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11-11-2014, 03:23 PM
I just went there last week. The food is quite good actually and the price point is not too bad as well. Rather than starbucks, I think they are competing with Old Town/ Toastbox. My laksa was about $5 - $6.
I personally drink their standard 3 in 1 coffee @ home as the calorie count was one of the lowest and they are usually priced 10% - 20% cheaper than Nescafe/ Old Town. Old Town tastes better but is also sweeter and much higher in calories.
From what I can see, they cite the following for the squeeze on margins:
(a) higher raw material costs (such as palm kernal oil)
(b) stronger SGD against MYR/ THB
© higher selling and distribution costs due to new product launches in Thailand
(d) higher depreciation/ tax expense
They need a strategy to normalise volatility in raw material costs/ FX. They have managed their margins relatively well in the past few years (buoyed by once of gains) but I wonder if they can keep this up.
I am concerned on whether they have lost market share in their core markets (Sg, Myanmar, Thailand, Philippines, etc). They have blamed the relocation of their factory to Malaysia as a once-off factor in drop in sales in Singapore and other export countries but it seems that they have really dropped the market share in China.
What I do like is that they seem to have a strategy to grow/ expand further both segmentally and geographically. They are proactively managing their operating margins as well by investing in factories and trying to move down the value chain in certain products.
To me, it's interesting to see where they will go from here. I do want them to succeed because of all the research I have done and I like the Management a lot.
vested a tiny little bit
I personally drink their standard 3 in 1 coffee @ home as the calorie count was one of the lowest and they are usually priced 10% - 20% cheaper than Nescafe/ Old Town. Old Town tastes better but is also sweeter and much higher in calories.
From what I can see, they cite the following for the squeeze on margins:
(a) higher raw material costs (such as palm kernal oil)
(b) stronger SGD against MYR/ THB
© higher selling and distribution costs due to new product launches in Thailand
(d) higher depreciation/ tax expense
They need a strategy to normalise volatility in raw material costs/ FX. They have managed their margins relatively well in the past few years (buoyed by once of gains) but I wonder if they can keep this up.
I am concerned on whether they have lost market share in their core markets (Sg, Myanmar, Thailand, Philippines, etc). They have blamed the relocation of their factory to Malaysia as a once-off factor in drop in sales in Singapore and other export countries but it seems that they have really dropped the market share in China.
What I do like is that they seem to have a strategy to grow/ expand further both segmentally and geographically. They are proactively managing their operating margins as well by investing in factories and trying to move down the value chain in certain products.
To me, it's interesting to see where they will go from here. I do want them to succeed because of all the research I have done and I like the Management a lot.
vested a tiny little bit