147 ANNUAL REPORT 2025 MST GOLF GROUP BERHAD Inventory and Product Obsolescence Risk The golf equipment industry is characterised by continuous product innovation and periodic model refresh cycles. As a result, the Group faces inventory management risks, including slower-moving stock or product obsolescence arising from evolving consumer preferences, market trends and product life cycles. Ineffective inventory management could impact inventory turnover and profitability. The Group mitigates this risk through structured procurement planning, periodic inventory reviews and ongoing monitoring of sales trends across its markets. Purchasing decisions are aligned with demand forecasts and product cycles, while inventory levels are regularly assessed to ensure operational efficiency and minimise obsolescence risks. Supplier and Brand Concentration Risk The Group’s business is supported by established international golf brands that contribute significantly to product offerings and customer demand. As is common within the industry, certain brands may account for a substantial portion of sales. Changes in supplier relationships, distribution arrangements, commercial terms or product availability could affect the Group’s revenue performance and market competitiveness. The Group mitigates this risk by maintaining long-term strategic relationships with brand principals and actively monitoring the concentration of sales within its brand portfolio. The Group also continues to broaden its product offerings across multiple brands and price segments to support business sustainability and reduce reliance on any single supplier. Regulatory and CrossBorder Compliance Risk Operating across multiple jurisdictions exposes the Group to various regulatory requirements relating to importation, taxation, employment laws and consumer protection. Changes in regulatory frameworks or non-compliance with applicable laws may result in financial penalties, increased compliance costs or operational disruptions. The Group manages this risk through close collaboration with its joint venture partner in Indonesia, who provides local expertise in navigating regulatory requirements within that market. The Group also appoints experienced local management personnel to oversee operations and ensure compliance with applicable laws and regulatory expectations. Key Risk Mitigation
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