Declining Return On EquityROE falling from 17.6% to 13.3% signals weaker capital efficiency and reduced ability to convert equity into earnings. If sustained, lower ROE can constrain shareholder returns and indicate the business needs higher margins or volume growth to justify current capital levels, pressuring long-term investor appeal.
Profitability Compression And EPS DeclineDeclining net margins and a large EPS contraction reflect pressure on bottom-line profitability. Persistent margin compression reduces internal funding for growth or resilience to shocks, and weak EPS trends can limit strategic flexibility and slow reinvestment in processes that underpin long-term competitive advantage.
Dependence On External Factory NetworkNCAB's model relies on a network of external factories; maintaining capacity, quality and cost control is critical. Structural supplier risk—including capacity limits, quality lapses, or geopolitical disruptions—can impair deliveries, reputational trust and margins over multiple quarters if vendor relationships or oversight weaken.