Since the glove doesn't have brand royalty, so their profit margin will be very low. But however the demand of glove is very high and it always there, so there is no worries about this industry, the only main point we should focus is who is going to last till the end? The last survival will be a winner.
In order to survey in such a competitive industry, management efficiency, production efficiency and economy of scale will be the main focus point to analysis this industry. Who can provide the lower price to the customer will be the winner.
The material cost and currency difference will not different much from each and other. Hence, we need to look at their production efficiency and management efficiency. I have checked through the TopGlove and Supermx financial statement, it seems like either one want to cover some important data, so their financial statement presentation is different. So should be careful on this.
From TopGlove financial statement result, their gross profit margin is getting less and less from 25.2% to 16.5% (as stated as previous post). However, distribution & selling cost was reducing from 7% to 3.5%, administrative cost was reducing from 5% to 3.5%. As a result, the operating profit is able to maintain at around 10% to 11%.
From Supermx, I cannot define its gross profit margin, because the financial statement presentation is different. However, it did show some figure that are raw material cost, staff cost and depreciation value. Raw material cost was increasing from 64% to 74.8%, however stuff cost is reducing from 14.1% to 5.5%. Depreciation value is around 3.5% to 4.8% if compare with revenue. At the end, the operating profit is around 9% to 12%.
From the above, both companies are not able to pass on the cost to client but able to reduce their operating cost significantly. So at the end, both only able to get a operating profit around 10% to 11%. At this point, it is hard to determine who is more efficiency, who is not.
No comments:
Post a Comment