Eratat Lifestyle - Forward PE 1.5X

The distributors were willing to put up money upfront to set up many shops, and were supposedly "encouraged" to do so by longer credit terms for the last 2.5 years. Yet after 2.5 years, they also need to be "encouraged" to change to Premium by subsidies, offset from trade receivables??? Seems like LOTS of encouragement are needed

long credit term....follow by subsides.....what will come next?

Yup. i need to save up my spare cash first, relaxing. for now, i need to conserve my cash for other personal use.  But when i am less tight up, i may also opt to continue accumulate Eratat.
 
As china realises that it cannot forever rely on low cost manufacturing, i believe China will be looking into steps to boost its domestic consumption. My speculative guess is over the next 12 mths, i believe china may introduce new policies to boost domestic consumption such as lowering of VAT or new tax policies etc. But tat's a guess of mine, which i think have a gd chance of happening.
 
momoeagle- new shops sure need money. u think all these distributors all run hundred over million mkt cap business meh? Distributors richer than the designer? can't be rite.
 
ya. Eratat is a small fry. it is not a big player yet. But being small, also means that it has greater room to expand and grow compared to a bigger company. Doesn't matter to me whether Eratat is the big leader or not. What's impt to shareholders is profitability level for Eratat. how many penny stocks below $1 can achieve 8 SGD per cents? Some may say my assumption is biased as I assume all the receivables are collectable. anyway, once the renovation subsidy issue are resolved and if all receivables are collectable, then we shld gradually observe growing cash balances for Eratat. That would need about 3-5 more quarters to observe.
Cheers
 
 
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[relaxing 30-11-2011]:

Hi Newsbiestock – Read the part “Professionlas at Play “ in the recent Nextinsight article “Sunpower Shareholders Should Be Advocates, Activists”. I believe in present fearful times, the professionals are already pushing down good small cap stocks to accumulate. The worse may yet to come in this media/internet  run market , esp for those good S-Chips which have not crashed yet, so brace yourself in the many months ahead.  As I have said, use spare cash to hold your fav. S-Chips. As for me, I am locking up my stocks and not let the professionals scare me into selling but will be patiently wait for the Eurozone to turn around before I re-enter the market.  So, don’t worry and be happy as the SGX won’t go away.      

In terms of market share, all apparel brands in China are small fries as the Rmb400 billion market is very fragmented. Even a leading brand like Lilanz ( China Lilang listed in HK ) which sells abt Rmb2 billion ( double that of Eratat’s ) has a small share in it’s market segment. The excitement is that the market is expected to grow to Rmb1.3 trillion by 2020.
www.china.org.cn/business/2011-08/30/content_23310600.htm
It’s a marathon race to establish the brand and sales/distribution network as China is such a huge country. Eratat’s 900 stores nation wide is no chicken feed as most top international brands have only a fraction of this as they are mainly in 1st tier cities. As they are in consolidation phase, it pays to be cautious in their expansion.
Investors should not overlook that Eratat takes pride in being placed 40th position out of 681 SGX listed companies in the 2010 BT Governance and Transparency Index. ( ref CEO report in 2010 ann report which can be downloaded from Eratat’s website ) Expect them to report everything as they are, though some may think they are not savvy for disclosing too much info.

I wonder if anyone finds it strange that Eratat gets a lot of "un-vested" individuals who regularly come in to comment on the many possible issues with the stock (which I had addressed before). If the stock is such a bad stock, then shouldn't investors who have no interest in the stock (since they don't really look deeply into the stock, and feel that they don't quite understand or buy the story), then shouldn't it make more sense for one to focus on stocks they believe they can make money from? I know I don't find it strange, because it's a choice (endogeneous) variable and the ability to make comes from two sides of an equation (your typical cost versus revenue argument). Buy low and/or sell high will help to ensure profits. Either way, I'm very happy that the stock is being beaten down cause it provides with opportunity. From a tactical point of view, it all fits. Perhaps a small insight for "next insight"

thanks, relaxing for sharing the article.
 
it is a useful report. And, relaxing is also rite abt the fragmented market. The combined apparel market can constitute products ranging from baby wear, teen wear, season wear, casual wear, sportswear, premium or even differentiate by gender. that's no way one apparel company can dominate and monopolise a big market share in china.
 
i think Eratat did execute a good strategy by launching their classic first in 2nd and 3rd tier cities first when most other competitors are trying to break the 1st tier cities, which is more competitive due to global brands.
 
although there seems to be more Eratat premium shops being open in 2011 than classic shops, i hope the management will also continue to grow their classic products and not neglect the classic due to the premium. The proportion of classic and premium needs to be in a balance.
 
e-shopping for apparels is a very interesting concept. I will bring this qns up during the next Eratat briefing.
 
For me, i am quite skeptical abt apparel e-shopping as most ppl would want to try out the clothes before they buy. shops will still be needed for shoppers will still want to enjoy the feel of shopping and trying out various products. However, i do have some female friends that i know of who bought apparel online. It will be interesting how the online space can create the opportunity for apparel companies. Having a shop space is too costly and it would be good to increase sales and wider the distribution channel.
 
The female apparel is an impt target market but not straightforward as female designs have more variety and females tends to be better bargainers than males who may just buy without much thinking. I can understand why Eratat starts off with premium for menswear first. But i won't be surprised someday if eratat enters the female premium wear....
 
tks.
 
 
[hr]
[relaxing 02-12-2011]:

In terms of market share, all apparel brands in China are small fries as the Rmb400 billion market is very fragmented. Even a leading brand like Lilanz ( China Lilang listed in HK ) which sells abt Rmb2 billion ( double that of Eratat’s ) has a small share in it’s market segment. The excitement is that the market is expected to grow to Rmb1.3 trillion by 2020.
www.china.org.cn/business/2011-08/30/content_23310600.htm
It’s a marathon race to establish the brand and sales/distribution network as China is such a huge country. Eratat’s 900 stores nation wide is no chicken feed as most top international brands have only a fraction of this as they are mainly in 1st tier cities. As they are in consolidation phase, it pays to be cautious in their expansion.
Investors should not overlook that Eratat takes pride in being placed 40th position out of 681 SGX listed companies in the 2010 BT Governance and Transparency Index. ( ref CEO report in 2010 ann report which can be downloaded from Eratat’s website ) Expect them to report everything as they are, though some may think they are not savvy for disclosing too much info.