Skeptic, you have raised good questions. I have reflected on the business and offer these 2 points for you to chew on:
1. How difficult is it to transform from being a sportswear business to premium menswear? Eratat has undertaken that transformation. It has taken 2 or 3 years. I think that has taken up a lot of time and money (subsidy for its distrbutors to change their shop design.).
2. How would you rate the success of its products? In the past 2 years, revenue has exceeded RMB1 billion. That is no small figure. And on a net profit of SGD30 million, Eratat should be a SGD300 million market cap if the market were only to accord it 10X PE.
There is alway risk.....Many concerns raised on Dukang also but share price eventually surged from 20c to 58c today....... Eratat may be the next hidden gem!
ISDN is another good example. Who would expect a 10ct stock to rise to over a dollar stock within 6 months? Eratat as of now is trading ard 14cts. Never under estimate its potential....
End of the day, it boil down to one risk- reward preference. Eratat is a high risk high reward investment/ speculation depending on which side of the camp u are in. There is no deny that there are risks involved and execution has yet to show results. Then again, when results is shown, it is usually too late for either camp to enter or exit.
I believe newbiestock and tactian are seasoned investors who know what they are doing. I used to own eratat but find the risk too high for me to stomach, but I didn't write off tactician and newbiestock views, in the end, it's your money that u will win or lose.
For Eratat is there a possibility of losing everything? My answer is yes, is it possible to be a multi baggers if transactions are honest and they succeed in expansion? Answer also yes, so the reward might be enough for some to take the risks as the most they can lose is their capital but the sky is the limit if they are right.
But seriously, those who are investing I. Eratat esp. Those who are rushing in recently should be prepared to lose everything if they are wrong. If u are not ready, or u have pump in too much to bear losing everything. Then think twice.
I belong to the sceptic camp with all due respect to the bull camp. I bail out mainly because the subsidy renovation news fell like a bomb, now like a company with prior strategic planning. The quarter before the subsidy, they are still talking about reducing receivables and growing to gain more bargaining power. Then the news came out of the blue.
Next, margin for their accessories is already high, and I wonder how much higher can premium accessories command ? 60- 80percent? That would make the ASP around 200-300 per item. Well, that is not actually a high price for a good brand, but can Eratat built that brand? I know of many Chinese friends who would not pad a eyelid for western goods like L V, or BMW etc, they tell me forget about buying Chinese made cars. If u wish to reach the market segment of vanity goods, Eratat is long way off. How about mid liners that command that price range. U ask yourself are u willing to spend hundreds on Eratat if I top up a few more hundreds and I can get zara, nautical etc... Which one would u choose, which one give u face when u are out playing golf., when u wear a Eratat polo t and nautical polo.? Or maybe timberland polo?
Nonetheless, if the transformation does indeed succeed, the rewards will be immense. I understand expansion need money, and there is a need to raise funds, but are they going out with a Big Bang when there is no new distributors and need so much money at once?
My question for those who are cheering, dreaming and taking high risk are:
How much of your fund are in these stocks? (Eratat, Qingmei & Dukang)
What percentage of your profit you have make as reqarding to your total fund?
Do you take calculate risk or banking on hope, dreams, expectation or luck?
I'm with Skeptic and Greenrookie. I don't believe in taking unnecessary high risk. Personnelly I'm happy to achieve 10% yearly return in good & bad year. Many have lost in stock market and destroy their career.
10% av year in year out is very 神in my definition Liao. I am just targeting 7-8 % and I have not been able to achieve it yet. Only when the next bear and bull come will I know if my plan can pan out. U must be very good at it.. Congrats!! And your Cordlife really stunt me!!
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