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Issue of 250 mil impairment:-
1. If the impairment was created this year, it is 25% of yearly sales revenue. Also means the company efficiency only 75%.
2. If the impairment was accumulated from previous year, why it was not written off from previous accounting year? This is serious in accounting standard.
3. Why management keep producing parts which customer already phased out?
4. Worst nightmare is company unable to meet customer specs product and result out of specs quality. Also means, company no longer able to compete with in LED market.
Why carry such high level of inventories when there are intentions to switch product line ? RM250m is not small sum for normal obsolete or slow moving inventories write-offs.
No lah. Probably all European car makers are in trouble now and cancel all the custom-made products. The question is who absorbs the write off (behind the scene) and losses?
New projects? New projects are mainly only possible with China lo. But the Chinese car market is also in the price war now. So how can the new projects fly?
Of course, full impairment (RM250m) already done at this QR announcement based on accounting standards. However, impairment tests need to be performed at every quarter & financial year end (subject to the concurrence of the external auditors) and depending on future developments (NRV, slow moving items, customer orders etc.), further impairment might also be necessary.
Over production of stocks despite drop in global demand and orders for European cars. The trend going forward will be China cars but these patents likely to be with China companies. Just look at the design of BYD cars nowadays (ex Porsche designers).
Precisely, Michael based on lead time and stock holding costs. Previous inventory level of > 600m (prior to impairment) is simply amazing. BTW 260m was their quarterly instead of monthly sales figures.
Why they wrote off? Some of the inventory especially non moving items carrying old price which edi not valid due to market price edi drop. Good or bad?Got pro n cons. If they keep hiding u wont be able to see their profit margin bad to higher number, may be just around 10m ++ profit, after adjust then they can clear this stock at market price but u will see good margin n profit next quarter. The bad thing u see stock price correction lol.
