26-07-2014, 01:49 PM
(26-07-2014, 01:27 PM)dzwm87 Wrote: [ -> ]What a coincidence. Posted the same thing as Boon.
Ha-ha ! And we made the same observations on its cost structure.
(vested)
(26-07-2014, 01:27 PM)dzwm87 Wrote: [ -> ]What a coincidence. Posted the same thing as Boon.
(26-07-2014, 02:07 PM)kelvesy Wrote: [ -> ]Under Adminstrative Expense (AE), there are two costs.
For Employee Benefits Expenses | Rental of Premises:
2013: 9,455 - 7.5% increment | 2,954 - negative 24.3% drop
2012: 8,793 - 5.2% increment | 3,901 - 14.8% increment
2011: 8,362 - 1.6% increment | 3,397 - 16.6% increment
2010: 8,227 | 2,914
There seem to be some attempts to control Administrative Expenses, such as relocation of their Singapore subsidiary to its Market Street office. It still remains high due to the one-off professional fees incurred for the acquistion of SolidGold. Perhaps, we are able to see a lower AE cost in the coming quarters.
(26-07-2014, 01:02 PM)Boon Wrote: [ -> ]Hi Kelvesy,
Distribution Costs (which I assume include commission) is not a problem.
The problem with BWI is its HIGH overhead fixed cost in the form of Administrative Expenses (AE) in relation to its revenue.
See Charts:
Gross Profit Margin (GPM = Revenue – Cost of Goods) has been pretty stable from 74% to 79% - this is not a problem
Distribution Costs as % of Revenue have been between 34.9% to 40.3% - and is trending down slightly of late – this is not a problem.
Administrative Expenses stayed around SGD 17 plus million – This Fixed Cost as a % of revenue has been staying HIGH (revenue staying low) – this has been the PROBLEM.
Revenue at about SGD 40 million plus is roughly at breakeven point.
To propel it to the next level of profitibility, BWI just needs to grow its revenues - be able to obtain its direct selling license in China would certainly be crucial, I reckon.
(vested)
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(28-07-2014, 11:17 AM)dzwm87 Wrote: [ -> ]I reckon BWI's products are not attractive at all. In terms of brands, there are only 6 and a quick google search doesn't give meaningful reviews on it.
On its geographical revenue breakdown, sales have been falling in every market except for Taiwan (but Taiwan alone is insufficient to offset the other declines). This trend has been happening for the past 7 years. Clearly, their products are not selling enough to win market shares and it seems management's solution to grow overall sales is to move into new markets (i.e. Myanmar and lately China).
Unless we are looking at an extraordinary product portfolio by BWZ, sustainable revenue growth could be tough. Perhaps, the thesis is for a one-off spike in revenue growth from China for operating leverage to work.