I have some really simple calculations... with information gathered from 3rd party sources, specifically this website.
According to nextinsight report, "RMB50 million will be for opening self-owned flagship and up to 10 retail shops in Shanghai by year-end; and RMB44 million will be for working capital, substantially to secure the supply of apparel products for all its self-owned and new distributors’ retail shops."
So 44m is for probably 11 self owned stores and new distributors' shops... Total probably around 20 as a first estimate? (Estimated more shops on purpose for more prudent calculations below...)
==> Let's give it a discount of 50% for more prudent calculations, how about 880 mil?
How would 500mil cash be enough then?
Also, on their report, the amount of trade deposits (probably the working capital to secure the apparels by the suppliers) is 156mil. This is for over 800 shops. This works out to around 225 new shops, which means my initial estimated calculations might be wrong for the number of shops.
But new distributors do not open many shops, probably 1 - 3 only according to CFO...!
And supposedly, they choose their distributors carefully, such that they have only 12 distributors at the moment... So there shouldn't be many distributors to start with...
Eratat used to report their trade receivables from
1-30 days
31-60 days
61-90 days
The last round, they reported 1-90 days.
Quite inconsistent in their reporting.
Also, it is quite interesting that it is the CFO who is on the front of the NextInsight reports, and not the CEO who appears virtually non-existent on most of the reports.
skeptic, is there anything better that u can say? i will take note of ur comment today. The time will come when eratat share price rocket and u hv to eat back your words.
momoeagle, nothing wrong with the CFO appearing in nextsinight. The CEO doesn't speak english tat well but in the AGM, u will see his photo in nextinsight cover page. what inconistent is there in the trade receivables reporting? dun get it. The credit days has been reduced from 150 days to 120 days. It's good enough.
Skeptic wrote: My exact sentiments, Rock, good points.
I think some people here are over-invested in Eratat and have fallen in love with the company. Whatever questionable or ambiguous actions that are done by the company are always somehow rationalized and looked upon positively. They cannot afford to lose so they subconsciously force themselves to only things with rose-tinted glasses.
The shareholder meetings are also quite useless because the CFO is not sufficiently grilled on their questionable actions of late. Questions such as the below are not sufficiently put forth to them. Shareholders tend to go easy on them because they also psychologically want to believe that everything is positive. They even do the job for the CFO and Investor Relations by defending the company day and night here even though they haven't got the answers to the questions below.
Amazing what happens when one falls in love with a stock.
"
1) Eratat have RMB502 million yet even cannot secure RMB100 million loan?
2) How Eratat utilise it's RMB502 million for it's business operation?
3) Eratat able to generate cashflow positive yearly, last year by more than RMB200 million yet so desperate for cash? (More than double the amount it desperately want to loan)
4) Any companies able to generate such impressive cashflow yearly maybe trading at over PE 20x. Why such great performance yet trading only at at PE2.5x"
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