1477 TT

Makalot Industrial Co Ltd

Consumer


Presented:05/14/2020
Price:NT$114.00
Cap:$0.80B
Current Price:NT$370.00
Cap:$2.91B

Presented

Date05/14/2020
PriceNT$114.00
Market Cap$0.80B
Ent Value$0.71B
P/E Ratio13.58x
Book ValueNT$43.43
Div Yield6.23%
Shares O/S219.86M
Ave Daily Vol2,608,366
Short IntN/A

Current

PriceNT$370.00
Market Cap$2.91B
Makalot Industrial Co., Ltd. engages in the manufacture, processing, and wholesale of garments. Its products include ready-to-wear clothing, sportswear, as well as sleepwear and loungewear. It also provides technology and research and development, trends and design, supply chain management, and distribution and information system services. The company was founded on January 10, 1990 and is headquartered in Taipei, Taiwan.

Publicly traded companies mentioned herein: Eclat Textile Co Ltd (1476 TT), Fast Retailing Co Ltd (9983 JP), Gap Inc/The (GPS), Hanesbrands Inc (HBI), Kohl’s Corp (KSS), Makalot Industrial Co Ltd (1477 TT), Nike Inc (NKE), Target Corp (TGT), Walmart Inc (WMT)

Highlights

The presenter is bearish on Taiwanese apparel manufacturers, and is short shares of Makalot Industrial Co Ltd (1477 TT). He believes Asian investors are expecting apparel companies, and therefore these manufacturers, to rebound reasonably well since Nike has recovered in China, and Makalot’s share price is down just ~25% to NT$115. However, he believes that the apparel industry is entering the most significant period of over-inventory ever seen, with companies canceling inventories before going bankrupt, thus driving price down for suppliers. Maintaining Makalot’s 15x – 17x forward earnings multiple, he sees downside to NT$66 per share based on his 2021 EPS estimate of NT$4.40, which is well below the consensus NT$7.40. He is equally bearish on Eclat (1476 TT) and other Taiwanese manufacturers with similar dynamics.

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Idea Discussion

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