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Evaluating EpiCenter Holdings: Can they compete with a big boy like Hon Hai

I know I haven’t done a piece on Epicenter Holdings yet. But this stock is doing something that I really like which is mobile productivity and mobile computing. You can read more about my thoughts here at www.ProductiveOrganizer.com

Now Epicentre Holdings Limited operates as a premium reseller specializing in the sale of Apple brand products and its complimentary products in Asia. The company offers its products in the retail market through its EpiCentres.

It is easy to see that money raised through the stock market for EpiCenter has 2 main uses:

  1. Future Working Capital
  2. Overseas Expansion

My worry is the second use. China probably is the easy to come to mind destination, but do you think it is easy to succeed. Investing in food retailers like Food Junction have taught me that it is never a straight forward case of you dump money you get returns.

Here, Hon Hai which is a large taiwanese manufacturer (you may know it better as Foxconn) wants to expand its retail chain:

Cybermart, a retail arm of Hon Hai which also owns Foxconn, has recently received approval as an Apple-licensed retailer in the Asia-pacific region. The retailer intends to sell Apple products in up to 500 new stores planned for China, Hong Kong and Taiwan. Cybermart will open seven to eight stores in 2011, starting with its first store in Tianjin, China which will open on April 1, 2011.

Now I do not know how successful Cybermart is vs EpiCenter but that is a big boy that is hard to go against.

What are your thoughts?

Kyith

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vwguy

Friday 4th of February 2011

I personally think that cybermart will have a way greater success than epicenter when they start operation in China. Hon Hai is a major (if not the biggest) contract manufacturer for Apple with iPad and iPhone in its production floor that spawned several buildings. They have very active and substantial billion dollar business relationship than epicenter can ever achieve. The reason why epicenter is able to gain success in markets like Singapore is Apple do not wish to establish Apple Store personally and allows partners to succeed. Hence, I think that Honhai who is way financially stronger, has great supplier relationship and better customer understanding will win Cybermart..... hands down.

Drizzt

Saturday 5th of February 2011

hi vwguy,

thanks for visiting and i think you are quite right. but we ask ourselves what is the edge of Epicenter? i think it is sticking close to the mantra of selling it the Apple way. in that sense the scope is pretty narrow and inevitability it means they are tied close to Apple's strength.

i think apple is here to stay but this retail industry geographical wise can be very cutt-throat.

that said, Epicenter is more like a boutique experience, such as the Hour Glass. The pie might be big enough if they do it correctly.

Best Regards.

temperament

Thursday 3rd of February 2011

Hi Drizzt, No, I don't own a smartphone.(Actually I am not sure. I use my phone for simple communication only. Very "kiam koo" lah.

Drizzt

Saturday 5th of February 2011

oh shucks, i was gonna invite you to www.belugapods.com which is actually on Android and iPhone

Ray

Thursday 3rd of February 2011

Hi Drizzt

As a newbie on stocks, I have been monitoring Epicentre & based on a quick assessment of financials, I think it has good fundamentals.

However, I share with you the same thoughts with regards to their plans to expand to China. The market in China is difficult imo for a few reasons - 1. import tax for electronic goods (although recently halved); 2. competition from other players such as Hon Hai; 3. readily available substitutes and replicas of Apple products

http://www.todayonline.com/Business/EDC110128-0000213/China-slashes-import-tax-for-electronic-goods

In Singapore, the Apple-play resellers I am familiar are: nuBox, Epicentre and iStudio. Between these, I would say Epicentre seems most promising in the market, followed by nubox and iStudio.

Am still on the fence on this because Epicentre's strategy is heavily based on the Apple product itself and market conditions. It should be set to rise eventually, how much growth is yet another story.

Drizzt

Thursday 3rd of February 2011

Slash of import tax could be a key to not just epicenter i feel. its like an opportunity there.

I am ok with them basing on Apple because they are selling a living concept Epicenter. if they sell all tom dicky harry stuff they will be like Challenger.

temperament

Thursday 3rd of February 2011

Hi Drizzt, Wishing you a "Happy and Prosperous new Year" Thank you for your hard (heart's) work.

Drizzt

Thursday 3rd of February 2011

hi temperament, happy chinese new year to you too. BTW do you own a smartphone?

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