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Retail price at RMB82 to RMB204, Real Nutri sells their products at RMB22 to RMB109.
Retailers can make as much as 100% to 400%? If it's so profitable, shouldn't Ruinian amino acids health product flood the Chinese market? Or why haven't they been able to push up the gap (or profit margin) which retailers are earning? I don't remember retailer/distributors earning such a wide spread. Their expertise is in distribution network, not much product value add which is able to warrant a 100% margin. My knowledge in health product is limited, so I might be wrong but then again, what's with health products that can allow such a wide spread? Probably Real nutri has some edge which I am not aware of.
Real Nutri's GPM has been around high 60% to low 70%. Using this same range, it means it cost only RMB7 to RMB30 to produce one box of health supplement. That's equating to about S$1 to 5.. too cheap? One may argue that it could be a result of Economies of Scale but I doubt so. Maybe a good comparison with similar peers may show the validity.
The IPO Prospectus does show the dividend policy - pg 9 - they expect at least 30% of profit to be paid out. Though it isn't a promise but most companies keep to it. Till date, if I recall correctly, Real Nutri paid less than 10% for the past 2 FYs.
Li Ka Shing holds 5% but based on its entire portfolio, it's probably a small proportion. Holding its current stake of 56m shares and assigning a value of HK$2 to each share, its gross investment is about US$16m. His latest net worth is at US$25.5b - investment is only 0.06% of his net worth. Don't forget, Li Ka Shing invested in the company before it was listed. Thus, the cost of investment should be lower than this. He can afford to lose everything and not lose his pants due to diversification. If we are intending to proportion that as well, it's fine to wager on Real Nutri's business.
Retailers can make as much as 100% to 400%? If it's so profitable, shouldn't Ruinian amino acids health product flood the Chinese market? Or why haven't they been able to push up the gap (or profit margin) which retailers are earning? I don't remember retailer/distributors earning such a wide spread. Their expertise is in distribution network, not much product value add which is able to warrant a 100% margin. My knowledge in health product is limited, so I might be wrong but then again, what's with health products that can allow such a wide spread? Probably Real nutri has some edge which I am not aware of.
Real Nutri's GPM has been around high 60% to low 70%. Using this same range, it means it cost only RMB7 to RMB30 to produce one box of health supplement. That's equating to about S$1 to 5.. too cheap? One may argue that it could be a result of Economies of Scale but I doubt so. Maybe a good comparison with similar peers may show the validity.
The IPO Prospectus does show the dividend policy - pg 9 - they expect at least 30% of profit to be paid out. Though it isn't a promise but most companies keep to it. Till date, if I recall correctly, Real Nutri paid less than 10% for the past 2 FYs.
Li Ka Shing holds 5% but based on its entire portfolio, it's probably a small proportion. Holding its current stake of 56m shares and assigning a value of HK$2 to each share, its gross investment is about US$16m. His latest net worth is at US$25.5b - investment is only 0.06% of his net worth. Don't forget, Li Ka Shing invested in the company before it was listed. Thus, the cost of investment should be lower than this. He can afford to lose everything and not lose his pants due to diversification. If we are intending to proportion that as well, it's fine to wager on Real Nutri's business.