Eratat Lifestyle

That is at least some consolation. In fact the whole bond deal is rather strange that a)The interest is so high b)The deposit is way below the bond value and c) Why need the bond in the first place ? plus d) setting the conversion at 25cents after 2 years indicating the company 's growth is not promising as now it had 21cents already with said 8cent/share this year what is the conversion be so low ?

a)The interest is so high

the borrowing rate is comparable in china.

b)The deposit is way below the bond value and

it is a bond issued at discount

c) Why need the bond in the first place ? plus

with the bond, it can grow faster, opening more flagship stores and hv a HQ building at Shanghai lol. without the bond, instead of having 10 flagship stores, they open less lol.

d) setting the conversion at 25cents after 2 years

25c (which gives them P/E 3+) is more than 100% above the current market price so it is a reasonable price for issuing of new shares n realistic target to achieve. Previously they did a placement at about 20+ cents. Any price below 20 cents is considered cheap by the company to do any share issuing, which will create too much dilution. No point set the warrant price at 40c right, which is quite too far off. The warrant holders also hope to exercise the warrants and make some profits. so a two year timeframe with price above at least 30 cents is a realistic target.

do note Eratat can redeem the bond early anytime they wish, the moment the returns are met.

newbiestock

You are very confident of the counter and I do wish the above answer is from the management themselves. Look at the current share price it dip back to where it surge 2 days ago and likely to go lower to hit 8cents then if support is broker at 8cents no one will know the low any more.

maybe bah, elbert.

8.6 c will be a critical support from the chart, so will hv to see if it can hold. so far, 8.6 c looks like still can hold..

The share price has dipped so much till many retailers dun dare to touch Eratat.

Signs tell me the big boys are collecting Eratat at a cheap price before pushing it up. The big boys are not in a hurry to buy up and waiting for the panic sellers to sell to them. And, look at the big blocks of queue in the bid and ask price. Vol still exceeded over 1 mil shares...

It looks like in a consolidation phase n after tat, may break out...

elbert wrote: newbiestock

You are very confident of the counter and I do wish the above answer is from the management themselves. Look at the current share price it dip back to where it surge 2 days ago and likely to go lower to hit 8cents then if support is broker at 8cents no one will know the low any more.

Thing is...

are "investors" in this because of
1) excellent valuations because of net cash per share?
2) increasing profits?
3) based on perceived prospects based on what management says or based on the confidence that "the management knows what they are doing"
4) SHK as the party of the loan/bond
5) or any other reasons?

For the first 4 reasons,
1) if it is so bloody obvious net cash per share far exceeds share price, why is there such a big discrepancy even though the STI is doing pretty well? This discrepancy has existed for quite a fair bit of time.

I don't believe anyone here has the answer definitely.

So what if cash per share has been increasing? Maybe the market is really stupid?

Then again, what makes "investors" think they are smarter than the majority of the market?

Fact is, by mere statistics, traders and investors will on average achieve gains similar to STI's growth, assuming no brokerage costs.


2) Increasing profits could come at the cost of investors.
2 key points
i) How much of the profits go into the growing receivables?

ii) Discrepancy between ROE and ROA. Like I pointed out, the difference between ROE and ROA may be able to speak volumes. Eratat's ROA is pretty low because the majority of its assets (about half of it) is in trade receivables. These are cash that are not with the company, and are not able to be put to work.

With the issued bonds, shareholders' equity doesn't change, but total assets will increase. Assuming Eratat earns more than the 16% interest they pay based on principal (their net margin is 22%), over the next 2 years, their ROE will look even better. Profits will look even better. But ROA will reduce. Assuming Eratat redeems is something so subjective I don't want to consider it. The bond period is a mere two years, and to even consider redeeming it before that??? What a waste of time and money....!

A good read is here
www.investopedia.com/articles/basics/05/052005.asp

Bear in mind that Eratat carries not a high amount of debt, but a high amount of receivables, explaining the low ROA.

It is not impossible for Eratat to overcome all odds and emerge as a strong company. But considering the quantum needed (using the CFO's words), I highly doubt it will be achievable within 3 years.


3) This is something super subjective, and has been the main counter argument against all the red flags raised so far. Which is why I never reply on such.

All I can say is, if I am meeting investors for my company, I will paint the most beautiful and rosy picture for the company. No one in the right mind will approach investors with a doomsday scenario.

4) If anything, the major risks of issued bonds are not borne by SHK, but by private equity firms and sophisticated investors who may not even know how to study bonds. SHK stands to profit from the commissions.

Remember the mini-bonds saga. The banks effectively transfer risks to retail consumers. And their reputation is still mainly intact after all the things they have done.



Last but not least, share price. Sure, one can wait long term for the eventual appreciation (if it does come), but how long terms does one really have? Anyone investing for the "long term" back in 2009~2010 in Eratat would still not seen much gains, compared to many other much better and easier to understand counters. A person putting $$ into STI would have made between 50% to 100% capital gain already. The time value of money cannot be underestimated.

I do hope investors who fervently believe in this company have done their own due diligence and risk analysis.

Hi !

Just to share w you below posting i saw at another site.

I have no intention to encourage anyone to buy or sell on

this counter. The posting is just for info.

All the best to all !!! Here is the posting >>>


RE: Eratat Lifestyle Limited

Managed to spot some activities in Jinan / Shandong Province and Hangzhou / Zhejiang Province – but do not know how many outlets are there?

Jinan / Shandong Province

- “鳄莱特服饰济南星耀商贸有限公司” – It looks like this is Eratat’s distributor in the Shandong Province. See introduction : jinan.myjob.com/company/32294503.html

- 13 outlets operated directly by the distributor plus many others operated by sub-distributors

- The introduction mentioned the distributor opened a shop at Parc66 in Jinan, which is consistent with the shopping directory of the mall belongs to Hang Lung Properties of HK : www.parc66.com/en/fashion/mens-fashion.aspx

- Recent recruting advertisements : opendata.baidu.com/zhaopin/?p=min...n=20&rn=20

Hangzhou / Zhejiang :
- 杭州炫烨服饰有限公司为鳄莱特集团在杭州区域注册的分公司，经营“ERATAT”品牌相关服饰产品。鳄莱特集团总部位于福建省晋江市，集团在2008年于新加坡成功上市，​目前分公司在浙江区域已有几十家专卖店，需要大量引进各类人才。- Not too sure if this is a distributor or directly owned by Eratat? Looks more like a distributor. search.51job.com/list/co,c,273322...,10,1.html
- Recent recruiting advertisements : bj.528.com.cn/resume/util/s991107.html - in expansion mode ?