There is no end to numbers and ratio when I dig a company ARs. Maybe I share some of my thoughts when reading annual reports qualitatively.
1) management assessment of industry:
You can also read about the management outlook. You can read if it's pessimism or optimism is valid. The safe approach is always to be conservative and surprise on the upside. But I have read reports where managements stick their head out and say their see growth pockets or headwinds. It is ok to be wrong ocassionally, we Are no oracles, but if they are right most of the time, it would be good. It is important that management is Ernest and sincere in their assessments, and not always give standard balance assessment. Remember a broken clock is right twice in a day.
Although it might be difficult to understand when a CEO speak about specifics of the Industry or product, it is very useful, as we can google it, wiki it or read it over a few times to understand it. We cannot understand it like an industry Insider, but we should still learn. Be wary of motherhood statements. Meaning it is laden with adjectives but not specifics. E.g. We continue to pursue R and D to provide innovation to value add our propositions to customers. Then ... ... (Examples Will be very welcoming please!)
2) Identification of growth areas:
MTQ identify growth areas in 2002, and never look back from their niche area in the O & G sector. The same goes with sembcorp industries, and ST. engineering. Growth areas can be new products or new markets. Such as a new country which they break into.
If a growth area is identified, is there consistent milking or efforts to make it works. And if it works, is that constant attempts to scale it up. No point keep hitting on different products, services or markets.
While it might sound contrary to what is said above, if a product/ service/ or market is proving to be of less snergy value with no results to show after years, e.g. Unable to scale after many years, restructure it or sell it.
4) SiZe and integration of services
Many of the Temeask owned companies, very often merge/ combine/ before branching out in a big way overseas.
Warren has talk about this, I do not wish to be a broken recorder here.
6) Focus on the people
May be a coincident here, but I notice some names tend to change as company expand into new areas or expand. CES got senior executive from Wingtai. CES has been on a roll. MTQ has a new director when they expand overseas. Shares option only for directors and executives only or also for employees. It show if they are paying lip-service when they say they value human capital. Is the data on productivity per head.
Do note that it does not mean these readings and analysis will pitch u a winner in the market, but maybe make more sense and know what to look for when reading.
If you have other points when u read annual reports or do researches. Let me know and drop me a comment, will ya
Thanks in advance,