Likewise, Briscoes, Noel Leeming, Harvey Norman etc etc
It’s a way of life in NZ.
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50c for long term hold is ridiculously good value provided they don’t fold which I don’t see them doing. They must be pretty desperate though . Retail in a tough spot right now
Disc not a holder
Existing shares = 295,073,217
New shares to be offered = 354,087,860 + $30 million in under writing (= 414 million stated in the documents )
totaling 709,152,077 shares
Closing market value = $330 million + $207 million = Market value of $537 million or 75.7 cents a share
*your equation missed out the under writing cost
Share price was $3.64 not that long ago.
Hype from growth by acquisitions quickly dissipates when the tide turns ...bubble bursts
Rod's too much of a prudent business man to risk what he has for more.
Briscoes has $67 million cash on the balance sheet, with 18.9% shareholding even for this raise Briscoes would have to put in $33 million to maintain their currently holding, never mind a takeover.
SP will track closer to the issue price. That is the most common way issues go from my experience.
He would have been approached under the $30m placement at 50 cents for sure so would have had ample time to carefully consider this capital raise already. Arguably the smartest man in retail in N.Z. That he has declined to participate at just 50 cents gives all shareholders of KMD and other retail companies a valuable insight into the seriousness of challenges he foresees ahead. Hope the underwriters have deep pockets.
Rather telling indeed - unless he wants the sp to really tank during and post the capital raise and then, make his move then?
Not taking up his 'entitlement' means the underwriters are already in the gun for around $35m of the $177m rights issue. :eek2:
Looks like sp could drop to 51c - 53c with that kind of overhang!
Net debt after capital raise will drop to around $80m vs SHF of $780m - so should be okay.
Only problem is that bulk of balance sheet consists of $635m intangibles! :eek2:
No question in my mind that this is a bank forced capital raise.
Thank goodness KMD has got underwriting in place.
We do not want another Pumpkin Patch - NZ needs our home grown brands.
At least shareholders who want to make a real killing Can also apply for some of Rod’s shares
Captain Kirk’s biggest challenge since the 87 Rugby World Cup
Hasn’t always tasted success though ...a bakery he was involved in went bust
He made a few bob out of Bailador Tech though.
Good guy though
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At least they being up front with those who are going to put heaps in
» In addition, the Group’s trading performance once stores reopen may be worse than anticipated, whether due to demand being slower to return than anticipated, margins being reduced due to the activity of competitors or the need for greater discounting than usual to attract customers, cost reductions having a negative impact on the Group’s ability to recommence operations quickly and effectively or other unforeseen factors. If these factors arise, they may have a material adverse effect on the Group’s financial position and performance
Been thinking about these guys more recently....
My general feeling has gone from somewhat negative to full on bear for a few reasons... Most of this is centered around Kathmandu rather than RipCurl and Obaz as I know more about it and from an earnings perspective is the cash generator of the bunch.
As posted above, Kathmandu is really the business they are by identifying a thin niche within the consumer goods market. They arent the best 'rag trader', holding ~17 weeks of inventory (IMHO HLG is good performer on global standards) but they knew who their customer was and effectively sold into that market. What is really probamatic is that their product portfolio from a purchasing perspective is quite 'activity related' i.e. if you need to buy everyday items you dont necessarily think of Kathmandu (and their marketing isnt aligned this way), but if you are travelling, or spending time in the outdoors then thats their niche. From a $ perspective product is 'upper mid' and so in a reduced economy that same niche of consumers will look to trade down within the category. The macro social/consumer effects over the next 2 years are going to seriously work against them, I know of other large brands which are re-configuring focus of their porfolio to be on the right side of these changes. Likewise their online sales arent amazing (though growing well rec
Also, I dont think (and somewhat know from discussions I've had with senior staff through my work) that they dont have near the brand equity around ethical/sustainability to keep those concisous consumers in a downturn (they list ~600M of intangibles on their balance sheet(. Moreover, from some social media posts I've seen (and joining all of the dots) they are withholding payment to local NZ suppliers of theirs....
IMHO, unless they do some serious turning of the ship they are going to be in some serious trouble. Their high levels of inventory holding (due to seasonal business) will come back to bite them. Has anyone stress tested their numbers? Asuming the raise goes ahead and the cost out initiatives they have outlined, are they able to swallow a -25% best case/ -50% worse case decline in revenue?
Sorry long post of rant
Good post bill
That’s how I’ve felt for a few years....a lot based on the lack of growth in kathmandu brand sales in NZ which was also starting to show in Australia.
Yoy mention intangibles of $634m (acquisition driven) but over $300m in lease liabilities could be the killer
No wonder they noted in the financials they’ll be in breach of bank convenants any day soon.
IMO once the retail sector opens again - whenever that will be customers will keep their cash very close for the next 8-9 months or until Xmass when there will be a short burst, this is the first time that the cool generation have had any sort of set back and they now believe in what is impossible to happen can happen and they will adjust their thinking and actions to this new paradigm.
IMO the S P will take quite a while to find a sustainable base perhaps until next years final results, if things and not handled carefully Kathmandu could go the way of Pumpkin Patch !! sad very sad imo!
I see the sharesies suckers are all lining up to buy at 72 cents. Crazy, they have no clue some of them. I see them on FB thinking the SP will go to TERP as if its some magical formula. Unfortunately a lot are going to get some rude awakenings. There were 382 orders at 72 before someone took a lot out just now.
Deleted - old news.
Seems to have received a good positive response from the instos
Hey if people are lapping this up maybe AIR should get in quick and do a similar capital raise...just change it to 4:1 at 50 cents and see how they go ?
Wesfarmers might take Kathmandu over in this story
But whatever Macquaries have put Kathmandu on a takeover target list and might attract others ...probably to small for Wesfarmers anyway
https://www.smh.com.au/business/comp...02-p54gcb.html
I have gone short at 91 cents. Lets see how that plays out.
You see them just after 10AM on the open. Or after coming out of a halt. Sharesies will not place orders pre-open so they all pop up at 10.01AM or thereabouts. But they are gone now. Interesting phenomena though. I went short at 91 cents, took some off the table on Friday at 82 cents and going to hold the rest of the short till about between 50 and 60 cents. (if it gets there)
Must be about time to exit the short. I see they are down to 63 cents this morning. That's a pretty quick fall the last few days. But I doubt they will fall over in the medium term. All that extra cash from the rights issue should support the balance sheet for a while.
I think so....This has the potential to be a deep recession...depression even. KMD sell things that we don't really need. There will always be some who can afford to buy their stuff, but those numbers could drastically reduce.
Basically, no one knows.
That's a problem.
Good rise this morning, something up?
Great volatility. Was 69c undervalued? Sure for what the company was. Is the current price close to the projected intrinsic value previously? probably not. Capital raising brought some financial stability I guess.
Whats the actual intrinsic value appropriate to assign to KMD? literally impossible to know with no cash flows. Can gamble/punt and make lots if you happen to match the institutes fair value projections.
Unreliable DCF shows that even if you assume no cash flow at all in 2H, the 1H alone probably valued it a little around the current price.
They haven't really sold much at all. The drop is largely due to the dilution from the capital raising.
Been some interesting (and very profitable!) price action. Not sure whether it's accumulation or short covering? Closed equivalent of 81c on ASX so let's see what happens today...
Well, the money is out of my account. Let’s see how many shares I get on 24th ......
50% up from the offer price .. but that will change maybe .. possibly.... obviously . Must say, I thought the online process was very easy...
I'm mindful that there will now be over twice as many shares for any future Div to be paid here
Probably a delay to things restarting with some customer resistance to going back out for a while
At best if Div resumes less than half what it was per share but probably less for next 6-12 months
Maybe I'm wrong, maybe I'm not - to what extent is the KMD name holding SP up ?
NZ Katmandu is open online store
We're delivering the essentials. ❄️🧊
Take on those cooler mornings and evenings with the right gear.
FREE delivery when you spend over $25 | Our couriers will provide contactless delivery and we have increased safety practices in our distribution centre in Christchurch.
As well as OZ ... online
Nah... people was cashing early Feb.....sitting on huge cash! Looking for place to put their cash.... therefore market will get higher n higher especially will low interest in the banks and plenty of newbies buying
Norges guys playing around with some of their KMD shares
My sense is KMD products are largely a fairly expensive discretionary spend and as such they will do it tougher than most other retailers in this deep recession.
My sense is that they are well and truly in trouble. A lot of kiwi's new pay full price at KMD because you wait for the 70% off sale. But many tourists passing through probably ended up paying 100% retail. They are gone. Not sure if KMD will even be profitable for a year or two.
The turnover has doubled in the last couple of years due to their boots and Rip Curl acquisitions. This has diversified their customers and locations which may give the Katmandu brand much greater exposure through the Rip Curl retailers. It will be interesting to see how badly their segments of retail fare.
Good to be down in Queenstown in September. Brilliant weather, great skiing, less people and lots of sales. Couldn't help comparing KMD sale prices with the Mountain Warehouse. Mountain Warehouse has some great gear at fantastic sale prices and makes KMD sale prices look like full retail ! Could be some extra good sales down there this year !
prehaps another capital rights issue this time next year as they trade in a loss? PPE fashion range as a new hardened economy start to be created for protecting the economy from farther risks?
Bear in mind that even after the KMD Cap Raise, I read somewhere that they still $100 m approx of interest bearing debt onboard going forward which will require servicing..
Around Cap Raise time I calculated that BGR also have $100 million approx unrealised write down on their now badly diluted stake as well over the fair value of the holding last time BGR reported .. arising out of their KMD foray which may land in BGR's next reports
Possibly changed a bit since then, but still probably a fairly hefty impact to come on BGR shareholder funds..
i alway sell retail whe they spike, sold out twice on the highs... bought back in as a destressed asset. if they survive will sell again ..be interesting to see if rip curl does soem trade.. after all surfing is on at level 3 and i can only ride my bike . no single sculling but swimming is in. a lady had her kids out swim training a few weeks ago.. pools cold its going to be cold in the water soon.. with Mr O promsing to give the government money if required its a restart ...
Learned a very expensive lesson with Pumpkin Patch. Those were different days, those were days like today.
I can't compare the two, Kathmandu, reaches many target groups. Now with what you mention, I will take that on board.
You have a very good point, and one I had forgotten. Thanks OGG.
Disc. Not a holder, currently out 99.5% (thanks to a Divi reinvestment, came as a surprise after my exit sale early March)
depth for tomorrow goes all the way down 63... DISC: always selling KMD...trading stock in private portfolios prehaps transfer to trusts at a later date.. DISC: run multiple entity transfers.
Surge in online sales and staged reopening of stores
https://www.nzx.com/announcements/352665
Good news from the online business.
Sometimes it pays to be contrarian. When in lock-down, buy outdoor gear (company shares).
Tough times for retailers ...wonder how much sales are down by?
Everything positive from Xavier but this statement slightly pessimistic ... Delaying and cancelling existing inventory orders where possible, based on reduced levels of expected demand in the medium term;
interesting article yesterday in Stuff on NZ company in the south island that brought in Italian machine for sock making and the Italians send over software to make woolen masks. KMD is one of there biggest outlets and the manufacture cant wait for NZs store to open. I was thinking just that , where could KMD get fashionable PPE. Well its being manufactured in WOOL right here in NZ using modern Italian machinery brought into the country late last year.. DISC: often holding , buying and selling this stock. Well done NZ and the value in this stock is the BRANDS and every generation loves the outdoors more and more...Do we charge a special package to bring in echo tourists ? Special flights with a 6 month stay at the now closed heritage ? For a mere cool 1 million a person?
KMD the star of the NZX today ...surging big time
Xavier needs to put announcements more people often picking on a real positive indicator And building from that