Elevator Pitch
Hong Kong-listed fashion retailer Esprit Holdings Limited (ESPGY) (ESHDF) [330:HK] trades at 0.43 times trailing P/B (price-to-book) and 0.22 trailing times P/S (price-to-sales), representing a significant discount to the stock's historical five-year average P/B and P/S ratios of 0.8 times and 0.5 times respectively. In addition, Esprit is debt-free with net cash accounting for approximately 114% of its market capitalization.
Although Esprit seems cheap with current valuations implying that investors get the loss-making retail business for free at current valuations, I think that this is justified for a couple