Sunday, January 1, 2012

Share Price Alert: Kathmandu Holdings Ltd 2




Welcome to 2012 Share Investor Blog readers. I hope it is a prosperous - oh OK and a happy one too.

Lets get back to business!

Kathmandu Holdings Ltd [KMD.NZX] had a very negative trading update out right at the arse end of 2012 -great to bury news at this time of year. This is after 2 years of apparent revenue and store growth and comes just two years after their IPO.

I have been skeptical of the sustainability of the growth of the company for the last 2 years as growth was pinned mostly on the opening of more stores and an unsustainable growth of same stores sales based on highly seasonal and constant sales promotions of merchandise.

To top this off competitors are nipping at Kathmandu's expensively decked out heels with both Jan Cameron's Macpac and FCO Fishing Camping Outdoors taking market share off the outdoor retail darling.

Cameron made a move to take a stake in Macpac in mid 2011 to compete head to head with KMD and it hasn't taken long for Macpac to make its mark given Jan's knowledge of the market, her retail experience and her intimate knowledge of how Kathmandu is run.

KMD shares took a 25% hit down to $1.64 on the trading update and recovered to close at $1.72 for the year. This is down from an IPO price of just over 2 bucks just over 2 years ago.

In a previous Share Price Alert for KMD back in May 2011 I warned that the share price was overvalued due to overly exuberant investor optimism which was based on management hype.

I picked this company as a buy in 2010 at under $1.50 in Share Investor's 2011 Stock Picks because I thought the IPO price was too high and expectations by management similarly optimistic but I would now have to lower my sights to reflect the higher impact from competition, especially from Macpac.

The company is still a worthy one but at a far lower price than its IPO valuation. I would therefore be happier with a valuation of $1.05c given the poor outlook for retail (for the 3rd year in a row) in general for 2012 and lower if the company does not respond well to all the negative impacts it will face this year.

Happy New Year current KMD investors and an even happier one to those of you who might get this share at half its IPO value.

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Kathmandu @ Share Investor

Jan Cameron makes her move on Kathmandu
Share Price Alert: Kathmandu Holdings Ltd
Kathmandu Holdings: Profit Upgrade lacks accurate comparison
Kathmandu Holdings Ltd: The First Year
Kathmandu Holdings Ltd: 2010 full year profit analysis
Chart of the Day: Kathmandu Holdings Ltd
Kathmandu Holdings: Market Update Misleads
Kathmandu's 2011 Results Under Pressure from Jan Cameron
Kathmandu IPO: Prospectus Analysis
Kathmandu IPO: Jan Cameron lands a blow to IPO
Kathmandu IPO: What is it worth?
Kathmandu IPO: Retail Interest HighKathmandu 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
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor ForumDownload KMD Company Reports




c Share Investor 2011



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