Final Assignmenton

FINANCIAL ANALYSIS

of

“NISHAT CHUNIAN Ltd.”

Submitted to:Sir Muhammad Rizwan Siddiqui

Submitted by:Daniyal Baig (db)

St. ID # 12439

Submission Date: January 01, 2012

Acknowledgement

By the grace of Almighty Allah, I have completed the financial

analysis on “Nishat Chunian Ltd.” for the year 2010 and 2011. This assignment will help me a lot in broaden my way of thinking and

taking corrective measures in the future.

I am very thankful to the subject teacher,

Sir Muhammad Rizwan Siddiqui, who gave me the opportunity to learn Introduction to Financial

Management by providing different techniques, precious examples and

helpful guidance in making this course understandable as well as Sir’s full coordination in making this report easy. No doubt this

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assignment will help us a lot in future and provide us a chance to

work in a broader aspect.

LETTER OF TRANSMITTAL

January 01, 2012

Mr. Muhammad Rizwan Siddiqui

Institute of Business Management

Karachi

Dear Mr. Siddiqui:

With all due respect and esteem admiration, here is the final assignment on financial analysis

on Nishat Chunian Ltd. The data presented in this report as ratio analysis is been calculated

through the annual report of Nishat Chunian Ltd. However, it also included secondary data as

well which is collected from Business Recorder and Karachi Stock Exchange site.

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In this report, I tried my best in analyzing whether to invest in this company or not as a

potential shareholder by comparing all the ratios of 2010 and 2011. However, the company is

well in resources, management teams and marketing personnel. The information provided in

this report will help in understanding it well.

Sincerely,

Daniyal BaigStd: 12439

CHAPTER 01

RATIO ANALYSIS

1. Short Term Analysis/ Liquidity Analysis / Solvency Ratios:

A. Net working Capital = Current Assets - Current Liabilities

In 2011: 16,094,062,942 - 13,270,579,775 = 2,823,483,170

In 2010: 10,454,425,019 - 10,755,625,154 = 301,200,140

Growth: 8.37 times

B. Current Ratio = Current Assets/ Current Liabilities

In 2011: 16,094,062,942 - 13,270,579,775 = 1.212

In 2010: 10,454,425,019 / 10,755,625,154 = 0.971

Growth: 24.8%

C. Acid Test Ratio or Quick Ratio = (Current Assets - Inventory) / Current Liabilities

In 2011: (16,094,062,942 - 5,178,429,523) / 13,270,579,775 = 0.822

In 2010: (10,454,425,019 - 3,560,305,415) / 10,755,625,154 = 0.64

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Growth: 28.43%

Graphical Representation:

The above graph shows A, B and C as Net working Capital, Current Ratio and Acid Test Ratio respectively for the year 2010 and 2011.

Analysis:

There is an increase in net working capital from 2010 to 2011 as 8.37 times or 837% which is

a very positive sign. Along with this, we if compare the difference of current ratio with the

acid test ratio of 2011 it will be 0.39 and for 2010 it is 0.33, so both the differences are less

than 0.45 which is considered as the bench marks.

As the current ratio has steadily increased, it is to be noted that the liquidity has not resulted

from the most assets. Instead, from the quick ratio one could note that the increase in liquidity

is caused by an increase in inventories.

2. Turnover Ratios (In-Time):

A. Inventory Turnover = Cost of Goods Sold / Average Inventory

In 2011: 32,662,974,975 / 4,369,367,469 = 7.47 times

In 2010: 10,661,332,976 / 2,899,983,066.5 = 3.67 times

Growth: 103.5%

B. Debtor Turnover = Net Credit Sales / Average Debtor In 2011: 40,675,056,941 / 591,467,944.5 = 68.77 times

In 2010: 13,343,539,563 / 352,642,653 = 37.83 times

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Growth: 81.78%

C. Creditor Turnover = Net Credit Purchase / Average Creditor

In 2011: 32,662,974,975 / 1,547,961,086.5 = 21.1 times

In 2010: 10,661,332,976 / 996,185,335 = 10.7 times

Growth: 97.2%

Graphical Representation:

The above graph shows A, B and C as Inventory

Turnover, Debtor Turnover and Creditor Turnover in time respectively for the year 2010 and

2011.

Analysis:

The inventory turnover in 2011 is much more than 2010, which means that resources are

being employed unproductively which is not a good sign because it shows that company is

going towards insolvency or liquidity. In 2010, debtor turnover was better as compared to 2011

which increases to 81.78% having negative sign for the company. Same is the case for creditors’

turnover. In 2010 they were paying off their liabilities earlier as compared to 2011.

3. Turnover Ratios (In-Days):

A Inventory Turnover = Average Inventory * 365 / Cost of Goods Sold

In 2011: 4,369,367,469 * 365 / 32,662,974,975 = 48.8 Days

In 2010: 2,899,983,066.5 * 365 / 10,661,332,976 = 99.4 Days

Growth: 50.9% Improved

B Debtor Turnover = Average Debtor * 365 / Net Credit Sales In 2011: 591,467,944.5 * 365 / 40,675,056,941 = 5.3 Days

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In 2010: 352,642,653 * 365 / 13,343,539,563 = 9.6 Days

Growth: 44.8% Improved

C Creditor Turnover = Average Creditor * 365 / Net Credit Purchase

In 2011: 1,547,961,086.5 * 365 / 32,662,974,975 = 17.3 Days

In 2010: 996,185,335 * 365 / 10,661,332,976 = 34.1 Days

Growth: 49.2% Improved

Graphical Representation:

The above graph shows A, B and C as Inventory Turnover, Debtor Turnover and Creditor

Turnover in days respectively for the year 2010 and 2011.

Analysis:

The turnover ratios in days for the year 2011 is approximately half as compared to year 2010

which means the company has doubled their efforts to improve it upto this level, which is

very satisfactorily.

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4. Leverage / Capital Structure:

A. Debt Burden = Total Debt (long term debt + Short term debt) / Total Equity

In 2011: (17,145,214,989 + 8,219,915,747) / 8,647,947,815 = 2.933

In 2010: (17,721,442,341 + 6,492,739,649) / 6,009,283,544 = 4.029

Growth: 27.2% Improved

B. Debt Ratio = Total Debt (long term debt + Short term debt) / Total Assets

In 2011: (17,145,214,989 + 8,219,915,747) / 39,063,742,579 = 0.649

In 2010: (17,721,442,341 + 6,492,739,649) / 34,486,351,039 = 0.702

Growth: 7.5% Improved

C. Interest Cover = Earnings before Interest & Tax (EBIT) / Interest

In 2011: 7,346,988,422 / 4,357,248,680 = 1.686

In 2010: 2,224,921,613 / 1,101,054,097 = 2.02

Growth: 16.53% Improved

Graphical Representation:

The above graph shows A, B and C as debt burden, debt ratio and interest cover respectively

for the year 2010 and 2011.

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Analysis:

The above leverage ratios i.e. debt burden and debt ratio in year 2011 is less than 2010, which

is a better sign because as low as the value, better it is. The debt-to-equity ratio tells us that

the firm has become less levered. To get a better idea about the proportion of debt, we can

turn the D/E ratio into the D/V ratio, so based on this; it is rather difficult to give a qualitative

judgment beyond observing the drop in leverage.

In terms of the firm’s ability to pay interest, 2011 doesn’t look good. However, the times

interest earned uses EBIT as a proxy for the ability to pay for interest, cash flow should be

considered instead of earnings.

5. Profitability Ratios:

A. Gross Margin = Gross Profit / Sales

In 2011: 8,012,081,966 / 40,675,056,941 = 19.60%

In 2010: 2,682,206,587 / 13,343,539,563 = 20.10%

Growth: (2.48%)

B. Net Margin = Net Profit / Sales

In 2011: 2,771,951,100 / 40,675,056,941 = 6.80%

In 2010: 988,781,241 / 13,343,539,563 = 7.41%

Growth: (8.23%)

Graphical Representation:

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The above graph shows A and B as Gross Margin and Net Margin respectively for the year

2010 and 2011.

C. Operating Margin = Operating Expense / Sales

In 2011: 145,331,249 / 40,675,056,941 = 0.35%

In 2010: 80,333,501 / 13,343,539,563 = 0.60%

Growth: 41.67% Improved

D. Administrative Margin = Administrative Expense / sales

In 2011: 171,037,680 / 40,675,056,941 = 0.42%

In 2010: 117,509,568 / 13,343,539,563 = 0.88%

Growth: 52.27% Improved

E. Selling Margin = Selling Expense / Sales

In 2011: 599,586,283 / 40,675,056,941 = 1.47%

In 2010: 438,360,713 / 13,343,539,563 = 3.25%

Growth: 54.76% Improved

F. Financial Margin = Financial Expense / Sales

In 2011: 4,357,248,680 / 40,675,056,941 = 10.71%

In 2010: 1,101,054,097 / 13,343,539,563 = 8.25%

Growth: 29.8% Improved

Graphical Representation:

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The above graph shows C, D, E and F as Operating Margin, Administrative Margin, Selling

Margin and Financial Margin respectively for the year 2010 and 2011.

Analysis:

The gross profit and the net profit in the year 2011 is declined by 2.48% and 8.43%

respectively, which is a negative sign for the company and for the shareholders as well

whereas the operating margin, administrative margin, selling and financial margin are

decreased in year 2011 as compared to last year which is a positive sign thus the amount is

shown in green color representing by how much percentage it has been improved.

6. Profitability Ratios Related to Investment:

A. Return on Investment = Profit after Tax / Capital Employed

In 2011: 2,771,951,100 / 25,793,162,804 = 10.74%

In 2010: 988,781,241 / 23,730,725,885 = 4.16%

Growth: 1.58 times

B. Return on Asset = Profit after Tax / Total Asset

In 2011: 2,771,951,100 / 39,063,742,579 = 7.10%

In 2010: 988,781,241 / 34,486,351,039 = 2.86%

Growth: 1.48 times

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C. Return on Capital Employed = Profit before Interest & Tax / Capital Employed

In 2011: 7,346,988,422 / 25,793,162,804 = 28.48%

In 2010: 2,224,921,613 / 23,730,725,885 = 9.37%

Growth: 2.04 times

D. Capital Employed = Total Assets - Current Liabilities

In 2011: 39,063,742,579 - 13,270,579,775 = 25,793,162,804

In 2010: 34,486,351,039 - 10,755,625,154 = 23,730,725,885

Growth: 8.7%

Graphical Representation:

The above graph shows A, B, C and D as Return on Investment, Return on Asset, Return on

Capital Employed and Capital Employed respectively for the year 2010 and 2011.

Analysis:

The profitability ratios related to investment in year 2011 is pretty good as compared to 2010,

which is a positive sign because more the values, better is the return.

7. Asset Turnover Ratio/ Investment Turnover Ratio:

A. Asset Turnover = Sales / Avg. Total Asset

In 2011: 40,675,056,941 / 36,775,046,809 = 1.10 times

In 2010: 13,343,539,563 / 27,140,821,899.5 = 0.47 times

Growth: 134%

B. Fixed Asset Turnover = Sales / Avg. Fixed Asset

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In 2011: 40,675,056,941 / 23,500,802,828.5 = 1.73 times

In 2010: 13,343,539,563 / 19,590,956,874.5 = 0.67 times

Growth: 158.2 %

C. Capital Turnover = Sales / Average Capital

In 2011: 40,675,056,941 / 7,328,615,679.5 = 5.55 times

In 2010: 13,343,539,563 / 4,727,383,855.5 = 3.24 times

Growth: 71.3%

D. Current Asset Turnover = Sales / Avg. Current Asset

In 2011: 40,675,056,941 / 13,274,243,980.5 = 3.06 times

In 2010: 13,343,539,563 / 7,549,865,025 = 1.84 times

Growth: 66.3 %

Graphical Representation:

The above graph shows A, B, C and D as Asset Turnover, Fixed Asset Turnover, Capital

Turnover and Current Asset Turnover respectively for the year 2010 and 2011.

Analysis:

All the above turnover ratios for the year 2011 is doubled than the last year which is a good sign because more the turnover better for the company. However, here I took sales as nominator; we can also compare it with C.G.S as well.

8. Working Capital Cycle / Cash Operating Cycle / Working Capital Planning:

Inventory Turnover Days = (Avg. Inventory x 365) / C.G.SAdd Debtors Turnover Days = (Avg. Debtor x 365) / Net Credit SalesLess Creditors Turnover Days = (Avg. Creditors x 365) / Net Credit Purchase

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Working Capital Cycle

In 2011: (4,369,367,469 x 365) / 32,662,974,975 = 48.86(591,467,944.5 x 365) / 40,675,056,941 = 5.3(1,547,961,086.5 x 365) / 32,662,974,975 = 17.29 = 37 Days

In 2010: (2,899,983,066.5 x 365) / 10,661,332,976 = 99.45

(352,642,653 x 365) / 13.343.539.563 = 9.64(996,185,335 x 365) / 10,661,332,976 = 34.11 = 75 Days

Growth: 50.6% improved

Graphical Representation:

Analysis:

In 2010, the working capital cycle was consist of 75 days whereas in 2011 it has improved

up-to 37 days which is 50.6% betterment in the planning cycle and excellent for the

company.

CHAPTER 02

Nishat Chunian Ltd. in the view point of Business Recorder

Article Published on August 18, 2011:

The following article which is an analytical report on Nishat Chunian Ltd. was published in Business Recorder on August 18, 2011 by the Economics and Finance Department of Institute of Business Administration (IBA) Karachi.

FINANCIAL ANALYSIS OF NISHAT CHUNIAN Ltd.

Profitability

Sales revenue has shown an upward trend since 2006, with the best performance in this regard in FY10.

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Sales during the year 2010 were the highest ever at Rs 13.34 billion, as compared to Rs 9.96 billion during last year which is an increase of 33.9 percent. Part of this rise owes to home textiles; sales of which increased to $48 million in FY10 from $25 million in FY09, resulting in better capacity utilization. Sales revenue increased because of higher product prices, higher exchange rate parity and better capacity utilization.

At the same time, cost of sales increased by 27 percent from FY09 to FY10. In spite of the increase in the cost of goods sold, profit after tax increased by 801 percent from FY09 to FY10.

Major contribution to the increase in profitability in FY10 came from the sharp increase in prices of yarn which is used in the spinning business.

The positive variances in the sales, gross profit and profit after tax led to 30 percent return on shareholder's equity during FY10. The EBIT ratio increased from 12 percent in FY09 to 16 percent in FY10, signaling an increase in the company's profitability.

The company's net profit margin significantly improved to 7.06 percent in FY10 as compared to 1.0 percent in FY09 due to the year-on-year reduction in interest expenses from 10.85 percent of sales in FY09 to 8.25 percent of sales in FY10.

Liquidity 

The current ratio has increased gradually from 0.81 in FY09 to 0.85 in FY10, which suggests that short run liquidity is not a problem for the company. Even though a decline from 0.43 to 0.37 has been observed in the quick ratio, the liquidity position is strong as this decline only signals towards the investment committed by the company on its subsidiary, NCPL.

Debt Management 

Despite capital expenditure on textile machinery and investment made in NCPL, leverage ratios of NCL have improved over last year. This is credited to the company's conservative capital structure.

Total debt to equity ratio also improved to 69:31 in FY10 as compared to 74:26 for the previous year. Long term debt has fallen by 14 percent in FY10. High interest rates and the company's requirement for higher level of borrowing for investment in NCPL led to a 53 percent increase in the borrowing cost from FY08 to FY09.

Till the end of FY10, this cost remained high, with a small increase of 1.8 percent coming from FY09. With NCPL now operational and no new investment or expansion projects in the pipeline, it is expected that this cost will reduce in coming years.

Operational Efficiency 

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The company has been able to improve its overall production efficiency and resource utilization capacity. This can be seen by the jump in its fixed asset turnover ratio from 1.20 in FY08 to 2.24 in FY10. Profit after tax attributable to shareholders has increased by 839 percent from FY09 to FY10.

Market Value 

There has been a phenomenal improvement in the earnings per share of the company. It rose from 0.22 in FY08 to 1.19 in FY 09, moving up to 7.89 in FY10.

Future Prospects 

Pakistan's main cotton growing areas in Punjab and Sindh have been severely affected by the devastating floods of 2010. On account of damage to the cotton crop in Pakistan and less cotton production in China, cotton rallied to the highest price in more than 15 years, before receding sharply in recent weeks.The outlook for the performance of the textile sector for the remainder of this year remains uncertain, so far given the relatively weak performance of cotton on international markets. In order to raise equity from the capital markets, NCL planned a privately-placed Term Finance Certificate issue worth Rs 500 million. Proceeds from this TFC issue were disbursed to NCL in September 2010.

NCPL is fully operational and is dispatching electricity as per the requirement of WAPDA. It is expected to have healthy profitability with minimum variation in profits. The company expects to receive cash dividends of around PKR 300-400 million every year from NCPL. It is hoped that steady stream of dividends from NCPL will help NCL smoothen out variations in its earnings.

Article Published on November 01, 2011:

NISHAT CHUNIAN SUFFERS RS. 85.889 MILLION AFTER-TAX LOSS

On November 01, 2011, it was published in Business Recorder that Nishat (Chunian) Limited has posted Rs 85.889 million as after-tax loss in the quarter ended on September 30, 2011 as compared to Rs 477.454 million profit after tax posted in the corresponding quarter in 2010.

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The board of directors of the company in its meeting held on Monday declared that the company's loss per share (basic) stood at Re 0.53 in the period under review against earning per share of Rs 3.01 in the same period of last year while loss per share (diluted) stood at Rs 0.52 in this period against earning per share of Rs 2.89 in the same period last year.

According to the financial results sent to Karachi Stock Exchange, the company's sales increased to Rs 4.1134 billion in this quarter against Rs 3.820 billion in the same quarter last year.

The cost of sales increased to Rs 3.774 billion against Rs 2.893 billion.The company posted Rs 44.709 million as loss before taxation in this quarter against profit before taxation of Rs 515.977 million in the same quarter of 2010.

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CHAPTER 03

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Nishat Chunian Ltd. According to Karachi Stock Exchange (KSE)

December 01 to 31, 2010

DateRate Turnover

CallsTradesTrading Value

MarketCapitalisation

Paid-upCapitalOpeningClosing Diff High Low Average Total Cross

Dec 31 22.53 22.72 0.19 23.20 22.50 22.96 1,917,658 -- -- -- -- 2,819,129,408 1,240,814,000

Dec 30 22.05 22.53 0.48 22.97 22.11 22.62 1,171,073 -- -- -- -- 2,795,553,942 1,240,814,000

Dec 29 22.51 22.05 -0.46 22.75 22.01 22.21 939,557 -- -- -- -- 2,735,994,870 1,240,814,000

Dec 28 22.80 22.51 -0.29 23.00 22.45 22.80 1,472,395 -- -- -- -- 2,793,072,314 1,240,814,000

Dec 27 22.65 22.80 0.15 23.04 22.63 22.88 305,705 -- -- -- -- 2,829,055,920 1,240,814,000

Dec 24 22.63 22.65 0.02 22.80 22.35 22.60 567,802 -- -- -- -- 2,810,443,710 1,240,814,000

Dec 23 23.11 22.63 -0.48 23.24 22.50 22.87 1,368,479 -- -- -- -- 2,807,962,082 1,240,814,000

Dec 22 22.78 23.11 0.33 23.46 22.74 23.13 4,320,225 -- -- -- -- 2,867,521,154 1,240,814,000

Dec 21 22.40 22.78 0.38 23.28 22.50 22.89 3,262,335 -- -- -- -- 2,826,574,292 1,240,814,000

Dec 20 22.28 22.40 0.12 22.84 22.28 22.60 1,756,743 -- -- -- -- 2,779,423,360 1,240,814,000

Dec 15 21.71 22.28 0.57 22.79 21.62 22.34 3,394,788 -- -- -- -- 2,764,533,592 1,240,814,000

Dec 14 21.55 21.71 0.16 21.94 21.63 21.77 548,447 -- -- -- -- 2,693,807,194 1,240,814,000

Dec 13 21.61 21.55 -0.06 21.95 21.51 21.71 700,375 -- -- -- -- 2,673,954,170 1,240,814,000

Dec 10 21.40 21.61 0.21 22.01 21.15 21.72 1,115,251 -- -- -- -- 2,681,399,054 1,240,814,000

Dec 09 22.12 21.40 -0.72 22.15 21.25 21.67 1,573,365 -- -- -- -- 2,655,341,960 1,240,814,000

Dec 08 22.25 22.12 -0.13 22.60 22.00 22.36 975,618 -- -- -- -- 2,744,680,568 1,240,814,000

Dec 07 22.39 22.25 -0.14 22.75 21.90 22.34 2,148,332 -- -- -- -- 2,760,811,150 1,240,814,000

Dec 06 22.93 22.39 -0.54 23.18 22.30 22.72 1,057,297 -- -- -- -- 2,778,182,546 1,240,814,000

Dec 03 22.87 22.93 0.06 23.49 22.81 23.18 3,126,566 -- -- -- -- 2,845,186,502 1,240,814,000

Dec 02 22.02 22.87 0.85 22.95 22.15 22.62 3,372,292 -- -- -- -- 2,837,741,618 1,240,814,000

Dec 01 22.77 22.02 -0.75 23.22 21.91 22.53 4,956,976 -- -- -- -- 2,732,272,428 1,240,814,000

Trend of the above Table:

December 01 to 31, 2011

Trend of the above Table:

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DateRate Turnover

Calls TradesTrading Value

MarketCapitalisation

Paid-upCapitalOpening Closing Diff High Low Average Total Cross

Dec 27 18.50 18.11 -0.39 18.55 18.10 18.14 46,781 -- -- -- -- 2,928,102,673 1,616,843,000

Dec 26 18.50 18.50 -- 18.60 18.20 18.49 628,109 -- -- -- -- 2,991,159,550 1,616,843,000

Dec 23 18.20 18.50 0.30 18.70 18.01 18.56 889,086 -- -- -- -- 2,991,159,550 1,616,843,000

Dec 22 18.24 18.20 -0.04 18.30 17.80 18.12 101,528 -- -- -- -- 2,942,654,260 1,616,843,000

Dec 21 17.84 18.24 0.40 18.60 17.90 18.35 1,017,453 -- -- -- -- 2,949,121,632 1,616,843,000

Dec 20 16.84 17.84 1.00 17.84 16.75 17.53 912,147 -- -- -- -- 2,884,447,912 1,616,843,000

Dec 19 16.21 16.84 0.63 16.98 16.28 16.76 235,267 -- -- -- -- 2,722,763,612 1,616,843,000

Dec 16 16.52 16.21 -0.31 16.45 15.90 16.15 101,618 -- -- -- -- 2,620,902,503 1,616,843,000

Dec 15 16.97 16.52 -0.45 16.70 16.20 16.50 305,845 -- -- -- -- 2,671,024,636 1,616,843,000

Dec 14 16.00 16.97 0.97 17.00 16.05 16.82 579,848 -- -- -- -- 2,743,782,571 1,616,843,000

Dec 13 16.03 16.00 -0.03 16.30 15.80 15.99 136,676 -- -- -- -- 2,586,948,800 1,616,843,000

Dec 12 16.54 16.03 -0.51 16.80 15.90 16.18 60,861 -- -- -- -- 2,591,799,329 1,616,843,000

Dec 09 16.30 16.54 0.24 16.65 16.10 16.44 167,366 -- -- -- -- 2,674,258,322 1,616,843,000

Dec 08 15.98 16.30 0.32 16.35 15.91 16.16 101,995 -- -- -- -- 2,635,454,090 1,616,843,000

Dec 07 15.97 15.98 0.01 16.49 15.75 16.00 190,225 -- -- -- -- 2,583,715,114 1,616,843,000

Dec 02 16.00 15.97 -0.03 16.00 15.51 15.78 275,541 -- -- -- -- 2,582,098,271 1,616,843,000

Dec 01 15.73 16.00 0.27 16.05 15.70 15.98 80,841 -- -- -- -- 2,586,948,800 1,616,843,000

Whole Year Trend 2010-2011:

CONCLUSION:

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From the ratio analysis, articles of business recorder and the above trend of KSE-100 index

about Nishat Chunian Ltd., I have reached to the conclusion that the company is growing in

the year 2011 as compared to 2010 but with negative growth as there is less increase in

volume as compared to last year but the hyper inflation in the cost of cotton due to flood has

raised the value (Rs.) which caused to increase in the Revenue (P x Q). Thus the increase in

growth is not due to volume but value.

The liquidity ratios and turnover ratios (In-Days) in 2011 are showing positive trend but the

profitability ratios including Gross Margin and Net margin both are showing negative trend

with 2.48% and 8.23% respectively as compared to last year which is very shocking for the

common stock shareholders as they won’t get any dividend this year.

But it doesn’t mean that potential shareholders shouldn’t invest in the organization because

the organization is overall performing well but the natural disaster in the form of flood for the

last two years, energy crisis and the worst-recession in the country has caused Nishat

Chunian to record negative margin. However, it is still within 10% so they will easily cover it

so the investors should invest in it next year after having a look on quarterly report.

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