Going SOUTH, page-20

just a 2cent from my fundamental approach

I have checked their wechat online platform. (actually the program itself is very powerful) The site was really good and as great as other legit online sales platform. You can basically put orders on their site and get them to send it to china directly, without visiting their stores. They also have a part helping people to upload their ID to get chinese customs clearance. If you compare their last year sales figure with only a handfull of stores, you can prob point out that most sales are made online. This is also why they have pointed out to expand their customer services team in china in 5 different major cities.


They currently state that 90% of the sales are from daigou players. As of now, they planning to change that ratio to half daigou and half tourist. This is achieved by the opening of physical stores in the main cities.
However, I also have a level of doubt on their expansion with up to 20 stores nation wide. Since most of the sales are generated online, how much more walk-in sales from tourists can they actually generate?

Some numbers

The inventory turnover (365days) of AU8 is around 30 ish whereas JB hi fi and myer are in their 40s and 50s.
This means au8 sell their inventories twice as fast as the big boys. I personally think the real number might even better, since they accumulate their inventory before this coming expansion.

Gross profit is around 13% from the recent monthly updates. This is definitely a lot lower than JB and myers since they are basically doing business with re-sellers(daigou). I do agree that by acquiring the chinese favoured brands could expand the margin.

For disclosure, i did acquire some shares through the short fall offer. Todays drop kinda make me feel like an idiot. By no means, i am saying this is the next big thing. just trying share some of my analysis.

PEACE