Share Investor: KMD

Showing posts with label KMD. Show all posts

Monday, November 15, 2010

Kathmandu Holdings Ltd: The First Year

Kathmandu Holding Ltd [KMD.NZX] have had a particularly bad first year as a listed company.

Profit levels and prospectus promises have failed to hit the mark and the share price has dropped by 22% to $1.67 since its November 12 2009 debut at NZ$2.13 on the NZX.

The prospects for the company, like many other retailers, do not look good for 2011 but for KMD look quite frightful considering its high debt levels and the prospect of more spending on new stores as the company expands to grow the company quickly and not break more IPO promises.

On the share price front, $1.67 is not far off the 52 week low of $1.54 set in September 2010 but of course doesn't really show any identifiable trading pattern yet after only one year. The share price has been much weaker over the last month and we should expect a further drop in January if Christmas sales don't deliver.

Might then be time for taking another look at the fundamentals based on a much lower share price.

Happy Trading.

Kathmandu @ Share Investor

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 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
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor Forum
Download KMD Company Reports

New From Fishpond.co.nz

Allan Hubbard: Man Out of Time - By Virginia Green

c Share Investor 2010

Friday, September 24, 2010

Kathmandu Holdings Ltd: 2010 full year profit analysis

The Kathmandu Holdings Ltd [KMD.NZX] 2010 Full Year Profit result out this morning is hard to fathom clearly because last years profit as disclosed in the 2009 Prospectus was a corrected pro -forma figure and this year profit figure has been impacted by IPO costs and associated listing costs.

The headline net profit of $25.2 million before IPO costs compares with the 2009 pro-forma net profit of $10.3 million. likewise the headline sales figure for FY 2010 was $245.8 million compared to 2009 $215.6 million.

Key Points

* Headline profit of $25.2 million compares well with $10.3 million (before adjustments for IPO costs and adjustments for comparison of 2009/2010)

*Missed most key prospectus forecasts.

*15 stores opened.

*Gross margins down.

*Dividend of 7c per share.

*Debt well down on last year (paid off from partial proceeds of IPO)

*Capital expenditure up on 2009.

Lets go by KMDs own preferred comparison though (hidden at the bottom of their release), which while hard still to get an accurate comparison year to year, because both 2010 and 2009 figures have been "adjusted" is probably the most relevant way of looking to see how they did in 2010.

2010 | 2009

Sales 245.8 240.0 5.8 2.4%
EBIT1 47.5 50.6 (3.1) -6.1%
NPBT pro-forma2 41.2 44.8 (3.6) -8.0%

1 Excluding IPO costs

So we can see that even with their own adjusted figures (which are not 100% accurate) that Kathmandu failed to hit key targets listed in their prospectus, only just beating last years sales figures by round $6 million.

The 2010 net profit then, along with other financial indicators in today's release make it hard to compare 2010 with 2009. For shareholders this means uncertainty on how well the company is accurately doing and they will only get some certainty in 12 months from now when figures can be more easily compared like for like.

On the year ahead and much like Briscoe Group Ltd [BGR.NZX] & The Warehouse Group Ltd [WHS.NZX] last week, CEO Peter Halkett concluded the 2010 profit release by saying that:

“Kathmandu is confident that given reasonable economic conditions there will be further improvement in profitability in the year ahead. The impact of the economic environment on consumer confidence, and cost pressures both domestically and internationally are a challenge, however given our market position and brand strength we remain well placed to continue our growth."

Unfortunately for shareholders Halkett seems to favour more store building over organic growth and this will come at the expense of higher capital costs, increased rental payments and possibly impact on gross margins as the company looks to focus on volume rather than quality.

Kathmandu @ Share Investor

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 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
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor Forum
Download KMD Company Reports

From Fishpond.co.nz

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

c Share Investor 2010

Tuesday, August 10, 2010

Mixed Retail Outlook

Recent announcements by retailers Briscoe Group Ltd [BGR.NZX] Kathmandu Holding Ltd [KMD.NZX] and Hallenstein Glasson Holdings Ltd [HLG.NZX] has got me thinking about the fortunes or otherwise of the other retailers in the Share Investor Portfolio.

Briscoes had a mild upswing in sales for the last half year to 1 August 2010 but in the last quarter of that half sales were down on the same period in 2009. This clearly indicates that the economy is not well at all. Kathmandu over-promised in their IPO Prospectus and last week delivered under par sales revenue. They cited a poor overall retail environment for the gap between their promises and last weeks reality.

Hallenstein Glasson had a different story to tell however with a sizable lift in projected profit for 2010 when compared to the same period in 2009 and a reasonable lift in sales considering the current poor retail environment. This is of course off a reasonably poor 2009 profit but the company is showing promise in a time of closed consumer wallets by concentrating on all important margins, avoiding frequent sales and keeping down costs. All the things the aforementioned seem to be ignoring - with the exception of BGR on costs.

The Warehouse Group Ltd [WHS.NZX] I suspect is going to have disappointing results coming up in September and Postie Plus Group [PPG.NZX] is likely to similarly disappoint the market - nothing new there then.

With the exception of expenses incurred from thus far failed attempts by Michael Hill International [MHI.NZX] and Pumpkin Patch Ltd [PPL.NZX] to expand in North America I think those two companies will see some improvement.

Retail successes over the last year seem to be concentrated on the specialist retailers who have a loyal following of their strong brands rather than the larger broad based "department store" type operators. They seem to have been able to cuts costs in the lean times in a more expeditious manner than their bigger competitors and keeping costs down, while attracting higher margin custom in this recession is key to staying in business.

You simply cant make money by selling stuff too cheaply just to get rid off it.

Disc I own BGR, HLG, MHI, PPL, PPG & WHS shares in the Share Investor Portfolio

Briscoe Group @ Share Investor

Long Term View: Briscoe Group Ltd
Briscoe's Cash worth looking at
Why did you buy that stock? [Briscoe Group]

Download BGR Company Reports

Discuss BGR @ Share Investor Forum - Register free

Thursday, August 5, 2010

Chart of the Day: Kathmandu Holdings Ltd

Kathmandu Holdings Ltd [KMD.NZ] shares have had a poor run since its media/broker hyped November market debut, a few cents above the $2.13 IPO price. The stock reached an intra day all-time low of $1.78 yesterday on bad news before finishing at an all-time low of $1.82 at market close - down 17%. The share price reached an all time high of $2.56 in mid April.

I have been brutal in my criticism of this company over the last year or so for one reason or another and cant see why so many invested in the IPO.

Having said that the company does have some value. Not the value calculated in the IPO but it could be getting close to something worth looking at soon.

Put it on your watchlist because the company has more bad news to come and therefore the stock could be under share price pressure.

It is a guess but value might be found in the $1.20 -1.30 range.

Chart of the Day @ Share Investor

Chart of the Day: Rakon Ltd

Kathmandu @ Share Investor

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 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
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor Forum

Download KMD Company Reports

From Fishpond.co.nz

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

c Share Investor 2010

Kathmandu Holdings: Market Update Misleads

I hate to say it but I warned prospective investors in Kathmandu Ltd [KMD.NZ] before the IPO last year that the pro-forma figures used in their 2009 Prospectus were suspect and it turns out that an announcement today by Kathmandu management indicating that projected figures used in the prospectus were mostly not met by the company.

While revenue was up by more than 13% - on the back of opening 14 more stores - for the year ended 31 July 2010 to NZ$245.5 million, same store sales for the year were up 1.3% and sales from all stores exceeded the forecast issued in the prospectus by NZ$5.5 million. All these figures of course are compared to the inaccurate pro-forma accounting method used in that same prospectus, so these positive figures made in yesterday's NZX release could well be misleading.

Every other key indicator KMD made in the prospectus has been missed, with EBIT for the FY2010 year, which excludes one-off costs incurred from the IPO, to be between NZ$47.0 million and NZ$48.0 million, which will be around 5% to 7% below the prospectus FY2010 pro-forma forecast. Kathmandu’s prospectus pro-forma forecast EBIT for the FY2010 year was NZ$50.6 million. The all important profit margin is expected to be round 63%, this is below the 64% projected in the prospectus.

Please also note that the nearly $17 million cost of the IPO is not included in the $47-48 million EBIT calculation or the interest charged on the large debt (larger now due to 14 extra stores being opened) the company holds on the balance sheet.

Also, keep in mind, once again KMD are using pro forma figures which make things very difficult to accurately compare year to year figures but even these comparisons make KMD look bad.

Using EBIT figures can also be a way of hiding negative news from shareholders and the broad use of them in the KMD release yesterday must also be taken into account when trying to assess the health of the company.

I am not saying there is anything underhand going on but the way the market update was put together means investors are getting far from an accurate picture and shareholders need to either give KMD a call to see what they really mean (because they have the actual raw figures untainted by pro-forma smudging and EBIT covering) or do some calculations of their own.

The reasons for the lower figures are being blamed on the overall retail downturn by Kathmandu management:

“Throughout the final four months of the financial year, in all 3 countries that Kathmandu trades in, the retail environment has been very challenging, and more difficult than we experienced in the first half of FY2010”. Chief Executive Officer Peter Halkett

Well, duh! this was not unforeseen when the prospectus figures were being compiled and projections made. We are currently enduring one of the worst recessions in recent history and every other retailer is having high rotation sales in the hope revenue keeps turning over because people have their wallets shut.

I must repeat what I have said in other commentary made on Kathmandu (see links below). Shareholders will not see an accurate picture for the company until financials can be compared like for like (with non pro-forma figures) in the full year result September 2011.

Until then we can only gauge the health of the company from the inaccurate figures currently used by KMD management and accepted by the NZX as sufficient disclosure to investors (it aint).

The market didn't like this of course and marked KMD shares down 23c or 17% to $1.82. This is below the $2.13 IPO price and a mid April high of $2.56.

There could be value to be found in the company as the share price eases.

Kathmandu @ Share Investor

Chart of the Day: Kathmandu Holdings Ltd
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 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
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor Forum

Download KMD Company Reports

From Fishpond.co.nz

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

c Share Investor 2010

Sunday, July 11, 2010

Jan Cameron ready to move on Postie Plus Group?

Not totally sure what her end game is but Jan Cameron, ex Kathmandu Ltd [KMD.NZ] and retailer with several different brands selling goods to the public, along with nearly 10% of Pumpkin Patch Ltd [PPL.NZ] has just topped up her holding in Postie Plus Group Ltd [PPG.NZ].

On Monday 5 July she bought 600,000 shares to take her holding in PPG to 19.26% or 7,702,537 shares. She previously held 17.76%.

Under the Takeovers Code the owner of 20% or more of shares in a company must make a bid for 51% of that company.

With 32,297,463 shares held by family associated with PPG and various smaller shareholders like myself and larger holders like ACC, Jan would only have to purchase a further 12,697,463 shares to make a play for a 51% holding. Just over $3.8 million.

The market capitalisation of PPG is just $12 million.

What are Jan's intentions though?

Well, one can only do some fancy guesswork on this so lets have a go.

Jan has had a holding in PPG for many years and just two years ago snapped up their distressed manchester brand Arbuckles and used some of the 23 store sites to install her own businesses.

Postie Plus runs three brands. Baby City, Postie and Schoolltex. Baby City being the most successful of the three. Overall though the company hasn't turned a profit for the last 3 years and its recent result, the half year to 31 Jan 2010 is another significant loss. Management have performed poorly over the entire 7 year listing of the company and any redemption from PPG shareholders would surely lay in how much they could get if they sold the company to a better operator.

What I think Jan is doing is buying up and waiting until the company gets in such a state the remaining shareholders will be more than willing to sell.

Jan will have to pay more than the 30c per share she paid on Monday because none of the family interests will want to have a complete fire sale but lets just say that they would probably be open to offers.

The sites that PPG currently operate their brands in would be perfect for her new outdoor goods venture or another of her many retail interests in New Zealand.

Whatever she does do with her PPG holding you can be sure it will fit into her larger retailing empire.

Disc - I own PPG shares in the Share Investor Portfolio

Postie Plus Group @ Share Investor

Long Term View: Postie Plus Group Ltd
I'm Buying: Redux
What is Jan Cameron up to?
Whats on Rod Duke's shopping list?

Jan Cameron @ Share Investor

Kathmandu's 2011 Results Under Pressure from Jan Cameron
Kathmandu IPO: Jan Cameron lands a blow to IPO
What is Jan Cameron up to?

Discuss PPG @ Share Investor Forum

Download PPG Company Reports

c Share Investor 2010

Monday, June 7, 2010

Kathmandu's 2011 Results Under Pressure from Jan Cameron

I have given Kathmandu Holdings Ltd [KMD.NZ] alot of criticism since its IPO and float back in November 2009 and its result 2010 interim result out in March doesn't really change much for me.

Its results for this period are largely academic because they cannot be accurately compared to last years figures with were calculated using pro-forma figures. Pro-forma accounting is calculated by removing "irregular" business transactions and smoothing out the balance sheet to make things look better to investors - a great way to hide bad news. Pro-forma is generally accepted as misleading.

The increases in revenue and profit for the 2010 half year look spectacular at first glance but the comparison to last year means little as I have outlined above and the headline figures of the NZX release omit significant IPO costs - $21.3 million, $6.3 million more than budgeted. The profit result then is a $13.3 million dollar loss not an $8 million profit.

Of particular interest to shareholders should be the figure tucked away in the 2010 Interim Report of the net tangible asset backing per share. It is 12c.

A better comparison on how well Kathmandu is going will be able to be made this time next year when we can accurately compare like for like figures (we still have to add the IPO costs to get a good comparison) and then perhaps I will stop my criticism if it is a good result.

Of further concern to Kathmandu shareholders will be the possible re-entry of the former owner of the Company, Jan Cameron, back into the same retail sector sometime in 2011.

She is currently in talks with Macpac, an outdoor equipment and clothing retailer, to establish some kind of competition against the former brand that she built up and as I have said before she is one smart cookie whose business acumen in retailing should never be underestimated by her competitors.

Kathmandu as a strong in your face brand have the outdoor sector mostly to themselves in New Zealand and Cameron's expertise and contacts in retail will be a formidable challenge to Kathmandu if she decides to make a move back into this area of retailing.

Kathmandu shares have traded as high as NZ$2.56 earlier in 2010 but finished trading last Friday at $1.90.

Kathmandu @ Share Investor

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
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor Forum

Download KMD Company Reports

From Fishpond.co.nz

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

c Share Investor 2010

Wednesday, April 7, 2010

Share Investor's 2010 Stock Picks: Looking Back

Back on December 13 2009 I picked 17 stocks in my Share Investor's 2010 Stock Picks .

At that time the market had been trending up for most of 2009 and stocks were well off their late 2008, early 2009 lows.

Since December the New Zealand Stockmarket and other global indexes have headed north with the NZX 50 Gross closing at an 18 month high today. (see chart below)

With this in mind lets see how my December picks have fared 4 months latter.

Main NZX picks

Fisher & Paykel Healthcare
[FPH:NZ]

Picked at $3.24 the stock is now $3.32, an approximate 2.5% increase.

Fletcher Building Ltd
[FBU.NZ]

Picked at $7.65 the stock is now at $8.50, an approximate 12% increase.

The Warehouse Group
[WHS.NZ]

Picked at $4.03 the stock is now at $3.80, an approximate 5% decrease.

Sky City Entertainment Group
[SKC.NZ]

Picked at $3.27, the stock is now at $3.29, a less than 1% increase.

Xero Ltd
[XRO.NZ]

Picked at $1.55 the stock is now at $1.63, an approximate 5% increase.

Contact Energy Ltd
[CEN.NZ]

Picked at $5.70, the stock is now at $6.50, an approximate 14% increase.

Mainfreight Ltd
[MFT.NZ]

Picked at $5.60, the stock is now at $6.50, an approximate 16% increase.

Main ASX Picks

Caltex Australia Ltd
[CTX.AX]

Picked at AU $8.00 the stock is now at $12.00, a 50% increase.

Coca Cola Amatil
[CCL.AX]

Picked at AU $11 the stock is now at $11.25, an approximate 2% increase.

Domino's Pizza Enterprizes Ltd
[DMP.AX]

Picked at AU$ 5.10 the stock is now at $5.70, an approximate 12% increase.

Minor Picks

Auckland International Airport Ltd [AIA.NZ] Up approx 5%.

Kathmandu Holdings Ltd [KMD.NZ] Up approx 20% but chosen for a dive that it took earlier in 2010

Port of Tauranga Ltd [POT.NZ] Even.

Michael Hill International Ltd [MHI.NZ] Up by approx 10%.

New Zealand Refining [NZR.NZ] Even.

Telecom NZ [TEL.NZ] Down approx 7 %.

Yum ! Brands Inc [YUM.NASDAQ] Up by approx 15%

In an overall rising market you are saying to yourself anyone can pick stocks (even a monkey with a dart can Darren) that are going to head north and you may be right. I picked some that have clearly done better than others and some that have fared very poorly indeed. Over 4 months you will get that but as time goes on stock prices will rise.

Stocks like Telecom have done particularly badly and I picked this stock because I thought it would plumb the depths, it did and bargain hunters would have done well out of this stock in the last 4 months and hopelessly over the long-term of course.

Some interesting moves down by the likes of the WHS and some very good rises by bell-weather stocks like MFT & FBU.

My best pick, a 50% rise in Caltex, just goes to show one can get lucky. It was trading at a comparative low when picked but oil prices were set to pick up on any economic recovery or at least the perception of one.

Overall a motley collection of results that will sort themselves out, given time, if I was right in the first place.

Disclosure : I own FPH, FBU, WHS, SKC, MFT, AIA shares in the Share Investor Portfolio .

Share Investor's Annual Stock Picks

Share Investor's 2010 Stock Picks
Share Investor's 2009 Stock Picks
Share Investor's 2008 stock picks

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c Share Investor 2009 - 2010

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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c Share Investor 2010

Share Investor

Monday, November 15, 2010

Kathmandu Holdings Ltd: The First Year

Friday, September 24, 2010

Kathmandu Holdings Ltd: 2010 full year profit analysis

Tuesday, August 10, 2010

Mixed Retail Outlook

Thursday, August 5, 2010

Chart of the Day: Kathmandu Holdings Ltd

Kathmandu Holdings: Market Update Misleads

Sunday, July 11, 2010

Jan Cameron ready to move on Postie Plus Group?

Monday, June 7, 2010

Kathmandu's 2011 Results Under Pressure from Jan Cameron

Wednesday, April 7, 2010

Share Investor's 2010 Stock Picks: Looking Back

Friday, March 19, 2010

Kathmandu 2010 Profit lacks good comparison

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