# ORL - OrotonGroup Limited



## booga82 (18 September 2006)

does anyone have any views on this stock? Its shares are down a fair bit and its strategic review is supposed to be coming out on the 25th Sept.


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## imajica (2 October 2009)

*Re: ORL- Oroton*

it has been ages since anyone commented on the oroton Group. I'll give you a few reasons why ORL is good right now.

1. goes ex-dividend on 8th October - 25c fully franked (total of 41c for the year (current share prce $5.42)

2. sales revenue up 10.5% to 134 million

3. NPAT up 16.1% to 19.4 million

4. big plans for expansion

a fantastic effort considering the GFC


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## Julia (2 October 2009)

Agree.  I've just had cash come through from a matured term deposit and will be buying some of this.

Was there something in particular that happened around 25/9 to cause that gap up?


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## imajica (2 October 2009)

they released their final report on that day indicating all of the positive things I stated above - the market really liked it


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## Julia (2 October 2009)

Ah, thought that might be what it was.  Thank you, Imajica.

I've just commented on this stock in the 'retirees' thread, on the basis that its target market is probably going to be relatively unaffected by budget constraints.

It has a good dividend too, at 7%, 100% franked.


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## VSntchr (12 January 2011)

With how slow retail has been (according to the media) it will be interesting to see how ORL fares when it releases its half yearly report.

It thrived through the GFC so you'd expect it to do the same now. Although their latest update indicated a slow start to the financial year. This seems to have been offset by their encouraging start to the asian expansion.

Interesting times!!


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## drlog (13 January 2011)

Commsec has a forecast 16-17% growth this financial year and I would say that is about right. They also have a decrease in dividend payout - I don't think that is right. I mean, it would be great if they could hold on to the dividend and use that cash to grow but I don't think that is what will happen.

I too am looking forward to the mid year report. Only about a month to go


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## Intrinsic Value (13 January 2011)

drlog said:


> Commsec has a forecast 16-17% growth this financial year and I would say that is about right. They also have a decrease in dividend payout - I don't think that is right. I mean, it would be great if they could hold on to the dividend and use that cash to grow but I don't think that is what will happen.
> 
> I too am looking forward to the mid year report. Only about a month to go




I have an IV of 12.85 for 2011 for Oroton going up to 17.19 in 2012.

It is on my list of stocks to buy.


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## drlog (13 January 2011)

Intrinsic Value said:


> I have an IV of 12.85 for 2011 for Oroton going up to 17.19 in 2012.
> 
> It is on my list of stocks to buy.




Woah, I think your future IVs are a little too hot (although I wish you were right). I can see that you are getting the massively increased IV from a lower payout ratio with Oroton's excellent ROE. I will tell you why I think that increase in IV won't happen:

*Scenario 1 - payout ratio stays at about 86%*
I see this is the more likely outcome. They don't need the money to pay back debt and opening new stores doesn't use up that much capital. They want to grow at a reasonable rate (which they have been for the last 3 years) with a high ROE. If they pay the shareholders a big wad of cash, they should be happy. There will be increasing value as well.

My forecast looks like this:
Year	2011	2012
EPS		65.5		75.6
DPS	54.0		61.0	

*Scenario 2 - payout ratio drops to 53%, as commsec forecasts*
IF the payout ratio decreases then they will probably use that cash to pay down debt and use for future growth. This increases equity which, in turn, decreases ROE. Perhaps Sally has a magic trick up her sleeve? I could be wrong! My forecast, if they decrease the payout ratio is that ROE will drop to around 60%ish. Therefore, the IV won't be around the $13 mark, but it will be above $10.



In either scenario, I am holding - this company is being run so well! It is currently at a mild discount to IV so would be ok for a long term buy in my opinion.


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## drlog (25 January 2011)

The price is up a bit today. Hehe, 76 buyers and 7 sellers.

Adrian Ezquerro wrote a piece in the Eureka report that was published last night praising the company. He values it above $10 based on last year's results with the value increasing over the next few years.

Still looks like a good buying opportunity, even now. I shall continue holding.


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## VSntchr (3 February 2011)

Interesting price action today - I attribute this solely to the stock being so thinly traded.

Whilst value investors like myself tend to ignore price changes in the short term, it is lovely to see it going up rather than down!


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## Intrinsic Value (3 February 2011)

VSntchr said:


> Interesting price action today - I attribute this solely to the stock being so thinly traded.
> 
> Whilst value investors like myself tend to ignore price changes in the short term, it is lovely to see it going up rather than down!




Well not if you want to buy more it isn't


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## VSntchr (4 February 2011)

Intrinsic Value said:


> Well not if you want to buy more it isn't




touche. However im fully invested in ORL at present, however I do see your point and would love to load up with more around the $6 - $7 level.

Seems like im waiting for about 10 stocks to drop at the moment...wheres the next GFC when you need it, right?


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## VSntchr (17 March 2011)

Was considering selling ORL before the HY results came out as I was expecting horrible figures...lazily I didnt even know they were coming out today but here they are!
Profit is almost identical to first half of last year.
Management still talking about avoiding discounting to pursue long term sustainable brand image etc etc.

I am happy that the figures have held up this well in the current retail environment - unlike all the other retailers which have all downgraded or missed forecasts.

With the future prospects looking good for ORL, and the potential of a successful o/seas expansion, I am quite happy to continue holding.


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## drlog (17 March 2011)

VSntchr said:


> Was considering selling ORL before the HY results came out as I was expecting horrible figures...lazily I didnt even know they were coming out today but here they are!
> Profit is almost identical to first half of last year.
> Management still talking about avoiding discounting to pursue long term sustainable brand image etc etc.
> 
> ...




I was a little shocked by the results - I expected ORL to do better but considering the depressed retail environment at the moment, I guess it makes sense. Considering that they opened stores and didn't manage to grow profits is a little concerning. However, their ROE remains high but not quite as high as it was last half year. I expect full year results to be about the same or marginally better considering all of the bad news around at the moment. Time will tell - still holding.


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## VSntchr (17 March 2011)

drlog said:


> I was a little shocked by the results - I expected ORL to do better but considering the depressed retail environment at the moment, I guess it makes sense. Considering that they opened stores and didn't manage to grow profits is a little concerning. However, their ROE remains high but not quite as high as it was last half year. I expect full year results to be about the same or marginally better considering all of the bad news around at the moment. Time will tell - still holding.




A little more positivity is found within the finer details of the report. I note that CODB has increased to ~47% up from 41%..although revenue is up despite like-4-like sales being flat. This indicates that management is following through with their statements of avoiding discounting - which I beleive will bode very well for ORL in the medium to longer term. EBIT margins are also slightly up. 

Inventory levels of the PRL brand have also been increased. So with inventory levels up and the store refurbishment cycle coming to an end it seems as though expenditure for ORL will be lower in the forthcoming periods..

Cash flow is absolutely excellent once again beating the accounting NPAT - indicating that they probably won't be asking the shareholders for more money anytime soon.

All in all I was disappointed with the flat profit figure but there are positives to take away


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## robusta (17 March 2011)

VSntchr said:


> A little more positivity is found within the finer details of the report. I note that CODB has increased to ~47% up from 41%..although revenue is up despite like-4-like sales being flat. This indicates that management is following through with their statements of avoiding discounting - which I beleive will bode very well for ORL in the medium to longer term. EBIT margins are also slightly up.
> 
> Inventory levels of the PRL brand have also been increased. So with inventory levels up and the store refurbishment cycle coming to an end it seems as though expenditure for ORL will be lower in the forthcoming periods..
> 
> ...




Good summary Valuesnatcher. I bought some ORL today.


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## JTLP (17 March 2011)

VSntchr said:


> A little more positivity is found within the finer details of the report. I note that CODB has increased to ~47% up from 41%..although revenue is up despite like-4-like sales being flat. This indicates that management is following through with their statements of avoiding discounting - which I beleive will bode very well for ORL in the medium to longer term. EBIT margins are also slightly up.
> 
> Inventory levels of the PRL brand have also been increased. So with inventory levels up and the store refurbishment cycle coming to an end it seems as though expenditure for ORL will be lower in the forthcoming periods..
> 
> ...




Normally I'd be disappointed to see high inventory levels (means stock is not rotating/ties up capital) but cost of raw materials are rising so it may be a great leveller.

I don't hold - just thought I'd add some insight.


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## drlog (18 March 2011)

VSntchr said:


> A little more positivity is found within the finer details of the report. I note that CODB has increased to ~47% up from 41%..although revenue is up despite like-4-like sales being flat. This indicates that management is following through with their statements of avoiding discounting - which I beleive will bode very well for ORL in the medium to longer term. EBIT margins are also slightly up.
> 
> Inventory levels of the PRL brand have also been increased. So with inventory levels up and the store refurbishment cycle coming to an end it seems as though expenditure for ORL will be lower in the forthcoming periods..
> 
> ...




You make good points. One thing to note is that at today's price, the dividend yield alone is high enough to hold on to ORL at about 9.3% franked up. Add on top of that the prospect of future growth and I think ORL is trading at a discount to IV. I did have IV at above $10 but now I think it is slightly below $10.


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## VSntchr (18 March 2011)

Yeah I haven't even considered the impact of the dropping share price on the yield, that is quite interesting/a very nice yield even if you are just buying in now...let alone for those of us that got in around ~$6.

Growth prospects do seem good..the only thing clouding my mind is the impact of Japan on the entire Asian region and how it will affect/decrease consumer spending? Also..how long will Australia be expected to stay in such a level of low retail spending? The encouraging thing to remember is that if ORL has managed to perform this well up until now...how well will it go if retail begins to boom again?

Another factor on ORL's side is that they appear to be one of the Aussie retailers that is embracing the online threat and openly talking about it in their reports...unlike some of the others...whether or not the internet is a long term threat to retailers I still see this as a good/innovative move..which seems to represent to me what Sally McDonald offers to shareholders..


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## McCoy Pauley (18 March 2011)

There's no question that Sally McDonald has achieved a fantastic turnaround story for ORL over the past few years.  Her management of ORL has been exceptional and I wish I jumped aboard even 12 months ago.  

My concern with ORL going forward, however, is that the return on equity has been extraordinarily high - upwards of 80%.  I doubt that such a high return on equity is sustainable in the medium to long-term, particularly with the headwinds confronting the retail sector.

In the current environment, to be flat on the NPAT compared to the previous first half is a good result, but I'm inclined to see whether the price will drop further before buying into ORL.


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## drlog (18 March 2011)

VSntchr and McCoy Pauley, you make excellent points.

I am holding now (bought around $7) and I have no intention of selling. If you are right and the sp falls below $7, it will be irresistible to buy based on dividends alone! Also, when the Australian retail industry picks up again, ORL will be in an advantageous position.

If the NPAT stays flat but equity increases (exactly what happened in this report) then the ROE falls but the book value increases. Therefore IV does go down but not by as much as if the book value stayed the same which is why my IV hasn't fallen too far.

It's going to be very interesting to see what happens over the next few years.


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## Noddy (18 March 2011)

Why would you hold onto a falling share.
Has dipped from $9.40 to $7.80, about 17% or so.
If the share is so good, why wouldn't you sell around $9.00, take a profit or avoid a loss, and then buy it back at a lower price ?
Don't you guys use a stop loss ?


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## drlog (18 March 2011)

Noddy said:


> Why would you hold onto a falling share.
> Has dipped from $9.40 to $7.80, about 17% or so.
> If the share is so good, why wouldn't you sell around $9.00, take a profit or avoid a loss, and then buy it back at a lower price ?
> Don't you guys use a stop loss ?




Simply put, I have no idea where it is going to go from day to day. If I knew with 100% certainty that it would fall from $9.4 to $7.8 then yes, I would sell and buy back. But I never did know that.

If I were to sell at $9, the share price would have to be guaranteed to fall to $8 in order for me to buy the same number of shares after paying tax. If I use a stop loss, its another way of crystallising losses. If I know that the company is of high quality (as is ORL), long term holding will give the best return.

I don't expect the sp to fall below $7 - all I'm saying is that if it does, it will be cheap and I will buy more.


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## Noddy (18 March 2011)

drlog said:


> Simply put, I have no idea where it is going to go from day to day. If I knew with 100% certainty that it would fall from $9.4 to $7.8 then yes, I would sell and buy back. But I never did know that.
> 
> If I were to sell at $9, the share price would have to be guaranteed to fall to $8 in order for me to buy the same number of shares after paying tax. If I use a stop loss, its another way of crystallising losses. If I know that the company is of high quality (as is ORL), long term holding will give the best return.
> 
> I don't expect the sp to fall below $7 - all I'm saying is that if it does, it will be cheap and I will buy more.




Nobody knows where the share price will go tomorrow, thats why it's a good idea to trade with a stop. Recent trailing stops for ORL would have been $8.50 then $8.97 then $9.10. When it broke $9.10 it would have been sold. Can always buy it back.

What would you do if the price fell to $5.00 or $3.00, would you still buy more ?
It was trading at $2.00 in March 09 only two years ago.

Doesn't make sense to trade without a stop IMO.
It keeps losses small, and barring complete disasters, locks profits in.


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## drlog (18 March 2011)

Noddy said:


> Nobody knows where the share price will go tomorrow, thats why it's a good idea to trade with a stop. Recent trailing stops for ORL would have been $8.50 then $8.97 then $9.10. When it broke $9.10 it would have been sold. Can always buy it back.
> 
> What would you do if the price fell to $5.00 or $3.00, would you still buy more ?
> It was trading at $2.00 in March 09 only two years ago.
> ...




That is the difference between you and I. I don't trade, I buy to hold. If the price falls to $5 or below, I would definitely buy more. It was undervalued a week ago and it is undervalued now. When it becomes very very undervalued, I will buy more.

The reason it has gone from $2 to $9 in two years is the Sally factor - it's all in the fundamentals! 

Each to their own though, good on you if you made money on ORL recently and I am happy because I hold shares in a quality company.


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## skc (18 March 2011)

drlog said:


> VSntchr and McCoy Pauley, you make excellent points.
> 
> I am holding now (bought around $7) and I have no intention of selling. If you are right and the sp falls below $7, it will be irresistible to buy based on dividends alone! Also, when the Australian retail industry picks up again, ORL will be in an advantageous position.
> 
> ...




You are investing based on price < IV which is great. What happens if price stays below IV at the same time IV is falling? Especially if the share price keeps leading the fall in IV...What is the contingency plan in your strategy?

May be some holders are looking too hard to find some positive, while the market is just saying the results are poor. Period. And that's over 3 days when the market rallied 200 points...




Noddy said:


> Doesn't make sense to trade without a stop IMO.
> It keeps losses small, and barring complete disasters, locks profits in.




I think when you are investing on fundamentals it is acceptable to trade without a *price-based * stop, but it is unacceptable to not have a event- / fundamental-based stop. E.g. IV falling 2 reports in a row might trigger that, as your growth assumptions are no longer valid.

ORL is not a stock that warrants buy and hold imo. It just hasn't got any sustainable competitive advantages imo. But buying when profits and IV are rising can certainly make good returns. You just need to know when the party ends.


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## Noddy (18 March 2011)

But how do you know what the I/V is ?
Because somebody prints a formula in a book and charges $50 for it.
Yet everyone who tries to use the formula gets a different answer.
If all share prices are based on the ROE, shares trading at a loss wouldn't trade at anything more than book value. Just not so.

And many shares are trading at multiples above ROE valuation.Woodside & Leightons for example.

Shares aren't traded according to some formula from a book. Most shares change price every day. Surely their intrinsic value doesn't change daily or even hourly throughout the year. No one knows where a share will trade next trading day, or next week.
IMO there's no value in trading without a stop, and buying into falling share prices (averaging down) because they are "cheap". Next week they may be even cheaper.


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## VSntchr (18 March 2011)

With all due respect Noddy, nobody here has attempted to start an argument whether or not their method of choosing/valuing/investing in companies is the best/right/wrong. 

You have your thoughts on stops and others have their thoughts about conducting valuations...the point of the threads are to discuss the relevant stock..

If you want to have a debate over whether or not value investing works, why not start a thread in the general investment and economis section?


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## tothemax6 (18 March 2011)

Noddy said:


> But how do you know what the I/V is ?
> Because somebody prints a formula in a book and charges $50 for it.
> Yet everyone who tries to use the formula gets a different answer.
> If all share prices are based on the ROE, shares trading at a loss wouldn't trade at anything more than book value. Just not so.
> ...



Noddy, the point of gauging the value of the company based on discounting its equity-per-share with its ROE (IV) is to give an idea of what its currently worth. It is not a precision thing simply because the ROE is not precisely predictable. A company like AUT, for instance, which probably still has a negative ROE, is valued highly because of an anticipated high _future_ ROE. 
So whilst people do buy and sell the stock according to 'how good the news is', or 'the chart has such and such a squiggle pattern', in the end the company will start paying a dividend out of its profits or repurchasing shares with its excess cash - and the dividend yield / stock price increase when this happens will of course be tied to the IV.


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## moreld (18 March 2011)

skc said:


> I think when you are investing on fundamentals it is acceptable to trade without a *price-based * stop, but it is unacceptable to not have a event- / fundamental-based stop. E.g. IV falling 2 reports in a row might trigger that, as your growth assumptions are no longer valid.




skc, just wanted to say that is the best thing I've read here in a while. It is a critical point that most newbies and some experienced investors forget.

As Peter Lynch said "There’s no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or , worse, to buy more of it, when the fundamentals are deteriorating."  

While Warren Buffett and a score of other investors may be sure enough of their IV calculations to double down, most investors are delusional about their prowess in calculating IV.  And hey, I mainly a fundie guy!

Excuse me that I'm off the Oroton topic, so let me say hey love those bags, so glittery.


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## Noddy (18 March 2011)

tothemax6 said:


> Noddy, the point of gauging the value of the company based on discounting its equity-per-share with its ROE (IV) is to give an idea of what its currently worth. It is not a precision thing simply because the ROE is not precisely predictable. A company like AUT, for instance, which probably still has a negative ROE, is valued highly because of an anticipated high _future_ ROE.
> So whilst people do buy and sell the stock according to 'how good the news is', or 'the chart has such and such a squiggle pattern', in the end the company will start paying a dividend out of its profits or repurchasing shares with its excess cash - and the dividend yield / stock price increase when this happens will of course be tied to the IV.




Straying off the track here. AUT has had no revenue to speak of for more than 10 years, has a book value of 22c, and yet is trading around $2.70. Nothing to do with I/V.
Is being priced on sentiment or potential. Not relevant to Oroton at all.
Trying to find out why ORL has fallen in the market this week, and at what price it would be a reasonable buy. How else would you know except by following the chart ?  Would assume ORL announcement has disappointed, and has been punished by the market. Knowing I/V for Oroton would be valuable, I agree, if the calculation was reasonably reliable, and could form the basis for an informed investment decision.
Have traded ORL three times in the past, but thought it became too expensive to deal with, particularly in an area of declining profits (retailing). With a big dose of reality to the share price at present, am looking for an opportunity to buy in.
If I/V is so easy to calculate, what is it ?


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## robusta (19 March 2011)

Noddy said:


> ). With a big dose of reality to the share price at present, am looking for an opportunity to buy in.
> If I/V is so easy to calculate, what is it ?




Somewhere between $7.00 and $11.00 depends on who you ask :

IMO I think it is about $9.70


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## tothemax6 (19 March 2011)

Noddy said:


> Straying off the track here. AUT has had no revenue to speak of for more than 10 years, has a book value of 22c, and yet is trading around $2.70. Nothing to do with I/V. Is being priced on sentiment or potential. Not relevant to Oroton at all.



I'll just assume you didn't even read my post.


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## fanger (3 April 2011)

robusta said:


> Somewhere between $7.00 and $11.00 depends on who you ask :
> 
> IMO I think it is about $9.70




I hope your right because I just sold all my JBH and bought ORL at $7.98.


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## Tightwad (3 April 2011)

I jumped in at $7.80, I should have checked the reasons behind this first - latest results a bit average.


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## VSntchr (22 September 2011)

Report out today, numbers all looking good. CODB is up a bit, but thats expected with the initiation of the Asian rollout.

The only dampener ive found after a 10 minute look was the ~$3m loss in fair value of FX hedge...


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## tothemax6 (1 October 2011)

This stock seems to be holding rather steady even though ORL is in the luxury retail sector. How can their earnings and outlook be holding steady when economic storm clouds are floating around and everyone is tightening their belts.
Insights?


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## Uni (1 October 2011)

tothemax6 said:


> This stock seems to be holding rather steady even though ORL is in the luxury retail sector. How can their earnings and outlook be holding steady when economic storm clouds are floating around and everyone is tightening their belts.
> Insights?




My wife's just asked me 5 mins ago to gift her a bag. Looking good vs EU default, what is more important (to our beautiful missus)? 

But watch closely for Coach/Oroton competition, I think they play the same field.


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## Klogg (24 January 2012)

Just been looking @ the ORL cash flow...

(2011 FY Annual Report here:
http://www.aspecthuntley.com.au/asxdata/20111028/pdf/01234962.pdf)

Can someone tell me why they've decided to increase the dividend @ the end of the 2011 FY, thus bringing the cash flow balance from (675) to (1221)... (pg 52 of the report)
All while the inventories have gone from ~23mil to ~30mil... and then needing to draw a little more on their loan.

Am I overlooking something here?

I know the figures aren't bad (it's only an extra 600k), but I'd imagine this is how bad habits begin.

Thanks in advance,
Klogg


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## VSntchr (19 March 2012)

Anybody kno wen the results are out? Morningstar had last week penned down...


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## clinta44 (19 March 2012)

VSntchr said:


> Anybody kno wen the results are out? Morningstar had last week penned down...




I was expecting this last thursday. Can't seem to find a different date at this stage...


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## clinta44 (21 March 2012)

Half Year Announcement released today. just a letter at this stage not accounts of yet. 

EBIT of $24.2M Up &% and NPAT of $16.1M up 4% 

on the surface it looks like quite a solid result in a really tough environment.


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## McLovin (21 March 2012)

The feedback in presentation about the current unsustainability of rising rentals and indexed leases against a backdrop of falling bricks and mortar customers, could be the canary in the coal mine for property trusts. If a company that is doing well is sighting that as a key concern, then what is the average retailer on struggle street thinking.


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## ScottyfromAussie (26 May 2012)

Not sure how much I like this one after a bit of research

1) Asia expansion performance isn't reported. 

All the business segments are lumped into one consolidated report which is weird, you'd think if everything was going as well as they say it is they'd want to show it with numbers.

2) Asia expansion requirements.

Each store that opens will need a skilled manager + competent staff. This will likely have to be created from the ground up and thats costly. Furthermore whilst the labor costs are often lower in Asia, I doubt you could charge the same prices. I may be wrong here but it makes sense.

3) Expansion is funded by debt

This is a biggy, they have so much free cashflow, why are they increasing their debt facilities?

They should stop paying the dividend and reinvest the earnings into the expansion. Divs just create tax liabilities for shareholders. I'd much rather the company keep the money and compound it at 80% per annuam rather than give it out. They can return it later!


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## VSntchr (26 May 2012)

ScottyfromAussie said:


> Furthermore whilst the labor costs are often lower in Asia, I doubt you could charge the same prices.




Forgive me for not providing the relevant report, but it has been stated before that ORL has initially encountered that the Asian market will pay _MORE_ for its products than the Aussie market....

Disclosure: Sold at $8.15....


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## McLovin (26 May 2012)

ScottyfromAussie said:


> Not sure how much I like this one after a bit of research
> 
> 1) Asia expansion performance isn't reported.
> 
> All the business segments are lumped into one consolidated report which is weird, you'd think if everything was going as well as they say it is they'd want to show it with numbers.




It's too small to be reported seperately. AASB 114 has the rules on what is and isn't a reportable segment, it's usually 10% of profit, revenue or assets/liabilities. I'd say considering they only had four stores opened between late 2010 and May 2011 it was far too soon to be expecting any meaningful data.



ScottyfromAussie said:


> 2) Asia expansion requirements.
> 
> Each store that opens will need a skilled manager + competent staff. This will likely have to be created from the ground up and thats costly. Furthermore whilst the labor costs are often lower in Asia, I doubt you could charge the same prices. I may be wrong here but it makes sense.




I think you've missed the mark here. Prestige brands are coveted in Asia, they certainly aren't sold cheaper.




ScottyfromAussie said:


> 3) Expansion is funded by debt
> 
> This is a biggy, they have so much free cashflow, why are they increasing their debt facilities?
> 
> They should stop paying the dividend and reinvest the earnings into the expansion. Divs just create tax liabilities for shareholders. I'd much rather the company keep the money and compound it at 80% per annuam rather than give it out. They can return it later!




Interest cover is over 30x. Debt is like red wine, a little is good for the health. I think you're jumping at shadows if that debt concerns you.


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## ScottyfromAussie (27 May 2012)

VSntchr said:


> Forgive me for not providing the relevant report, but it has been stated before that ORL has initially encountered that the Asian market will pay _MORE_ for its products than the Aussie market....
> 
> Disclosure: Sold at $8.15....




Please kindly link the report as well as the source.

I'm more than happy to be wrong if I learn something or acquire a valuable resource.




McLovin said:


> It's too small to be reported seperately. AASB 114 has the rules on what is and isn't a reportable segment, it's usually 10% of profit, revenue or assets/liabilities. I'd say considering they only had four stores opened between late 2010 and May 2011 it was far too soon to be expecting any meaningful data.




I didn't know that before. Thank you  , Do you know a website I could find out more about these rules? More specifically for investment purposes rather than the whole AASB guidebook.



McLovin said:


> I think you've missed the mark here. Prestige brands are coveted in Asia, they certainly aren't sold cheaper.




I see where you're coming from but I'm not sure how the argument holds up.

I convet Maserati's, but I can't afford one at the moment. I still covet it but that doesn't get me one 

Last when I was in Singapore and KL, I brought a lot of spending money specifically because I knew I could buy stuff cheaper there. I think over the long term, the Aussie dollar will have strong purchasing power over its neighbours and thats a bit of a pain for ORL imho.



McLovin said:


> Interest cover is over 30x. Debt is like red wine, a little is good for the health. I think you're jumping at shadows if that debt concerns you.




Its not so much that I think the debt is too high, its not, its that they're using debt to expand rather than slashing the div.

By paying me the div, I have to pay income tax on it. Also the company pays interest on the debt they use. Basically its inefficient from an owners point of view.

They could've kept the div, saved me the tax, saved the interest expense, funded the expansion with it and compounded my money at 80%. Also they could've got a world of bigger tax benefits than just a deduction for interest expense.

As Bob Shaw said "You have to grow from earnings". Plus I'm much happier to pay tax on my div compounded a few times at 80%.

Finally if they do slash the div the stock will fall to $4/$5 and I could get a bargain 

Cheers guys,
   Scotty


----------



## VSntchr (27 May 2012)

ScottyfromAussie said:


> Please kindly link the report as well as the source.




The source is ORL lol. I think it was in the second-latest full year report...


----------



## McLovin (27 May 2012)

ScottyfromAussie said:


> I didn't know that before. Thank you  , Do you know a website I could find out more about these rules? More specifically for investment purposes rather than the whole AASB guidebook.




You can try this. http://www.cpaaustralia.com.au/cps/...porting-toolkit-reporting-standards-2012.html

I still buy this when new editions come out (I used the second edition at uni)
http://www.coop-bookshop.com.au/bookshop/show/9780170181860
It's a really good reference, assuming you understand the basics of accounting.



I see where you're coming from but I'm not sure how the argument holds up.



ScottyfromAussie said:


> I convet Maserati's, but I can't afford one at the moment. I still covet it but that doesn't get me one




There's a bit of a difference between a $1,000 handbag and a $400,000 car. I know girls who will happily go and spend $2,000 on a handbag or $500 on a pair of shoes but could absolutely not afford a Maserati. ORL is clearly trying to target this fast growing demographic in Asia.





ScottyfromAussie said:


> Its not so much that I think the debt is too high, its not, its that they're using debt to expand rather than slashing the div.
> 
> By paying me the div, I have to pay income tax on it. Also the company pays interest on the debt they use. Basically its inefficient from an owners point of view.




Sounds good in theory but in practise the largest providers of capital in Australia are super funds. They're income investors and it would be unlikely they would approve of the company "slashing the div".

That's ignoring the argument that the relative cost to the company of debt maybe cheaper than equity.


----------



## ScottyfromAussie (27 May 2012)

McLovin said:


> You can try this. http://www.cpaaustralia.com.au/cps/...porting-toolkit-reporting-standards-2012.html
> 
> I still buy this when new editions come out (I used the second edition at uni)
> http://www.coop-bookshop.com.au/bookshop/show/9780170181860
> It's a really good reference, assuming you understand the basics of accounting.




That really is excellent. It'll take me a while but I'll need to plough through that 



McLovin said:


> There's a bit of a difference between a $1,000 handbag and a $400,000 car. I know girls who will happily go and spend $2,000 on a handbag or $500 on a pair of shoes but could absolutely not afford a Maserati. ORL is clearly trying to target this fast growing demographic in Asia.




I like this idea but is there evidence/studies to back it up?



McLovin said:


> Sounds good in theory but in practise the largest providers of capital in Australia are super funds. They're income investors and it would be unlikely they would approve of the company "slashing the div".
> 
> That's ignoring the argument that the relative cost to the company of debt maybe cheaper than equity.




Is it worth paying out divs now when you could pay much higher divs in the future? There's a huge cost attached to obeying the institutional imperative as Hagstrom calls it. Usually the result is a stagnant company value.

Slashing the div would depress the stock price in the short term, there's little question about it. However in the long term, it would be much better off. Also as I pointed out, the investors will save a lot of tax.


----------



## McLovin (28 May 2012)

ScottyfromAussie said:


> I like this idea but is there evidence/studies to back it up?




To back up what? That someone on a middle class income can afford an expensive handbag but not a Maserati?


----------



## ScottyfromAussie (28 May 2012)

McLovin said:


> To back up what? That someone on a middle class income can afford an expensive handbag but not a Maserati?




ah no..I mean evidence that this market segment is understood by Oroton and that their strategy will be tailored to these consumers?

Also whether these consumers would even want the Oroton bags over those made by say Prada or other brandnames.


----------



## McLovin (28 May 2012)

ScottyfromAussie said:


> ah no..I mean evidence that this market segment is understood by Oroton and that their strategy will be tailored to these consumers?
> 
> Also whether these consumers would even want the Oroton bags over those made by say Prada or other brandnames.




Well I'm sure they haven't just gone and invested in these new territories without having done market research.


----------



## ScottyfromAussie (28 May 2012)

McLovin said:


> Well I'm sure they haven't just gone and invested in these new territories without having done market research.




I wondered about this myself, I couldn't find any R&D on their financials.

I was hoping they would have a regular R&D expense.

The only mentioned of research in the FY11 was refering to the market in Asia which they researched. But "research" could mean a lot of things and research isn't free.

There is a marketing expense which I guess I could see them putting research dollars under but usually these are separate.


----------



## McLovin (29 May 2012)

ScottyfromAussie said:


> I wondered about this myself, I couldn't find any R&D on their financials.
> 
> I was hoping they would have a regular R&D expense.
> 
> ...




It's unlikely the amount is material and therefore doesn't need to be disclosed as a seperate item.


----------



## clinta44 (31 May 2012)

ScottyfromAussie said:


> Also whether these consumers would even want the Oroton bags over those made by say Prada or other brandnames.




I've just come back from a holiday from malaysia and singapore. The only oroton store I ventured into was the Marina bay sands one. had a few people in the store and customer numbers were simular to orther stores... Although it was a quiet morning... 

In malysia I didnt go into any of the oroton stores but I didnt notice any knock offs in the markets but there was plenty of LV, Prada, Chloe etc but no oroton... 

This Is good and bad. Good that there bags are not getting knocked off... Bad that it would seem they are not as popular as other brands and not worthly of being knocked off.


----------



## Ves (16 August 2012)

The Ralph Lauren license is now gone.  That's a third of their NPAT effectively wiped out!!  They will lose some meat off their balance sheet too.   It will be interesting to see what the next step will be for them.  Does this put a big dent in their cash flow to hurt the Asian expansion plan?

Earnings risk strikes again.  Look out below.


----------



## McLovin (16 August 2012)

I guess it gives some colour as to why they are doing this...

http://www.vogue.com.au/fashion+sho...first+ready+to+wear+collection+at+mbfwa,17781

NB: I am not a Vogue reader but I do find the Vogue forums very handy for tapping into the market that companies like ORL, PMV etc are targetting.


----------



## skc (16 August 2012)

Ves said:


> The Ralph Lauren license is now gone.  That's a third of their NPAT effectively wiped out!!  They will lose some meat off their balance sheet too.   It will be interesting to see what the next step will be for them.  Does this put a big dent in their cash flow to hurt the Asian expansion plan?
> 
> Earnings risk strikes again.  Look out below.




They lose 1/3 of NPAT, but they *gain *some meat on their balance sheet as they free up the capital that was supporting the licence previously. Their announcement tried to cast a slight positive spin on the event, that this freed-up capital can be used to grow their own brand more aggressively.

Things won't look too good for tomorrow, however.


----------



## Ves (16 August 2012)

skc said:


> They lose 1/3 of NPAT, but they *gain *some meat on their balance sheet as they free up the capital that was supporting the licence previously. Their announcement tried to cast a slight positive spin on the event, that this freed-up capital can be used to grow their own brand more aggressively.
> 
> Things won't look too good for tomorrow, however.



That depends how you look at it.   It is possible that they lose scale  (and therefore margins contract) and their reputation is battered  (although I admit, I am not sure how, but it is is possible).  Ralph Lauren sales were almost half of their revenue, weren't they?  That's a fair chunk of cash flow down the drain,  if that cash flow (and the capital it was coming from) was helping the expansion then they better replace it pretty quickly!  That's what I mean by losing meat. Maybe I should have said it loses some of its edge. You make a good point, but all of a sudden they have gone from a position with degrees of certainty to one of without!   Let us hope they have good contingency plans for their sakes.

Interesting side show:  Roger the Dodger also held this very recently. Interesting to see what is said this time... third strike from his list of ten companies you would have no problem holding if the market closed for five years.

edit:  I think the market will trade this one close to $4 at some stage tomorrow. I think EPS was $0.62, so it comes down to roughly $0.40 if there was no growth.   Not entirely unrealistic if it trades at a P/E closer to 10 instead of 12.5 is it?


----------



## McCoy Pauley (17 August 2012)

Pre-open estimates a drop of about 10% on the open.


----------



## clinta44 (17 August 2012)

there are sell orders in as low as $5.50... it will be an interesting day that's for sure. 

Down down prices are down!


----------



## RottenValue (17 August 2012)

I assume that Rodger the Dodger would have sold out of this one back in April


----------



## clinta44 (17 August 2012)

RottenValue said:


> I assume that Rodger the Dodger would have sold out of this one back in April




Roger would have bought in 1999 when it was trading at 80c - then sold at its historical high in Feb 2011 at $9!

 Another perfect trade no doubt!


----------



## McLovin (17 August 2012)

The earning potential of ~$30m invested into this business is excellent, assuming that they can deploy that sort of amount. The problem is that they are basically going to have to almost double their Oroton business in order to maintain their profitability. God knows how achieveable that is.


----------



## Ves (17 August 2012)

McLovin said:


> The earning potential of ~$30m invested into this business is excellent, assuming that they can deploy that sort of amount. The problem is that they are basically going to have to almost double their Oroton business in order to maintain their profitability. God knows how achieveable that is.



If it was that easy then why would they have been paying out 80-85% of their earnings for so long? I think the market has lost its marbles with this one today... as far as I can see the valuation for the Oroton segment of the business is higher than it was yesterday.  It certainly well exceeds the price  I thought it would touch.


----------



## McLovin (17 August 2012)

Ves said:


> If it was that easy then why would they have been paying out 80-85% of their earnings for so long? I think the market has lost its marbles with this one today... as far as I can see the valuation for the Oroton segment of the business is higher than it was yesterday.  It certainly well exceeds the price  I thought it would touch.




I don't disagree with you. CAPEX last year was ~$6m across both brands. They're going to end up with a lot of cash on their balance sheet for years or they're going to distribute it.


----------



## Ves (17 August 2012)

So allowing for capex they basically paid every single dollar out? It is interesting to note that 60% of their sales came from online, which I would not imagine requires much capital.  Asia is obviously what they need this money for and where they will get the most growth.

There were some rumours that they planned to buy Mimco  (Witchery ended up with it) and more rumours on a planned purchase of RM Williams.   

Also did not realise that 45% of this stock is owned by a concentrated group of holders.  Combine this with the fact that there will still be 2 (you could almost say 3) unaffected dividend payments before the PRL contract ends, and I guess that explains why the share price did not fall lower today.

ORL might be subject to a takeover of its own if the share price happens to lose support.


----------



## ROE (17 August 2012)

Asia is easier said than done, Asian rich don't like unknown brands

Oroton is relatively new they need to build the reputation and that could 
takes years and may not be successful.

Not only that you got to have keeping up with the Jones image so owning an Oroton show that 
you got some cash to burn so other Jones can imitate your look and buy the same stuff...

all this is not that easy to execute...but if they can pull it off then they may make a few bucks out of it 

Remember people shell out big bucks for fashion the brand has to be recognised by their peers, no peer recognition no purchase

and where do Oroton made their stuff? if you sell rich stuff in Asia and it said made in China that is a no go zone


----------



## skc (17 August 2012)

McLovin said:


> I don't disagree with you. CAPEX last year was ~$6m across both brands. They're going to end up with a lot of cash on their balance sheet for years or they're going to distribute it.




They have been expensing their Asian expansion as opposed to piling them on the balance sheet.

I am a bit stunned as well that they didn't fall more today. 35% of earnings gone just like that. $30m payment from RL was for inventory already held so it's not exactly free new money. They only managed to spend $1.2m in 2H12 on international expansion so it will be a long time before they finish spending $30m (or a long time before the earning hole is plugged).

I had a valuation of ~$5.5 and I expected the panic to push it below $5...


----------



## McLovin (17 August 2012)

ROE said:


> and where do Oroton made their stuff? if you sell rich stuff in Asia and it said made in China that is a no go zone




Most luxury labels are made in China or other parts of Asia these days. I know off the top of my head Coach, Prada, Burberry and Emporio Armani are all made in China. Last time I was in Asia (earlier this week) they didn't seem to be struggling.

At the very pointy end LV, Jil Sander etc are all still made in Europe but then again LV burns all their excess stock at the end of the season rather than have end of season sales, which is a different league to the one ORL is playing in.



			
				skc said:
			
		

> I am a bit stunned as well that they didn't fall more today.




I think we all are.


----------



## ROE (18 August 2012)

McLovin said:


> Most luxury labels are made in China or other parts of Asia these days. I know off the top of my head Coach, Prada, Burberry and Emporio Armani are all made in China. Last time I was in Asia (earlier this week) they didn't seem to be struggling.
> 
> At the very pointy end LV, Jil Sander etc are all still made in Europe but then again LV burns all their excess stock at the end of the season rather than have end of season sales, which is a different league to the one ORL is playing in.
> 
> I think we all are.




You may be right but from doco I watch 2 years ago these Italian fashion house still make majority of luxury goods outside China and only 10-20% in China to test the appetite.

on the same year I research a bit into these things and most Chinese dont like buying luxury goods brands made in China, No brainer if it said made in Italy or France etc....

Time will tell if Oroton Asian sale dont pickup you know what may cause it...


----------



## McLovin (19 August 2012)

ROE said:


> You may be right but from doco I watch 2 years ago these Italian fashion house still make majority of luxury goods outside China and only 10-20% in China to test the appetite.
> 
> on the same year I research a bit into these things and most Chinese dont like buying luxury goods brands made in China, No brainer if it said made in Italy or France etc....
> 
> Time will tell if Oroton Asian sale dont pickup you know what may cause it...




Yeah, they don't make everything in China but they also aren't making the stuff in Milan or Paris. Basically, the stuff they sell in Asia is made in Asia (not necessarily China) the stuff they sell in the Americas is made in Mexico or a central American country and the stuff they sell in Europe comes from places like Turkey or Romania. Until the 1980s these were small family run boutiques but they're now big businesses with whole teams dedicated to supply chain management, the days of some guy working in a studio to make a garment are pretty much over, although they have done well to maintain that image!

The top end houses still make their stuff in Europe but ORL is not playing in that league. Infact I think ORL is at about the same price point as Coach or RL both of whom make almost everything in China.

Interesting discussion though, next time I'm in Asia I'll have to go and have a look at some CoO labels in the boutiques.


----------



## McCoy Pauley (20 August 2012)

Up 2.5% so far today.  I think that the share price resilience has to do with the fact that ORL made it clear that the decision has no effect on the results to be announced to the market in September (IIRC), so investors/speculators are hoping for a big pay-day in terms of dividends before selling out.  I expect ORL's share price to drift lower after it goes ex-dividend in a couple of months.


----------



## clinta44 (20 August 2012)

McCoy Pauley said:


> I expect ORL's share price to drift lower after it goes ex-dividend in a couple of months.




I tend to agree, I think there is a bit more to play out - the $30 Mil figure is solely Oroton's value of the RL Business. It will be interesting to see the full details of the hand back once published.


----------



## McCoy Pauley (20 August 2012)

Interesting to note that Ralph Lauren Corporation's share price rose 4.6% in the US on Friday night (our time).


----------



## McLovin (20 August 2012)

McCoy Pauley said:


> Interesting to note that Ralph Lauren Corporation's share price rose 4.6% in the US on Friday night (our time).




That probably has more to do with RL beating analyst estimates last week.

A 5% move in RL's share price is a market cap change equal to about 3x ORL's entire value.

I'd love to know who is buying and how they can justify this price, for ORL.


----------



## skc (20 August 2012)

McLovin said:


> That probably has more to do with RL beating analyst estimates last week.
> 
> A 5% move in RL's share price is a market cap change equal to about 3x ORL's entire value.
> 
> I'd love to know who is buying and how they can justify this price, for ORL.




If an armchair analyst like myself can see the huge apparent mis-pricing, I am guessing that it can only be insiders who is buying. May be there's a deal to buy something to plug the earning hole soonish...


----------



## Tannin (20 August 2012)

I watched Oroton's price changes with interest. I saw this as an opportunity to buy a good company for a cheap price ..... but ORL only dropped a couple of dollars for a short while and is now trading close to $6.50 - not much more than a dollar lower than before the announcement. 

So my money stayed in my pocket. I was looking for a bargain price at or below $5 and that clearly isn't on the radar. 

Strikes me that the loss of RL shouldn't really be such a massive blow. They still have the structures and the outlets, same as before, they just need to switch over to other products. I don't see that as being so difficult. (Disclaimer: I know nothing whatever about the fashion industry, and care less. But how hard can it be to find some alternative products to sell next year? Actually selling the stuff is usually the  hard bit, after all.) 

Summary: I see a good future for the company but I'm not interested at these prices.


----------



## skc (20 August 2012)

Tannin said:


> Strikes me that the loss of RL shouldn't really be such a massive blow. They still have the structures and the outlets, same as before, they just need to switch over to other products. I don't see that as being so difficult. (Disclaimer: I know nothing whatever about the fashion industry, and care less. But how hard can it be to find some alternative products to sell next year? Actually selling the stuff is usually the  hard bit, after all.)
> 
> Summary: I see a good future for the company but I'm not interested at these prices.




From what I've read they are handing over the leases to RL as well. So they don't have empty shelves wiating to be filled.


----------



## notting (20 September 2013)

Has had a few interesting days.
Wonder if it was the Montgomery fund buying into that like it did MMS.


----------



## skc (20 September 2013)

notting said:


> Has had a few interesting days.
> Wonder if it was the Montgomery fund buying into that like it did MMS.




Makes me feel good about my short :

This 5 year chart looks interesting.


----------



## peter2 (2 July 2014)

skc was spot on with his assessment of the descending triangle pattern. 

Nine months later, I notice a higher low (HL) on the weekly chart and an obvious resistance level which could be a reasonable buy trigger. 

This would indicate that insto investors have/are accumulating this stock at the low prices. There wasn't a huge capitulation at the lows but the volume was above average for three weeks and price did go higher immediately after. 

Have any of our forum FA guys looked into this company recently? 
Is that div yield realistic? Are those earnings realistic? 

I'm not looking for advice, just re-starting a conversation on a company that a lot of people commented on in the past.


----------



## leyy (16 July 2014)

on a 8 month high,

very attractive dividend yield 7% ++


----------



## Klogg (16 July 2014)

leyy said:


> on a 8 month high,
> 
> very attractive dividend yield 7% ++




Maybe on last year's dividend. The interim dividend was cut from 22c to 8c - can't imagine it would have been sustainable otherwise, given the Ralph Lauren impact.


----------



## skc (17 July 2014)

peter2 said:


> skc was spot on with his assessment of the descending triangle pattern.




Thanks. 



peter2 said:


> Have any of our forum FA guys looked into this company recently?
> Is that div yield realistic? Are those earnings realistic?




Fundamentally it defied gravity for quite some time on the impact of a major reduction in earnings. The market got all rosy-eyed thinking that organic growth will mitigate the impact. But growth takes time and it didn't come quick enough, so the market gradually sold it down, to a level where pretty much no growth is assumed. 

The dividend and earnings you see are historical. H1 reported EPS was 12.4c, and H1 typically is 60% of the full year. So annualising that you get ~20-22c, assuming some organic growth in H2. Dividend likely to be 80-85% payout range, so 16-18c for the year. Implying a yield of some ~3.5% or so at share price of $4.75.

The reward:risk was there back around $3.60-$3.80. I am still kicking myself for not actively monitoring it back then.


----------



## ROE (17 July 2014)

Bought a couple weeks ago under  $4 and it had a Stella run since, luck of timing I guess 
but I will hold for longer term, I think the future is  bright for ORL after following it for a while and 
search and dig a lot of stuff on it.


----------



## JTLP (17 July 2014)

skc said:


> Thanks.
> 
> 
> 
> ...




They will be trying to offset the loss of RL with the introduction of Brooks Brothers - similar clothing store/style. Not quite sure it has the brand mark/recognition yet but they do do some nice things so will see how it goes.


----------



## McCoy Pauley (18 July 2014)

JTLP said:


> They will be trying to offset the loss of RL with the introduction of Brooks Brothers - similar clothing store/style. Not quite sure it has the brand mark/recognition yet but they do do some nice things so will see how it goes.




Brooks Brothers definitely does not have the same brand recognition as Ralph Lauren has in Australia.  It's a net loss for Oroton, IMO.

The question is whether Oroton can make their Asian expansion strategy work.  IMO, it's a very risky strategy to pursue.  Oroton simply does not have the reputation that the true high couture products (such as LVMH) have in the region.  Whether Oroton can tap into the upper-middle class consumers in Asia will dictate the company's fortunes.

I think I'm also right in an assessment that Oroton is opening more standalone stores and with the demise of DJs, I would expect that that market channel would be crimped given Woolworths SA will wish to push its own brands at the expense of third party brands.

I haven't looked at Oroton for quite some time, so I'm relying mainly on memory, but I'd be cautious about holding Oroton for the long term.  Their strategy involves a great deal of risk and I'm not sure that the pay-off is worth that risk.


----------



## ROE (18 July 2014)

I wouldn't classified ORL as high end luxury, I say they are more like high quality products at middle class price.

I know plenty of people who use ORL products and my family use them as well.
Their price is reasonable for a high quality products.

If you are looking for quality at an affordable price tag ORL is one of the brand 
Oroton is very popular with middle class Australian Asian, if that is an indication of Asian taste then
I see great future ahead.

I am prepare to wait for 5-10 years for their strategy to play out...I dont mind going in at this stage, clean balance sheet, decent dividend income, by the time you wait for the strategy to deliver fruit it is too late to get them cheap.


----------



## McLovin (18 July 2014)

ROE said:


> I wouldn't classified ORL as high end luxury, I say they are more like high quality products at middle class price.




I agree. I think we've had this discussion before, a few years ago. I see ORL's competitors as being more like Coach, Guess, Chanel etc than LVMH.


----------



## skc (18 September 2014)

skc said:


> The dividend and earnings you see are historical. H1 reported EPS was 12.4c, and H1 typically is 60% of the full year. So annualising that you get *~20-22c*, assuming some organic growth in H2. Dividend likely to be 80-85% payout range, *so 16-18c for the year. *Implying a yield of some ~3.5% or so at share price of $4.75.
> 
> The reward:risk was there back around $3.60-$3.80. I am still kicking myself for not actively monitoring it back then.




Just coming to blow my own horn a little bit. Today's result revealed a NPAT of $8.3m, an EPS of 20.2c and dividend of 16c for the year.

Assuming decent LFL growth, continued plodding on the international scene plus full year contribution from the 2 new brands (both loss making in FY14)... a 10-15% jump in EPS is quite doable. 

I didn't realise the share price fell off a cliff in the last 3 days before the report (probably due to weak overall market and weak Myer results)... At low $4.1 the forward PE is ~17x. Not cheap but with 2 promising brands at their infancies it seems like a fair price. 

Fundamentally here's the best slide from their presentation imo.




But really... what a crappy business ORL is. SBB makes $6.8m in half a year and is only 1/4 of the market cap!


----------



## skc (15 January 2015)

skc said:


> Just coming to blow my own horn a little bit. Today's result revealed a NPAT of $8.3m, an EPS of 20.2c and dividend of 16c for the year.




If I blew my own horn when the call was right, it seems only fair to come back and laugh at myself when the call is wrong.

The 2 new brands are still underwater, while the core Oroton brand is not being managed probably. Price = margin = image = can't just discount things to move stock. You'd thought that's luxury retail 101.

On the bright side, they did warn in early Dec's AGM that things are not rosy. Anyone listening could have gotten out ~$3.50-$4.


----------



## VSntchr (15 January 2015)

skc said:


> The 2 new brands are still underwater, while the core Oroton brand is not being managed probably. Price = margin = image = can't just discount things to move stock. You'd thought that's luxury retail 101.
> .




Yeah. As soon as Sally left they started on the whole discounting route...and I thought "WTF is Ross thinking". The whole time she was there they both made it clear that they would not discount as to protect the brand image.

It didn't take long for her absence to cause a bunch of headaches. Key (wo)man risk!

Pitty I was too slow to read the announcement and missed the trade. Free fall down to $2.90...that would have made for a good week!


----------



## Rainman (15 January 2015)

Retail - and especially fashion retail - is a godawful business in the absence of a genuine competitive advantage.  And that ORL simply does not have.


----------



## Huskar (19 March 2015)

Horrible result this morning too. Cash balance all but gone. -ve OPCF. Inventories blowout. Not looking good..


----------



## ROE (19 March 2015)

Huskar said:


> Horrible result this morning too. Cash balance all but gone. -ve OPCF. Inventories blowout. Not looking good..




yeah rolling out too many loss making stores, need to slow down and get some cash flow going first


----------



## skc (19 March 2015)

Huskar said:


> Horrible result this morning too. Cash balance all but gone. -ve OPCF. Inventories blowout. Not looking good..




I can't believe they didn't get punished more... and I can't believe I couldn't get any borrow to short this.

Cash gone and now in net debt. And what happens after inventory blowout?! You have to do a big discounted sale!

They really should have cancelled the dividend.

Sub $2 soon by the looks on the chart now that the old $2.50/$2.60 support is well and truely smashed.

May be PMV can take it over and fund its expansion. Sol, you reading this?!


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## VSntchr (20 March 2015)

skc said:


> I can't believe they didn't get punished more... and I can't believe I couldn't get any borrow to short this.
> 
> Cash gone and now in net debt. And what happens after inventory blowout?! You have to do a big discounted sale!



Agree. I was smiling big time as I could get borrow on this and happily used it on the open at 2.64. Shame that I got impatient and closed a bit early before the afternoon express straight to the low 2.40's arrived. 



> They really should have cancelled the dividend.



I think this to myself so often. Personally, I am in the firm belief that companies should be far more focused on optimising their capital structure and use of funds rather than focusing on sticking to one path (the dividend consistency path at any cost) in order to please a subset of investors who are in it for a return of capital. I guess it's heavily to do with the franking credit system we have in place..



> Sub $2 soon by the looks on the chart now that the old $2.50/$2.60 support is well and truely smashed.
> May be PMV can take it over and fund its expansion. Sol, you reading this?!



I didn't want to hold the short overnight for this reason. DJS got snapped up so I would think that the possibility is certainly there...and ORL could fit nicely into PMV's portfolio.


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## McLovin (20 March 2015)

VSntchr said:


> I think this to myself so often. Personally, I am in the firm belief that companies should be far more focused on optimising their capital structure and use of funds rather than focusing on sticking to one path (the dividend consistency path at any cost) in order to please a subset of investors who are in it for a return of capital. I guess it's heavily to do with the franking credit system we have in place..




It might also have something to do with making their cost of capital as low as possible. I do agree with the principle but I sometimes wonder if, as a shareholder, when one advocates these things they're not cutting off their nose to spite their face. I wonder if there's any research out there about the cost of equity for dividend v non-dividend paying companies that are otherwise in similar financial situations.


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## skc (20 March 2015)

McLovin said:


> It might also have something to do with making their cost of capital as low as possible. I do agree with the principle but I sometimes wonder if, as a shareholder, when one advocates these things they're not cutting off their nose to spite their face. I wonder if there's any research out there about the cost of equity for dividend v non-dividend paying companies that are otherwise in similar financial situations.




May be another reason is the incentive structure of the exectuives. Cancel the dividend you can guarantee the share price will flop big time. Your average market participant is short term and not that understanding. So if the incentive structure is around TSR or anything... propping the share price up (while not actually achieving anything) is a full time occupation.

P.S. Not saying that's what ORL is doing at all. Just in a general sense.


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## VSntchr (22 May 2015)

ORL has been in disarray since Sally left. Another downgrade today - price falling through $2.00. If it wasn't for all that director buying after the HY result, we probably would have been here sooner 

Wonder how far the FY div will get cut??


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## greggles (30 November 2017)

Oroton Group announced to the ASX this morning that the company has been placed in voluntary administration. Shares are now suspended from trading.

"The Strategic Review process has failed to secure a viable option for the Company and an Administrator has been appointed," Oroton said.

Bad news for those holding. Things are looking grim.


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## System (13 August 2018)

On August 10th, 2018, OrotonGroup Limited (ORL) was removed from the ASX's official list in accordance with Listing Rule 17.11, following the transfer of all the issued capital of the Company to Manderrah Pty Ltd ACN 111 080 356 ATF the GJJ Family Trust.


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