3 key indicators to check the health of technology or semiconductors companies.
1. Inventory level:-
Inventory ÷ revenue
High inventory level may cause inventory write down, as tech demand changes rapidly
2. Investment expenditure:-
Capex ÷ revenue
Compare it with the previous quarters, if it grows higher then be careful on the profits for upcoming quarters
3. Net profit margin:-
Upstream players eg. Vitrox is doing an automated testing machine and semiconductors biz is maintaining a 20% to 30% profit margin all the time. However, downstream players eg. SKP Resources is doing assembly biz, which only maintaining a 5% to 10% profit margin.
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