|Shares Out. (in M):||0||P/E|
|Market Cap (in $M):||48,367||P/FCF|
|Net Debt (in $M):||0||EBIT||0||0|
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Disclaimer: This is a relatively illiquid Korean small cap opportunity. That should discourage a significant proportion of you from reading further. (All figures in Korean Won unless otherwise noted)
Overview: Obzee is a fashion retailer
Executive Summary: Obzee and O2nd brands continue to grow
CEO, Mr. Kang - We have met and spoken to the CEO a number of
times. He is a young 40ish executive
(the younger the better in
Obzee – Obzee is the company’s
largest brand. It is a mid/high end
casual brand focused on females age 24-35.
We don’t expect much growth out of this brand and don’t need it to
complete our thesis. The one potential
risk is that the Obzee brand begins to decline at a significant pace offsetting
growth in Club
O2nd - This is an offshoot brand to Obzee which targets a slightly younger demographic than Obzee, 18 – 27 year old females. It is a slightly more casual, more wearable brand than Obzee. Growth should be slightly higher for O2nd than for Obzee as O2nd is a younger brand with few department stores than Obzee. We forecast 4-8% YOY growth in this brand. Obzee and O2nd have been the heart of the company up until this year. We believe previous year’s valuations have been hampered by the large concentration of revenue in these two brands (2005 = 95% of revenue). This is about to change.
Hanni-Y – This is the brand that the
CEO is most excited about. His wife is
the chief designer. It is a high end
female casual wear brand similar to Dolce & Gabbana. The strategy has been to start the brand in
Roughe & Lounge – This brand is an accessory offshoot of the Obzee and O2nd brands. Sales are growing nicely, but growth past 2008 will be moderate as the accessory market is not as large as either the Obzee or O2nd markets.
|Y & Kei||896||-||-||-|
|Rouge & Lounge||1,581||4,946||8,864||12,091|
|Y & Kei Export||653||890||1,091||1,312|
Inventory - Unlike
Land/Bldg – The Company has what is
conservatively valued at $20 mill
Cash – Cash balance at 12/06 should
be around $13 mill
Financials (Korean won millions) Stock px is 4,770 won now.
|Non Commish SG&A||16,593||18.6%||19,082||18.6%||22,064||17.1%||25,144||15.8%|
|Unlev Net Inc||5,317||6.0%||5,177||5.1%||8,447||6.5%||12,451||7.8%|
|ROIC if Sell Bldg||20,000||8.5%||32.9%||39.5%|
Valuation (Won 000’s except share price)
|Current Valuation||Current Multiples||Target Valuation|
|Px (won)||4,770||EV/2007 EBITDA||2.4||2008 Unlev NI||12,500,000|
|2007 P/E Net of Cash||3.9||Net Cash||17,000,000|
|Excess Cash||12,000,000||2008 P/E Net of Cash||2.2||MC||167,000,000|
|Land & Bldg||20,000,000|
and the CEO are overly aggressive on Club
- Obzee and O2nd sales begin to decline offsetting new brand growth
- Margin expansion does not follow revenue growth
- The CEO dies or divorces his wife, a key designer.
- CEO speaks decent English, but the CFO does not.
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