CAV - Cavalier Corp (Carpets)

[winner69]

A fair proportion of the improved cash flow came from working capital (less stock, debtors etc)

If nothing else a sign that management are sort of managing these days, rather than hoping as in the past.

Still need to drive more profits though....but getting there

[winner69]

I really can't figure how CAV can have an NTA of .97 and a turnover of $148m and still be valued at only $41m. Still suffering from historical mis-management?
Still, not too unhappy given I jumped in at 30c - primarily as I thought it might be a takeover target.

Even though a better year CAV return on invested capital (equity + debt) was only 5.5%. Their cost of capital is about 8%/9% so still a value destroyer

Companies that don’t cover their cost of capital don’t deserve to trade at book value or above until they can demonstrate they can consistently add economic value (ie earn more than cost of capital)


With a book value of $1.04 maybe current share price is a bit harsh but as others have said their recent performance has been abysmal

To achieve a positive return on their cost of they need to get npat up to about $7.5m. In light of non existent / low growth in sales most of that extra profit looks like it has to come from continued efficiencies and productivity.

At least heading in the right direction ...might get there one day?

As an aside Hirsts are still beating CAV in the specifier/architectural market.

[sb9]

Even though a better year CAV return on invested capital (equity + debt) was only 5.5%. Their cost of capital is about 8%/9% so still a value destroyer

Companies that don’t cover their cost of capital don’t deserve to trade at book value or above until they can demonstrate they can consistently add economic value (ie earn more than cost of capital)


With a book value of $1.04 maybe current share price is a bit harsh but as others have said their recent performance has been abysmal

To achieve a positive return on their cost of they need to get npat up to about $7.5m. In light of non existent / low growth in sales most of that extra profit looks like it has to come from continued efficiencies and productivity.

At least heading in the right direction ...might get there one day?

As an aside Hirsts are still beating CAV in the specifier/architectural market.

Its all good, however it does deserve bit of premium for a turnaround story and they (board and management) seem to be working very hard and heading in right direction.

[winner69]

Its all good, however it does deserve bit of premium for a turnaround story and they (board and management) seem to be working very hard and heading in right direction.


A premium on what?


Current PE of about 10 which seems about right for a manufacturer in a cyclical market which mentions softening market conditions several times


But no doubt the market will get ahead of itself and we will see 70 cents soon

[sb9]

A premium on what?


Current PE of about 10 which seems about right for a manufacturer in a cyclical market which mentions softening market conditions several times


But no doubt the market will get ahead of itself and we will see 70 cents soon

May be it deserves marginally better P/E, 11 perhaps?

[winner69]

Market not all that rapt in the report

Tomorrow’s another day ....market might take a day or two get over the shock of a profit

Bit of a worry the number of times they mentioned softening market conditions here and in NZ

[Scrunch]

My thoughts,
Fantastic that profitability guidance has been hit (and at the top end)
Marginal that there was no dividend - confirms they are still in recovery mode and that bankers are still powerful behind the scenes. Still deserving a modest PE
Negative - the interest rate on bank debt rose 130 points in a flat interest rate environment
Negative - the record low bank balance may be a bit artificial. Note 4c has an interest rate of 7.3% and $2,798 of interest at 7.3% requires an average balance of $38m. Opening $41.5m, half yr $34.1m, closing $31.5m. This mix of balances doesn't average to $38m. If any of this interest was at last year's noted 6% then the average balance was even higher.
Positive - The half year EBITDA increased again from $4.4m to $5.7m. If $5.7m's continue for 2018/19 in both half's another good increase will happen next year.
Negative - $148m of FY revenue meant 2nd half didn't grow on the 1st half.
Great - If bank balances in 2018/19 are say $10m lower than in 2017/19 then there's a $730k lower interest cost for 2018/19 ($525k after tax). That's 13% net profit growth, even if underlying EBITDA doesn't grow.
Negative - Cavalier's medium term recent history
Positive - The bean counters considered the gap between NTA and share price and discounted cashflow modelling came in above not below NTA

This is a low-coverage stock so I'd expect the market to slowly digest the result and start to move upwards but this may not happen to the AGM and some forward profitability guidance

Disc holding and considering buying more

[sb9]

My thoughts,
Fantastic that profitability guidance has been hit (and at the top end)
Marginal that there was no dividend - confirms they are still in recovery mode and that bankers are still powerful behind the scenes. Still deserving a modest PE
Negative - the interest rate on bank debt rose 130 points in a flat interest rate environment
Negative - the record low bank balance may be a bit artificial. Note 4c has an interest rate of 7.3% and $2,798 of interest at 7.3% requires an average balance of $38m. Opening $41.5m, half yr $34.1m, closing $31.5m. This mix of balances doesn't average to $38m. If any of this interest was at last year's noted 6% then the average balance was even higher.
Positive - The half year EBITDA increased again from $4.4m to $5.7m. If $5.7m's continue for 2018/19 in both half's another good increase will happen next year.
Negative - $148m of FY revenue meant 2nd half didn't grow on the 1st half.
Great - If bank balances in 2018/19 are say $10m lower than in 2017/19 then there's a $730k lower interest cost for 2018/19 ($525k after tax). That's 13% net profit growth, even if underlying EBITDA doesn't grow.
Negative - Cavalier's medium term recent history
Positive - The bean counters considered the gap between NTA and share price and discounted cashflow modelling came in above not below NTA

This is a low-coverage stock so I'd expect the market to slowly digest the result and start to move upwards but this may not happen to the AGM and some forward profitability guidance

Disc holding and considering buying more

Good analysis and well thought out points, thanks for sharing.

[sb9]

https://www.nzx.com/announcements/324478

70c on the cards soon?

[winner69]

https://www.nzx.com/announcements/324478

70c on the cards soon?

Seems to be going in opposite direction

Announcement not taken well

[sb9]

Seems to be going in opposite direction

Announcement not taken well

Yeah, should've said 60c :confused:....tht the announcement was positive in my books, obviously not.

[bull....]

seems like cav is selling all assets slowly to keep the bank happy

[blackcap]

Must have been almost a done deal a few days ago.

https://www.nzx.com/announcements/324621

Sale of wool scouring business finalised for $13.5m

[Scrunch]

Yeah, should've said 60c :confused:....tht the announcement was positive in my books, obviously not.

The concept of selling down a non-essential asset to retire a significant chunk of debt is good. The price received isn't, neither is the contrast between the Annual report note 8a and Alan Clark's (Chair) cover letter to the annual report. The only reason this deal didn't slam the share price is because Mr Market doesn't really believe the CAV book values (Equity of $1.06/share at June, share price around 60c). If the Market did believe the book value of CWH, 17c of this value has just disappeared.

Reading the AR comments and the AR cover letter comments around around new entrants, I'm wondering if the true background to this was an offer along the lines of "we will pay you $x for your share of CWH. This offer is only open for xx days. If we don't secure a suitable CWH shareholding we will enter the industry with new facilties."
>This would explain the extremely short period between announcing the deal and the notification today that its settled
>It would explain why the Annual report puts the risk of of a new entrant as being "remote" and a key factor in accepting the offer is the potential damage to value a new entrant would do, which isn't really an issue if it is truely a "remote" chance.
>It would explain why the AR outlines audit accepted DFC calculations supporting the book value of CWH and within months of this work, a deal resulting in a write-down of $11.8m is being proposed
>It would explain why a price is only 6x what CAV's share of CWH earnings have been over the last 10 years has been accepted.

Disc still holding but confidence dented.

[sb9]

https://www.nzx.com/announcements/325982

Very nice presentation of ASM documents. Big reduction in debt and dividends to be re-instated in near future. 2018 is turnaround year they say, hopefully 2019 is a boomer for shareholders.

[blackcap]

Bit of a mixed bag. Revenue down but profit looking like it may be up a bit.

https://www.nzx.com/announcements/327885

[winner69]

Bit of a mixed bag. Revenue down but profit looking like it may be up a bit.

https://www.nzx.com/announcements/327885

Quite a confusing announcement

Key bit for me is ‘Excluding the non-cash write down, Cavalier is expecting normalised EBITDA of between $4.2m to $4.7m, compared with the prior year of $4.4m.’

So still could be going backwards ......or making slow progress ......not good


Wish they wouldn’t say ‘exciting initiatives’ ....usually delusional hype that leads to disappointment

[Scrunch]

The plus is that it's not a downgrade and while ebitda is similar to last year net earnings are up.

[winner69]

Still not making much money but at least within guidance

Laying the groundwork for a disappointing second half - Cavalier CEO, Paul Alston, commented: “Cavalier is in good shape and well positioned to take advantage of the global resurgence in demand for high end woollen flooring. However, market conditions on both sides of the Tasman are becoming increasingly difficult with reduced consumer confidence and lower flooring sales. Confidence in Australia is particularly low and sales are softening. These conditions are expected to continue and will make for a challenging second half of the financial year.”

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/330952/295402.pdf

[winner69]

Still hope for CAV according to this story

http://www.sharechat.co.nz/article/b098de8d/cavalier-gives-shareholders-reason-for-hope-no-dividend-yet.html?utm_medium=email&utm_campaign=Cavalier%20gives%20shareholders%20rea son%20for%20hope%20no%20dividend%20yet&utm_content=Cavalier%20gives%20shareholders%20reas on%20for%20hope%20no%20dividend%20yet+CID_526b353b 848e54a806f7560b64a76ce5&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticleb098de8dcavali er-gives-shareholders-reason-for-hope-no-dividend-yethtml

[blackcap]

Still hope for CAV according to this story

http://www.sharechat.co.nz/article/b098de8d/cavalier-gives-shareholders-reason-for-hope-no-dividend-yet.html?utm_medium=email&utm_campaign=Cavalier%20gives%20shareholders%20rea son%20for%20hope%20no%20dividend%20yet&utm_content=Cavalier%20gives%20shareholders%20reas on%20for%20hope%20no%20dividend%20yet+CID_526b353b 848e54a806f7560b64a76ce5&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticleb098de8dcavali er-gives-shareholders-reason-for-hope-no-dividend-yethtml

Hope dashed, downgrade issued this morning. What a saga.

[winner69]

Hope dashed, downgrade issued this morning. What a saga.

Still not making any money

In spite of what they say I doubt if things will ever change with Cavalier


Given the soft market and current trading conditions, Cavalier expects a second half profit performance close to break even and is forecasting a FY19 normalised Net Profit After Tax1 around the $1.9 million reported at the half year. 1H19 result included a $0.6m contribution from the wool scouring business (FY18 $1.4m contribution). Cavalier’s interest in the wool scouring business was sold in September 2018 and provided no further contribution in 2H19.

[winner69]

Share price back below 40 cents

Many got excited with the turnaround story a while ago when the share price went over 60 cents

May never see that again

[MauroNZ]

Out of curiosity I asked the owner of Flooring Xtra in Wellington if CAV is the most selling brand and he said yes. I know that for the whole market probably doesn't mean a lot.

[Timesurfer]

Share price back below 40 cents

Many got excited with the turnaround story a while ago when the share price went over 60 cents

May never see that again

I think there is still potential there to focus on the high end product and ride the wave of sustainable products. Having said that, I wasn’t prepared to wait and did quit my few this morning taking it below 40 cents again. Might see where they are at next year before investing again.

[BeeBop]

I also saw/see them as a turnaround story. Last year’s annual report looked like a good start point for them BUT the big gap for me was that I couldn’t see any translation into sales (at that point) so I put them on my radar but not into my pocket. Unfortunately, that still seems to be the same with no major translation into sales...and that is one of my key buy requirements....good housekeeping with good tangible sales. I wonder how much global reach they have; surely a focus on Bremworth, ditching the cheap stuff, and having a really high end product in wealthy markets is doable....goodness, even in the Middle East carpets are necessary - they cart them around on trucks to cover the sand for events.....wool ones at that. A friend of mine purchased one for NZD8k (cost more than our small second car!). Never mind, my accumulated dividends are being redirected into my IFT allocation and I will stay watching....you never know.

[winner69]

Share price back below 40 cents

Many got excited with the turnaround story a while ago when the share price went over 60 cents

May never see that again

Had a coffee with an old mate who knows a bit about the home/commercial design and specification markets. Said Cavalier being taken to the cleaners by the competition and even Bremworth not really favoured by those who specify floor coverings. He’s not surprised they continue to struggle.

Jeez - had a look at share price ....that 26 cents must be all time low ...probably a reflection of where they heading to.

[winner69]

Must be due to report full year in next week or so

Hope FY normalised profit more or about the $1.9m they said they were going to get

And no doubt a pretty positive commentary about the future ....pop up shops, winning with the trade (yeah right, building relationships with specifier/influencers and global domination of real wool carpets.

[ratkin]

Are they going to carpetulate?

[RTM]

Are they going to carpetulate?

It took me a moment.....but that is hilarious. Thx.

[winner69]

Are they going to carpetulate?

No ..going to fight to the bitter end

The $1.9m is safe .....not much is it though

• Cavalier also notes that future cashflows are based on forecasts that are sensitive to changes in
volumes and margins and that compliance with obligations and future going concern are subject to
material uncertainty if those forecasts are not met.


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/339574/305904.pdf

[percy]

At a share price of 24.5 cents CAV's market cap is $16.8mil.
If the market is forward looking it certainly does not like what is sees.

[Balance]

At a share price of 24.5 cents CAV's market cap is $16.8mil.
If the market is forward looking it certainly does not like what is sees.

Gone from profit in first half to break even in second half. Not a great outlook.

And Cavalier has zero takeover appeal!

[Brain]

Trading at a PE of about 8 seems a bit optimistic to me for a company that has been struggling to reposition/reinvent itself for a number of years without success. Making a great product Bremworth with a great name with good market recognition but they just cannot seem to get it together. I remember when this was a great share to own - increasing profits good dividend stream and they always did what they said they would. Fortunately I sold mine years ago. From memory people used to say this was a bottom draw stock. It lends weight to the argument that there is no such thing as a bottom draw stock.

[macduffy]

My bottom drawer is full of such stocks but not CAV. After many years of lucrative divvies I saw the light and sold - rather late in the piece though, unfortunately.
In a nutshell, CAV was also too slow - the trend to synthetics was well established before they woke up.

[Sgt Pepper]

My bottom drawer is full of such stocks but not CAV. After many years of lucrative divvies I saw the light and sold - rather late in the piece though, unfortunately.
In a nutshell, CAV was also too slow - the trend to synthetics was well established before they woke up.

Have they reached a death spiral?

[macduffy]

Who knows? Perhaps they'll get a second wind but I won't be putting any money on it.

http://www.sharechat.co.nz/article/7ad43dcb/cavalier-announces-strategic-collaboration-with-nz-merino-company.html

[glennj]

I have a paltry 10000 shares bought at $1.14 as a possible recovery stock and an excuse to follow the company. I'm down the tubes by $8000+
and am now treating this as a bottom draw stock and haven't had the confidence to buy more and average down. The wool carpet product is great but
recent management despite trying hard haven't delivered as much as I'd hoped. I want the new strategy to succeed. We've recently ordered new house carpet
and were impressed with the Cavalier range which we've ordered. Perhaps it is a bit pricey for most people? It would be a big loss if this company failed!

[Sgt Pepper]

Who knows? Perhaps they'll get a second wind but I won't be putting any money on it.

http://www.sharechat.co.nz/article/7ad43dcb/cavalier-announces-strategic-collaboration-with-nz-merino-company.html

How sad
years back this was an iconic NZ company, profitable, and was favorite for retired investors with their great dividends, paid 3 times per year

[winner69]

Did meet guidance of normalised $1.9m ...that’s good

Auditors not too kind ...not convinced about the company’s forecasting ability so a bit to say about ‘going concern’

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/339825/306273.pdf

[winner69]

Directors optimistic but it looks like they need serious volume growth as well as decent price increases to stay in business.

http://www.sharechat.co.nz/article/e043e7a3/cavalier-says-price-volume-increases-needed-to-meet-bank-covenants.html?utm_medium=email&utm_campaign=Cavalier%20says%20price%20volume%20in creases%20needed%20to%20meet%20bank%20covenants&utm_content=Cavalier%20says%20price%20volume%20inc reases%20needed%20to%20meet%20bank%20covenants+CID _c34b31436080df65a8ef196e212aebab&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlee043e7a3cavali er-says-price-volume-increases-needed-to-meet-bank-covenantshtml

[winner69]

Hope isn’t really a strategy ...but the volume fairy might save the day

Is this the CAV boardroom these days?

[Beagle]

Directors optimistic but it looks like they need serious volume growth as well as decent price increases to stay in business.

http://www.sharechat.co.nz/article/e043e7a3/cavalier-says-price-volume-increases-needed-to-meet-bank-covenants.html?utm_medium=email&utm_campaign=Cavalier%20says%20price%20volume%20in creases%20needed%20to%20meet%20bank%20covenants&utm_content=Cavalier%20says%20price%20volume%20inc reases%20needed%20to%20meet%20bank%20covenants+CID _c34b31436080df65a8ef196e212aebab&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlee043e7a3cavali er-says-price-volume-increases-needed-to-meet-bank-covenantshtml

The five year trend in sales as shown in the presentation does not in any way support the directors assertions and contentions. As a numbers man I cannot reconcile the directors optimism regarding the future with the steady serious down-trend in numbers that's clearly obvious. Cavalier carpet is already extremely expensive relative to alternatives, especially synthetic carpet.
The choice of floor coverings with new modest cost housing is primarily based on price. The present economic conditions are extremely unfavourable towards high end discretionary purchases and the trend towards synthetics and hard floor coverings is well and truly intact and continuing.

As your cartoon alludes too...I really think they are on a wing and a prayer of hope. I wouldn't buy at any price.

[Jay]

We have just replaced some of our flooring and gone with a hard floor covering in our modest older home - some was replacing existing non carpet flooring.
Personally I would go for a wool carpet where using carpet as opposed to a mixed blend or solely synthetic if economically viable and within budget, but as you sat Mr Beagle not favourable for most people at present.
I would think that most of the 100,000 kiwi build homes (whenever they get built, if ever) won't be using cavalier carpet.

[Beagle]

Agreed. Its simply too expensive for most families so its becomes a high end discretionary choice for the comfortably well off only. That's the nub of the issue.
High end European vehicles are not selling very well either and there's a lot of debate about whether they're more durable or really any better than mainstream vehicles too. If the directors think they can swim against the prevailing economic tide then I hope they and shareholders have some life jackets handy. :eek2: Enough said.

[Scrunch]

Interesting acc change in shareholding notice. They were at 5.4% and are now 2.2%. You need to promptly disclose promptly on a 1% change or going under 5%. This indicates they found a buyer or buyers for a stake of about 3%. Some unknown person or institution has confidence in CAV.

[peat]

An article of general interest
https://www.nzherald.co.nz/north-island/news/article.cfm?c_id=1503932&objectid=12273575

[winner69]

Another half year …. another half year of declining sales ...and again a loss reported

But OK as a NEW STRATEGY is on the way


Nice phrase used 'growth deceleration' but sounds painful ...must it some time

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/348776/317192.pdf

[percy]

Another half year …. another half year of declining sales ...and again a loss reported

But OK as a NEW STRATEGY is on the way


Nice phrase used 'growth deceleration' but sounds painful ...must it some time

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/348776/317192.pdf

Loved the "this change will take patience,investment and time."

[Balance]

Another half year …. another half year of declining sales ...and again a loss reported

But OK as a NEW STRATEGY is on the way


Nice phrase used 'growth deceleration' but sounds painful ...must it some time

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/348776/317192.pdf

Really sad to see this once iconic and successful NZ company which added so much value to NZ primary produce blunders it’s way towards oblivion.

Talked to a farmer 2 days ago and he has switched from sheep & wool to deer and cropping - deer because there is huge demand from Asia for the velvet, and cropping because the dairy and meat farmers cannot get enough.

Wool? Total waste of time as far as he is concerned.

[sb9]

Interesting to note their NTA as per NZX is 0.70c and they're trading at 0.25c. May be someone would be keen to mop them up or not??

[blackcap]

Interesting to note their NTA as per NZX is 0.70c and they're trading at 0.25c. May be someone would be keen to mop them up or not??

Depends if that NTA is a real NTA. Sometimes the NTA on the books might be .70 but someone only willing to give .25 for those assets.....

A quick squizz of the annual sees that the majority of that .75 is plant and equipment and inventories... not sure if there is any value there.

[sb9]

Depends if that NTA is a real NTA. Sometimes the NTA on the books might be .70 but someone only willing to give .25 for those assets.....

Fair enough, they seem to be disciplined with reducing their debt though year after year, not so sure about their business

[nztx]

Is CAV finally waking up ?

SP up 5c today

A fair bundle of Land & Buildings shot onto the market in past 3 or so weeks

Now the Chairman going as well & retiring as a director

https://www.nzx.com/announcements/356668

[Scrunch]

Is CAV finally waking up ?

SP up 5c today

A fair bundle of Land & Buildings shot onto the market in past 3 or so weeks

Now the Chairman going as well & retiring as a director

https://www.nzx.com/announcements/356668

The announcement today had three important updates.
>Bank debt reduced to $14.5m (bank debt was $20.5m last year and $31.5m the year before)
>Inventory was down to approx. $35m. Superficially this is good as inventory was $48m last year. Hopefully they aren't tricking the market and writing down the value of synthetic inventory then claiming a lower inventory value.
>If a sale and leaseback property deal is progressed, it will need shareholder approval

Even with the increase today to 27c, the market cap of CAV is still under $20m but market cap is above debt which is a good sign. The real unknown questions are what level of sustainable profit do they believe is possible from their new strategy?, how long will it take to get there (2025 is suggested in the press release) and if they are on-track to deliver (a big big if) when will the market start pricing success with the new strategy.

If you go back before the GFC, CAV has managed net profit percentages in excess of 5%. If the planned strategy were to return them to this sort of performance and generate sustainable $5m surplus's on say $100m of sales, it should support a share price around $1. The current share price is 27c so Mr market is still basically betting that this outcome won't happen and sustainable profits barely exceeding $2m are likely.

The property sale and lease back reference is interesting. Bayley's was marketing property with a rental of $3.1m/yr. I'm not sure what capitalisation rate is appropriate, but if it was 10%, this will bring in $31m of cash (less fees). Lower yields would generate a higher value and as a reference point, all but two of PFI's properties had a capitalisation rate under 10% in 2019.

With a property BV of $24m at the end of 2019, a sale at that price would be a profit on sale. The sale would clear all bank debt and leave Cavalier in a strong net cash position. The new rental costs would however hurt the P&L, but some of this would be offset by no interest expenses.

https://www.bayleys.co.nz/1902461

[kiora]

Could be just selling their jewels
https://www.interest.co.nz/Charts/Rural/wool-prices2
Raw wool priced halved in last year
Then sustainable surplus around $2.5 after lease payment?

[Ekrub]

Could be just selling their jewels
https://www.interest.co.nz/Charts/Rural/wool-prices2
Raw wool priced halved in last year
Then sustainable surplus around $2.5 after lease payment?

Fed Farmers approve. https://www.scoop.co.nz/stories/BU2007/S00420/feds-applauds-carpet-makers-wool-focus.htm

[macduffy]

Fed Farmers approve. https://www.scoop.co.nz/stories/BU2007/S00420/feds-applauds-carpet-makers-wool-focus.htm

Yes, we would expect Federated Farmers to approve. More importantly, what is being done to make wool carpets more attractive to buyers? There's been plenty of wool promotions in the past but price relative to the cheaper synthetics has been a problem.

Disc: Not holding.

[Sideshow Bob]

As a random question (in a tongue-in-cheek way), what do Greenies put on their floors?

Synthetic carpets, typically made from non-renewable petroleum products.

Or wool carpets, produced by methane emitters killing the planet, and although 'natural' goes through a reasonably heavy process to become carpet.

Just wondering.... :confused:

[Waltzing]

bare floors.. wood.. viking style forest houses..as we do in sweden..

[kiora]

bare floors.. wood.. viking style forest houses..as we do in sweden..

With sheepskin rugs?

[Waltzing]

Of course! probably trade for polar bear ... now very bad taste...

[youngatheart]

I hope there's some upside to this stock. Could be wonderful if they manage to make the change and trade off the clean, green covid-free image...

[nztx]

I hope there's some upside to this stock. Could be wonderful if they manage to make the change and trade off the clean, green covid-free image...

suspect they may still be investigating trialling flying carpet innovations .. the dough from hocking off the Land & Buildings in progress will be in soon .. been a broom around the board room .. some positive noises as well which a certain quotient seem to have noticed before being distracted elsewhere ..

what's the bet that CAV's flying carpets become reality before NTL manage to slam a even a sniff of a few grams of gold stuff on the deck for all to see ? ;)

CAV is an interesting stock -- with a SP which has had past useful patterns of periodic ups & downs, possibly noted by some traders

[youngatheart]

I fully concur with you about CAV getting more done than NTL... I've taken a wee punt on this stock as I think they've made a good call by going back to their core business....

[Brain]

I fully concur with you about CAV getting more done than NTL... I've taken a wee punt on this stock as I think they've made a good call by going back to their core business....

They should never have been distracted from their core business in the first place.

[youngatheart]

I agree. One thing I like about these guys is that that give regular monthly market updates so we should see one in the next couple of weeks :)

[Waltzing]

Dont see any reason for the stock price to bounce yet accept they are trying something... i would love to have a look at the new product line when they bring it out . May even purchase a new carpet from them if they reintroduce the gold one.

[nztx]

Dont see any reason for the stock price to bounce yet accept they are trying something... i would love to have a look at the new product line when they bring it out . May even purchase a new carpet from them if they reintroduce the gold one.


Agree .. a difficult sector / market amid the synthetic jobs .. a big job to make the natural stuff even remotely sexy again

And Aussie competition in the game on our own soil, if not mistaken

Okay they may have sorted out the house a bit -- but let's see what the harder work needed in the marketplace yields up

[Waltzing]

I would happily support there product range for wool and purchase just like i have with RIP CURL and Kathmandu. The only time i buy non southern seas is when i pick up coffee and chocolates in LandsKrona sweden. I do find better bathroom products in sweden then here though.

DISC: trade this share every 5 or so years. I though it would be either bought out or closed it doors by now.

[nztx]

I would happily support there product range for wool and purchase just like i have with RIP CURL and Kathmandu. The only time i buy non southern seas is when i pick up coffee and chocolates in LandsKrona sweden. I do find better bathroom products in sweden then here though.

DISC: trade this share every 5 or so years. I though it would be either bought out or closed it doors by now.


Yep you're right - it's been hanging in there stumbling along casting off the associate operations for some time
and now the bricks & mortar for one perhaps one last long fling at trying to do things right & rescue it's rightful
slice of the market.

The reason why it's not been t/over is probably the others in the market, and from that who wants to be competitor
by buying in to them. Comcom prob would have a thing or two to say if they were being looked at for a gobble up
by the Aussie competition. CAV if anything have shown some resilience in hanging in there in probably not best of
times surrounded by the foreign carpet peddling sharks. Have to give the board past & present some credit there.

Even if they did or were forced into fancy footwork to divest the associate operations.

Lets see what the new focus can bring, as the restructured ship should soon be near freehold (not that that's necessarily always
the best position to be operating from)

[Waltzing]

Buying products that are locally produced in countries is becoming the new fashion if the product has a high quality locally sourced materials. This has been happening in the UK with wool products in the craft on farm manufacturing. Cant recall the end products but populations are becoming more discerning buyers of local products in many countries it appears.

[Waltzing]

just had a rave review on cav woollen carpets from carpet layers ..

[Nor]

Should convert the national herd to black sheep and go for the niche market.

[sb9]

Might propel sp further on back of today's transformational/bullish news from CAV.
Especially the piece of news relating to their ambition to resume dividends as soon as possible now that they will be fully debt free.

[Snoopy]

Should convert the national herd to black sheep and go for the niche market.


That would never work as there is too much competition for the resource. Black sheep are very much in demand to fill board seats across multiple corporates ;-P.

SNOOPY

[nztx]

That would never work as there is too much competition for the resource. Black sheep are very much in demand to fill board seats across multiple corporates ;-P.

SNOOPY

What would the late Tony have to say about this ? ;)

[winner69]

pretty good update from Cavalier today

That'll set the share price alight ..... maybe over 50 cents just like that

[percy]

pretty good update from Cavalier today

That'll set the share price alight ..... maybe over 50 cents just like that

Been a great deal of "hard yards" to get where they are.
I always doubted they would get there.
So well done CAV.

[sb9]

pretty good update from Cavalier today

That'll set the share price alight ..... maybe over 50 cents just like that

With sale and lease back of properties I would say debt will be almost zero, wonder what that'll do to sp, may be a buck??

[bull....]

but you might be waiting a long time for a meaningful return on investment this from an announcement

Financial benefits of the transformation strategy and return to profitable growth expected from FY23 onwards, following an initial 12 to 24 months of investment, with full benefits expected from FY25 onwards.

https://www.nzx.com/announcements/356719

[sb9]

How is that for some serious bidding....



1,025,136
4
39

[jorge_telosa]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/359898/330889.pdf

[bull....]

With sale and lease back of properties I would say debt will be almost zero, wonder what that'll do to sp, may be a buck??

yea i had a closer look , after the sale of the building and the improving sales outlook for the rest of this year they should have close to 20 odd million cash as my guess by next half which is close to 30c / share. also the sell out of synthetics will add to the improving picture. the caveat is the uncertain picture going on from next year once stimulus runs out

[sb9]

yea i had a closer look , after the sale of the building and the improving sales outlook for the rest of this year they should have close to 20 odd million cash as my guess by next half which is close to 30c / share. also the sell out of synthetics will add to the improving picture. the caveat is the uncertain picture going on from next year once stimulus runs out

At least they've got clear strategy going forward and very lean in their operation unlike earlier with all manufacturing plants adding onto cost base.

Looks like sharsies crowd haven't got cottoned onto this one yet :p

[jorge_telosa]

Resolution: That the sale and leaseback of the Auckland Property, details of which are set out in the Explanatory Statement, so as to enable the Company to execute its transformation to the all-wool and natural materials business model, while also providing it with the additional liquidity and funding, be approved.
Detail of the total number of votes cast in person or by a proxy holder are:
Resolution - Approval for the sale and leaseback of the Auckland Property
For 36,474,323 (99.25%)
Against 277,004 (0.75%)
Abstain 32,015
17 September 2020

[Sideshow Bob]

https://www.nzx.com/announcements/360533

Preliminary FY20 Full Year Result

28/9/2020, 3:33 pmFLLYRCAVALIER CORPORATION FULL YEAR RESULTS ANNOUNCEMENT

For the 12 months ended 30 June 2020:
• The key outcome for the year was the announcement of Cavalier’s new transformational strategy to become a sustainable, interior solutions business.
• The FY20 preliminary results reflect the re-setting of the organisation as Cavalier commences its pivot, as well as the softening trading conditions noted in 1H20, which were further exacerbated by the COVID-19 pandemic in 2H20.
• Revenue was $118.0m, down 13% on prior year, due to the softer trading conditions reported in 1H20 and the impact of COVID-19 restrictions and the lockdown in New Zealand in April 2020.
• Statutory NLAT of $(21.5)m, with normalised NLAT (see Note below) of $(3.5)m excluding non-trading adjustments.
• Normalised EBITDA (see Note below) was $2.3m, excluding non-trading adjustments of $(11.2)m pre-tax primarily related to the strategic change and company re-set.
• Net debt reduced to $14.5m as at end of June and has further reduced since year-end to $7.2m as at end-August 2020.
• Since year-end, shareholders have approved the sale and leaseback of the Auckland property which will support the execution of the new strategy.
• FY21 sales volumes to date have been stronger than anticipated with increasing sales of wool carpets.

Cavalier Corporation Limited (NZX: CAV) has today released its unaudited preliminary results for the twelve months to 30 June 2020.

The FY20 results reflect the re-setting of the company as it commences its new strategy and transformation, as well as the softening trading conditions noted in 1H20, which were further exacerbated by the COVID-19 pandemic in 2H20.

Revenue of $118.0m was down 13% on prior year, with sales reduced significantly in April and May (compared to the same months in the prior year) as a result of the COVID-19 shutdown. The revenue impact was mainly felt in New Zealand where annual sales volumes were down 17% on the prior year, with Australia finishing the year down just 5%. Since emerging from the lockdown, sales volumes have been stronger than initially anticipated. Partly, this has been led by pent up demand and consumers spending money on their homes in lieu of other discretionary spends, as well as sales of synthetic carpets as retailers have been stocking up ahead of Cavalier’s transition away from these fibres.

Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) was $2.3m, excluding non-trading adjustments of $(11.2)m pre-tax which were primarily related to Cavalier’s strategic transformation and company re-set. These are non-cash adjustments and have no effect on the underlying operations or trading of the business.

While some operating expenses were able to be reduced during the shutdown period, Cavalier has a number of fixed costs which were still incurred during this time. The business was able to continue paying all salaried and waged staff throughout the shutdown period, supported by the Government’s wage subsidy of which 46% of the $2.8m claimed was recognised in the FY20 results. The remaining $1.5m will be recognised in the current financial year.
Operating cashflows were strong at $6.8m, mainly due to the release of cash as Cavalier commenced its transition away from synthetics and ceased acquiring synthetic yarn inventory.

The company reported a statutory net loss after tax of $(21.5)m with profitability impacted by the COVID-19 lockdown, particularly in April and May. Excluding the non-cash, non-trading adjustments and derecognition of deferred tax assets, the normalised NLAT was $(3.5)m.

Net debt reduced to $14.5m as at 30 June 2020 and has further reduced to $7.2m as at 31 August 2020 due to stronger than expected trading in the new financial year and the accelerated sell down of remaining synthetic stocks.

Chair of Cavalier, George Adams, said: “The focus for the last 18 months has been on the development of a solid strategic plan to differentiate Cavalier’s positioning and to create a sustainable and prosperous future for the company. Over the next 10 years, Cavalier’s vision is to become a global leader in designing and creating desirable, safe, sustainable and high performing natural interior solutions. Swift debt reduction coupled with the sale of the Auckland building has been integral to providing strong financial platform for the company to execute its plan.

“As part of the transformation, there is a challenge with impairment assumptions especially with a market capitalisation considerably less than the net asset value of the company. Directors agreed to take the conservative position of writing-down assets (including deferred tax assets) as the transformation changes the risk profile of the company and returning to acceptable profitability is a few years away.”
Outlook

Cavalier has a comprehensive plan to grow value for shareholders through growing the wool flooring market, building demand for Cavalier’s woollen carpets and rugs, strengthening its presence in retail channels through expanded distribution and actively seeking other opportunities in the interior solutions sector to leverage the company’s strengths and capabilities.

Since year-end, shareholders have approved the sale and leaseback of Cavalier’s Auckland property, which will put the company into a debt free position and provide the financial strength to execute its transformational plans at pace.

As previously advised, trading has been stronger than anticipated in the FY21 year to end-August 2020, with New Zealand sales revenues up approximately 10% and Australia down just 6%. That strength has continued into September with sales in both New Zealand and Australia up on the same period last year. Increases in woollen carpet sales have been encouraging, especially in Australia.

As advised, total sales revenue for FY21 is expected to reduce as Cavalier exits its synthetic plastic carpet business, and as a consequence of COVID-19. Investment costs will be incurred as the company’s manufacturing and sales base is re-set to reflect the new sales focus; and marketing spend and people costs will increase significantly to support the new strategic direction and enhance Cavalier’s market presence.

George Adams said: “Like many businesses around the world, Cavalier has been materially impacted by COVID-19. As we move to a new normal, it reinforces our belief that our transformation to a purpose led, sustainable business model is the right decision for our company and our long-term future.

respond to this demand, by building on our heritage as a global leader in the manufacture of beautiful woollen flooring to deliver desirable, sustainable, safe and high performing interior products.”

NOTE: Normalised EBITDA and Normalised NLAT are non-GAAP measures. Normalised EBITDA excludes non-trading adjustments of $11.2m which comprise restructuring costs of $1.2m and asset write downs of $10.0m, primarily associated with the re-set of the Cavalier business as it commences its new strategy, and as a result of a conservative valuation of assets more closely aligning market capitalisation and net asset value. Normalised NLAT excludes the above as well as derecognition of deferred tax assets. A reconciliation of GAAP to non-GAAP measures is provided on page 51 in the accompanying unaudited financial statements.
28 September 2020
ENDS

[Balance]

Chopping and changing its strategy every other year to ‘meet changes in market conditions and trends’ - hard to keep up with what the company’s latest strategy is.

When in doubt, stay out I guess is best.

[winner69]

Does this mean they are 'forecasting' another normalised loss this year FY21

As advised, total sales revenue for FY21 is expected to reduce as Cavalier exits its synthetic plastic
carpet business, and as a consequence of COVID-19. Investment costs will be incurred as the
company’s manufacturing and sales base is re-set to reflect the new sales focus; and marketing
spend and people costs will increase significantly to support the new strategic direction and enhance
Cavalier’s market presence.

[nztx]

What's the next strategy if the latest plans turn to a curious shade of dyed water ?

Sell out to the Aussies perhaps or become a listed shell looking for a new cause ?

CAV seems however to be garnering up some support with rising SP -- must be the smell of Loot
on the balance sheet with no debt - guess 2021 will include a gain on quitting the bricks & mortar
to hopefully cover all the other necessary sins & extra ordinary costs .. ;)

[winner69]

Looks like last weeks announcement not enough to excite the market

Heading back into the 20’s

[nztx]

Looks like last weeks announcement not enough to excite the market

Heading back into the 20’s


Natural woolly floor coverings cant be as sexy as CAV were hoping for .. perhaps the punters are having
more fun playing with NZM & PPH to be bothered watching the next CAV chapter being spun out ;)

[sb9]

Things looking well for Cavalier...

https://www.nzx.com/announcements/362614

New Bremworth brand identity leads Cavalier’s transformational strategy towards sustainable, interior solutions business.
• Exit from synthetic carpet market well-advanced.
• Q1 results up on previous year.
• Sales revenues for first quarter of FY21 have continued to be stronger than anticipated when the Company first came out of COVID-19 Level 4 lockdown in April.
• Further reduction in net debt to $1.4m as at end of October 2020, putting the Company in a strong position from which to execute the transformation.
• Sale and leaseback of the Auckland property, with the net proceeds to be invested in supporting the new strategy, remains underway.

[bull....]

Things looking well for Cavalier...

https://www.nzx.com/announcements/362614

New Bremworth brand identity leads Cavalier’s transformational strategy towards sustainable, interior solutions business.
• Exit from synthetic carpet market well-advanced.
• Q1 results up on previous year.
• Sales revenues for first quarter of FY21 have continued to be stronger than anticipated when the Company first came out of COVID-19 Level 4 lockdown in April.
• Further reduction in net debt to $1.4m as at end of October 2020, putting the Company in a strong position from which to execute the transformation.
• Sale and leaseback of the Auckland property, with the net proceeds to be invested in supporting the new strategy, remains underway.

yep i reckon there have tons of excess cash this time year if sales keep up

[nztx]

yep i reckon there have tons of excess cash this time year if sales keep up

New Carpet & Renno for Christmas, instead of Offshore Holiday - or too late for 2020 ? ;)

[MauroNZ]

11.9% jump today, seems the market liked the announcement.

[nztx]

11.9% jump today, seems the market liked the announcement.


Any guesses on when CAV will be proudly back over the buck ? ;)

[bull....]

Any guesses on when CAV will be proudly back over the buck ? ;)

when the govt starts installing wool carpets in all govt owned buildings. anyway i see there cash pile growing strongly and will wait with interest there next results to see if this is the case. surely a big dividend payout at some stage will occur if this is the outcome

[sb9]

Any guesses on when CAV will be proudly back over the buck ? ;)

Another couple of quarters of performance like this and we could be there in a hurry...

[Waltzing]

still some way to go but there is finally hope. We will continue to talk to the local flooring people to see if they are impressed. They still consider the product to be good quality.

[nztx]

Another couple of quarters of performance like this and we could be there in a hurry...


see winner69's post 1089 - still relevant ?

the stuff under foot doesn't sell itself .. or does it ?

I guess any outfit can freehold itself by selling the freehold it operates from, but
what's really changed to make CAV's flooring lines more sexy to the extent
that they have a runaway success & bulging pockets of profits in current times ?

Did someone in Marketing find a mysterious button under their seat labelled Lift Off ? ;)

And will the suggested pattern of improvement be consistent ongoing trading ? ;)

How long has this been happening or have the new fandangled plans to infinite corporate newfound
prosperity just come out of the box in past few months ? ;)

[winner69]

Things never seem to go to plan at Cavalier

Probably only a small glitch

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/362836/334586.pdf

[bull....]

Things never seem to go to plan at Cavalier

Probably only a small glitch

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/362836/334586.pdf

least its not a life or death situation anymore for cav.

see the people supposed to be buying the property set up a vehicle soley for this purpose so i guess if they dont settle that vehicle will close.
least they have other interested parties in a hot property market

[sb9]

least its not a life or death situation anymore for cav.

see the people supposed to be buying the property set up a vehicle soley for this purpose so i guess if they dont settle that vehicle will close.
least they have other interested parties in a hot property market

Yep, shouldn't be that hard to sell property in NZ under current red hot environment, more so in Auckland.

[bull....]

Yep, shouldn't be that hard to sell property in NZ under current red hot environment, more so in Auckland.

exactly the fact they have next to no debt now and can finance the strategy from cashflows means when they do eventually sell the property they will have a huge cash pile

[winner69]

exactly the fact they have next to no debt now and can finance the strategy from cashflows means when they do eventually sell the property they will have a huge cash pile

Might get even more dish for property if need to sell again ...plus a bit from the defaulters

[bull....]

Might get even more dish for property if need to sell again ...plus a bit from the defaulters

possibly as for the defaulters they set there company up in dec 2019 so its probably a shell only so have to weigh the cost of litigation against potential reward i guess. also depends what undertakings the people signed in the purchase agreement.

[flyinglizard]

The current sales price of Auckland land is about $24m, outstanding of share is 68.68m. Means gain approximately $0.349 cash/share. The deal won't get through is a good thing anyway.

If CAV is able to sell the land for over $30m next year, then $0.44 cash /share. Current share price is $0.33. How do you think?

[haewai]

The current sales price of Auckland land is about $24m, outstanding of share is 68.68m. Means gain approximately $0.349 cash/share. The deal won't get through is a good thing anyway.

If CAV is able to sell the land for over $30m next year, then $0.44 cash /share. Current share price is $0.33. How do you think?


Am I missing something, but what does it matter if it is valued on the balance sheet as a fixed asset or as cash? Impact on assets / share is the same. Perhaps the current land valuation is too low. Is that what you're suggesting?

Leasing negatively impacts expenses and cash outflows, balanced against returns on the cash received.

[Southern Lad]

possibly as for the defaulters they set there company up in dec 2019 so its probably a shell only so have to weigh the cost of litigation against potential reward i guess. also depends what undertakings the people signed in the purchase agreement.

Do we know whether Kinleith Land & Infrastructure Limited paid the standard 10% deposit to Cavalier on the purchase contract becoming unconditional? If they did, there might be some upside to CAV. As CAV is likely to still have to pay the Bayley's commission on a sale that doesn't complete, they may be out of pocket if a meaningful deposit wasn't paid.

[bull....]

Do we know whether Kinleith Land & Infrastructure Limited paid the standard 10% deposit to Cavalier on the purchase contract becoming unconditional? If they did, there might be some upside to CAV. As CAV is likely to still have to pay the Bayley's commission on a sale that doesn't complete, they may be out of pocket if a meaningful deposit wasn't paid.

you would think so , usually 10% of the purchase price is the most you can demand. so 2.4 mil may have been paid as deposit which after the 12 days cav is entitled to keep less commission and lawyer fees as you say. the commision payable might be based on the lease rental?

i think cav up to year to sue for damages even if they re sell the property to someone else.

so agree with you cav win/win situation

[bull....]

great news

Cavalier further advises that Cavalier Bremworth has also entered into a new sale and purchase agreement with another third party on terms substantially the same as the previous agreement, except for the requirement of Cavalier to guarantee the obligations of Cavalier Bremworth under the lease and the increase in the purchase price of the Auckland property to $25.5 million (an increase of $900,000).

https://www.nzx.com/announcements/363263


a new sale and did they keep the forfeited deposit on the cancelled deal?

[sb9]

Good programme on TV1 Sunday last night re Wool and its future. Saw this lady Rochelle Flint, GM Marketing & International Operations from Cav being interviewed for a portion and she sounded pretty upbeat about wool carpets future.

[Ekrub]

It can be seen on TVNZ On Demand, if you log in. It may have prompted a few buyers of CAV shares this morning.

[Ahgong]

great news

Cavalier further advises that Cavalier Bremworth has also entered into a new sale and purchase agreement with another third party on terms substantially the same as the previous agreement, except for the requirement of Cavalier to guarantee the obligations of Cavalier Bremworth under the lease and the increase in the purchase price of the Auckland property to $25.5 million (an increase of $900,000).

https://www.nzx.com/announcements/363263


a new sale and did they keep the forfeited deposit on the cancelled deal?

The first paragraph of the announcement mentioned that the contract with Kinleith was forfeited because they did not pay the deposit.

[Scrunch]

great news

Cavalier further advises that Cavalier Bremworth has also entered into a new sale and purchase agreement with another third party on terms substantially the same as the previous agreement, except for the requirement of Cavalier to guarantee the obligations of Cavalier Bremworth under the lease and the increase in the purchase price of the Auckland property to $25.5 million (an increase of $900,000).

https://www.nzx.com/announcements/363263


a new sale and did they keep the forfeited deposit on the cancelled deal?

The new higher price is an additional 1.3c/share. It also removes uncertainty re tge deals progress so no surprise the share price is up 3c as at late morning.

[nztx]

The new higher price is an additional 1.3c/share. It also removes uncertainty re tge deals progress so no surprise the share price is up 3c as at late morning.


Bear in mind that CAV's properties don't appear to have been revalued in the books
as far as I can see from their Reports .. "Cost or Deemed Cost" in Note 5A of the
2019 Annual Report

From Preliminary 2020 FY Report filed with NZX:

Under Note 6 (Page 26)

AUCKLAND PROPERTY

"The Group’s property, plant and equipment includes the Auckland property with a carrying value of $12,877,000 that was sold and leased back subsequent to the balance date. The property was not classified as held for sale at the balance date as other funding arrangements for the transformation to an allwool and natural materials organisation were being considered at that time, and the final offer that was made for the property subsequent to the balance date was subject to consideration and approval of the Directors, Overseas Investment Office (OIO) and shareholder approval. "

The last 2 years Years Reports include some fairly hefty other write downs, provisioning, restructuring provisions& exit from former business joint venture etc coming through into bottom line


Realised Property Gains must add to reported NTA, if this is the case

[bull....]

Bear in mind that CAV's properties don't appear to have been revalued in the books
as far as I can see from their Reports .. "Cost or Deemed Cost" in Note 5A of the
2019 Annual Report

From Preliminary 2020 FY Report filed with NZX:

Under Note 6 (Page 26)

AUCKLAND PROPERTY

"The Group’s property, plant and equipment includes the Auckland property with a carrying value of $12,877,000 that was sold and leased back subsequent to the balance date. The property was not classified as held for sale at the balance date as other funding arrangements for the transformation to an allwool and natural materials organisation were being considered at that time, and the final offer that was made for the property subsequent to the balance date was subject to consideration and approval of the Directors, Overseas Investment Office (OIO) and shareholder approval. "

The last 2 years Years Reports include some fairly hefty other write downs, provisioning, restructuring provisions& exit from former business joint venture etc coming through into bottom line


Realised Property Gains must add to reported NTA, if this is the case

good points.

be in cash when it settles in the balance sheet. i reckon by next reporting date they have 35c of cash in the bank. effectively your paying nothing for there other assets at current prices. people only starting to realise just now

[nztx]

good points.

be in cash when it settles in the balance sheet. i reckon by next reporting date they have 35c of cash in the bank. effectively your paying nothing for there other assets at current prices. people only starting to realise just now

Very likely & that's before the new campaign to make "Wool threads on the floor" very sexy again takes hold .. ;)

Discl: Holder

[flyinglizard]

good points.

be in cash when it settles in the balance sheet. i reckon by next reporting date they have 35c of cash in the bank. effectively your paying nothing for there other assets at current prices. people only starting to realise just now

The cash/share is $0.3713 now (25.5m/68.68m). Just today's closing sp. I saw the momentum of purchasing Made in NZ products recently, after talking to three carpet suppliers last week. Hope CAV will win the tenders of some government projects. If this momentum continues, then CAV will generate positive cash flow and NPAT F21.

[bull....]

The cash/share is $0.3713 now (25.5m/68.68m). Just today's closing sp. I saw the momentum of purchasing Made in NZ products recently, after talking to three carpet suppliers last week. Hope CAV will win the tenders of some government projects. If this momentum continues, then CAV will generate positive cash flow and NPAT F21.

take a little of for restructuring etc . they should be able to pay a big chunk of these costs from cashflow for the immediate future as there pick up plenty of cash flow from selling remaining synthetics also building activity is huge so sales should be strong

[bull....]

bullish price action on the daily and weekly charts , matter of time before i reckon before 40c is taken out then 60c is next resistance area

[Waltzing]

ready for re enter the market ... we remember the losses... one of our few losses ever...

another shambles was suggested last evening over gin and tonic... Smith City..from holders of no less than MFT...

[Ferg]

https://www.nzx.com/announcements/363635

The auditors report makes for pretty grim reading regarding future cash flows and performance. It sounds like the property sale is needed to fund operating cash flows. Also, the P&L shows they cannot make a profit from selling carpet given the asset impairments in the last 2 years are less than the reported losses. I'm not seeing any reason to invest but happy to be proved wrong if anyone else has anything to add.

[nztx]

https://www.nzx.com/announcements/363635

The auditors report makes for pretty grim reading regarding future cash flows and performance. It sounds like the property sale is needed to fund operating cash flows. Also, the P&L shows they cannot make a profit from selling carpet given the asset impairments in the last 2 years are less than the reported losses. I'm not seeing any reason to invest but happy to be proved wrong if anyone else has anything to add.

Yes - agree

I look it this way - this the almost final run for CAV having liquidated bulk bricks & mortar to even get into a position
to be able to pursue the opportunity & put profitable runs on the board.

I guess the Bank of "Loyal Shareholder's Deep Pockets" is available still as another option if things dont work out
for latest initiatives. But if it doesn't pan out, stakeholders are going to be fairly disappointed

All up recent performances and CAV's long downwards spiral has in process destroyed much shareholder wealth & gutted a
once very proud & profitable NZ Manufacturer, as it was during the days of Tony Timpson.

CAV's Board indeed appear to have a good deal to answer for what has been seen over the subsequent years.

[Waltzing]

"I'm not seeing any reason to invest "

not yet ... another year to go at the very least.. share price ahead of itself... was a good trade on the news and now a strong sell..

the product itself seems to still have a good reputation at the local tile and flooring retail outlets.

[winner69]

https://www.nzx.com/announcements/363635

The auditors report makes for pretty grim reading regarding future cash flows and performance. It sounds like the property sale is needed to fund operating cash flows. Also, the P&L shows they cannot make a profit from selling carpet given the asset impairments in the last 2 years are less than the reported losses. I'm not seeing any reason to invest but happy to be proved wrong if anyone else has anything to add.

Maybe you weren’t meant to see all that bit

https://www.nzx.com/announcements/363665

[KJMLimited]

Maybe it is this bit:
The Group is also exploring opportunities to raise equity funding. At the date of issuing this opinion no equity funding had been obtained by the Group.

[bull....]

also you lot missed that they have 17m of synthetics to sell thru yet. so 25m from property sale + 17m? of synthetic carpet inventory sales so maybe 42m cash less restructuring costs by mid next year ?
also the cashflow should be read on the basis of trading going forward not the historical accounts in the annual report

. i agree its a spec buy only at this stage

[flyinglizard]

Have to wait a few months to see the half year report of F21. CAV has to approve its business strategy to be successful.

[Xenith]

Family member In the sector told me that cavaliers pricing is too high and that their wool business will only target a select few customers with money to burn. Their opinion is that the company is going down the drainpipe

[Ferg]

Maybe you weren’t meant to see all that bit

https://www.nzx.com/announcements/363665

Very true. I don't for a minute believe they re-read the report after my post...but hey dreams are free! :) I was thinking at the time the auditors need to stay in their lane given some of their statements were forward looking.


Maybe it is this bit:
The Group is also exploring opportunities to raise equity funding. At the date of issuing this opinion no equity funding had been obtained by the Group.

I just checked and that was removed from the new version. I can't see any other changes in the auditors report. Nice spotting.

[bull....]

Snugger Government buildings could move the whole office market

https://www.stuff.co.nz/environment/climate-news/123576264/snugger-government-buildings-could-move-the-whole-office-market


good opportunity for cav to sell therewool carpets to the govt now since they declared a climate emergency

[winner69]

So govt employees work in warm cosy offices with plush wool carpets ....while those living in state houses put up with cold damp mouldy places

[Balance]

So govt employees work in warm cosy offices with plush wool carpets ....while those living in state houses put up with cold damp mouldy places

As should be the case, W69?

How dare the peasants out there demand decent accommodation and living off the state?

[winner69]

Carpet sales going well

Profit to be higher than last year

All going to plan

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/365601/338100.pdf

[MauroNZ]

Carpet sales going well

Profit to be higher than last year

All going to plan

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/365601/338100.pdf

My little knowledge on the TA following KW's advice seems a good time now to buy.

[bull....]

imagine the big cash pile they be sitting on in march ... wow i reckon they should sell the AUS business and concentrate on NZ

[haewai]

Family member In the sector told me that cavaliers pricing is too high and that their wool business will only target a select few customers with money to burn. Their opinion is that the company is going down the drainpipe

Facts beats hearsay, although I guess an anecdote is factual. Just not one I'd include in my investment decisions.

[Dassets]

Not a holder but interested. Read the Establishment of a Long-Term Incentive Plan announcement today. Pretty disappointing. Price set based on 20 trading days prior to 1 Nov(not not at a premium, just that price circa 31 cents. Then they vest if Total shareholder return is 14% per annum from 1 Nov 20 to 1 May 23. Oh share price at the current time is enough to trigger grant. If I was a shareholder I wouldn't be that happy.

[nztx]

Not a holder but interested. Read the Establishment of a Long-Term Incentive Plan announcement today. Pretty disappointing. Price set based on 20 trading days prior to 1 Nov(not not at a premium, just that price circa 31 cents. Then they vest if Total shareholder return is 14% per annum from 1 Nov 20 to 1 May 23. Oh share price at the current time is enough to trigger grant. If I was a shareholder I wouldn't be that happy.


Agreed - Dassets

This pangs of here's a Bonus dished out with base price set on historic low levels

Very disappointing conduct seen from CAV's board to see them act this way !

Do they need the cash ?

What has CAV done so far to date ?

Maybe sell some real estate, slightly change course (probably well overdue too)
and make a few more positive fluffy plans accordingly (yet to be delivered on) ;)

Is this sort of incentive warranted ?

How much shareholder value has CAV managed to destroy in past few years up to recent ?

CAV should be making the same offer to all their shareholders IMO ;)

Let's put it this way - the late Tony Timpson would probably not be very impressed!

Let's see what the market makes of this ..

Currently not a holder, but have been.

[Waltzing]

havnt read all the details of taken much notice but after returning from europe found the gold woollen carpet had suffered a few set backs...

look like cav is not going to the carpet barn in the sky after all.

[nztx]

Preliminary Interim 31 Dec 2020 HY:

https://www.nzx.com/announcements/368189

Cashed up with Loot in the Bank out of quitting the Bricks & Mortar -- now aspiring to go

Let's wait & see how these guys go with trying make the woolly fly again .. ;)

[Waltzing]

" woolly fly again "

a woolly kite fly again... never seen a woolly kite flying...

[bull....]

what i find amazing is the 26 million in cash they got and they cant even find it in there hearts to pay a 1c div at cost of 700k to suffering s/h

[Waltzing]

must be still redesigning the Kite...

i once sent the design team back to redesign the kite. The first kite was a total hit and so the design team though yes we have a better kite..

in theory it was but it flew like a 777 with an engine on fire..

eventually after 2 years of redesign and much pain the new kite emerged and the design team thanked me for being a total you know what...

to get the plane flying again sometimes takes a determined approach across scorched earth..

[bull....]

wonder if the old dogs will use social media to spread the rebrand or will it be old fashioned expensive tv ad's? anyway the cash in bank equates to 37cps at the moment

[Waltzing]

better off to get to those front line sales people who have the knowledge

ive spoken to some and they still like and talk of the old woollen product with praise.

[nztx]

what i find amazing is the 26 million in cash they got and they cant even find it in there hearts to pay a 1c div at cost of 700k to suffering s/h


Agree - but just look at the past chapters of classic c**k up's on the report card to get an indication
of what those around the Board Table have been responsible for over the years .. ;)

With some outfits (not necessarily this one) it's not difficult to imagine that they would
even manage to screw up a simple Pay Dividend job with no extra help needed to achieve that .. ;)


The jury remain out of whether CAV's Board have it in them to make the new woolly initiatives & directives
work or whether it will be another disaster to add to the already good number of similar over the years on
the card - where a once very proud perfectly good company has been transformed into a trainwreck
owning a bit of real estate and a Board for the main slept through how to rescue things at the pertinent times .. ;)

[bull....]

think i write to the ceo asking why they are so tight on paying a div

[haewai]

think i write to the ceo asking why they are so tight on paying a div

Jeez, they've only just turned a profit, and only really by selling some assets. Perhaps you should read their guidance first.

[Brain]

Jeez, they've only just turned a profit, and only really by selling some assets. Perhaps you should read their guidance first.

I am happy for them to be cautious and careful with that cash

[bull....]

Jeez, they've only just turned a profit, and only really by selling some assets. Perhaps you should read their guidance first.

my concern is that the company has not been run very well over the years and now that they have a big pile of cash they will waste it all on marketing etc.

if i was running the company i would sell the aus division and add to the 26m cash pile and focus just on NZ and give some cash to s/h so at least that get something in case you blow all the money on your transformation.

[nztx]

The Market seems to have caught the smell of CAV's loose loot.. or should that be loose change ? ;)

Did the CAV bods scurry out & buy some flash new office cars to be sign written, new desks, puters and a new
hidey hole for the new recruit finance guy to hide in, around the time the property bucks hit the tin for
everyone to be onto it so fast .. ? ;)

Admittedly they did seem to be out of luck first time round trying to offload the sticks & mortar to a party
who reportedly had curious past habits of leaving things unsettled .. ;)

(Who knows the chappy CAV encountered might even be a good recruit for the Hobby Gold mining
outfit around those parts .. to join the board of pretenders & perpetual fund raisers, where even the snails
move at a quicker pace than any sort of productive human activity)

Someone had better tell the long suffering CAV punters that they're likely * out of luck this time round ..
and probably the next, and the next, especially if things get a bit hairy instead of fluffy woolly .. ;)

If the Board co*k up again and manage to blow most of the trove, then the unfortunates might even have
to throw some further pennies in the tin too .. ;)

[winner69]

CAV doing it’s best to temper your enthusiasm -

While it is still too early, and the operating environment remains uncertain, for the Directors to be providing shareholders with an earnings guidance for FY21, shareholders should note that earnings for the rest of this financial year will not track what the Group has achieved in 1H21.

This is partly due to the increased marketing spends in 2H21 as we invest in the transformation as outlined earlier. At the same time, volumes in 2H21 will be significantly down on 1H21, with the bulk of the synthetic carpet stock having already been sold in 1H21 and sale of woollen carpet in Australia likely continuing to be impacted by disruptions to the supply chain.

And

Then they mention something about 2025 for the good times

[haewai]

The Market seems to have caught the smell of CAV's loose loot.. or should that be loose change ? ;)



Yeah, there's 38c per share in cash alone.

[winner69]

All the good vibes around CAV doesn't seem to be helping CAV share price

Slow sinking to that 30 cents level which seems to act as support

Not many companies can lay claim to a negative Enterprise Value

[bull....]

its a shame watching. the cash on hand gives the company a finite life going forward unless there turn around is a roaring success. but with wool inputs at record lows now and wool generally more expensive than synthetic's it be a hard sell to developers etc who just throw in the cheapest crap on new builds etc, so is it the rich end of town only really whos the market. if wool inputs go up it make wool carpet very expensive further limiting there market.
so you can value the company based on expenditure going forward. cash divided by expenditure on marketing etc should give you an approx life span of the company. the shares will devalue over time unless they perform a remarkable turn around. i dont see it from being a purely wool carpet seller , maybe they need to diversify into other home based stuff as well where wool becomes the up-sell?

they should have sold the aus division a year ago or earlier and wound the company up , returned money to s/h who may have got anywhere from 60 - 90c return i reckon and should have given s/h something last report before they embark on there last hope.

[nztx]

All the good vibes around CAV doesn't seem to be helping CAV share price

Slow sinking to that 30 cents level which seems to act as support

Not many companies can lay claim to a negative Enterprise Value


Dividend next month - you reckon ? ;)

[sb9]

Dividend next month - you reckon ? ;)

Might be, someone is happy to accumulate around the current 34c mark..

[nztx]

Announcement next week anyone - for Major Govt Carpet Supply Contract for all them thousands of Govt Houses for untold homeless ? ;)

CAV might fly like an eagle again to the MOOOOOON and beyond yet - huh ? ;)

[sb9]

Looks like CEO Paul had enough trying to turnaround this pup and decided throw in the towel.

[winner69]

Looks like CEO Paul had enough trying to turnaround this pup and decided throw in the towel.

I always love it when CEOs do the honourable thing - With Cavalier now well positioned to commence the five-year strategy implementation, it is the right time for me to hand over the reins”

As you hinted maybe he is tired and bored .....and is “putting my energy into a new role.”

[nztx]

Looks like CEO Paul had enough trying to turnaround this pup and decided throw in the towel.



Next month's Dividend may have to be cancelled to pay him out all the inflated dues & accrued CEO add-ons .. ;)

[nztx]

I always love it when CEOs do the honourable thing - With Cavalier now well positioned to commence the five-year strategy implementation, it is the right time for me to hand over the reins”

As you hinted maybe he is tired and bored .....and is “putting my energy into a new role.”


Wish I could get as tired selling a bit of Corporate Real Estate & directing a slight change in direction
of a tired long thought lame horse for the said package .. ;)

[Dassets]

Oh I love the release. Apparentally CAV has a globally iconic brand. Also the CEO led the turnaround of the company.

Maybe the accounting team doing the P and L must have missed something. And the brand is so iconic the marketing team decided to restrict consumer access to its products, you know like Rolex. Or the bankers actually wanted to lend CAV more money and were disappointed to have the debt paid down. Maybe that is the answer, the accounting team missed the iconic brand value add.

A company that seems to be living in an alternative universe perhaps. Could be a good Hollywood movie concept.

[nztx]

Oh I love the release. Apparentally CAV has a globally iconic brand. Also the CEO led the turnaround of the company.

Maybe the accounting team doing the P and L must have missed something. And the brand is so iconic the marketing team decided to restrict consumer access to its products, you know like Rolex. Or the bankers actually wanted to lend CAV more money and were disappointed to have the debt paid down. Maybe that is the answer, the accounting team missed the iconic brand value add.

A company that seems to be living in an alternative universe perhaps. Could be a good Hollywood movie concept.


Agree with you there - Dassets .. ;)

CAV may have forgotten where the gas & accelerator pedals are .. ;)

[bull....]

the ceo did his job well ...... down size and save cav. bankers orders
but in the long term that is undecided if they survive under there new plan

[SarahHart]

CAV Chairman goes 2020. Now a new one.
CAV CEO goes 2021.
Spinning Manager goes June 2021.
Sales heading south - year after year.
Auckland buildings sold, competitors booming in red hot property market with CEO leaving four months after receiving long term share plan.
Things not looking good.

[haewai]

Capital value @$0.43 = $29.5m
Cash on hand @ 31 Dec = $26.3m
+ no debt, profitable and executing new strategy

Good to see consistent daily increase in share price

[bull....]

Capital value @$0.43 = $29.5m
Cash on hand @ 31 Dec = $26.3m
+ no debt, profitable and executing new strategy

Good to see consistent daily increase in share price

no 5 best performing stock for the mth .... valuation will decline with the cash balance though unless they get meaningful traction in the new business so i still treat the stock as highly speculative at this stage

[sb9]

Someone's accumulating here, but still has lot of risks imo.

[nztx]

CAV to HENRY: Now we'll have the Deposit on the Real Estate which you failed to pay any settlement:


https://www.nzherald.co.nz/business/carpet-maker-cavalier-corporation-seeks-deposit-from-kinleith-over-failed-246m-deal-to-sell-factory

{Paywalled]

[haewai]

Looks like yesterday's announcement of the new CEO gets an approval tick from investors today.

New Zealand carpet and wool company, Cavalier Corporation Limited (CAV: NZX) is delighted to announce the appointment of Greg Smith, previously CEO of Icebreaker, as the new Chief Executive Officer of Cavalier Corporation Limited. ... Greg has extensive international business experience, running iconic New Zealand companies and helping them to scale on the world stage. He was with Icebreaker for eight years, holding the position of CEO and Brand President for almost four years. Prior to that, Greg held senior executive roles at Michael Hill Jeweller for over 21 years.

[bull....]

good points.

be in cash when it settles in the balance sheet. i reckon by next reporting date they have 35c of cash in the bank. effectively your paying nothing for there other assets at current prices. people only starting to realise just now

just as the price was starting to move nzx queries it lol , up 45% in last 3 mths. took a bit longer than i thought for market to realise in the 30s was free money

[winner69]

Godfrey Hirst must be hurting a bit

Wanting CAV to stop making claims about how good wool is

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/376284/351056.pdf

[Brain]

Godfrey Hirst must be hurting a bit

Wanting CAV to stop making claims about how good wool is

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CAV/376284/351056.pdf

I think Godfrey Hirst are in the process of shooting themselves in the foot. This should be a great opportunity for Cavalier. I usually stay well clear of companies that get involved with lawsuits but I will make an exception for this one.

[Brain]

12% jump today. Maybe the market is beginning to realise the free marketing that Godfrey Hirst will be giving cavalier.
Little New Zealand company daring to use renewable wool in their carpet being monstered by an American company that uses synthetics.

Cav might be going quite well. The brain household has decided to re-carpet with bremworth and we have to wait to the end of November because the carpet we chose is out of stock and it is one of their more expensive carpets.

[bull....]

bullish price action on the daily and weekly charts , matter of time before i reckon before 40c is taken out then 60c is next resistance area

we reached our second target 60c nearly a 100% return now , not to shabby for a company nobody liked on this thread.

[Leftfield]

we reached our second target 60c nearly a 100% return now , not to shabby for a company nobody liked on this thread.

Still don't like it..... but well done you!

[Scrunch]

Still don't like it..... but well done you!

But you would need to agree its ESG credentials (well at least the E bit) have improved as CAV shifted away from making plastic carpets aka synthetic carpets. Quite a few investors are increasingly looking at ESG.

[Brain]

Still don't like it..... but well done you!

I can remember the good days for cavalier where they were most of my portfolio. They paid a good dividend, excellent communication with shareholders and they always did what they said they would do. From memory (which on occasions is a bit dodgy I would admit) the share price rose to $4 per share and paid about 25c dividend. Then it all slowly went to custard. People wanted to buy synthetic carpets. Now things have changed again in my opinion.
Good old renewable wool, CO2 storage and that international company using synthetics monstering poor old cavalier,the good little kiwi company doing its best for the environment.

All looks promising to me. But I admit I am biased as I think natural materials are great and I am puzzled why other people do not have the same view.

[bull....]

Still don't like it..... but well done you!

investing for me is never about liking the company , its about how much money i can make

[Leftfield]

Good points folks....... I've clearly let years of frustration with this company effect my judgement tho' I never held.

Always good to be open minded and I've been guilty of having a closed mind on this. GLH.

[Ferg]

I am puzzled why other people do not have the same view.

Carpet beetle doesn't eat synthetic carpets.
https://www.kiwicare.co.nz/problem/carpet-beetle/
It is nigh on impossible to be rid of it.
No more wool carpets for me sorry.

[kiora]

"Deterring carpet beetle
Your carpet has been treated with an insect resist agent to deter carpet beetle and infestation from moths
and other insects. It is important to note the insect resist chemical is embedded in the carpet fibre and needs
to be eaten by the insect to have an effect and stop further spreading – this will mean fibre loss can occur.
This treatment does not stop insects from entering your home. Thorough and regular vacuuming around
the skirting boards and under infrequently-moved furniture will help prevent infestation. Failure to properly
maintain these areas will void all or part of the warranty coverage."
http://www.bremworth.co.nz/attachments/docs/warranty-and-maintenance-brochure-november-201.pdf

[nztx]

I think a Thread title upgrade needed, as these guys are now listed & known as -

BRW - BREMWORTH LTD

[Brain]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/BRW/396166/375619. (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/BRW/396166/375619.pdf)

[Waltzing]

strong bounce off 45 ish ....

does anyone follow this stock anymore ?

[silverblizzard888]

Not sure I like the outlook for the company in this economy, they had their chance in a booming economy and property market, now its downhill...

[nztx]

Not sure I like the outlook for the company in this economy, they had their chance in a booming economy and property market, now its downhill...


with you there too ..

[na2m1]

https://i.stuff.co.nz/business/131109282/carpetmakers-prepare-for-surge-in-demand-after-auckland-floods Bremworth said their business was hectic. Hopefully that means more demand is coming up for their carpets.

[nztx]

My goodness - today's BRW (Bremworth) announcement looks like a hectic shambles

https://www.nzherald.co.nz/business/bremworth-first-half-loss-narrows-profits-dogged-by-litigation/WS7K37VWFBDHDHYY7CIT3O55GE/

Bremworth first half loss narrows, profits dogged by litigation

and the financials:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/BRW/407609/389852.pdf


Did the Loss actually narrow - or did someone miss something in haste to go to print/news by the Media ?


LOSS H1 31.12.22 ($778k)

SURPLUS H1 31.12.21 $1001K


Looks like the Competition are being a bit active and aggressive in "The Narrows" trying
to eat poor old BRW's marketing drives alive .. cant like what they are seeing :)

Wonder what has improved when financials suggest things have dipped down through the hole
in floor on comparative Half Years against the year previously

Not a word of the actual bottom line Loss in the Preliminary Announcement here that I can see:

https://www.nzx.com/announcements/407609

Word on the Battle with Godfrey, Awatoto etc anything but what the P&L bottomline
trend looked like .. must have badly wanted to not report bottomline Profit Reversal into LOSS ;)

How long will BRW continue losing money as it continues in the scrap with the Competition
which must be draining Cash and Management attention away from the ball and goal
posts at the other end ?

The sale of real estate gave BRW a window to redeem themselves to earlier glory.
Will they make something of it or maybe not ? ;)

Be plenty of market opportunity out there in time to come with damage repair, new builds etc, assuming the waving of pokers at the Competition and back again doesn't distract the job overly and Management can actually get things back on track in the right direction

[sb9]

Once a dog will always be a dog (not intended to hurt beloved pet by name usage)

Don’t think even the ex Icebreaker top guy can save this one..