Kamdar
is a department store which bring in different concept for the local
shopping experience. Aside of conventional products like casual wears,
Kamdar also provide varieties of fabric for clothing and decorating
uses. This has become a one stop shopping center for most of the
housewives (This is where most of the male individuals suffer waiting
and giving comments.) As I did evaluations for several garment
manufacturer and trader before, I discover that Kamdar present its
products in a way that fits middle and lower class needs where
everything comes with a very low margin and thus push up the sales
volume at the same time providing products with the moderate quality.
Compared to other department stores, Kamdar put a very heavy emphasize
on selling its fabric which is displayed in a very big portion of its
floor space. As there are not much value added process like logo
printing, packaging and clothing designing, this enables Kamdar to
manage its inventories at lower cost without doubt. In order to expand
its distribution network to reach more consumers, the company opened
several branches across different states in Malaysia. Therefore, most of
Kamdar's capital expenditure goes to opening these branches for
maintaining revenue level.
As
purchase of garments and fabrics is a highly seasonal affected,
customers flow will only increase when there's festivals or huge sales
promotions. Therefore, business will strive for a certain period and
drop to bottom at another time. This causes a major cash flow problem
where the company's cash is stuck with the inventories for a very long
time and lower the ability to order up to trend products. Aside of that,
operating and maintaining department stores will lead to a very high
cost. When stocks are mark up with very low margin, increasing overhead
will slice the company's profit lower. Recently, it is reported that
there is substantial amount of unapproved cash withdrawals from its
subsidiary where it reflect the company's internal control is weak. This
incident, however doesn't deteriorate the fact that Kamdar's ability of
generating future earnings and hence it might be opportunities to buy
it at fair price.
Although
there is positive indication, the company's operating cash flow is
undergoing an extreme fluctuations for the past ten years. For
evaluation purpose, I will eliminate 2012 to smoothen the cash flow
annual growth rate calculation which is 12.14%. As for returns on assets
and equities, it is quite weak and shows inefficiencies for ten years
straight. I have no reason to go further after interpreting these basic
data. Filtered out of my list.
Stock: KAMDAR Code: 8672
Stock: KAMDAR Code: 8672
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