Author Topic: DII-B.TO - Dorel Industries  (Read 5357 times)

PlanMaestro

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Re: DII-B.TO - Dorel Industries
« Reply #10 on: July 06, 2011, 07:40:59 AM »
Actually their FCF multiple is more like 6 (depreciation and amortization > capex).

It looks very cheap, but I suppose you want more of an assessment of its safeness. As you mention, their TBV does not provide downside protection so you have to be comfortable that they can defend their cash flow. And from a distance, and that means Mexico, the first risk that jumped on me is that I do not like their product mix.

I am surprised they have been able to consistently grow revenues at a 10% despite this so I might be missing something in the following assessment. Take it as 20,000 feet view.

Furniture: reminds me of Dexter shoe. Many cheap American stocks in this sector. Part of this is its extreme cyclicality and high fixed costs. But also many of them are looking for ways to move to Asian manufacturing. and brand and distribution is not much of a barrier to entry in this sector. Transportation and distribution used to be a big barrier but ready to assemble and discounters are a big threat. I imagine there are some upscale niches like Natuzzi but the pictures of their products look more like affordable furniture.

Bicycles: I remember very well Cannondale, GT and Mongoose from the times I used to exercise (now I think it is bad for your health). But from what I remember, there is not much value in the frame and assembly, both of which are more of a commodity. Shimano used to be the Intel inside of this industry and I did not see anything in the 10K that makes me think different

Juvenile: it looks like their best segment. But as a Latin American father this is the first time I have heard of them. Are they well recognized in Canada?

« Last Edit: July 06, 2011, 08:47:43 AM by PlanMaestro »


oddballstocks

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Re: DII-B.TO - Dorel Industries
« Reply #11 on: July 06, 2011, 08:42:27 AM »
Just wanted to add about the kids brands, we have a few Safety 1st items, and I know Maxi Cosi is the luxury kids line, I would expect high margins out of them. Lowes sells Safety 1st as well as WalMart.

I believe the Cosco line is a private label brand, interestingly enough I've purchased Cosco items at Costco.

Just clicking on the links on the website I recognize almost all of the brands (as an American) I've seen most of them in stores and apparently own a few items that Dorel makes. 

In some ways they remind me of Audiovox, buying brands that used to be very popular and trying to give them a second life. 
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