Credit Analysis for Auto Spare Parts Company
[pic]
Credit Analysis
Instructor: Dr. Hisham Tabsh
Credit Analysis by:
Mahmoud Abboud
Najib Awar
Fall 2008
Introduction:
SPIT is a Business family that was established 35 years ago by the father and now distributed among his 4 children. The company is Involved in the trade of auto parts: European, Korean, Japanese operating from a Headquarter of area 800m2 (offices & warehouses) in addition to another warehouse of 400m2.
As per our interviews with “Zaim Company” & “Hussein Berro Company”, these companies helped us in our assessment of the SPIT managerial performance and for industry and market risk.
Industry risk:
We begin first by assessing the industry risk as it has its pros and cons as every other industry.
Pros:
• Auto spare parts are not of a perishable nature and can be stored under regular conditions • Different range of prices from the cheap non-original Chinese to the original parts • Different sources and countries to get the products • It’s a necessity product if you own a car • High profit margin in the retail sector and especially in the used spare parts • The presence of new models and new technology • Customer loyalty is heavily present in this kind of business
Cons:
• Shipping cost and different currencies • Large number of dealers • Requires huge warehouses • Marketing and advertisement are not involved • Word of mouth in Lebanon could highly affect a store’s reputation • Probability of outdated inventory because of the new coming car models
Market risk:
Industry fragmentation:
The market is not dominated by single players or monopolist, but it’s highly shared by many suppliers for the time being. This division is due to the diversity of sources and countries that are involved in such kind of industry
Cyclicality:
This kind of industry is a bit cyclical where it rises in the summer especially with the incoming of the tourists where car rental
Credit Analysis
Instructor: Dr. Hisham Tabsh
Credit Analysis by:
Mahmoud Abboud
Najib Awar
Fall 2008
Introduction:
SPIT is a Business family that was established 35 years ago by the father and now distributed among his 4 children. The company is Involved in the trade of auto parts: European, Korean, Japanese operating from a Headquarter of area 800m2 (offices & warehouses) in addition to another warehouse of 400m2.
As per our interviews with “Zaim Company” & “Hussein Berro Company”, these companies helped us in our assessment of the SPIT managerial performance and for industry and market risk.
Industry risk:
We begin first by assessing the industry risk as it has its pros and cons as every other industry.
Pros:
• Auto spare parts are not of a perishable nature and can be stored under regular conditions • Different range of prices from the cheap non-original Chinese to the original parts • Different sources and countries to get the products • It’s a necessity product if you own a car • High profit margin in the retail sector and especially in the used spare parts • The presence of new models and new technology • Customer loyalty is heavily present in this kind of business
Cons:
• Shipping cost and different currencies • Large number of dealers • Requires huge warehouses • Marketing and advertisement are not involved • Word of mouth in Lebanon could highly affect a store’s reputation • Probability of outdated inventory because of the new coming car models
Market risk:
Industry fragmentation:
The market is not dominated by single players or monopolist, but it’s highly shared by many suppliers for the time being. This division is due to the diversity of sources and countries that are involved in such kind of industry
Cyclicality:
This kind of industry is a bit cyclical where it rises in the summer especially with the incoming of the tourists where car rental