JERASIA CAPITAL BHD Value Evaluation

Jerasia Berhad is an apparel conglomerate which consists of manufacturing and trading activities. Owning a series of highly branded product mixes, Jerasia distinguish itself among the competitors in terms of target market where they aim for the middle and upper society. This is in conjunction with the change in trend among the youngsters where product’s brands are being highly emphasized to reflect their status and ability. Despite of their luxurious price tag, from my point of view, their ability to set up unique display windows and the brand along is able to attract a lot of customers. (Not to mention the crowd which the company can attract if they hold any kind of sales. When there is ordinary brand with discount, consumer will see it as stock clearance while discount of luxury brands means that they can get something of higher value with lower price. [It’s logical nowadays]). Moving on, capital expenditure is not vital for survival purpose. Instead, large amount of the company’s gross profit goes to other expenses (which I think is mainly regarded with marketing cost). Barriers of  entry by government is quite high as establishment of manufacturing factory in the third world country like Bangladesh (due to their low cost advantage) has been quite a serious issues for the locals recently.

Manufacturing workers working condition which are long ignored by the industry player occurred to be a very serious threat to the business recently. Poor working condition and collapse of factory building lead the locals to protest against discriminating wages and human right issues. Indirectly, cost of goods sold in the future will be affected. Also, changes of trend is a very high cost as the company need to recalibrate with their suppliers, workforces and marketing departments after every certain period.

With an extreme trend shown by free cash flow after operating activities, we can see that the company is yet to recover its cash level before the world financial crises. It never incur negative cash flow in the eight years until 2012 and 2013. Looking into both ratios, the efficiency level in deploying its assets and equity is also quite low although there are improvements as compared to before. Overall, the company is yet up to expectation at the moment.
Stock: Jerasia Code: 8931