Eratat Lifestyle - Forward PE 1.5X

Hi Tactician,
I don't think I blast the company hard at all. I'm stating based on my personal opinions and research from an outsider point of view. I have no vested interest, but as stated, my main interest in study comes from having once invested in HongXing, China Sky and Fuxing, and eventually having exited all with an overall gain (lucky me). I do try to separate between objectivity and subjectivity as much as I can and I believe I have made it clear in the previous posts.
I don't believe I have done as much homework as local blue chips which I also invest in, mainly because I'm not able to personally verify the shops, the clothings, and the market sentiment over in China. All my sources of information are from forumers, SGX and brokerages reports, all of which are either second hand or third hand. To me, to truly know the company, it would have to be first hand. But this is something personal, and I admit I only practice half heartedly for blue chips as well. Then again, how well do we need to know how Singtel or Starhub operates?
Basically, as newbiestock would know, I have been warning against Eratat since ~23cts, so I don't see how any investors would have regretted it at all. I do find your statement that my warning would have caused them to make uninformed decisions an extremely misleading one. It is my diligence that would had stop me from buying then. The broad market went down, but Eratat did went down more than proportionately. Of course, if I was wrong and investors finally decide it is a gem, the margin of safety would be significantly larger now than before.
And also, investors should never make decisions purely based on the posts of others, be it from recommendations on forums or analysts.
 
It is indeed interesting that most people who are already vested will like to hear only positive feedback, and tend to start negative insuinations on forumers who posted on the negatives. In fact, the CIMB's negative report was well ignored. References were however made frequently at the SIAS research report which had positive recommendations since well over 20 cents.
 
I respect your postings and your decisions, which obviously came with much thoughts. But to me, Eratat is perhaps now at a price of limited downsides tecnically, but I don't see it as a limited risk fundamentally with main focus on receivables. I'm a firm believe that "if you don't manage debtors, they will begin to manage your business as you will gradually lose control due to reduced cashflow".

Hi Momo, Your last post makes excellence sense and I agree with it wholeheartedly. I only mentioned about the blast because I'd seen some of your older posts which did blast Eratat without much support - many of which was reiterated by Ethan. Being vested doesn't mean that one should only consider positive results/postings. In fact, one has to be extra vigilant because of the vested interest (without being vested, there's nothing to lose). As such, greater insight, etc should be garnered and greater amounts of effort spent trying to get the best information when one is vested, and issues should be addressed, albeit in a rationalized manner and not in a manner of the "headless chicken" syndrome. Cheers

Hi Tactician, My earlier posts were all on the same points. I guess it was because I continued the discussion in the old CNA forum to ethan and newbiestock, which is why many points were missing As for the "headless chicken" syndrome, I like this description Sounds like walking around aimlessly like a dead zombie. Well, I was guilty of that when I first started out. I was fortunate that it was in late 2008 that I started... Cheers!

There's a new Kim Eng report which can be extracted from Eratat's website www.eratatgroup.com/v2/     Encouraging that more analysts are covering this stock. It's good that Eratat regularly update it's website to keep investors informed.
 

Having a high brand image is probably still a long way to go for Eratat. I will choose to be cautious since it is easy for mgt to make mistake while scaling up its biz based on branding. Just take a look at Dapai, another s-chip which has been trying to build a brand by pumping so much money in A&P over last few years. It is trying to resolve supply issue by building its own production and now it is facing intense competition and probably fake products...that it has to slash ASP by 50% for its backpack to achieve sell thru. Share price has fallen from 25cts to just a mere 4cts now..

 
 
Hi Gangho –   I think Dapai lost it’s way when they opened 500 new specialty stores . Their  sales/admin costs are 4 times that of Eratat’s  as the latter source its apparels and does not own its retail outlets.
 
China is a gigantic country and its not easy  to build a nationwide sales/distribution network ,  let alone establish a brand, but I believe  Eratat is already there with their Classic range in 2nd/3rd tier cities. The casual wear market is  huge but highly fragmented , hence there are great opportunities.  Nevertheless, investors should make their own decisions re  risks vs rewards.