Eratat Lifestyle

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11 years 2 months ago #15824 by greenrookie
Replied by greenrookie on topic Eratat Lifestyle
I observed Eratat and Dukang have reacted rather differently.

When Qingmei chairman start selling his stake, the fall in price is quick and scary! But Dukang and Eratat only experience mild fall, and stabilized after 1 day.

I do note something similar about S-chips that got into trouble, QIngmei announced profits warning soon after the sell-off, and it lead to a free fall.

Traders should really start watching any "profits guidance" especially if it is out of the blue for Eratat and Dukang, the red flags will be slapping your face if they announce a "profit guidance" soon. If not, we might see the "red flag" fades away...
The following user(s) said Thank You: g6everyday

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11 years 2 months ago #15826 by g6everyday
Replied by g6everyday on topic Eratat Lifestyle
Thank you Greenrookie for sharing your observation!

Personally i think there always has 1001 reasons for selling , but only for one reason to buy.

With the due diligence from SHK, all shares from Lin pledged recently, i do not see this as red flag, but looking forward what values will this/these new investor/speculators can bring in since they dare to take up all shares from Ye.

Again, make sure you can sleep well before sail on this boat.

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11 years 2 months ago #15827 by newbiestock
Replied by newbiestock on topic Eratat Lifestyle
last week was busy week for me. Weekend went Malaysia for shopping.

i am still holding. No intention to sell. There are 1001 reasons for selling, as what g6everyday said.

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11 years 2 months ago #15830 by relaxing
Replied by relaxing on topic Eratat Lifestyle
Hi Greenrookie – When it comes to S-Chips, there is no trend as they are not predictable. Some even go up after bad news, which could be due to syndicates pushing up to unload their remaining holding? A high absolute priced S-Chip can be more dangerous as they have further to fall. I’d never hold S-Chips long as they have 101 ways to skin you alive. Just be careful dealing with S-Chips. esp when there are red flags. Best is stay away.

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11 years 2 months ago #16006 by greenrookie
Replied by greenrookie on topic Eratat Lifestyle
I was reading a link provided by wildreams from VB

www.tradingfloor.com/posts/china-finance...g-resistant-17009177

It talks about where short sellers start, obviously, it is the financial reports, he mentioned clearly that companies that have all the red flags are not necessarily frauds, but mention that if companies does not show such flags, it might allow an investor to sleep better.

It wasn't really something very forensic, it was rather common sense, but I realised Eratat had quite a lot of ticks throughout the checklist (Again, this does not necessarily implied fraud,but maybe you should be losing some sleep,and use the time to dig deeper?)

1) Incredible Margins

Copied from Boon from valuebuddies:
Gross Profit Margin(GPM) FY2012 / FY2011
Lilanz = 40% / 39%
Zuoan =47% / 44%
Xiniya = 33% / 34%
Eratat = 31% / 33%

Net Profit Margin (NPM) FY2012 / FY2011
Lilanz = 22% / 23%
Zuoan =21% / 21%
Xiniya =13% / 21%
Eratat =14% / 14%

So Eratat pass this marker, no super margins.

2) Receivables growth
This has been deliberated many times, and forummers had point out that receivables are actually dropping, but I shall move on to the next point, and explain why I still think this is a issue.

3) Acquisitions
Eratat has not made any major acquistions, just organic expansion, but they gave renovation subsidies. And the renovation subsidies are offset by receivables, hence Q1 fall in receivables should not be something to cheer about.

4) Goodwill
PAssed!

5) Cash
Large horde of cash that is not spent over a long period of time, they are expanding into Shanghai agressively, why is it still not drawn down in a significant way? If they are already recruiting, it should means the shops are rent/bought, renovation going on...

6) Cash but increase loans
Well, lets not go into the SHK bonds again.

7)Insider dealings
If before the most recent sell-off by ye sanzhi, CEO has been reducing his stake too.

LAst but not least, I thought the only way to effective clear all doubts will be local knowledge, visiting the outlets, and check the renovation work done.

But as Boon from VB pointed out, there is no store locator in Eratat website,what we have seen all these while are just Shanghai outlets.From their wesite, they claim "Eratat products are sold in more than 1000 retail locations spanning across the PRC through our distributors and retailers." Anyone seen any Eratat outlets besides shanghai? I have been to Nanjing, Suzhou, Hangzhou, Beijing, but never seen those shops. I have seen xtep, and others thou....

I am not implying its a fraud.

But can Eratat stand a short selling attack? Minzhong has a major shareholder with deep pockets, a look at 2012 AR show chairman with the highest stake of 25%, the second largest stakeholder is Ye Sanzhi. He is gone too.

I am actually tempted to "trade" Eratat, but I think I will give the trading a miss too.

Just my 2 cents worth.

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11 years 2 months ago #16007 by greenrookie
Replied by greenrookie on topic Eratat Lifestyle
Sorry,

After digging further, I think short sellers need not go into such extent of digging financial reports . Given how SAIC can be caught sleeping with document filed, maybe one just need to find discrepancies in their filings to launch a short sell attack!

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