Net operating margin 0062 0066 0074 0088 0062 x net

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Net Operating Margin 0.062 0.066 0.074 0.088 0.062 x Net Operating Asset Turnover 3.097 2.563 2.476 2.762 = Return on Net Operating Assets 0.203 0.190 0.219 0.171 Net Borrowing Cost (NBC) 0.022 0.013 (0.040) 0.021 Spread (RNOA - NBC) 0.181 0.177 0.259 0.150 Financial Leverage (LEV) 0.385 0.382 0.413 0.390 ROE = RNOA + LEV*Spread 0.273 0.258 0.326 0.230 Turnover Turnover Analysis Analysis Net Operating Asset Turnover 3.097 2.563 2.476 2.762 Net Working Capital Turnover 3.815 3.079 2.832 3.129 Avge Days to Collect Receivables 29.720 31.341 30.259 24.393 Avge Inventory Holding Period 340.688 344.145 343.071 308.061 Avge Days to Pay Payables 218.156 147.676 128.731 107.244 PP&E Turnover 14.355 15.935 20.709 25.596 CHOW: CHOW: Advanced Advanced Dupont Dupont Dupont Model Model 2009 2009 2010 2011 2011 2012 2012 Net Operating Margin 0.064 0.067 0.067 0.056 x Net Operating Asset Turnover 1.693 2.357 2.676 2.470 = Return on Net Operating Assets 0.108 0.158 0.180 0.138 Net Borrowing Cost (NBC) 0.023 0.104 0.091 0.043 Spread (RNOA - NBC) 0.085 0.053 0.088 0.095 Financial Leverage (LEV) 0.131 0.034 0.066 0.107 ROE = RNOA + LEV*Spread 0.119 0.160 0.185 0.148 Turnover Turnover Analysis Analysis Avge Days to Collect Receivables 38.152 11.377 10.660 13.059 Avge Inventory Holding Period 123.387 141.907 139.672 157.738 Avge Days to Pay Payables 21.353 5.152 2.894 2.985 PP&E Turnover 3.807 26.890 34.968 30.381 Gross Margin 0.199 0.197 0.190 0.188 Compare both companies’ drivers of RNOA, we found that TSL has higher Net Operating Margin and Net Operating Asset Turnover than Chow sang sang, which can be explained by the fast grows of overseas market (Maylasia) and the 14.4% growth rate of sales
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turnover in Mainland China in the year 2012. Furthermore, we noticed that TSL has a high Net Borrowing Cost . At 29 February 2012, the Group’s interest bearing liabilities increased to HK$440 million from HK$215.6 million ,which may contribute to the completion of the issue of the convertible bonds to CDH King Limited on 20 April 2012. ebruar012, the Group’s interest Since the NBC is still lower than RNOA. As a result, the spread between them is high. The TSL take use of the high financial leverage and opened two new stores in Hong Kong in the last year.
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