How to Read a Company Annual Report - Part 1
•By Mahersaham Team
Artikel ini juga tersedia dalam Bahasa Melayu
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First and foremost, we must understand why we need to read an annual report.
It is, of course, because we want to conduct research using the annual report on the counter we wish to analyse.
Other purposes include:
1. Being able to assess whether a company is good or not for investment purposes
2. Providing an advantage to business owners to expand their business from a blueprint perspective (analysing management, profit/loss)
One of the analyses commonly used by investors is Fundamental Analysis (FA).
FA is important in terms of determining the true value of a company so that investors can buy shares at a discounted price.
Ways to determine the true value of a company include:
1. Financial Statements
-- Shareholder''s Equity
-- Income Statement / Profit and Loss
-- Balance Sheet (asset, liability, shareholder''s equity)
To obtain annual reports, you can refer to the websites BursaMalaysia.com and MalaysiaStock.Biz
Based on the image above, this is an example of the Malaysiastock.Biz page. You can search for any counter you wish to analyse in the search symbol or code or name section.
I am using Poh Huat as an example. Once you have searched, you can scroll all the way down to the right-hand side where there is a section for you to download the company''s annual report, as shown in the image above.
For Poh Huat''s annual report, CG stands for corporate governance. So you need to download the annual report 2019-final.
Next, let us look at the table of contents. Typically, in an annual report, the company will include its vision and mission. The vision and mission are meant to give you a picture of the direction the company is heading.
Based on the image above, the company''s table of contents contains information about corporate information, corporate structure, information of directors and more.
This information is important for you to identify who the shareholders are, which directors are involved, and how the company is managed.
The following is a financial statement that you can use to conduct research on a particular counter.
Group financial highlights refers to the combination of the main company with its subsidiaries that hold 50% or 70% ownership in the company.
Turnover = revenue/sales.
In the annual report, you need to look at whether the revenue is increasing from year to year. Additionally, you can also see how much it has increased and how consistent the growth rate is.
A company with increasing revenue is a company that is growing.
Other important things you can look at include return on equity, dividends, and profit after tax.
In conclusion, you should know how to read an annual report to make it easier for you to conduct fundamental analysis research.
Through reading annual reports, it helps you to some extent to know where to find support and resistance levels.
That is all for this article on how to read annual reports, Part 1. We will continue with Part 2 and beyond. Stay tuned!
May this article be beneficial for you.
An Annual Report is a company''s yearly report that contains financial information, performance data, and the company''s direction. Investors need to read it to conduct fundamental analysis before investing in any counter.
Annual Reports can be obtained through the Bursa Malaysia website under Company Announcements, the company''s official website, or through platforms such as Mplus and the Mahersaham application.
Key things include revenue (turnover), profit after tax, return on equity, dividends, and substantial shareholders. Also look at the trend of revenue growth from year to year.
No, the Annual Report alone is not sufficient. It should be combined with technical analysis, current news, and industry research to make more comprehensive and wise investment decisions.
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