Asked on 14 May 2019
Discuss anything about Eurosports Global Ltd SGX: 5G1.SI share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell this stock on the SGX Singapore markets. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment in Eurosports Global Ltd SGX: 5G1.SI
TL;DR The irony is that a firm who served wealthier clients doesn't look financially strong. Their cars look good but the financials dont. It may not be that worthwhile trying to find out more about their business model.
Source: Car and Driver
The company was established in 1998, and specialise in the business of distribution of ultra-luxury and luxury automobiles and provision of after-sales services. The Automobile Sales business retails new ultra-luxury and luxury automobile brands and pre-owned automobile brands comprising mainly Lamborghini, Pagani, Alfa Romeo and Touring Superlegerra.
The company's income statement looks pretty bad. Where the company's EBITDA is already negative. This is a clear sign that the company is losing cash flow. The income statement had improved over time, although it is still in the red.
The firm's short-term liquidity doesn't look good either, with a current ratio that is close to 1, and a quick and cash ratio which are pretty low. On the contrary, the firm does not hold much debt, which is evidenced by the Debt/Assets and Debt/Current Assets ratio. However, despite this, the firm does have negative earnings which means paying off the debts would become a challenge. Furthermore, the Altman Z score does point towards a dangerous level indicating some good chance of bankruptcy.
The firm seems like they have a moderate amount of free cash flow for the level of sales that the firm is producing. However, the firm's cash flows have also decreased over time and worsened. This suggests that the firm's earning power is slowly decreasing. With such poor cashflows, it is probably right that the firm is not paying out dividends so that the business can sustain itself.
Because of the weak earnings, the firm looks quite inefficient. There are some slight improvements from 2017 onwards but the figures are all still in the red.
Some metrics might point towards the firm being undervalued, but I would suppose that this is due to the weak earnings potential of the firm. Some valuation metrics like P/E, PEG and EV/EBITDA can't be used since earnings are negative. The sales metrics show some positive signs, but this is distorted by the high costs which lead to the firm's weak earnings.