I did take a look a Toya recently and found it unconvincing. The business seems optically cheap but growth is very WC intensive. These WC tensions are now being financed with short term debt which has been piling up in the last few quarters which is a bit worrying given the high interest cost in Poland. I would say this is the reason why they recently suspended dividend payment. In summary, I dont like the FCF generation profile and BS is deteriorating rapidly (probably owning to a bad management on the finance front).
I think this is a bit hyperbolic. Debt/EBIT is still only 1x.
I think deteriorating inventory turnover has to do with Covid related supply chain problems and (ill timed) expansion into China in 2021. I expect that to normalize, so then you will probably see a WC tailwind in coming year or two.
And ROIC is still at 20%. They are a branded distributor, so most of their growth investment comes from working capital expansion.
They mention that the large central warehouse went in operation in July. I wonder what effect this has on margins and inventory.
"The subsidiary Yato Tools (Jiaxing) with headquarters in Baibu Town, a town in the Zhejiang Province of the People's Republic of China in the economic zone is in the process of building the Group's central warehouse in China. This warehouse will enable the Group to optimize the supply chain by building a buffer between independent suppliers and the Group's customers, which will increase the efficiency of supply chain management. This is the Group's response to a clearly noticeable global trend related to the ever faster developing e-commerce, at the expense of other sales channels, which increases the pressure on the speed and flexibility of deliveries.
This will be an element of increasing the competitive advantage on the market and building shareholder value.
The warehouse was operationally launched in July 2022. Currently, the warehouse is being equipped with modern warehouse automation and the necessary infrastructure, which will allow it to obtain full operational capacity within a few months."
I did take a look a Toya recently and found it unconvincing. The business seems optically cheap but growth is very WC intensive. These WC tensions are now being financed with short term debt which has been piling up in the last few quarters which is a bit worrying given the high interest cost in Poland. I would say this is the reason why they recently suspended dividend payment. In summary, I dont like the FCF generation profile and BS is deteriorating rapidly (probably owning to a bad management on the finance front).
I think this is a bit hyperbolic. Debt/EBIT is still only 1x.
I think deteriorating inventory turnover has to do with Covid related supply chain problems and (ill timed) expansion into China in 2021. I expect that to normalize, so then you will probably see a WC tailwind in coming year or two.
And ROIC is still at 20%. They are a branded distributor, so most of their growth investment comes from working capital expansion.
3Q numbers out and sales are hanging in there, even if not keeping up with inflation. Swung to net debt, but relatively modest.
They mention that the large central warehouse went in operation in July. I wonder what effect this has on margins and inventory.
"The subsidiary Yato Tools (Jiaxing) with headquarters in Baibu Town, a town in the Zhejiang Province of the People's Republic of China in the economic zone is in the process of building the Group's central warehouse in China. This warehouse will enable the Group to optimize the supply chain by building a buffer between independent suppliers and the Group's customers, which will increase the efficiency of supply chain management. This is the Group's response to a clearly noticeable global trend related to the ever faster developing e-commerce, at the expense of other sales channels, which increases the pressure on the speed and flexibility of deliveries.
This will be an element of increasing the competitive advantage on the market and building shareholder value.
The warehouse was operationally launched in July 2022. Currently, the warehouse is being equipped with modern warehouse automation and the necessary infrastructure, which will allow it to obtain full operational capacity within a few months."
I have been assuming that it is the reason for the inventory build, given that unit sales aren't down.
If they release inventory, grow earnings into 2023 and pay a dividend, this stock will soar.
Can't get this shareholder notification to translate the pdf. Are these insider purchases or sales by Szmidt?
https://toya.pl/powiadomienie-o-transakcji-na-akcjach-toya-s-a-wykonywane-przez-osobe-pelniaca-obowiazki-zarzadcze-13
I agree with this and even think the inventory build up may actually be a reflection of anticipated higher selling prices in Europe.