It was a cold Sunday afternoon in Shanghai when my partners and I met Mr Huang, CEO of a large shoe factory in Wenzhou. The aim of this meeting was to explore the possibility of investing in Mr Huang’s company. His sales and production figures were impressive but the earnings were way too low – 3% ROS (return on sales).
一个寒冷的星期天下午，我和我的伙伴在上海与黄先生——温州一家大型制鞋厂的老板会面。这次会谈是为了探讨投资黄先生公司的可能性。这家厂的销售量和生产量都很可观，但盈利却很低，毛利率(销售利润率)仅有3%。
We were looking for companies with at least 15% ROS, which means that for every dollar the company sells, 15 cents is the net profit after deducting all costs of goods, overheads, expenses, taxes and so on. The world’s best performing company is doing 29% ROS. It was not too much for investors to look at 15% when 29% is the best in its class.
我们期望公司的毛利率至少是15%，这就意味着公司每销售1美元的产品，在扣除成本、企业一般管理费用、间接费用、直接费用和税金后就有15美分的净利润。世界上业绩优秀的公司毛利率高达29%。当有29%的最佳毛利率作参照时，对投资者而言，15%的毛利率是不算高的。
Mr Huang went on to sing praises about his production capabilities and capacities. He stressed that he had the people and resources to do another 2 million pair of shoes, as he knew we could swing in 1 million pairs if we co-own the company. The company was very asset heavy. He had $4 of assets for every 50 cents of profits. It would be wonderful if Mr Huang could generate $4 of profits for the $4 assets employed.
黄先生不断地吹嘘自己公司的生产能力。他知道如果我们合作的话，可以生产100万双鞋，但他还强调他有人力和物力再生产200万双鞋。他公司的资产很大，每4美元的资产创造50美分的利润。如果黄先生每投入4美元的资产，能产生4美元的利润时，那该有多好呀！
Most managers of business and public facilities care very little about the returns on the assets employed. From an investment perspective, it is about input and output. I am an advisor to a public service sector in Singapore that provides community centers to people in the neighbor. The principal objective of this public service is to allow people to interact so as to build up a cohesive society. When you look at the number of people using, visiting or benefiting from these community centers that cost millions of dollars to build, you wonder if it would be better to build shopping centers instead. So to increase the patronage, the community centers start to invite top brand retailers like McDonalds, Starbucks, top training companies to become their “anchor tenants” to bring in the peopl......More↓↓↓
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