Eratat has reported a nett profit of RMB 37.4M for 1Q11 [Jan-Mar 2011], an increase of 90% over Jan-Mar 2010 period. Its EPS for the Quarter is 9 cts(RMB) [pre-earnings dilution] or 7.8 cts(RMB) following the recent placement issue of 60 million shares at 20.2 cts. See SGX’s Announcement in –
info.sgx.com/webcoranncatth.nsf/VwAttach...INAL.pdf?openelement
Eratat’s latest results show that it has been rather successful in its strategy to reposition itself as a casual lifestyle brand. Despite the challenging and competitive consumer market, Eratat was able to raise the ASP of its branded footwear and apparel to maintain or improve its profit margin.
Eratat’s 2Q11 results due in August 2011, are expected to be significantly better than the current one for 2 reasons.
1. 1Q11 Profits entail the delivery of only about 44% of the orders received for the 2011 Spring/Summer Season (i.e. Jan-Jun 2011) amounting to RMB 477M. The balance of the orders (56%) would be delivered in 2Q11 (Apr-Jun 2011).
2. New confirmed orders of RMB 40M from “Eratat Premium” Summer Series for delivery in 2Q11, would also contribute to profits in 2Q11.
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The bottomline is rosy, but the accounts receivables are getting bigger. Eratat is saying it's ok, they are collectible. Does anyone have any inkling on when this sort of thing can stabilise?
I mean Eratat is stretching out credit terms to its distributors so they can open new shops. Isnt there some point when the whole thing starts to stabilise or slow down and the receivables start getting paid back faster?
The other thing that caught my attention was the cash balance -- nice one at 9.9 SG cents a share, which is higher than the 7.4 cents a share at end 2010.
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