Management Discussion and Analysis by Group Managing Director

Suiwah Corporation Bhd is a public limited liability company incorporated and based in Malaysia that has been listed on Second Board of Bursa Malaysia Securities Berhad in 1995. The Company was transferred to the Main Board of Bursa Malaysia Securities Berhad in year 2005.

"Sunshine": is the established household name in the heart of all Penangites. In the spirit of the name "Sunshine", we aimed to work endlessly with our customers, suppliers, shareholders and the community to create a future of limitless promises. All this is encapsulated in the tagline "Sunshine, Great Price, Great Choice"

At present, the stores are diversely spread out geographically in Penang Island and Bertam, in the mainland. In addition to the stores, the Group also smaller scale businesses with its neighbourhood concept standalone supermarket business, convenient stores and individual private label shop. The higher growth from retailing revenue was mainly contributed by new store opening in the second quarter of financial year 2017. At present, there are 3 large scale departmental & supermarket stores, 3 neighbourhood standalone supermarkets, 10 convenient stores and 3 individual private label shops, targeting to provide convenient shopping to the shoppers in the vicinity where the outlet is located. We aimed to provide continuous refreshing image and appeal outlook that seek to satisfy the ever changing needs and desires of our valued customers.

Sunshine Central, the brainchild of Crimson Omega Sdn Bhd, is being developed and conceptualised to become the next prestigious commercial belt as well as a happening hub in Air Itam, Penang. The architecture of Sunshine Central is designed for functionality and built for versatility. This development fully utilizes the magnificent view and connected to modern amenities and infrastructures, is set to create an alluring ambience for the community from near and far.

During the financial year, the Group commenced its trading business in construction materials. Despite the substantial increase in its revenue, the gross margin increased was further compressed in the competitive market. The rising cost of doing business has further dampened the bottom line for this business segment.

The Group's property investment business remains very challenging in the year under review due to lower rental collection and higher operating cost, e.g. depreciation incurred during the reporting period. Rental rates in general moderated in recent years resulted in competitive rental rates and efforts by the Group to maintain and sustain occupancy rates within the stores.

The Group's business is generally exposed to the economy, business and retail market risks such as changes in shoppers' behaviour, rising cost of living, competition, regulatory changes, foreign exchange risk, succession planning risk, etc. This may affect the Group's revenue and profitability performance.

The Group seeks to limit these risks through prudent management policies, continuous review and evaluation of the Group's operation and strategies, close working relationships with the Group's stakeholders, especially the community within which it is operating, government authorities, right merchandise and tenants mixed, retention of key management staff and technology upgrades in line with industry trends.

Foreign currency exchange and oil price fluctuations could have direct impact on cost to import construction materials and equipment which will affect the performance of property investment and development segment of the Group. There is also risk due to ineffective project management which could lead to project delay, construction cost overrun and also the risk of tighter lending policies from financial institutions which could lead to slowdown in the property and construction sectors.

In order to mitigate these risks, the Group will take appropriate calculated risks where currency fluctuation issues are concerned. The Group will also ensure the progress of construction be completed according to the scheduled to avoid paying any additional associated costs incurred arising from late handover.



Despite a challenging year, the Group attained higher revenue amounting to RM397.260 million for year ended 31 May 2017 (''FY2017'') compared to RM375.834 million in the previous year representing an increase of 5.70%. The Group profit before tax for FY2017 was RM13.663 million, as compared with its profit before tax of RM12.430 million previously, an increase of 9.92%.

The overall increase in the Group's financial year to date performance can be explained by:

New project commercialization with a premium from higher technological value add content, which augmented the contribution from the manufacturing sector caused manufacturing segment to record a 13.98% increase in revenue and profit before tax increase by 90.93%, as compared previously.

Total revenue registered by the retail business segment for financial year to date increased by 3.46% to RM300.453 million compared to RM290.413 million recorded in the preceding year corresponding period mainly due to contribution from new retail outlet. Profit before tax recorded a decreased by 25.90%, from RMS.992 million to RM6.663 million, impacted by additional operating cost incurred due to the opening of new retail outlet during the reporting period.

Property investment and development segment registered a decrease in revenue from RM4.802 million to RM3.775 million. Loss for the reporting period was RM3.395 million as compared to loss before tax of RMl.229 million, recorded in the preceding corresponding period ended 31 May 2016, mainly due to the lower rental collection, higher operating cost, e.g. depreciation incurred during the reporting period.

Commencement of trading in construction materials caused the trading revenue to increase by 313.32% from RM0.383 million to RMl.583 million. Profit before tax for the period under review was RM0.083 million as compared to RM0.094 million previously, impacted by intense competition from competitors.

As at 31 May 2017, the Group's shareholders' fund remains strong at RM221.812 million which provides a net asset value per share of RM3.87 (2016: RM3.72). Earnings per share increased to 16.75 sen per share (2016: 13.32 sen) for the year under review due to higher profit.

The group's property, plant and equipment net book value as at 31 May 2017 increased by RM45.430 million. This amount includes capital work in progress in respect of its new mixed development project in Farlim that will be opened in early 2020.

The Board recommended a first and final single tier dividend of 1 sen per ordinary share for FY2017. The Company's dividend payment may vary and is subject to the Company's level of cash, indebtedness, retained earnings, business operations, financial performance, capital expenditure, current and expected obligations and such other matters as the Board may deem relevant from time to time.



Despite market headwinds, the Group is determined in its approach to executing its transformation plans. Given our dedication and commitment to growth and success across all business segments, the Group is confident of delivering our transformational strategy and creating long term value for shareholders.

The Company understand a good succession planning can provide long term competitive advantage for the group. It is vital to invest proper amount of time and attention to ensure that pivotal talent is identified and nurture. To achieve this, retail division has set up SURE®(Sunshine Upscale Retail Excellence) Centre. This is a centre for retail excellence to train young management trainees by way of work and study programme. This collaboration programme will prepare them to gain internationally recognise certificate in Supply Chain Management, awarded by International Trade Centre, Geneva. This MLS-SCM®programme is an ISO 9001 2008 certified programme.

QDOS as the technology arm of the Group is currently constructing a new Plant at Batu Kawan which will be ready by March, 2018. The Group acquired a total of 13 acres of land at Batu Kawan which translate to 6 times of its current size. Viewing investments with a long lens makes the team motivated to focus on achieving our vision. QDOS remains optimistic about the growth of industries namely in the automotive, telecommunication and medical segment.



The Board and executive management team would also like to take this opportunity to express their sincere gratitude to the employees, customers, shareholders, suppliers and partners for all their unstinting efforts and contributions over the past years.

I would also like to extend my personal thanks to my fellow Directors for their constant dedication as the Group attributed its success to the leadership of its Board of Directors and it also owes much to the dedication of its employees and the support of its loyal customers and trust given by all our shareholders.

The Group will continue to embark on a series of adjustments its business strategies with an aim to diversify satisfactory performance for the upcoming financial year.

Thank you.



Managing Director
Date: 26 September 2017