Developing New High End Product Lines for First Tier Chinese Cities
Increasing number of speciality stores and exclusive Eratat stores to build brand equity and awareness
Potential vertical integration downwards to sell directly to consumers
Great Proxy to Chinese Consumption Growth as China switches from a manufacturing-based economy to a consumption-based economy and with the largest migration to the cities in human history from China's 800 million rural residents, the bulk of China's population is simply going to become more fashion conscious as China' middle class continues to grow rapidly
Peers in Hong Kong like Anta, Li Ning and Xtep trading at P/Es ranging from 15-20
Anta is currently valued at 5.5 billion SGD producing 207 million SGD net profit a year.
Eratat forecasted to produce net profit of about 30 million SGD net profit this year (managed 9 million in the last quarter alone!) yet valued at only just over 100 million SGD! Compared to Anta's 5.5 billion.
Eratat closed at 25 cents on friday. Why doesnt it just go for dual listing in Korea ... or HK?
People should ask the chairman when he is in town for full-year results briefing.
By right, Eratat's PE valuation should be easily twice as high as now. Stock worth 50 cents, in other words.
Share price is way undervalued now....no point going dual listing now. Wait till the price is being pushed up to 45c then consider that. That may eventually drive Eratat price to 80c!
To me it's certain that Eratat will go up by a few times, just got to be patient and wait for its true valued to be realised. I am prepared to hold on to it for years if need be.
As Warren Buffet once said, in the short run the stock market is a popularity contest, in the long run it is a weighing machine. In the long run Eratat will be fairly valued, patience is key.
As it is Eratat is already severely undervalued by financial ratios. Also, the Chinese consumer story will be the biggest, most significant momentous growth story of our lifetimes. We're talking about the urbanization and increasing purchasing power of 20% of the world's population, Eratat is poised to benefit from this growth story.
Furthermore, unlike many Chinese Consumer stocks listed in China and Hong Kong which are trading at P/Es in the range of 15-20, Eratat is trading at a forward P/E of 3.5, 10% below book value, despite growing revenue, net profits and gross profit margins.
Along with Qingmei, Eratat is probably the most undervalued company in SGX at the moment.
Last edit: 13 years 10 months ago by ethan999. Reason: Grammatical Errors
