sales incentive- this happens only once in a while. If the sales incentive can motivate the distributors to open new shops in the future, why not.
renovation subsidy - this only applies to the old shops and those old shops when first setup were paid by the distributors themselves. New shops uses the new look and the setup costs are beared by the distributors.
Relative size - if u use RMB271.4 mil, exclude VAT and trade deposits to supplier, the % is only 20+% of the current assets. I hope I dun have to repeat again. Please distinguish the differences between receivables for distributors vs trade deposits for suppliers. I will feedback to the CFO that maybe he should separate them carefully in the balance sheet, in case some misinterpret it.
Made in China- Do u know Eratat is marketing its apparel as a UK brand? Their trademark is registered in UK. well, even established brands in Nokia can vanish and we see Samsung, a small player in the phone industry in the previous decade rising to top player today. Please don't conclude so early that small players can't compete with established players. As long as Eratat innovate its design and stay ahead of fashion trends, it has the ability to compete with big players.
I'm not saying this company won't go far in the long long run, but question is... how long is this long run? 3 more years from today? I doubt it. It is already 5 years since its IPO.
Momoeagle, this is a very dangerous remark that u made. I am ultra-bullish on China. And, I am also very confident that Eratat will last much longer than 3 years from today. This year will be a record profit and next year will even be better.
If you think Eratat's growth of cash balances are due to bond proceeds n fund raising, then u are totally wrong. As I said before, every 485 days, their cash balances will grow at least a RMB100++ million (which is their retained earnings). The growth of their cash balances are due to hard work of the cash accumulated over the past few years. Sino Grandness raise cash even more often than Eratat but why we don't see sino grandness grow year after year and why after 2011, Sino Grandness did not give anymore dividend at all?
Momoeagle, Lilanz is the industry leader in the apparel industry. They got Chen Daoming as their endorsed spokesperson and the Lilanz brand is highly well known among the Chinese there. If u invest in Lilanz a couple of years ago when it is the size of present Eratat, you would have made a multi bagger returns and u should see the dividends multiplying over the years.
As what Geo says, look at the future, instead of just looking at the past. If the management did what they promises, build a HQ and open 10 flagship retail shops, give them a pat because they honour their promises. Better than those companies that overpromise and ended up giving a blank cheque.