(a) Describe the type of business conducted by the company.

Yong Tai Berhad (YTB) is an investment holding company whereby YTB's chief
source of revenue is derived from the payment of dividends, rents ,interest etc from its
subsidiary companies. Although its raison d'tre is investment holding ,but there is
substantial activity in the manufacturing and retailing side of the business through the
operations of its subsidiary companies and hence Yong Tai Berhad could be classified as
a manufacturing and retailing business.For example, the companies Yong Tai Brothers
Trading Sdn. Bhd. and The Image Outlet Sdn. Bhd. are involved in the retailing of
garments which are represented by many brand names notably 'Effu ' and 'Emillio
Valentino' while another subsidiary company , Syarikat Koon Fuat Industries Sdn. Bhd is
involved in the manufacturing of textiles and other related products. This has enabled
Yong Tai Berhad and its subsidiary companies to offer a competitive price range of
quality products to a broad and stable market. Yong Tai Berhad operations are carried out
in Malaysia, China ,Hong Kong, and Europe.


(b) Describe and explain the type of organization formed by the company.
The organization formed by the company Yong Tai Berhad (YTB) is a
corporation. The fact is obvious in the sense that YTB is a business which issues shares
and is a separate legal entity organized under company law in accordance to the laws
pertaining to that effect in Malaysia. Yong Tai Berhad was incorporated in Malaysia on
12 August 1994. Yong Tai Berhad is also a public listed company and was listed on the
Second Board of Bursa Malaysia on 15 September 1998. On 3 August 2009, Yong Tai
Berhad was listed on the Main Market of Bursa Malaysia with effect with the merger of
the Main Board and the Second Board.
Besides, YTB is a corporation in the sense that it is a public listed company that
is owned by shareholders who elect a board of directors to oversee primary
responsibilities. It is without a doubt that YTB's greatest advantage is its ability to raise a
substantial amount of financial capital by issuing shares. Secondly, YTB's shareholders
also gain an advantage with the fact that their liability in the company is limited. The
shareholders are only accountable for the sum of their original investment in the event the
company is in serious financial or legal trouble. The drawback in YTB as a corporation is
that it is subjected to double taxations by the taxing authorities. The possibility of double
taxation arises when YTB declares and pay taxes on the net income of the corporation at
the end of YTB's financial year . If the corporation also pays out dividends to individual
shareholders, those shareholders must declare that dividend income as personal income
and pay taxes at the individual income tax rates.
(e) Your decision as to whether you would invest in the company or not, based on the
analysis made.
After submitting the annual report of Yong Tai Berhad to careful analysis, we
have decided that we will not invest in the company. Although the company is a listed
company on Bursa Malaysia and it has control over many subsidiaries, but we deduce
that in the long run, the company will face losses of a unacceptable scale to the investor.
Although the company has many subsidiaries which are involved in many
activities, mainly manufacturing and retailing, it faces a loss between 2011 and 2012. The
number of subsidiary companies may prove a liability to Yong Tai Berhad in the long run
since control over these companies may involve increased borrowing to cover costs and
plan future operations, increased tax levied on Yong Tai Berhad and the possibility of
unsold and obsolete stock since the company is involved in retailing clothes and these
products may go out of fashion, causing losses.
Secondly, the company, has seen an increase of total liabilities in contrast to total
assets in 2012 compared to 2011. Although the company itself managed to increase its
assets between 2011 to 2012, the assets of its subsidiaries declined, from RM 139874894
to RM 83928533. Besides, the company also faces increased risks of bad debts since its
investments in its subsidiary and sub-subsidiary companies increased from RM 33901810
to RM 48901810.
In conclusion, the manufacturing and retailing business conducted by Yong Tai
Berhad and its subsidiaries discourages us from investing in the company because of the
added risks of a multi-operational company.
Appendix
www.bursamalaysia.com.my
www.yongtai.com.my
Yong Tai Berhad Annual Report 2012 (pages 24 and 25 are shown here)