What is corporate sustainability? - Cryptocurrency exchange platform withdrawals without delays

Why is sustainability so important? The logic lies in:

As value investors,

We always want to choose companies with high value.

So,

How do we define a high-value company? That requires us to evaluate it.

Valuation mainly considers the company’s profitability,

That is, the company’s current ability to make money,

And also its future capacity to continue earning.

Therefore,

Growth rate is an important consideration,

But at the same time,

The company’s current profitability is equally important.

Another point is,

Even if growth is good,

Growth must be sustainable.

Otherwise,

The company might perform well only in the short term,

Then suddenly demand disappears,

Leading the company into difficulties.

For example,

LeEco is a typical case,

Its growth was once very good,

But suddenly, it fell off a cliff,

With performance plummeting.

Taking coffee and masks as examples,

We can see many industries showing strong growth in the early stages,

But some of that growth may be fake,

And then it suddenly disappears.

Therefore,

Sustainability is crucial for companies.

Sustainability is the foundation of profitability,

Because earning profits takes time to accumulate,

Like a rolling snowball,

Only by rolling continuously,

Can it grow bigger and bigger.

Thus,

Companies that can sustain profitability,

Their importance is self-evident.

Besides growth,

The most fundamental is the ability to sustain.

So,

When analyzing,

What kind of companies are actually sustainable? I divide it into two dimensions,

One is external,

The other is internal.

External means demand,

This demand must be sustainable,

That is, if people buy your product today,

They will still buy it tomorrow,

This demand persists,

And that is external.

For example, Baijiu,

As a type of liquor, has existed for thousands of years,

People have been drinking it since its invention,

And I believe they will continue to do so in the future.

Although tastes and other aspects may change,

People’s preference for alcohol is natural,

So this kind of sustainability is relatively strong,

At least for the next few decades, it won’t disappear,

Indicating its good sustainability.

Some sustainability may be weaker,

Like masks,

After the pandemic ends, demand for masks may drop significantly,

This is an example of poor sustainability.

Or electronic products,

Taking smartphones as an example,

The phone used this year,

May be replaced with a new model next year.

Previously, desktop computers were used,

Then laptops,

Now people just use smartphones,

Or previously used Walkmans,

But they are no longer used,

Then came the iPod,

And now the iPhone.

Companies that produce such products,

And TV manufacturers as well,

From black-and-white to color TVs,

The change is very rapid.

From an enterprise perspective,

This isn’t necessarily good,

Although it’s good for consumers,

It’s not good for manufacturers,

Because demand changes very quickly.

The same applies to the clothing industry,

These industries find it hard to produce leading stocks.

Because consumer demand often changes,

If companies can’t keep up with market trends in time,

Their products may become obsolete.

When companies finally produce products,

Consumer demand may have already shifted.

Therefore,

This is an industry full of uncertainty,

Companies must fully consider the sustainability of demand when formulating strategies.

You need to pay attention to whether consumer demand is stable or unstable,

Whether changes are fast or slow,

Because this directly affects the company’s sustainability.

If a company cannot sustain development,

It faces the risk of bankruptcy.

Even the best management in the industry is useless,

A good cook cannot make a meal without rice.

If tomorrow’s demand disappears,

It’s like there’s no rice in the pot,

How can there be rice in the bowl? So if this industry demand disappears,

No matter how excellent the management,

Or how strong the moat, it won’t help.

This is one aspect,

Regarding demand sustainability.

Another aspect of sustainability,

Is technological change.

Maybe demand still exists,

But technology updates too quickly.

The TV example I mentioned earlier is a case in point,

TVs may still have viewers,

But types keep changing: LCD TVs,

4K TVs, etc.

Therefore,

Technological change is rapid,

Just like how VCDs evolved into DVDs.

Companies in such industries may become leading stocks,

Like Changhong in the TV industry,

But they can also decline quickly.

So many electronic products,

No matter how advanced the technology,

Growth may be strong,

But sustainability is key.

They must keep updating technology,

Once there’s a misjudgment in technology,

They may go bankrupt.

Bottom-fishing doesn’t work either,

Like in the computer industry,

Companies like Compaq,

Were just a flash in the pan,

This is also the reason.

There are also examples related to computers,

In a storage industry,

Used to use floppy disks,

Then CDs, etc.,

Now this technology updates very fast.

Storage efficiency of electronic products has increased many times,

So-called new technologies,

Will be eliminated in a year or two.

The speed of technological update is too fast,

Companies constantly need to choose,

Option A or Option B,

It’s like gambling,

Eventually, mistakes will happen,

And if they make a mistake, the company is finished.

Because they must choose components like processors,

The electronics industry is not a good field,

Due to rapid updates,

Intense competition,

Many participants,

Once a competitor rises,

You might not even know where they are,

And in two or three years, you could go bankrupt,

The speed of technological change in such industries is too fast.

Industries with rapid consumer change are not good industries,

Why? Because they directly shorten the company’s sustainability.

The importance of a company’s sustainability,

We have discussed earlier,

It is closely related to the company’s valuation.

Even next year’s sales volume is uncertain,

Or could be overtaken by a better company next year.

Continuous technological updates can also make a company unsustainable.

Changes in demand and technology both affect the industry’s growth rate.

Industry changes too fast are generally not a good sign.

When selecting stocks,

Try to avoid these rapidly changing industries.

These industries may produce some high-flying stocks,

But this is only short-term.

One or two years, even two or three years, is not long,

And these industries have a high mortality rate.

Therefore,

When you buy in,

The stock is likely already at its peak,

And this risk is very high.

I recommend everyone stay away from these companies,

Because these industries are beyond your capacity.

Unless you understand demand changes,

Are very familiar with technology,

And are sure that this technology can beat others in the future.

If you meet these two conditions,

Then you can earn substantial income in this industry.

Here I am sharing some analysis,

Regarding the topic of sustainability.

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