in 2009, eratat's FY revenue was RMB777.4 mil. At end of 2012, its FY revenue was RMB 1031.8 mil. that's a 30+% revenue growth over four year.
The growth rate for Eratat may vary every year but over a medium to long term timeframe of 4-5 years, it will show a net growth. so, skeptic, u telling me it is not a growth stock?
By revenue and number of shops, Eratat is probably only half the size of Lilanz. A lot of my prc friends whom i know residing in Singapore also do not know about Lilanz brand. so? but u look at the dividends and valuations at Lilanz.
For those who have been to any of their briefings will know that Ken had said that Eratat usually follow one year strong growth, followed by a slower growth the next year and then before embark on the next stronger expansion growth. After every round of expansion and transformation phase, u need to consolidate ur position and grow a bit slower in order to make the growth sustainable in the long run. I don't believe in growing recklessly at all costs.
If give Eratat a 5-7 yrs timeframe, can it grow double to the size of Lilanz today? I am sure it can.
Skeptic wrote: Newbiestock, a lack of market demand is a negative sign, it's amazing so many of you can spin every piece of news around to make it appear positive.
China is experiencing consumption growth every year, and part of that consumption growth is going towards fashion and apparel. However so far Eratat's lack of distibutor/order book growth suggests that it is not gaining its fair share of the market pie.
Furthermore, in the trade fair earlier this year, it was mentioned that there was still no sign of any new distributor.
If the products are selling well, they will be many more distributors knocking on their door, they won't have to grant distributors such one-sided payment terms, and the growth in order book would have given them more clout over their suppliers by now.
As things stand, Eratat continuously appears to lack bargaining chips, and even has to offer distributors subsides and incentives. If Eratat products were selling very well, I doubt it would be in such a weak bargaining position.
Eratat has cash way in excess of its current market cap. Yet there is very little news of any advertising and marketing efforts going on to acquire new distributors and increase brand awareness among consumers. Till now not a single of my Chinese friends has heard of this brand. What is the management doing sitting on so much cash (and trying to raise more at potential dilution to shareholders) but unable to achieve growth?
P/E is indeed very low - but what about PEG? Where is the growth? Is it stagnant or perhaps even negative in future as more and more international and local brands start crowding the apparel market?
You only have the look at the last couple of posts to see what I mean when I say these stock is full of cheerleaders
As Rock says, too many hopes, too many dreams. The working capital requirements are so high such that all it takes is one bad season, and most of the receivables may not be collected, resulting in a huge reduction in NAV.
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