DIIBF - Dorel Industries

[ValorFace]

Dorel Industries (DIIBF; DII-A.TO; DII-B.TO) seems like an interesting playing on biking-boost occurring with COVID.  It's micro/small-cap (and thinly traded).

 

Biking brands are Cannondale, BMX, Schwinn. 

 

https://www.dorel.com/eng/CMS/DOR_Q12020_IR_vfw.pdf

https://sgbonline.com/dorel-sports-finds-silver-lining-in-pandemic-cloud/

 

Biking is 1/3 of revenue.  Home furnishings (ecom 64% of sales) is 1/3 of revenue. Baby products, strollers, carseats, etc, (brands you will recognize with young kids), is 1/3 of revenue. 

 

Stock has been beat-up after tariff challenges, and could be setting up to for Biking boost (if they can keep up with demand).  Other segments could be flattish to slightly down on COVID.

 

 

 

[Cigarbutt]

This is worth following but there is more than trade jitters to explain the secular decline in their three segments and the recent enthusiasm about bikes may be short lived.

There is value within the entity and it may be somehow realized but there is a melting ice cube risk.

They are now stuck with a large debt burden which may limit the upside.

There is another thread:

https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/dii-b-to-dorel-industries/msg383061/#msg383061

 

[rb]

I would stay away from this one. Value trap.

 

I've been following it for 10 years or so. It always looks cheap and will pop up on screeners. Somehow the only thing it manages to do is to get even cheaper.

[ValorFace]

Cigar, rb, thanks for thoughts.  I'll continue to monitor and do more work.  I need to run through what a temporary step-up in bike brands may do to short-term earnings.  Thanks for note on more structural long-term challenges.

[Spekulatius]

Bycles is most likely a one off boom. It’s probably over by June/July. Walmart stated that they saw people buying bikes when the stimulus checks came in mid April. That tell us something already.