Eratat Lifestyle

the Group decided to support the distributors to upgrade their older shops by
providing them renovation subsidy. Currently, about 20% of the retail shops are of the New
Premium shop image (as shown in the above-right picture). The terms and quantum of
subsidy (which are essentially based on location, shop quantity, total shop floor area, etc)
are still being finalized and is expected to complete during the fourth quarter of 2011, and
this will be offset against trade receivables. Thereafter, the credit days are expected to be
regularized to 91-120 days......................
 
Great...Eratat listen to investor feedbacks to reduce receivables!!!

I am out of the stock first thing in the morning, hopefully I can break even or just get away with minor losses. Eratat disappoint in a few fronts, and seriously. First, order book. While summer series is usually lower than autumn series, you can tell roughly from it's revenue that this year order book is Around 15-20% smaller than last year series. Next, it will suffer a double whammy of having to providing renovation subsidy, doesn't matter it is offset from the receivables, it will means lower profits going forward. Third, cash cycle is getting longer and less predictable. Q3 should be a "harvesting" quarter, yet operating cash flow is low, even if it's positive. All, in all, it means Eratat move to being a "premium" brand is hitting road blocks, doesn't matter the higher margin or ASP, if you end up with lower sales, revenue, you might as well stick with affordable casual products that fly off the shelves. Just my honest comments, not trying to influence anyone investment decision. Is your call.

From their 3Q11 results and outstanding orders on hand, they are likely to achieve EPS 8 cts by end year with much improved margins.
info.sgx.com/webcoranncatth.nsf/VwAttach...ress.pdf?openelement
 
 
 
 

Don't be in a hurry first. after i attend the briefing today, i'll post my comments. will have to see what they have to say.

Ho ho, there is a big fight among the bulls & bears. Bears sold down Eratat all the way to 12.3 cents.... then the bulls decided, hey, cheap, cheap, and bought it all the way up to 13.1 cents. All this by 10.10 am. Wonder how the day will end.... And who's attending the Eratat briefing this afternoon? Can pls report your observations>?

The 3Q EPS of Eratat is 10.19 cts bringing the EPS for 9 months to 30.92 cts(RMB). The delivery of the remaining 54% outstanding orders in 4Q11 should generate an EPS of at least another 10 cts(RMB) making a total of at least 40 cts(RMB) or 8 cts(S) for the full year. Not many penny stocks around the same price level could boast such earnings, also pay dividends and are debt free.
The Order Book of RMB380M for 1H 2012 (RMB477M for last year) is certainly a big disappointment, although not surprising. Eratat’s earnings can therefore be expected to fall next year. The US economic slowdown and EU financial crisis, together with China’s inflation problem - rising wages & raw materials costs, are expected to adversely affect the profitability of virtually all stocks including S-chips for the next 12 months.
I believe the current bear market has already discounted a sizeable portion of the bad news in the share price of many stocks including Eratat. At a price of around 13 cts, forward PE of under 2X & with S-chips already being out-of-favour with investors for long time, Eratat is expected to have limited downside even if it reported a significant drop in profit next year. However, those without vested interest could do better focusing their attention on selective blue chips and good second liners that usually take the lead in any “uprising” when the bull market returns. It usually takes some time for rotational interests to come to the penny stocks if they are able to survive through the bear season.