Eratat Lifestyle

Hi greenrookie - Good bet as the downside is limited and panic or margin selling are almost over. I am not worried abt the longer credit terms as the management has a good track record.  In fact I am amazed that distributors are willing to commit and spend so much money to open the 61 Eratat Premium outlets in exchange for an additional 30 days credit?
I think this is a safe bet as the present Rmb550m orders on hand will result in 8 cts EPS this year. Last yr, their EPS was 5 cts and dividend 0.6 cts. Other points are:- 
1) Their operation costs are  low as I think their factories and land are fully paid up.
2) No borrowings as presently have Rmb178m cash
3) Sales are only in China with 10% GDP growth. Little impact even if GDP slows to 8% as in the time of height of 2007/2008 US subprime crisis.
4) Do not own any retail stores as they focus on brand building.
 
    

Hello guys: Eratat can take the market gloom today? The good news keeps coming out of Eratat --- more to come in a month or 2. But meantime, the darn US & Europe troubles keep disturbing the markets.

yup. Joe, like what u say. let's wait for a month or two and see if there's more good news to come.

Eratat has been paying out a dividend since IPO. The running yield is something like 11.5%, according to Bloomberg. Not sure if this is right. Seems too high......

Hi garl - Basing on the 0.6cts dividend in last finanvial yr, the current dividend yield is abt 4.7%. I think the poor valuation is due mainly to the deteriorating trade receivables which is expected to get worse. Hopefully this will stablise by next year? 

Don't worry abt the receivables because it is collectible, so long as sales are doing well. Distributors invest so much in Eratat brand such as renovation of the shop, they cannot give up halfway. so, when payment due date is up, they will pay on time.
Compare Eratat to Lilanz. I am expecting dividend to grow exponentially from the year 2013. Over the next few quarters, shld see cash balance grow, so will dividend.
Imagine few yrs down the road, Eratat gives dividend at about 1-3 cents sgd per share. At the share price u bought, it would be at least 8%-15% yield. tat is if u hold tat long.
Net cash is at 170+ rmb million, at end of Q2, which is 8.1 cents/share. I am estimating tat at the end of Q3, its net cash will be at least 240+/- 10-30 rmb million, assuming it collects back all the receivables it claimed. so, by Q3, net cash/share shld be around 10-12 cents/share at least. 
Do note
- Q1 and Q3 normally have +ve cashflow
- Q2 and Q4 has tighter cashflow because of 50% trade deposits but full year, shld see a full positive cashflow.
 so, it seems like 12-13 cents is already the bottom for its share price.
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[relaxing 31-08-2011]:

Hi garl - Basing on the 0.6cts dividend in last finanvial yr, the current dividend yield is abt 4.7%. I think the poor valuation is due mainly to the deteriorating trade receivables which is expected to get worse. Hopefully this will stablise by next year?