KMD Kathmandu Brands

[winner (n)]

Really good trading update today

KMD share price should be a ot higher than $1.10 if this is how they are performing

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KMD/395265/374587.pdf

[Shareguy]

Agree winner. I got some more this morning.

[Shareguy]

FB positive

KMD Brands' (KMD) trading update highlighted a pleasing second half performance, notwithstanding ongoing COVID-19 challenges. Management's first-time FY22 guidance for Underlying (pre-IFRS) EBIT of NZ$53m–NZ$59m was below our expectations, but (1) a record winter promotional period for Kathmandu in Australia, (2) the recovery in the supply of Obõz product, and (3) a strong wholesale order book for Rip Curl, supports an improving outlook. Whilst we remain cognisant of the current risks surrounding the broader economic environment, we continue to view the risk-reward as positive. KMD currently trades on a two-year forward PE of ~9x, at the bottom end of peers and below its own historical average PE multiple. We retain our OUTPERFORM rating.

[winner (n)]

Average analyst target $1.53 according to marketscreener

KMD a global outfit where whatever happens in NZ has minimal impact on overall performance - you'd think that the share price would get back to those levels again ... sooner than later?

[Shareguy]

It's my only retail stock. I like the diversification of the business.  $1.50 is fair. All we need is for conditions to improve and should be back over $2.

[winner (n)]

Kathmandu is interesting from a corporate finance point of view

Pre Rip Curl acquisition market cap was $760m. Today it is $787m in spite of $374m of new capital since.

There's a thing called MVA - Market value Added being Market Cap less Shareholder Equity. In other words how much 'value' has the market added (rewarded) the company for its efforts.

Back in August 2019 KMD'd MVA was about $300m - it is now negative $43m - ie market Cap less than Equity.

This MVA is essentially the NPV of future financial returns over and above the company's cost of capital (known as excessive returns). Been tough for Kathmandu last couple of years so look at 2023 prospects in this regard. Forecasts for F23 imply a ROIC (Return on Invested Capital which includes debt) of 9% -  which is probably below Kathmandu's current cost of capital. - in other words no 'excessive returns'

This valuation methodology says KMDs market cap is about the same as its equity (ie no market value) and that is about the same as today's share price.

It seems the market per se is not yet expecting Kathmandu to make excessive returns from its recent acquisitions and will need to see that happening before the share price makes any decent gains. That's saying the recent acquistions haven't added any real value to date.

Playing around with numbers if they could achieve EBIT of $150m and show signs of growing this forever then something around $1.50 would be a reasonable valuation..... maybe next year

Just finance stuff but you'd be surprised how many real investment managers (not the guru broker analysts) look at a company this way

[Shareguy]

Take your points Winner. No question covid has been destructive in destroying shareholder value. Pre covid things were looking good.

I think the acquisition of Rip Curl has probably saved the company and has the potential to be the largest brand. Covid has not been kind especially to the Kathmandu brand.  Previous to covid you had earnings per share in 2019 of $.25 and a DPS of $.16 from $83m EBIT

We will need a miracle I think to get to $150m EBIT next year, maybe 2024. This year (2022) is not going to be good either in the broader sense, although improvement over last year.

To me this company will be a big beneficiary in any recovery. Only if covid continues to not be such an issue.  The weather does what its supposed to do, and the world doesn't go to war. Then the company should continue to improve with the 2023 earnings being a substantial improvement say $120m EBIT and $.12 EPS.

So given the market is future looking I'm thinking $1.50 is realistic now.

Thoughts ?

[arekaywhy]

Any predictions for performance with the border opening up?

Tourists looking for cheap outdoor gear to explore Godzone?

[winner (n)]

Any predictions for performance with the border opening up?

Tourists looking for cheap outdoor gear to explore Godzone?

What happens in NZ is insignificant in the big picture of this global out

So answer to you question in my humble opinion is very little.

[Shareguy]

For bar says was a lot of Australians buying KMD last quarter.  Now own 34.5 percent of the shares.

[BlackPeter]

That's good. If they own the shares, hopefully they buy as well the goods ;

Anyway - so far retail seems to do quite well ... and every time I am in the pool I notice more people wearing Rip Curl tops ... good people, I always give them a smile.

[Shareguy]

CIP FY22/23 forecasts lowered to reflect expected cost pressures
We leave our sales forecasts unchanged, however lower our forecast EBITDA for KMD in FY22/23 by -9% and -7% respectively, to reflect the impact of inflationary cost pressures such as freight and labour on Group earnings.
Maintain Overweight. Target price -8.1% to $1.58 (prev. $1.72)
Following our above-mentioned forecast changes and impacts from an increased RFR we decrease our 12-month DCF derived target price for KMD

[winner (n)]

Result out today I think

Won't be that good but they'll paint a bright outlook

Could be so bright the share price will rocket to $1.20 ..that'll be cool

Those guru analysts can't be wrong with their targets over $1.50

Sorry, meant to post yesterday as on open you might miss out on the real cheap shares at the Dollar Store

[Shareguy]

Craig's say $39m NPAT DPS 5.5c for FY22

Forbar say $40.3m NPAT DPS 6.1c for FY22

Let's see . Result out today. I'm picking it's going to be good.

[winner (n)]

Craig's say $39m NPAT DPS 5.5c for FY22

Forbar say $40.3m NPAT DPS 6.1c for FY22

Let's see . Result out today. I'm picking it's going to be good.

$40m+ bloody good after a $6m first half loss eh

The colour around how bright the future is is key today