SG mart as well as APL has struggled this qtr with lowering steel prices. Biggest concern that I see here is maintaining margins and the additional discounts they like to give.
On the call the management explained, 0.8% ebitda, incase of no inventory loss would’ve been 1.7%. In falling pricing environment they still resorted to discounted pricing.
SG mart is still new its good the business model is being tested early during volatile pricing environment and they can work the problems out.
I don’t doubt volume capability but I believe they should fiercely defend their target margin.
Disclosure: invested with keen watch on its discounting + margin trend
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