So, maybe their product is overpriced? But then one needs to ask, compared to what? Starbucks? I think that I only paid about $8 for the 10oz bag of C.B. ...
Guess need to do some more dd.
The reason I was attracted to this stock is the fact that they have a 50% cost advantage over starbucks in China since they ostensibly do not have to pay the 50% import tariff like starbucks.
"Boutique" coffee shops typically charge by the cup so theoretically there is enough margim there to swamp out premium bean prices. But, as you indicated, they may not be too competitive with bags of regular store brands in the U.S.
On the other hand, if comparable to a premium brand like starbucks, that might not be too bad.
The organic thing may be a plus since people in China suffer with a lot of pollution. Those growing number of people becoming affluent enough to buy coffee at a franchise shop may just be willing to pay a bit for for at least something that isn't polluted. If their bean prices are cheaper than starbucks enough to undercut starbucks and still turn a profit, well, then we're in business.
The producer ownership thing- have a mixed mind about that. If they're so poor that they just sell their shares as soon as they get them, well, maybe that could be a source of pressure on the stock. Some of this selling could just be some people taking advantage of the general market downturn -getting the price down to cover or perhaps start quietly buying in a bit.
Most likely though, probably seeing dilution here due to some sort of equity finance scheme. Hopefully not too toxic. Hopefully mgnt not naive enough to fall for the usual convertible debiture scam... guess I need to read through the 10q etc to see how bad off they actually are.
I had hoped somebody had already done some dd of this nature on the board. I guess the board will be slow until news or more of an uptick in the pps.
So far still think that they have a shot at becoming something akin to a "starbucks of china", eventually.
AI
