About URGI

(old writings when I called URGI strong buy last month.)

The net income comparison is quite distorted because of the one time tax benefit for 2005

the growth rate I am refering to is in their most recent report:

operation income for full year of 2006 and 2005
15,016 11,616 29.3%

income before tax (which included the interest from their cash) is
15,622 11,447 36.5%

while the top line revenue growing at 5.3% percent

comparing those numbers, the logical conclusion is

The profitbility of this company has significantly improved in the past year
largely due to their strategy of closing out unprofitable stores

2006 saw 13 old store closed and 6 new store opened, and I would think they will continue to do so to further boost profitbility. And also Online sales increased 52% for the comparable 52-week period,

I don't have a breakdown number to know exactly the portion of this in their topline, however I would think the online part of URGI will provide further growth and playing bigger part in 2007.

So the high growth story is threefolds:
1. demand is strong, too many overweight americans need large size apparels.
2. their strategy for growth is very good, lowering cost while pursuing profitbility by targeting "Sales per Selling Square Footage"
3. Online sales gaining strong traction to cover areas with no local URGI stores.

the just reported Q4 is actually a bad quarter for them due to warmer than expected weather, that's the main reason we have stock price been beaten down from mid Nov's 20 to current sub 13, I do think this Q's number is disappointing but it presents the buying opportunities for investor with longer holding time frame.

Switch from the growth part, the EV/Ebitda ratio for URGI is very good,
according to a recent article

and it should be on top of a take over target short list for bigger player in this field.