News blog

Naibu Global International

• BY: Andrew Hore |
• POSTED: 14/09/2014 |

There was more bad news from Chinese branded sportswear supplier Naibu Global International in its interims.

Even house broker Daniel Stewart has downgraded the company from a buy to a hold. The share price subsequently collapsed from 52p to 21p, which values Naibu at £12.7m. That is less than its cash in the bank.

Naibu had already admitted that it could not open its new factory because of a shortage of workers. This means that more shoe production will have to be outsourced which will hit margins. This factory has been leased to a tenant for three years for RMB6m a year.

In the six months to June 2014, revenues increased by 6% to RMB1.03bn but pre-tax profit fell from RMB214.8m to RMB206.5m – equivalent to £19.7m – as margins declined. There will be no interim dividend. This is despite the fact that there is RMB332.7m of cash in the balance sheet. There was a RMB308m increase in trade receivables as Naibu gave its distributors longer to pay because of tough trading conditions. There have been no bad debts yet.

Daniel Stewart forecasts RMB385m profit for the full year. The profit multiple is 0.5 at the current share price which indicates the lack of confidence in the company and the lack of dividend.

A new factory is planned in the Naibu Industrial Zone in Dazhu County, Sichuan Province and this will be in operation during 2016.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFSeptember2014_60.pdf