"In another and less fathomable leap, it is aiming to make disposable diapers in the U.S., taking on the likes of Procter & Gamble in its home market. Jacob argues, after market study, that he can realize a 10% to 15% cost advantage. His brave mantra: “My father made me strong enough to survive.”

This is news to me. Is he planning to make diapers via KGL or via new company?. Anyone has any insights on this?

This is as per Kagome's Q2 presentation (Apr to June):
Kagome started consolidating PBI into their accounts from end of May this year. Their estimate of sales for the last two quarters (July-December) for PBI is 3.4 billion Yen (185 crores) . This is derived from Kagome presentation that says:

"Net Sales Plan by Segment FY2015 2nd Half: Net increase in sales by PBI (U.S.) (+¥3.4 billion). A weak yen will also have favorable impact."

This is from Kagome's 9 months (Jan to Sept) consolidated results:
The performance for PBI is from May end to September end (4 months) is sales of 5.18 billion Yen ( 282 crores). This is derived from Kagome's statement that says:

"Sales to major food services customers were strong at Kagome Inc. Net sales at United Genetics Holdings LLC were at roughly the same level as the same period of the previous year, but there was net increase of sales at Preferred Brands International (“PBI”), which was made a consolidated subsidiary at the end of May 2015. As a result, net sales in the U.S. were up 37.4% from the same period of the previous year at ¥19.035 billion."

Comparing this to last year (PBI) again from the presentation: In the period ended March 31, 2015, net sales reached ¥5.0 billion (272 crores), and operating income was ¥500 million (27.2 crores). - Revenue has increased over each of the past 7 periods, with an average growth rate of 17%/year.

Either I am interpreting something incorrect or it looks like PBI is having a dream run with May to September sales being greater than last year sales. For all the data and presentations you can look here:
http://www.kagome.co.jp/company/ir/data/fy/index.html

Disclosure: Invested at an average price of 600 it forms more than 10% of my portfolio allocation. No transactions in last 6 months.

hi

I cant make out any specific cup and handle pattern but stock seems in an uptrend.

you can drop the sir bit.

regards
hitesh.

My calculation for 4 Rs cost is based on the discussion with the management and extrapolation of past results. Lets to look at the following Table:

As we can see from the above table, gross margin of the company is increasing. This is mainly on account of higher margin in Female segment. As per the management, gross margin in the female and male segment is 80-90% and 30-40% respectively. Lets see the following table to understand it better.

* Rough calculations
So it is clear from the above table that gross margin is around 85% in the FC. Selling price of Cupid FC is around 24-25 Rs so cost of manufacturing comes to be around 4 Rs.Cost and selling price of FHC is 15 Rs and 35 Rs respectively.

Moat:

• Based on the above facts, i think company has cost advantage. Further, operating cost for cupid is very low as compared to FHC.
• Secondly, as it takes long time to get approval and market size is too small for the big players to concentrate on right now. There is high entry barrier in the industry.

Disc: Invested and views could be baised.