paperweight

Thanks for all your takes on this! In the last month I have found a lot of stocks trading at these multiples, so I don't feel the need to jump on something of that sort anymore. IMO the risk is not worth the reward here (both business risk with Target being >80% of revenue, and management with the huge payout). Cheers!

Thanks for all the replies. I'm happy you also think that way. Since you threw out some ideas, let me reveal what I was talking about. I'm looking A-Z and have only done Netnets before, so please give me some (even if it's negative) feedback on this one. I realize China is a hard pass for some, but I decided it is worth my time. The company in question is Hyfusin Group Holdings Limited. It is listed on the HKSE with ticker 8512.HK. The ratios I gave above were done in my head, very approximately, so they aren't on the mark. But just from the numbers, it looks cheap. They manufacture scented candles, and since there was just a major recall, I looked up and found out they sell to Target. As I'm non-US, I might be wrong here but Target probably rotates products very quickly, so the short to mid term earnings picture is also in question here. Target is like 80% of their revenue. They just built a new factory, which might or might not be a good thing. Additionally, costs from product recall are coming & 2 guys got 40M HKD, so about 5M USD, which just seems crazy. Please give me feedback. Do you think this might do good in a basket? Or is the old: "If you are not prepared to buy a lot of it, then don't buy it at all." applicable here?

I found something trading at a ~3x PE, earnings should be sustainable for at least 4 years. Cash position covers debt and comes out (net) to ~1/2 market cap. P/B ~0.5. No dividend for the last 4 years. The business does not have a moat, it's a product I would categorize as differentiated but otherwise commodity like. The company is not the market leader (in fact, it's a copycat) and is riding a trend wave. I don't think margins and sales levels are sustainable long term. (+10y) Management is quite expensive, paid themselves $7M (2 people). That comes out to about 40% of net profit!! As I'm writing this down, I realize it's a pass. I need to be more strict when looking at companies. Anyone have any management horror stories for me to read so I can say no quicker next time?