After reading the post EG - Is it REALLY Turning Around Successfully??.
I got a bit curious, so did a little bit digging to see how true the aforemention worsening invetories and receivable in EG account. And to my shocking, it is actually getting worse... much worse.
The chart above show the turnover for receiveable, inventory and payable in a year. The higher the number the better, as it show the company can fully turnover its inventories and received money.
And the number suggest it is getting worse since 2014.
The chart above show metric which expresses the length of time, in days, that it takes for a company to convert resource inputs into cash flows (Cash Conversion cycle) and Invetory to Cash Days is use to measure the length of time (in days) that a company uses to sell inventory, collect receivables into cash. As you can see the the numbers of days it take for EG to sell and receive the cash has actually more than double.
And this actually reflected in the company Free cashflow as well as the Free cashflow yield as shown below
*Please note, this is not a buy or sell call.
Created by lkoky | Feb 17, 2017
year 2014 is where the reconstruction started. The increase in inventory can be expansion as well. The risk is always there for turnaround company.
2017-01-04 14:58
Plane
Changing to worse business model you mean?
New business can mean stock build up but cannot explain slow collection from debtors.
2017-01-04 17:50
I think that's why EG management is currently looking for ways to raise money. I worry they may call for right issue. Even if they do private placement, that will also cause the dilution of shares..
I believe EG's revenue will increase when the capacity of the new plant is being filled up, but the potential share dilution may drag down the EPS, and everything back to square one.
2017-01-04 19:23
EG - Borrowing Up, Receivables Up but Profits Not Up?
https://klse.i3investor.com/blogs/shareshare/118293.jsp
2017-09-05 16:44
paperplane2016
I think don't use old data to judge its future. as it just started on new business model. give it 1 year to see??
2017-01-04 08:58