Comvita - CVT

[ratkin]

Makes sense. Good on you for selling fast - no material offers left.

Agree - the last quarter was shocking - I don't dare to extrapolate the numbers to a full year. On the bright side ... maybe now I can buy the shares for $4 as I always intended?

I said about Six months ago that people need to be careful trading this stock, itt has very poor liquidity, which was masked by the recent interest in the company. Any bad news could make it very difficult to get money out at a decent price.

[Snow Leopard]

Slide 14 - does not help - the (Male) 6 of the 7 'Experienced Leadership' have their hands in their pockets !

Best Wishes
Paper Tiger

[Beagle]

Makes sense. Good on you for selling fast - no material offers left.

Agree - the last quarter was shocking - I don't dare to extrapolate the numbers to a full year. On the bright side ... maybe now I can buy the shares for $4 as I always intended?

Discl: not holding and hey, my broker is an optimist. They rejected my $4 order for CVT. Apparently I am too far away from the market price :crying:. Sigh - lets try again tomorrow;

Thanks. Not sure about $4 but I think the buyers with a 9 as the first number are pretty "brave".

[winner69]

Slide 14 - does not help - the (Male) 6 of the 7 'Experienced Leadership' have their hands in their pockets !

Best Wishes
Paper Tiger

I take it Luke wasn't present - more pressing matters at pumpkin patch?

[IAK]

Had a chat with the yield seeking neighbour I have. A group down the bowling club cashed in their term deposits and have had bad experiences with HLG and after cutting their losses on that went to AIR and after collecting the dividend sold them at a loss and moved into Comvita as the next hot stock. These guys apparently are pretty clique and like following each other.

Nearly $13 they paid and now lamenting another capital loss.

Brokers seem to be encouraging them poor buggers. I told him either go back to term deposits or just hold on to his Comvita shares and hope it'll be alright.

Betcha many oldies are lamenting buying shares for the dividend - but some probably done very well

Gee, they'll be spewing now.

[Beagle]

Slide 14 - does not help - the (Male) 6 of the 7 'Experienced Leadership' have their hands in their pockets !

Best Wishes
Paper Tiger

Has the stripey one noticed slide 10 which also looks a bit "off" Is that a nasty looking head and shoulders pattern I see emerging in the SP graph ?

I think more concerning is the degree to which the SP has outperformed the index. Its all built on expectations of strong growth which simply isn't happening at present. One also wonders if they are talking ordinary profit being similar to last year but I would think there will be redundancy / restructuring costs with all those lay-offs so reported profit might look pretty sour.

Hope they provided shareholders with some nice honey flavoured sweet scones for afternoon tea as they'll need all the sustenance they've got to weather the shock of what's happening to the share price. Poor shareholders driving back to Auckland this evening, crikey that would be a very long drive in the circumstances...

Anyone's guess where this one bottom's out. For me, I will wait until it breaks up through the 100 day moving average again which won't happen anytime soon.

[horus1]

Just been to meeting. Continuing to hold . I feel they have addressed the problem in China with the latest arrangement at 10.60. A good share with a long term strategy. The access to market problem is reajusting. Mr Bunt was there.

[whatsup]

Maybe that is why they didn't take up all the SEA that was on offer with their rights issue, was the writing on the wall then ?

[kiwidollabill]

I've mentioned a few times the risks that exist within the NZ honey industry so wont repeat them here.

However, I feel the board have got a bit to answer for.... It states in the prezzo that 60% of their customers are Chinese, but in the sales distribution, only 33% of product is direct into Asia. Now, fudging a few number to account for sales into Japan/Korea and that Chinese reside outside of Asia, that is a hell of a grey market channel! Aligned with the fact China has one of the most volatile regulatory regimes around food you would think this risk gets discussed and actions implimented at a board level.......

There are further regulatory changes coming to the industry (MPI and CIQ) soon, and consolodation to happen with the number of players (think what happened to the Infant Formula market a few years back). No opinion on the SP but there is a certain risk premium to being associated with the NZ honey industry.

[winner69]

So npat about $17m for 2 years in a row - where's the growth?

Thats 42 cents a share

Say a PE of 12 is fair enough- that's $5.04 ......hmmm

[percy]

So npat about $17m for 2 years in a row - where's the growth?

Thats 42 cents a share

Say a PE of 12 is fair enough- that's $5.04 ......hmmm
hmmmmmmmmmmmmmmmmmmmmmmm sounds about right.hmmmmmmmmmmmmmmm!

[trader_jackson]

I'm sure a while back when they first mentioned that the chinese restrictions "would have no impact" on sales (or something to that effect) in a NZ Herald article that I explained on here how I could not believe they could make this assumption less than a day after something in china changed(restrictions tightened)... I was sure I posted my thoughts on here, but can't find it so maybe just discussed with a friend... and well what do we have here today... a fall in sales revenue due to china leading to a loss? as percy says.... hmmmmm!

I have refrained from posting on TIL for a while, but I wonder if the TIL thread has learnt anything from this?

[Snow Leopard]

Look Harder

Has the stripey one noticed...

8407

The name is Tiger, Paper Tiger.

[Apathy]

https://www.nzx.com/files/attachments/246731.pdf

Main points:-
Very difficult trading conditions in first quarter. Ouch
Expecting a loss in the first half to 31 December - Double Ouch !
Expecting net profit for FY17 to be broadly similar to FY16 - Triple ouch, no profit growth on the back of increased share capital = EPS reduction !
Target of $400m annual sales has "very conveniently" been pushed out to 2021, from 2020.

Not impressed that they didn't front foot the whole regulatory issue in China properly much earlier.
At least they have taken the positive step of culling staff, (obviously this is a good step by management) but its fair to say the company is experiencing significant growing pains.

I expect the SP to under-perform until they can prove they can regain growth momentum.

Nothing in this is a surprise - as pointed out the inventory build, drop in receivables and new distribution agreements sent clear message. Not to mention redundancies.

Further - for a legitimate business to talk about the ' recovery with the traders operating in informal channels adjust to new rules' as upside......... seriously that's the distribution path?

No surprise but disappointing nevertheless. Least they have SEA to fall back on.

[winner69]

Mind you the $17.1m npat this year will be 12 months v 15 months last year - so you could call it profit growth

But then again last year was $17.2m for 12 months to March and then a small loss for the April/June period.

Loss for H117 means a loss for a 9 month period (April to December) ....hmmmm

Something just doesnt seem to add up

[winner69]

One other thought

If H117 is a loss (how much not stated) and FY17 going to be $17m that means H217 going to be (heaps?) more than $17m ......compared to say $8m in H216

Now that's super duper growth .....all back on track

No worries

[Beagle]

Downgrades come in three's. I'm not sure I'm all that comfortable believing their profit forecast in the circumstances. Early days to predict a profit similar to last year when they're currently making a loss.

As Apathy pointed out the redundancies were a big clue that all was not well so I reduced my holding at that time and sold the rest very quickly yesterday.

I'm not going to try and value this one until we see more evidence of how things are tracking. Subtlety pushing out their $400m sales target to 2021 from 2020 raises serious questions about the credibility of this long range forecast in my mind.
Watch for them to push this out to 2022 next year !

[Leftfield]

Chart not looking healthy.... MA's about to form 'death cross'. Take care holders.
8408

[King1212]

still remember clearly,,brokers recommended to highly buy CVT...well...I always do an opposite. If the brokers said..sell...I would hold....if they said buy...I would sell....

[percy]

still remember clearly,,brokers recommended to highly buy CVT...well...I always do an opposite. If the brokers said..sell...I would hold....if they said buy...I would sell....

Yet "most" brokers' research get "most" companies right.
Maybe even as high as 9 out of 10 for FNZC,8 out of 10 for Craigs and Macquaries ,and Forbar either very good or very poor.
What I do find is they often see a company a bit different from the way I see a company,so all research is very helpful.

[Balance]

My concern really pertains to the cautionary note by CVT on China - points to something deeper as downgrades come in threes.

Watching out for further downgrades.

Not a stock I would invest in now until the downgrade cycle reverse trend to upgrade.

[Beagle]

Interesting read https://www.linkedin.com/pulse/chinas-food-sector-big-boys-game-room-little-guys-paul-o-brien-%E4%BF%9D%E7%BD%97?trk=hp-feed-article-title-like

More headwinds coming for China sales ?

[Apathy]

One other thought

If H117 is a loss (how much not stated) and FY17 going to be $17m that means H217 going to be (heaps?) more than $17m ......compared to say $8m in H216

Now that's super duper growth .....all back on track

No worries

One down grade at a time - the Fonterra model. Never put off until tomorrow what you can put off until the day after tomorrow.

The only way they will get close to that figure will be on the back of shipping massive amounts of stock to the new distributors - on very favourable terms. Filling the pipeline isn't the same as maintaining the pipeline (its the same as same store growth in retail companies) so watch for some ongoing volatility before things settle.

[winner69]

Bargain hunters out after lunch ....end of day was quite respectable

Blackmores have similar story - "July and August were challenging markets," the chief executive Christine Holgate told shareholders at Thursday's annual meeting. "September and October were better."

http://www.smh.com.au/business/retail/blackmores-shares-slump-as-growth-fades-20161026-gsbofj.html

This China thing just a blip - getting back to normal pretty quickly

No worries

[kiwidollabill]

"This China thing just a blip - getting back to normal pretty quickly"

First it is lucrative...
http://www.stuff.co.nz/business/industries/7263884/NZ-formula-finds-lucrative-Chinese-market

Then there are these 'short term' set backs....
http://www.stuff.co.nz/business/small-business/67309125/small-exporter-resigned-to-dip-in-volume

Then it is all over....
http://www.stuff.co.nz/business/farming/74220256/Carrickmore-drops-out-of-infant-formula-business

Playing devils advocate here but "those who do not learn from history are doomed to repeat it"

[Beagle]

Bargain hunters out after lunch ....end of day was quite respectable

Blackmores have similar story - "July and August were challenging markets," the chief executive Christine Holgate told shareholders at Thursday's annual meeting. "September and October were better."

http://www.smh.com.au/business/retail/blackmores-shares-slump-as-growth-fades-20161026-gsbofj.html

This China thing just a blip - getting back to normal pretty quickly

No worries

Couple of important things to note. Blackmores are still making money with the downturn, CVT aren't at present. Blackmores were $220 in January, now $103, so a fall of over 50%.

A further thought I had today. We know last year they only made $1.3m in the last quarter where they shifted the balance date to 30 June 2016. They said this is traditionally a quiet quarter so lets assume next year's Q4 is also quiet and they make a similar result.
We know that the company expects to make a loss for the six months to 31 December 2016.
Are they really going to make circa $16m + whatever extra they need to make to cover first half loss...all in the first quarter of 2017 ? Is this really plausible ?

NBR reported they made 23 staff redundant if I remember correctly. Not a huge cull from 450 is it !

Rather than no worries W69, I'd say holders have a fair bit to be worried about.

[winner69]

Couple of important things to note. Blackmores are still making money with the downturn, CVT aren't at present. Blackmores were $220 in January, now $103, so a fall of over 50%.

A further thought I had today. We know last year they only made $1.8m in the last quarter where they shifted the balance date to 30 June.
We know that the company expects to make a loss for the six months to 31 December.
Are they really going to make circa $15m in the first quarter of 2017 ?

That $1.8m was one off favourable things - they reported operating npat for full 15 months was essentially the sames 12 months to March. Last 3 months was actually $0.1m loss

So 9 months of losing money then a 100% increase in H2

[Beagle]

WOW... this whole apparent concentration of the full years profit in the first quarter of 2017, lets just say it will be interesting to see if it pans out that way. Even if it does and clearly I have my doubts and believe the risk of another downgrade presents a clear danger to one's investment capital, that still leaves a decline in EPS due to the additional shares issued as part of the Chinese J.V. scheme.

People don't buy growth companies to see EPS declining !...just a blip according to the CEO who's been in the job for just over a year...the same man that told us a few months ago this whole Chinese regulatory thing wasn't impacting overall sales...Hmmmmmmmm...could easily do a Blackmores and halve if things don't work out according to Scott's vision in my opinion.

More likely to halve in the short run than double its SP that's for sure !

[Beagle]

Market seems to be "buying" the story that they can match last year's profit and to be frank I am a little surprised it hasn't fallen a lot further. I'm definitely sceptical, not holding until it breaks through 100 day MA to the upside and I suspect that won't be for quite a long time.

[macduffy]

From the Guardian. (Is it old news?)

https://www.theguardian.com/world/2016/nov/04/manuka-honey-wars-new-zealand-crime-booming-industry-poisoning-beatings

[Beagle]

From the Guardian. (Is it old news?)

https://www.theguardian.com/world/2016/nov/04/manuka-honey-wars-new-zealand-crime-booming-industry-poisoning-beatings

I can't recall seeing it before, scary stuff.

[ShouldHaveHeld]

From the Guardian. (Is it old news?)

https://www.theguardian.com/world/2016/nov/04/manuka-honey-wars-new-zealand-crime-booming-industry-poisoning-beatings


After some googling found some other interesting articles.
https://www.tvnz.co.nz/one-news/new-zealand/thieves-do-anything-get-their-hands-nzs-golden-liquid-manuka-honey
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11730260

[GTM 3442]

Scary, but, then again, some of the stuff that gets sold as "manukau honey" is pretty scary too. There's probably about five years in it before the brand is irretrievably tarnished.

How many hectares of manuka have been planted in New Zealand in the last five years? In Australia?

http://www.bloomberg.com/news/articles/2016-08-24/there-s-a-battle-to-trademark-manuka-the-champagne-of-honeys

[ShouldHaveHeld]

Scary, but, then again, some of the stuff that gets sold as "manukau honey" is pretty scary too. There's probably about five years in it before the brand is irretrievably tarnished

I guess that is why China trusts brand like Comvita.
People there have heard of it, know that it is 100% legit and trust their retailers to provide it.

[Balance]

I guess that is why China trusts brand like Comvita.
People there have heard of it, know that it is 100% legit and trust their retailers to provide it.

Went and took a visitor to a souvenir shop in the city to buy some manuka honey to take home overseas.

Visitor instinctively asked for Comvita which interestingly enough, was not displayed prominently compared to all the other brands on sale.

Saleslady explained the UMF factor and recommended another brand (KiwiGold - very fancy packaging with gold lettering etc) explaining that it is registered with UMF Honey Association.

Visitor happy to buy KiwiGold brand as it was 10% cheaper and there was an extra 5% discount for buying a dozen.

Here's the interesting bit to me - if more and more of the shops selling manuka honey are prepared to spend time and effort to explain the UMF factor and steer customers to other cheaper brands, matter of time before Comvita feels the impact. Either Comvita loses sales or will have to reduce margins.

[Beagle]

SP suggests they are struggling. The trend is now clearly down.

[kiwidollabill]

I'm getting word in that things aren't great for the industry.....
The grey channels into China are being shut down (which Comvita is heavily reliant on)
Total China sales are down 20-30%
Alot of inventory is sitting around at the moment (both in NZ and in CHN), with heavy discounting going on.

Dont want to beat the war-drum but I don't see the 1H loss as a 'blip'

[Ogg]

I'm getting word in that things aren't great for the industry.....
The grey channels into China are being shut down (which Comvita is heavily reliant on)
Total China sales are down 20-30%
Alot of inventory is sitting around at the moment (both in NZ and in CHN), with heavy discounting going on.

Dont want to beat the war-drum but I don't see the 1H loss as a 'blip'

Could this be the next Bellamy's?

[kiwidollabill]

Could this be the next Bellamy's?

Couldn't say, but two things I know....
The market tailwinds which have propelled the industry to high yoy growth in the CHN market (where 60% of CVT product ends up), have subdued.
The exec and the board have not adequately dealt with their sales/supply chain/distrubution risk by allowing so much in-direct trade into a market with one of the most volatile govt regulatory frameworks

[Balance]

I'm getting word in that things aren't great for the industry.....
The grey channels into China are being shut down (which Comvita is heavily reliant on)
Total China sales are down 20-30%
Alot of inventory is sitting around at the moment (both in NZ and in CHN), with heavy discounting going on.

Dont want to beat the war-drum but I don't see the 1H loss as a 'blip'

Comvita web-site - 3 for price of 2 sale on UMF 5 & 10.

http://www.comvita.co.nz/offers

[Beagle]

I'm getting word in that things aren't great for the industry.....
The grey channels into China are being shut down (which Comvita is heavily reliant on)
Total China sales are down 20-30%
Alot of inventory is sitting around at the moment (both in NZ and in CHN), with heavy discounting going on.

Dont want to beat the war-drum but I don't see the 1H loss as a 'blip'

Downgrades come in three's and we've only had one so far. Disc - don't hold, chart tells you everything you need to know.

[ShouldHaveHeld]

Went and took a visitor to a souvenir shop in the city to buy some manuka honey to take home overseas.


Hey Balance,
Which shop would this be? i would like to scope it out myself and check them later again after the holiday period ;)


edit: As it is Christmas / Gift times. i believe that Manuka honey falls into that category where people buy it for the sake of not knowing what to buy for gifts to take overseas etc. (basically what someone mentioned in the TIL thread).
There is also a big brand and products expo in Hong Kong that is currently running from 10th Dec till 2nd Jan. Comvita has a spot in this which looks nicely presented
8541

[winner69]

Downgrades come in three's and we've only had one so far. Disc - don't hold, chart tells you everything you need to know.

Aren't they forecasting a stellar second half year performance

[horus1]

Good share Where i think they differ from some others are that the chinese cos whe are distributers and retail have a direct shareholding. They are not just dependent on e channels,still at $12 I thought they were overpriced. Held for years and just top up now and again.

[Beagle]

Aren't they forecasting a stellar second half year performance

I for one am not "buying it", their story that is, (some of their products are very good IMO). I think after the incident I am sure we can all recall when the CEO Mr Coulter initially said, (wasn't it about mid 2016 ?) the Chinese grey import changes were having no effect..and now we see in the current half they've shifted all the way from that infamous outlook statement to now a forecast loss for goodness sake ! What possible confidence can we have that they can forecast such a strong recovery in 2H profit ? Remember Mr Coulter has only been CEO for just over 12 months (appointed 1 October 2015). I'm very skeptical and I don't think he's done nearly enough to earn the market's trust, in fact quite the opposite. I think the whole thing was handled very, very badly from a shareholder relations perspective.
The fact that they are talking their new Chinese partner's joint venture as a way of "mitigating" the effect of tax changes gives a clear heads-up as to the seriousness of the issue and how badly they got it wrong earlier this year. Their forecasting credibility is now very much in question, (at least in my mind). All the risk appears to be to the downside...(I could almost write their excuse report for them, (Chinese tax changes caused more of an effect than we thought...counter balancing new J.V. Chinese partner positive impact taking longer to bed in and flow through, currency impact, sluggishness in Chinese consumer spending e.t.c., e.t.c. e.t.c.) I also take exception to the fact that they slipped out their target year for $400m sales target from 2020 to 2021 without so much as a single word of explanation.
Odds on that target date slipping to 2022 next year, very high in my opinion.

[Balance]

Hey Balance,
Which shop would this be? i would like to scope it out myself and check them later again after the holiday period ;)




The Best Souvenirs Company Ltd - 217 Hobson St, Auckland. Car parking in front of the shop.

Very well stocked and presented shop - they even sell dried deer and seal appendages for the ole fellow! :D

[stoploss]

This sort of behaviour doesn't help , could put the bee population at serious risk ..... I think this was what was linked to PSA in Kiwifruit the importation of Chinese pollen

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11770393

[Balance]

This sort of behaviour doesn't help , could put the bee population at serious risk ..... I think this was what was linked to PSA in Kiwifruit the importation of Chinese pollen

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11770393

http://naturebee.com/

Freaking counterfeiter - they must have changed their narrative of where they source their raw pollen from as the site now mentions supplies from China.

[Vaygor1]

http://naturebee.com/

Freaking counterfeiter - they must have changed their narrative of where they source their raw pollen from as the site now mentions supplies from China.

Appears these Naturebee pack of liars haven't fixed all their webpages yet... or are they now including a teaspoon of NZ pollen per tonne of Chinese pollen?
http://naturebee.com/aboutus.html

As part of their punishment, all purchasers over the entire company history should be refunded by order of the courts. After all they have not received what they were told they were getting.

[kiwidollabill]

^ Not the first time this has been done. To my knowledge, Royal Jelly is only produced by one 'small' NZ company, likely that is from China also.

[Ogg]

http://www.stuff.co.nz/business/farming/88007642/australian-honey-at-least-as-potent-as-nzs-manuka-honey-study-finds

[Beagle]

http://www.stuff.co.nz/business/farming/88007642/australian-honey-at-least-as-potent-as-nzs-manuka-honey-study-finds

Interesting, thanks for sharing. I reckon their products are good and I believe their is a strong basis for believing they work, (honey is good for you, mentioned many times in the bible but with no reference to manuka honey). Certainly I find their medi honey product very good on extremely dry skin, nothing I have tried is anywhere near as good. The shares will be good buying at some point in the future but I will wait for the TA signals to tell me when.

[winner69]

That $1.8m was one off favourable things - they reported operating npat for full 15 months was essentially the sames 12 months to March. Last 3 months was actually $0.1m loss

So 9 months of losing money then a 100% increase in H2

I am still far from convinced they will achieve forecast, ie npat the same as F16

Share price just over 8 bucks is a fair way off highs of 13 bucks or so

Might look at the fibs to see where this decline might end.




Hasn't been this cheap for zonks - good one to have in stocktastic 2017

[winner69]

Next Fib 'support' is $7.45 (61.8% retracement)

Might be worth a serious look at that level - even though anything could happen if half year announcement is shocker

[Beagle]

Next Fib 'support' is $7.45 (61.8% retracement)

Might be worth a serious look at that level - even though anything could happen if half year announcement is shocker

Not the first half that worries me mate, that's a loss and has already be telegraphed, (compares to a $3.0m profit in 1H last year). By the time they announce the half year loss they'll probably have to update on second half prospects. I still believe downgrades come in three's. We've had the first one, the second will probably come with the half year result and probably the third one will be forced on them under the continuous disclosure requirements of the NZX somewhere close to balance date so by the time the final result comes in their earlier announcements aren't actionable. (Acknowledge this is a deeply skeptical viewpoint but remember they initially said the Chinese thing wasn't having an impact and from there it changed all the way to a loss). Surely the most plausible future announcement will center around the Chinese effects (where 60% of their product ends up), being more pronounced than earlier envisaged ? I reckon you'd be a brave man to bet on a different outcome.

Keeping powder dry for as long as it takes for clear evidence of a fresh uptrend to be established. We could still be a long way from the bottom if the truth is as ugly as I suspect it really is.

Just for fun, imagine what happens to the SP if the EPS is 30-40% down on last year ? Investors will have to seriously re-rate the PE down because the growth story is in tatters....so a much lower PE on a 30-40% earnings decline = SP potentially tanking very badly in 2017. Okay I'll speculate. SP at present is based on a PE of ~ 17 and EPS of 46.8 cps = ~ $8.00
Say the EPS tanks 40% = 28 cps. I reckon we'd see the PE contract to around 13-14, (should probably be lower with that sort of result as their credibility would be in tatters) but they will dress it up with promises of growth to resume based on XYZ but say 13.5 x 28 = $3.78. Not saying it would get that low but that's my worst case scenario which would see the SP halve from here.
(Remember that a 5% EPS decline is already baked in if by some miracle they can manage to match last year's profit as they issued 2m new shares as part of the new Chinese J.V. to quote "mitigate" the effects of tax changes in China) so is a 30-40% EPS decline really that implausible considering they made a profit in IH last year and are looking at a big loss in 1H this year ?

[winner69]

4-traders not up with play with CVT?

Eps for F17 is 52 cents and 71 cents for F18

[Beagle]

4-traders not up with play with CVT?

Eps for F17 is 52 cents and 71 cents for F18

That is strange. Two brokers with an accumulate and I a buy recommendation. Average forward estimate of EPS at a significant, nearly 10% divergence to the companies own guidance. Average 12 month price target $11.50. Expect downgrades as they follow the market down, I reckon.

I feel very strongly this is a very good stock to short on the NZX for those fortunate enough to be in a position to execute such a strategy.

[Joshuatree]

http://www.stuff.co.nz/business/farming/88007642/australian-honey-at-least-as-potent-as-nzs-manuka-honey-study-finds
Thanks Ogg. over 82 species of leptospernum manuka in Aus to our 1 and some varieties(16%) having more UMF!. Serious comp alright and what ;vast acreages there.? And dismissing it as not a threat by saying "global demand is outstripping supply" is a bit flippant?.More supply( an explosive growth?) at higher grades from Aus could well lower prices here.

[BlackPeter]

Thanks Ogg. over 82 species of leptospernum manuka in Aus to our 1 and some varieties(16%) having more UMF!. Serious comp alright and what ;vast acreages there.? And dismissing it as not a threat by saying "global demand is outstripping supply" is a bit flippant?.More supply( an explosive growth?) at higher grades from Aus could well lower prices here.

Agree - here goes the moat, if they ever had one. Probably a good time to take them from my watchlist ...

[Marilyn Munroe]

Agree - here goes the moat, if they ever had one.....

A guy in a pub told me honey from Blue Borage a wild flower common in North and Central Otago was only slightly less active than Manuka Honey.

Boop boop de do
Marilyn

[ados_nz]

Well at least they have a 2 - 3 year window until any Ausi plantings are capable of producing commercial quantities.

[Beagle]

Well at least they have a 2 - 3 year window until any Ausi plantings are capable of producing commercial quantities.

Sorry, that doesn't give me any meaningful comfort going forward. Comvita are out of stock with their Medihoney derma cream...at a time of year in summer when dermatitis can be at its worst...really makes me wonder about the integrity of their stock management systems. Many other products on their website also out of stock and not for the first time by any means. To be frank their stock management system, if they have one, looks like it doesn't have reasonable system parameters. If you're getting low on a medi honey product how hard can it be to set the appropriate low stock level in the system and get new batches made up ? If their stock management system is unprofessional and clearly I think it is, I must confess the doubt really starts to creep in about other aspects of their business operation.

[kiwidollabill]

Sorry, that doesn't give me any meaningful comfort going forward. Comvita are out of stock with their Medihoney derma cream...at a time of year in summer when dermatitis can be at its worst...really makes me wonder about the integrity of their stock management systems. Many other products on their website also out of stock and not for the first time by any means. To be frank their stock management system, if they have one, looks like it doesn't have reasonable system parameters. If you're getting low on a medi honey product how hard can it be to set the appropriate low stock level in the system and get new batches made up ? If their stock management system is unprofessional and clearly I think it is, I must confess the doubt really starts to creep in about other aspects of their business operation.

Ironic considering they are sitting on millions worth of table honey they cant sell

[BlackPeter]

Actually - in addition to increased competition and market woes (China) am I wondering whether this company is currently going through "growing pains at a growth ceiling".

I noticed (in a different industry) that there seem to be several ceilings a company has to break through to keep successfully growing. If they are small - organisation is basically up to the skills of an individual and communication is easy in a small team. First barrier is around 50 staff, when they need to start co-ordinate several "organisers" and find a better way to communicate than just shouting in the start-up garage. Obviously CVT managed some time ago to break this first ceiling.

However - the next ceiling seems to be between 500 and 1000 employees and potentially several different locations - this is when you need to invest serious money into processes - and you need as well the discipline to use them. You need to invest as well in good ERP systems (and in people who know how to use them). I have seen a number of companies which never managed to break through this second barrier - and their growth stalled at this stage.

Some of their problems mentioned here point to a quality system and an ERP system which is either not used or not working.

Question - would they have empowered people who know what systems a larger organisation needs to effectively organise itself and foster internal communication?

[Beagle]

Another good post BP. Well to test their systems and because I want some, I sent them an e.mail asking when they expect the above mentioned product to be back in stock at 11.18 a.m. this morning. Got an automated response saying my enquiry has been assigned a case number and they'll revert within 24 hours. Hmmm, let's see what happens given tomorrow is a weekend and given the time of year.

Surely I don't have to make a special trip and drive into central Auckland, spend forever finding a park and go and visit their retail store, wasting at least 1.5 hours of my time as well as fuel and parking costs just to buy a $19 product ! Just as well I haven't quite used all the last tube of it yet...but really consumers should be able to rely on a company for replacement supply of what I consider to be an essential skin care need as and when required shouldn't they ? I'll let you guys know how long it takes them to get back to me and what their response is.

[Raz]

Actually - in addition to increased competition and market woes (China) am I wondering whether this company is currently going through "growing pains at a growth ceiling".

I noticed (in a different industry) that there seem to be several ceilings a company has to break through to keep successfully growing. If they are small - organisation is basically up to the skills of an individual and communication is easy in a small team. First barrier is around 50 staff, when they need to start co-ordinate several "organisers" and find a better way to communicate than just shouting in the start-up garage. Obviously CVT managed some time ago to break this first ceiling.

However - the next ceiling seems to be between 500 and 1000 employees and potentially several different locations - this is when you need to invest serious money into processes - and you need as well the discipline to use them. You need to invest as well in good ERP systems (and in people who know how to use them). I have seen a number of companies which never managed to break through this second barrier - and their growth stalled at this stage.

Some of their problems mentioned here point to a quality system and an ERP system which is either not used or not working.

Question - would they have empowered people who know what systems a larger organisation needs to effectively organise itself and foster internal communication?

That sums it up me thinks. Rodger first world problems are real !! :-)

[Beagle]

That sums it up me thinks. Rodger first world problems are real !! :-)

Tesla owners get range anxiety and I have skin care tube depletion anxiety, no wonder psychology is such a growth profession :)

[winner69]

Roger

Prob out of stock in the retail store as well

Good sign ....sales booming ....ha ha

[Sideshow Bob]

Another good post BP. Well to test their systems and because I want some, I sent them an e.mail asking when they expect the above mentioned product to be back in stock at 11.18 a.m. this morning. Got an automated response saying my enquiry has been assigned a case number and they'll revert within 24 hours. Hmmm, let's see what happens given tomorrow is a weekend and given the time of year.

Surely I don't have to make a special trip and drive into central Auckland, spend forever finding a park and go and visit their retail store, wasting at least 1.5 hours of my time as well as fuel and parking costs just to buy a $19 product ! Just as well I haven't quite used all the last tube of it yet...but really consumers should be able to rely on a company for replacement supply of what I consider to be an essential skin care need as and when required shouldn't they ? I'll let you guys know how long it takes them to get back to me and what their response is.

Keeping product in stock is a fundamental. Albeit slightly more difficult when a natural product and subject to the vaugaries of weather and little bees working.

But what I took from your message was the word "essential" and that weren't considering other brands/products but considering how to get supply. Sounds like loyal consumer!

[winner69]

Roger - TRILOGY have some good products fir your skin

Give them a go - they need a bit of help

[horus1]

On the other hand I purchased some items the other day and the service was excellent. I hold the shares and have for along time. I continue to accumulate. Good chairman and board.

[Beagle]

Another good post BP. Well to test their systems and because I want some, I sent them an e.mail asking when they expect the above mentioned product to be back in stock at 11.18 a.m. this morning. Got an automated response saying my enquiry has been assigned a case number and they'll revert within 24 hours. Hmmm, let's see what happens given tomorrow is a weekend and given the time of year.


Okay so the test of their customer service standards went pretty well so far. Got a response at 2.01 p.m. thanking me for my enquiry and saying they are expecting fresh stock to be available within the next ten days. They explained that their website doesn't allow placement of backorders online and I'll need to place the order online once the item is back in stock. I have made a diary note for 16 January to check back online and see if what they said would happen, does.

Need to find something else to worry about now LOL

[winner69]

Read this the other day about Bellamy's China disaster - 'the lesson is not blindly going where every lemming is headed, and not paying for a perfect blue sky'

Maybe applies to Comvita?

[kiwidollabill]

Read this the other day about Bellamy's China disaster - 'the lesson is not blindly going where every lemming is headed, and not paying for a perfect blue sky'

Maybe applies to Comvita?

There are large similarities between the IF market and NZ Manuka honey industry in how they have entered and done business in China I believe.

Another favourite of mine...

"Those who do not learn from history are doomed to repeat it"

[kiwidollabill]

Now they are moving DOWN the value chain?

"enables Comvita to strengthen its position as a long term Medical Honey supplier to Derma Sciences"

https://www.nzx.com/companies/CVT/announcements/295457

[winner69]

And .....'potential acquisitions currently under consideration by Comvita.,

Nice

[Beagle]

Medihoney product range in my opinion is the crown jewel of the operation with the best long term potential for growth. I have mixed feeling about this transaction, feels like flogging off the silverware to me.

[ados_nz]

Fairly valuable silverware none the less

[Balance]

As Bellamy's second profit downgrade showed, downgrades do come in threes so best to avoid CVT or TIL who are exposed to the China 'grey' market sales until results are out.

[Beagle]

Okay so the test of their customer service standards went pretty well so far. Got a response at 2.01 p.m. thanking me for my enquiry and saying they are expecting fresh stock to be available within the next ten days. They explained that their website doesn't allow placement of backorders online and I'll need to place the order online once the item is back in stock. I have made a diary note for 16 January to check back online and see if what they said would happen, does.

Need to find something else to worry about now LOL

Product was back in stock on their website as promised on 16 January. Disc: Happy to reorder their derma skin product, (not nearly so keen to place an order for their shares).
Agree with Balance...more downward forecast revisions far more likely than not.

[sb9]

https://nzx.com/companies/CVT/announcements/295844

One word ...SHOCKING!!!

Disc - Not a holder, never held.

[Beagle]

https://nzx.com/companies/CVT/announcements/295844

One word ...SHOCKING!!!

Disc - Not a holder, never held.

Couldn't agree more. Quite apart from the massive shock factor this is the key takeaway for me looking at this company long term.

We are seeing strong sales in all our markets, including the Australian *
domestic market, however the exception is still the Australasian informal *
trade channel into China. Although this has improved over the past two *
months, revenue from this channel is expected to remain lower than historical *
levels in the short to medium term.


As predicted earlier in this thread, downgrades come in three's. We have the second downgrade now. It won't surprise me if all they do is break even for the year, (excluding extraordinary items).

[iceman]

https://nzx.com/companies/CVT/announcements/295844

One word ...SHOCKING!!!

Disc - Not a holder, never held.

Wow, this is a hefty change. What will Mr Market do today. Not holding but will be watching with interest

[sb9]

Wow, this is a hefty change. What will Mr Market do today. Not holding but will be watching with interest

Bid depth has all but disappeared....

[ShouldHaveHeld]

Wow!! Glad i left a while back! GL to who ever is still holding!

[Beagle]

Wow, this is a hefty change. What will Mr Market do today. Not holding but will be watching with interest

Will be a very good day for one punter I know who has a short position. Disc Don't hold, wish I had a short position too.

Honestly, I struggle to value the company now. Is there any valid reason it shouldn't return to its $2.90 - $3.90 trading range that existed several years ago ?

[bull....]

a shocker, just goes to show those back alley channels thru china were generating big sales for any company doing business in china.
charts had big sells at highs so hope many people got out at the highs don't see much support till around 3.5 - 4

[winner69]

Was that profit warning #2 ....if so #3 still to come

The weather excuse is a smokescreen I reckon. Jeez they have honey in stock to get through this and most of next year

The real problem is poor sales and they gloss over that (as usual)

Love the way that they say the F17 result will be $23m odd which beats previous guidance of $17m - only because of the timely sell off of the family silver.

No worries though - next year will be just fine. As such might buy some at 3 bucks

[LAC]

Wow, 5-7mill from forcast of 17mil.
This is going to be a bad day for CVT

[Beagle]

Was that profit warning #2 ....if so #3 still to come

The weather excuse is a smokescreen I reckon. Jeez they have honey in stock to get through this and most of next year

The real problem is poor sales and they gloss over that (as usual)

Love the way that they say the F17 result will be $23m odd which beats previous guidance of $17m - only because of the timely sell off of the family silver.

No worries though - next year will be just fine. As such might buy some at 3 bucks

Agree with you mate 100%.

Next years earnings ???

First up, I simply don't believe their current year forecast as I have mentioned several times already. At best I see them coming in slightly under guidance, say $3-4m. My core assumption is close to break even.

Seeing as they still have plenty of stock they are selling, (they were massively overstocked at balance date) in a bizarre way actually one could argue this poor season for honey production is a blessing as they should be able to achieve premium prices seeing as at a retail level stock will be short. I agree at a core level there is a real issue with slow sales and there is a lot of smoke and mirrors with their announcement.

What is crystal clear now is that the situation in China where 60% of their sales ended up is extremely serious and will have effects over the medium term, (I read that as 2-5 years). This will seriously impact profit in the foreseeable future.

Really to be honest I struggle to see them getting to half way between last year's result of $17m and this years result of (supposedly 5-7m).

Lucky if they can do $10m per annum going forward which is an EPS of 24 cps.

Best to price this as an agri stock, (risks of weather pests e.t.c.) with a theoretical underlying growth rate.

I use my time honored PE of 10 for agri stocks. Maybe add 2-3 PE for underlying growth in use due to medical benefits. Maybe a PE of 13 and if they can make 24 cents per share, (and that's a big IF), fair value is perhaps $2.99...call it $3.00 :) I think the buyers looking for 10,000 shares at $5.75 are "very brave"

[winner69]

This lot of muppets are just as bad as the the Bellamy's lot

I think they don't have a clue whats going on.

[winner69]

Doesn't look like I will get some at 3 bucks ...or even 4 bucks today

Patience I think

[BlackPeter]

Wow - last trade $6.45 and resistance level (if you want to call it that way) is $5.75. Great example for a falling knife!

Actually - I think that Rogers valuation (around $3) looks quite fair ...

[Xerof]

This lot of muppets are just as bad as the the Bellamy's lot

I think they don't have a clue whats going on.

I think their whole supply chain is under pressure - east coast landowners are looking to take control of their honey on their own land, instead of receiving peppercorn lease income. Secondly, the explosion in hive numbers will be affecting individual apiary yields, and then you could also (perhaps) blame the weather.

batten down the hatches

[Balance]

As Bellamy's second profit downgrade showed, downgrades do come in threes so best to avoid CVT or TIL who are exposed to the China 'grey' market sales until results are out.

CVT's second profit downgrade - expect another at least if history is any guide.

There's a lot of manuka honey around - just go to any health supplement shop. Just not Comvita's.

Plus, did CVT not have very high inventory level leading into the high sales period?

[Beagle]

This lot of muppets are just as bad as the the Bellamy's lot

I think they don't have a clue whats going on.

Agree. There's now a serious question over their forecasting credibility which was already in question due to the fiasco of the way they initially handled the Chinese regulatory change crisis, (and yes it is a crisis when 60% of your sales are badly affected). Serious question too regarding the sale price of the silverware, (pretty obvious at the time CVT were driving the sale process seeing as settlement is to be effected in January so soon after the sale, I said privately to a mate that it was obvious CVT needed the money quickly from that sale).

It looks to me like the CEO Scott Coulter who has only been in his position since late 2015 is "learning on the job". Take their updated current year forecast with three grains of salt I reckon.

Balance I agree. There could well be another two forecast updates as the company will be keen to avoid any "actionable" matter. So another two changes to the forecast to come followed by the disappointment of the result itself and disappointing outlook and then shareholders can look forward to it exiting the NZX50 and the resultant effects on the SP of index tracking funds selling.

Seems to me shareholders have a LOT to "look forward too" over the next year.

[trader_jackson]

I talked to a friend about this... couldn't believe that the Comvita chief executive could turn around and make such a claim, so quickly...

For me, seemingly never ending inventory build ups (that in percentages, are consistently increasing 2-3x more than revenue increases), margin decreases, concerning cash flows, dramatic recent increase in debt, and chinese regulatory uncertainty are all important things to be considered...

However what is more alarming to me, seeing this is a growth stock, is that management seemingly don't actually know there biggest market/opportunity, china, and what is really going on... making such a direct confirmation of "no it doesn't affect us" in this nz herald article 4 weeks ago, then a 'near hidden' U turn today of "hmm maybe it does affect us, but hopefully shouldn't too much", is concerning... then the fact the share price tracked down in the days/weeks leading up to results simply doesn't help...it would appear some not-so-sweet honey leaked out early

Good luck to the holders, but I will be waiting till they can confirm they understand their key opportunity/market, they stop increasing inventory dramatically more than revenue growth, show they can keep debt under control, and get back to at least operating cash flow positive

Disclosure: was very tempted, and expected/hoped to see pretty good results, instead got shocked left, right and centre

Huge profit downgrade, still shocks me how the CEO turned around and said the china sales would have no effect (and I believe I was one of the first to point this out)... and what is worse is that they were already negative cash flow... financial statements likely to look like a bloodbath now...

Disclosure: same as 5 (nearly exactly) months ago

[forest]

This includes an unfavourable, non-operating, fair value adjustment on SeaDragon Limited (NZX:SEA) options held of $2.8m for the six months ended 31 December 2016."

It seem to me CVT management should spent some time trying to understand the business ventures they getting into. This part of the down grade has nothing to do with the weather but seemingly was a gamble into something they have little understanding of.

[Baa_Baa]

Wow - last trade $6.45 and resistance level (if you want to call it that way) is $5.75. Great example for a falling knife!

Actually - I think that Rogers valuation (around $3) looks quite fair ...

A small point but you're talking about a 'support' level, not to be confused with 'resistance'. Buyers create support levels, Sellers create resistance levels.

From a TA perspective, supports are/were at 6.35, 5.36, 4.50. Live bids show 6.35 support is under pressure now, bid 6.20 ask 6.40

$3.00 is an extreme view of support being a 100% retrace of the entire move since April 2014.

[BlackPeter]

A small point but you're talking about a 'support' level, not to be confused with 'resistance'. Buyers create support levels, Sellers create resistance levels.

From a TA perspective, supports are/were at 6.35, 5.36, 4.50. Live bids show 6.35 support is under pressure now, bid 6.20 ask 6.40

$3.00 is an extreme view of support being a 100% retrace of the entire move since April 2014.

Baa, fair enough - I wanted to say "support". I am however not talking support levels based on TA (i.e. previous lows), but just looking into the bid / sales depth. At the time of the post you referred to was $5.75 the (highest) price point with more than one offer and at least a 5 digit number of shares asked for. That's what I (falsely) called "resistance" and meant "support";

[Beagle]

A small point but you're talking about a 'support' level, not to be confused with 'resistance'. Buyers create support levels, Sellers create resistance levels.

From a TA perspective, supports are/were at 6.35, 5.36, 4.50. Live bids show 6.35 support is under pressure now, bid 6.20 ask 6.40

$3.00 is an extreme view of support being a 100% retrace of the entire move since April 2014.

Why not a complete retracement back to the 2014 level ? In 2014 they made $7.6m and were talking about growth continuing like crazy. Maybe they can make that in FY18, maybe not...but what's their "growth" profile now ????

Agree with TJ's assessment, CEO's initial reaction to the Chinese situation still shocks me, (obviously had no idea whatsoever) so what reliability does one now attach to their forecasting ability given today's major forecast meltdown ? Then there's the Sea Dragon fiasco...really this company is starting to look like a complete fiasco itself. Maybe someone's head needs to roll and appoint someone who knows what they're trying to do ?

[winner69]

They say full year npat to e $20m-$22m which includes profits on selling the family silver

No mention of a operating tax paid profit for the full year - or did I miss something

[Leftfield]

Was stalking this one with a view of investing but am not impressed. Poor China performance, selling key IP and now we learn that their supply situation is fragile. Management seem to be struggling. Will stay away and wish holders good luck!

[Beagle]

They say full year npat to e $20m-$22m which includes profits on selling the family silver

No mention of a operating tax paid profit for the full year - or did I miss something

$5 - $7m is their new normalized operating forecast, down from $17m three months ago....soon to be revised down to approx break even IMO.

[ratkin]

Did it jump down much in price? Always been very illiquid stock, imagine holders had trouble selling today without a massive gapdown.

Always said I would buy back in when it fell back to Six dollars. Time to have a think, or at least wait and see where the bottom is. I was always fearful something would happen to the Bees, with such poor trading makes it risky, the poor little buggers struggling to survive as it it , without bad weather giving them a slap.

They have spent a lot of cash buying up producers, so they would not suffer a shortfall in supply. I dont know about how pricing works, but presumably they put the price up on the finished product during the lean years. Honey not exactly cheap as it is

[beetills]

How dependent are these guys on China sales.?

[Apathy]

i forewarned back in October it was going to get uglier and there was no way they were going to hit last years result on the back of a 6 month loss. Even mentioned SEA write down.

These guys have been waiting to come up with an excuse and finally blamed it on the weather. I could accept that the harvest might impact next years result but not this year - particularly given their very high stocks.

Lot of increased competition in the market so maybe supply not just about weather..?

Lets see what the top line looks like - how does a 60% drop in raw material supply hit sales?

[Beagle]

Couple of important things to note. Blackmores are still making money with the downturn, CVT aren't at present. Blackmores were $220 in January, now $103, so a fall of over 50%.

A further thought I had today. We know last year they only made $1.3m in the last quarter where they shifted the balance date to 30 June 2016. They said this is traditionally a quiet quarter so lets assume next year's Q4 is also quiet and they make a similar result.
We know that the company expects to make a loss for the six months to 31 December 2016.
Are they really going to make circa $16m + whatever extra they need to make to cover first half loss...all in the first quarter of 2017 ? Is this really plausible ?

NBR reported they made 23 staff redundant if I remember correctly. Not a huge cull from 450 is it !

Rather than no worries W69, I'd say holders have a fair bit to be worried about.

From 27 October when I seriously questioned their new $17m forecast. We now know their first half forecast loss is ~ $7m.

We know last year they struggled to make $1.3m in the fourth quarter so lets assume the same that gives a result for the first two quarters and the last one of ~ ($5.7m) loss.

Their new forecast for the year is $5 - $7m profit which by deduction suggests they think they'll make a profit of ~ $12m in the period from 1 January to 31 March 2017. Really ????????

Having thought about this some more....I reckon grab yourself a truck load of salt for that revised forecast...remember you read it here first from me...They'll be very lucky to break even on a normalised basis for the FY17 year. Just as well they sold the silverware isn't it, they obviously needed to fire sale the IP.

[Marilyn Munroe]

I was told of a High Country Runholder who was offered high fees for hosting hives by some Johny-Come-Lately bee keeper. He took the offer dumping his usual bee keeper.

I hope he got the money up front.

Boop boop de do
Marilyn

[Balance]

From 27 October when I seriously questioned their new $17m forecast. We now know their first half forecast loss is ~ $7m.

We know last year they struggled to make $1.3m in the fourth quarter so lets assume the same that gives a result for the first two quarters and the last one of ~ ($5.7m) loss.

Their new forecast for the year is $5 - $7m profit which by deduction suggests they think they'll make a profit of ~ $12m in the period from 1 January to 31 March 2017. Really ????????

Having thought about this some more....I reckon grab yourself a truck load of salt for that revised forecast...remember you read it here first from me...They'll be very lucky to break even on a normalised basis for the FY17 year. Just as well they sold the silverware isn't it, they obviously needed to fire sale the IP.

The IP firesale was treated as a positive in some quarters?

My biggest concerns are that management do not seem to have a good grasp of what has been happening on so many fronts and the business has fundamentally changed for the worse.

[babymonster]

usually profit downgrade come in three? i heard it form somewhere..

[winner69]

Change of balance date without any real substantive reason is a red flag to me.

[ratkin]

i forewarned back in October it was going to get uglier and there was no way they were going to hit last years result on the back of a 6 month loss. Even mentioned SEA write down.

These guys have been waiting to come up with an excuse and finally blamed it on the weather. I could accept that the harvest might impact next years result but not this year - particularly given their very high stocks.

Lot of increased competition in the market so maybe supply not just about weather..?

Lets see what the top line looks like - how does a 60% drop in raw material supply hit sales?

Yes, weather could be a very convenient excuse.

[tim23]

I don't hold but the weather is a huge factor Apathy good prediction but the weather has been the biggest factor in you being correct. Looking to buy but will take wait and see approach

[Balance]

$5 - $7m is their new normalized operating forecast, down from $17m three months ago....soon to be revised down to approx break even IMO.

Looks like stock has shifted into severe reverse gear on earnings and sp performace.

Stock steadily climbed from $3.85 in Jan 2015 to $8.35 on ta series of profit upgrades. Example on 10 Nov 2015 : "For the six month period ending 30 September 2015, Comvita recorded an after tax profit of $3.0 million on sales of $91.1 million. With the strong result for the first six months we now expect our operating profit after tax to be in the range of $15-17 million, up 46% to 65% for 12 months to 31 March 2016, compared to the prior year."

Today's drop looks ominous so I tend to agree with Roger that there are more downsides yet - CVT is a stock best to avoid until profit trend stabilizes.

[tim23]

Good advice Balance for the brave at this stage

[horus1]

They will stabilise and it is then the time to pick up some more which I will do. Good products .

[Apathy]

I don't hold but the weather is a huge factor Apathy good prediction but the weather has been the biggest factor in you being correct. Looking to buy but will take wait and see approach

Weather has nothing to do at all with me being correct-then or now!

Last year $230m sales on COGS $113m (lets say 50%) they started this year with just over $95m in stock...... or $190m in sales based on prior year.

It is total BS - or they have a massive stock problem of 'unsaleable' material... maybe they are picking up bad habits of SEA...... Supply constraints followed by a one off write down of stock...

i am not saying weather isn't an issue - but that pain is going to be next financial year.

[Beagle]

Weather has nothing to do at all with me being correct-then or now!

Last year $230m sales on COGS $113m (lets say 50%) they started this year with just over $95m in stock...... or $190m in sales based on prior year.

It is total BS - or they have a massive stock problem of 'unsaleable' material... maybe they are picking up bad habits of SEA...... Supply constraints followed by a one off write down of stock...

i am not saying weather isn't an issue - but that pain is going to be next financial year.

A little birdy flying close to the ground told me they have a MASSIVE stock of low grade manuka honey product they simply cannot find a home for, for love or money....

[Apathy]

A little birdy flying close to the ground told me they have a MASSIVE stock of low grade manuka honey product they simply cannot find a home for, for love or money.

Ha.....their annual report told me the same thing!;-)

So it really is SEA all over again..... they have sold all the good stuff and booked a profit but the low grade stuff sits in stock over valued........ sorry but there is plenty of demand locally for Manuka Honey - they just don't want to meet the market price.

If you are correct - board and management all need the flick. It's amateur hour - book big profits and build stock of the low grade offtake/by product at unrealistic valuations.

[Beagle]

Ha.....their annual report told me the same thing!;-)

So it really is SEA all over again..... they have sold all the good stuff and booked a profit but the low grade stuff sits in stock over valued........ sorry but there is plenty of demand locally for Manuka Honey - they just don't want to meet the market price.

If you are correct - board and management all need the flick. It's amateur hour - book big profits and build stock of the low grade offtake/by product at unrealistic valuations.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11700416 Looking back at what was said and the situation now faced... http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11787248 what a fiasco !

[ratkin]

Not a big position for me ~ 4% portfolio and I am very comfortable with that.

Are you still holding Roger?

[winner69]

In that NZ Herald article - In May last year, Comvita co-founder Alan Bougen sold down his stake in Comvita for just over $12m. Bougen's trust - Flaxmill - said it had sold down its stake in the company to just over 5 per cent from 7.6 per cent at $12.06 a share.

Must have had a long range weather forecast.

Maybe regretting not selling the other 5% but is still collecting his directors fees

That Luke Bunt seems to bring ill fortune to what he is involved in of late - pumpkin patch and now this.

[Balance]

In that NZ Herald article - In May last year, Comvita co-founder Alan Bougen sold down his stake in Comvita for just over $12m. Bougen's trust - Flaxmill - said it had sold down its stake in the company to just over 5 per cent from 7.6 per cent at $12.06 a share.

Must have had a long range weather forecast.

Maybe regretting not selling the other 5% but is still collecting his directors fees

That Luke Bunt seems to bring ill fortune to what he is involved in of late - pumpkin patch and now this.

On the other side, the Chinese must be feeling rather skunk - 2m shares placed to them in October 2016 at $10.60 per share!

Benefit of hindsight, it definitely looks like they needed the placement money and the IP sale money to shore up finances.

[Baa_Baa]

In that NZ Herald article - In May last year, Comvita co-founder Alan Bougen sold down his stake in Comvita for just over $12m. Bougen's trust - Flaxmill - said it had sold down its stake in the company to just over 5 per cent from 7.6 per cent at $12.06 a share.

Must have had a long range weather forecast.

Maybe regretting not selling the other 5% but is still collecting his directors fees

That Luke Bunt seems to bring ill fortune to what he is involved in of late - pumpkin patch and now this.

Have you done the maths?

They bought at ...

They sold 2.6% at ...

Thier net position is ...

[winner69]

Have you done the maths?

They bought at ...

They sold 2.6% at ...

Thier net position is ...

Yes he has made heaps

but pretty shrewd cashing in a few at $12

Can't blame him though - he must have said to himself jeez $12, they not worth that much ....(and I have a deck to build)

Without Alan there would be no Comvita

[Balance]

http://seekingalpha.com/article/4037558-comvita-share-price-correction-presents-attractive-entry-growing-chinese-nutri-healthcare

A bullish view (before today's downgrade) - if $7.80 represented good entry level due to price correction, $6.50 today must be even better?

Real impact of today's downgrade will be seen tomorrow - will the Chinese shareholders see this as an opportunity to top up or will they stand aside. Institutions will most certainly be watching closely.

[Beagle]

https://www.nzx.com/files/attachments/246731.pdf

Main points:-
Very difficult trading conditions in first quarter. Ouch
Expecting a loss in the first half to 31 December - Double Ouch !
Expecting net profit for FY17 to be broadly similar to FY16 - Triple ouch, no profit growth on the back of increased share capital = EPS reduction !
Target of $400m annual sales has "very conveniently" been pushed out to 2021, from 2020.

Not impressed that they didn't front foot the whole regulatory issue in China properly much earlier.
At least they have taken the positive step of culling staff, (obviously this is a good step by management) but its fair to say the company is experiencing significant growing pains.

I expect the SP to under-perform until they can prove they can regain growth momentum.


Are you still holding Roger?

See post above titled "Sold Immediately" on 26 October 2016. I had previously sold half at around $11 when it tripped down through the 100 day MA and got the rest away at just over $10.
Very happy to be out of this and I am planning on staying out until at the very earliest the real result is revealed for the FY17 year in late August. If they go under $3 before then I would reconsider my position. If I was still holding now, I would definitely sell at $6.50, if that's the implied question you're asking me ?

[Balance]

See post above titled "Sold Immediately" on 26 October 2016. I had previously sold half at around $11 when it tripped down through the 100 day MA and got the rest away at just over $10.
Very happy to be out of this and I am planning on staying out until at the very earliest the real result is revealed for the FY17 year in late August. If they go under $3 before then I would reconsider my position. If I was still holding now, I would definitely sell at $6.50, if that's the implied question you're asking me ?

Good on you Roger.

I have learnt the hard way from years past that profit warnings do come in two's and three's. In this case probably more so as the CEO seems clueless as to how much the China market really means to the company's sales and profits.

In the book 'Naked Trader', one of the biggest mistakes made by traders and investors is ignoring profit warnings. A profit warning means a company is in some kind of trouble or is having problems. Why take the risk just because the sp looks cheaper than what it was before?

[sb9]

http://seekingalpha.com/article/4037558-comvita-share-price-correction-presents-attractive-entry-growing-chinese-nutri-healthcare

A bullish view (before today's downgrade) - if $7.80 represented good entry level due to price correction, $6.50 today must be even better?

Real impact of today's downgrade will be seen tomorrow - will the Chinese shareholders see this as an opportunity to top up or will they stand aside. Institutions will most certainly be watching closely.

Could be the reason why its going up today.

[winner69]

Could be the reason why its going up today.

Probably

Yesterday was just a storm in a teacup

Seems all hunky dory with Comvita - next year will be fine (weather and financial wise) and a guy said on the radio this morning that Seadragon is going to add heaps of value.

[Beagle]

Good on you Roger.

I have learnt the hard way from years past that profit warnings do come in two's and three's. In this case probably more so as the CEO seems clueless as to how much the China market really means to the company's sales and profits.

In the book 'Naked Trader', one of the biggest mistakes made by traders and investors is ignoring profit warnings. A profit warning means a company is in some kind of trouble or is having problems. Why take the risk just because the sp looks cheaper than what it was before?

Thanks mate. I always appreciate you sharing your point of view with the frequent golden nuggets of information contained therein.

Could be the reason why its going up today.

Early days. Some people think it must be cheap because it used to be $12.80.

[sb9]

Probably

Yesterday was ust a storm in a teacup

Seems all hunky dory with Comvita - next year will be fine (weather and financial wise) and a guy said on the radio this morning that Seadragon is going to add heaps of value.

Hope so, by the way winner how about those bowling mates of yours who got in at $13 or so.....

[kerryo]

Up 5% after yesterdays knee jerk reaction. Obviously the Chinese shareholders see this as a buying opportunity.

[ados_nz]

And the rest of us are wondering if we cut our losses and dump this stock.....

[winner69]

Hope so, by the way winner how about those bowling mates of yours who got in at $13 or so.....

They pissed off big time but going to hang in there

Like many have (or will) found out the promise of better returns from the stock market over term deposits hasn't eventuated. Chasing yield and the next big thing a mugs game unless you have some idea what you doing.

[sb9]

They pissed off big time but going to hang in there

Like many have (or will) found out the promise of better returns from the stock market over term deposits hasn't eventuated. Chasing yield and the next big thing a mugs game unless you have some idea what you doing.

Ouch..feel sorry for them, hope it works out ok for them in longer term.

[Balance]

Up 5% after yesterdays knee jerk reaction. Obviously the Chinese shareholders see this as a buying opportunity.

Good opportunity to sell to them then.

[Hoop]

See post above titled "Sold Immediately" on 26 October 2016. I had previously sold half at around $11 when it tripped down through the 100 day MA and got the rest away at just over $10.
Very happy to be out of this and I am planning on staying out until at the very earliest the real result is revealed for the FY17 year in late August. If they go under $3 before then I would reconsider my position. If I was still holding now, I would definitely sell at $6.50, if that's the implied question you're asking me ?

The confirmation of the sucker rally together with the flip flop of the MA200 ($10.80) days before the Death Cross (and price plunge) gave TA investors time to get out (again)....What a beautiful death cross example http://www.sharetrader.co.nz/images/smilies/smile2grin.gif.

For the Fundies this article from NZCTA (NZ China Trade Association) (http://www.nzcta.co.nz/chinanow-commentary/1866/are-the-days-of-wine-and-honey-in-china-about-to-buzz-off/) back in September 26th 2016 was a dire warning

http://i458.photobucket.com/albums/qq306/Hoop_1/CVT%2023012017.png (http://s458.photobucket.com/user/Hoop_1/media/CVT%2023012017.png.html)

[Hoop]

Up 5% after yesterdays knee jerk reaction. Obviously the Chinese shareholders see this as a buying opportunity.

NO!..not "obviously" more like your personal presumption..

The law of physics applies to trading as well....Even crap will bounce given enough distance to free-fall

[Beagle]

The confirmation of the sucker rally together with the flip flop of the MA200 ($10.80) days before the Death Cross (and price plunge) gave TA investors time to get out (again)....What a beautiful death cross example http://www.sharetrader.co.nz/images/smilies/smile2grin.gif.

For the Fundies this article from NZCTA (NZ China Trade Association) (http://www.nzcta.co.nz/chinanow-commentary/1866/are-the-days-of-wine-and-honey-in-china-about-to-buzz-off/) back in September 26th 2016 was a dire warning

http://i458.photobucket.com/albums/qq306/Hoop_1/CVT%2023012017.png (http://s458.photobucket.com/user/Hoop_1/media/CVT%2023012017.png.html)

Thanks Hoop. Thanks to your excellent and frequent TA posts this old hound is learning new tricks, proof an old dog can learn new tricks :)

Thanks for that article which makes fascinating reading. Considering ~ 60% of their product ends up in China, (much of the Australian sales were for re-export to China) the risks around the accreditation process and the resultant effects on CVT would appear to be quite serious. I am very pleased to have used the skills you so freely share, (thank you), on here to make a timely exit.

[Hoop]

After a decent free-fall a dead cat bounce event is very likely to occur...Rule of thumb is the price should pull back 30% of the plunge, or to meet a resistance line..
I chose to ignore the $6.00 trade....Target price..$6.40 + (($7.80 - $6.40) x 30%) = $6.82
Charted target price resistance..unconfirmed resistance at $7.00... confirmed resistance zone $7.65ish to $8.00
When the target price is met..2 strategies..either hold until sell signals emerge or sell near TP and take quick profit.

When to enter dead cat investing?...Use very short term charts with momentum indicators..Wait for the fall (-ve) momentum (and price) to stop and reverse to +ve momentum..
To give you an idea, see below for the self updating Big chart free version (remember it is 20 minute delayed data)...so if you wish to do DC investing buy the up to date data together with a decent charting program.

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=NZ%3acvt&uf=0&type=4&size=4&sid=1595403&style=320&freq=7&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=3&rand=661196747&compidx=aaaaa%3a0&ma=0&maval=9&lf=2&lf2=1024&lf3=65536&height=981&width=1045&mocktick=1

[kerryo]

Good opportunity to sell to them then.

Thanks, I did.

[Balance]

https://www.nzx.com/files/attachments/251910.pdf

ONL restated sales forecasts - distributors' sales down 85%!

So much for the manuka honey story - amber gold (honey) going the same way as liquid white gold (milk).

[Beagle]

https://www.nzx.com/files/attachments/251910.pdf

ONL restated sales forecasts - distributors' sales down 85%!

So much for the manuka honey story - amber gold (honey) going the same way as liquid white gold (milk).

WOW thanks for sharing, some very somber reading there.

[Apathy]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11700416 Looking back at what was said and the situation now faced... http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11787248 what a fiasco !

Note the comment in the later article......they have been building stocks for 18 months and have enough supply to meet demand for next year??

How does that add up? Its consistent with what their balance sheet suggests but that means the profit down turn has nothing at all to do with stocks......... its the crash in demand and price...

Once you start telling lies you need to have a very good memory....

[Xerof]

Note the comment in the later article......they have been building stocks for 18 months and have enough supply to meet demand for next year??

How does that add up? Its consistent with what their balance sheet suggests but that means the profit down turn has nothing at all to do with stocks......... its the crash in demand and price...

Once you start telling lies you need to have a very good memory....

Indeed, 'stale' inventory. Oh well, at least it won't go off

I hope their bees like tulips, coz they appear to be left holding them.....ref March 1637 events

[Beagle]

Note the comment in the later article......they have been building stocks for 18 months and have enough supply to meet demand for next year??

How does that add up? Its consistent with what their balance sheet suggests but that means the profit down turn has nothing at all to do with stocks......... its the crash in demand and price...

Once you start telling lies you need to have a very good memory....

I agree with you 100% mate and that's exactly what's suggested by this. https://www.nzx.com/files/attachments/251910.pdf. Also CVT very conveniently glosses over the compliance and regulatory risk posed by the Chinese authorities where 60% of their products end up. What happens to the company if they're not an approved supplier to China ?

I understand they're not making any money from their company owned hives so that explains some of the downgrade but in my view the weather is a very convenient excuse and masks some of the really serious issues the company faces.

For those very brave souls who see value here, here's some more info on trading dead cat bounces https://www.learningmarkets.com/trading-a-dead-cat-bounce/

[winner69]

No 4 buck bargains now

We'll prob look back in a years time and say what the heck was the fuss about

Maybe 8 bucks by end of week and then 9 bucks and then ......

[BlackPeter]

No 4 buck bargains now

We'll prob look back in a years time and say what the heck was the fuss about

Maybe 8 bucks by end of week and then 9 bucks and then ......

Possible - but unlikely. At current it is in a beautiful downtrend ... and the fundamentals we know of certainly wouldn't support a SP as high as today.

If you hope for a quick recovery, I think there would need to come new facts the market does not know about. Any proposals?

[Sideshow Bob]

How are the guys at the bowling club going Winner? Drowning their sorrows??

[Beagle]

The company talks as though they will be accredited under the forthcoming Chinese regulations like is already a fate acoompli but a few infant milk powder producers got a rude shock when they were completely overlooked by Chinese authorities and didn't even get a look-in and others were surprised by the rigor of the process. Seeing as ~ 60% of their sales end up in China, accreditation and whether it happens or not is the elephant in the room.

The other thing worth considering is that the new tax impost the Chinese have imposed on grey market channels is only 12%...hardly draconian by any measure and yet the effects on sales appears to have been quite pronounced. NBR has an interesting behind the paywall article today talking about counterfeiting issues with manuka honey products in China...another material risk the company is surprisingly quiet about.

[Balance]

No 4 buck bargains now

We'll prob look back in a years time and say what the heck was the fuss about

Maybe 8 bucks by end of week and then 9 bucks and then ......

$7.40 - impressive recovery in share price towards the $7.83 before it crashed 2 days ago.

Guess the Chinese have put the word out that they are looking for lines of stock at these bargain prices (compared to their $10.60 placement price)?

[horus1]

As stated at the AGM the chinese Co which took the shareholding at 10.80 is a large retail chain , Govt backed in china. I feel that the regulatory problems will be solved. Price fluctuations similiar ti this have happened before and looking back have been a buying opportunity.

[Balance]

As stated at the AGM the chinese Co which took the shareholding at 10.80 is a large retail chain , Govt backed in china. I feel that the regulatory problems will be solved. Price fluctuations similiar ti this have happened before and looking back have been a buying opportunity.

The sp chart since Dec 2015 would beg to disagree with you. Each buying opportunity had been superseded by a new low.

[Apathy]

As stated at the AGM the chinese Co which took the shareholding at 10.80 is a large retail chain , Govt backed in china. I feel that the regulatory problems will be solved. Price fluctuations similiar ti this have happened before and looking back have been a buying opportunity.

I think that is very very optimistic. Profit warnings always understate the true extent - it is basically about BOD butt covering on going disclosure requirements with minimum info. and it takes the sting out of the subsequent result.

We don't know if it is market down turn, raw material shortage, counterfeit products, more competition, regulatory, weather..... half year result will give us proper info on top line sales and inventory.

Given they started year with 12 months of inventory - a drop in sales will blow that out further - and if it is the 'wrong' stock then its going to be a big write off.

And as for the weather - have no doubt it has impacted but there is no way you can convince me that impact won't be really felt till next financial year.

$4 won't be cheap

[RGR367]

It would be while still then if I could bought them for less than 3 bucks. I'll wait :cool:

disc: not a holder yet

[Hoop]

The self updating 15 minute chart Post#642 (http://www.sharetrader.co.nz/showthread.php?1449-Comvita-CVT/page43) is currently showing the bounce is weakening..The momentum indicator as from 2.30pm today has gone slightly negative (one sell signal) The other indicators still OK and the depth is showing no resistance points at this moment...

Closed today at $7.30 down 10c from its high point...A brilliant bounce so far ...The dead cat bouncers will be very happy with this one..

[Beagle]

Dead cat bounce...looking a bit dead now.

[Ogg]

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11789377

[kiwidollabill]

A few posts back someone mentioned the possibility of CVT having "a large stock of poor, unsalable honey"

I believe this is correct and will provide some context - Manuka is early flowering, the beekeepers feed their hives prior to nectar flow with sugar water to promote numbers and high bee activity. However, even with keepers swapping out combs (some are poorer with this practise), alot of the 'sugar honey' remains in the hive. This becomes a problem as there is a 'C4 sugar test' as part of QA release into China and the EU/UK, honey which has >7% sugar derived honey will fail this test. Generally CVT will be blending their batches to get at close to this as possible or dumping product in other countries which dont do import testing. The bad weather would have promoted greater amounts of feeding to keep the hives viable, but less manuka to feed on. Equals poor quality honey.

If we are looking for the next downgrade, expect them to write off the value of some of their inventory.....

[winner69]

A few posts back someone mentioned the possibility of CVT having "a large stock of poor, unsalable honey"

I believe this is correct and will provide some context - Manuka is early flowering, the beekeepers feed their hives prior to nectar flow with sugar water to promote numbers and high bee activity. However, even with keepers swapping out combs (some are poorer with this practise), alot of the 'sugar honey' remains in the hive. This becomes a problem as there is a 'C4 sugar test' as part of QA release into China and the EU/UK, honey which has >7% sugar derived honey will fail this test. Generally CVT will be blending their batches to get at close to this as possible or dumping product in other countries which dont do import testing. The bad weather would have promoted greater amounts of feeding to keep the hives viable, but less manuka to feed on. Equals poor quality honey.

If we are looking for the next downgrade, expect them to write off the value of some of their inventory.....

Interesting industry insights - thanks kiwi$bill

$95m of honey is a lot of honey

Last report said this high level of inventory was one of theit strengths

Bit of a bugger ifeven a small portion is not worth much (10%is nearly $10m)

[kiwidollabill]

Interesting industry insights - thanks kiwi$bill

$95m of honey is a lot of honey

Last report said this high level of inventory was one of their strengths

Bit of a bugger ifeven a small portion is not worth much (10%is nearly $10m)

Two years ago, the word amongst the industry was 'Secure your supply'- the M&A activity and CVT buying apiary businesses speak to this. Fast forward two years we have the opposite problem, with the massive growth in the number of brands seen in China, Manuka is quickly becoming commoditised (if it isnt already). Notice in the ONL release the commentary around distributors requesting price points which were not achievable? The market is awash with product at the moment.

Looking into the crystal ball.... this may shake out a number of the brand owners who don't have a viable business anymore, also look for an announced range of regulatory changes from China in the near future to also do this. Two years from now, CVT should likely still be around (unless PE look it at the same way I do and buy it out from angry shareholders), waiting 6-12 months for the volitility to die down a decent entry point might be achievable to ride the bounce. Likely to however trade on a much more sensible PE.

Very similar to what the IF market has had to go through.....

DYOR

[Beagle]

My pick is that counterfeit product will fill the vacuum of lack of supply of high UMF product in China in the year ahead. Counterfeiting is obviously still a massive issue in China for all sorts of products.
The other thing is all honey is good for you, (mentioned many, many times in the bible) so consumers taking counterfeit manuka honey, factoring in the placebo effect will mean most customers won't notice the difference and will believe the counterfeit product is the real article. This places even more price pressure on genuine suppliers. Comvita appear to be in quite a "sticky", (sorry, couldn't resist), situation.

Brokers still appear optimistic this year is a one-off, I believe headwinds may remain for the medium term.

[Baa_Baa]

If the competitive 'moat' is under siege, along with operational issues, the future may be more about getting used to the new normal, which may not bode well for future SP even after the correction, unless CVT finds a way to address its issues and maintain its differentiation.

[kiwidollabill]

My pick is that counterfeit product will fill the vacuum of lack of supply of high UMF product in China in the year ahead. Counterfeiting is obviously still a massive issue in China for all sorts of products.
The other thing is all honey is good for you, (mentioned many, many times in the bible) so consumers taking counterfeit manuka honey, factoring in the placebo effect will mean most customers won't notice the difference and will believe the counterfeit product is the real article. This places even more price pressure on genuine suppliers. Comvita appear to be in quite a "sticky", (sorry, couldn't resist), situation.

Brokers still appear optimistic this year is a one-off, I believe headwinds may remain for the medium term.

Yea that too, be wary of any Manuka of a rating more than 15+.

Near on impossible to get it that high nowdays and pass the C4 sugar test

[winner69]

Kiwi$bill -I take it Watson & Son are having the same supply issues as well?

[kiwidollabill]

Kiwi$bill -I take it Watson & Son are having the same supply issues as well?

Wouldnt be sure about them specifically but I see no reason why they would be any different to these supply issues.

There are a few high end suppliers that remained supplying in the UK and didn't go into China like everyone else, they wont be facing the same pressure at the seller end but likely the same poor honey collection.

[Balance]

Yea that too, be wary of any Manuka of a rating more than 15+.

Near on impossible to get it that high nowdays and pass the C4 sugar test

Thanks for that, k$b.

Will make sure I steer my overseas visitors away from the $280 per 250g jar of UMF 18+ honey!

[trader_jackson]

Brokers still appear optimistic this year is a one-off, I believe headwinds may remain for the medium term.

I note Forsyth updated their CVT coverage with 'just' a 30 cent downgrade to $11.70

[Sideshow Bob]

I note Forsyth updated their CVT coverage with 'just' a 30 cent downgrade to $11.70

So a mere 63% more than where it is trading today......hope they're not ploughing all of their managed funds into there.

[Balance]

Wouldnt be sure about them specifically but I see no reason why they would be any different to these supply issues.

There are a few high end suppliers that remained supplying in the UK and didn't go into China like everyone else, they wont be facing the same pressure at the seller end but likely the same poor honey collection.

https://www.nzx.com/files/attachments/252188.pdf

Over-supply of honey products in China market.

[Beagle]

http://www.sharechat.co.nz/article/c37f39d5/oceania-natural-third-quarter-sales-growth-stalls-on-unstable-grey-market.html?utm_medium=email&utm_campaign=Oceania%20Natural%20third-quarter%20sales%20growth%20stalls%20on%20unstable% 20grey%20market&utm_content=Oceania%20Natural%20third-quarter%20sales%20growth%20stalls%20on%20unstable% 20grey%20market+CID_68dbe4a9c8df98f465f22b9f172e0f 9a&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlec37f39d5oceani a-natural-third-quarter-sales-growth-stalls-on-unstable-grey-markethtml

Look at that very ugly decline in sales for the latest quarter. Tax change and uncertainty regarding looming new regulatory issues are really stinging.

[winner69]

Director Luke has bought 35,000 shares

Been a Director since 2014 and this looks like his first purchase - ?

Must think hare price has hit rock bottom

[kiwidollabill]

Little birdie told be CVT is discounting 25% in China to clear stock. So much for the brand moat.

[ratkin]

If you start a sentance with ........... a little birdie told me......... Does it mean you can just make stuff up?? :D

[kiwidollabill]

If you start a sentance with ........... a little birdie told me......... Does it mean you can just make stuff up?? :D

Not if that birdie is someone connected within the industry....

[kura]

Was looking at CZZ results in Aus, market not impressed.
Maybe market (& me) are preoccupied with short term outlook

[Balance]

Was looking at CZZ results in Aus, market not impressed.
Maybe market (& me) are preoccupied with short term outlook

Not an inspiring result at all.

Chart of CZZ resembles that of CVT but fall not as dramatic and as much.

The worry is that it really looks like the Aussies are really going to get into the manuka bandwagon in a big way.

The bandwagon can only carry so much - remember only too well how NZ milk and milk powder were described as liquid and white gold.

CVT really needs to maintain brand integrity at all cost in the shakeup which looks inevitable?

[Pipi]

Not good for the NZ Honey industry.

http://www.stuff.co.nz/business/industries/89047444/queens-grocer-pulls-new-zealand-manuka-honey-from-shelves

[winner69]

I see Harrod's branded manuka honey 15+ from NZ has sold out

22 quid for 375 gms

[Beagle]

Not good for the NZ Honey industry.

http://www.stuff.co.nz/business/industries/89047444/queens-grocer-pulls-new-zealand-manuka-honey-from-shelves

Excerpt from the comments section
The manuka honey myth is getting busted. Priced beyond its usefulness. Inconclusive results when used as a dressing. No results at all when eaten. A true scam.
Tea tree oil is a good cheap antiseptic ointment..
Logic suggests a degree of skepticism is warranted regarding the benefits to eat manuka honey compared to eating normal honey given the vast price difference.
Maybe if you're a top athlete like Novac Jokovich earning millions on the world tennis circuit...for your average Joe Bloggs faced with the everyday need to balance their budget from 101 competing directions ?

That said I think the CVT manuka honey based derma cream's for about $20 are very good value, work well and are affordable because they last well...but eating manuka honey at current prevailing prices ?????

Common folks, hands up ! who's actually paying current prices and eating this liquid gold ?
I won't eat it as a small part of a regular diet as I consider it too expensive for regular consumption but maybe if I had a bad flu that wouldn't go away I might buy some but maybe I have this back to front ?

Maybe a little bit on a couple of bits of toast two or three times a week in the lead up too and during winter makes for a healthier and happier hound over winter ?..or is this money down the drain and normal honey is almost as good so you'd not notice the difference...who can say for sure ?

[winner69]

Even ordinary honey is an outrageous price these days

Have good old fashioned jam on my toast these mornings

(Note to Aaron - National Super not high enough to allow honey these days)

[Beagle]

Pull the other one mate...you're not short of a quid :p I am certain that deciding to ante up for regular honey would have far better health effects and be a good cost benefit exercise compared to regular sugar laden jam.

The real question is do you pay $31 for 250g of this https://shop.countdown.co.nz/?banner=www#url=/Shop/ProductDetails%3Fstockcode%3D434586%26name%3Dmothe r-earth-manuka-honey-umf-10%26searchString%3Dmanuka%2Bhoney that's $12.40 per 100 grams or

$22.59 for 950 grams of this https://shop.countdown.co.nz/?banner=www#url=/Shop/ProductDetails%3Fstockcode%3D793687%26name%3Dmothe r-earth-clover-honey-blend%26searchString%3Dclover%2Bhoney $2.38 per 100 grams

Is the manuka stuff really worth more than 5 times the price ?

[winner69]

Pull the other one mate...you're not short of a quid :p I am certain that deciding to ante up for regular honey would have far better health effects and be a good cost benefit exercise compared to regular sugar laden jam.

The real question is do you pay $31 for 250g of this https://shop.countdown.co.nz/?banner=www#url=/Shop/ProductDetails%3Fstockcode%3D434586%26name%3Dmothe r-earth-manuka-honey-umf-10%26searchString%3Dmanuka%2Bhoney that's $12.40 per 100 grams or

$22.59 for 950 grams of this https://shop.countdown.co.nz/?banner=www#url=/Shop/ProductDetails%3Fstockcode%3D793687%26name%3Dmothe r-earth-clover-honey-blend%26searchString%3Dclover%2Bhoney $2.38 per 100 grams

Is the manuka stuff really worth more than 5 times the price ?

I'm told more calories in honey than jam

Most honey tastes nicer but touted 'benefits' are a bit exaggerated I reckon

Marmalade pretty healthy.

[Beagle]

http://www.benefits-of-honey.com/honey-in-the-bible.html

[percy]

Excerpt from the comments section
Logic suggests a degree of skepticism is warranted regarding the benefits to eat manuka honey compared to eating normal honey given the vast price difference.
Maybe if you're a top athlete like Novac Jokovich earning millions on the world tennis circuit...for your average Joe Bloggs faced with the everyday need to balance their budget from 101 competing directions ?

That said I think the CVT manuka honey based derma cream's for about $20 are very good value, work well and are affordable because they last well...but eating manuka honey at current prevailing prices ?????

Common folks, hands up ! who's actually paying current prices and eating this liquid gold ?
I won't eat it as a small part of a regular diet as I consider it too expensive for regular consumption but maybe if I had a bad flu that wouldn't go away I might buy some but maybe I have this back to front ?

Maybe a little bit on a couple of bits of toast two or three times a week in the lead up too and during winter makes for a healthier and happier hound over winter ?..or is this money down the drain and normal honey is almost as good so you'd not notice the difference...who can say for sure ?

My wife has Hanz honey Manuka blend on her one peice of toast in the morning.Think the last jar was about $18 from Pack'nSave.Think a jar lasts her about 3 months.
I have one green kiwi fruit before my two slices of toast with Crunchy peanut butter,no added sugar or salt.[on special at Pack'nSave $3.50 a jar last week]
I think it is all in the mind.Wife says her honey is good for her,while I have not had a cold since starting my day with one kiwi fruit.

[peat]

Little birdie told be CVT is discounting 25% in China to clear stock. So much for the brand moat.
worse actually
its the end of the golden weather for CVT until brand integrity can be re-established.

[Beagle]

worse actually
its the end of the golden weather for CVT until brand integrity can be re-established.

When's that going to happen in your opinion ? Personally I see this stock as uninvestable for at least 12 months.

[Balance]

Pull the other one mate...you're not short of a quid :p I am certain that deciding to ante up for regular honey would have far better health effects and be a good cost benefit exercise compared to regular sugar laden jam.

The real question is do you pay $31 for 250g of this https://shop.countdown.co.nz/?banner=www#url=/Shop/ProductDetails%3Fstockcode%3D434586%26name%3Dmothe r-earth-manuka-honey-umf-10%26searchString%3Dmanuka%2Bhoney that's $12.40 per 100 grams or

$22.59 for 950 grams of this https://shop.countdown.co.nz/?banner=www#url=/Shop/ProductDetails%3Fstockcode%3D793687%26name%3Dmothe r-earth-clover-honey-blend%26searchString%3Dclover%2Bhoney $2.38 per 100 grams

Is the manuka stuff really worth more than 5 times the price ?

The market for high UMF manuka is not NZ but overseas - especially the China market. That's where the demand has pushed the price to astronomical level.

The health product shop I go to when I have overseas visitors from time to time stock Comvita UMF18+ but only if you ask as it is kept in the cabinet, locked up! At $230 per 250g jar, no wonder! They have no problem getting rid of the stock when they can get it - medicinal grade is how they describe it.

[Balance]

I see Harrod's branded manuka honey 15+ from NZ has sold out

22 quid for 375 gms

Can't be the real stuff.

UMF15+ in NZ is over $100 per 250g jar!

[Beagle]

The market for high UMF manuka is not NZ but overseas - especially the China market. That's where the demand has pushed the price to astronomical level.

The health product shop I go to when I have overseas visitors from time to time stock Comvita UMF18+ but only if you ask as it is kept in the cabinet, locked up! At $230 per 250g jar, no wonder! They have no problem getting rid of the stock when they can get it - medicinal grade is how they describe it.

You'd be expecting a meaningful improvement in your health at that price or perhaps its the mysterious elixir of youth! I suspect a large part of the benefit is actually the belief / positive psychological wellbeing effect that comes from taking these things. Whatever makes you feel happy can actually lead to more wellbeing :)

[Balance]

You'd be expecting a meaningful improvement in your health at that price or perhaps its the mysterious elixir of youth! I suspect a large part of the benefit is actually the belief / positive psychological wellbeing effect that comes from taking these things. Whatever makes you feel happy can actually lead to more wellbeing :)

The placebo effect is a proven scientific fact so same with manuka honey.

One thing I can say from heresy from those who are prepared to pay big bucks for for the high UMF manuka honey is that it is excellent for sore throats, cough and stomach ulcers. So there you go!

[peat]

One thing I can say from heresy some people esp in PEB thread think everything you say is heresy:p

[Balance]

some people esp in PEB thread think everything you say is heresy:p

Great catch Peat!

Guess those Pike River Coal, NZOG and Snakk (to name 3) posters who thought everything I said was heresy are yet to change their view? :D

Was at a health shop yesterday in Queen St (Shortland St to be exact) and it had GoHealth Manuka honey on special - buy 1, and second one half price. Discounting getting very obvious now.

[Beagle]

Great catch Peat!

Guess those Pike River Coal, NZOG and Snakk (to name 3) posters who thought everything I said was heresy are yet to change their view? :D

Was at a health shop yesterday in Queen St (Shortland St to be exact) and it had GoHealth Manuka honey on special - buy 1, and second one half price. Discounting getting very obvious now.

I really value your input mate :)

[jonu]

Great catch Peat!

Guess those Pike River Coal, NZOG and Snakk (to name 3) posters who thought everything I said was heresy are yet to change their view? :D

Was at a health shop yesterday in Queen St (Shortland St to be exact) and it had GoHealth Manuka honey on special - buy 1, and second one half price. Discounting getting very obvious now.

Most likely in anticipation of a tightening up of the definition of manuka honey by MPI which is due in a matter of weeks. This clearing up of the definition will be of great benefit to Comvita in my personal view, but will have many in the apiary industry sweating.

As previously disclosed I am a Comvita employee but am not speaking on their behalf and am not declaring anything that is not already available to the market

[Beagle]

Most likely in anticipation of a tightening up of the definition of manuka honey by MPI which is due in a matter of weeks. This clearing up of the definition will be of great benefit to Comvita in my personal view, but will have many in the apiary industry sweating.

As previously disclosed I am a Comvita employee but am not speaking on their behalf and am not declaring anything that is not already available to the market

Wait till the Chinese authorities want to audit your quality control procedures, whenever that might eventually be, and then you guys might be the ones sweating.
Disc I don't believe the official profit forecast of CVT, not by a long shot. (Don't hold).

[Gonzo]

Do they tell their bees not to visit clover, pohutukawa, rata, kamahi etc flowers

[Balance]

Do they tell their bees not to visit clover, pohutukawa, rata, kamahi etc flowers

It's all in the testing regime as to which flowers the bees obtain the pollens and honey from.

Problem is that there's so much counterfeiting going on it's very difficult for the average consumer to know. The copying in China now is flawless.

[Beagle]

It's all in the testing regime as to which flowers the bees obtain the pollens and honey from.

Problem is that there's so much counterfeiting going on it's very difficult for the average consumer to know. The copying in China now is flawless.

And what's the bet the Chinese know all about the placebo effect so seeing all honey is good for you nobody will be any the wiser !

[Balance]

And what's the bet the Chinese know all about the placebo effect so seeing all honey is good for you nobody will be any the wiser !

If the infant formula regulations which China brought in a few years ago is any guidance, there will be quite a process to go through before any of the honey companies
gain certification if the China government decides to bring in an audit process.

I recall a few companies like Fonterra were given the fast track (being a necessity, infant formula supply must be maintained) but it is doubtful manuka honey is seen as an essential!

[kiwidollabill]

If the infant formula regulations which China brought in a few years ago is any guidance, there will be quite a process to go through before any of the honey companies
gain certification if the China government decides to bring in an audit process.

I recall a few companies like Fonterra were given the fast track (being a necessity, infant formula supply must be maintained) but it is doubtful manuka honey is seen as an essential!

I was once in a meeting with someone in the IF market during this time - they had been advised that the going rate for gaining a fast track approval was NZD40k in cash, they declined....

[Balance]

I was once in a meeting with someone in the IF market during this time - they had been advised that the going rate for gaining a fast track approval was NZD40k in cash, they declined....

Sounds like a scam? I know one company which would have been happy to pay several times that amount if paying the bribe would give them approval. Alas, despite export IF to aching for over 5 years with a good brand and China distributors, it did not get approval.

Interesting times ahead for the honey industry. I personally think though that MPI is taking a much more proactive approach with Manuka honey (albeit late) than it ever did with IF. So there is hope that there will be an orderly process of verifying what is real Manuka money (honey) vs so much of the nonsense out there.

[arc]

Had an interesting chat yesterday with a person who is conducting research for the iwi's, honey production and resources providing hives with source material has become a HOT topic, but the underlying theme has a nonpositive outcome for certain companies. I am carefully considering current levels of holdings in this arena.

[kiwidollabill]

More news from the coal face....

The honey take in the NI is massively down (even more than I thought), ~10-15% of previous years in the major regions (Northland/East cape) though there are pockets doing well.

Moreover, alot of the BIG producers are holding off buying any honey until the new MPI rules come into force (though MPI have skipped a number of previous deadlines...)

This will certainly shift the supply/demand dynamics, weed out a few of the cowboys etc.

[Xerof]

So the honey produced this season will be "floral Chelsea" yeah?

[kiora]

More news from the coal face....

The honey take in the NI is massively down (even more than I thought), ~10-15% of previous years in the major regions (Northland/East cape) though there are pockets doing well.

Moreover, alot of the BIG producers are holding off buying any honey until the new MPI rules come into force (though MPI have skipped a number of previous deadlines...)

This will certainly shift the supply/demand dynamics, weed out a few of the cowboys etc.

I would be surprised that 10-15% is what you call massive.From the goss sounds more than that KDB. Does that mean who has reasonable supplies can corner the market?

[Lego_Man]

Had an interesting chat yesterday with a person who is conducting research for the iwi's, honey production and resources providing hives with source material has become a HOT topic, but the underlying theme has a nonpositive outcome for certain companies. I am carefully considering current levels of holdings in this arena.

Are you insinuating that iwi are going to start trying to clip the ticket, claiming traditional ownership of the manuka plants and thus a "production input" of the honey?

[Rossimarnz]

'Tasmanuka' as a brand name has been trademarked in Australia. This is in readiness for Australia trying to demonstrate that leptospernum honey from Australian varieties also has merit alongside NZ Manuka honey

[kiwidollabill]

I would be surprised that 10-15% is what you call massive.From the goss sounds more than that KDB. Does that mean who has reasonable supplies can corner the market?

Sorry, I may not have been clear - they have collected only 10% of the volume compared to last year (i.e. 10t vs 100t)

[kiora]

Sorry, I may not have been clear - they have collected only 10% of the volume compared to last year (i.e. 10t vs 100t)

Yep that,s quite clear now thanks KDB. Now what are the implications of that???

[kiwidollabill]

Yep that,s quite clear now thanks KDB. Now what are the implications of that???
Well, its clear that there is a fair amount of inventory sitting around by many companies so it should take some excess supply off and allow better pricing position into Asia (this is so very similar to the dairy industry from two years ago...). This seasons honey will be of quite poor quality (alot of sugar feeding), and with the new MPI laws to come into effect, it will prevent export of it. Big losers will be the beekeepers and any companies hanging onto poor quality stock.

This will probably get rid of the Johnny come lately companies into NZ.

But the real risk to the NZ manuka position will be from Australia (they may come into this supply void), they have their own quality issues (they allow honey imports)

IMHO there is alot more news to come out from CVT in regards to these issues and the market is not correctly priced. I'd sit on the side for 6 months to provide clarity to filter through. There could be a good opportunity for those to trade through a rise. When that entry point will come is up for speculation - it could be >12 months if CVT is suffering a supply shock and have certainty around the 17/18 season or it could be after the MPI rules are released and CVT will be a winner.

[Xerof]

Are you insinuating that iwi are going to start trying to clip the ticket, claiming traditional ownership of the manuka plants and thus a "production input" of the honey?

I reported on here a month or so ago that iwi want to kick commercials off, and commence their own businesses, certainly on the NI EC

[arc]

http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by Lego_Man http://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=655254#post655254)
Are you insinuating that iwi are going to start trying to clip the ticket, claiming traditional ownership of the manuka plants and thus a "production input" of the honey?

I personally have no idea what plans exist on the inside.

I do know that all players are suffering from multiple hives being stolen and that they are worried about more than just the varroa mite

[kiwidollabill]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11801776

A bit of background on the daigou channel and now why it is such a problem for CVT

From my perspective this is a case of the exec and the board failing to manage their supply chain risk, I don't see how 'the force of the market' is an excuse.

The only 'brand' that got built was "Manuka", now to the point where honey is a commodity.....

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11801776

A bit of background on the daigou channel and now why it is such a problem for CVT

From my perspective this is a case of the exec and the board failing to manage their supply chain risk, I don't see how 'the force of the market' is an excuse.

The only 'brand' that got built was "Manuka", now to the point where honey is a commodity.....

Sounds like Comvita is floundering in its response to the Chinese government clamp down on the grey market?

Then there's the manuka honey review to come and then, the health supplements after that.

Best to stand aside until it's clear out there!

Scary to see Bellamy's sp down to $4.80 from nearly $16.00!

[peat]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11801776

A bit of background on the daigou channel and now why it is such a problem for CVT

From my perspective this is a case of the exec and the board failing to manage their supply chain risk, I don't see how 'the force of the market' is an excuse.

The only 'brand' that got built was "Manuka", now to the point where honey is a commodity.....

yes a good article KDB, thanks for posting that

[44wishlists]

On a trip in Hong Kong now, had a chat with one of the CVT staffs in the office. Sales have been going on since Christmas, and Chinese New Years, but the results ain't helping them to finish work on time. On the other hand, another CVT product Medihoney is gaining popularity here.

[Beagle]

An 11.9% level of tax on grey imports is not what anyone would realistically call a punitive tax rate so this tax appears to be by no means the only serious issue.
Over time once the changes to the certification process are implemented and assuming CVT is chosen to be reviewed and indeed meets the Chinese requirements I feel they will have a viable business model again.
In the meantime with exports to China seriously impacted, (estimated 60% of their exports ended up there), I can see plenty of risk both in terms of the accuracy of their forecasting and the serious effects on the business if they're not approved under the proposed new certification process. Disc: I am happy to stand aside and not be an investor until risk materially diminishes.

[emearg]

I note we now have Comvita branded Blis K12 products:
http://www.comvita.co.nz/products/honeyblis/prod630259
http://www.comvita.co.nz/products/travelguard/prod630260

Are these a recent addition? I wonder how they are selling?

[BlackPeter]

I note we now have Comvita branded Blis K12 products:
http://www.comvita.co.nz/products/honeyblis/prod630259
http://www.comvita.co.nz/products/travelguard/prod630260

Are these a recent addition? I wonder how they are selling?

No idea ... but if they rely on this web interface, it can't be much. It looks terrible. Can't they afford to pay for a web designer?

[winner69]

Didn't bother go past the first sentence showing the loss ...except had to look at the inventory number

Crickey dick - it's increased since June .... thought the bees were on strike

[trader_jackson]

I remembering questioning why increasing their inventory was so important... always looked a bit concerning to me... of course others told me not to worry and it was a great thing that they consistently increased inventories... then again, this was when the share price was in the double digits... how things have changed

[Beagle]

Result is out and would have been profoundly shocking if we hadn't of been profoundly shocked already.

I remain deeply skeptical regarding full year forecast. CEO notes grey market channel remains key risk for 2H sales, (I think shareholders have got that already) so I think this is simply a statement giving them wiggle room on full year forecast.

CEO says challenges may remain for the next few months on the grey market channel. I think this is another classic understatement, who doesn't remember when he said in 2016 changes weren't having any effect !

New J.V. arrangement for direct distribution into China starts 1 July 2017, outside this financial year. I am pretty sure this was supposed to have been originally timetabled for implementation in March 2017 so appears to have been pushed back without any explanation, much like their sales target of $400m was pushed out from 2020 to 2021...wonder what year they're hoping to achieve $400m sales target now, 2025 ?

I think challenges will remain for at least the next 12 months and think at the current price the shares are overpriced taking into account the dramatic sea change event that's impacted the company and more importantly will impact it for the foreseeable future.

Friend of mine told me they are sitting on a LOT of low UMF honey they simply CANNOT sell. Stock level has risen and is a real concern...yet they have often been out of stock of high UMF product...

[Balance]

Didn't bother go past the first sentence showing the loss ...except had to look at the inventory number

Crickey dick - it's increased since June .... thought the bees were on strike

Maybe the other manuka based products (skincare, propolis, royal jelly etc) are not selling? Just a thought.

[Ogg]

When does this become a takeover target for private equity if it hasn't already?

[Beagle]

When does this become a takeover target for private equity if it hasn't already?

$2 - $2.50 in my opinion and then they take a serious knife to internal costs.
If I remember correctly they laid off a "whopping" 23 of about 450 staff, fiddling with costs while Rome burns ?, you folks be the judge.

[kiwidollabill]

They're going to have alot more low value honey sitting around at the end of this season and when the new MPI guidelines come into force they may not be able to export it....

How long before they have to write off some of the inventory - I thought that might become the next downgrade....

[Sideshow Bob]

What are the guys at the bowling club saying W69?

Crying in their jugs of Lion Brown?

[kura]

Was interesting to see that Seadragon got a honorable mention in dispatches ! (or did I get that wrong ? )

[Apathy]

Was interesting to see that Seadragon got a honorable mention in dispatches ! (or did I get that wrong ? )

You mean the $2.8m write down or the $5m they are still carrying and has yet to be written off?

i thought overall the market was very kind on them today.

[winner69]

Finally had a look at Comvita financials

First thing that strikes me is horrendous cash burn over the last few years ......whilst they continue to pay dividends

Last 33 months total cash burn has been $59m (not counting cost of acquisitions) and in same period they have paid out another $19 odd in dividends. (Total inc dividends $78m). Cash burn of Xeroesque proportions.

Just as well the market reckons H2 is going to be an all time record half year.

[freebee]

Article in today's paper, not great local PR for Comvita.

http://www.nzherald.co.nz/the-country/news/article.cfm?c_id=16&objectid=11804546

[BlackPeter]

Article in today's paper, not great local PR for Comvita.

http://www.nzherald.co.nz/the-country/news/article.cfm?c_id=16&objectid=11804546

Nothing new about that. You can find cheaper (and often better) NZ lamb in European supermarkets than here. I bought last year quite drinkable NZ Marlborough Chardonnay back in Germany for 3 Euro (roughly NZ$5) per bottle (as well in the supermarket). NZ Apples are in Europe most of the year cheaper than here ... so why not the honey?

This is the ugly side of our agricultural industry ... they need to compete all around the world with others (and therefore price their goods in other markets quite reasonable). Here in NZ they are "protected" by our border control - and they use their home markets to squeeze the fat margins out of the NZ consumers they hold at ransom.

[Vaygor1]

Nothing new about that. You can find cheaper (and often better) NZ lamb in European supermarkets than here. I bought last year quite drinkable NZ Marlborough Chardonnay back in Germany for 3 Euro (roughly NZ$5) per bottle (as well in the supermarket). NZ Apples are in Europe most of the year cheaper than here ... so why not the honey?

This is the ugly side of our agricultural industry ... they need to compete all around the world with others (and therefore price their goods in other markets quite reasonable). Here in NZ they are "protected" by our border control - and they use their home markets to squeeze the fat margins out of the NZ consumers they hold at ransom.

I agree.
Best NZ lamb I ever had was destined for France but was sold here as the packaging ink had run a bit.
Quality of NZ goods in Asia and the Middle East are higher than here for sure.
The standards impose on a lot of countries before allowing products to be imported from anywhere means the crème de la crème of NZ-made is exported to ensure it gets through.

[Sideshow Bob]

Nothing new about that. You can find cheaper (and often better) NZ lamb in European supermarkets than here. I bought last year quite drinkable NZ Marlborough Chardonnay back in Germany for 3 Euro (roughly NZ$5) per bottle (as well in the supermarket). NZ Apples are in Europe most of the year cheaper than here ... so why not the honey?

This is the ugly side of our agricultural industry ... they need to compete all around the world with others (and therefore price their goods in other markets quite reasonable). Here in NZ they are "protected" by our border control - and they use their home markets to squeeze the fat margins out of the NZ consumers they hold at ransom.

Never always as straightforward as that. There are also issues such as GST on food in NZ, exchange rates, relative volumes as well as a cosy duopoly in NZ and margins. You can get something chilled or frozen to Europe cheaper than you can get something from Auckland to the lower South Island.

Often for the likes of apples or meat, 'the market price is the market price'. If the market says a leg of lamb is 10 quid, then is 10 quid regardless of if the exchange rate is 0.6 or 0.3. But still sells in Countdown for $20 regardless.

But otherwise yes, we do pay too much for food in NZ......

Back to Comvita, likely that Ali is getting it cheaper than the shop in Tauranga, and probably putting a whole lot less margin on it.

[arc]

Eventually the prices will have to fall anyway. The group thats presently sending NZ people to China, teaching how to make hives and establish honey production industries, in a few years it will be big enough that "everyone" will have to "adjust".

[winner69]

CVT up 11% in last week or so

Becoming a market darling again?

[Beagle]

Yes it is becoming harder to ignore the recovery. Clear break above 100 day MA today on the back of the Chinese authorities flip-flop which will allow continuation of grey channel imports to China apparently without new labelling a licensing requirements.
Blackmores and Bellamy's up about 14% since that Chinese announcement earlier this week but CVT relatively unchanged ?
Maybe the market is starting to look through the current year's abysmal projected profit and believes that with the grey channel now all clear and a new joint venture partner with a very wide distribution network in China coming on stream on 1 July and with 24 new products this year alone the market seems to be starting to price in future growth again.
Company Investor presentation February 2017 https://www.nzx.com/files/attachments/253401.pdf
Maybe the worm, (bee?) has turned on this one ?

[Balance]

https://www.nzx.com/companies/CVT/announcements/299458

"Comvita announced today that the two major downside risks communicated in our previous market announcements of 23 January and 21 February 2017 have both come to bear, and we now expect that the direct impact of these two situations will result in an after tax operating loss for the financial year ended 30 June 2017, in the order of $7m."

Massive profit downgrade from Jan 2017 forecast that "2017 after-tax operating earnings will be in the range of $5-7m".

So downgrades do come in threes!

[BlackPeter]

https://www.nzx.com/companies/CVT/announcements/299458

"Comvita announced today that the two major downside risks communicated in our previous market announcements of 23 January and 21 February 2017 have both come to bear, and we now expect that the direct impact of these two situations will result in an after tax operating loss for the financial year ended 30 June 2017, in the order of $7m."

Massive profit downgrade from Jan 2017 forecast that "2017 after-tax operating earnings will be in the range of $5-7m".

So downgrades do come in threes!

So - you are buying after this dip bottoming out?

[Beagle]

https://www.nzx.com/companies/CVT/announcements/299458

"Comvita announced today that the two major downside risks communicated in our previous market announcements of 23 January and 21 February 2017 have both come to bear, and we now expect that the direct impact of these two situations will result in an after tax operating loss for the financial year ended 30 June 2017, in the order of $7m."

Massive profit downgrade from Jan 2017 forecast that "2017 after-tax operating earnings will be in the range of $5-7m".

So downgrades do come in threes!

Yes, you're famous saying has come true, not entirely unexpected. I thought they might break even this year so the loss of $7m translates to 7m / 42m shares = 17 cps of share value down the gurgler vs my expectations.
On the plus side they are not expecting an early increase in sales through grey channels so with the recent flip flop from the Chinese maybe they are finally being conservative ?

I shall eat my hot cross buns with no manuka honey on them this year as an "effective" protest and suck it up and hold through this disappointment.
Disc: A small 3.7% part of my well diversified portfolio.

[Ogg]

Given the nature of the 2016-2017 honey harvest and the fact that Comvita has significant levels of inventory, the extremely poor season is unlikely to impact future profitability.

"Significant levels of inventory", has this been mentioned before in those terms?

[winner69]

So 26 October 2016 that 'we expect our net profit after tax for the June 2017 financial year will be similar to our 2016 after-tax operating earnings of $17.1m. '

Then on January 23rd 'we now anticipate that our 2017 after-tax operating earnings will be in the range of $5-7m'

And then today 'result in an after tax operating loss for the financial year ended 30 June 2017, in the order of $7m'

Enough said - i think Mr Coulter has no idea what's going on, maybe too much honey mead made him slightly delusional

First down grade $10m-$12m and this downgrade $12m-$14m. It's amazing the share price has collapsed completely. Maybe hope is a strategy

[Balance]

"Significant levels of inventory", has this been mentioned before in those terms?

If I understand what CVT is trying to say, it is that they have not made sales as the grey China channel has stalled very badly this year so they have plenty of inventory to supply sales for future years.

Luckily honey keeps forever?

[sb9]

I shall eat my hot cross buns with no manuka honey on them this year as an "effective" protest and suck it up and hold through this disappointment.
Disc: A small 3.7% part of my well diversified portfolio.

Hmmm..wonder what made you to jump on board in the first instance onto this one Roger...just curious nothing sinister :)

[janner]

Hmmm..wonder what made you to jump on board in the first instance onto this one Roger...just curious nothing sinister :)

What Gordon Gecko said, perhaps. :-))))

[Ogg]

Chinese buyers are still asleep. It will probably bounce in the afternoon.

[Balance]

Chinese buyers are still asleep. It will probably bounce in the afternoon.

I think you are right which is why there is a pause in the market.

BUT - the Chinese buyers could turn sellers this time round? There are a few who bought below $7 and they may have had enough if they have not already sold.

Then who is going to buy from them? :eek: