Operating Margin - Chervon Holdings Ltd (HKEX:2285)

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Price: 21.18 HKD 3.52%

Market Cap: 10.8B HKD

8.1%

Current

Average

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

8.1%

Operating Profit

150.7m

Revenue

1.9B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
CN	C	Chervon Holdings Ltd HKEX:2285	10.8B HKD	8%
JP		Fujitsu General Ltd TSE:6755	4 282 616.6T JPY	3%
CN		Midea Group Co Ltd SZSE:000333	609.1B CNY	10%
CN		Haier Smart Home Co Ltd SSE:600690	258.1B CNY	8%
CN		Gree Electric Appliances Inc of Zhuhai SZSE:000651	230.4B CNY	18%
US	S	Sharkninja Inc NYSE:SN	16.3B USD	13%
IN		LG Electronics India Ltd NSE:LGEINDIA	1.1T INR	9%
CN	E	Ecovacs Robotics Co Ltd SSE:603486	46B CNY	8%
IT		De' Longhi SpA MIL:DLG	5.5B EUR	12%
CN	H	Hangzhou Greatstar Industrial Co Ltd SZSE:002444	43.6B CNY	15%
CN		Beijing Roborock Technology Co Ltd SSE:688169	40.7B CNY	7%

Chervon Holdings Ltd
Glance View

Market Cap

10.8B HKD

Industry

Consumer products

In the bustling world of power tools and outdoor equipment, Chervon Holdings Ltd. stands as a formidable player, orchestrating its operations with precision akin to a well-tuned engine. Founded with the vision to revolutionize the tool industry, this Chinese-based company has grown into a global powerhouse. Chervon is renowned for its innovative approach, developing advanced technologies that enhance user experience across its diverse product range. From power drills that can transform a simple task into a seamless operation to lawn mowers that whisper through the grass while delivering a pristine cut, Chervon’s offerings underscore an unwavering commitment to quality and efficiency. The company’s portfolio encompasses several well-regarded brands, including EGO and Devon, each catering to different segments of the market, from DIY enthusiasts to professional contractors. Beyond the craftsmanship of its tools, Chervon has sharpened its business strategy on the whetstone of research and development. A large portion of its revenue is driven by its ability to swiftly adapt and forecast market trends, integrating cutting-edge technology into its product lines. This forward-thinking approach ensures a steady stream of both retail and professional customers, thereby expanding its global footprint. By investing in product innovation and maintaining strong customer relationships through reliable service and distribution networks, Chervon secures its position not just as a manufacturer but as a leading innovator in the power tool industry. The company continues to grow its financial muscle by ensuring that its products not only meet user needs but also anticipate the next leap in technological advancements in the ever-evolving landscape of power tools.

View Chervon Holdings Ltd Analysis

Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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Chervon Holdings Ltd
HKEX:2285