Why JCY is deep shit?

What can the financial statement tell us about JCY this business?

If you look back to JCY's past financial statement history, you will notice JCY net profit margin is around 10% to 11%. This tell us he is at a very competitive industry environment.

However out of the 10% to 11% net profit margin, JCY need use back its profit to upgrade back its property, plant and equipment. This is not happen in just one year, it happens on every year, almost every quarters. So you will see JCY is growing at the past but however it doesn't generate any cash from the business, what JCY grow is the plant and equipment. It uses most of the shareholder's money to pump in back to upgrade its plant and equipment, in order to keep this company alive.

This type of company definitely cannot help shareholder generate any wealth. Worse, when technology is suddenly changing, then it might face serious problem because all its existing equipment cannot be used anymore and it needs to use money to upgrade its equipment again. And this is exactly what is happening now.

Now the world technology is changing from previous hard disk technology to mobile tablet devices such as ipad, samsung galaxy tab and others. So you can see its financial statement is facing a big trouble now. Company earn no profit but still need to spend money to keep on upgrade its equipments.

Avoid this type of company unless it can show some economy of scale and no one can compete with it.