Originated from Singapore, Bonia is a luxurious apparel manufacturing
company distributing exotic products like leather apparels. As the sole luxury
apparel listed company in Malaysia, Bonia faces less local competition.
Instead, competitors are mainly from abroad. As the company’s revenue is mainly
generated from Malaysia and Singapore, it depends highly on the purchasing
power of the locals as well as international tourists. In terms of location,
Bonia does a pretty good job in location like Pavillion KL, luxury retail
outlet and busy international airports like KLIA and Changi. These locations
are able to attract a lot of consumers and in turn directly contribute to the
company’s revenue. As for barriers of entry, manufacturing luxurious apparel
requires a tremendous amount of capital as well as materials from overseas. Being
able to cooperate with Italian designer, Studio Pelletteria Alessandra, it is
an extremely rare opportunity which contributes to the company’s product line
to cope up with latest fashion derived from European countries. Furthermore,
Bosnia has long established its strong branding in Malaysia and Singapore since
two decades ago which enjoy certain customer loyalty and good images from the
public.
As Bonia’s main target market is the wealthy high class
society, this includes large portion of revenue coming from international
tourists. Tourism is a very fragile industry in case of global financial crises,
terrorism or pandemic outbreak. Also, trend changes in a unimaginable state
where outdated design might result in excessive inventories.
According to the cash flow since 2007, it faces a huge fall during
2008 and gradually climb back to the level before after six years which is 0.23
per share. We can see that it takes a long time for the company to climb up
after certain crises. Although both ratios show that the company is managing
their assets and equities efficiently, the fact of the company's vulnerability
is undeniable where in times of good or bad, it needs to continuously invest in
its subsidiary and associates which can be up to 50 million per annum. Overall,
it fails to show the ability generate steady growing income in the future which
doesn’t fulfill the criteria of value investing.
Company: BONIA CORPORATION BHD [S] Stock: BONIA Code: 9288
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