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Non-Tech : KARE - Koala Corporation
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To: BRA who wrote (2)5/21/1999 10:45:00 AM
From: Alan Villalon   of 9
 
Part of my concern was that it is in a very boring industry. With a market cap of 70M and KARE already the leader of the pack, how much room is there for appreciation.

I read that KARE revenues break-up is as follows:
51% Family convenience (i.e high chairs, booster seats) - 60% margins
35% Modular play equip (i.e. swings, ladders for parks) - 40% margins
14% Activity products (i.e. toys in waiting rooms & day care) - 60% margins

Future revenues estimations:
39% Family convenience
37% Modular play equipment
24% Activity Products

My worry is that if KARE starts losing their competitive niche (basically they are the only ones to pitch to high-end customers), there is plenty of room to lose on margins. These may pose problems as KARE tries to break from mini-cap territory into small cap land.

I want to see KARE get into small cap status because that will draw in more institutional money. However, with only 3 millions shares outstanding, institutions will hesitate to come in because they will cause this to skyrocket upwards (too little float).

I have read that KARE's management team is on solid ground. I am going to request an investors' packet and take a look around. I like what I see so far but can they go further without giving up margins is a concern.

-Al
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