1. What Happened? Chohung’s Performance Analysis
Chohung achieved revenue growth through product diversification, but operating profit and net income declined significantly due to rising cost of goods sold, foreign exchange losses, and losses from derivative transactions. Consolidated revenue increased by 18.3%, while operating profit decreased by 40.2% and net income by 18.4%. Similar trends were observed on a non-consolidated basis.
2. Why Did This Happen? Root Cause Analysis
The main causes of the decline in profitability are rising cost of goods sold, foreign exchange losses, and derivative transaction losses. Furthermore, a roughly 42% increase in inventory suggests potential sales sluggishness or overproduction, highlighting inefficiencies in inventory management. The increasing debt ratio also raises concerns about financial soundness.
3. So, What Should We Do? Investment Strategy
Chohung needs to improve profitability and secure financial soundness by cutting costs, increasing production efficiency, developing high-value-added products, managing foreign exchange risks, and improving its financial structure. Investors should closely monitor these factors when making investment decisions. Short-term profitability improvement and long-term product competitiveness in response to changing consumer trends are crucial.
4. Investor Action Plan
- Short-term investors: Closely monitor trends in profitability and financial structure improvement, and wait until relevant indicators improve.
- Long-term investors: Evaluate the company’s long-term growth potential and management’s response strategies to consider investments from a long-term perspective.