Volatile Operating Cash FlowIrregular operating cash conversion limits the company’s ability to self‑fund capex, repay debt or return capital to shareholders. Over months this raises refinancing and liquidity risk, forces reliance on external funding, and may constrain investment in capacity or working capital during demand spurts.
Low Net Profit MarginsDespite better gross margins, elevated operating expenses compress net margins, leaving limited retained earnings for reinvestment or cushioning against input cost shocks. Persistently thin net margins reduce resilience to cyclical downturns and hinder capital accumulation for strategic initiatives.
OEM Order And Input Cost SensitivityHeavy dependence on OEM order cycles and commodity raw‑material pricing creates structural revenue and margin cyclicality. Smaller scale and customer concentration can weaken negotiating leverage, making earnings more vulnerable to order slowdowns or input cost spikes over the medium term.