Friday, March 19, 2010

Kathmandu 2010 Profit lacks good comparison

I am not a big fan of Kathmandu Ltd [KMD.NZ] I will admit that. A prospectus as bent as Elton John on speed and growth largely centered on debt driven store expansion.

Their 2010 half year profit out yesterday that blew the market out of the stratosphere, share price wise, hasn't changed my view.

The trouble with this particular profit release is that it suffers from lack of a good and accurate comparison from last year.

Shareholders are therefore still unable to assess the state of the company yet with any form of credibility.

In one example they are comparing pro-forma net profit after tax (NPAT), pointed out in the prospectus, with an "adjusted" figure for the "actual" 2010 HY NPAT - what does that really mean? I don't know.

All important same store sales look impressive at first glance but have they also been "adjusted" as well to show the company in a better light? Once again I don't know.

One glaring example of poor management were the IPO costs, $21.3 million compared to the prospectus estimate of $15 million - 40% higher.

IPO costs relating to advisory fees were substantially higher, due to the scope of work eventually required to meet the requirements of dual listing on both the NZX and ASX. Additional costs were also incurred as a result of the change in banking arrangements.

If management cant get that right then you have to wonder about management of the company in the future.

The stockmarket needed a reason to get this company back up above its IPO price (see 4 month chart above) and insiders sent the price up sharply from mid February and mums and dads got back in over the last few days and pushed the share price up by more than 10% to NZ $ 2.46

Kathmandu @ Share Investor

Kathmandu IPO: Shares set for discount
Kathmandu IPO: Prospectus Analysis
Kathmandu IPO: Jan Cameron lands a blow to IPO
Kathmandu IPO: What is it worth?
Kathmandu IPO: Retail Interest High
Kathmandu IPO: A tough mountain to climb
Kathmandu No.1 but IPO should get the Bullet
Download the detailed Kathmandu Value Cruncher Report - Requires free registration at Share Investor Forum to download
Download Kathmandu IPO Prospectus

Discuss Kathmandu at Share Investor Forum

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