Sector : Consumer
Cyclicals
Sub
Sector :
Automotive and Auto parts
This comparison would
look into companies that manufacture and trading automotive parts (Metal Part
& Heat Exchange). Company manufacturing and trading automotive interior,
plastic and batteries are excluded in this comparison. The companies are:
Competitiveness
Market shares is
an importance indicator to determine the competitiveness of the company. Total
revenue make from manufacturing and trading of metal part & heat exchange
for automotive industry for the year 2018 is RM 1,268,272,929.
|
COMPANY
|
REVENUE (AUTOMOTIVE
PARTS) 2018 (RM)
|
MARKET SHARE
(%)
|
|
408,307,000
|
32.19
|
|
|
472,602,000
|
37.26
|
|
|
62,539,164
|
4.93
|
|
|
209,166,765
|
16.49
|
|
|
115,658,000
|
9.12
|
EPMB and APM is the top two companies for 2018 in
term of market share which are 37.26 %and 32.19 % respectively. Both companies
add up to have 69.45 %.
Operational
For operational, operating income of the companies had been review. Operating
income determine how much the companies’ revenue had turn into profit after
reduction cost of operating expense.
Besides operating income, operating margin ratio is
also calculated. Companies with higher operating margin ratio have more
probability to survive in today financial crisis. The median operating margin
ratio for this group of companies for 2018 is 1.28 %.
|
COMPANY
|
2018 OPERATING
INCOME (RM)
|
2018 OPERATING
MARGIN RATIO
|
|
26,220,000
|
6.42
|
|
|
6,045,000
|
1.28
|
|
|
-1,162,806
|
-1.86
|
|
|
7,479,810
|
3.58
|
|
|
-1,062,000
|
-0.92
|
As a value investor, company with negative operating
income would be considering disqualified from the evaluation. Hence MCEHLDG and
SMISCOR would be disqualified. Even though EPMD has positive operating income
in 2018 but EPMD had negative operating income for 2017. So EPMD would be
disqualified as well.
APM had the highest operating margin ratio which is
6.42 compare to it peers with a median operating margin ratio of 1.28.
Sustainability
For the sustainability of the business, debt of the
companies is being review. There are two criteria to look at interest coverage ratio ,
which is used to determine how easy the companies able to pay off the interest
of outstanding debt and debt ratio .
The
median debt ratio for 2018 is 0.37.
|
COMPANY
|
2018 INTEREST
COVERAGE RATIO
|
2018 DEBT
RATIO
|
|
7.01
|
0.24
|
|
|
0.41
|
0.55
|
|
|
-3.98
|
0.12
|
|
|
3.84
|
0.48
|
|
|
-2.14
|
0.37
|
APM is the best company for sustainability because
it has high interest coverage ratio and low debt ratio.
Summary
In summary a point is given to each company to evaluated
each company competitiveness, operational and sustainability. Points given are as
follows:
Competitiveness
|
Criteria
|
Point
|
|
Greater
than 30 % Market Shares
|
5
|
|
20.01
% - 30.00 % Market shares
|
4
|
|
10.01
% - 20.00 % Market shares
|
3
|
|
5.01
% - 10.00 % Market shares
|
2
|
|
1.00
% - 5.00 % Market shares
|
1
|
|
Less
than 1%
|
0
|
Operational
|
Criteria
|
Point
|
|
Greater
than 2.05 Operating Margin
|
5
|
|
2.01
– 2.05 Operating Margin
|
4
|
|
1.51
– 2.00 Operating Margin
|
3
|
|
1.01
– 1.50 Operating Margin
|
2
|
|
0.51
- 1.00 Operating Margin
|
1
|
|
0.00
– 0.50 Operating Margin
|
0
|
|
Less
than 0
|
Disqualified
|
Sustainability
|
Criteria
|
Point
|
|
No
Financial Cost
|
2
|
|
Greater
than 5 Interest Coverage Ratio
|
1
|
|
Less
than 5 Interest Coverage Ratio
|
0
|
|
Criteria
|
Point
|
|
Less
than 0.25
|
3
|
|
0.25
– 0.40
|
2
|
|
0.40
– 0.55
|
1
|
|
Greater
than 0.55
|
0
|
|
COMPANY
|
Competitiveness
|
Operational
|
Sustainability
|
Total
|
|
5
|
5
|
4
|
14
|
|
|
5
|
DIS
|
1
|
DIS
|
|
|
1
|
DIS
|
3
|
DIS
|
|
|
3
|
5
|
1
|
9
|
|
|
2
|
DIS
|
2
|
DIS
|
From the evaluation above, APM (14 points) is
qualified for further analysis.
However
investor shall take note that this industry only contribute 32.19 % of
APM 2018 revenue. APM also operate in other sectors which is interior
& plastic segment which is 56.17 % of APM 2018 revenue.
Summary of Stock Reviews
http://ivkls.blogspot.com/2020/04/industry-comparison-automotive-parts.html
