KMD - Kathmandu

[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

[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/kath...-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!!