I am investigating NTPM recently because of its share price has been decreasing recently.
Question1: Does NTPM consider a high depreciation company?
Although I think the main problem that erodes NTPM’s net profit is the raw material price surge. Anyhow, I use criteria taught in https://investmentquadrant.com/gross-profit-to-assets-ratio/ to have a check.
- Growing Revenue – pass
- Maintain GPA above 20% – pass
- Cash flow is consistently higher than net profit – Pass except in 2018. (NTPM annual report 2018 – pg 62)
Operating Cash flow in 2018 is greatly reduced because of the extremely high surge in receivables and inventories. Do you any idea why it can increase so much in a year? Any view on NTPM situation now?
Hi Chee Cong,
Personally, we have not been tracking NTPM for a long time already so I do not have much insight of the company. I took a brief look at their financial, their gross margin have reduced which result in decrease in profit as mentioned by you. Another thing you may want to take note is that their debt level seem to increase quite a lot in recent years. You may want to find out why they are doing that.
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