Eratat Lifestyle

but eratat has pretty much lost market's interest and twindling down after hitting 0.185 recently..

Hi Joes - Last yr they ranked 40th out of 681. But 52nd out of 657 ain't bad as it's in top 8%, better than most non S-Chips. Dunno why investors ignore this stock though it has paid 3 yearly dividends since 2008 listing and that their YE2011 EPS is visible due to orders on hand ?

Results for 2Q coming out pretty soon. Should look pretty but will it cause the stock to fly?
Eratat Lifestyle is very cheap at 2.5X PE using 1Q EPS. The receivables are big and growing -- sorry to say this --- if you believe the receivables are collectible and the external auditor has seemed to agree on this, then the stock should be worth a lot more than 17 cents current price. 

Actually to measure forward P/E we shouldn't annualize Q1 earnings because as with many Chinese companies, Q1 is traditionally the weakest quarter. In Eratat's case, only 232 million or about 44% of 1h 2011's order book was realized in Q1, leaving another 285 million in sales to be realized in Q2(this includes the 40 million in Premium orders for q2).
Furthermore, due to re-orders and third party sales (for their footwear), actual half-yearly revenue tends to be about 10% higher than the intial orderbooks. If this is the case again, then we can expect q2 revenue to exceed 300 million and with net profit margins between 16%-17% q2 could potentially be a record quarter for Eratat. If you take this figure and annualize it, you would get a forward P/E of about 2 or less, and trading at about just 55% of Net Asset Value. 
However, they need to show the market how they can bring receivables down in the long run and improve cash flow. If as the latest nextinsight report states, Eratat's actual retail prices for Premium Stores are 3 times what distributors pay Eratat, and the Premium products sell well as reported, then the profit margins that distributors may potentially be making from Eratat Premium products may allow them to be less dependent on Eratat extending receivables/credit to them in the medium-to-long term. 
With all that cash, can Eratat perhaps begin to open its own directly owned stores in the long run since the retail prices are 3 times higher than what distributors pay Eratat? We''ll see.  

Hi Ethan999 - I am baffled why investors by-pass this counter when the orders on hand and YE2011 EPS are visible?  There is so little downside risk considering its low PE and 30cts NAV plus a proven/transparent management team?  It also has a great potential to be a top fashion brand in the huge China market.     

What do you gurus think of Eratat's 2Q results? Already announced after mkt closed today. Solid hor? Eratat worth only 17 cents with this kind of result????