S-chips make a comeback in Singapore

[ichiran]

Eratat operates in a highly competitive landscape and one area of concern is their cash conversion cycle increasing from 104 days as at 31 Mar 10 to 126 days as at 30 Sep 10. This trend is likely to persist and their trade receivables should also be monitored as Eratat strives to motivate their distributors by owning the specialty shops through extending longer credit terms to them.

The only thing I like about them is their pro-active management of the business evident in their switch from sports to premium lifestyle wear.

If Eratat is in a net cash position and now trading at a significant discount to fair valuation, would carrying out a placement exercise at this point (notwithstanding the discount) imply that the management foresees more challenging times ahead?