The margin gap betwee Lenskart and EssilorLuxottica tells you everything about why this valuation is stretched. Expecting a regional player with 1.95% margins to somehow achieve margins twice that of the global leader while capturing a third of a market that might not even grow as projected is pretty optimistic. The comparison to EssilorLuxottica's 11.8% on $29.9B revenue really puts things in perspective.
Thanks for putting this together - it seems that there is a need to relieve some of the demand pressure from the market. Should institutional/ retail investors be given a freer hand to allocate to global opportunities than they are allowed currently?
. If the Chinese government can keep the job market fairly stable, navigate the perils of growth, and avoid wars, ….never.
One good thing about the Chinese government is that it is always focused on the economy and plans years in advance. China can look 20, 30 years into the future and keep it’s growth aimed in a steady and unrelenting manner. China is a model for other underdeveloped countries to follow. Her diverse growth and economic stature is nothing short of amazing over the last 30 or so years.
This is one thing that western countries cannot do efficiently and effectively. Changes in parties, changes in government, compromises, budgetary constraints, and short range planning cause inefficient and sometimes paralyzing decisions. An uninformed and uneducated citizenry cannot optimize Democracy in today’s fast moving world. A biased, misleading, and false media and leadership makes a mockery of what Democracy was meant to be. In this environment, swings tend to be more pronounced and dramatic so false bubbles form and pop. Greed of a few overwhelm the desires and needs of the masses. Oligharchs are dominating many countries today, including the United States.
One thing China needs to watch out is her demographics. Like Japan, China’s senior population is growing and because of it’s ‘one child’ policy, a contraction in population with a aging of it’s working population will occur. Japan suffers from this malaise today and no end is in sight. Some predict her population will decline by a third by 2060. (Wikipedia) The decline in population in Japan is not because it had a ‘one child’ policy but because couples decided against having children or young people staying single, the effect is the same, population decline.
Japan’s technology lead is waning, her population is declining, and wealth creation is stagnant. Abe is trying to revive the military as one way to keep the economy alive. (the Korean War catalyzed Japan’s economic miracle after world war 2) North Korea’s threat has come at the right time for Japan to use this as the excuse to grow the military and to sell weapons overseas as a new growth market. Time will tell if this works.
Japan probably is in more peril than China because Japan tends not to allow new immigrants or foreigners to become Japanese citizens or residents. China too can suffer this effect if it does not plan ahead. With that in mind, automation is the future of manufacturing and many logistic processes. Japan and China are strong in this area and it will help offset the young people labor shortage in the near future. The future problem will be the support of seniors and the healthcare system as they live longer.
China’s Communist Party currently promotes innovation, disruptive technologies, and new ideas which, if the seeds sprout, will ensure future products and markets. Currently, things like infrastructure, fast trains, electric transportation, food production, super computers, QR code applications, high density batteries and capacitors, solar, and wind help to ensure current and future markets. Artificial Intelligence, nuclear (Thorium and Fusion, high temperature reactors), biologics, synthetic biology, genetics, nanotech, quantum applications, aerospace, marine mining, space applications, and more will continue to propel China in the future. Technology has been, is, and will be the wave that carries economic growth and prosperity forward for China.
As long as China’s government continues to support these efforts and shares these financial benefits with her citizens and expands to share these technologies with her neighbors and friends, the world will become more China centric and the future will look bright. China’s vision of a ‘peaceful rise’ should be the vision for all countries.
China’s support of Africa, and now Eurasia (Belt Road Initiative), will grow the seeds of future growth in food, energy, and resources. Integrated economies will help lessen the threat of wars and discord. Shared logistics and development is a win-win for all countries involved.
America used to be that beacon and technology was her strength. Today, her government, politics, and wealth distribution is destroying the advantages she had to become the hegemon of the world. Her political leadership is void of moral, technical, and political wisdom. Today, America is in decline and her leadership is incompetent and lacks the wisdom to support future technologies and their ecosystems.
China’s only fear should be that she too will become ambivalent and become like America or like her history past during the century of humiliation. Let’s hope her leaders remembered that lesson well and China will continue to be a great and strong nation,
2. I will be reporting your substack to the regulators - Substack like this lead me to believe that I understand valuation and P/E whereas the trick is - YOU make it so simple!
The margin gap betwee Lenskart and EssilorLuxottica tells you everything about why this valuation is stretched. Expecting a regional player with 1.95% margins to somehow achieve margins twice that of the global leader while capturing a third of a market that might not even grow as projected is pretty optimistic. The comparison to EssilorLuxottica's 11.8% on $29.9B revenue really puts things in perspective.
Thanks for putting this together - it seems that there is a need to relieve some of the demand pressure from the market. Should institutional/ retail investors be given a freer hand to allocate to global opportunities than they are allowed currently?
. If the Chinese government can keep the job market fairly stable, navigate the perils of growth, and avoid wars, ….never.
One good thing about the Chinese government is that it is always focused on the economy and plans years in advance. China can look 20, 30 years into the future and keep it’s growth aimed in a steady and unrelenting manner. China is a model for other underdeveloped countries to follow. Her diverse growth and economic stature is nothing short of amazing over the last 30 or so years.
This is one thing that western countries cannot do efficiently and effectively. Changes in parties, changes in government, compromises, budgetary constraints, and short range planning cause inefficient and sometimes paralyzing decisions. An uninformed and uneducated citizenry cannot optimize Democracy in today’s fast moving world. A biased, misleading, and false media and leadership makes a mockery of what Democracy was meant to be. In this environment, swings tend to be more pronounced and dramatic so false bubbles form and pop. Greed of a few overwhelm the desires and needs of the masses. Oligharchs are dominating many countries today, including the United States.
One thing China needs to watch out is her demographics. Like Japan, China’s senior population is growing and because of it’s ‘one child’ policy, a contraction in population with a aging of it’s working population will occur. Japan suffers from this malaise today and no end is in sight. Some predict her population will decline by a third by 2060. (Wikipedia) The decline in population in Japan is not because it had a ‘one child’ policy but because couples decided against having children or young people staying single, the effect is the same, population decline.
Japan’s technology lead is waning, her population is declining, and wealth creation is stagnant. Abe is trying to revive the military as one way to keep the economy alive. (the Korean War catalyzed Japan’s economic miracle after world war 2) North Korea’s threat has come at the right time for Japan to use this as the excuse to grow the military and to sell weapons overseas as a new growth market. Time will tell if this works.
Japan probably is in more peril than China because Japan tends not to allow new immigrants or foreigners to become Japanese citizens or residents. China too can suffer this effect if it does not plan ahead. With that in mind, automation is the future of manufacturing and many logistic processes. Japan and China are strong in this area and it will help offset the young people labor shortage in the near future. The future problem will be the support of seniors and the healthcare system as they live longer.
China’s Communist Party currently promotes innovation, disruptive technologies, and new ideas which, if the seeds sprout, will ensure future products and markets. Currently, things like infrastructure, fast trains, electric transportation, food production, super computers, QR code applications, high density batteries and capacitors, solar, and wind help to ensure current and future markets. Artificial Intelligence, nuclear (Thorium and Fusion, high temperature reactors), biologics, synthetic biology, genetics, nanotech, quantum applications, aerospace, marine mining, space applications, and more will continue to propel China in the future. Technology has been, is, and will be the wave that carries economic growth and prosperity forward for China.
As long as China’s government continues to support these efforts and shares these financial benefits with her citizens and expands to share these technologies with her neighbors and friends, the world will become more China centric and the future will look bright. China’s vision of a ‘peaceful rise’ should be the vision for all countries.
China’s support of Africa, and now Eurasia (Belt Road Initiative), will grow the seeds of future growth in food, energy, and resources. Integrated economies will help lessen the threat of wars and discord. Shared logistics and development is a win-win for all countries involved.
America used to be that beacon and technology was her strength. Today, her government, politics, and wealth distribution is destroying the advantages she had to become the hegemon of the world. Her political leadership is void of moral, technical, and political wisdom. Today, America is in decline and her leadership is incompetent and lacks the wisdom to support future technologies and their ecosystems.
China’s only fear should be that she too will become ambivalent and become like America or like her history past during the century of humiliation. Let’s hope her leaders remembered that lesson well and China will continue to be a great and strong nation,
1. numbers are stupid
2. I will be reporting your substack to the regulators - Substack like this lead me to believe that I understand valuation and P/E whereas the trick is - YOU make it so simple!
Thank GOD I am a subscriber.
These numbers are positively insane!