After studying Choppies 2014 financials, I am concerned about their cash position with all this talk of aggressive growth in new market. Is there a general % or measure I can work with to see if the company is short on cash? or will not be able to take a large knock if things dont go as planned?
depends on their business model-if like pnp they sell their stock before they pay for it then is cash reserve really important-they use their suppliers cash not their own.I am not bullish on the share but cash on hand may not be the best measure in this sector
they have a very narrow foot print (Harare which is old spar stores and the jhb-buluwayo corridor) .. expanding beyond that very hard as it about DCs etc. An how do they really compete against a SHP who are masters, they will always be second tier and I don't buy second tier
Their growth is based on their ability to position their stores on areas that seem too small for big players like shoprite, pnp and spar to capitilize. These are mostly areas where small shopping malls are built to create access to shopping for settlements that are a bit away from the CBD. It seems to be working for them at the moment and they will be able to raise enough capital if they don't do major changes to this approach. All that i'm saying is that they seem to have a plan. In this case, not having a cash reserve does not really increase their risk of failing to maintain an aggressive growth. It is rather their approach of avoiding competition with the big players that increases their chances of raising capital at a faster rate.