Dapai International Holdings (formerly "China Zaino")

[FFNow]

I have divested from Dapai: http://financiallyfreenow.wordpress.com/...bye-dapai/

[isaac]

i divested my shareholdings yesterday. briefly:

1.) bank balance is RMB 659,535,000. Interest earned on that amount: RMB 561,000.

0.08%. even POSB gives 0.125%. I believe interest rates in PRC are higher than 0.08%, especially for such a large amount

2.) Profit Margins. Dapai has a whopping 21.2% net profit margin. Contrast this to Nike, Inc, which despite having huge branding power achieves only 7% net profit margin, and adidas AG with 2.4% net profit margin.

Since Nike manufactures most of it's stuff in Vietnam and China, I assume that both Nike and Dapai's average cost price to be similar.

Dapai's figures then show that they can manufacture a backpack for S$ 11.50 and a luggage for S$ 38.50.

If Nike/adidas is able to sell a backpack for around S$ 50 (I saw at Queensway), and Dapai at S$ 15, I fail to see how Dapai can exceed Nike/adidas' margin. Of course, Nike/adidas make other things other than backpacks and 7% / 2% includes these other things. So I might be wrong here.

3.) Management during the IPO promised at least 20% of profits to be paid out as dividend a year. They did not fulfil this for FY2010, saying

"Our Board decides not to declare dividend for FY 10 so as to retain reserve for the capex of the
new Anhui luggage plant and for future business development. The Board will consider
recommending a steady dividend policy of the Group at the end of next financial year."

They have already declared a dividend policy and reneged on it. 20% of profits this year adds up to a mere S$10 million.

-Unless I've read the financial statement wrongly, I believe they have already factored in some payment for both the facility and shops, as seen by the S$13 million spent on PPE.
-They are STILL swimming in cash with S$130million and negligible debts.

4.) Did a placement amounting to S$10 mil, and paid out S$10 mil of dividends shortly after.


I never should have invested in this supposed undervalued story. Expensive lesson.

[redcorolla95]

The key question is: is the Dapai brand real?
I don't really know of anyone who's heard of it - the bona fide brands like Li Ning & Anta have people on the sell-side to confirm that their stuff is in stalls and getting sold.
No real need to commission a special survey to assure people that the brand exists.

[FFNow]

3.) Management during the IPO promised at least 20% of profits to be paid out as dividend a year. They did not fulfil this for FY2010, saying

"Our Board decides not to declare dividend for FY 10 so as to retain reserve for the capex of the
new Anhui luggage plant and for future business development. The Board will consider
recommending a steady dividend policy of the Group at the end of next financial year."

They have already declared a dividend policy and reneged on it. 20% of profits this year adds up to a mere S$10 million.

-Unless I've read the financial statement wrongly, I believe they have already factored in some payment for both the facility and shops, as seen by the S$13 million spent on PPE.
-They are STILL swimming in cash with S$130million and negligible debts.

4.) Did a placement amounting to S$10 mil, and paid out S$10 mil of dividends shortly after.


I never should have invested in this supposed undervalued story. Expensive lesson.

This is the same case as China Hongxing. They have got so much cash but they don't pay dividends.

[isaac]

3.) Management during the IPO promised at least 20% of profits to be paid out as dividend a year. They did not fulfil this for FY2010, saying

"Our Board decides not to declare dividend for FY 10 so as to retain reserve for the capex of the
new Anhui luggage plant and for future business development. The Board will consider
recommending a steady dividend policy of the Group at the end of next financial year."

They have already declared a dividend policy and reneged on it. 20% of profits this year adds up to a mere S$10 million.

-Unless I've read the financial statement wrongly, I believe they have already factored in some payment for both the facility and shops, as seen by the S$13 million spent on PPE.
-They are STILL swimming in cash with S$130million and negligible debts.

4.) Did a placement amounting to S$10 mil, and paid out S$10 mil of dividends shortly after.


I never should have invested in this supposed undervalued story. Expensive lesson.

This is the same case as China Hongxing. They have got so much cash but they don't pay dividends.

I believe hongxing does pay dividends. Having said that, Hongxing teaches us a lesson that even though dividends are paid, money might still be phantom.

[kazukirai]

In case anyone's wondering where the discussion that was here on China Hong Xing's cash hoard is, it's been moved to the China Hong Xing thread.

[Nick]

Proposed Rights Issue of 1 rights share for 4 existing shares to raise $19 mil:

http://info.sgx.com/webcoranncatth.nsf/V...A0037185A/$file/Dapai_RightsIssue.pdf?openelement

Dapai has S$102 million cash in the bank with only S$6.8 million debt based on 1Q 2011 statement. Is there really a need to turn to equity financing for a proposed M&A deal which would cost $19 million ?

(Not Vested)

[freedom]

money, the more the better?

[isaac]

sigh. 100 mil and need to beg for 19 million to do a potential deal. glad i divested.

[Musicwhiz]

Dapai has S$102 million cash in the bank with only S$6.8 million debt based on 1Q 2011 statement. Is there really a need to turn to equity financing for a proposed M&A deal which would cost $19 million ?

Question is - is the cash really there?

If it has $102 million and needs to turn to a rights issue at such a deep discount to last done price then it really sounds extremely fishy!

Well-run companies with cash hoards do not run to shareholders to raise small sums of money.