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14-01-2011, 11:59 PM
Hi all, just some thoughts. I haven't read through the prospectus yet and have not crunched any numbers. But the gut feel and experiences of friends who had been partners in various 'night ventures' aka pubs/night clubs is not good.
While on the plus side, Harry's is an established brand here in Singapore and occupies a certain niche, the margins for this type of business are usually thin with strong competition/alternatives (I suppose this falls under the category of an unattractive industry by Porter). This means to me that the risk of the company making a wrong turn and have sufficient resources to survive it is not very high. (aka the safety margin). The proposed expansion overseas is a classic step by such companies to open new markets and revenue stream. But quite risky IMO.
Harry works because it appeals to sufficient number of expats here in Singapore as well as locals. Not quite sure if the same concept would fly in say, Jakarta when there are many other 'colorful' choices to go.
While on the plus side, Harry's is an established brand here in Singapore and occupies a certain niche, the margins for this type of business are usually thin with strong competition/alternatives (I suppose this falls under the category of an unattractive industry by Porter). This means to me that the risk of the company making a wrong turn and have sufficient resources to survive it is not very high. (aka the safety margin). The proposed expansion overseas is a classic step by such companies to open new markets and revenue stream. But quite risky IMO.
Harry works because it appeals to sufficient number of expats here in Singapore as well as locals. Not quite sure if the same concept would fly in say, Jakarta when there are many other 'colorful' choices to go.