London
Biscuits Berhad is a confectionary conglomerate which hold its presence
in Malaysia food industry. It is well known with its comprehensive
cakes production line. Different from other snack manufacturers, London
Biscuits focuses half of its resources towards the manufacturing and
innovating of cake. This enable the company to operate with the
advantage of very large economic scale as most of its plants and
machineries are dedicated for single major type of product. As the
market is getting competitive than ever, existing conglomerate are
fighting for their own pieces of pie, not to mention the entry of
foreign products. Price war is often seen via promotions in different
markets for this kind of products. In order to capture some market
niche, the company has especially apply for the use of Disney characters
trademark to distinguish their products from their competitors. This
enables London Biscuits Berhad to leverage on Disney's strong branding
which is well established via media industry. Unfortunately, this kind
of strategy cannot last long as consumer will eventually ignore the
original brand with their mind positioning influenced by the package.
In
my very own observation, consumers in Malaysia prefer crackers rather
than cakes some of the time. As crackers consumption of the same price
can last longer, it is more worthy than purchasing cake products. Thus,
it eventually push down the sales of cake products. Also, cost of
producing cakes are a lot higher as they need to undergo more procedures
of manufacturing compared to other snacks which further heightened the
cost. Tin box package is often used with crackers which ultimately makes
it convenient for storage and also treated as a gift upon special
occasions. This small difference leads to tremendous purchasing behavior
in the end.
Based
on its cash flow, recent figure incurred by the company is lower than
it is 10 years ago. It is understood that this company undergo several
acquisitions in the past. However, buying into companies that eventually
suck up your cash, I don't think it is worth it. Worse, return on both
assets and equities are astonishingly low, which reflects the company
poor deployment their resources. With its poor quantitative performance,
I will filter this company out from my list.
Stock: LONBISC Code: 7126
Stock: LONBISC Code: 7126
没有评论:
发表评论