Author: noobxiaoz | Publish date: Fri, 25 Apr 22:14 | >> Read article in Blog website
Oriental
Food is a local manufacturer of confectionary and snacks. My attention
is converged to the company's snacking division line. Already known for
its cheese balls which fill up the childhood for most people, its snack
series come with a rather low price and guaranteed recipe. Although the
snacking market is already filled up with popular international brand
like Lays and Mister Potato, Oriental Food's line market share has never
deteriorated. Utilizing its position of cheap and unique recipe, it
continually captures the taste and preference of fellow Malaysians. The
group further extend their advantageous position by offering their
products at a smaller quantity. With the already low price offered, it
just get cheaper and reach extensive target groups than usual. The group
has also done quite a splendid job by allowing plenty of factory visits
for charitable organizations and schools. Marketing efforts are seen
where the group seeks distribution channel through family carnivals by
sponsorships. Capital expenditure is undergoing a rather inconsistent
pattern as there is a high of annual RM14 million spending and there is
zero spending on the other extreme. However, the chairman indicates that
the group is focusing on innovating new products to defend their market
share. As there will be large scale research and development going on, I
don't see the group's cash reserve allows it with only RM15 million
which is equivalent to only 1 year spending.
As
mentioned above, the company is competing in a market where a lot of
competitors are aggressively fighting for their own market share. ( Note
that it's not the word 'increase' I'm using, instead it's FIGHTING)
Promotion of lower prices are often held regardless of festivals or
special events. Also, people's awareness has increased towards their
diet. With this trend going on, snacking business will be more difficult
to survive with stricter monitoring of the food process.
The
operating cash flow is growing steadily with an annual growth rate of
only 4.61%. ROA and ROE has rather poor performance. With the three poor
quantitative indicators, the firm has still spaces of improvements.
Filtered out of my list.
Stock: ORIENT Code: 4006
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