya Food, Return on Asset is very low during the year 2016 to the year 2018. This shows that the company is not efficiently using their assets in generating profits from the company. Return on Equity (ROE) is a ratio showing how efficient a company in using shareholder fund in generating profits for the company. The higher is the percentage of the ratio the more efficient is the company in using shareholder equity in generating profits. Berjaya Food, Return on Equity is very low during the year 2016 to the year 2018. This indicates that the company is not efficiently using shareholder funds to generate income for the company. Shareholders may find it risky and doesn’t worth to invest in Berjaya Food. The earnings per share of Berjaya Food are also very low during the year 2017 to the year 2018. The company will have difficulty in getting equity financing from shareholders. This is because shareholders will gain less return from their investment in the Berjaya Food. The existing shareholders and future shareholders will have doubt on the management of the Berjaya Food in managing the company.

Technical Analysis The technical analysis used in this assignment consists of moving average convergent and divergent (MACD), relative strength index and moving average. The technical pattern of technical analysis are support or resistant.

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On 04/02/19, I bought 59,200 units of Berjaya Food shares at price of RM1.34 per share in total of RM79,328. On 08/03/19 I sell off all the shares at RM1.48 for total proceeds of RM87,616 and gain profits of RM8,288. The MACD is showing signal to sell at the end of Feb 19. The RSI is showing signal to sell at the middle and end of Feb 19 and signal to buy at the beginning of March 19.The moving average showing signal to sell at the end of Feb 19. The support line at the end of Feb 19 and beginning of March 19 giving signal to buy the shares.

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DAYANG ENTERPRISE HOLDINGS BHD Company Background Dayang Enterprise Holdings Berhad (Dayang) (712243-U) is an investment holding company that has three wholly owned subsidiaries under its wing which are Dayang Enterprise Sdn Bhd (DESB) (61505-V), DESB Marine Services Sdn Bhd (DMSSB) and Fortune Triumph Sdn Bhd (FTSB).

The company’s operations commenced with DESB in 1980 whose initial business was the trading of hardware materials and supply of manpower for the offshore oil and gas industry. Besides, this was expanded to include provisioning of maintenance services, fabrication operations, hook-up and commissioning and charter of marine vessels. This company has been awarded with numerous contracts including those by Petronas Carigali, Sarawak Shell Berhad and ExxonMobil. In line with its emphasis on quality, DESB was accredited with an MS ISO 9001:2015 Quality Management System certified by SIRIM QAS International Sdn Bhd in June 2017. In addition to that, Dayang Enterprise Holdings Berhad also received the Grand Award from ExxonMobil and Petronas Carigali, as recognition of safety excellence in 2004. Since 2002, Dayang Enterprise Holdings Berhad has been the annual recipient of Petronas Carigali Certificate of Appreciation.

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The strengths of this company are:        

Having approved license and registration by Petronas. Established track record. Experience in supporting diverse types of offshore structures. Economies of scale. Comprehensive In-House skills and expertise. High quality standards. Marine vessels. Full range of In-House equipments and tools.

The main services of Dayang Enterprise Holdings Berhad are provision of maintenance services, subsidiary of this Company which is Dayang Enterprise Sdn Bhd (DESB) undertakes the overall provision of maintenance services, which focuses on the following areas: 

Maintenance of Topside structure



Maintenance of pipes and valves and



Electrical and instrumentation

The maintenance services are provided either on a routine or scheduled basis or during a breakdown or emergency, in which case maintenance works are undertaken due to fault or failure. Besides, they provide fabric operations service. Fabrication generally refers to the valuedadded process of constructing structures out of various raw materials, primarily metal. Dayang Enterprise Holdings Berhad undertakes engineering and fabrication services to meet the needs of its customers including onshore fabrication for products such as pipe and valve systems, skids and other steel structures such as hand rails and helideck extensions. Furthermore, this Company have two fabrication yards cum warehouses name Labuan Yard at Kampung Rancha-Rancha, Labuan, FT and Kemaman Yard at Kemaman Supply Base, Kemaman, Terengganu. The third services provided by them is hook up and commissioning, Dayang Enterprise Holdings Berhad also undertakes the provision of hook-up and commissioning for steel structures and electrical and instrumentation services as part of its supporting products and services to the oil and gas industry.

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On the other hand, some of the tasks related to hook-up and commissioning of electrical & instrumentation includes electrical engineering, system design, equipment & system procurement, wiring including laying of new wires & cables, panel installation & wiring and testing & commissioning. Charter of marine vessels also one of the services that provided by them, Dayang Enterprise Holdings Berhad possesses its own marine vessels which are used to provide offshore accommodation for its personnel as well as work area and equipment to facilitate the provision of its supporting products and services.

The list of Dayang Enterprise Holdings Berhad sharholders:

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Economic Analysis Economic factors includes taxation rate, the stage of economy of country name, economic performance of country name, exchange rate, interest rate, consumer disposable income, labour market conditions, and inflation rate. Economic Factors that Impact Dayang Enterprise is increasing liberalization of trade policy of Malaysia which can help Dayang Enterprise to invest further into the regions which are so far off limits to the firm. Besides, availability of core infrastructure in Malaysia over the years lead the Malaysia government to increase the investment in developing core infrastructure to facilitate and improve business environment. In order to that, Dayang Enterprise can access the present infrastructure to drive growth in oil & gas sector in Malaysia. Furthermore, based on the economic performance of Malaysia we believe the economic performance of Malaysia in 5 to 10 years will remain stable as the government expenditures are in stable demand because of disposable income, and increasing investment into new industries. Moreover, government intervention in the energy sector and in particular oil & gas industry can impact the fortunes of the Dayang Enterprise in the Malaysia. According to the economic cycles, the performance of Dayang Enterprise in Malaysia is closely correlated to the economic performance of the Malaysia's economy. The growth in last two decades is built upon increasing globalization and utilizing local resources to cater to global markets. On the other hand, downward pressure on consumer spending will give negative impact on consumer, for the instance even though the disposable income of consumer has remain stable, the growing inequality in the society will negatively impact customers sentiment and thus impact consumer spending behaviour. Besides, Dayang Enterprise own approved license & registeration by Petronas, Dayang’s wholly owned subsidiary, DESB is registered with Ministry of Finance and has a Petronas approved license that enables it to provide supporting products and services for the oil and gas industry. Dayang Enterprise having 25 years of oil and gas experience, so that it is successfully established a track record that is associated with quality, reliability, technical expertise as well as service excellence.

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Furthermore, Dayang Enterprise provides supporting products and services, especially maintenance services for a wide range of exploration and production platforms, and other offshore structures. Dayang Enterprise also experience plus its track record serve as a distinct competitive advantage when bidding for offshore contracts. Dayang enjoys significant economies of scale, which serves as a competitive advantage when bidding for new contracts, but at the same time able to maintain a high margin. This is achieved through providing a wide range of supporting products and services, and servicing a large number of offshore structures. In addition to that, Dayang Enterprise has in-house expertise and skills to maintain most types of offshore structures and platforms and thus does not rely on outsourcing and / or third party expertise. Dayang Enterprise has eight vessels in operation and construction of another maintenance and accommodation workboat. Dayang Enterprise believe that by having its own vessels, They able to reduce its reliance on the supply of charter services from external parties and allow the company to be more competitive in terms of pricing and costing when bidding for contracts. Moreover, thye has a full range of in-house equipments and tools that allows it to provide a prompt and consistent product and service quality, high efficiency and the ability to undertake high volume work.

Industry Analysis There are three main ways in which we can perform industry analysis, these are the competitive forces model also known as Porter’s Forces, the broad factors analysis also knows as PEST analysis and SWOT Analysis. As per my suggestion, the new investors at Dayang Enterprise Holding Berhad can use Porter Five Forces as a strategic management tool to do industry analysis. It will help the investors at Dayang Enterprise in mapping the various competitive forces that are prevalent in oil & gas industry. Dayang Enterprise can use porter five uses to help managers at Dayang Enterprise to understand about rivalry among existing players in the oil & gas services & equipment, bargaining power of buyers of Dayang Enterprise, bargaining power of suppliers of Dayang Enterprise, threat of new entrants in the oil & gas services & equipment industry and threat of substitute products and services in the oil & gas services & equipment industry.

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The Porter Five Forces that determine the industry structure in oil & gas services are: 

Threat of new entrants in oil & gas industry – if there is strong threat of

new

entrants in the oil & gas services industry then current players will be willing to earn lower profits to reduce the threats from new players. 

Threat of substitute products and services in oil & gas services sector – If the threat of substitute is high then Dayang Enterprise has to either continuously invest into R&D or it risks losing out to disruptors in the industry.



Rivalry among existing players in oil & gas industry – If competition is intense then it becomes difficult for existing players such as Dayang Enterprise to earn sustainable profits.



Bargaining power of buyers of Dayang Enterprise and Energy sector – If the buyers have strong bargaining power then them usually tend to drive price down thus limiting the potential of the Dayang Enterprise to earn sustainable profits.



Bargaining power of suppliers in oil & gas – If suppliers have strong bargaining power then they will extract higher price from the Dayang Enterprise. It will impact the potential of Dayang Enterprise to maintain above average profits in oil & gas industry.

The Porter Five Forces analysis is important for Dayang Enterprise because the new investors or clients can use Porter Five Forces model to analyse the competitiveness faced by Dayang Enterprise in oil & gas industry. Porter five forces analysis of Dayang Enterprise will help in understanding and providing solution to for nature & level of competition, and how Dayang Enterprise can cope with competition. In addition to that, from outside various industries seem extremely different but analysed closely these five forces determines the drivers of profitability in each industry. Besides, investors also can Porter Five Forces to understand key drivers of profitability of Dayang Enterprise in oil & gas industry. The core objective of strategists and leaders at Dayang Enterprise is to help the organization to build a sustainable competitive advantage and thwart competitive challenges from other players in the oil & gas industry. There few steps in order to practice a good Porter Five Forces:

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Step 1-Defining relevant industry for Dayang Enterprise. For the example, Dayang Enterprise does mostly its business in oil & gas industry. Step 2 -Identify the competitors of Dayang Enterprise and group them based on the segments within the energy industry. Step 3- Assess the Porter Five Forces in relation to the oil & gas industry and assess which forces are strong in oil & gas and which forces are weak. Step 4 - Determine overall energy industry structure and test analysis for consistency. Step 5- Analyse recent and future changes in each of the forces in the oil & gas industry. This can help in predicting the trend in overall energy sector. Step 6- Identify aspects of industry structure based on Porter Five Forces that might be influenced by Dayang Enterprise competitors and new entrants in oil & gas industry. Porter Five Forces framework can be used for developing strategies for Dayang Enterprise Holding Bhd. Furthermore, to achieve above average profits compare to other players in oil & gas industry in the long run, Dayang Enterprise needs to develop a sustainable competitive advantage. On the other hand, oil & gas industry analysis using Porter Five Forces can help Dayang Enterprise to map the various forces and identify spaces where Dayang Enterprise can position itself. By doing Industry analysis using Porter Five Forces, Dayang Enterprise can develop generic competitive strategies which are cost leadership, differentiation, cost focus & differentiation focus. Cost leadership In cost leadership, Dayang Enterprise can set out to become the low cost producer in the oil & gas industry. How it can become cost leader varies based on the Energy industry forces and structure. In pursuing cost leadership strategy, company name can assess to pursuit of economies

of scale,

proprietary technology, supply chain

management options,

diversification of suppliers, preferential access to raw materials and other factors. Differentiation Dayang Enterprise can also pursue differentiation strategy based on the oil & gas industry forces. In a differentiation strategy Dayang Enterprise can seek to be unique in the oil & gas industry by providing a value proposition that is cherished by customers.

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Besides, Dayang Enterprise can select one or more attributes in terms of products and services those customers in the oil & gas values most. In addition to that, the goal is to seek premium price because of differentiation and uniqueness of the offerings. Industry analysis of oil & gas using Porter Five Forces can help Dayang Enterprise to avoid spaces that are already over populated by the competitors. Focus - cost focus & differentiation focus The generic strategy of focus rests on the choice of competitive scope within the oil & gas industry. Dayang Enterprise can select a segment or group of segment and tailor its strategy to only serve it. Most organization follows one variant of focus strategy in real world.

Fundamental Analysis Dayang Enterprise’s primary competitors include some of the most prominent oil & gas companies in the industry. The examples of the competitors are Sapura Energy, T7 Global Berhad, Malaysia Petroleum Resources Malaysia and Petra Energy Bhd. Financial performance of three largest oil & gas Companies in Malaysia for financial year ended 2017:

Revenue ($ million) Profit before tax ($ million) Profit after tax ( $ million) Total assets ($ million) Total liabilities ($ million) Total equities ($ million) EPS

Sapura Energy 661,410 274,728

Petra Energy 8,597 (17,910)

T7 Global 184.140 (1,584,239)

276,050

(17,733)

(1,638,791)

11,048,854 1.968,381

337,879 2,407

207,846,426 34,314,819

9,880,473

335,472

173,531,607

3.50

(14.34)

0.49

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Financial performance of Dayang Enterprise Holdings Berhad from 2013 to 2017: 2017 (RM’000) Income Statement Revenue 499,910 COGS 1,235 Net Income 456,234 Financial Position Total assets 1,257,186 Total liabilities 630,540 Total equities 636646 Cash Flow Operating (2,826) Investing Financing (27,203) Ending balance 26,855 cash

2016 (RM’000)

2015

2014

2013

4,200 2,556 (39,031)

35,140,000 8,731,000 11,393,736

66,406,606 1,963,628 63,992,150

58,230,000 1,560,184 57,682,111

1,255,524 709,909 545,615

1,268,547,009 683,900,893 584,648,116

604,374,488 423,610 603,950,876

445,329.296 20,236,185 425,093,111

49,108 (10,402) 56,894

78,711,346 (741,460,228) 628,197,788 18,277,568

(11,552,203) 94,190,494 (48,848,789) 52,828,662

(22,245,550) (68,872,024) 31,375,973 19,039,160

Dayang Enteprise Holding Bhd revenue was increased from the year 2013 to 2014 then decreased by RM 31,266,606 on 2015 and decreased again by RM 30,940,000 on year 2016. Its shows that Dayang Enterprise demands by their customers were very low for the past three years from 2013 to 2015. Besides, the sales decline as there are many competitors outside started trying to compete with Dayang Enterprise and trying to get their customers. However, the sales increased back on 2017 by RM 495,710,000. Besides, the cost of sales or manufactures was keep rise from 2013 to 2015 then dropped drastically by RM 6,175,000 on 2016 and RM 1,321,000 on 2017. As the sales keep increased from 2013 to 2014 the cost of manufactures also increased, so in order to produce oil & gas services Dayang Enterprise increased the costs for each of services. In addition to that, the net income was keep declined from 2013 to 2016 and rise so hugely on 2017. Besides, the totals assets own by Dayang Enterprise was keep increased every year from year 2013 to 2017 which is very good things for them because they can use the assets to pay off the obligation. The large amount of current assets can easily convert into cash and pay off the liabilities. Besides, large amount of assets that own by Dayang Enterprise shows how efficient the company can produce profits by manage their assets in their daily to daily business. The large amount of assets also can shows how much of profits can produce by the assets that own by a Dayang Enterprise. 23 | P a g e

Furthermore, the total liabilities were declined from 2013 to 2014 and increased by RM 683,477,283 on 2015 which means Dayang Enterprise took borrowings or debt in order to run their business. The total liabilities are lesser than total assets means that Dayang Enterprise has enough capitals for their day to day operations even though the total liabilities increased on 2016. Microsoft’s ending balance of cash as 2017 remained healthy. The cash hold by Dayang Enterprise was increased by drastically by RM 33,789,502 on 2014 then declined by RM 34, 601,094 on 2015. The decline was due to the lower cash flow from operating activities and financing activities. On the other hand, the net cash was increased on 2016 which will help Dayang Enterprise for their daily to daily business operations and pay off all the debts as well.

Profit Margin Current ratio Working capital Debt to equity ratio Return on assets Return on equity

2017

2016

2015

2014

2013

91%

(9.29%)

32%

96%

99%

0.09

0.53

0.75

2.15

3.54

(RM 576,164)

(RM75,050)

0.99

1.30

1.17

0.07

0.05

36%

3%

8%

10%

13%

72%

7%

2%

11%

14%

RM567,831,324 (RM13,644,843)

51,339,040

Profit margin called as return on sales ratio or gross profit ratio means percentage of sales left over after paid all the expenses that paid by business. Dayang Enterprise profit margin rise from year 2013 to 2014 which means they are efficient in converting all their sales into net income. In 2015 the profit margin decreased to 32% of sales left over after paid all the expenses and they also not so efficient in managing their sales in order to convert into net income. In year 2017, the profit margin increased radically which means Dayang Enterprise make more sales and the net income also become higher. The second ratio is current ratio, this ratio measures efficiency of a company can pay off the short term liability by using the current assets that owns by company.

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According to the calculation, Dayang Enterprise current ratio keep declined from 2013 to 2017 which was from 3.54 times decreased to 0.09 times lesser than 1 which means Dayang Enterprise having less amount of current assets that can easily convert into cash and able to pay off the liabilities immediately. Furthermore Dayang Enterprise own large amount of noncurrent assets than current assets in order to run their business in oil & gas. In addition to that, net working capital determines the company can meet the obligations with the current assets or not and also to determine of how much of deficiency and excess there is. Dayang Enterprise working capital was decreased on year 2014 by RM 37,694,197 which means the current liabilities exceed the current assets and the Company have no enough capital for their day to day operations. Furthermore on 2015 the working capital extremely increased by RM 554,186,481, which means on that particular year Dayang Enterprise have enough capital for their business and the current assets also higher than current liabilities. Then, Dayang Enterprise working keep declined from 2016 to 2017 so as the business in more risky situations the assets cannot easily convert and not able to pay of the debts. Debt to equity ratio is a ratio which helps to compare total debt to total equity. A higher debt to equity ratio indicates that more creditor financing than investor financing. According to the calculation Microsoft in more risky situation as the debt to equity ratio keep increased from 2013 to 2016. Meanwhile, Dayang Enterprise also in less financially stable because having more creditors than investors and the investors don't wants to fund the business operation due to lack of performance by Dayang Enterprise. Return on assets means how efficient of a Company can produce profits by manage their assets. According to the calculation, Dayang Enterprise not managing properly their assets in order to produce profits from the year 2013 to 2016. Then the ratio increased by 33% in 2017 means Dayang Enterprise having high return on assets ratio on 2017 and wisely convert money that used to purchase assets into profits. In addition to that, Return on equity means an ability of a firm to generate profits from its shareholders investments in the company. This ratio is very important for potential investors because they want to see how efficiently a company will use their money to generate net income. According to calculation, Dayang Enterprise having highest return on liquidity ratio on 2017 compare to the rest of years.

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Besides, Dayang Enterprise also attracts more investors to invest into their Company as their equities are wisely managing or using by Dayang Enterprise and it lead the investor’s trusts on them.

Technical Analysis For the fiscal year ended 31 December 2018, Dayang Enterprise Holdings Berhad revenues increased 35% to RM937.6 Million. Net income totalled RM164.2 Million and the total. loss of RM144.9 Million. Revenues reflect an increase in demand for the Company's products and services due to favourable market conditions. Furthermore, net income reflects administration expenses decrease of 9% to RM98.9 Million. Basic Earnings per Share excluding extraordinary items increased from -RM0.15 to RM0.17. This is first impression that can lead client or investor to buy the stocks of this Company.

SELL

BUY

SELL BUY SELL BUY

Our first day trading day was started on 4 February 2019. Based on the technical chart analysis, the price of the stock on 4 February 2019 is at RM 0.590 per unit. I suggested client to buy the first 130,000 units of stock as the price is decreased from RM 0.595 to RM 0.590 per unit of stock which is a good time to buy stocks. 26 | P a g e

Furthermore, based on Moving average analysis the line is in rising trend channel, which a good signal for investors to buy their first stocks. Besides, the candlestick chart changed the colour from green to red which means its giving signal to buy stocks as it is in down trend channel. On the other hand, MACD also is in rising trend channel so it’s can be a good signal for investor to buy their first unit of stock. Based on Relative Strength Index, it’s less than 70 and started to decline which means the price is going to decreased so investor can buy more stocks at this point with the hope that the price will increase in future drastically. After a while, I decided not to take any risk by buying any stock as the price of the stocks keep fluctuated and wait until the price go up in order to sell it off. On the last day of trading day which is on 1 March 2019 I decided to sell it off all the stocks at the price of RM 1.18 per unit with the difference of RM 0.59 from the cost of the stock at the beginning. In addition to that, the Relative Strength Index is above 70 which mean it is a good signal to sell off the stocks in order to get high profits. The MACD line is keep rise which means the price of the stock keeps increasing day by day so on the last day of trading it’s giving a good signal to sell off all the stocks. Furthermore, Moving Average analysis and candlestick chart also giving a good signal to sell of the stocks on the last day of trading day. The price of the stock also keeps bullish. The total costs of this Dayang Enterprise Holdings Bhd are RM 76,700 while the total proceeds are RM 159,300 and the total gains that investor can earn by investing under stocks are RM 82,600. On the other hand, the Return on Investment for this stock is 1.08.

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WEIBO CORPORATION Company background Weibo Corporation, incorporated in 2010, is a social media platform for people to create, distribute and discover Chinese-language content. The Company provides ways for people and organizations to publicly express themselves in real time, interact with others on a global platform and stay connected with the world. The Company operates through two segments: advertising and marketing services, and other services. The Company has a range of users, including ordinary people, celebrities and other public figures, as well as organizations, such as media outlets, businesses, government agencies and charities. The Company's product categories include those for users, advertising and marketing customers and platform partners. Products for Users The Company offers self-expression products that enable its users to express themselves on its platform; social products to promote social interaction between users on its platform; discovery products to help users discover content on its platform, and notifications to notify users on Weibo account activities through short message service (SMS) or push notification on their device. The Company offers third-party online games, including role playing games, card games, strategy games and real life simulation games. Most Weibo games are offered for free and certain games allow users to purchase virtual currency, known as Weibo Credit, to redeem virtual items. Its very important person (VIP) membership offers its users certain services and functions that are not available to regular users. With these additional functions, VIP members can follow more users, have more ways to personalize their Pages, can send voice feeds, enjoy more cloud storage, receive additional options to manage information flow and followers, receive SMS notification of Weibo account activity and have access to games. VIP membership is available through monthly or annual subscriptions. It has also developed a suite of mobile applications, including Weibo Headlines, which aggregates news and information from Weibo and other online sources, and Weibo Weather, a weather application in China that features weather condition, particle matter index (PMI) and other information, such as scenic photos from cities that the users selected to follow.

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Products for Advertising and Marketing Customers The Company seeks to provide advertising and marketing solutions to enable its customers to promote their brands and conduct marketing activities. It provides its customers with analytical tools to enable them to track and improve the effectiveness of their marketing campaigns on its platform. Its advertising and marketing customers include accounts, Alibaba/e-commerce merchants, small and medium-sized enterprises (SMEs) and individuals that seek a spectrum of online advertising and marketing services ranging from brand awareness to interest generation, sales conversion and loyalty marketing. It offers advertising and marketing solutions, including social display advertisements and promoted marketing. Its promoted marketing includes promoted feeds, promoted accounts and promoted trends. Products for Platform Partners The Company seeks to provide its platform partners with tools and application programming interface (API) that customers can use to share their content to Weibo's platform, distribute Weibo content across their properties and enhance their Websites and applications with Weibo content, and to build social applications on Weibo or integrate their products with Weibo. Weibo's platform partners include traditional and online media outlets, as well as developers of games and other applications. Products offered for its platform partners include Weibo Connect, which allows its platform partners to link their Websites and mobile applications to its platform, enabling their users to share content to Weibo; Weibo Service, which is open API that allows third-party developers to build applications to serve individual and organization users; Weibo Credit, which allows its users to purchase in-game virtual items and other types of fee-based services on Weibo and for its platform partners to receive payment, and Weibo wallet, which enables individuals and businesses to hand out red envelops to build active follower base. The Company competes with Tencent, Netease, Sohu, Phoenix New Media, Twitter, Instagram, Facebook, WhatsApp, Line, Kakao Talk, Snapchat, iQiyi, Youku Tudou, Bitauto, Autohome, Meituan/Dianping, Qunar, Baidu, UC Web, Qihoo 360, Weixin/WeChat, QQ Mobile, Qzone Mobile, Yixin, Laiwang, Douban, Baidu Post, Momo, Inke, In, Nice, Paipai, Meipai and Jinritoutiao.

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Shareholder information Shareholders Name

Equities

%

Alibaba Group Holding Ltd. (Investment Management)

9,000,000

7.42%

Harding Loevner LP

6,998,040

5.77%

Fisher Asset Management LLC

2,764,345

2.28%

Genesis Investment Management LLP

1,783,661

1.47%

The Vanguard Group, Inc.

1,738,502

1.43%

BlackRock Fund Advisors

1,707,911

1.41%

Wells Capital Management, Inc.

1,547,782

1.28%

Platinum Investment Management Ltd.

1,402,555

1.16%

SSgA Funds Management, Inc.

968,639

0.80%

William Blair Investment Management LLC

837,226

0.69%

Economic analysis 

Net revenues were $481.9 million, an increase of 28% year-over-year.



Advertising and marketing revenues were $417.0 million, an increase of 25% yearover-year.



Value-added service ("VAS") revenues were $64.9 million, an increase of 44% yearover-year.



Net income attributable to Weibo was $166.5 million, an increase of 27% year-overyear, and diluted net income per share was $0.73, compared to $0.58 for the same period last year.



Non-GAAP net income attributable to Weibo was $183.6 million, an increase of 26% year-over-year, and non-GAAP diluted net income per share was $0.80, compared to $0.64 for the same period last year.

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

Monthly active users ("MAUs") were 462 million in December 2018, a net addition of approximately 70 million users on year over year basis. Mobile MAUs represented 93% of MAUs.



Average daily active users ("DAUs") were 200 million in December 2018, a net addition of approximately 28 million users on year over year basis.

Fiscal Year 2018 Highlights 

Net revenues totaled $1.72 billion, an increase of 49% year-over-year.



Advertising and marketing revenues were $1.50 billion, an increase of 50% yearover-year.



VAS revenues were $219.3 million, an increase of 43% year-over-year.



Net income attributable to Weibo was $571.8 million, an increase of 62% year-overyear, representing a net margin of 33%, compared to 31% in 2017. Diluted net income per share was $2.52, compared to $1.56 in 2017.



Non-GAAP net income attributable to Weibo was $624.2 million, an increase of 54% year-over-year, representing a non-GAAP net margin of 36%, compared to 35% in 2017. Non-GAAP diluted net income per share was $2.73, compared to $1.80 in 2017.

For the fourth quarter of 2018, Weibo's total net revenues were $481.9 million, an increase of 28% compared to $377.4 million for the same period last year. Advertising and marketing revenues for the fourth quarter of 2018 were $417.0 million, an increase of 25% compared to $332.3 million for the same period last year, primarily driven by an increase of $91.5 million, or 31% growth in advertising and marketing revenues from small & medium-sized enterprises ("SMEs") and key accounts. VAS revenues for the fourth quarter of 2018 were $64.9 million, an increase of 44% yearover-year compared to $45.1 million for the same period last year, mainly attributable to the incremental revenues from the newly acquired live broadcasting business in the fourth quarter 2018.

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Costs and expenses for the fourth quarter of 2018 totaled $298.8 million, compared to $232.2 million for the same period last year. Other than the inclusion of marketing expenses related to barter transactions under the new revenue guidance as illustrated below, the increase in costs and expenses was primarily due to the incremental costs of revenue share incurred by the newly acquired live broadcasting business as well as the increase in personnel related costs and expenses. Non-GAAP costs and expenses were $295.5 million, compared to $220.0 million for the same period last year. Income from operations for the fourth quarter of 2018 was $183.0 million, compared to $145.3 million for the same period last year. Non-GAAP income from operations was $186.4 million, compared to $157.5 million for the same period last year. Non-operating loss for the fourth quarter of 2018 was $1.9 million, compared to a nonoperating income of $1.7 million for the same period last year, mainly resulted from the impairment on investments of $12.3 million for the fourth quarter of 2018. Income tax expenses were $14.9 million, compared to $17.0 million for the same period last year. Net income attributable to Weibo for the fourth quarter of 2018 was $166.5 million, compared to $131.0 million for the same period last year. Diluted net income per share attributable to Weibo for the fourth quarter of 2018 was $0.73, compared to $0.58 for the same period last year. Non-GAAP net income attributable to Weibo for the fourth quarter of 2018 was $183.6 million, compared to $146.0 million for the same period last year. NonGAAP diluted net income per share attributable to Weibo for the fourth quarter of 2018 was $0.80, compared to $0.64 for the same period last year. As of December 31, 2018, Weibo's cash, cash equivalents and short-term investments totaled $1.83 billion. For the fourth quarter of 2018, cash provided by operating activities was $164.0 million, capital expenditures totaled $10.4 million, and depreciation and amortization expenses amounted to $5.8 million.

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Fiscal Year 2018 Financial Results For fiscal year 2018, Weibo's total net revenues were $1.72 billion, an increase of 49% compared to $1.15 billion in 2017. Advertising and marketing revenues for 2018 were $1.50 billion, an increase of 50% compared to $996.7 million in 2017. Advertising and marketing revenues from SMEs and key accounts were $1.38 billion, an increase of 51% compared to $912.1 million for 2017, while advertising and marketing revenues from Alibaba was $117.7 million, compared to $84.7 million for 2017. VAS revenues for 2018 were $219.3 million, an increase of 43% compared to $153.3 million for 2017. The increase was mainly attributable to the growth in membership revenues and revenues from the live broadcasting business. Costs and expenses for 2018 totaled $1.11 billion, compared to $742.5 million for 2017. Other than the inclusion of marketing expense related to barter transactions under the new revenue guidance as illustrated below, the increase in costs and expenses was primarily resulted from the increase of sales and marketing expenses for user acquisition and channel investment, as well as the increase in personnel related costs and expenses. Non-GAAP costs and expenses were $1.06 billion, compared to $693.8 million for 2017. Income from operations for 2018 was $609.3 million, compared to $407.6 million for 2017. Non-GAAP income from operations was $662.2 million, compared to $456.2 million for 2017. Non-operating income for 2018 was $59.6 million, compared to $9.6 million in 2017, mainly resulted from the increase in interest income and fair value change of investments. Income tax expenses were $96.2 million, compared to $66.7 million for the same period last year. The increase was mainly attributable to higher profits generated in the fiscal year 2018. Net income attributable to Weibo for 2018 was $571.8 million, compared to $352.6 million in 2017. Diluted net income per share attributable to Weibo for 2018 was $2.52, compared to $1.56 in 2017. Non-GAAP net income attributable to Weibo for 2018

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was $624.2 million, compared to $405.7 million in 2017. Non-GAAP diluted net income per share attributable to Weibo for 2018 was $2.73, compared to $1.80 in 2017. Industry analysis At the moment, the debt-to-equity of Weibo Corporation (NASDAQ:WB) is high, standing at 73.79, a figure that is higher than the 34.18 average recorded by the industry. This means that the company is currently holding a debt level at 883.11 M. WB shares have a strong debt-toequity ratio but their quick ratio which reads 4.00 is strong and might cause problems for them later in the future. Even though there was a rise of +42.62% in revenue, the company failed to succeed in outperforming the industry average of 19.08%. For the most recent quarter, the net income has jumped by +62.14%. This strength in their income has affected them and thus increased their earnings to $175.98 M. The 72.50% yoy growth of WB’s revenue has gone up that of the industry average by 16.52%. For the past 12 months, Weibo Corporation revenue has gone up by 55.98%. The sustained growth in their revenue has helped boost their earnings per share. In the fiscal year 2018, Weibo Corporation overcame its bottom line by hitting earning $1.57 per share compared to the $0.48 in 2017. The 12-month return on equity has significantly fallen to 24.86 in comparison to the same data for other companies in the same industry. This shows that there is a major weakness within the organization over the past one year. Comparing them to other companies in the industry and the overall Technology sector, the industry average is 17.87 while 13.93 is of the sector.WB total operating cash flow had jumped to $116.14 billion compared to $85.53 billion in the same quarter last year. Also, looking at the price to cash flow of the company and the industry average, the 105.97 ratio of the stock is higher than the industry’s 30.44. Weibo Corporation (NASDAQ:WB) has a priceto-earnings ratio of 115.44 which is higher than the 41.41 industry average at the moment. In addition to their unfavorable P/E ratio, Weibo Corporation has maintained a gross margin of 77.35. This shows whether the company has what it takes to effectively turn the revenue into profit. The company’s ROA is 17.35 when compared to 10.50 for the stocks operating in the same industry. This can be attributed to the strength recorded in the net income produced by total assets. Comparing it to other companies in the sector, Weibo Corporation ROE is above 13.93 that of both the sector average.

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The operating profit margin for Weibo Corporation (WB) is 29.73%, a figure which is considered to be strong. It has gone 10.47 from the 0.18 over the past 5 years. In addition to this, their operating margin is 19.26 higher than the industry average. The net profit margin which stood at -4.01 on average in the past 5 years has jumped to 23.02 in the last 12 months. Added to that, this ratio has surpassed the industry net margin that stands at 3.43. Analysts meanwhile rate Weibo Corporation (NASDAQ:WB) as a buy. Still some above discussed indicators of the $15.82B company show strength while others show weakness. There is little evidence at the moment to justify the expectation of the WB shares to either perform positively or negatively when compared to other stocks. The primary strengths of Weibo Corporation can be witnessed in its increased revenue, growing earnings per share, higher return on equity, increased operating cash and high net margin. Subsequently, financial analysis has also identified some weak areas that include high debt, relatively high P/E ratio, lower return on assets and low net margin. Fundamental analysis Financial Performance of WEIBO CORP from 2013 to 2017 (Values in U.S. Thousands) NEXT

12-2017

12-2016

12-2015

12-2014

12-2013

Sales

1,150,054

655,800

477,891

334,172

188,313

Cost Of Goods

231,255

171,231

141,960

83,599

59,891

Gross Profit

918,799

484,569

335,931

250,573

128,422

Operating Expenses

511,500

343,820

299,388

273,275

187,921

Operating Income $M

407,554

140,980

37,503

-22,103

-58,608

Other Income

9,557

-31,000

-723

-42,237

17,944

Pre-Tax Income

417,111

109,980

36,780

-64,340

-40,664

Income Tax

66,746

4,316

2,591

1,128

271

Net Income Continuous

350,365

105,664

34,189

-65,468

-40,935

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Ratio analysis Annual Income Statement (values in 000's) Period Ending: 12/D31/2017 12/31/2016 Liquidity Ratios Current Ratio 422% 215% Quick Ratio 422% 215% Cash Ratio 370% 142% Profitability Ratios Gross Margin 80% 74% Operating Margin 35% 21% Pre-Tax Margin 36% 17% Profit Margin 31% 16% Pre-Tax ROE 35% 15% After Tax ROE 30% 14%

12/31/2015

12/31/2014

239% 239% 161%

436% 436% 334%

70% 8% 8% 7% 6% 6%

75% 7% 19% 20% 12% 12%

Technical analysis

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Relative strength chart

This technical indicator compares the relative strength or weakness of a stock. It measures the magnitude of rise or fall in stock price movements. 77.35 is the RSI value of WB stock.

Moving average

Moving averages show the average price of WB stock over a set time period and help traders see the overall trend by smoothening out the daily variation in price movement. The 20 day moving average of $61.78 is above the last closing price of $72.07. Weibo Corp Moving Average Convergence Divergence or MACD 37 | P a g e

Two important concepts with respect to moving average convergence divergence or MACD are: crossovers and divergence. When the MACD rises above the signal line, it typically indicates a bullish trend and most likely the stock prices will go up. The Weibo Corp MACD indicator can be used to identify bullish and bearish trends for the stock.

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APPLE INC Company background Apple, Inc., is one of the major providers of consumer electronics, personal computers, and related software with Samsung and Sony. The consumer electronics and information technology industries have roots in early popularity and the spread of basic household goods beginning in the early 20th century. The establishment of many public and private radio stations in the 1920s survived most urbanization in the United States. Apple designs, manufactures, and markets mobile communications and media devices, personal computers, and mobile digital music players to consumers and businesses around the globe for small businesses, businesses, intermediaries, education, and enterprise customers. The company also sells related third party software, services, accessories, solutions, and digital content and applications. It offers iPhone, a line of smartphones; iPad, multi-purpose tablet; and Macs, desktop lines and mobile personal computers. The company also provides iLife, a user-oriented digital lifestyle software suite; iWork, an integrated productivity suite that helps users create, present and publish documents, presentations, and spreadsheets; and other application software, such as Final Cut Pro, Logic Pro X, and FileMaker Pro. History Apple, Inc., was founded on April 1, 1976. Led by Steve Jobs, Ronald Wayne, and Steven Wozniak. Though Wayne quickly exited the company, the success of the Apple I personal computer kit quickly catapulted the company into the spotlight. Incorporated on January 3, 1977, the major products of Apple Apple II and the included business software acquired a place as industry standard for spreadsheet automation and documentation at workplace. By 2013, Apple has become one of the best and most popular consumer electronics providers on the market. The introduction of new technology innovations to the market has driven growth, with CEA expecting an increase of thirty-five billion sales from smartphones alone (2013). Consequently, the consumer electronics industry is an important and important sector in the US economy, with Apple alone using 80,000 individuals, and creating jobs for more than 600,000 in the United States specifically (Apple, 2013).

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Economic Analysis Apple Inc. fiscal and monetary policy Aggregate demand (AD) is a macroeconomic concept that represents the volume of demand for goods and services in the economy. This value is often used as a measure of economic growth. Both fiscal and monetary policies may affect aggregate demand as they may affect the factors used to suppose: consumer spending on goods and services, investment expenditure on business capital goods, government spending on goods and public services, exports, and import. Fiscal policy affects aggregate demand through changes in government spending and taxation. Those factors influence employment and household income, which then impact consumer spending and investment. Monetary policy has an impact on money supply in the economy, which affects interest rates and inflation rates. It also affects business expansion, net exports, employment, debt costs, and relative cost of consumption rather than savings-all directly or indirectly impacting on aggregate demand. Apple's fiscal and monetary base is centered around the key concepts of competitive pricing based on areas specifically in the industry. It is not a company that tries to shrink its competitors; Instead, Apple is focused on providing products to customers who are often returned for business and upgrades. Fiscal policy, the federal government policy has been offering growth opportunities in recent years, given the expansion and assurance of federal aid to the consumer lending industry ensuring adequate credit guarantees to consumers. Basically, the change in government's monetary policy to stimulate further growth has given the impression of lending to more individuals, allowing for the purchase of relatively high priced products at Apple. Thus, government policy has played an important role in establishing fiscal opportunities for sustainable growth. In addition, there are other external factors affecting Apple's product prices such as government intervention, competition, market and demand. Explanation of competition, market factors and demand has been given above except government intervention.

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According to Bloomberg news reports, the US government has banned Android in the US market during a patent war between Apple and Samsung companies. Some media reports state that the US government is part of an Apple company in conflict with the Samsung company. The results of the Apple company that achieved victory in the patent case have given Samsung companies suffered a huge loss. This can be seen as a good news to Apple companies when they see their most threatening competitors to get a heavy strike. It also affects the sales revenue of iPhones and iPads in the US market. There is a statement that iPhone demand has a slight increase in 2012. In this way, the US government performs additional taxes on Apple companies for environmental charges to reduce unnecessary rubbish from electronic devices made during production procedures. The US Environmental Protection Department declares that there are 3 million tonnes of waste of electrical and electronic equipment disposed of every year. This is the reason why taxes have added every piece of electronic devices to every firm in the US. In addition, the price of Apple products in other European and Asian countries is also different. This is because, the governments of other countries will impose additional foreign taxes to protect their own domestic firms. It raises prices for every Apple product and that is why the price of apple products sells higher than United States.

Industry Analysis Growth Cycle of Industry Industry Life Cycle refers to the five stages an industry goes through: Introduction, Growth, Shakeout, Maturity, Decline, Snack Time.

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Introduction: In this phase the strategic objective is to achieve market acceptance and future growth of seed. In this product innovation ranking is maximum. The same strategy to achieve the objectives at this stage is to start and leverage the network effect. Network impact refers to the positive effect that the user of a product or service has the value of the product for other users. Growth: At this stage of the life cycle, market growth rates accelerate. Industrial standards are often set at this stage. Standard is an agreed settlement of a set of familiar engineering and design features. This may appear under competition or be charged under the government or other standard setting agency. Once the standard has been established, competition is moving from product innovation to processing innovation. The innovation process refers to new ways to produce existing products or deliver existing services more efficiently. Shakeout: Throughout this cycle stage, the decline in growth rates and firms began to compete directly with each other for market share, rather than catching a part of the growing pie. The rugby firms were forced out of the industry. Profit scraping and only the strongest and most efficient firms survive as competition is increasing in the industry as firms start to cut prices and offer more services to get more market share. The importance of the process of innovation improvement while the importance of decreasing product innovation. Maturity: This is the level of technology accepted by the public. It can cause the market to reach the point of saturation where the competitor has been trapped. And revenue slows because your technology becomes a commodity. For example; every year Apple, Samsung and HTC are refreshing their flagship devices to attract more sales and maintain their income levels. Decline: Here's what everyone is worried about. The inevitable decline. Or more precisely at the death stage. This is a stage where we will see a decrease in sales or the appearance of replacement technology. Here you will come to a point that does not return, where further development is unprofitable. For example, the Nokia Symbian mobile operating system is a creamy plant for many years, so Google and Apple enter the market with Android and iOS respectively. The technology life cycle represents the business part of the matter here. But consumers cannot be ignored either. After all, their willingness to use new technology that will determine your success.

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Competitive Position The advantages of Apple's competitiveness revolve around the establishment and its brand superiority. The company is now recognized as one of the most influential and the best companies in the world today. In addition, the uniqueness of its products provides competitive advantages that other companies have not been able to compete for years. Likewise, the company provides free services to its users at least two years after they buy the device. Users can go for maintenance at different Apple stores and make sure their devices work. Dynamics of the personal computer industry seems to be problematic for Apple. With technology changing, it has become mandatory for technology companies to invest in improving their products and ensuring that they are up-to-date. However, this may be a challenge for Apple because its products are not compatible with other products in the industry. For example, it's hard for an individual to transfer music from mac to a regular computer. As a result, this makes them much less compared to other computers on the market. Apple is the first company to introduce personal computers to the technology world. However, due to the inevitable changes in its management and the significant difference in the direction that the company needs to take, it results in its competitive advantage to other companies in the computer industry including Gateway, Dell, and Microsoft. Over the years, the company has been trying to restore its position in the market with limited success. However, at this time, Apple has set up a dedicated market by selling to high end customers and providing better service than its competitors. It does this by creating your own computer hardware and software. Apple sets rates for other companies when it introduces a touchscreen mobile phone. However, other companies explore the same technology and create a competitive environment for the company. Moreover, they can defeat Apple by providing their products at cheaper prices compared to the Apple iPhone. However, Apple pays compensation for a high price by providing exceptional customer service and offers free maintenance on all mobile devices for their customers after purchase. By doing so, the company can maintain its customer base.

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The introduction of iPod into the multimedia market is a revolutionary creation that makes great profit for the company. The IPod changes how people listen to music and are positively accepted by the community. Although the company may have been competing from other companies in the industry, it has successfully established and maintained its position as a leading company associated with mobile music players. The media player industry has proven successful for Apple and it is one of the key competitive advantages for other companies.

Fundamental Analysis Now let’s turn to look at profitability: with a current Operating Margin for Apple Inc. [AAPL] sitting at 26.73% and its Gross Margin at 38.27%, this company’s Net Margin is now 22.40%. These measurements indicate that Apple Inc. [AAPL] is generating considerably more profit, after expenses are accounted for, compared to its market peers. This company’s Return on Total Capital is 30.14, and its Return on Invested Capital has reached 27.55%. Its Return on Equity is 49.36, and its Return on Assets is 16.07. These metrics all suggest that Apple Inc. is doing well at using the money it earns to generate returns. Turning to investigate this organization’s capital structure, Apple Inc. [AAPL] has generated a Total Debt to Total Equity ratio of 106.85. Similarly, its Total Debt to Total Capital is 51.66, while its Total Debt to Total Assets stands at 31.30. Looking toward the future, this publicly-traded company’s Long-Term Debt to Equity is 87.48, and its Long-Term Debt to Total Capital is 42.29. This company is not leveraging its assets to take on debt, which stunts its growth and limits the ROI for investors. This company’s Enterprise Value to EBITDA is 11.52 and its Total Debt to EBITDA Value is 1.42. The Enterprise Value to Sales for this firm is now 3.30, and its Total Debt to Enterprise Value stands at 0.10. Apple Inc. [AAPL] has a Price to Book Ratio of 10.02, a Price to Cash Flow Ratio of 14.58 and P/E Ratio of 14.95. These metrics all suggest that Apple Inc. is more likely to generate a positive ROI.

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This company’s Receivables Turnover is 6.28 and its Total Asset Turnover is 0.72. This publicly-traded organization’s liquidity data is also interesting: its Quick Ratio is 1.09 and its Current Ratio is 1.12. This company, considering these metrics, has a healthy ratio between its short-term liquid assets and its short-term liabilities, making it a less risky investment. Apple Inc. [AAPL] has 4.74B shares outstanding, amounting to a total market cap of $877.61B. Its stock price has been found in the range of 142.00 to 233.47. This stock’s Beta value is currently 1.12, which indicates that it is more volatile that the wider market. This stock’s Relative Strength Index (RSI) is at 77. This RSI score is good, suggesting this stock is overbought. Shares of Apple Inc. [AAPL], overall, appear to be a solid investment option, with Wall Street analysts expecting its price to rise considerably in the next 12 months. This company generates high value from the labor resources and other capital it has available, and while it has heavy Long-Term Debt to Equity, the majority of the metrics point to this investment being highly attractive.

Technical Analysis Apple Inc. rose 1.30% on the last trading day, up from $ 183.73 to $ 186.12, and has now gained 7 consecutive days. It's not always that stocks manage to earn so many days in a row and fall for a day or two should be expected. Prices have risen in the last 7 days and increased by 6.37% over the last 2 weeks. Turnover increased in recent days along with the price, which is a positive technical sign, and, overall, 15:48 million shares traded the previous day. In total, 39.02 million shares were bought and sold for about $ 7 261.66 million.

The closing price at the end of the last trading day (Friday, March 15, 2019) from AAPL stock is $ 186.12. This is 1.3% more than trading days before Thursday, March 14, 2019. All day stocks fluctuated 1.95% from low day at $ 183.74 to high day $ 187.33.

Moving average Apple Inc. is located at the top of the trend of broad and strong improvement over the short term, and this will usually provide excellent sales opportunity for short-term traders in response back to the bottom of the expected trend. The breakdown of the top trending line at $ 187.59 will show a higher rate of increase. 45 | P a g e

Given the current short-term trend, stocks are expected to increase 19.66% over the next 3 months and, with the probability of 90% holding between $ 200.26 and $ 224.48 at the end of this period. Signaling Only positive signals in the charts today. Apple Inc. holds buy signals from both short and long term. In addition, there is a general purchase signal from the relationship between the two signals where the short-term average is above the long-term average. On the correction below there will be some support from the line at $ 179.54 and $ 172.03. A break below any of these levels will issue a sell signal. Purchase signals were removed from the bottom of the pivot on Thursday, March 07, 2019, which showed a further increase until a new top pivot was found. Volume is rising at a price. This is considered a good technical signal. Support & Resistance The stock holds RSI14 at 77 and is currently being overbought at RSI. This does not have to be a sales signal because many stocks can go long, and hard while being overbought on RSI. Therefore, it is important to assess stock history as it may inform you about RSI sensitivity.

On the downside, the stock gained support just below today's level from the cumulative total at $ 156.83 and $ 150.73. There is a natural risk involved when the stock is testing the support level, because if these breaks, the stock will then fall to the next level of support. In this case, Apple Inc. got support just below today's level at $ 156.83. If this is broken, then the next support from the cumulative amount will reach $ 150.73 and $ 142.1

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Microsoft Corporation Company background Microsoft Corporation, incorporated on September 22, 1993, is a technology company. The Company develops, licenses, and supports a range of software products, services and devices. Besides, the Company's involved in productivity and business Processes, intelligent cloud and more personal computing. The Company's products include operating systems, crossdevice productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, video games, and training and certification of computer system integrators and developers. Furthermore, Microsoft also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services. It also delivers online advertising to a global audience. Productivity and Business Processes The Company's Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. This segment primarily comprises Office Commercial, including volume licensing and subscriptions to Office 365 commercial for products and services, such as Office, Exchange, SharePoint, and Skype for Business and related Client Access Licenses (CALs); Office Consumer, including Office sold through retail or through an Office 365 consumer subscription, and Office Consumer Services, including Skype, Outlook.com and OneDrive, and Dynamics business solutions, including Dynamics ERP products, Dynamics CRM on-premises, and Dynamics CRM Online. In addition to that, Microsoft is designed to manage personal, team, and organizational productivity through a range of products and services. Office 365 is its cloud-based service that provides access to Office plus other productivity services. Skype is designed to connect friends, family, clients, and colleagues through a variety of devices. The Company competes with Adobe Systems, Apple, Cisco Systems, Facebook, Google, IBM, Oracle, SAP, Infor, The Sage Group, NetSuite and Salesforce.com. 47 | P a g e

Intelligent Cloud The company's intelligent cloud segment consists of its public, private, and hybrid server products and cloud services. this segment primarily comprises server products and cloud services, including sql server, windows server, visual studio, system center, and related calls, as well as azure, and enterprise services, including premier support services and Microsoft consulting services. Besides, its server products are designed to make information technology (IT) professionals, developers, and their systems productive and efficient. Server software is integrated server infrastructure and middleware designed to support software applications built on the windows Server operating system. This includes the server platform, database, business intelligence, storage, management and operations, virtualization, service-oriented architecture platform, security, and identity software. It also licenses standalone and software development lifecycle tools for software architects, developers, testers and project managers. CALs provide access rights to certain server products, including SQL server and windows server, and revenue is reported along with the associated server product. On the other hand, Azure is a scalable cloud platform with computing, networking, storage, database, and management, along with advanced services, such as analytics, and solutions, such as Enterprise Mobility Suite. Azure includes a platform that helps developers build, deploy, and manage enterprise, mobile, Web, and Internet of Things applications, for any platform or device. Azure enables customers to devote more resources to development and use of applications that benefit their organizations, rather than managing on-premises hardware and software. The Company competes with Hewlett-Packard, IBM, Oracle, Red Hat, CA Technologies, Apache, Linux, MySQL, PHP, SAP, BMC, VMware, Adobe, Ruby on Rails, Amazon, Google and Salesforce.com. More Personal Computing The Company's more personal computing segment consists of products and services geared towards harmonizing the interests of end users, developers, and IT professionals across screens of all sizes. This segment primarily comprises windows, including windows OEM licensing (windows OEM) and other non-volume licensing of the windows operating system, volume licensing of the windows operating system, patent licensing, windows embedded, MSN display advertising and windows phone licensing, devices, including Microsoft surface (surface), phones, and PC accessories, gaming, including Xbox hardware, Xbox Live, 48 | P a g e

comprising transactions, subscriptions, and advertising; video games, and third-party video game royalties, and search advertising. The Company designs, manufactures, and sells devices, such as surface, phones, and other intelligent devices, as well as PC accessories. Its devices are designed to enable people and organizations to connect to the people and content using integrated Microsoft services and Windows. Surface is designed to help organizations, students, and consumers to be more productive. Its gaming platform is designed to provide a variety of entertainment through the use of its devices, peripherals, applications, online services, and content. It offers Xbox 360 and Xbox One. The Company competes with Amazon, Apple, Google, Sony, Nintendo, Electronic Arts, Activision Blizzard and Facebook.

Economic policy Governments regulation fiscal and monetary policy. The government has two important roles to play in the national economy. The first is the "role of protection" that aims to protect individual personal property from invasion by others. The important role of the government is to contribute to economic stability, especially through fiscal and monetary policy. First, we will look at the role of government protector and then we will analyze recent fiscal and monetary trends. We focus our analysis on the US government because first of all, it is Microsoft's original state and secondly, it affects directly or indirectly to the world government policy. The government protection function is important for Microsoft. As previously mentioned, the company spends most of its resources in research and development projects, so intellectual property rights are critical to Microsoft's operations, as it protects the company from illegal copying. In addition, another government protection function is to ensure that the market operates efficiently by prohibiting monopolies or cartels. As such, Microsoft is under the supervision and legislative authority of a local (US) and foreign (eg EU). As a result, Microsoft has many court issues to handle. The first clash took part in 1990 where the US Federal Trade Commission accused Microsoft of potentially associating with IBM. Since then, Microsoft has faced many different court cases against anti-competitive behaviour.

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One of the most influential cases occurred in 2004 when the EU Commission took antitrust lawsuit against Microsoft because of its dominance in the market, which sentenced the company to US $ 613 million and forced him to disclose certain product information. In the analysis of financial statements, we will face the financial feeling of the prohibition. Fiscal Policy Fiscal policy is the use of government and tax expenditure policies to generate stimulus output, employment and aggregate demand for the economy during the recession (fiscal policy explanation). On the other hand, when the economy is at its peak, the government can reduce spending and increase taxes to prevent economic growth to avoid inflation (a tight monetary policy). While the overall trend of the Federal Federal budget deficit tends to increase (the amount of spending exceeds its total revenue), there is a period with a deficit of the decline pattern. More specifically there was a huge increase in government debt between 2001 and 2004 (9/11 incidents and dot-com ruptures) due to mass military spending in war and tax deductions. Between 2005 and 2007, the federal government tried to reduce the budget deficit by increasing taxes. However during the period between 2008 and 2010 (financial crisis), the federal government began to cut taxes and increase spending in the bailout package to stimulate the economy. From a Microsoft perspective, a great extraordinary federal debt can be a risk factor for future economic instability (a potential debt crisis like some Euro zone experts). However in the short term, this may indicate potential opportunities to increase consumer spending and recovery from a recession, which may increase demand for Microsoft products. More specifically there was a huge increase in government debt between 2001 and 2004 (9/11 events and dot-com blasts) due to mass military spending in war and tax cuts. Between 2005 and 2007, the federal government tried to reduce the budget deficit by increasing taxes. However during the period between 2008 and 2010 (financial crisis), the federal government began to cut taxes and increase spending in the bailout package to stimulate the economy. From a Microsoft perspective, a great extraordinary federal debt can be a risk factor for future economic instability (a potential debt crisis like some Euro zone experts). However in the short term, this may indicate potential opportunities to increase consumer spending and recovery from a recession, which may increase demand for Microsoft products. 50 | P a g e

Monetary Policy Monetary policy can be defined by the actions of the US Federal Reserve (Central Bank of the United States) in determining the size and rate of money supply growth. Due to the sluggish recovery of the US economy from the 2008 financial crisis, the Federal Reserve is trying to spur growth and reduce unemployment with monetary explanation. To achieve that, the Federal Reserve has recently launched a quantitative easing. This monetary monetary policy tool aims to maintain interest rates at a low level by purchasing a USD $ 75bn long T-long bill. The explanation of monetary policy means increasing the money supply in the economy. This will lower interest rates. As noted in the macroeconomic analysis, low interest rates encourage private consumption and investment and it will also depreciate the US dollar. Therefore, clearing monetary policy can benefit Microsoft by increasing consumer spending (higher demand for software systems) and increasing private investment, resulting in more Microsoft business users. Furthermore, exports of companies can be increased due to US $ depreciation. However, in the long run high inflation could be a negative consequence of high money supply that could damage the economy and the company as well.

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Industry Analysis Growth Cycle of Industry There are five stages in the product life cycle. The first stage is product development, second stage is introduction, third stage is growth, fourth stage is maturity and the final stage is decline.

Stage One The first stage of business growth cycle is product development. At this stage the business is being created, planned and established. Many things can go wrong a good business planning is important in product development stage. The product is being developed to meet customer’s interest and preference. The development and research expenditure will become loss for the company if the product fails to meet consumer’s expectations. Stage Two The second stage of business growth cycle is introduction. In the introduction stage the product is being introduced to the market. The product is assigned a brand name and introduce at a lower price to get customers attention to try the new product. The product may be distributed to the market where the demand is higher. The product will be promoted in various ways to create the product awareness. There is no profit generated if the revenue the company gain is equal to the research and development cost of the product at development stage.

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Stage Three The third stage of business growth cycle is growth. During the growth stage the sales of the product are at much higher level. When the demand is higher the price can be increased temporarily. There are more distributions of products in the market to meet larger customers demand. Promotions and advertising take place in order to attract more customers for the new product. If competition increases the price of the product might decrease. Mostly the price will remain same and the company will approach a new distribution channels to fulfil the increasing demand. Stage Four The fourth stage of business growth cycle is maturity. During the maturity stage the profits earned from the product will increase. The advertising costs can be reduced at this stage and steps are taken to enhance the products so that the new product can be competitive with other products in the markets. The company should maintain the market share that they have achieved and the maintaining process is not easy for a company. Stage Five The fifth stage of business growth cycle is decline. In the decline stage the product is losing their potential in the market due to tough competition with other competitor products. At this stage the cost of the product usually will be reduced. One of the reasons for this situation is the saturated market due to competitors, product with new features and more advanced. This situation is unavoidable but the company still have many options. One of the options is upgrading the products by adding new features and makes it more attractive for the customers.

Competitive Position Microsoft has implemented diverse strategies in order to stand outstanding in the technological industry. These strategies are diversified which is depending on the goals and include both internal and external. The following are some of the main competitive advantages that Microsoft has implemented.

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Microsoft human resource management is one of the competitive advantages of the company. Microsoft carried out extraordinary recruitment process to recruit new staff of the company. Talented employees are hired from diversified backgrounds in order to create the highly multicultural workplace. Beside that Microsoft also conducted training for their staff in order to improve their skills and knowledge. Microsoft believe that by creating right set of skills in their employees through arranging training and development for their employees can actually improve the productivity of the staff and also the company itself. Microsoft takes reviews and evaluation seriously and employees have to go through performance appraisal and there are incentives for employees who perform well and outstanding. Strong brand equity is the major source of competitive advantage for Microsoft where it has more than 40 years old business. Microsoft has brought variety of hardware and software products to the market. The brand equity of Microsoft relies on the trust that they have created and also the efficiency of their products. Microsoft also has created a strong and reliable image as outstanding technology brand. Beside that many personal computers come with an installed of standard Microsoft Window software Microsoft also is a global business with offices around the world in several countries. The corporate headquarters of Microsoft are located at Redmond, Washington. Microsoft also owns other significant large facilities throughout the globe. Most significant properties include R&D centres in India and China and DATA centres in Ireland, Singapore and Netherlands. It also has offices in major countries like India, Australia, Canada, UK, Germany, China and France. Microsoft has a global distribution channel for their sales and distribution of its products and services. They sells and distributes their products through OEMs (Other Equipment Manufacturers), direct channels, distributors and resellers. Their global salesforce performs a various tasks. They will connect with the major customers in the public and private sectors. Beside that Microsoft has managed its global presence through a large sales and distribution network. The global network of Microsoft has helped to understand customers and manage their customer relationships better.

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Microsoft also has expanded their product range in the recent years. The large product portfolio of Microsoft includes hardware, software, gaming products, web based services and cloud services. Microsoft is a leading name in the global IT industry. The several best selling products including Windows OS and MS Office productivity suite. Windows OS is a leading operating system used on millions of computing devices throughout the world. MS office is a productivity suite including software like MS Word, MS Power point, MS excel, and several more software that help professionals and businesses around the world to improve their productivity. Another important source of competitive advantage for Microsoft is its focus on innovation. The company invests a large sum in the research and development. Microsoft is facing competition from its competitors. Focus on research and innovation has helped the company to improvement their earnings. Microsoft has expanded its product portfolio and is touching a larger customer segment. The investment in R&D is among the highest for the Microsoft company. Microsoft has improved the quality of its hardware, software and other products and services a lot over time. It may be easy to generate a source of competitive advantage in the tech industry but to retain it is a difficult task.

Customers have several options and Microsoft have to retain them. To retain the customers for longer, Microsoft will manage several things apart from product quality and pricing. Microsoft have a strong marketing strategy, great packages, global reach and must be able to engage their customers. Microsoft also must regularly updates their software. Their usability and availability have made Microsoft very popular. Beside that, Microsoft has offers a wide range of computing products including hardware and software. These products address the needs of a wide range of customers including private businesses, public organizations and individual professionals. It offers some products that do not have many substitutes.

Microsoft’s pricing strategy is a critical point of differentiation and also a source of advantage. Its both a business strategy and a unique advantage that Microsoft has achieved. Prices are a critical part of business strategy. Managing the prices well helps to expand customer base and grow customer loyalty. Microsoft has enjoyed heavy growth in the recent years. Its fast growth is fuelled by its product quality as well as its pricing strategy. Microsoft has created a large range of packages to meet the needs of several different groups of customers. 55 | P a g e

Fundamental Analysis Microsoft Corporation’s primary competitors include some of the most prominent technology companies in the industry. The examples of the competitors are Apple, Google, IBM and Oracle. Besides Microsoft is a diversified corporation that offers many types of products and services, the company faces stiff competition in several key areas of the technology sector. Financial performance of three largest technology Companies in World for financial year ended 2017:

Revenue ($ million) Profit before tax ($ million) Profit after tax ( $ million) Total assets ($ million) Total liabilities ($ million) Total equities ($ million) EPS

Apple 229,234 61,344

Oracle 37,728 11,517

IBM 79,139 11,400

64,089

9,335

5,758

375,319 241,273

134,991 80,745

125,356 107,631

134,047

54,246

17,725

9.27

2.27

6.67

Financial performance of Microsoft from 2013 to 2017:

Income Statement Revenue COGS Net Income Financial Position Total assets Total liabilities Total equities Cash Flow Operating Investing Financing Ending balance cash

2017 ($ million)

2016 ($ million)

2015 2014 ($ million) ($ million)

2013 ($ million)

89,950 34,261 21,204

85,320 32,780 16,798

93,580 33,038 12,193

86,833 26,934 22,074

77,849 20,249 21,863

241,086 168,692 72,394

193,694 121,697 71,997

176,223 96,140 80,083

172,384 82,600 89,784

142,431 63,487 142,431

39,507 (46,781) 8,408) 7,663

33,325 (23,950) (8,393) 6,510

29,080 (23,001) (9,080) 5,595

32,231 (18,833) (8,394) 8,669

28,833 (23,811) (8,148) 3,804

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Microsoft revenue was increased from the year 2013 to 2015 then decreased by $ 8,260 million on 2016 and increase again by $ 4,630 million on year 2017. Its shows that Microsoft demands by their customers were very high for the past three years from 2013 to 2015. After 2015, the sales decline as there are many competitors outside started to growing up and trying to compete with Microsoft and trying to get their customers. However, the sales increased back on 2017. Besides, the cost of sales or manufactures was keep rise from 2013 to 2015 then slightly dropped by $ 258 then its increased back on 2017. As the sales keep increased the cost of manufactures also increased, so in order to produce quality products and services Microsoft increased the costs for each of product and services. In addition to that, the net income was keep fluctuate from 2013 to 2017. Besides, the totals assets own by Microsoft was keep increased every year from year 2013 to 2017 which is very good things for them because they can use the assets to pay off the obligation. The large amount of current assets can easily convert into cash and pay off the liabilities. Besides, large amount of assets that own by Microsoft shows how efficient the company can produce profits by manage their assets in their daily to daily business. The large amount of assets also can shows how much of profits can produce by the assets that own by a Microsoft. Furthermore, the total liabilities were declined from 2013 to 2016 and increased by $ 46,995 million on 2017. The total liabilities are lesser than total assets means that Microsoft has enough capitals for their day to day operations even though the total liabilities increased on 2017. Microsoft’s ending balance of cash as 2017 remained healthy. The cash hold by Microsoft was increased by $ 4,865 million on 2014 then declined by $ 3,074 on 2015. The decline was due to the lower cash flow from operating activities and financing activities. On the other hand, the net cash was increased every year which will help Microsoft for their daily to daily business operations and pay off all the debts as well.

Profit Margin Current ratio Working capital Debt to equity ratio Return on assets Return on equity

2017

2016

2015

2014

2013

23.57% 1.43 RM 95,324 2.33

19.69% 2.35 RM 80,303 1.69

13.02% 2.50 RM 74,854 1.20

25.42% 2.50 RM 68,621 0.92

28.08% 2.71 RM 64,049 0.80

9% 29%

9% 23%

7% 15%

13% 25%

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Profit margin called as return on sales ratio or gross profit ratio means percentage of sales left over after paid all the expenses that paid by business. Microsoft profit margin declined from year 2013 to 2015 which means they are not efficient in converting all their sales into net income. In 2016 Microsoft converted 19.69% of their sales into profit and it’s increased by 3.88% in year 2107 which means Microsoft make more sales and the net income also become higher. The second ratio is current ratio, this ratio measures efficiency of a company can pay off the short term liability by using the current assets that owns by company. According to the calculation, Microsoft current ratio keep declined from 2013 to 2017 which was from 2.71 times decreased to 1.43 times which means Microsoft having less amount of current assets that can easily convert into cash and able to pay off the liabilities immediately. Furthermore Microsoft own large amount of non-current assets than current assets. In addition to that, net working capital determines the company can meet the obligations with the current assets or not and also to determine of how much of deficiency and excess there is. Microsoft working capital was increased every year which means the current assets exceed the current liabilities and the Company have enough capital for their day to day operations. Besides, as the assets can easily convert and able to pay of the debts the business is in less risky. Debt to equity ratio is a ratio which helps to compare total debt to total equity. A higher debt to equity ratio indicates that more creditor financing than investor financing. According to the calculation Microsoft in more risky situation as the debt to equity ratio keep increased from 2013 to 2017. Meanwhile, Microsoft also in less financially stable because having more creditors than investors and the investors don't wants to fund the business operation due to lack of performance by Microsoft. Return on assets means how efficient of a Company can produce profits by manage their assets. According to the calculation, Microsoft not managing properly their assets in order to produce profits from the year 2013 to 2015. Then the ratio increased by 2% in 2016 and keep consistent in 2017 means Microsoft having high return on assets ratio on both years and wisely convert money that used to purchase assets into profits. In addition to that, Return on equity means a ability of a firm to generate profits from its shareholders investments in the company. This ratio is very important for potential investors because they want to see how efficiently a company will use their money to generate net income. According to calculation, According to the calculation, Microsoft having highest return on liquidity ratio on 2017 compare to the rest of years. 58 | P a g e

Besides, Microsoft also attracts more investors to invest into their Company as their equities are wisely managing or using by Microsoft and it lead the investor’s trusts on Microsoft.

Technical analysis

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Relative strength index

Moving average There are many factors at play when looking to successfully conquer the stock market. New investors have the tendency to become overwhelmed at the prospect of putting their hard earned money to work. If the individual investor decides that they are going to be managing their own money, they may be looking for a proper place to start. Investors might want to start by clearly defining their own goals. Creating realistic and attainable goals can help get the investor walking down the right path. As many experienced investors know, setting goals and staying on track can be a big help for navigating the markets. As traders scan the equity market, they may be using Simple Moving Averages to help figure out where a stock is headed.

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Moving averages help predict the price direction of MSFT stock based on certain triggers, but with a lag, and form building blocks for other technical indicators like the MACD and bollinger bands. A key factor that impacts moving averages is the lag factor. The 20 day moving average of $111.18 is below the price of $117.52.

Microsoft Moving Average Convergence Divergence or MACD The moving average convergence divergence or MACD is a technical indicator which helps assess the stock price trend. Traders usually wait for a confirmed crossover signal before entering into a trading position. Divergence implies that the current stock price trend could come to an end, when the stock price diverges from MACD. The Microsoft MACD indicator can be used to identify bullish and bearish trends for the stock.

Microsoft Relative Strength Index This technical indicator compares the relative strength or weakness of a stock. It measures the magnitude of rise or fall in stock price movements. The relative strength index of MSFT stock is 70.9.

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