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I understand the moat. But why isn't it reflected in their return ratios (e.g. ROIC 6.4%, RoE 6.2%) and margins (e.g. Net income margin 8.9%)?

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Massive amounnts of goodwill lowers ROIC. They buy business to grow their empire. They don't buy business because they're undervalued. They tend to overpay.

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This is a fair concern. A lot of this can be explained by its unique business model and the investments made. Significant M&A in recent years and massive Capex investments coming in after the merger have so far impacted these metrics. In this business, strategic investments tend to take some time to pay off.

As for the margins, while its retail operations and the margins on sales are actually quite strong due to its dominance and high-end brand portfolio, other operations like manufacturing, in particular lens manufacturing, is a very low margin business, weighing on the overall business. Also, the licensing of luxury brand rights pressures margins as well, but is important in maintaining industry dominance.

Overall, this explains the lower margins.

Finally, we also shouldn't forget that there are still quite some integration challenges and synergies from the merger that need to be worked out, pressuring financial metrics. Similar to the margin profile, quite a bit of improvement is expected in the year ahead across the company's financial profile.

I hope this answers your question. Otherwise, let me know!

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