Some interesting details about Eratat

Eratat is a counter listed on SGX. Previously, I have expressed concerns over its business model and its obscene amount of trade receivables.

Subsequently, Eratat reduced its trade receivables, not by collecting back the cash, but by providing something called a renovation subsidy. Which sounds nice, but still means ultimately, the cash didn't get to them.

It has been quite a while since I studied their statements. There were some people who were pointing to the SIAS research as the "authority", and expressed their confidence in this counter because SIAS said so, especially after I have expressed concerns over it. Certain things that are red herrings in my opinion are then brushed away. :(

I dug out the past reports of SIAS research on Eratat. Each and every one of the reports mentioned Increased Exposure, even though the estimated Intrinsic Value calculated by the analyst went to S$0.27.

Interestingly, the highest price the counter has ever went to was S$0.28.


Checking the history reports by SIAS (no offence meant to any organisation),


23rd Sep 2010  Intrinsic Value S$0.320  Title: New Business Shows Great Promise
06th Oct 2010  Intrinsic Value S$0.320  Title: Running a Tight Ship
04th Nov 2010  Intrinsic Value S$0.450  Title: An Exciting Set of Results - 108% Growth
01st Mar 2011  Intrinsic Value S$0.480  Title: Time for value to be recognized.
05th Apr 2011  Intrinsic Value S$0.480  Title: Do you want to miss this ride?
07th Apr 2011  Intrinsic Value S$0.420  Title: Fast and Furious
11th May 2011  Intrinsic Value S$0.430  Title: Yet Another Exciting Set of Results
05th Aug 2011  Intrinsic Value S$0.325  Title: Strong Growth Revisited
06th Sep 2011  Intrinsic Value S$0.325  Title: China’s Gateway to European Fashion
08th Nov 2011  Intrinsic Value S$0.325  Title: Climbing the Brand Value Ladder
23rd Feb 2012  Intrinsic Value S$0.325  Title: Accumulate on Overreaction to Results
12th Apr 2012  Intrinsic Value S$0.325  Title: Treading New Ground in Trade Show
14th Aug 2012  Intrinsic Value S$0.240  Title: Focus Shifting to Distribution Expansion
05th Nov 2012  Intrinsic Value S$0.240  Title: 3Q Results Showed Improvement Over 1H
26th Feb 2013  Intrinsic Value S$0.270  Title: 4Q Results Back to Par
02th May 2013  Intrinsic Value S$0.270  Title: Higher Volume, Higher Prices for Apparel
13th May 2013  Intrinsic Value S$0.270  Title: Preparing for the Next Lap of Growth

In all reports, the analyst maintained increase exposure. And in all the reports, the intrinsic value is higher than the share price.

Clearly, it can be seen that unless an investor bought in at the ultimate low, he/she will most likely be facing a big paper loss following the research reports. Well... The "investor" may make a profit another few years down the road. The question is then, how many years does that few years mean?


Research reports protect themselves by
"As of the date of this report, the analyst and his immediate family may own or have positions in any securities mentioned herein or any securities related thereto and may from time to time add or dispose of or may be materially interested in any such securities.
...
...
The use of this material does not absolve you of your responsibility for your own investment decisions. We accept no liability for any direct or indirect loss arising from the use of this research material. We, our associates, directors and/or employees may have an interest in the securities and/or companies mentioned herein."


The analyst and organisation are protected by their disclaimers, but your money isn't.
Neither does any of my blog posts constitute any solicitation of an offer to buy or sell any securities. ")


Moral of the story: Do your own thorough homework.