KMD - Kathmandu

[Dr_Who]

Anyone interested?

The doc will not touch this one. Private equity sell down. Since JC sold out, the company have not done much, no inspiration. It has become just another clothing store. The fact that Goldman is selling down in this market is telling me maybe they want to get rid of this dog fast.

There are plenty of cheap retail stocks out there. Kath will have to be priced extremely well (cheap) to have me even look at it.

Maybe another lamb to the slaughter?

[Peitro]

Lack of initiative and growth will cause me to steer clear.. I think this company peaked in the JC days.

Don't like their "premium pricing" with continuous discounting model. You would have to be a sucker to pay anywhere near their retail prices, even at 50% off their products are well overpriced.

[Placebo]

They will trade off the `Kiwi icon' sentiment. Similar to Pumpkin Patch. Agree with the doc, plenty of other retail stocks out there, we are in a recession, and the Feltex experience makes the market wary of private equity sales.

One to watch - but not interested in the IPO.

[whatsup]

Will be interesting to read the promotors spin on this one.

[winner69]

Prob put of a value of $400 mill on it

Big price for a brand name .... and probably lumbered with heaps of debt

[whatsup]

Yeh including $399 mill for good will!!!

[kizame]

I thought private equity partners were actually supposed to improve the overall business,either because they thought the business was not being managed to it's optimum,or because it was an absolute steal being either debt free or just plain undervalued.
Or have I got that wrong?

If they want to list this,they must make a profit presumably,so I guess you would have to wonder what is going to be left on the table for Ma n Pa.

Would have to be good value, low PE and
major expansion plans,with real good management,otherwise why the hell would you want to go there. PPL is a better bet.

[glennj]

Yes the vendors would have to be realistic with pricing to get an IPO away in this market.

However I think they've been encouraged by good performance cf. other retailers. GSJBWere released a communication last month on 14 July from which I quote;

"The board of Kathmandu has forecast a significant 20% increase in operating performance during FY09(July), to $42m EBITDA. Given the strength of the recent trading and the impact of a range of cost and pricing initiatives it is likely that Kathmandu's final result will be ahead of this budget, which will be an excellent result given the highly volatile and difficult retail environment.

[macduffy]

Will have to wait and see what they come up with of course but I reckon previous posters have summed it up pretty well. Retailing has moved along since Kathmandu's glory days and it's now got a lot more competition in its space.

[zac]

Private Equity bailing. The numbers will look good for the float and a year out then profit will mysteriously evaporate and share holders will be left holding a heavily indebted, average performer. Did I hear someone mention Feltex?

[Placebo]

I am not sure what existing listed retailer I would compare them to. They are quite different to Pumpkin Patch/Hallensteins which are fashion season driven. Kathmandu has seasonal stock but they also carry a large range of high-end items like $500 raincoats, tents and sleeping bags etc. You don't buy one of those every year (well, I don't ;))

A lot of these retailers depend on new store openings to drive sales growth. Kathmandu is relatively mature in NZ and also has a sizeable presence in Australia. So will there be growth in store numbers?

You really have to see the figures on same store sales to make a judgement. Will be an interesting prospectus...

If I was in the market for a retail stock it would be PPL or MHL. Just not now ;)

[whatsup]

Yeh as long as they price the float on a P E of 5-6 for 2010/11 it should be a success and not 14 + that they think they deserve

[warthog]

Maybe they should offer membership of the exclusive Burger Fuel VIP club as an incentive?

[troyvdh]

.....in my mind this is embarrasing and only further cements the view held by many that the sharemarket is a driven by a naked unadulterated lust to make a quick buck....a merchant bank initiating a public listing !!!!!!!!!!!! give me a break......

[Dr_Who]

It seems to me like no one on this forum is applying for any shares in the IPO, so begs the question, who will they pitch this to? Are the mums and dads who lost out in Blue Chip, Bridgecorp etc spend their last dime on the Kathmandu IPO?

[winner69]

Dr .... plenty of insto with their heaps of Kiwisaver money they have to just invest in something .... anything thats going

Paper said as long as the vendors leave something the instos will have a go eh .... and then the vendors can respectably sell down twhat they keep

[Dr_Who]

Only mugs would invest their money with managed funds.

[macduffy]

It seems to me like no one on this forum is applying for any shares in the IPO, so begs the question, who will they pitch this to? Are the mums and dads who lost out in Blue Chip, Bridgecorp etc spend their last dime on the Kathmandu IPO?

A bit too early to write this off, I think.

We need to see what the financials look like; what price and prospective P/E it's pitched at; what debt it will be carrying; how much skin the vendors are leaving in; plans for the future; who the directors and executives are; and a host of other things.

Then we'll probably decide to give it a miss!

;)

[COLIN]

As far as IPO's are concerned, these days I tend to remind myself that I read somewhere that Warren Buffet shies away from investing in them. Admittedly that policy means that I have foregone isolated opportunities like RAK and BGR, but there are numerous others that went the other way - often after an initial little uptick during the post-listing period when the promoters "manage" the price.
And an IPO coming out of a Private Equity fund is a reason for double caution.

[Rif-Raf]

Not sure why people are bagging this company so much. Strong brand and one of the small number of kiwi retailers that have successfully expanded into Australia and into UK. They are probably a quiet achiever in terms of what they have managed to achieve.

[POSSUM THE CAT]

Rif Raf they were reasonably sucessfull But when a private equity firm goes and makes an offer for something that was not for sale & the owner says thank you very much. they have paid far to much. So how much is the private equity firm prepared to lose I would not value it at much more than 30% of what they payed for it. In the current economic climate.

[barney]

For the same reasons as many have previously posted I would'nt go near anything floated by private equity.Another thing to consider is that since the private equity outfit brought the business how much money have they invested into it while owning it.I bet there's been hardly a dollar put in to developing new technologies,products etc.They would have stripped out the costs to make it look good and will leave it loaded up with debt.Now they want there money out.

Watch the brokers who are involved in the float promoting it to the mum and dad investors.Then you know it's a dog.

[troyvdh]

dear rif....you have missed the point completley....the company itself is virtually irrelevant ...its a bit like mcdonalds..the food stuff ...is totally irrelevant....ITS THE MARKETING.....mcdonalds could sell bags of fresh air.......

[tobo]

yeah, just like Coca Cola could sell bags of water.
Oh...they do already.

[lakedaemonian]

Personally, I think they'd be better off waiting to float for another 5-ish years.

Not exactly a "seller's market" investment climate.

At the coal-face/anecdotal level, everyone I know who spends considerable time camping/tramping/mountaineering.....Kathmandu has a pretty lousy reputation for quality.

Macpac, Fairydown, Swazi, Ridgeline are all well respected.....Kathmandu is really a fashion retailer disguised with an outdoorsy vaneer.

I think Kathmandu's value proposition to the customer is in some cases far inferior to it's New Zealand competition.

Just my 0.02c

[BRICKS]

ALL this crap talk about a float that has not happened YET..

[Rif-Raf]

dear rif....you have missed the point completley....the company itself is virtually irrelevant ...its a bit like mcdonalds..the food stuff ...is totally irrelevant....ITS THE MARKETING.....mcdonalds could sell bags of fresh air.......

I undertand and agree with what you guys are saying about being careful of anything private equity floats in terms of saddling with debt etc.
The point I'm trying to make is regardless of what financial trickery the vendors do, the underlying business has carved out a very successful value proposition and brand which is more than can be said about most other kiwi retailers that have tried to take their brand global.

[J R Ewing]

I am having some difficulty reconciling the $60 mil EBITDA with the $8 mil profit. There is $20.9 mil debt servicing on a debt of $187 mil, but where is the other $32 mil of EBITDA?

[POSSUM THE CAT]

J R Ewing I always thought the T in EBITA stood for Tax so this needs to used in your calculations

[macduffy]

J R Ewing I always thought the T in EBITA stood for Tax so this needs to used in your calculations

Plus the Depreciation and Amortisation components represented by "DA".

[winner69]

I am having some difficulty reconciling the $60 mil EBITDA with the $8 mil profit. There is $20.9 mil debt servicing on a debt of $187 mil, but where is the other $32 mil of EBITDA?

The 08 accounts had EBITDA at $37.9m - less D and A of $4.3m less I of $21.0m less tax of $4.6m gave NPAT of $8.0m

It was quoted above that F09 EBITDA would be $42m which sort of implies maybe NPAT around $11-$12m

Where did you $60m EBITDA come from JR?

They had better do a magic -- say EV of 6 times EBITDA would give a valuation of $250m but heck last accounts said about $200m of debt ... which doesn't leave much for equity does it

Better make it 10 times EBITDA then to make it respectable ... easy as

[J R Ewing]

The 08 accounts had EBITDA at $37.9m - less D and A of $4.3m less I of $21.0m less tax of $4.6m gave NPAT of $8.0m

It was quoted above that F09 EBITDA would be $42m which sort of implies maybe NPAT around $11-$12m

Where did you $60m EBITDA come from JR?

They had better do a magic -- say EV of 6 times EBITDA would give a valuation of $250m but heck last accounts said about $200m of debt ... which doesn't leave much for equity does it

Better make it 10 times EBITDA then to make it respectable ... easy as

There is an article on stuff that says:

"Kathmandu is understood to produce (EBITDA) of about $60m." In the same paragraph it talks of the $8m after tax profit. That is hard to reconcile - perhaps the $60m is a forecast?

As you point out they will need to get this EBITDA well above $38m in order to leave significant equity based on a rational multiple of 5 or 6. I wonder how much of the capital raised is going into debt reduction and how much is going to the existing shareholders?

[cycat64]

Kathmandu is owned by three Private Equity Funds (GSJBW's Hauraki No.2 (25.5%) and Trans Tasman Fund 07 (24.5%) and (I think) 50% Quadrant). I invested $100,000 in the first of these over the period 2004 - 2007. Their first investment was Norfolk Group which was floated a couple of years ago on the ASX at about $1.90 a share. A lot of the same questions and issues that are outlined above were asked and mulled over then, but the bottom line is that over 2007-2008 I received deposits in my bank account totalling about $220,000. The return so far on the investment is 10x and they still own 20% (the share price incidentally is about $0.78 at the moment but has ranged between $2.20 and $0.21 since the float from memory) and there are a couple of other groups building stakes. The second investment was Bild NZ (Acrow Scaffolding and Dominion Constructers) but they have lost their shirt on that one. The third, Vision Senior Living Retirement Villages is looking somewhat dicey but management seem to be over the moon over the success of Kathmandu (especially the roll-out of stores in Britain). I disagree strongly with some of the earlier comments. I love fossicking through their stores and their stuff is high quality and attractive. Moreover, the brand appeals to the young and wealthy and their stores (often off the beaten track) are very well patronised, especially during the sales where there can be standing room only. The model needs to be considered also as they are a little different. They have control over everything from design, manufacture to in-store sales (and soon to go on-line). While I appreciate the concerns expressed about IPOs in this environment, especially by Private Equity, I am not complaining. I expect an IPO on the ASX and while the environment is much different to when Norfolk was floated, the power of high leverage and good luck may result in another windfall. There are other ways to make money than sharetrading but Private Equity involves risk, good fortune and willing buyers in an IPO with nowhere else to put their money.

[Placebo]

Hi Cycat,

Good post, some good observations. I am left wondering how you, as an investor in Hauraki, are left feeling with them in effect selling off the family silver, leaving themselves only with (in your words) investments they have "lost their shirt" on and "looking somewhat dicey".

I wonder how other private equity funds fare, what their success rates are. If they are like this, can you really blame them for ramping and spinning the living hell out of the stuff they take back to the market?

[cycat64]

To get involved with a Private Equity Fund usually requires a fair amount of money. In the case of Hauraki No.2 the minimum contribution from memory was $20,000 but in the case of a later one I am aware it was in the region of $500,000 and for 'selected' clients only. It is an area of high risk and patience. In the case of Hauraki No.2 we are halfway to the wind-up deadline of 10 years. Prior to Hauraki No.2 the Hauraki No.1 fund was wound up after about 6 years and returned an impressive result to investors. A typical fund will take on about 4 - 10 investments. The attrition rate is high and on average about 20% of investments go down the gurgler, but it often requires only one to perform well and you get the money back. This was the case with Norfolk and the No.2 fund. There are lots of funds about, especially Australian ones, but in NZ the Direct Capital and Pohutukawa funds have done well (the new Maui Capital group may also be worth following). When committing money to these funds you have to be prepared to lose the lot, but you are also gaining access to the talents of the 'get rich quick' boys. These people are generally multi-millionaires who have come up through the investment banks and who move ruthlessly and single-mindedly to maximise their investments. Their ambition and greed becomes your gain or your loss. These people are far too talented to limit themselves to mundane jobs such as executives in the big name companies and prefer the thrill of the chase. Placebo asks how I feel about the 'family silver' ie. Kathmandu, being flogged off. Well, I feel real good, because I might just get that part of my money back and maybe some more to boot. The intention when Kathmandu was bought was to add value to it and then screw the investing public off in an IPO within a medium time frame (a la Guiness Peat). It may be a case of 'buyer beware' but as one of the sellers I have no qualms or regrets about it. Meanwhile, can I interest you in a retirement apartment ?

[glennj]

I see in the Hauraki No2 report;
"Kathmandu is currently finalising its full year result to 2009, which will represent an approximate 50% increase over FY08."
Looking even better than expected.

[Placebo]

To get involved with a Private Equity Fund usually requires a fair amount of money. In the case of Hauraki No.2 the minimum contribution from memory was $20,000 but in the case of a later one I am aware it was in the region of $500,000 and for 'selected' clients only. It is an area of high risk and patience. In the case of Hauraki No.2 we are halfway to the wind-up deadline of 10 years. Prior to Hauraki No.2 the Hauraki No.1 fund was wound up after about 6 years and returned an impressive result to investors. A typical fund will take on about 4 - 10 investments. The attrition rate is high and on average about 20% of investments go down the gurgler, but it often requires only one to perform well and you get the money back. This was the case with Norfolk and the No.2 fund. There are lots of funds about, especially Australian ones, but in NZ the Direct Capital and Pohutukawa funds have done well (the new Maui Capital group may also be worth following). When committing money to these funds you have to be prepared to lose the lot, but you are also gaining access to the talents of the 'get rich quick' boys. These people are generally multi-millionaires who have come up through the investment banks and who move ruthlessly and single-mindedly to maximise their investments. Their ambition and greed becomes your gain or your loss. These people are far too talented to limit themselves to mundane jobs such as executives in the big name companies and prefer the thrill of the chase. Placebo asks how I feel about the 'family silver' ie. Kathmandu, being flogged off. Well, I feel real good, because I might just get that part of my money back and maybe some more to boot. The intention when Kathmandu was bought was to add value to it and then screw the investing public off in an IPO within a medium time frame (a la Guiness Peat). It may be a case of 'buyer beware' but as one of the sellers I have no qualms or regrets about it. Meanwhile, can I interest you in a retirement apartment ?

Ha ha! Nice Cycat. Appreciate the candid response

[J R Ewing]

I see in the Hauraki No2 report;
"Kathmandu is currently finalising its full year result to 2009, which will represent an approximate 50% increase over FY08."
Looking even better than expected.

That could equate to an EBITDA for 2009 of $60m. Assuming a multiple of 6, and that debt is still $187, that gives an EV of $173m.

Obviously you would need to look at how they got to the EBITDA figure, a 50% increase over the last twelve months is (as you say) "better than expected".

I would be keen to see the proposed debt post IPO...

[Yossarian]

That could equate to an EBITDA for 2009 of $60m. Assuming a multiple of 6, and that debt is still $187, that gives an EV of $173m.

Obviously you would need to look at how they got to the EBITDA figure, a 50% increase over the last twelve months is (as you say) "better than expected".

I would be keen to see the proposed debt post IPO...


I think in your example the EV is $360m - i.e. value excluding debt. cheers

[winner69]

I think in your example the EV is $360m - i.e. value excluding debt. cheers

I think you both know what you meant to say but not quite clear

Say EBITDA $60m ... EV on a multiple of 6 is $360m

If as JR assumes debt left in the business is $180m then they could float the equity for $180m (say 180 million shares for a $1) and everyhting would look respectable and attractive

Easy as ... nice round numbers and only 50% debt in the floated as well

But I think they will want a higher valuation of $360m

[J R Ewing]

I think you both know what you meant to say but not quite clear

Say EBITDA $60m ... EV on a multiple of 6 is $360m

If as JR assumes debt left in the business is $180m then they could float the equity for $180m (say 180 million shares for a $1) and everyhting would look respectable and attractive

Easy as ... nice round numbers and only 50% debt in the floated as well

But I think they will want a higher valuation of $360m

Yes, that's what I meant to say. My thoughts are that a $60m EBITDA would be a strong result compared to the previous year, and that in a difficult trading environment.

Hard to see too many takers at a multiple of 10 or thereabouts...

[Dr_Who]

There is an article in the NBR about Goldman Sachs JBWere fund in trouble. Is this the same fund in Kathmandu? I am not a subscriber, so dont have access to the article.

[winner69]

Think it is about some retirement village outfit they have a large interest in deeply in braech of banking convenants which is affecting the whole fund if they have to pump heaps of cash in

Don't know if it is the same fund which owns Kathmandu

[Anna Naum]

Papers reporting that it will be floated in next month or so.....but Mr Solly Lew said he had examined the outdoor equipment and clothes retailer Kathmandu, which is pursuing a public float, but had no interest in the group.

guess it will just have to be Mum and Dad who front up, poor people.

[Dr_Who]

Went down to Nood furnitures cos they have a sale on. Nood is one of JC's new stores. Found a couch that we like, it was 50% off. Ask if they deliver and was gonna put in a buy order until I was told that I have to wait 3-4 months for delivery!!! :eek:

I mean WTF? Hello anyone home? How can you make a client wait 3-4 months in todays competitive environment?

The Nood furnitures are very nice. In the Freedom furniture range. Trendy and funky.

[Shashank]

haha

Just had to check i was on the right forum (asx or nzx).

Regarding the IPO for Kathmandu... hmm quite hard to say but personally for me, i wouldn't go near it. I have only flicked through the first set of opinions people have given out but my usualy 'moto' is, buy shares in company you believe in (any maybe use).

There are few clothings stores which would be hell cheaper than kathmandu

Just look around, warehouse, postie plus etc. all comes to mind ..

[CJ]

Went down to Nood furnitures cos they have a sale on. Nood is one of JC's new stores.

Like Kathmandu, never buy anything at Nood for full price. Wait a week and it will be 50% off.

they have some nice stuff in their (designer style) but I would be concerned at the quality of it. I have bought cheap Chinese knockoffs of designer furniture and it was a lot more expensive than the cheap knockoffs Nood is selling! (or have they got great purchasing power?)

[Dr_Who]

Kathmandu Float Expected By Christmas

Thursday, 8 October 2009 - 10:03am
Wellington, Oct 8 NZPA - A float of clothing retailer Kathmandu is reportedly expected before Christmas.

The Independent weekly business newspaper today said it understood Kathmandu's owners, Goldman Sachs JBWere and Australia's Quadrant Private Equity, were likely to sell at least 75 percent of the firm. They were seeking a valuation of about $450 million.

Lead managers of the float -- Goldman Sachs JBWere and Macquarie -- were sounding out investors on demand and pricing in this country and Australia.

At least three-quarters of the shares were likely to be sold in Australia where listed companies typically attracted higher valuations and shares were being offered extensively through retail investment networks, The Independent said.

Kathmandu has 84 stores, of which 45 are in Australia and 32 in this country.

NZPA WGT mjd nb

[BRICKS]

He has said that the IPO will float next week wanting 400 million and will be spoken
all in AUS, they have 84 shops but BRICKS would not touch IT..

[troyvdh]

I am with you BRICKS...its got a horrible smell about it......

[airedale]

Better opportunities elsewhere.

[macduffy]

There's some pretty forthright views being put forward but we havn't seen a prospectus yet.

Or have I missed something?

:cool:

[BRICKS]

There's some pretty forthright views being put forward but we haven't seen a prospectus yet.

Or have I missed something?

:cool:

BET now you wont BUY ... THIS type of company is being flogged at the top price for the current owners not for Johnie come latelys and on top we just need another clothing SHOP

[macduffy]

BET now you wont BUY ... THIS type of company is being flogged at the top price for the current owners not for Johnie come latelys and on top we just need another clothing SHOP

We'll see - once the prospectus comes out.

Taking too hard a line resulted in my missing out on the IPO's of Woolworths, Freightways and CBA. The prospectus for the latter was available in bins outside CBA branches in Sydney at the time, just like real estate brochures!
So I've learnt not to jump to conclusions about such things.

;)

[Dr_Who]

We'll see - once the prospectus comes out.

;)

Hey Macduffy, I value your views on this IPO. Pls comment when you have had a look. I too will try to crunch some numbers and do some quantitative and qualitative analysis. I think the Myers listing will be important to watch to see how this one will float.

My experience from looking at the shops, I see Kath as just another over priced store and have no competitive advantage.

[cycat64]

I could understand why posters would be so averse to this float if it was based on fact. But the facts are not out there as yet. No float has been announced. It is possible that Kathmandu might be a lemon, but the facts so far tell us that it has been a hugely successful business and one of the few New Zealand retailers to crack the Australian market. Dr Who tells us that Kathmandu has over-priced stock and has no competitive advantage. Can I ask him two questions ? Firstly, is there something wrong with over-priced goods even though people buy them ? Secondly, for a lack of competitive advantage there has to be competition, so pray tell me what the competition is ?

[tobo]

The only thing we don't know is the price.
We know what the business is.

Kathmandu was based on an image of all the young trendies doing their OE, and high-tech advanced and good-looking outdoor wear for the rugged climates that wasn't cutesy ski-bunny wear.

More recently, for a lot of people, it's those same quality clothes for use by past OE-ers who now live in the city, and now available at 50% discount when you catch the never-ending sales. (Of course, once in the shop, you sometimes find the thing you want is not on sale. You either buy it...or you go down the road to para rubber or hallensteins or posti-plus)

The question is around the potential for the brand to transition from rugged/quality/trendy to discount clothing.
There must be other clothing brands that have done this

[zac]

The Kathmandu brand is well established and was, at the outset, a brilliant concept. The initiators, Jan Cameron and others, came from a background of retailing outdoor sports equipment, in particular, clothing. Kathmandu clothes are designed for what may be called, the urban tramper; they garments are not rugged enough or durable enough for the real thing but appeal to people who identify with travel or the outdoors. I wear Kathmandu gear in town but not in the bush. There is competition for the same market as Kathmandu; Bivouac, Mountain designs, Snogum, Columbia, Swandri etc. All are trying to trade off the outdoor image to sell casual wear. Bulk Asian made clothing is cheaper at Kathmandu, but with the exception of house brands (of average quality), any good quality branded product is no cheaper than in other stores. Kathmandu has certainly had a marketing edge over the competition but I sense that this is disappearing, and since the new private equity buyout the quality of product being sold has gone down; less good quality specialized gear in favour of cheap house brand goods.
A sort of Warehouse for the outdoor wanabe.

[Placebo]

Here we go. The rumours are all true: http://www.stuff.co.nz/business/2979663/Kathmandu-looking-for-457-million

[zac]

Further to my comments above I should mention that from the beginning the design of Kathmandu garments has been first rate; and their publicity material is superb. But on the racks the garment range has been reduced and colourways are less trendy. I will not be buying shares.

[BRICKS]

What your been waiting for $1.65 to $1.90 AU,, prob will go the high end but with so much money in AUS super funds you wont get a look IN..


BY the way there is NO general public offer..,, sorry KIWI`s...

[Nevl]

What your been waiting for $1.65 to $1.90 AU,, prob will go the high end but with so much money in AUS super funds you wont get a look IN..


BY the way there is NO general public offer..,, sorry KIWI`s...

Too pricey for my taste. Will wait till they list and then take another look. Like the company and the growth prospects but $450mill on ebita of $57 is asking a bit much in this climate.

[winner69]

Nice prospectus with plenty of pictures - prob looks great on glossy paper

https://kathmanduholdings.com/DocumentDownload.ashx?item=OPa6t6apok2Kpn-VtOHqsQ


Pretty high margin business and the proforma accounts look pretty good .... not leaving much debt in $70m) but then again vendors not retaining much of an interest either

Growth based on new stores

But priced at 13-15 times NPAT is getting a bit on the high side .... wouldn't want a bad result in the first year or so and they will br crucified

[Dr_Who]

How are they funding the new shop store rollouts?

[winner69]

How are they funding the new shop store rollouts?


From cash flows Dr ... what else

Generate heaps of dosh

[minimoke]

Nice prospectus with plenty of pictures - prob looks great on glossy paper

Pretty high margin business and the proforma accounts look pretty good .... not leaving much debt in $70m) but then again vendors not retaining much of an interest either

I'm normally right into IPO's so this one has my interest.

The pictures certainly target their market - young white people with a sense of adventure but the reality being they won't get past a latte on the high street.

I'm not so sure of the technical build of their products - from expereince a goretex coat leaked where I had my phone - good bye phone! Neither am i sure on their selling strategy - as pointed out earlier why would you pay full retail when you just have to hang a round for a while and get 50% off. At full retail there are products around which are better technically and price.

But to the books. A 3% projected dividend yield doesn't do it for me. So will we be getting press notices from IRD reminding us of teh tax implications of flicking this on listing? I doubt it.

Haven't had a detailed look at the aco****s but I'm not sure sales are increasing at the rate of store opening so I'm wondering if the brand is reaching near saturation.

Which leads me to the brand. Intangibles account for 77% of the assets. MHI is at 0.19%

Best I have a closer look.

[macduffy]

Still ploughing my way through the prospectus.

Here's Stephen Bartholomeusz' thoughts on the subject. He usually has something worthwhile to say.

http://www.businessspectator.com.au/bs.nsf/Article/Kathmandu-Myer-David-Jones-pd20091019-WY8JQ?OpenDocument&src=spb

[Footsie]

Looks OK to me.
if you could get it on a p.e of 13x thats pretty good for a retailer growing at this speed.

JB hi fi are on about 18x

there is probably a stag in it at the least. also because its a small float with a big profile demand is likely to outstrip supply. unlike Myer.

while i think its unlikely to deliver a briscoes or pumkin patch debut performance (first 12 months im talking), i think someone could get a 25% return from the IPO level.

[BRICKS]

Still ploughing my way through the prospectus.

Here's Stephen Bartholomeusz' thoughts on the subject. He usually has something worthwhile to say.

http://www.businessspectator.com.au/bs.nsf/Article/Kathmandu-Myer-David-Jones-pd20091019-WY8JQ?OpenDocument&src=spb

AS BRICKS said you would not BUY so in or out that's of coarse you can twist your broker
to come ACROSS..

[kizame]

Can't believe you guys want to suck this one up.
No funds form this ipo going to the company,and still will have debt and have to fund it's expansion.
Private equity firm will sell you this retailer at an expensive price,even though there are cheaper,better performers already expanding on out market.

Wouldn't you be better going and buying some MHI or PPL.
The stores are only busy during sale time.
Their exorbitantly price product lines are just that,I have been in there probably about 4-5 times and bought stuff all,yet I would be their target customer.Rather shop elswhere,where you know your getting quality.

Wouldn't touch this with a barge pole.

[Penfold]

I would put money on it that this will be down 10% within a month or two... they are putting it on the market at approx the same PE ratio as Billabong.

Which would you rather buy: world renowned surf brand or dodgy cheap outdoor gear manufacturer that has to heavily discount to sell?

Leave this dog I reckon...

Disc: Holding BBG

[J R Ewing]

I would put money on it that this will be down 10% within a month or two... they are putting it on the market at approx the same PE ratio as Billabong.

Which would you rather buy: world renowned surf brand or dodgy cheap outdoor gear manufacturer that has to heavily discount to sell?

Leave this dog I reckon...

Disc: Holding BBG

I don't see anything cheap about this company - neither the stock nor the shares!

[Balance]

Help the PE players make A$125m?

No thanks.

[Lion]

Remember Feltex

[ratkin]

Garbage .

Wouldnt touch them with yours :)

[bull....]

Brought some socks once cost $25 for the pair they looked smart and felt comfortable and had the Kathmandu logo on them.
After a couple of months the bottoms had worn holes in them and they had to be binned huge disappointment.
My other socks from the warehouse black and plain cost about $5 easily lasted 3 times as long given the same amount of wear time.
I dont know what there other products are like but the experience and cost put me off going back.

[macduffy]

With memories of the Feltex debacle still fresh, investors are entitled to be sceptical about IPO's promoted by private equity firms. Personally, I don't think that Kath is anything like the dog that some posters believe but I agree that it's being sold at a price(range) that appears rather expensive, even when allowance is made for the recent depressed retail conditions and expectations that these are improving.

As S Bartholomeusz has pointed out, a lot will depend on how well the Myer IPO floats, not so much because its another retailer as the differences are obviously great, but for what it indicates as to the "tone" of the market for new issues.

I won't be investing, although until my broker does his sums I'm not sure I'd get the chance! There are too many better opportunities out there and other calls for funds such as CPB's rights issue to which I will cheerfully subscribe shortly.

Will watch with interest.

:cool:

[Balance]

Article on Myer IPO - direct bearing on Kathmandu as both are being sold down by private equity owners.

http://thebull.com.au/articles_detail.php?id=6731

Overhyped, over-priced and designed to make the most money for the owners.

Crumbs left for investors.

They take the cream and the milk, you take the water left.

[Dr_Who]

Here's a test for you guys.

Is Jane Cameron buying any shares in this IPO?

[macduffy]

Here's a test for you guys.

Is Jane Cameron buying any shares in this IPO?

No idea, doc, but does it really matter?
Jan Cameron is long gone from Kath and I can't see her wanting to buy back, in what could only be a small, non-controlling way.

[kizame]

Real unusual question, why on earth would she want to?

Think about it.

[Balance]

Well, I like all the negativity so I am in.

There are some in this forum you want to watch very carefully - when they get really negative, you get in.

[COLIN]

Overhyped, over-priced and designed to make the most money for the owners.

Crumbs left for investors.

They take the cream and the milk, you take the water left.

Balance: You're a total enigma!

[COLIN]

Well, I like all the negativity so I am in.

There are some in this forum you want to watch very carefully - when they get really negative, you get in.

I'm now waiting for you to hype SCF!

[Dr_Who]

Help the PE players make A$125m?

No thanks.



Article on Myer IPO - direct bearing on Kathmandu as both are being sold down by private equity owners.

http://thebull.com.au/articles_detail.php?id=6731

Overhyped, over-priced and designed to make the most money for the owners.

Crumbs left for investors.

They take the cream and the milk, you take the water left.


Well, I like all the negativity so I am in.

There are some in this forum you want to watch very carefully - when they get really negative, you get in.

Just Amazing!

...and this is only within a few days

[COLIN]

Just Amazing!

...and this is only within a few days

Kind of discredits him/her, I think.

[macduffy]

Just showing some balance?

:D

[Balance]

It all comes down to the pricing.

The more negative, the better.

[kizame]

It all comes down to the pricing.

The more negative, the better.

Then you would be better waiting til after it lists?

I think the aussies are a bit more bullish on this ipo for some reason.

I will not change my spots.

[Balance]

The Ozzies want it - so they can have mine soon.

[Dr_Who]

No idea, doc, but does it really matter?
Jan Cameron is long gone from Kath and I can't see her wanting to buy back, in what could only be a small, non-controlling way.

JC also has a passive portfolio. She has this year invested in PPL and PPG which have done very well (both retail clothing stocks). She knows Kathmandu inside out, hence if the IPO is any good you would expect her to invest in it. Just a theory.

[Anna Naum]

JC also has a passive portfolio. She has this year invested in PPL and PPG which have done very well (both retail clothing stocks). She knows Kathmandu inside out, hence if the IPO is any good you would expect her to invest in it. Just a theory.

Looks like Jan has had a change of plan....

Jan Cameron is planning to launch 60 outdoor stores late next year – 30 in New Zealand and 30 in Australia, and she aims to heavily undercut her former company Kathmandu on price.

www.stuff.co.nz/business/industries/2996271/Kathmandu-faces-competition-from-former-owner

[Balance]

Oh dear, Brian Gaynor does not like the IPO, it seems.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10605033&pnum=0

The Ozzies better like this one as they are definitely going to be able to get a few from moi!

Ozzy, ozzy, oint oint oint!

[BRICKS]

WITH all these big spending of other peoples money and what do you end up with KAT,
When there is an on going ready made winner in the the great south island called
Smith City chain of stores with very little debt and a great takeover TARGET...

[troyvdh]

Dr who...a few postings back you queired if JC was/could/will buy into this IPO...balance you seem to be all over the place....all this i find just weird.....a bunch of professional money folk...whose sole purpose on earth is to wake up and make dosh..they are paid to do that ...buy something and then try and flog it off....thats it....the cream is gone....only hope is left....why would anyone want to give these jokers exactly want they want.......

[Dr_Who]

Looks like Jan has had a change of plan....

Jan Cameron is planning to launch 60 outdoor stores late next year – 30 in New Zealand and 30 in Australia, and she aims to heavily undercut her former company Kathmandu on price.

www.stuff.co.nz/business/industries/2996271/Kathmandu-faces-competition-from-former-owner


Oh dear! Looks like they will have to offer Kathmandu IPO at a PE of 6x and 7% div before anyone will even take look at it. :D

[Anna Naum]

Most broker firm allocations closed last Wed/Thu I am told.

[kizame]

Dr who...a few postings back you queired if JC was/could/will buy into this IPO...balance you seem to be all over the place....all this i find just weird.....a bunch of professional money folk...whose sole purpose on earth is to wake up and make dosh..they are paid to do that ...buy something and then try and flog it off....thats it....the cream is gone....only hope is left....why would anyone want to give these jokers exactly want they want.......

Eggs actly!!!

[Balance]

Dr who...a few postings back you queired if JC was/could/will buy into this IPO...balance you seem to be all over the place....all this i find just weird.....a bunch of professional money folk...whose sole purpose on earth is to wake up and make dosh..they are paid to do that ...buy something and then try and flog it off....thats it....the cream is gone....only hope is left....why would anyone want to give these jokers exactly want they want.......

BS.

Tell that to investors who bought Freightways, Super Cheap Auto, JB Hi-Fi etc off private equity interests.

It all comes to the pricing.

The more negative the better.

[Balance]

Oh dear! Looks like they will have to offer Kathmandu IPO at a PE of 6x and 7% div before anyone will even take look at it. :D

I will eat my shoe if it is sold at that kind of PE.

Will you eat sheep's eyes if it is priced higher than that?

[Dr_Who]

I will eat my shoe if it is sold at that kind of PE.

Will you eat sheep's eyes if it is priced higher than that?

Hey Balance, you gotta chill out sometime or you may have a heart attack before you reach 40. Notice my smilie grin at the end of that post? That usually means the post is abit of a cheek.

Anyway, whats wrong with sheep eyes? I would glade eat them and sheep brains if cooked nicely.

[Balance]

Hey Balance, you gotta chill out sometime or you may have a heart attack before you reach 40. Notice my smilie grin at the end of that post? That usually means the post is abit of a cheek.

Anyway, whats wrong with sheep eyes? I would glade eat them and sheep brains if cooked nicely.

Fair enough, Dr_who.

Meanwhile, more bad news for Kathmandu - in Sydney Morning Herald.

http://www.smh.com.au/business/unhappy-campers-at-kathmandu-20091026-hgon.html

Might be able to get it even cheaper in the post-IPO market, you reckon?

[Dr_Who]

Might be able to get it even cheaper in the post-IPO market, you reckon?

You may get your wish.

OUCH!

Jan Cameron to start new clothes venture

"I imagine that if we are offering a similar product at competitive prices, at everyday low prices, around 50 to 60 per cent lower than Kathmandu, I imagine that might be quite attractive," she said. "I really love the product and the industry and I see an opportunity with a different model.''

http://www.stuff.co.nz/business/world/3001496/Jan-Cameron-to-start-new-clothes-venture

[Footsie]

but if there is a restraint of trade how can she start?
she will be in court before the first store even opens?

[bermuda]

Looks like Jan has had a change of plan....

Jan Cameron is planning to launch 60 outdoor stores late next year – 30 in New Zealand and 30 in Australia, and she aims to heavily undercut her former company Kathmandu on price.

www.stuff.co.nz/business/industries/2996271/Kathmandu-faces-competition-from-former-owner

Anna,
That statement is the key for me. This IPO is only for the brave.

[Nitaa]

but if there is a restraint of trade how can she start?
she will be in court before the first store even opens?Logically there would always be a restraint of trade clause in the sale of her stake in Katmandu. How is she getting around this? Dont know but it could also be used to screw Katmandu of more cash.

One thing, she is ruthless and she isnt giving away any free lunch. Not someone i would want to to business with imo.

[Xerof]

She cannot be restrained forever....how long ago did she sell out?

The fact she's talking end of next year might give a clue to the duration of any binding restraint

[CJ]

She cannot be restrained forever....how long ago did she sell out?

The fact she's talking end of next year might give a clue to the duration of any binding restraint

Restrained till May 2011 according to the article. She has a few options:


Trying to talk down the IPO so she can buty in cheap
Trying to get an extra payout (as previously mentioned)
She believes the ROT was too broad and therefore not stand up in court
She has found a loophole in the ROT - she already owns shares in lots of retail so it must be specific to outdoor? or a % of ownership?

[kizame]

She cannot be restrained forever....how long ago did she sell out?

The fact she's talking end of next year might give a clue to the duration of any binding restraint

So,why would she send out such an advanced warning of her intentions?

Would it be to put pressure on a certain share price?

[biker]

One thing, she is ruthless and she isnt giving away any free lunch. Not someone i would want to to business with imo.

No different to the sharks flogging off Katmandu!

[Nitaa]

No different to the sharks flogging off Katmandu!Totally agree. I also have to say its a bit like the sharks getting a taste of their own medicine. Its quite an interesting scenario and i would be really surpised if the average shareholder does well out of it mid to long term.

discl. Never any intention on taking part of this IPO

[minimoke]

So,why would she send out such an advanced warning of her intentions?

Would it be to put pressure on a certain share price?
Very good questions.

Either way it can't be good for the IPO and forecasts.

The value of KAT is in its brand in a particular segment of the outdoors retail market.

This move has to devalue that brand on several fronts. Jan Cameron has her own "brand" which will attract investors. It appears she is prepared to introduce extra competition into this segment. It seems she is keen on dividing the pie rather than expanding it (going for cheap every day prices rather than KATs 50% off sale strategy).

Her 50% off worked in the times of Macpac and Fairydown with their high price home made products. That strategy may work for as long as no-one has "big barn" pricing - but it looks like this is about to change.

Future sales growth now has to be looked at in a different, more negative light. KATs brand valuation has to be less if it looses its current position in the market. Legal battles on restraint of trade will give Jan Cameron publicity and be a distraction of KATS new management. And I'm waiting for someone to bring Cabelas properly to Australasia.

On the positive side ozzies haven't been burnt by Feltex so won't have that aversion to this type of IPO. Their view of the world will be larger than our parochial view so they may see greater opportunity and they may have more of an appetitie for IPO's than NZ'ers have at the moment.

I won't be stagging this one nor looking at buying in ex IPO.

[BRICKS]

IT appears that COMMSEC has online available shares for BUYING of KAT as long as your
not from USA fill in the forms and pay your money go get them KIWI`s...

[Balance]

So,why would she send out such an advanced warning of her intentions?

Would it be to put pressure on a certain share price?

Jan is just letting the market know her intentions so that investors cannot come back in 2 years' time and blame her for KAT coming under pressure.

They have been warned. She can now proceed with a clear conscience.

[Dr_Who]

So, after plenty of heated, yet constructive discussions, anyone in for the Kath IPO?

[bermuda]

[QUOTE=bermuda;279854]

Avoid it like the plague.

Can't believe they can have an IPO when the opposition has made her intentions clear.

There must be a clever story here.

[Balance]

Myer IPO lists tomorrow - not looking good with many institutions avoiding the IPO.

I am in with KAT and looking forward to the Ozzies getting all hot with it.

[Anna Naum]

As stated in a number of press reports, the brokers need Myer to go well as they have a lot more rubbish to sell. I think Jan is being very kind to NZ investors with her disclosure of new formats/stores, after all if you invest in KAT after what she has said you know she is coming after your money some time soon.

[Balance]

As stated in a number of press reports, the brokers need Myer to go well as they have a lot more rubbish to sell. I think Jan is being very kind to NZ investors with her disclosure of new formats/stores, after all if you invest in KAT after what she has said you know she is coming after your money some time soon.

Disagree. The PE sellers of Myer are laughing all the way to their million dollar homes and resorts.

Promotors and brokers know only too well that investors out there have very short memories and as long as they can spin a yarn, the punters will be in.

That's why we have crashes after crashes.

Who remembers Frucor, Vertex, Feltex, Fortex etc?

[Anna Naum]

Disagree. The PE sellers of Myer are laughing all the way to their million dollar homes and resorts.

Promotors and brokers know only too well that investors out there have very short memories and as long as they can spin a yarn, the punters will be in.

That's why we have crashes after crashes.

Who remembers Frucor, Vertex, Feltex, Fortex etc?

Balance, I do not think Myer will be a good medium term investment and do not like KAT for similar reasons. With Aussie papers suggesting Myer @ $4.10 means PE will walk away with 6x what it invested you can see why they want people to think they are great investments!

[Balance]

As stated in a number of press reports, the brokers need Myer to go well as they have a lot more rubbish to sell.

Correction - my disagreement is re this comment of yours. Whether Myer goes well or not is irrelevant - the sellers are happy and the brokers have their commission.

Those who bought in are aware that the PE sellers made 6X their money and good on them.

I do not think that the brokers and sellers give a stuff after they have their money in the bag - the punters will keep coming back for more as they have short term memories. Has been, will be and forever.

[macduffy]

I think A N's point is that " how the Myer float goes" will have some effect on the strike price arrived at for the KAT float. Let's see what happens when Myer starts trading.

I agree with that.

[Balance]

I think A N's point is that " how the Myer float goes" will have some effect on the strike price arrived at for the KAT float. Let's see what happens when Myer starts trading.

I agree with that.

The more negative Myer IPO goes, the better for the price-setting of KAT. The lower the better.

Then, it's Ozzy, Ozzy, Oink, Oink, Oink if the KAT promotors are to be believed that the Australians cannot get enough of this company.

Omens for good listing of Myer are not good however.

[BRICKS]

[QUOTE=macduffy;279892]I think A N's point is that " how the Myer float goes" will have some effect on the strike price arrived at for the KAT float. Let's see what happens when Myer starts trading.

WITH USA having a big fall Friday and we mite have a blood bath tomorrow with or without
Myer what KIWI`s don't understand now is the super money hanging around Oz has changed the way of life there is NO logic any MORE..

[Balance]

[QUOTE=macduffy;279892]I think A N's point is that " how the Myer float goes" will have some effect on the strike price arrived at for the KAT float. Let's see what happens when Myer starts trading.

WITH USA having a big fall Friday and we mite have a blood bath tomorrow with or without
Myer what KIWI`s don't understand now is the super money hanging around Oz has changed the way of life there is NO logic any MORE..

250 pts fall is a bloodbath?

What do you call a market that has gone up over 70% since March 2009 then? Have we seen you describe the market going up?

The SKY IS FALLING!

[BRICKS]

[QUOTE=BRICKS;279894]

250 pts fall is a bloodbath?

What do you call a market that has gone up over 70% since March 2009 then? Have we seen you describe the market going up?

The SKY IS FALLING!

THE market is a day to day affair and tomorrow is down only effects people who want to SELL..

[Balance]

[QUOTE=Balance;279896]

THE market is a day to day affair and tomorrow is down only effects people who want to SELL..

My pick is that Myer will struggle to hold $4.00 tomorrow. Too many Australasian institutions staying clear and too many retail investors going for a punt.

[BRICKS]

[QUOTE=BRICKS;279897]

My pick is that Myer will struggle to hold $4.00 tomorrow. Too many Australasian institutions staying clear and too many retail investors going for a punt.


AND who really CARES..

[Balance]

[QUOTE=Balance;279910]


AND who really CARES..

LOL - so what are you doing on this thread?

[Nevl]

[QUOTE=BRICKS;279897]

My pick is that Myer will struggle to hold $4.00 tomorrow. Too many Australasian institutions staying clear and too many retail investors going for a punt.

so anyone in for a short on Myers tomorrow? It will be a down day as the asian markets follow through on Fridays drop on Wall Street. Hard to see Myers holding up in this enviroment.

[Lizard]

I had a look at KAT prospectus today. I'm a little sceptical on some of the 2010 figures/assumptions - e.g. rolling out 12 stores on similar capex as 2009 and with a decrease in working capital? And growing sales by over 11% but overheads (ex-interest) by less than 9%? It's all possible, but, at the very least, unlikely to be repeatable. By my calcs, 2011 might struggle to see an improvement on forecast 2010.

Sensitivity to margins will be crucial in the end. A 1% change in margins probably moves EBIT by about 6% - and not sure they make a good enough case to believe there is much upside to margins.

I'd value at about $1.70 - $1.75. Which is not to say it won't go up - I've rarely liked the value retail stocks have been floated at, but it didn't stop BGR or PPL going up in the first 12 months.

[Dr_Who]

Kath will have an interesting listing :D

[minimoke]

If Myers sp goes down more, which looks likely, then Kath IPO will also get impacted. Cant wait to see this dog list.
MYE down 5.6% at the moment while the All Ords is down 2% - not a great start and perhaps an ill wind for KAT.

[Balance]

The worse, the better. May get KAT at $1.00.

Them Ozzies sure know how to lead the way.

[whatsup]

The worse, the better. May get KAT at $1.00.

Ozzy Ozzy oink oink oink!

Should be priced at a p/e of 11 for 2010/11 earnings, no more.

[Anna Naum]

Should be priced at a p/e of 11 for 2010/11 earnings, no more.

Pricing this week and broker firm allocations have been made I am told. Insto pricing later this week.

[Anna Naum]

Positive article in the Australian today on KAT.

http://www.theaustralian.com.au/kathmandu-on-shopping-list/story-e6frg8zx-1225795907685

[GR8DAY]

.....when you buy an unlisted business you usually pay 1.5 to 2 times what it nets pa NOT 11 times as you are suggesting Anna Naum (and others). Who in their right mind would buy a business priced like that?? NOT ME!!!

[macduffy]

.....when you buy an unlisted business you usually pay 1.5 to 2 times what it nets pa NOT 11 times as you are suggesting Anna Naum (and others). Who in their right mind would buy a business priced like that?? NOT ME!!!

Pricing an IPO depends on a number of factors, not the least of which is the projected earnings multiple. But it's not possible to generalise about that. An established, profitable business such as KAT will command a higher multiple than a business that struggles to make a profit; a high growth "sexy" business (Rakon?) will command a higher figure still.

Anna Naum is about right IMO in suggesting a multiple of about 11.

Disc: Didn't subscribe.

[GR8DAY]

.......point taken McDuffy but MY point remains......would you personally go out and buy a viable and profitable business for 11 times what it earns per annum. If your'e being honest the answer is no??! It's nonsense. So in other words it will then take 11 years to recoup that investment (if they distribute 100% of earnings).....this is what they're asking. What a fantastic way to print money for the current owners!!

[winner69]

.......point taken McDuffy but MY point remains......would you personally go out and buy a viable and profitable business for 11 times what it earns per annum. If your'e being honest the answer is no??! It's nonsense. So in other words it will then take 11 years to recoup that investment (if they distribute 100% of earnings).....this is what they're asking. What a fantastic way to print money for the current owners!!

So you won't be buying any shares in anything then greatday .... it would be nonsensical to do so

Look at it this way .... over those 11 years you are getting a 9% return on your investment .... and guess what ... you still own the company after 11 years ... seems a good deal

[minimoke]

.....when you buy an unlisted business you usually pay 1.5 to 2 times what it nets pa NOT 11 times as you are suggesting Anna Naum (and others). Who in their right mind would buy a business priced like that?? NOT ME!!!By comparrison:
BGR = 16.5
KRK = 26.4
MHI = 3.6
PPG = 27.5
SCY = 18.3
WHS = 17.4

[CJ]

By comparrison:

MHI = 3.6I beleive this included a big one off gain so not a true comparison.

A PE of 11 isn't that bad for a retailer I would have thought.

[Anna Naum]

.....when you buy an unlisted business you usually pay 1.5 to 2 times what it nets pa NOT 11 times as you are suggesting Anna Naum (and others). Who in their right mind would buy a business priced like that?? NOT ME!!!

I do not think PE purchased KAt from Jan at anything like 1.5 to 2x. As for the 11x suggestion, as seen in the comps that minimoke provided, it can be suggested it is not that expensive IF it goes at 11x.

[percy]

a small unlisted company will sell for a pe of 4.
pe of 11 isonly high if the company,s growth is less than 11%pa.
should growth be a lot higher pe will soon come down.
pe is usually market,s guess of growth.
a good ratio is PEG ie the pe divided by growth.
so company on pe of 11 with expected growth of 22% would have a
peg of .5 excellent.
however if growth was only 5.5% peg would be 2 very poor.

[Balance]

Positive article in the Australian today on KAT.

http://www.theaustralian.com.au/kathmandu-on-shopping-list/story-e6frg8zx-1225795907685

Wow - a buy recommendation from a powerhouse broking firm like HTM Wilson! Or did they took so much stock they are now scrambling to justify why?

Let's hope the instos price this thing low.

[minimoke]

Wow - a buy recommendation from a powerhouse broking firm like HTM Wilson! Or did they took so much stock they are now scrambling to justify why?

Let's hope the instos price this thing low.
With Wilsons detailed technical analysis I'm really kicking myslef I didn't get in on this. I'm sure had I known that KAT spent 5% - 6.5% on marketing I would have been knocking on the bank managers door to double my mortgage for this opportunity!

[winner69]

That woman from Wilsons didn't do much of her analysis .... she only used bits and pieces out of the prospectus and added a few words like compelling to make her target price look right

This float will be a success .... the world wants these sort of things ... as some guru said it's just like the early 90's which saw the start of the biggest bull run ever

[kizame]

Stand back and think,just what is attractive about this float.

If it is a winner then it is because there is not much else on offer at the moment,bar capital raisings in the form of distressed companies.

I can't see how this company is attractive,buy a retailer whom has a competitive advantage or whom retails with a point of difference,they don't do either.
PPL - good product,niche market,well set out attractive stores.They have the wow factor as in No.1 searched for product on trade me for a long time.
MHI- This co. has changed since first listing,but you can't argue with the proven success formula,attractive stores,sales staff whom are drilled on the science of retailing,and not to mention an inspiring leader.

You can pick up cheaper better retailers already on the market with way better prospects IMHOP.

[Jay]

I would have thought 1 reason to steer clear , at least from the IPO, is that all the money is going to the (will be former) owners. What does that tell you?
The are not even prepared to stick around!

[troyvdh]

you should have made more postings in 8 years jay....

[cycat64]

I'm not sure why all you posters seem to think it is immoral that the owners of Kathmandu are selling up. They want to sell and presumably someone wants to buy. The buyers had a choice - take it up or leave it alone. Why should they leave something in it ? You know, I sold my home recently. It served me well for 12 years. I put a price on it and someone came along and bought it. I didn't tell them about the magpies that nest just over the back fence and have made my life miserable for years. They can find that out, but in the meantime they may well be enjoying their new home. Bugger leaving money in it. When I went down the drive in the car for the last time I felt the world lift off my shoulders. Do all you people grizzling about this float accept prices below what you can get on the market when you sell things, and then leave a bit in to show some faith ? Bet you don't.
I wouldn't touch this IPO with a barge pole. But then....

Disc: Own part of KAT through Hauraki No.2

[Anna Naum]

Looks like Kiwis dont like it and Aussies do.....

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10608478

[Dr_Who]

Looks like Kiwis dont like it and Aussies do.....

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10608478

Are these the same Aussie investors that put their money in Myers? The tables have turned. Usually, anything IPOs the Aussies dont want we end up with it.

If JC came out to raise funds to compete with Kathmandu and the numbers stack up, I would be interested in putting money with her.

I wonder what the forecast PE would be for Kat if JC's new adventure store starts selling products at half the price?

[Anna Naum]

Are these the same Aussie investors that put their money in Myers? The tables have turned. Usually, anything IPOs the Aussies dont want we end up with it.

If JC came out to raise funds to compete with Kathmandu and the numbers stack up, I would be interested in putting money with her.

I wonder what the forecast PE would be for Kat if JC's new adventure store starts selling products at half the price?

I think most KAT sales are at 40% or more off, I would be surprised if they sell that much at full price.

Part of the reason the NZ market is so small compared to AU is that AU companies for many years have come to NZ and made takeover offers for NZ companies at multiples that seem crazy to a NZ investor. One of the reasons they can do that is the multiple they are priced at in the Aussie market means the takeover is quickly (if not immediately) earnings accretive to them.

It is possible that a stock can be viewed as expensive by NZ investors and cheap by Aussies or other foreign investors. Thats one of the reasons why companies like Lion Nathan and Nufarm changed domicile....and it is one of the reasons why FBU, NPX and probably others are looking at it now.

[Balance]

I think most KAT sales are at 40% or more off, I would be surprised if they sell that much at full price.

Part of the reason the NZ market is so small compared to AU is that AU companies for many years have come to NZ and made takeover offers for NZ companies at multiples that seem crazy to a NZ investor. One of the reasons they can do that is the multiple they are priced at in the Aussie market means the takeover is quickly (if not immediately) earnings accretive to them.

It is possible that a stock can be viewed as expensive by NZ investors and cheap by Aussies or other foreign investors. Thats one of the reasons why companies like Lion Nathan and Nufarm changed domicile....and it is one of the reasons why FBU, NPX and probably others are looking at it now.

Good point. Ozzies certainly value their listed companies much more than NZers who are happy to sell at the firstr opportunity for a quick profit. Imagine if we still had Fletcher Energy -n it would be $30 at least today.

[Balance]

Looks like Kiwis dont like it and Aussies do.....

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10608478

KAT was only available in NZ through Were & Macquarie so the other brokers are talking bs. Also, someone should ask Waddell about his firm's IPOs like Diligent, PRC, Austral, Glass Earth etc.

[Xerof]

More misinformation from Balance

Waddell had nothing to do with any of those IPO's

[Balance]

More misinformation from Balance

Waddell had nothing to do with any of those IPO's

Waddell is part of McDouall Stuart.

So you are telling us that McDouall Stuart has nothing to do with the IPOs?

And Waddell does not represent the firm?

[Xerof]

I repeat: Waddell had nothing to do with those IPO's.

You of all people should know they were organised by McDouall Stuart long before Waddell joined McDouall.

[Balance]

I repeat: Waddell had nothing to do with those IPO's.

You of all people should know they were organised by McDouall Stuart long before Waddell joined McDouall.

Fair enough. We are talking here about the firm, Waddell, not Waddell the person.

And Wadell now represents McDuall Stuart.

Anyway, the other brokers are going to eat humble pie if KAT is priced really low by the institutions.

Let's watch and see.

[Dr_Who]

Priced at $1.70, so gives forecast PE of 13 to 15x.

What day does it list?

[whatsup]

Priced at $1.70, so gives forecast PE of 13 to 15x.

What day does it list?

Still too expensive should have a p/e of 11--12 imho.

[Anna Naum]

Priced at $1.70, so gives forecast PE of 13 to 15x.

What day does it list?

According to paper, Kathmandu shares are expected to begin trading on the ASX and the NZX tomorrow at 11am Sydney time and 1pm New Zealand time.

[Dr_Who]

Thanks Anna.

Kath listing will be interesting to watch.

[Turboman]

Predictions on what it will close at tomorrow? I've got $1.66

[patrick]

Too much self interest evident in some of the postings!

My pick...a 6 cent premium.




Disc: Hauraki No 2 investor

[CJ]

Disc: Hauraki No 2 investorAs an involuntary seller, are you buying back in?

[Anna Naum]

Predictions on what it will close at tomorrow? I've got $1.66

Are you talking AU or NZ price. Stock was issued at $1.70 AU

[Footsie]

the insto book build was 3 times covered at 1.70

I think they have learnt from MYR. it will be a premium IMHO

[whatsup]

When does it start to trade ?

[Anna Naum]

When does it start to trade ?

Kathmandu shares are expected to begin trading on the ASX and the NZX at 11am Sydney time and 1pm New Zealand time.

[tango]

Very interesting to watch.

I didn't bother getting the prospectus as I don't think they have a unique competitive position. There are lots of competing products at lower prices. There is sentimental attachment to the brand and it does have some value but I know I'm one of the many people who only shop there when they have their half price sales.

[Anna Naum]

code = kmd

[Anna Naum]

2.25 .

[Nevl]

2.15 now. wow.

[Anna Naum]

2.15 now. wow.

? do you have live feeds? I thought I did and it says $2.28

[Nevl]

no i don't but was using the sharechat site. but it looks as though they are settling around the $2.20 mark

[Ponda]

Last trade at 1.23pm was $2.26 on the NZX
Last trade at 11.23pm was $1.79 on the ASX (EST)

Disc: Not a holder

[patrick]

As an involuntary seller, are you buying back in?

Have to get some advice from K/DONT first.

[Footsie]

small premium as expected

Just what every IBanker wants.... I.e the vendor got a good price but a little bit left in it for the punters.

[Balance]

Fair enough. We are talking here about the firm, Waddell, not Waddell the person.

And Wadell now represents McDuall Stuart.

Anyway, the other brokers are going to eat humble pie if KAT is priced really low by the institutions.

Let's watch and see.

So much for all the negative talk here and Kathmandon't.

Nice IPO. Nice profit.

[Sideshow Bob]

It's only the first day - the proof in the pudding is what happens over the coming weeks....but still, better than Myers!!

[Balance]

It's only the first day - the proof in the pudding is what happens over the coming weeks....but still, better than Myers!!

Proof of the pudding is that it has listed well - confounding the doom and gloom merchants (Kathmandon't indeed!)

Money in the bank for those who went in for a quick profit. 66m shares traded in Oz and 11m in NZ.

[Balance]

Big lesson to be learnt here.

Watch some of the posters here carefully.

When they get feverishly negative, you know you are on to a winner.

Could be big or could be small - but a winner.

[patrick]

Proof of the pudding is that it has listed well - confounding the doom and gloom merchants (Kathmandon't indeed!)

Money in the bank for those who went in for a quick profit. 66m shares traded in Oz and 11m in NZ.


It looks like
"We did not get an allocation so we don't like it."

Perhaps why the NZ brokers missed out.

[OldRider]

I haven't tried for any new issue recently. Too little cash, it has been much more profitable I think,going for as many as possible of the SPP's and rights isues.

I took a look at those purchased, not one was lower than purchase, Rakon has just managed to stay afloat. Presently, gain about 30% since April 2009, better I think than
the FPO's, taking a guess gain must be close to 100% annual rate.

[macduffy]

I haven't tried for any new issue recently. Too little cash, it has been much more profitable I think,going for as many as possible of the SPP's and rights isues.

I took a look at those purchased, not one was lower than purchase, Rakon has just managed to stay afloat. Presently, gain about 30% since April 2009, better I think than
the FPO's, taking a guess gain must be close to 100% annual rate.

I agree with that.

There's not been any need to chase IPO's for those who qualified for the many lucrative rights issues and SPP's. Some of the gains, particularly on the Aussie issues such as the banks, TSE, RIO, BOW etc have been spectacular. Of course, one had to be holding the right shares at the time!

;)

[Dr_Who]

Will have to revisit this threat in 2 years time and see where the sp is. As we all know, the med to long term invest dont really care where the short term price movement is, cos 2-10% return is neither here nor there. We dont see shrewd investors like JC buying PPL for a 2-10% gain and flick it off in a week.

[Balance]

Will have to revisit this threat in 2 years time and see where the sp is. As we all know, the med to long term invest dont really care where the short term price movement is, cos 2-10% return is neither here nor there. We dont see shrewd investors like JC buying PPL for a 2-10% gain and flick it off in a week.

I am going to consign this posting to posterity.

Medium to long term investors? On sharetrader?

Remember what was said about JC and Rod Duke when they bought PPL and the sp kept falling?

[troyvdh]

If you like Rod Oram...NZ investors get the thumbs up (as opposed to the ozzies) by not going near this outfit.

[Doyle]

If you like Rod Oram...NZ investors get the thumbs up (as opposed to the ozzies) by not going near this outfit.

Which Article was that?

[troyvdh]

radio nz site ...catherine ryan has mr oram on on a regular basis.Go to the site and you can have it replayed.In essence what he was saying is that at a time when folk are being encouraged to diversify away from rentals..along comes a "throw off" from some money blokes who made heaps (from borrowing heaps).Hardly a good start to begin investing in shares.

[minimoke]

Big lesson to be learnt here.

Watch some of the posters here carefully.

When they get feverishly negative, you know you are on to a winner.

Could be big or could be small - but a winner.
Maybe. I've no regrets I didn't get into this IPO at $2.13. Stagging for $2.23 isn't worth it. Price already dropped back to $2.16 so I'll keep it on my watch list purely as a point of reflection.

[Anna Naum]

Maybe. I've no regrets I didn't get into this IPO at $2.13. Stagging for $2.23 isn't worth it. Price already dropped back to $2.16 so I'll keep it on my watch list purely as a point of reflection.

Had to wait a while.

[Balance]

Below issue price in Oz now.

Great IPO - as expected, the Ozzies lapped this one up, allowing NZers to take a profit.

Cheers, matey!

[kizame]

If you made a wee bit here good on you,but I think it was a gamble.As i said before you only need to think a wee bit about this one,and then the decision as to whether you want to be there or not, is easy.
There are other offerings I think coming up,that are way more alluring.

[Balance]

If you made a wee bit here good on you,but I think it was a gamble.As i said before you only need to think a wee bit about this one,and then the decision as to whether you want to be there or not, is easy.
There are other offerings I think coming up,that are way more alluring.

The more negative some of the posters here are, the better.

You simply do the opposite.

[Dr_Who]

Its breached the AUD1.70 support level.

If it stays below the 1.70 it can go lower. A chartist may able to confirm this.

[kizame]

Its breached the AUD1.70 support level.

If it stays below the 1.70 it can go lower. A chartist may able to confirm this.

If it closes today below 1.70 the support,then it is still in a downtrend,however I feel that it is probably just being revalued down to where it should be for now based on a forward PE ratio I suspect.It is too new to the market to be in a large downtrend.

[minimoke]

Maybe. I've no regrets I didn't get into this IPO at $2.13. Stagging for $2.23 isn't worth it. Price already dropped back to $2.16 so I'll keep it on my watch list purely as a point of reflection.So a month on we have Oz showing interest at UAUD$1.65. And NZ has stalled with only 2 bids, the best at NZ$2.03. Perhaps the best way to get something out of KMD at the moment is via their up to 60% off sale.

[Anna Naum]

Was in my local store yesterday picking up a few Xmas goods. Asked the store manager how things were going this year, he said that they were a bit ahead of last year and thought the styles this year were better. I noted that stock levels looked lower and he suggested that the ordering system had improved a lot.

[cycat64]

As a follow-up to my earlier posts. The return to investors in the Hauraki No.2 fund for their 25% ownership of Kathmandu was 3.4x the original capital. This represented a 41.7% compound annual return. The general impression created was that the float was a bit of a damp squib for the owners. Well, I beg to differ.

[troyvdh]

..as well you should...no surprises there i suppose...in my world there is saying..."always leave something for the next bloke (shella i suppose to..)"...and in my experience ...30 plus years its done me well....aint lost heaps...aint made heaps...made enough though...just average...cheers...

[macduffy]

Today's IPO pricing works on the basis of tendering the shares to the highest bidder, or at least, the highest price at which the offering will be taken up.

I doubt that the concept of leaving money on the table has very much to do with it, from the vendor's point of view.

;)

[troyvdh]

..thats my point..."they"...extract the last cent out of the deal...maximise the "good" in the product...and sell...leaving behind a "bright future"...but then some of us see futures in products that are at a "low"...after a while i have realised that when "everything is rosy in the garden"...then what are the chances of "things getting better"...from a situation of "things" ...being ..."great"...Look at tiger...what were the chances of his situation actually improving....from perfect...having said that I am aware of the saying "never stand in front of a "moving train"...so ....I really havent a clue....just plugging along....cheers...

[Dr_Who]

KMD's next profit announcement will be very interesting. If they cant meet forecast the shares will get hammered.

Yes a great IPO indeed......... Yeah Right.

[Balance]

Wish there is an IPO like this every month. Easy money.

All the stock you want and all the stock you can sell in the first week for a profit yo the Aussies.

BRING THEM ON!!!!

[winner69]

Kathmandu done a bit better then Meyer since floating .... on the ASX KMD only down 5% while MYR down 11% from the IPO price.

Both down though the ASX up 3-4% since they both floated.

Another not so good sign is that both are not that far off the lows they have achieved.

Easy money for some in the early days but will be interesting where both are in 6 months time

That Meyer store in Melbourne is a dogs breakfast of a place ... is undergoing a major fit out but heck it is a mess.

Kathmandu stores in Wellington don't seem to have to had too many shoppers in them this week

[whatsup]

Kathmandu done a bit better then Meyer since floating .... on the ASX KMD only down 5% while MYR down 11% from the IPO price.

Both down though the ASX up 3-4% since they both floated.

Another not so good sign is that both are not that far off the lows they have achieved.

Easy money for some in the early days but will be interesting where both are in 6 months time

That Meyer store in Melbourne is a dogs breakfast of a place ... is undergoing a major fit out but heck it is a mess.

Kathmandu stores in Wellington don't seem to have to had too many shoppers in them this week

Winner , The real lesson from these OVER PRICED floats/refloats is NEVER BUT NEVER buy any share that a private equity partner has had anything to do with, IMHO most of them would sell their fathers (for a $ or whatever ) if they knew who he was.

[troyvdh]

...Whatsup....what a perverted point of view...more so given the time of year...how dear you slay these kind folk beavouring away behind ...ummm...somewhere...trying to mmmmm..do good stuff.....darn it....you know what i mean....shame on you.....anyways..

PS ...hope you have a good one...

[whatsup]

...Whatsup....what a perverted point of view...more so given the time of year...how dear you slay these kind folk beavouring away behind ...ummm...somewhere...trying to mmmmm..do good stuff.....darn it....you know what i mean....shame on you.....anyways..

PS ...hope you have a good one...

Please say that all again in anglich?

[cycat64]

I don't wish to be an apologist for Kathmandu as I no longer have an interest in them, nor do I wish to. However, I am amused at the trash that is being written in this thread. It matters not whether the previous owner was an individual, a private equity fund, or whatever. They will be selling to maximise their return. The market determines the price according to the demand for the shares, presumably after the buyers have done due diligence.

In the case of Kathmandu there is no evidence whatsoever that their float will turn out to be a dud for those who elected to get on board. Quite the contrary. It has been a hugely successful business to date with a marvellous track record, a record that would easily eclipse most of the better companies on the NZX boards.

It is correct that in the recent IPO it was mainly the Aussies that came to the party. But what does that tell us ? Since when have the Aussies been inferior in their judgement than New Zealanders ?

Let us wait to see if this outfit meets its prospectus projections. Then cast judgements, but any conjecture at this point is plain drivel.

[whatsup]

I don't wish to be an apologist for Kathmandu as I no longer have an interest in them, nor do I wish to. However, I am amused at the trash that is being written in this thread. It matters not whether the previous owner was an individual, a private equity fund, or whatever. They will be selling to maximise their return. The market determines the price according to the demand for the shares, presumably after the buyers have done due diligence.

In the case of Kathmandu there is no evidence whatsoever that their float will turn out to be a dud for those who elected to get on board. Quite the contrary. It has been a hugely successful business to date with a marvellous track record, a record that would easily eclipse most of the better companies on the NZX boards.

It is correct that in the recent IPO it was mainly the Aussies that came to the party. But what does that tell us ? Since when have the Aussies been inferior in their judgement than New Zealanders ?

Let us wait to see if this outfit meets its prospectus projections. Then cast judgements, but any conjecture at this point is plain drivel.

Yeh right, pass me a Tui!!!

[troyvdh]

...dear cat you put your point very well...and it is appreciated....however i would venture to say that the opinions put forward are from folk who have experience have ..."lost some skin" over their investment lives....hence their posts....to state same is "drivel" is very very very brave...and perhaps somewhat arrogant....position to take....but good on you anyways.....I wish you well....

[Dr_Who]

I think JC will have the last laugh on KMD.

Just watch this space.;)

disc: not a sh, did not buy any in the IPO

[Dr_Who]

CaN IT HOLD $1.60? :eek:

How low can this dog go? :eek:

[winner69]

CaN IT HOLD $1.60? :eek:

How low can this dog go? :eek:

Answer appears to be NO .... close at 159.5

See what happens tomorrow for confirmation

[Balance]

I think JC will have the last laugh on KMD.

Just watch this space.;)

disc: not a sh, did not buy any in the IPO

Er? What last laugh?

The private equity interests who bought from her are the ones laughing like hyped-up-on-P gang members all the way to the bank. Bought from her for $1 in 2006 and sold for $4 equivalent - a profit of over 300%!!!!

She must be bitter as twisted Invercargill lemon that they stole the company from her.

It's the Australians who bought the hype who are wearing the losses from the IPO. Bloody good job too! Great IPO for NZers who sold to the Ozzies.

http://www.nzherald.co.nz/news/print.cfm?objectid=10605033

[Dr_Who]

Answer appears to be NO .... close at 159.5

See what happens tomorrow for confirmation

Sp now at $1.55. With flat retail sales as indicated by WHS and MYR will be testing times for alternative clothing stores. Trading at a high PE, one wonders if KMD can meet forecast. We saw what happen to PPL sp when they miss forecast.

Those that have been saying.... Great IPO... Yeah right mate.

[Balance]

Sp now at $1.55. With flat retail sales as indicated by WHS and MYR will be testing times for alternative clothing stores. Trading at a high PE, one wonders if KMD can meet forecast. We saw what happen to PPL sp when they miss forecast.

Those that have been saying.... Great IPO... Yeah right mate.

Get over it, Dr Who.

Great IPO for Private Equity Investors.

Great IPO for Staggers.

Lousy IPO for Ozzie investors, so great IPO for NZers who took a quick profit.

How often do you get an IPO where you can get all the stock that you want and flick it out in volume for a nice profit day 1 and day 2?

No point stating the obvious about KMD missing forecast - all stocks get punished if they miss forecast, some more than others. Tell us what will happen if KMD exceeds forecast - what will happen?

[minimoke]

Get over it, Dr Who.

Great IPO for Private Equity Investors.

Great IPO for Staggers.

Lousy IPO for Ozzie investors, so great IPO for NZers who took a quick profit.

How often do you get an IPO where you can get all the stock that you want and flick it out in volume for a nice profit day 1 and day 2?

No point stating the obvious about KMD missing forecast - all stocks get punished if they miss forecast, some more than others. Tell us what will happen if KMD exceeds forecast - what will happen?
Before we get too carried away lets remember that demand for this IPO was weak - hence its low listing price. The indicative price range was AUD$1.65 to $1.90 but listed at $1.70.

The Private Equity investors would have been happy enough with this price - but it wasn't as good as they would have liked.

Staggers made a profit - but 4% (less brokerage fees and tax) didn't, IMO, reflect the risk atttached to this listing. Especially off the back of Meyers listing which, as I recall ended their first day down 8%.

As for investors - this has been in downwood trend since day three of listing.

I'm struggling to see how this could be described as a "great" IPO in any sense of the word.

[macduffy]

Only in the sense of a successful stag - as Balance keeps on telling us!

:D

But the company is listed, adds some additional (moderate) depth to the market. Now has the job in front of it to attract long term investors.

[Balance]

Before we get too carried away lets remember that demand for this IPO was weak - hence its low listing price. The indicative price range was AUD$1.65 to $1.90 but listed at $1.70.

The Private Equity investors would have been happy enough with this price - but it wasn't as good as they would have liked.

Staggers made a profit - but 4% (less brokerage fees and tax) didn't, IMO, reflect the risk atttached to this listing. Especially off the back of Meyers listing which, as I recall ended their first day down 8%.

As for investors - this has been in downwood trend since day three of listing.

I'm struggling to see how this could be described as a "great" IPO in any sense of the word.

Question of reading the tea-leaves.

Risk attached to the listing? Read thru' the thread - everyone got so negative that the IPO was going to be priced right fort a stag. And you can get as much stock as you want - not often with IPOs do you get that privilege. No brainer there.

Private Equity made 300%+. So they did not make 350%. Big deal!

As for investors - they were warned, weren't they?

[minimoke]

Question of reading the tea-leaves.

Risk attached to the listing? Read thru' the thread - everyone got so negative that the IPO was going to be priced right fort a stag. And you can get as much stock as you want - not often with IPOs do you get that privilege. No brainer there.

Private Equity made 300%+. So they did not make 350%. Big deal!

As for investors - they were warned, weren't they?

As I recall, JC got around NZ$275 for her 51% and 49% tranches. At listing these canny Private equity investors got NZ$426m so I’m not sure how it’s figured they made 350% on their investment. $426m less listing fees ($20m??) less the AUD$40m I’m sure they would have liked if the issue price was $1.90 less what they have borrowed / spent growing KMD since the ’06 buyout. No public offering and no uptrend in price – despite overall AUX / NZX market improvements since then. I reckon the Private Equity investors were well pleased to get out with what they did.

I don’t reckon its reading the tea leaves. I reckon it’s a lucky break by some punters who were swayed by their brokers and given a mere 4 hours on day one to quit their holding. Sure the stags (only 10% of shares held by NZ’ers) made a “profit” but not of a size I’d be crowing about as the coin could so easily have fallen on the other side.

[Balance]

As I recall, JC got around NZ$275 for her 51% and 49% tranches. At listing these canny Private equity investors got NZ$426m so I’m not sure how it’s figured they made 350% on their investment. $426m less listing fees ($20m??) less the AUD$40m I’m sure they would have liked if the issue price was $1.90 less what they have borrowed / spent growing KMD since the ’06 buyout. No public offering and no uptrend in price – despite overall AUX / NZX market improvements since then. I reckon the Private Equity investors were well pleased to get out with what they did.

I don’t reckon its reading the tea leaves. I reckon it’s a lucky break by some punters who were swayed by their brokers and given a mere 4 hours on day one to quit their holding. Sure the stags (only 10% of shares held by NZ’ers) made a “profit” but not of a size I’d be crowing about as the coin could so easily have fallen on the other side.

Ok, it's clear you have no idea how private equity deals work so watch the numbers dance for your pleasure.

$275m was funded by capital/equity of $78m and debt of $197m.

The PE investors received $316m from IPO = $426m less listing fees of $15m & KMD received $85m.

$316m divided by $78m = 300%+ profit.

Tea leaves were easy to read if you care to read carefully. The ozzies loved this IPO and KMD made KMD an index stock in both ASX and NZX, ensuring after market support. After the disappointment of Myer, KMD was going to be priced by the institutions 'cheap'.

[Sideshow Bob]

$426m - $15m - $85m = $326m.

But whatever the profit, then they have to pay back the $197m debt??

[Balance]

$426m - $15m - $85m = $326m.

But whatever the profit, then they have to pay back the $197m debt??

What's $10m between JC and the PE investors?

The debt is left in KMD and reduced by the $85m mentioned above. It has also been reduced by cash flow generated by KMD in the last 3 years.

That's how PE works. Magic, huh?

Mind you, the PE investors in Yellow Pages and Independent Liquor are probably sitting on multi-billion dollar losses.

[whatsup]

What's $10m between JC and the PE investors?

The debt is left in KMD and reduced by the $85m mentioned above. It has also been reduced by cash flow generated by KMD in the last 3 years.

That's how PE works. Magic, huh?

Mind you, the PE investors in Yellow Pages and Independent Liquor are probably sitting on multi-billion dollar losses.

Romoured to be around $550 mil in Independent Liquors case but then again its most probably a limited liability vehicle partnership in which case the original "seed " money -$100mil, from the PE investors is "lost" and the real leverage investment is left with the fianancer!

[minimoke]

Ok, it's clear you have no idea how private equity deals work so watch the numbers dance for your pleasure.

$275m was funded by capital/equity of $78m and debt of $197m.

The PE investors received $316m from IPO = $426m less listing fees of $15m & KMD received $85m.

$316m divided by $78m = 300%+ profit.

Tea leaves were easy to read if you care to read carefully. The ozzies loved this IPO and KMD made KMD an index stock in both ASX and NZX, ensuring after market support. After the disappointment of Myer, KMD was going to be priced by the institutions 'cheap'.
I don't have the PE figures - but I have no doubt they were happy enough with this particular listing. But my point being that they would have preferred a listing at $1.90 - making another $40m on their original $78m. There probably is something to be said for " a bird in the hand...."

The Ozzies may have loved this listing - but are probably rueing the decision as they have seen their investment fall 10% in a month or so and those keen buyers in the first few days have dropped more. I can't see much advantage being an index stock if playing this one is like catching a falling knife. Good luck to buyers in the short term. Those that bought MYR after listing would probably be less unhappy.

As an aside, wouldn't the PE owners have paid off some of their debt over the past few years?

[steve fleming]

Romoured to be around $550 mil in Independent Liquors case but then again its most probably a limited liability vehicle partnership in which case the original "seed " money -$100mil, from the PE investors is "lost" and the real leverage investment is left with the fianancer!

http://www.smh.com.au/business/alcopops-on-woolworths-shopping-list-20100106-ludr.html

"Independent Liquor, which was sold to the private equity firms PEP and Unitas in December 2006 for $NZ1.3 billion"

"The business is believed to be worth about $700 million, which is sharply lower than the price two private equity operators bought it for three years ago"

On those numbers you wouldn't think there would be much equity left for the PE guys....

[Balance]

I don't have the PE figures - but I have no doubt they were happy enough with this particular listing. But my point being that they would have preferred a listing at $1.90 - making another $40m on their original $78m. There probably is something to be said for " a bird in the hand...."

The Ozzies may have loved this listing - but are probably rueing the decision as they have seen their investment fall 10% in a month or so and those keen buyers in the first few days have dropped more. I can't see much advantage being an index stock if playing this one is like catching a falling knife. Good luck to buyers in the short term. Those that bought MYR after listing would probably be less unhappy.

As an aside, wouldn't the PE owners have paid off some of their debt over the past few years?

Well, anytime you can spot an investment where we can make 300% plus in 3 years, let s know, will you?

We will pay you the first 100% for your efforts.

[minimoke]

That's how PE works. Magic, huh?


The magic, according to Cycats enligtening posts, wasn't so great for Hauraki No 2 with their Bild NZ investment or Vision Senior Living. I suspect we probably hear more about the "Good News" stories rather than the reality of these investments which is that they are risky and that investors in PE need a great return to reflect that risk.

[Silverlight]

Funny thing with the $15 IPO expense, the exchanges get about $2m between them, $2 lawyers another $2m and the final $10m goes to the Lead broker... Goldman Sachs.

Oh wait who were the PE owners? Goldman Sachs, paying themselves for listing, convenient.

[Balance]

The magic, according to Cycats enligtening posts, wasn't so great for Hauraki No 2 with their Bild NZ investment or Vision Senior Living. I suspect we probably hear more about the "Good News" stories rather than the reality of these investments which is that they are risky and that investors in PE need a great return to reflect that risk.


That is ExACTLY how PE works.

[minimoke]

That is ExACTLY how PE works.
So nothing really magical about it then. Just simple ole leverage and risk management

[Balance]

So nothing really magical about it then. Just simple ole leverage and risk management

Simple? Try getting the kind of leveraged funding these guys can get, and try and sell the companies down as they can!

[minimoke]

Simple? Try getting the kind of leveraged funding these guys can get, and try and sell the companies down as they can!
Getting a tad off topic but getting the funding isn't too hard. Just look at how easy it was for Hotchin and Watson or any of the other finance companies who raised $billions. Or we could just look at is as a matter of scale your mom and pop can do this with say real estate as a very crude example.

Your mom and pop can leverage, for example 90 - 100% on real estate and could probably get 66% to purchase equites - same as the PE guys.

The PE guys spent around 4% on the sale of KMD (for legal advice and a flash brochure and a network of punters) and this excludes what they spent tarting up KMD for sale. Your mom and pop would spend less than this when it comes to selling their real estate.

My analogy obviously has weaknesses. Like real estate buyers probably aren't mugs enough to believe a seller if that seller was to say, for example, "This house has two bedrooms but we are planning on converting the back yard into sleepouts creating 6 more rooms" or saying "we're making $350 a week and project to be making 15% more next year". Nor would people, in Fendalton, for example, believe that nearly half the value of their property is in the "Fendalton" brand.

But the mugs are out there - if you produce a big flash colourful sales brochure (Pegasus Town comes to mind) focussing on the really neat things in your real estate neighbour hood, which may serve as a distraction from some important detail - like someone is going to release a load of cheap rental properties for WINZ clients in the neighbourhood.

But each to their own. PE investors know they go into a high risk environment - lets not be fooled into thinking that every PE investment returns 300% in 3 years. Some may, others will take big hits which brings your 300% return down. Good on those with the wherewithall and desire and risk profile to get into PE. If this is you, Balance, then good on you. I'm sure all here will celebrate your 300% sucess, and will no doubt comiserate when you let us know the losses your PE investements have made.

[Dr_Who]

It doesnt matter how one twist and turn or how much money PE make, it still stands that this was a crap float for the investors who took up the IPO. Who gives a hoot how much the PE make? As an investor, we are most concern about how much we make.

It will hurt much more when JC comes out with new chain of adventure clothing store that sells 50% cheaper than KMD clothing.

From the beginning it was obvious that the public investor will get nothing out of this float. A good lesson to be learnt here for the mum and dad investor. But sadly I doubt mum and dads have learnt anything from this.

[minimoke]

It doesnt matter how one twist and turn or how much money PE make, it still stands that this was a crap float for the investors who took up the IPO. Who gives a hoot how much the PE make? As an investor, we are most concern about how much we make.

Agreed. Though I'm not sure there is anyone here that has bought since listing so doubtful anyone is going to make anything.

It might be more of a case of pondering how much people who did buy and hold will loose. It will also serve as a beacon for future PE IPO's. Sure we can refer to FTX and draw conclussions but one bad deal shouldn't necessarily spoil future opportunities. That would be a bit like saying "People lost their shirts in '87 so i'm not investing in shares ever again."

I suspect this IPO will be another lesson for investors in IPO's. For the sake of current owners I'm hoping we don't see a repeat of reknown investing techniques (such as the "Belg") but thats a wee way off yet.

[Balance]

Agreed. Though I'm not sure there is anyone here that has bought since listing so doubtful anyone is going to make anything.

It might be more of a case of pondering how much people who did buy and hold will loose. It will also serve as a beacon for future PE IPO's. Sure we can refer to FTX and draw conclussions but one bad deal shouldn't necessarily spoil future opportunities. That would be a bit like saying "People lost their shirts in '87 so i'm not investing in shares ever again."

I suspect this IPO will be another lesson for investors in IPO's. For the sake of current owners I'm hoping we don't see a repeat of reknown investing techniques (such as the "Belg") but thats a wee way off yet.

Don't kid yourselves for 1 sec that KMD will serve as a beacon for future PE IPO's. There have been FTX, FRE, VTX, PPL, JBH, FRU etc. They are all different and as they should be.

One thing for sure - 'Wall St learns nothing and remembers nothing." Multiply that 10 times in NZ and Australia.

Also, you and Dr Who seem to think that everyone buys into IPOs as long term investments. They do not.

Also, notice Westpac has just disclosed a shareholding in KMD? They manage billions so a $20m loss here and there is nothing. Learn something from that.

[Balance]

Bugger!

SP now above IPO price.

[minimoke]

Bugger!

SP now above IPO price.
It as a surprise - but is it sustainable?

[Silverlight]

NPAT 4.4m without extraordinary's is a 50 PE.

Actual result 11m loss.

NTA is -12 cps!


Why is this up 7%

[BRICKS]

NPAT 4.4m without extraordinary's is a 50 PE.

Actual result 11m loss.

NTA is -12 cps!


Why is this up 7%

NTA is - [12] [loss], Cant understand KIWI`s paying overs for a dog LOSS when the juggeled BOOKs only..

[winner69]

NPAT 4.4m without extraordinary's is a 50 PE.

Actual result 11m loss.

NTA is -12 cps!


Why is this up 7%

Presentation said full year NPAT will be $31m after allowing for IPO stuff

That puts KMD on a PE of about 15 after todays rise ... and 15 is where the market players put things until they work out what really is going to happen

Plenty of growth to come they say

Maybe, just maybe, this is an IPO where everybody won

[Dr_Who]

MYR and KMD included in the S&P index or something like that end of this month. Dont know the exact date. So a combination of meeting target and index buying? It would be good if they can sustain the earnings.

[cycat64]

I don't wish to be an apologist for Kathmandu as I no longer have an interest in them, nor do I wish to. However, I am amused at the trash that is being written in this thread. It matters not whether the previous owner was an individual, a private equity fund, or whatever. They will be selling to maximise their return. The market determines the price according to the demand for the shares, presumably after the buyers have done due diligence.

In the case of Kathmandu there is no evidence whatsoever that their float will turn out to be a dud for those who elected to get on board. Quite the contrary. It has been a hugely successful business to date with a marvellous track record, a record that would easily eclipse most of the better companies on the NZX boards.

It is correct that in the recent IPO it was mainly the Aussies that came to the party. But what does that tell us ? Since when have the Aussies been inferior in their judgement than New Zealanders ?

Let us wait to see if this outfit meets its prospectus projections. Then cast judgements, but any conjecture at this point is plain drivel.

KMD now trading at 40c above their IPO. Perhaps the Aussies knew a bit more than many of the posters on this thread.

[troyvdh]

...wow....gee the SH's of this outfit are a staunch lot.....not....

....mmmm...very quite here ...mmmmm

[Lizard]

Added to the S&P "All Australian" 200 index... they're stealing our stuff again! :p