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scamper
19-09-2008, 09:43 AM
Note that cav has a 11 cps div coming with today as the record date.

sp has dropped 62 in the last 10 days.

it is currently 2 cents lower than when the results were announced 4 weeks ago.

and, not buys/sells today, so no movement from its crash low yesterday.

so, is the market rational/irrational with respect to cav?

macduffy
19-09-2008, 10:21 AM
I'd say it's just getting trashed, along with the rest of the market. A preponderance of sellers over buyers.
Note it's up a couple of cents today - along with the rest of the market!

;)

777
19-09-2008, 10:28 AM
Scamper ex date is next Friday.

Dividends

The policy of paying dividends three times a year continues.

The Directors have declared a fully imputed final dividend for the year ended
30 June 2008 of 11 cents per share, an increase of 0.5 cent on the equivalent
for the previous year.

This final dividend, together with the first interim of 3 cents per share
paid in December 2007 and the second interim of 6 cents per share paid in
March 2008, gives a total of 20 cents - 1 cent up on the 19 cents per share
for the previous year.

The final dividend will be paid on Friday, 3 October 2008. The share register
will close at 5 p.m. on Friday, 26 September 2008 for the purpose of
determining entitlement to the dividend and will reopen on Monday, 29
September 2008.

scamper
19-09-2008, 11:12 AM
one of us has a misapprehension...
besides, i didn't mention the phrase "ex-date", cos i'm not entirely sure what it refers to...

but, if you buy today, you get the divi.
and then, if you sell on monday, you still get the divi.

so it seems that monday is the ex date, no? are we actually on the same page?
cheers, scamper.

macduffy
19-09-2008, 11:33 AM
It looks like you're a week early, scamper. Relevant dates are 26 and 29 Sept according to announcement on CAV website.

;)

scamper
19-09-2008, 02:48 PM
scamper's a dope. thought today was the 26th...
back to the kennel.

winner69
21-02-2009, 07:32 AM
I don't know whether it is the times we are in or something else but many company announcements are starting to confuse (or cloud) the real picture ... and Cavalier is no exception.

Like - after raving on how hard thing are going to be they say ...our earnings outlook for the year to 30 June 2009 as a range from $11 million tax paid (which would be almost 40% down on last year) to $13 million tax paid (almost 30% down on last year). ..... this doesn't so bad. H1 earnings were down 7% on last year (would have been more if it wasn't for the contribution from Ellison carpets) so things are going to get worse if Full year is going to be down 40% - the guidance doesn't specifically say that second half earnings are going to be down 65% does it. Thats some damage eh

When they mention debt they talk about ratios and (purposely?) don't actually state a debt figure. In the narrative they do say equity is $83m (less than June 08 because the payment of last years dividend was higher than earnings) but overlook to specifically say that debt is $97m. Probably a lot of debt if icash flows are reducing to the degree that the earnings guidance imply.

One other thing they did mention that inventories are increasing ... up tp $70m which is enough to support the next 6 months sales .... hope they don't make too much more .... maybe some cheap carpets coming up.

Have they been transparent enough in their announcement ... headlines and comments are not too bad but in my mind some of the real stuff is missing

winner69
21-02-2009, 07:35 AM
In saying all that at 170 odd is on about 10 times forecast earnings ... these days a pretty hefty multiple and in view of what might happen after June a bit high

However CAV is on the face of it one of the less stressed companies on the NZX (solvency wise) so got something going for them

Phaedrus
21-02-2009, 08:17 AM
The market giveth - and the market taketh away....

http://h1.ripway.com/78963/CAV221.gif

An illustration of why exit strategies are important.

winner69
21-02-2009, 10:09 AM
What I hadn't noticed that CAV debt increased by $14m from December 07 to June 08 ($70m to $84m) and then by another $13m (to $97m) in the six months from June 08 to december 08

Definitely going the wrong way .... but they say they do something about it

Some also might say that they have been borrowing to pay the regular dividends

Feltex had the iconic tag .... sure Cavalier Bremworth is just as iconic .... making carpets that NZers live on since the 50's

winner69
21-02-2009, 12:51 PM
The market giveth - and the market taketh away....

http://h1.ripway.com/78963/CAV221.gif

An illustration of why exit strategies are important.

Thats an amazing chart eh Phaedrus ... something for fundamentalists to envy

In round numbers lets say CAV has gone from 170 to 550 (trebled) and then gone all the way back to 170 ... so shareholders return in those 8 years has been the dividend.

Why do fundamentalists envy such a graph .... because it shows the sentiment of the market.

In 2000 (start of P's chart) CAV earnings were about 20 cents a share / it was on a PE of 9 and trading at 1.5 times book value (all pretty respectable for a manufacturing company)

At its peak of 550 odd in 2003 CAV earnings were 29 cents a share (only 50% more than a few years before) / its PE had expended out to 16 and it was trading at 5 times book value (bit rich eh)

Now today earnings are what they were in 2000 ... about 20 cents a share / its PE is about 9 and it is trading at about 1.4 times book value

So 'fundamentally' nothing surprising about todays price is there. CAV shareprice has not been dragged down by the malaise of the market .... it is 'fundamentally priced' about right

Just highlights what happens during boom times and when on fundamentals things get 'overvalued'. CAV earnings over the last 10 years have generally been in the 20 to 30 cents per share (reached 32 cents in 2004). Cav has paid out a fair chunk of earnings in dividends so its equity has only increased from $60M TO $80M in the last 8 years or so. CAV earnings have consistently covered its cost of capital but not excessively or to the extent it deserves to trade much above 1.5 times book value. Pretty solid performing company ... what you would expect from a good old fashioned manufacturing company

so the market was exhuberant in 2003 and 2004 ..... CAV multiples expanded and the share price shoot up to 550 ... on fundamentals overvalued ..... and probably a genuine value investor (if there is such a beast) would have bailed .... ironic ..... about the same time as the likes of phaedrus would have bailed as well


What happens in secular bear and bull markets it is the multiples that change .... when stocks like CAV reach truly overvalued levels and when 100 or 200 day moving averages signal it take the winfalls and run ... think of it as present from god.

Using Phaedrus's phrase 'the market giveth ... but don't let the market taketh away'

Interesting stuff

777
21-02-2009, 01:37 PM
Back in 1996 I bought 10,000 Cavalier for $15,750. Since then I have had $24,887 returned as dividend and capital repayment($3,500) and the shares I have now, 8750 are worth $15,020. This approx is a 7.4% net return. On top of that is what ever the $24,887 has earned over those 13 years.

I have always thought it a well run company which is managed by people who don't have big egos to support. Not too many of those on the NZX these days.

Lawso
18-03-2009, 12:53 PM
I'm with 777 on this one. I too bought in 1996 and with thrice-yearly dividends, a share split and a buy-back, my CAVs have long since paid for themselves. Of course the sp has fallen from the giddy heights but it looks as if the market is finally wakingup to CAV's positives. These include the very astute purchases of Norman Ellison carpets and Ontera carpet tiles, and rationalisation in the wool scour sector. CAV's sp rose 7% last week, has been up every day this week, jumping 26c today alone. At 180cps it is roughly 60% higher than its 12-month low.

scamper
11-05-2009, 06:44 PM
while the sp hasn't done much since your post, Lawso, it has consolidated at the higher level to the extent the chart is suddenly looking promising:
30 and 90-day moving average crossover, downtrend broken.
scamper holds some, and will be watching carefully to buy a few more.
really like the 3x annual div, and 10% is quite good.
do you think they'll lower the div next time round?
cheers, scamper.

winner69
18-07-2009, 09:48 AM
From all accounts all on track to deliver a pretty repsectable result in tough times for comapnies like these

Hopefully debt will have come down .... they had enough stock when last reporting to last many months


Shareprice back close to 200 .... wouldn;t surprise to see closer to 250 in a month or so post positive comments in the announcement

macduffy
18-07-2009, 10:21 AM
From all accounts all on track to deliver a pretty repsectable result in tough times for comapnies like these

Hopefully debt will have come down .... they had enough stock when last reporting to last many months


Shareprice back close to 200 .... wouldn;t surprise to see closer to 250 in a month or so post positive comments in the announcement

What accounts are these, winner ?

Have I missed something recently, other than CAV's SP trend is looking positive and at a six month high?

Cheers

winner69
18-07-2009, 11:17 AM
What accounts are these, winner ?

Have I missed something recently, other than CAV's SP trend is looking positive and at a six month high?

Cheers


Just word on the street as they say ....

....volumes stuff all but some keen buyers this week

winner69
18-07-2009, 11:21 AM
With the company renowned for not saying much publicly one will have to wait until late August

winner69
21-08-2009, 12:39 PM
From all accounts all on track to deliver a pretty repsectable result in tough times for comapnies like these

Hopefully debt will have come down .... they had enough stock when last reporting to last many months


Shareprice back close to 200 .... wouldn;t surprise to see closer to 250 in a month or so post positive comments in the announcement

And so it turned out to be ..... that post was a month ago and the shareprice was about 200 and now 260 ..... 25% increase leading up to the announcement so obviously punters had caught on somehow

Sound pretty positive as well so maybe quite a lot more upside in the shareprice

macduffy
21-08-2009, 01:19 PM
Good call, winner.

CAV is one of my longest held NZ stocks and has been a pretty good performer and a great income stock.
Result was close to forecast, they're doing well in a tough market.

:cool:

777
21-09-2010, 02:10 PM
Seems Canterbury will need some new carpets ...

And still they rise. Topped up at 2.39 back in May.

blackcap
22-09-2010, 08:17 AM
Can anyone explain this meteoric rise? To me it seems irrational, yes they will need some more carpets in Canterbury but surely its not only that?

macduffy
22-09-2010, 12:20 PM
It certainly has been a meteoric rise!

But perhaps it's just that the market has rediscovered a well run business that has delivered consistently good profits and high dividends for longer than most can remember.

As an income investment, CAV sure beats those dodgy finance company debentures!

Disc: The longest Hold in my portfolio.

Lawso
22-09-2010, 01:38 PM
Posted by macduffy:
"The longest hold in my portfolio"

Me too, macduffy. Since 1996. I was still buying more in 2001-02, when the price was over $6 (just before a 2:1 split). But I wish I hadn't taken advice to diversify into fixed interest, back when the likes of St Laurence and Strategic were being recommended by the so-called experts.

macduffy
22-09-2010, 02:11 PM
Hi, Lawso.

I should qualify my statement.

The equal longest Hold in my portfolio.

I bought CAV in 1995, along with STU (still held), Dominion Breweries and Skellerup. The latter two long since gone.

CAV has proven to be a classic stock to hold for income and to buy in the dips. STU would have performed better for me had I treated it as the cyclical that it is, but we live and (hopefully) learn.

blackcap
23-09-2010, 03:27 PM
that still doesnt explain this sudden interest though.... Or is Efficient Markets just not working properly atm?

shasta
23-09-2010, 03:49 PM
that still doesnt explain this sudden interest though.... Or is Efficient Markets just not working properly atm?

What about the South Canterbury Finance money going into the NZX market, for dividend paying stocks?

The earthquake in Canterbury will certainly help CAV over the next year

macduffy
23-09-2010, 03:54 PM
I've never been overly impressed by the Efficient Market theory.

Markets - and individual stocks - have always been subject to large dollops of sentiment, enthusiasm, depression and mood swings which tend to throw "Efficiency" out of the window on occasions. At least, that's been my experience these last 40 odd years!

Perhaps CAV is just back in fashion?

h2so4
23-09-2010, 10:44 PM
that still doesnt explain this sudden interest though.... Or is Efficient Markets just not working properly atm?

Who knows and who cares why? Maybe some investors have just gone nuts.:D

blackcap
24-09-2010, 07:34 AM
Who knows and who cares why? Maybe some investors have just gone nuts.:D

Cheers... I quite like your theory, I really do. Well im not complaing as I hold a few. Definately some South Canterbury money coming in the next few days to keep the market propped up. Cav has been a great little company, divs are good, imputed and happy to hold :)

h2so4
24-09-2010, 08:35 AM
I was playing around with some new ratios I found that I quite like. It comes from a book called The Little Book That Beats The Market. Well worth a read.

As at yesterdays close

Return on capital 27.5%

Earnings yield 9.5%

voltage
17-01-2011, 09:21 PM
any thoughts on CAV as stock to hold, will do well from demand - CHCH erthquakes and flooding in aussie. Good dividend play

macduffy
18-01-2011, 06:07 AM
Yes, its been a good steady income stock for a long time now and short term prospects are looking good.

Market seems to agree.

I hold.

scamper
18-01-2011, 09:45 AM
scamper's a holder as well.
But with a div currently at 5.54% (directbroking site), am not sure that it's a great earner.
However, carpets will need renewing all over the place soon.
The chart is all good, but the eps of 19.3 doesn't seem completely terrific... cheers.

macduffy
18-01-2011, 11:08 AM
The 5.54% doesn't include imputation credits. Grossed up, it's about an 8% gross yield at current SP.

macduffy
11-03-2011, 03:03 PM
In a sea of red ink today it was good, if rather intriguing, to see CAV up a whole 21c!

I can't find any announcement so it's either belated "earthquake" reaction or something is leaking in the good ship Cavalier.

Any ideas?

winner69
13-04-2011, 05:50 PM
Commerce Commission giving the go ahead for CAV to almost get a monopoly on the wool scouring market should help the share price even more

scamper
13-04-2011, 06:52 PM
When was that announcement, winner?
There seems to have been a sudden and largish drop over the last couple of days.
And the sp sat around 360 for nearly a month.
I am beginning to wonder if the supposed good times ahead are an illusion...
Cheers.

winner69
13-04-2011, 07:24 PM
Commerce Commision said so

13 April 2011

The Commerce Commission has reached a preliminary view that it should allow Cavalier Wool Holdings to acquire up to 100 per cent of New Zealand Wool Services International’s wool scouring assets and stock (and/or the shares in New Zealand Wool Services International).



The Commission has today published its draft determination on Cavalier Wool Holding’s application under the Commerce Act for authorisation of the proposed acquisition.



“Our preliminary view is that the proposed acquisition would substantially lessen competition in the North and South Island wool scouring markets. Cavalier Wool Holdings would essentially have a monopoly on the supply of wool scouring services post acquisition. However, at this preliminary stage, the Commission expects that there would be benefits to the public that would outweigh the loss of competition,” said Commerce Commission Chair Dr Mark Berry.



“The Commission considers there is the potential for Cavalier Wool Holdings to raise prices after the acquisition because of the loss of the constraining influence of NZ Wool Services International. However, we expect that the level of the detriment resulting from the acquisition is likely to be limited by the ongoing, long-term competitive threat of the Chinese wool scouring industry and the potential for new entry into the New Zealand wool scouring industry,” said Dr Berry.



“On the other hand, the Commission considers that there would be considerable benefits to the public arising from the rationalisation of the wool scouring industry that Cavalier Wool proposes to carry out. The rationalisation is likely to lead to lower production and administration costs, the freeing up of industrial sites, and lower ongoing capital expenditure requirements in the future.”



The Commission is seeking submissions on its Draft Determination by 27 April 2011. Submissions will be posted on the Commission’s website. The Commission will hold a conference with interested parties on 4 and 5 May, and the final determination will be issued by 31 May 2011. You can find details of the conference on the Commission’s web site at:



http://www.comcom.govt.nz/media-releases/detail/2011/commerce-commission-issues-draft-determination-on-wool-scouring-assets-application

scamper
14-04-2011, 09:30 AM
Well spotted!
information like this should surely be up on share sites...
meanwhile, another 1.1% has dropped off so far today.
Maybe time to snatch a few more...

Lizard
22-08-2011, 09:04 PM
I thought the result today didn't offer much to get excited about. Debt levels are creeping up again relative to EBIT, although still acceptable, but cashflow constrained by the need to tie up more $ in higher priced wool.

The angling over the WSI wool scours seems interesting. Do we presume that the offer to WSI to purchase the scouring operations for $40m is simply to put something on the table in order to get Commerce Commission ruling that would apply to purchase of the ex-Hubbard/SCF related shareholdings? i.e. potential full take-over offer for WSI?

Do we think they could fund that from bank debt? The third quarter results from WSI would make it seem attractive at current market cap. And if CAV are willing to throw around numbers like $40m for for the wool scours, why isn't WSI looking better bid?

janner
22-08-2011, 09:16 PM
Why do you post such interesting Questions Lizard ??..

Especially when i am on my way to bed ??

There are so many stocks that need looking at..

Your thoughts on GFF.. nearly 14% return at todays price..

winner69
07-10-2011, 07:49 AM
Cutting jobs and thinking about 4 day weeks as high wool prices make cheaper synthetic carpets more attractive .... demand down

At least doing something about protecting profit in the short term ..... but long term is this good

Lizard
07-10-2011, 08:03 AM
Cutting jobs and thinking about 4 day weeks as high wool prices make cheaper synthetic carpets more attractive .... demand down

At least doing something about protecting profit in the short term ..... but long term is this good

Where's that sourced from, Winner? Google isn't handing me anything...

Maybe also a bit of politicking between buying groups who have consolidated in recent years and are now tending to source their own ranges from off-shore to put the pricing negotiations back in their court?

minimoke
07-10-2011, 10:15 AM
Where's that sourced from, Winner? Google isn't handing me anything...

I'll help out: http://www.scoop.co.nz/stories/BU1110/S00178/cavalier-subsidiary-cut-42-jobs-on-rising-wool-prices.htm

S (http://www.scoop.co.nz/stories/BU1110/S00178/cavalier-subsidiary-cut-42-jobs-on-rising-wool-prices.htm)ad to see. On the back of Feltex and Godfrey Hurst closing down after the Christchurch earthquake - not a great industry to be in. Unless of course you are into nylon.

Lizard
07-10-2011, 07:49 PM
Thanks Mini.

CAV is one of those companies that I am always a fan of, yet never own. In most of the last decade, the numbers just didn't seem to stack up, since I am terribly "cheap". But I suspect those getting the dividends would have been happy enough. Still a darn sight better investment than many other NZ household names turned out to be.

winner69
12-10-2011, 06:42 PM
So sales down 20% so far this financial year and no guidance as to how this is going to affect profits

At least doing the decent thing and paying the divies out in cash instead of shares which may keep going down

Get through the tough times guys and maybe 2015 will be better for you

Sideshow Bob
12-10-2011, 07:32 PM
Probably a double whammy - economy down and wool prices substantially up. Perhaps lived easy on the back of low wool prices?

Lizard
13-10-2011, 07:30 AM
So sales down 20% so far this financial year and no guidance as to how this is going to affect profits

At least doing the decent thing and paying the divies out in cash instead of shares which may keep going down

Get through the tough times guys and maybe 2015 will be better for you

Probably pretty hard to comment on profits after one quarter - extrapolated for a year, might be too big a headache to contemplate with current gearing.

Cancelling the DRP and paying out in cash is a heart-warming acknowledgement of shareholder interests - so hope it favours them if they ever need to call on shareholder support.

Having just two markets and effectively just two products is always going to make a company more vulnerable. But CAV have historically achieved surprising consistency in performance. It will be interesting to see what they are able to do to turn this around.

Lizard
18-11-2011, 03:10 PM
AGM time and sales now only down 18% instead of 20%.... but no interim div this year.... big step for CAV which has been a perennial for those wanting income over the past decade....

.... might be going back to GFC lows and maybe lower. Going to be a horrible first half and then we will see how long it takes to hit the next cyclical upturn.

moimoi
18-11-2011, 06:10 PM
Probably pretty hard to comment on profits after one quarter - extrapolated for a year, might be too big a headache to contemplate with current gearing.

Cancelling the DRP and paying out in cash is a heart-warming acknowledgement of shareholder interests - so hope it favours them if they ever need to call on shareholder support.

Having just two markets and effectively just two products is always going to make a company more vulnerable. But CAV have historically achieved surprising consistency in performance. It will be interesting to see what they are able to do to turn this around.

Liz,

I take it your no fan of DRP's. Why? (if i may ask and only if you have the energy or inclination to answer)

cheers
Moi.

777
18-11-2011, 08:04 PM
Take the money and invest in the shares when the price is right. Simplistic but the cash flow gives you choices. IMHO.

Lizard
18-11-2011, 10:08 PM
Actually, I didn't realise I wasn't a fan of DRP's until you wrote that...

The comment about CAV that you quote above wasn't specifically meant that way - I was really just saying that they did the honourable thing when they cancelled the DRP just to avoid shareholders getting given shares at a price they believed would be too high - given the somewhat drastic change in outlook they were presenting.... especially fair-minded given that they must have been suddenly torn as to whether to conserve cash (as now evidenced by them advising there will be no interim dividend).

But, yes, thinking about it, I don't tend to sign up for DRP's - partly because I think that any dividend that isn't paid out of cash is a "false" dividend. I particularly think that underwritten DRP's (more common in Australia) verge on being intentionally deceptive. Of course, there is a nice place for DRP's as a compounded saving device - although I'd rather see the company carry out a share buyback to cover those holders who'd prefer a low cost way of increasing their holding over taking the income rather than diluting those (often older) investors who prefer income. Definitely any company offering more than a 5% discount to VWAP would be fairer to holders if they simply reduced the dividend and paid cash... maybe even 2% is enough discount in the current low-interest environment, while debt is relatively cheap.

If you don't have the cash and you can't borrow the cash, you probably shouldn't be giving it away to shareholders....

Lizard
18-11-2011, 10:10 PM
One other thing about DRP's is that they are a bit of a pain for companies that spend a month or two between ex-date and paid date.... that's a whole month or more of the year that you can't sell your shares without being left with the unmarketable DRP parcel. It's caught me out before...

scamper
17-01-2012, 03:24 PM
Some astonishing gains in the last few weeks.
Looks like the great slide has halted.
30-day MA well broken, but volumes very light.
Paws crossed, Cheers, scamper.

winner69
15-02-2012, 11:37 AM
Roger Kerr on the radio the other morning said that the NZ economy was doing pretty well, esp the 2nd half of last year and starting the new year, so he expected all companies reporting good profits in this earnings season round ..... and sort of made the comment that he wouldn't be able to understand why any company disappointed

Well come on Roger ... get out into the real world .... in some sectors it's real tough out there

Well well .... that short announcement from CAV really was a shocker eh ..... too hard to guess how much we'll make this year but it looks like it'll be (a lot?) less than $8m (did say $8.5m to $10.5m a few month ago) .... so Roger will think this outfit is bloody hopeless?

Lizard
15-02-2012, 11:40 AM
AGM time and sales now only down 18% instead of 20%.... but no interim div this year.... big step for CAV which has been a perennial for those wanting income over the past decade....

.... might be going back to GFC lows and maybe lower. Going to be a horrible first half and then we will see how long it takes to hit the next cyclical upturn.

Looks like that "horrible first half" is going to be NPAT around $3.5m and 59% down on last years $8.5m... could never understand why it bounced before, but still think it is probably going back to GFC lows or lower... no sign of that cyclical upturn for them yet.

Don't think there will be debt risk around those figures yet, but will probably want to see some improvement before they start rolling long-term financing in another 12-18 months.

Lizard
15-02-2012, 11:45 AM
Well come on Roger ... get out into the real world .... in some sectors it's real tough out there

Well well .... that short announcement from CAV really was a shocker eh ..... too hard to guess how much we'll make this year but it looks like it'll be (a lot?) less than $8m (did say $8.5m to $10.5m a few month ago) .... so Roger will think this outfit is bloody hopeless?

There is always some sector doing it tough... it's called "change". Think it is possible that Cavalier is affected by a degree of structural shift here - both in terms of NZ acceptance of non-wool carpets (just as butter eventually lost out to margarine a couple of decades ago), and in terms of industry structure (larger retail buying groups with their own import channels).

Maybe, just as they once said, "the stars aligned" in their favour a few years ago, they are now seeing their stars scattered...

scamper
15-02-2012, 04:30 PM
And now Scamper is out.
sincerely hope no-one got over excited and acted on my comment above.
Best wishes to the stayers.

winner69
17-02-2012, 04:25 PM
I see operating cash flow number had brackets around it

Not a good look when you get $111m in from selling stuff but you spend $111m on supplies and wages ..... and then need to pay the bank and the taxman

never mind .... its all seasonal eh .... we'll be right

Lizard
17-02-2012, 04:55 PM
I see operating cash flow number had brackets around it

Not a good look when you get $111m in from selling stuff but you spend $111m on supplies and wages ..... and then need to pay the bank and the taxman

never mind .... its all seasonal eh .... we'll be right

You going to put up the Altman-Z for us? :)

winner69
17-02-2012, 06:33 PM
You going to put up the Altman-Z for us? :)

Think it'll be OK .... they don't look too distressed .... making more than they selling .... it is all seasonal

winner69
17-02-2012, 06:56 PM
You going to put up the Altman-Z for us? :)

just in the safe zone ... almost 'on alert' or 'exercise caution' but in view of the seasonal problem most of that excessive stock will go to make it safely in the 'safe' zone

lot of old codswallop anyway this z-altman ..... but cav do what hby did and fix the balance sheet up properly

was interesting the long tirade about the balance sheet in that commentary .... somebody getting at them?

Lizard
17-02-2012, 09:05 PM
Yes, agree they will likely be okay. Look to have shed another 70 jobs this half, so that's got to be a saving... still, MD retiring is always a bit disconcerting in a company going through a tough patch. Another dividend cancelled is probably more of a disappointment to loyal holders than a surprise.

Getting inventory back down to $60m would still look comfortable and not suggest too many lost sales due to lack of stock. Was down to $44m in 2006/07 - not sure if they can get back there with Aussie business being bigger these days.

Might have near $25m of debt moving into "current" by next reporting period, going off liquidity profile in last years AR. Will be needing to show a good hand to the bank.

But, yes, should be okay.

janner
17-02-2012, 10:17 PM
Liz says..

But, yes, should be okay.

In what time frame ??.. A year ?.. Two. ??..

winner69
25-02-2012, 07:25 PM
r tNBR had a front page article 'Cavalier slump sparks call for fresh thinking'

Essentially says that having the best carpet people around as managers and on the Board might blinker thinking as the world changes. Had a lot of quotes from Arthur Lim (dear old fella) .... one being 'I do think, that, given the particular situation the world is in, that it is time for the company to take a fresh approach to repositioning the business'

CAV might have the best wool carpets in the world .... it is a premium product which has done the company well in the past .... but as Lim says 'a premium name will only take you so far .... somewhere along the way you have to start looking at the wider horizon'

Main problem methinks is how they cope with ever increasing consumer demand (globally) for synthetics

Silverlight
27-02-2012, 08:35 AM
r tNBR had a front page article 'Cavalier slump sparks call for fresh thinking'

Essentially says that having the best carpet people around as managers and on the Board might blinker thinking as the world changes. Had a lot of quotes from Arthur Lim (dear old fella) .... one being 'I do think, that, given the particular situation the world is in, that it is time for the company to take a fresh approach to repositioning the business'

CAV might have the best wool carpets in the world .... it is a premium product which has done the company well in the past .... but as Lim says 'a premium name will only take you so far .... somewhere along the way you have to start looking at the wider horizon'

Main problem methinks is how they cope with ever increasing consumer demand (globally) for synthetics


Where was the call for a change of leadership or direction or "fresh thinking" 6 months ago when the price was almost $4.

They pulled the DRP, then the dividend to preserve cash, which is a good view by management.

Just like builders, methven or stubes, they are at the historic low in the building sector, and with significant spending expected in future from Christchurch alone, they are still one of the biggest brands for carpet in NZ, they may be out of favour but so is the construction industry.

When the front page article yells SELL, and the price has already gone from $4 to $2, the contrarian in me says BUY :)

Ekrub
27-02-2012, 10:38 AM
This article, earlier February, came with a BUY recommendation. Time to top up?

http://www.sharechat.co.nz/article/658ddbc5/cavalier-corporation.html

winner69
28-02-2012, 08:07 PM
Getting cheaper by the day ..... below 200 at the mo

his building downturn will end soon and CAV will double in price ..... done that and more already in the last few years

Lizard
28-02-2012, 09:08 PM
This building downturn will end soon and CAV will double in price .....

Totally agree... but from what price? (After a 1:5 rights issue at $1.20 in 5 months time perhaps? :p)

Jim
20-04-2012, 07:29 PM
I think she is a Feltex follower ???

Hoop
21-04-2012, 10:45 AM
I think she is a Feltex follower ???
Jim I'm with Belg on this one.
Liz would be one of the top FA people on Sharetrader...Her posts should be highly respected. We on Sharetrader are very lucky to have these people willing to contribute to the site.

I revisited the Feltex thread and Liz entered the thread on the 14 April 2005 (page 16) (http://www.sharetrader.co.nz/showthread.php?1070-Feltex-%28FTX%29-All-over-for-shareholders/page15&highlight=feltex) at a time when Feltex was going downhill...nearly all the posts were pessimistic....interestingly it was quoted that Forbarr had an $1.53 to 1.34 revaluation and had a change from accumulation to hold at a time when Feltex chart resembled a downhill ski run with the shareprice at 77c.

Jim this is Liz's first post on that Feltex thread... plenty of valuable wisdom ..eh??


In my experience, brokers hardly ever turn their forecasts around overnight. Usually their valuations drift slowly down or up (more often following rather than leading market sentiment). DCF valuations are amazingly susceptible to sentiment.

As an associate of the flooring industry, I would say that FTX is a stock I never considered investing in. As an investor, one look at FTX's appalling history would convince me that the only safe time to invest is at the start of a cyclical construction upturn, not the tail end.

winner69
21-04-2012, 05:26 PM
Even at $2 you are paying for next years promises at next years prices

CJ
27-04-2012, 12:37 PM
Check out this for wisdom - from David Mcewen's investment sheet the Mcewen investment report (MIR676)

- - -
"Quite possibly, all the bad news is priced into the shares and there may be somegood news to come from a recovering NZ property sector, an increased prospectthat rebuilding will start in Christchurch later in the year, the need to refurbish return to paying decent dividends, the shares are heavily discounted and worth aSPECULATIVE BUY "
- - -

The very next day, the shares plunged 11% to around $1.89.Not sure why he would make such an announcement just prior to an announcement. Must have been expecting a bounce but went against him.


Don Huse, a director for the last two years has resigned effective immediately.

https://www.nzx.com/companies/CAV/announcements/222269

Mr Donald William Huse has resigned as a director of Cavalier Corporation Limited, effective today.
Mr Huse has been a director of the Company since February 2010.
The Board takes this opportunity to thank Mr Huse for his contribution.
The Board further advises that it will be looking at possible candidates to replace Mr Huse ahead of the Annual Meeting of shareholders in November.


Odd. I don't like it when directors resigned for no disclosed reason. Only been there two years as well. Huse is quite well regarded, ex AIAL, currently Transpower and AMP Office director. I wonder what the reason is?NOt a good look. Must have disagreed with the strategy going forward. Hopefully not anything more serious.

montana
21-05-2012, 03:04 PM
Why wont Cavalier shares stop sliding, and when are they likely to stop!? They've dropped another 4.6% today, to 1.46c, with a total drop of 31% over the past 6 weeks. If this NZ Wool services sale goes through next month, is the share price likely to increase by much, or will they not recover until they post a decent net profit?

troyvdh
21-05-2012, 06:51 PM
Dear montana....after 30 years ...you learn....shares generally tend go lower than they should (fear)....and generally higher than they should....(greed)....we ALL have suffered/fallen to this phenomena....that is the nature of the MKT...look at my postings re CEN.....i.e. as someone seeking rational explaination of shareprice performance....I imagine that my postings re same have been viewed a pathetic by many........

....but as I say to those managing rental properties....if it was easy ..everyone would be doing it.......cheers....

..stay and learn....

Fred114
22-05-2012, 10:42 AM
Just ordered some Cav Brem capret for my house. Really nice product. Looks good.

zigzag
22-05-2012, 11:58 AM
Just ordered some Cav Brem capret for my house. Really nice product. Looks good.

Thanks for that Fred. I have just topped up my holding (as in yesterday) A few more people likeyou (as in people with good taste) and I might just get a dividend next year!

montana
22-05-2012, 12:08 PM
Thanks for that Fred. I have just topped up my holding (as in yesterday) A few more people likeyou (as in people with good taste) and I might just get a dividend next year!

Mind me asking your average buy in price zigzag? I bought at 2.10, anticipating that to be the trough. It's been a slippery slide ever since! What i'm really looking for is somebody to tell me that it's going to be alright. Lol.

winner69
22-05-2012, 12:34 PM
Mind me asking your average buy in price zigzag? I bought at 2.10, anticipating that to be the trough. It's been a slippery slide ever since! What i'm really looking for is somebody to tell me that it's going to be alright. Lol.

Would say CJ's average buy in price in excess of $50 ... a metre that is .... but then again he could have obtained at a real value price

h2so4
22-05-2012, 12:45 PM
Would say CJ's average buy in price in excess of $50 ... a metre that is .... but then again he could have obtained at a real value price

Slightly less than 35 shares per metre..... hmmm a new ratio for the NZX?:) Lizard's gonna like that one.

winner69
22-05-2012, 06:27 PM
Jeez Montana - CAV shareprice still going down .... if it is any consolation the shareprice has been lower than this. One week in 2008 it reached 133 - and lets hope that world markets don't collapse again or CAV might go under a buck .... but it is last century that CAV was doen at these prices

Wonder what a metre of decent carpet cost in those days

montana
24-05-2012, 10:56 AM
Finally some upwards movement. Up 6.9% today at the time of writing this post.

Forgive my ignorance (i'm new to the stock market) but can anyone shed some light on the overall weighting demand for shares has on the increases/decreases in value.

I'm stuggling to figure out why overnight demand has increased threefold, and the share price has had a significant increase with no company or industry announcements of any kind?

Any (intelligent) comments are much appreciated :)

Mike

Te Whetu
24-05-2012, 10:11 PM
Could be any number of reasons. However the most likely is that its an illiquid stock with a massive spread.

This means that when someone want to get in/out they may have a significant impact on the price.

The spread is the difference between the bid and ask, it's what you effectively have to pay to get in and out of the stock (either that or put your order to the market and hope someone else crosses). I note that the spread is currently 9 cents (6.1%).

Small stocks like this have much higher risk (measured by standard deviation). Not all movements will be able to be attributed to an announcement.



Disc: Hold no CAV, but would consider getting in below $1.30'ish

clips
14-06-2012, 08:31 PM
are they buying 64% of nzwsi ??

montana
11-07-2012, 10:41 AM
are they buying 64% of nzwsi ??

They were supposed to have put their bid in last month but Godfrey Hirst appealed the Comm comm's decision to allow them to buy it.

"Cavalier slipped 0.3 per cent to $3.77 after Wool Equities emerged as a rival
bidder for NZ Wool Services International, saying it has funding in place to
make an offer for the wool scouring company.

Cavalier Wool Holdings, made up of Cavalier, ACC’s investment arm and private
equity investor Direct Capital Investments was ordered to make a temporary halt
to its offer for WSI on Friday pending an appeal by carpet maker Godfrey Hirst,
which opposes that deal.

The Commerce Commission approved Cavalier’s $40 million takeover even though
it would create a monopoly in New Zealand wool scouring because it agreed the
competitive threat was from Chinese rivals."

montana
23-07-2012, 12:27 PM
:t_down:
http://business.scoop.co.nz/2011/07/08/godfrey-hirst-applauds-high-court-stay/#more-42920

clips
23-07-2012, 07:01 PM
then this from November 2011.....


Court dismisses bid to stop Cavalier Wool’s scouring monopoly; Godfrey Hirst threatens to quit NZ
Posted in Rural News Updated November 24, 2011 - 09:41am, BusinessDesk
Godfrey Hirst NZ, New Zealand’s biggest carpet maker, says it may abandon local manufacturing after the High Court rejected its appeal against a decision to allow a group led by rival Cavalier to create a monopoly in wool scouring.

Australian-owned Godfrey Hirst said it was disappointed with the ruling and will weigh up its options over the next few days.

“It creates a monopoly in a key sector which potentially jeopardises the longevity of the New Zealand wool industry,” general manager Tania Pauling said in a statement. “We intend reviewing the judgement over the coming days and will be considering our options going forward – including the possibility of relocating some of our manufacturing assets offshore.”

The High Court in Wellington has dismissed an appeal against the regulatory approval for an acquisition that would give Cavalier Wool Holdings the ability to build a wool scouring monopoly in New Zealand.

mknz
11-09-2012, 10:38 AM
Cavalier seems to have formed a nice base from late may through August between 150 and 155. I expect that from here @175, with most of the bad news behind us, we should have a reversion to the long term mean of 240 over the next 8 months for an ROI of 37% without depending on any particularly good news at all. There will be some bumps along the way but the longterm looks really, really good on this share.

mknz
12-09-2012, 11:55 AM
Thanks Belgarion, this 'prudence' comes from plenty of mistakes catching falling knives.

montana
18-09-2012, 12:52 PM
Up 8.5% in less than 2 weeks, with no real announcement. Demand currently four times greater than sellers. Have I missed something?

macduffy
18-09-2012, 01:48 PM
Up 8.5% in less than 2 weeks, with no real announcement. Demand currently four times greater than sellers. Have I missed something?

May be that the Christchurch re-build is finally getting some traction. CAV is a cyclical stock and should be expected to improve significantly as the economy improves.eg Craigs have forecast a "Forward Gross Yield" - 24 months out - of 11.9%.

Just as likely though it's a case of a rising tide lifting all boats - the NZ market's strong and most "boats" have risen.

mknz
18-09-2012, 06:28 PM
Today was quite a happy day for me :-) in the news yesterday cavalier was mentioned as the biggest gainer on the nzx, that makes me think it's the momo's pushing it up today. We're still on track to get to the long term mean price of 2.50 per share, but over the next few days i expect either a correction or flat trading for a week.

montana
21-09-2012, 08:27 AM
http://www.stuff.co.nz/business/farming/7704190/Cavalier-committed-to-scouring-merger

New Zealand's largest wool scourer, Cavalier Wool Holdings, has not given up on its ambitions to merge its scouring operations with those of New Zealand Wool Services International, despite news yesterday of a $31 million takeover bid for WSI from a Melbourne-based wool merchant.
The bidder, WSI Holdings, an associated company of family-run Lempriere Holdings, has already secured 75 per cent of WSI shares through lock-up agreements with the receivers of two Allan Hubbard-associated companies, which hold 64 per cent of WSI, and senior WSI managers, who hold another 11 per cent.

WSI Holdings will make a takeover offer for all shares in WSI at 45 cents per share, costing it about $31m in total.

Shares in WSI closed at about 37 cents a share yesterday, valuing the company at about $25.5m.

Receivers from PricewaterhouseCoopers have been trying to offload the 64 per cent shareholding once controlled by Hubbard-associated companies Plum Duff and Woolpak Holdings since the two companies were placed in receivership nearly two years ago.

Cavalier last year bid $40m to acquire the scouring assets of WSI. If successful, Cavalier would have gained a monopoly over New Zealand's wool scouring industry, a monopoly authorised by the Commerce Commission.

Cavalier Wool Holdings said yesterday that because it had been given commission approval to acquire the assets of WSI, but not the shares of the company, it had had to negotiate its various offers for the company through the board rather than directly with the receivers.

The board of WSI had been "consistent in its desire to retain its independence, so concluding a purchase of the company's assets was always going to be a difficult task”, Cavalier chief executive officer Nigel Hales said.

“The longer the process went on, the more likely it was that an alternative offer would emerge, and we are pleased that this particular process now appears to be coming to an end.

“The opportunity to combine the two companies' scouring operations remains. We continue to believe that consolidation is the right outcome for the New Zealand wool industry in the face of declining wool volumes and competition from China for unprocessed wool."

WSI Holdings' bid is subject to approval from the Overseas Investment Office.

Asked whether WSI Holdings had indicated what its intentions for WSI were, WSI chairman Derek Kirke said yesterday that it was "very early days" but there had been no indication so far that WSI Holdings had any plans other than to continue to operate it in its current form.

WSI managing director Michael Dwyer and four other senior employees, together with one retired employee, have signed lock-up agreements to sell a combined 11 per cent shareholding to WSI Holdings for 45 cents per share.

Once WSI's board of directors received the takeover offer it would seek an independent appraisal on the offer, which it would send to shareholders, along with the board's recommendations.

WSI's board of directors said that although the company had continued to trade profitably, having a majority of its shares tied up in two companies in receivership had meant a lengthy period of uncertainty for its employees and customers.

WSI reported a net profit for the year to June 30, 2012, of $2.24m, down from $6.64m in the prior fiscal year.

Operating revenue for the year was $201.97m, up from $200.11m in the fiscal year to June 30, 2011.

clips
21-09-2012, 12:16 PM
.... tell 'em their dreamin'

mknz
25-09-2012, 02:26 PM
It's been fun, thanks for the great ride, CAV still has a long way to go up but I doubt it will climb anywhere near as fast as the past two weeks.

winner69
25-09-2012, 02:58 PM
It's been fun, thanks for the great ride, CAV still has a long way to go up but I doubt it will climb anywhere near as fast as the past two weeks.

Hope you haven't sold then mate

15000 new houses as a result of the Chch quakes ....CAV must get a decent share of that one would think

mknz
25-09-2012, 03:13 PM
Hope you haven't sold then mate

15000 new houses as a result of the Chch quakes ....CAV must get a decent share of that one would think

I don't deny there is a long way to go, but I bought in at 175 and sold at 212 and 205 for an 18.7% gain in 1 month. I figure CAV will rise another 10% this month but I want more than that. Call me insane. You'll certainly do well, CAV is a very cyclical company :-)

montana
25-09-2012, 03:54 PM
I don't deny there is a long way to go, but I bought in at 175 and sold at 212 and 205 for an 18.7% gain in 1 month. I figure CAV will rise another 10% this month but I want more than that. Call me insane. You'll certainly do well, CAV is a very cyclical company :-)

you want more than that, yet you settled for less :scratcheshead:

macduffy
25-09-2012, 04:14 PM
I don't deny there is a long way to go, but I bought in at 175 and sold at 212 and 205 for an 18.7% gain in 1 month. I figure CAV will rise another 10% this month but I want more than that. Call me insane. You'll certainly do well, CAV is a very cyclical company :-)

Well done! But I'd love to know what stocks you prefer - for a better than 10% per month gain, that is!

;)

777
25-09-2012, 05:29 PM
I don't deny there is a long way to go, but I bought in at 175 and sold at 212 and 205 for an 18.7% gain in 1 month. I figure CAV will rise another 10% this month but I want more than that. Call me insane. You'll certainly do well, CAV is a very cyclical company :-)

Have you allowed for tax on your trading?

mknz
25-09-2012, 06:14 PM
@777 No, this is my pre-tax return. I would have had 21% gain but it started to drop halfway through my exit.
@Montana Keep in mind the time-frame. Instead of thinking of total return I think of it as return / unit of time. I estimate that cavalier will get up to 230 over the next 30 days, and that is a 10.8% gain from $2.05 where it is now. 10.8%/30days. If you have a trade that you are confident will give you more than 10.8% over the next month you should switch to that.
@macduffy Unfortunately I can't disclose that information yet... but if you search for me in a week I'll likely be posting from my next trade's forum:-)

Minerbarejet
25-09-2012, 06:54 PM
For a complete and utter fluke how does 10% in three days sound. In at 1.83 last week and out at 2.04. Try that with your favourite bank. Now for the crunchy bit - original investment returned and I now have a bunch of Cavalier shares for nothing just in case they carry on. Maybe I'll make up for those woebegone RNS after all. Next - NPX. Hmmmmmm

macduffy
25-09-2012, 08:01 PM
@777 No, this is my pre-tax return. I would have had 21% gain but it started to drop halfway through my exit.
@Montana Keep in mind the time-frame. Instead of thinking of total return I think of it as return / unit of time. I estimate that cavalier will get up to 230 over the next 30 days, and that is a 10.8% gain from $2.05 where it is now. 10.8%/30days. If you have a trade that you are confident will give you more than 10.8% over the next month you should switch to that.
@macduffy Unfortunately I can't disclose that information yet... but if you search for me in a week I'll likely be posting from my next trade's forum:-)

Fair enough.

Wouldn't do to have the rest of us climbing all over your next trade!

:cool:

montana
28-09-2012, 09:00 AM
Well the WSI acquisition isn't looking too promising anymore :(

http://www.nzfarmersweekly.co.nz/article/9552.html

mknz
05-10-2012, 09:44 AM
Here are a few worrisome things about the market that Cavalier operates in:

Cavalier gets 54% of it's business from Australia and Oz is heading into a recession. Part of the reason CAV did so badly this year was the recession in Europe, but now that "recession" is turning into a full scale implosion with France, the second biggest economy in the Euro showing a PMI of 45. The Euro contamination is still spreading and getting worse and not better.

Australia's economy is dependent on China's economy and China is in a full scale crash right now. China's demand for Australia's things is going to continue to drop off the bottom of the longterm charts. With more than half of Cavaliers business coming from Australia I have serious doubts that Cavalier will turn much of a profit. Maybe 1-2million, but certainly not 8 -10 million.

The rest of Cavalier's business comes from New Zealand, and NZ's money comes from protein exports to Australia and China. As China's crash begins to negatively effect the new middle classes incomes it is possible that they could return to buying rice instead of protein. That would be a severe blow to New Zealand's economy.

Finally, the Rhino on the carpet ads have been extremely powerful in shaping public opinion and it is quite likely that Cavalier will not have nearly as much marketshare in the new Christchurch as it did before the earthquake, and Cavalier's new commercials are not effective in combating this durability argument.

In general, all this information makes it seem less likely that Cavalier's restructuring is going to have as positive an effect as management hopes, and for me personally this is preventing me from putting my money back into Cavalier.

Snoopy
06-10-2012, 11:17 AM
Here are a few worrisome things about the market that Cavalier operates in:

Cavalier gets 54% of it's business from Australia and Oz is heading into a recession.


Hasn't the Oz building market been in recession for some time already?



Part of the reason CAV did so badly this year was the recession in Europe, but now that "recession" is turning into a full scale implosion with France, the second biggest economy in the Euro showing a PMI of 45. The Euro contamination is still spreading and getting worse and not better.


What is the percentage of Cavilier's sales go into Europe though? Is it even 1% of sales?



Australia's economy is dependent on China's economy and China is in a full scale crash right now. China's demand for Australia's things is going to continue to drop off the bottom of the longterm charts. With more than half of Cavaliers business coming from Australia I have serious doubts that Cavalier will turn much of a profit. Maybe 1-2million, but certainly not 8 -10 million.


mknz, those capital intensive carpet factories need a certain volume to cover their costs. Could it be that the rebuild of Christchurch might provide this, irrespective of what happens in Australia? The first consent for a new office building in the Christchurch CBD was only granted last week.

Also I would be interested to know what percentage of Cavalier's sales go into refurbishing buildings (more likely in a recession to attract tenants to fill existing office space) as opposed to new builds.



The rest of Cavalier's business comes from New Zealand, and NZ's money comes from protein exports to Australia and China. As China's crash begins to negatively effect the new middle classes incomes it is possible that they could return to buying rice instead of protein. That would be a severe blow to New Zealand's economy.


Let those poor Chinese eat (rice) cake!



Finally, the Rhino on the carpet ads have been extremely powerful in shaping public opinion and it is quite likely that Cavalier will not have nearly as much marketshare in the new Christchurch as it did before the earthquake, and Cavalier's new commercials are not effective in combating this durability argument.


I never thought it was likely that the removal of sow crates would mean a large uptake in Cavalier carpeted 'porker hotels' to appease the animal rights lobby anyway. No matter how well the Cavalier Rhino proved the concept!



In general, all this information makes it seem less likely that Cavalier's restructuring is going to have as positive an effect as management hopes, and for me personally this is preventing me from putting my money back into Cavalier.


I am not saying you are wrong. Just putting a different perspective on events.

SNOOPY

Sideshow Bob
06-10-2012, 12:16 PM
Don't know anything about the company, but haven't wool prices come back down again??

Balance
06-10-2012, 12:56 PM
Here are a few worrisome things about the market that Cavalier operates in:

Cavalier gets 54% of it's business from Australia and Oz is heading into a recession. Part of the reason CAV did so badly this year was the recession in Europe, but now that "recession" is turning into a full scale implosion with France, the second biggest economy in the Euro showing a PMI of 45. The Euro contamination is still spreading and getting worse and not better.

Australia's economy is dependent on China's economy and China is in a full scale crash right now. China's demand for Australia's things is going to continue to drop off the bottom of the longterm charts. With more than half of Cavaliers business coming from Australia I have serious doubts that Cavalier will turn much of a profit. Maybe 1-2million, but certainly not 8 -10 million.

The rest of Cavalier's business comes from New Zealand, and NZ's money comes from protein exports to Australia and China. As China's crash begins to negatively effect the new middle classes incomes it is possible that they could return to buying rice instead of protein. That would be a severe blow to New Zealand's economy.

Finally, the Rhino on the carpet ads have been extremely powerful in shaping public opinion and it is quite likely that Cavalier will not have nearly as much marketshare in the new Christchurch as it did before the earthquake, and Cavalier's new commercials are not effective in combating this durability argument.

In general, all this information makes it seem less likely that Cavalier's restructuring is going to have as positive an effect as management hopes, and for me personally this is preventing me from putting my money back into Cavalier.

Big yawn! Talk about losing perspective!

The Western economists, commentators and media have been predicting the crash of China now for over 15 years.

Why have they been wrong and will continue to be wrong? Because the Chinese do not borrow like Westerners and they certainly know how to work hard and save for a rainy day.

That's where the Greeks, Spanish, Irish, Icelanders, French, Italians, North Americans, Australians and above all, New Zealanders lost their way a long time ago.

BTW, do you know that the price of coal today is still 50% higher than where it was in 2008 and 300% more than 10 years ago? Shhhh ... we do not want to stop the scare-mongering.

Lizard
16-11-2012, 01:18 PM
From the agm speech:

Given the slow start for quarter one and little or no improvement in Australian market activity, our previous earnings indication of $10 to $12 million is looking to be a bit of a stretch. Our earnings are difficult to predict in this uncertain environment because they are so sensitive to carpet sales volumes. The best guidance we can offer at this stage is for normalised earnings between $6 and $10 million tax-paid.

So, once again, the mirage of improvement recedes into the distance and the share price heads back towards the lows (currently $1.55). I do not see this as surprising - I have been more surprised at the recurring buoyancy. However, I think we are close to seeing the lows for this cycle within the next 6-9 months, so hoping it will go low enough this time to finally offer an entry I'm comfortable with.

Funny, a few years ago, there was an AGM where the Chair or MD commented that the "stars aligned" in the previous year. This AGM, there is reference to "annus horribilis". Pick your entry.

Jay
16-11-2012, 03:08 PM
Unlucky I picked this in the comp, thinking they would bounce back this year, in real life bought HLG and DIL - so cannot complain there!

percy
15-02-2013, 05:10 PM
Today's preliminary announcement makes for sober reading.

Lizard
15-02-2013, 05:36 PM
I actually think we might be close to a good time to buy at last... although I am still slightly reserved on that and would definitely watch the chart. While I think the chance of capital raising has not completely disappeared, if they have made it this far, I think they will see it through without.

Good to see reduction in inventories, but I'm not certain that they have room to go much below $50m before cuts in stock start to impact sales - especially as they roll out new synthetic product lines. Also not sure that they will be able to prune much more out of receivables. It is always possible the flow-on from Mainzeal could create a few slow payments on the commercial side - no real insights on that, but it is always hard to know where the fall-out stops. However, from my reading of debt-facilities and liquidity risk, I am guessing debt-repayment requirements second half will not be as high. So provided they DO see some pick up in sales second half (and it seems possible), then I think capital-raising will be avoided.

Overall, I would put it on the watch-list for a possible buy. Ideally, I would like to see it re-visit old lows and bounce again to make it worth the risk.

777
15-02-2013, 05:38 PM
Very slow progress in their climb back to profitability. Price picked up in anticipation of better news ( and a small div)no doubt but will be interesting how far down it will go.

Brain
26-05-2013, 09:00 PM
Surely Cavalier should be benefitting from the chch rebuild. Is it time to be positive about this share?

Flugenbear
27-05-2013, 07:42 PM
Surely Cavalier should be benefitting from the chch rebuild. Is it time to be positive about this share?

Certainly demand for their products should be on the increase now and the next 2-3 years. If this doesn't lead to increased profitability I'll be scratching my head as to why...I certainly don't see too much downside IMHO.

_Michael
27-05-2013, 09:12 PM
Cavalier is good exposure to NZ building uptick

They got hurt with high wool prices and dollar last two years but these problems subsiding

New problems for them are soft Aus building starts and floor retailer consolidation / direct importing

Plus nz has been big buyer of wool carpet but slowly accepting synthetic

Disclosure: despite all thAt I hold as value stock and expectation of nz building boom

janner
27-05-2013, 09:17 PM
Cavalier is good exposure to NZ building uptick

They got hurt with high wool prices and dollar last two years but these problems subsiding

New problems for them are soft Aus building starts and floor retailer consolidation / direct importing

Plus nz has been big buyer of wool carpet but slowly accepting synthetic

Disclosure: despite all thAt I hold as value stock and expectation of nz building boom

Michael... Value stocks do not rely on expectations..

Brain
19-06-2013, 08:34 AM
Probably about 9 to 10 cents per share after tax normalised earnings. Positive remarks for the future. I guess it depends on the Australian economy. Any thoughts Ladies and Gentlemen?

Lizard
19-06-2013, 08:53 AM
I am cautiously optimistic in regard to their business prospects.

However, I wish the market would price a little more risk in to make the investment odds stack up...

Positive cashflow in the first 6 months came from significant reductions in inventories and receivables and was used to reduce debt to a more comfortable level. It seems to me that cashflow will likely have remained very tight during the second half and may continue to provide constraints around growing the business. So although they have done well to get this far without a capital raising, it would still seem possible. (Wonder if they could tap the NZDX for cash?).

I keep watching CAV, but hard to get excited unless offered an entry in the $1.10 - $1.30 region.

muss1
30-07-2013, 05:42 PM
SP has been sitting around the 1.60-1.70 mark for a while now, has the market priced this as low as it's going to go? Pick up in building consents in the news today led by Auckland and Chch. With full year results released within the month, and earnings already expected to be at the lower end of guidance, is now the time to buy? Cav have cut the fat off their operation in the last few years so who margins are expected to improve. Slow Australian recovery is a risk, but is this already priced in?

baller18
30-07-2013, 06:02 PM
SP has been sitting around the 1.60-1.70 mark for a while now, has the market priced this as low as it's going to go? Pick up in building consents in the news today led by Auckland and Chch. With full year results released within the month, and earnings already expected to be at the lower end of guidance, is now the time to buy? Cav have cut the fat off their operation in the last few years so who margins are expected to improve. Slow Australian recovery is a risk, but is this already priced in?
Slow Australian recovery?
They haven't been really in recovery, their economy has taken a hit due to the mining sector, but its not like they are in recession. However, a large chunk of Australian's economy does depend on the mining sector so who knows where it would be heading in the next 12 months. Could recover in no time, or could go down even more...
So, does cavalier depend on the Australian economy?

Disc : Has been on my watchlist for awhile now...

winner69
30-07-2013, 06:35 PM
I fear CAV will be on your wish list for some time baller ...so long that you may forget all about it

Great brand, great product but the money is in their premium carpet -the expensive end of the market

This end of the market is not growing, probably shrinking. Just too expensive for most punters who in the main go for cheaper stuff that does the job just as well. Synthetics taking larger chunk of market over the natural products like wool.

Will maintain their volumes in residential but no huge growth for them in this segment methinks, even globally. Still some demand in commercial space but the real lucrative contracts are few and far between

Somehow they need to reinvent themselves but they are finding that hard to do. The world has changes but CAV hasn't.

This thread has some interesting posts in the earlier days that support this view

Lizard says pretty fully priced with not enough room for the inherent risks involved. I agree with her. The market still having an optimistic view of future prospects

Seeing you into long term investments maybe CAV not for you

baller18
31-07-2013, 08:56 AM
Yes definitely doesn't look like a long term holder right now, if it drops to $1.20 - $1.40 maybe??

muss1
01-08-2013, 09:33 PM
I don't disagree with your points winner, but this is obviously a cyclical company and we are at the beginning of another cycle. They have trimmed the fat off their operation to get through the recent tough times. The pick up in building consents will impact the premium carpet market also. Even if we aren't expecting them to be as profitable as they once were there is still a lot of room for the SP to climb with modest growth.

As for the Australian market, this accounts for half of the companies revenue which is obviously a downside. Just need those Aussies to catch up. As for company performance - I see the expected pick up in the NZ market to kick the recovery of CAV off enough to warrant buying at current levels

blackcap
01-08-2013, 10:41 PM
It just struck me too.. if the Australian market accounts for half of the revenue... will this be impacted adversely by the recent slump in the value of the Australian dollar? Or or most of the costs associated with these revenues also denominated in AUD and therefore only the bottom line that is affected?

bulltrap
01-08-2013, 11:46 PM
It just struck me too.. if the Australian market accounts for half of the revenue... will this be impacted adversely by the recent slump in the value of the Australian dollar?

They did well in 2011 when AUD was peaking, so the current AUD plummet is surely not good for CAV.

Another headwind is that wool prices seem to be creeping up again:

http://www.interest.co.nz/Charts/Rural/wool-prices

Third and fourth warning signs are that the share price is trending downwards and lacks bid support.

I'm watching from the sidelines for now...

winner69
06-08-2013, 03:01 PM
They did well in 2011 when AUD was peaking, so the current AUD plummet is surely not good for CAV.

Another headwind is that wool prices seem to be creeping up again:

http://www.interest.co.nz/Charts/Rural/wool-prices

Third and fourth warning signs are that the share price is trending downwards and lacks bid support.

I'm watching from the sidelines for now...

So CAV going below 150 is your fault

Still can see 120 odd here

baller18
06-08-2013, 03:24 PM
So CAV going below 150 is your fault

Still can see 120 odd here
Wow your preiction might come sooner than we all expected, you could see 1.25 soon. Only one buyer lined up at $1.4 and only with a 2000 lot order

baller18
06-08-2013, 03:44 PM
yup being real careful with falling knives, especially with first hand experience with DIL...

winner69
06-08-2013, 06:43 PM
The other thing I forgot to mention is that Godfrey Hirst seem to run rings around them and they are a fierce competitor

Especially so in the commercial sector

Lizard
06-08-2013, 06:51 PM
The other thing I forgot to mention is that Godfrey Hirst seem to run rings around them and they are a fierce competitor

Especially so in the commercial sector

I'm not sure if you're being serious or stirring the pot here? :ohmy:

Lizard
06-08-2013, 06:56 PM
Okay, time to watch a little more closely... share price collapsing - pick your cause:

ACC finished their latest buying spree?
Hills Floorings announces liquidation?
Impending results season?


I think there is a possibility they may have taken the retrenchment drive a little far - perhaps raising equity (or maybe a debt issue?) would have been a complementary option to staff and inventory reductions if things are that tough?

There comes a point where spending-money-to-make-money has to pre-empt cutting costs and freeing up cash.

baller18
06-08-2013, 07:27 PM
CAV has a price/book value of $1.13 atm... Is it undervalued or is something wrong with the company fundamentally?
Stockholders equity value at $1.239
So if it goes to $1 will it be a good buy?
Is CAV going through cyclical losses?
Will it turn itself around?

winner69
06-08-2013, 07:31 PM
Okay, time to watch a little more closely... share price collapsing - pick your cause:

ACC finished their latest buying spree?
Hills Floorings announces liquidation?
Impending results season?


I think there is a possibility they may have taken the retrenchment drive a little far - perhaps raising equity (or maybe a debt issue?) would have been a complementary option to staff and inventory reductions if things are that tough?

There comes a point where spending-money-to-make-money has to pre-empt cutting costs and freeing up cash.

Colin McKenzie said about the restructuring of manufacturing 'The cost benefits that will flow through from the beginning of 2014 are EXPECTED to be significant and the LIKELY payback for the consolidation is expected to be within two years' (as quoted in NBR)

History would say that these benefits are not certain to be captured and if they are history also says CAV will then come across other hurdles that need to be overcome and then another 2 years for a payback.

They are in a sunset industry but I will give them some due that they have sort of seen that and are now pushing synthetics hard .... even though Hirst tore them to shreds in the courts about their misleading advertising of the 25 yeat guarantee. (see Hirst are playing hard and I feel they have more energy and desire to win)

Ouch 25 year guarantee on synthetic carpets .... seems to limit future sales somewhat eh

Lizard - being serious here.

baller18
06-08-2013, 09:59 PM
If you want to learn how to catch falling knives, I suggest you check out a movie called " The House of Flying Daggers " The lady in that movie can catch falling knives with her eyes closed, and still look well above average.
haha yes have seen it!! Only if we could do that with shares...
We'll all be on a yacht together!!

bulltrap
07-08-2013, 11:32 AM
So CAV going below 150 is your fault

Still can see 120 odd here

:cool:

Third post and already moving the market! Not bad

Snoopy
09-08-2013, 01:40 PM
I am cautiously optimistic in regard to their business prospects.

However, I wish the market would price a little more risk in to make the investment odds stack up...

Positive cashflow in the first 6 months came from significant reductions in inventories and receivables and was used to reduce debt to a more comfortable level. It seems to me that cashflow will likely have remained very tight during the second half and may continue to provide constraints around growing the business. So although they have done well to get this far without a capital raising, it would still seem possible. (Wonder if they could tap the NZDX for cash?).

I keep watching CAV, but hard to get excited unless offered an entry in the $1.10 - $1.30 region.

I agree that a capital raising is a possibility. Total debt is some $70m based around a net profit of $4.3m (FY2012) makes for a pretty ugly minimum debt repayment time.

MDRT = $70m/$4.3m= 16.2 years

The problem is this business is structured for profits around $14m to $17m per annum, which is what they did earn from FY2008 to FY2011 inclusive. Until profits look like being restored to a consistent level, the capital raising risk looks too great. Maybe if the cash issue comes that will be the time to jump in.

Incidentally, I don't agree that Cavalier is on the way out. Perhaps woollen carpets will not regain the popularity they had in the 1970s, before synthetics were around. But when I replace the carpet in my house I won't be considering synthetic. The fire retardant properties (or lack of) are enough to rule synthetic out for me, whatever the price savings.

SNOOPY

macduffy
09-08-2013, 02:07 PM
Incidentally, I don't agree that Cavalier is on the way out. Perhaps woollen carpets will not regain the popularity they had in the 1970s, before synthetics were around. But when I replace the carpet in my house I won't be considering synthetic. The fire retardant properties (or lack of) are enough to rule synthetic out for me, whatever the price savings

Cavalier is, rightfully, well known for its quality wool carpets. Since the acquisition of the Ontera carpet tile business - which I assume are largely synthetics? -the business has diversified somewhat from its wool carpets/ wool buying/scouring base. I don't see any numbers on the respective wool/synthetic volumes or revenues but I wonder if anyone has any insights here?

Or am I completely wrong in that the carpet tiles are also mainly wool?

Edit: I've just noticed in the 31 Dec 2012 half year report that CAV "..expect to launch Cavalier's new high-end synthetic products before year end...

percy
09-08-2013, 05:38 PM
Incidentally, I don't agree that Cavalier is on the way out. Perhaps woollen carpets will not regain the popularity they had in the 1970s, before synthetics were around. But when I replace the carpet in my house I won't be considering synthetic. The fire retardant properties (or lack of) are enough to rule synthetic out for me, whatever the price savings.

SNOOPY

May I suggest you spend $10 or $12 on a smoke detector.They work with both synthetic and wool smoke.
After a good house fire neither carpet is any good.
lol.

Snoopy
10-08-2013, 11:45 AM
May I suggest you spend $10 or $12 on a smoke detector.They work with both synthetic and wool smoke.
After a good house fire neither carpet is any good.


Of course, no-one would argue against the logic of having a good smoke detector, and as you point out Percy they are not exactly expensive. But I see that as quite separate to the argument of woollen verses synthetic carpet. The smoke detector gives you the signal to get out. Wool is slower to ignite and the fumes are less toxic when it does ignite. So the woollen carpet is giving you the time to get out, or perhaps snuff out any smoldering before the fire gets started. It is a slightly crude analogy, but I see the smoke alarm as the ambulance at the bottom of the cliff, and the woollen carpet the barrier at the top that hopefully means any fire will not 'take hold'. Ideally you want both.

Having said all this, I do admit my current house was built in 1991 as a builders spec and has a synthetic carpet. I don't lose any sleep over that. But it has got to the stage where the living room areas are due for replacement and it hasn't held its colour particularly well. So I intend to replace that section with a woollen carpet.

SNOOPY

POSSUM THE CAT
10-08-2013, 01:29 PM
Snoopy suggest you do a test with two scraps of carpet & make sure one is the fire retardant treated synthetic type. You might be surprised.

Brain
10-08-2013, 05:10 PM
Personally I think natural fibres are way better than synthetics. I prefer to buy items made from Wool, leather, cotton and wood never plastic. I believe many people think the same way and there will always be a niche market for wool carpets.

soar
10-08-2013, 09:55 PM
Being a carpet retailer, we have tried to cover the field by using both wool and solution Dyed nylon carpets in our 2 level home. Both medium price points from the Cavalier group. The wool feels far fare more luxurious and less plastic under foot, and nylon easier to deal with when our aged cat fails to make the litter box. I believe the synthetics are over sold, and their infinite warranties do not cover their loss of appearance retention.

percy
11-08-2013, 06:22 AM
soar,
Welcome, and thank you for your comments.

777
16-08-2013, 02:50 PM
A 4c dividend in October. Things starting to look up.

winner69
16-08-2013, 06:45 PM
A 4c dividend in October. Things starting to look up.

But the shareprice went down after the ann and back to 140

Commentary won't too bad

Lizard
16-08-2013, 09:29 PM
Cashflow a lot lower in second half - no longer freeing up inventory. No debt repayments. NPAT heavily reliant on earnings from the 50% holding in CWH. Dividend seems a keen move, but I guess 4cps not going to make or break at this stage. Banks seem relaxed.

_Michael
17-08-2013, 08:47 AM
Cashflow a lot lower in second half - no longer freeing up inventory. No debt repayments. NPAT heavily reliant on earnings from the 50% holding in CWH. Dividend seems a keen move, but I guess 4cps not going to make or break at this stage. Banks seem relaxed.

YEah I also raised eyebrows a little when they said they will recommence div

On a positive note maybe it signals their confidence in the outlook.

My humble take is that NZ will start to underpin earnings for all of this exposed to NZ/AU building - namely CAV / MVN / FBU

People are worried about Australia but I have been reading quite a lot of press in AFR Smart Investor which indicates construction is falling moderately but is expected to pick up quite welll in 2014 as building mix tends more away from mining and into residential/commercial building

I am holding these guys and MVN for the time being and will give it another 12 months to see if the NZ uptick flows through to earnings

Everyone talks about CHC but Auckland is also desperately short of housing stock and the government is right now trying to make easier build....

blackcap
17-08-2013, 08:51 AM
Call me naive if you will but could someone help me out please. When CAV start saying things like... "normalised is a non-GAAP" form of reporting... etc is that not a form of deflection. Ie are they trying to hide something here? Or is reporting normalised earning "common accepted practice"?

I know there were "restructuring" (we stuffed up and have to fix our mistake) costs, but to me if you report "normalised" you can almost always report a profit if you have a clever enough bookkeeper. For what its worth, if they can avoid future "restructuring" costs, then profits at a slightly higher rate (increase in turnover in NZ and wool prices) and a divvie of 6-8 cents may make $1.40 a good entry point.

_Michael
17-08-2013, 09:12 AM
Call me naive if you will but could someone help me out please. When CAV start saying things like... "normalised is a non-GAAP" form of reporting... etc is that not a form of deflection. Ie are they trying to hide something here? Or is reporting normalised earning "common accepted practice"?

I know there were "restructuring" (we stuffed up and have to fix our mistake) costs, but to me if you report "normalised" you can almost always report a profit if you have a clever enough bookkeeper. For what its worth, if they can avoid future "restructuring" costs, then profits at a slightly higher rate (increase in turnover in NZ and wool prices) and a divvie of 6-8 cents may make $1.40 a good entry point.

You are right its bad practice and it is definitely a deflection as the "restructures" etc still cost shareholder money despite not being part of usual ongoing operations

Brian Gaynor highlighted the exact issue that you raise a while back in the article below

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10749064

The worst offenders I personally find are FBU who every single year manage to pull out at least $100m in "one-off" costs

This is total BS becuase even if its a asset write down, they are writing own an asset that was paid for with your cash!!!

The other thing is FBU break out costs for opening/closing plants when its done so often you would argue its normal operations

blackcap
17-08-2013, 09:13 AM
Thanks for the reply and the article Michael. Appreciated.

winner69
17-08-2013, 09:22 AM
Doing it this way is to give you a reasonable picture of what is normal today and if we 'don't stuff up' again what can be expected in the future, or at least a better feel for next year anyway.

You meant to be forward looking .... so whats normal is important to see what the future holds ... so you can assess what the company is worth ...in normal times

The past is forgotten and forgiven ... just think future

A study a few years ago in the states (pre GFC) concluded that S&P500 companies wrote of 20% of profits were offset by write downs in the subsequent 5 years.

Michael - has the $300m plus writedown affexted the future of PGW?

blackcap
17-08-2013, 09:39 AM
Hi Winner...

I can see where you are coming from and it does make sense as you put it. But my major fear is that this gives inept management a nice little get our of jail free card and this "tool" for use of better word is able to be manipulated and therefore provide distortions. Surely an analyst worth his/her salt can provide future normal earnings by digging through the abnormals?

macduffy
17-08-2013, 02:18 PM
Any estimate of "future normal earnings" is only ever going to be an educated guess, whichever ways analysts juggle past years' abnormals.

To me, the encouraging bit was that the official GAAP NPAT number was +$3m, compared to the previous year's loss of -$1.6m. Oh, and the dividend.

winner69
17-08-2013, 04:03 PM
Cavalier intrigues me.

.

You may have noticed CAV intrigues me as well .... or at least a morbid fascination for it

Zigzag ... wouldn't quite go as far a permanent turnaround story .... but possibilities of a cyclicaly if timed right .... but anything to do with these companies I have a morbid fascination with be prepared to be disappointed

bulltrap
18-08-2013, 12:23 PM
A study a few years ago in the states (pre GFC) concluded that S&P500 companies wrote of 20% of profits were offset by write downs in the subsequent 5 years.

Michael - has the $300m plus writedown affexted the future of PGW?

My lesson from the PGW goodwill write-off was that if you're going to shrug off historical write-downs (as both company management and market appear to have done), you also have to plonk a big discount on anything that gets added to the balance sheet in the first place - that is, take any capitalized costs with a hefty serve of pink rock salt.

Shall we say a 50% discount for intangibles (e.g. goodwill) and 20% for tangibles, as a first approximation?

It was a shock to me as a casual investor that a company can pay too much for something and then treat their overspend as an 'asset'.

macduffy
18-08-2013, 05:06 PM
The problem is that it is often only in hindsight that it becomes apparent that a company has paid too much for an acquisition - and that can take years to become obvious.

On the other hand, there are instances of the opposite - real bargains - eg Infratil and NZ Super's purchase of Shell's downstream assets.

:cool:

baller18
19-08-2013, 10:24 AM
Damn should've got in at $1.40! Argh missed my chance

winner69
19-08-2013, 05:08 PM
Star performer today

If anybody wants a decent chunk they will need to go to 200 eh

percy
19-08-2013, 05:30 PM
Star performer today

If anybody wants a decent chunk they will need to go to 200 eh

Yeah right.!!
Sorry I am not convinced.

baller18
20-08-2013, 10:37 PM
Looking from the charts, CAV just had a W bottom, any TA traders out there who can confirm this with me? Even thought it was only a few days and the volume is still quite low, does this signal they will be going in an up trend if it breaks through at $1.55?

But looking at the bollinger bands, it hasn't touched the bottom of the bollinger band either but it hasn't flattened so...

percy
21-08-2013, 06:24 AM
Looks a very risky bet to me at present.SP at $1.52 means to me it is still in a down trend as the 50 day moving average is $1.60 while the 200 day ma is $1.74. Both moving averages are still in a downtrend.The ma,s need to turn upwards before I would consider buying.Also I am not sure what the MACD is signalling.

percy
21-08-2013, 02:16 PM
Craig's have updated their target price to $1.94.They are confident of strong earnings growth over the next couple of years.

baller18
21-08-2013, 02:36 PM
Craig's have updated their target price to $1.94.They are confident of strong earnings growth over the next couple of years.
Hm.. think we might be seeing an uptrend from the W bottom..

winner69
22-08-2013, 02:09 PM
Hey that is a neat W on the chart eh

Nearly didn't see it on chart that is still heading down from 4 bucks

You telling me the W is a double bottom or something

baller18
22-08-2013, 02:39 PM
Hey that is a neat W on the chart eh

Nearly didn't see it on chart that is still heading down from 4 bucks

You telling me the W is a double bottom or something

Yes, a W double bottom..

baller18
23-08-2013, 04:34 PM
Cavalier bouncing nicely off the W bottom, to be on an uptrend

muss1
04-09-2013, 05:12 PM
Another week or so has passed and it looks like CAV has settled a bit and the market is pricing in a bit of upside. Low volume, but it isn't the most liquid of stocks anyway. My main concern is the Aussie market that CAV relies on for half (or more) of its revenue, but it would appear even if that doesn't pick up for a while the NZ market will be doing enough to support a higher SP

macduffy
05-09-2013, 09:41 AM
I'd still like to know what proportion of CAV's sales are of synthetic, rather than wool, carpets. I seem to be hearing more and more people opting for the former as they recarpet their homes, acknowledging that the wool product is superior but that the cost advantage of synthetic makes it hard to ignore. There also seems to be more imported carpet available these days.

Yes, I hold CAV!

muss1
05-09-2013, 04:01 PM
This would be an interesting stat. We do know they have a synthetic range sold under "cavalier bremworth" so the option is there. That along with their Norman Ellison brand which targets the lower end of the market suggests they are well positioned across the carpet market

Lizard
05-09-2013, 08:26 PM
Retailing has changed to becoming very brand-aligned. The Cavalier Habitat Collection (high end synthetic) is mostly selling through Flooring Xtra stores. Carpet Court are pushing imported synthetics under "SmartStrand". Godfrey Hirst using the "Flooring Foundation" to try to create a similar exclusivity with other independent retailers.

All of which has made it harder for the consumer to shop around on price using the one product - restricting the price war to "equivalent" products which may vary in texture, colour etc. Overall, this is probably benefiting the retailers rather than the manufacturers at this point.

Joshuatree
05-09-2013, 08:42 PM
Another disadvantage with wool is carpet beetles. Some friends had to replace their wool carpet with synthetic recently.

macduffy
06-09-2013, 07:13 AM
Retailing has changed to becoming very brand-aligned. The Cavalier Habitat Collection (high end synthetic) is mostly selling through Flooring Xtra stores. Carpet Court are pushing imported synthetics under "SmartStrand". Godfrey Hirst using the "Flooring Foundation" to try to create a similar exclusivity with other independent retailers.

All of which has made it harder for the consumer to shop around on price using the one product - restricting the price war to "equivalent" products which may vary in texture, colour etc. Overall, this is probably benefiting the retailers rather than the manufacturers at this point.

Thanks, Liz.

I think you're getting to the crux of the CAV problem there. It seems to me that the big retail chains are calling the tune rather more these days than was the case when smaller, local firms proliferated. Cavalier had the market recognition then which now has to be shared/competed with the likes of Carpet Court, Number One Carpets and other franchises who import cheaper, synthetic product.

muss1
06-09-2013, 03:26 PM
Thanks, Liz.

I think you're getting to the crux of the CAV problem there. It seems to me that the big retail chains are calling the tune rather more these days than was the case when smaller, local firms proliferated. Cavalier had the market recognition then which now has to be shared/competed with the likes of Carpet Court, Number One Carpets and other franchises who import cheaper, synthetic product.

If we accept this is true (I'm not arguing for or against this) what impact do people think this will have on CAV? Yes, they may lose some market share. But we are dealing with a cyclical that is at the bottom of the cycle. In my opinion there is an increase in company profit on the cards - it's just how much. Even if we don't get back to the previous top on cycle there is still significant room for the SP to grow. Not to mention the fat trimming that has gone on in the past couple of years.

_Michael
09-09-2013, 07:16 PM
Retailing has changed to becoming very brand-aligned. The Cavalier Habitat Collection (high end synthetic) is mostly selling through Flooring Xtra stores. Carpet Court are pushing imported synthetics under "SmartStrand". Godfrey Hirst using the "Flooring Foundation" to try to create a similar exclusivity with other independent retailers.

All of which has made it harder for the consumer to shop around on price using the one product - restricting the price war to "equivalent" products which may vary in texture, colour etc. Overall, this is probably benefiting the retailers rather than the manufacturers at this point.

Very true - retail concentration is the big threat to Cav as it has been to many manufacturers in other industries. When a few dominant retailers emerge they tend to rationalise suppliers so they can negotiate the best price (but not choice) for the consumer.

The additional threat here seems to be the retailers importing their own brands direct (not quite equivalent to supermarket home brand but not far off)

My brother recently bought carpet at Carper Court and said he asked about Cavalier/Bremworth and they just kept "ramming SmartStrand down my throat". He would say, "but isn't wool more durable", and they would say "forget wool, this SmartStrand is unbelievable"...

He did some research and bought Cav in the end but they tried and tried and tried to persuade him otherwise. I also have held CAV for a while and am in profit now but the more stories I hear the more I prefer MVN for cyclical building play

The way I figure is people care what brand of taps are in their bathroom whereas carpet its harder to have that brand advantage...

winner69
10-09-2013, 03:32 PM
Cavalier has built its business over many years on having an (iconic) premium brand. There are a few companies like this but most are facing challenges as the world changes. They will not survive doing things the way have done for decades - they need to change and adapt to the new way. And invariably the new way is not likely to be as profitable as in the past.

Cavalier makes stuff for buildings - residential and commercial. If their business is similar to others in this sector the split is probably 60% commercial and 40% residential. The commercial segment probably growing faster than residential.

Commercial is both new buildings and the renovation/redecorating of existing buildings. Residential is new houses along with homeowners outing new carpet in.

Historically brand owners like Cavalier were the ones who had the greatest influence on both homeowners and those who chose carpets for commercial buildings (architects, specifiers, designers etc). How good their marketing was created the demand and the premium price people paid.

The rules gave changed. The influencers are now, as pointed out a few posts ago, the power is now with distributors and retailers, and with the architects and specifies. They are the ones who 'influence' the purchaser based on what is best for them. The manufacturers like cavalier are slowly losing control of their brand. The distributors and retailers are screwing them down on price and other things, ie margins are diminishing, even on their premium products. Somebody also pointed out the rise of channel/distributor exclusive brands. Just imagine when the likes of Bunnings get into carpets to see what will happen to market dynamics (they sell heaps of carpet tiles now so carpet not that far away)

All this is compounded by the demand for high value stuff like Bremworth is falling, both from an affordability perspective and the wide range of synthetic products available at much cheaper prices.

The commercial segment is highly competitive - price is everything in most cases. The Cavalier rep might be calling on architects and specifies touting why they should use Bremworth for their clients but so are the competitor reps and I know that Geoffrey Hirst outgun Cavalier in Australia. Even when it's get specified price comes into play. I would say this segment, even though the largest part of the market, is also the segment that has the lower margin.

So Cavalier (like others) are losing control of their premium brands - cheaper substitute products and the growing power of their distributors and retailers. Inevitability not really a good place to be in.

A cyclical play so Where are we in the current cycle. In NZ commercial activity is above average, new residential activity is still below average (even though 50% off the bottom of the cycle) and homeowners redecorating is pretty buoyant. Aussie is a bit tough but not desperately so in commercial segment. So on balance cavalier should be doing ok at the moment (definitely not bottom of the cycle stuff) with some upside.

Are Cavalier winning in market place? In Aussie I thing Hirst taking share. They have been slow to respond to meeting the market demand for cheaper products (anything below the high cost of Bremworth is cheaper) so are losing out there as well. And probably finding it hard to manage al the demands of their distributors etc.

So a good investment? They are good brand but struggling but will make an acceptable profit but not to the degree that may have been seen years ago, margins will continue to come under pressure. I wouldn't pay much more for CAV than what is worth today, and even that is not guaranteed to make acceptable returns.

Bored as today so just sharing as how I see it.

One thing which puzzles me. Carpet is generally purchased laid - who actually pays for the carpet laying? Comes out of the retailer margin or do they screw the consumer and add on heaps to cover the cost?

winner69
11-09-2013, 03:19 PM
Carpet only a portion of Furniture, carpet and Homewares retail sector but how these sort of shops are going is probably indicative of how carpet retailers are going .... and a bit of a guide as to CAV slaes

Charts below from Stats NZ Retail Trade Survey and that sector.

As with a lot of home related industries the mid 00's were a boom time (bubbke) and an extraordinary event.

Long term trend is a better picture where these retailers are now .... about average/normal eh

And that long term trend line is only 0.8% pa .... not a particularly good growth rate eh and it is actual dollars of the day. Low growth from substitute/cheaper products? a bit of price deflation? homeowners not doing redecorating as often as they used to (new furniture and carpets every 15 years instead of 10?)

muss1
11-09-2013, 08:43 PM
Great post winner. A very good argument - I have a couple of thoughts I'd like to add

Cavalier's earnings have hit a bottom and bounced back with their last announcement - this suggests that the cycle is only beginning for them (or they have been hit seriously hard and lost a lot of market share etc and are actually mid cycle - I doubt this though).

There is the Christchurch rebuild which is by no means a minor factor. From what we see on the news this hasn't started yet. I am a consultant in the industry and our company stands to get a lot of new design work from Chch, but none of this has begun yet.

Australia are still lagging, and even with reduced market share CAV still stand to benefit from the improved economy when it happens. My concern here is if it takes too long. Lets hope the election acts as the catalyst people think it will.

CAV has put in place significant cost cutting measures while they have been struggling which will also have a positive impact.

All things considered - I still think even if CAV don't hit the highs of the bubble they still stand to significantly improve on where they are now. I think we are in for above market returns for the next few years as a minimum.

winner69
14-09-2013, 02:18 PM
CAV still puzzles me ... they should be making more than they are.

New residential builds are up 50% over the last 2 years .....currently 6000 odd extra homes a year than 2 years ago. Carpet sales up?

Commercial work, ESP the sectors that are likely to have carpets. Heaps busier than 2 years ago. Carpet sales up?

Carpet retailers in nz look they doing pretty well at the mo compared to 2 years ago. CAV selling more carpets?

Ok, Aussie a bit weak but commercial not that bad and new home building hasn't collapsed.

To me they should be selling more carpet than a few years ago but they ain't.

In the annual results they talk about growing volumes ...maybe margins are pretty shot still.

Residential construction going from 19000 homes a year now to 25000 a year home in 2 to 3 years time. Will CAV sell mor carpet? Or are the competitors going to keep on beating them?

I fear that competitors are winning.

Market heaps better than 2 years ago .... CAV not doing better. Market to be heaps better in 2 years time ......CAV do better.. You would hope so but there seems to be something holding them back.

I see CAV priced at the mo to both grow and to improve margins ....chances of that happening?

Prob wrong again but something not right at the mo.

_Michael
16-09-2013, 06:37 AM
CAV still puzzles me ... they should be making more than they are.

New residential builds are up 50% over the last 2 years .....currently 6000 odd extra homes a year than 2 years ago. Carpet sales up?

Commercial work, ESP the sectors that are likely to have carpets. Heaps busier than 2 years ago. Carpet sales up?

Carpet retailers in nz look they doing pretty well at the mo compared to 2 years ago. CAV selling more carpets?

Ok, Aussie a bit weak but commercial not that bad and new home building hasn't collapsed.

To me they should be selling more carpet than a few years ago but they ain't.

In the annual results they talk about growing volumes ...maybe margins are pretty shot still.

Residential construction going from 19000 homes a year now to 25000 a year home in 2 to 3 years time. Will CAV sell mor carpet? Or are the competitors going to keep on beating them?

I fear that competitors are winning.

Market heaps better than 2 years ago .... CAV not doing better. Market to be heaps better in 2 years time ......CAV do better.. You would hope so but there seems to be something holding them back.

I see CAV priced at the mo to both grow and to improve margins ....chances of that happening?

Prob wrong again but something not right at the mo.

All good questions. IMHO its a problem with retail landscape plus the wool price issue where they became priced out of the market.

Went to the Home Show yesterday (OMG are Aucklanders insanely crazy about their homes) and it was telling. The retailer that they are aligned with (Flooring Xtra) did not even have any wool carpert on display - and had a very humble presence overall.

Meanwhile Carpert Court with the massive rhino had a huge presence with a total focus on "smart strand"

Cavalier were in there somewhere but go lost behind Godfrey Hirst and Feltex.

On another note I wonder if Feltex are winning the lions share of Chc business due to being the local player (Cav = Auckland centric)

winner69
16-09-2013, 07:36 AM
All good questions. IMHO its a problem with retail landscape plus the wool price issue where they became priced out of the market.

Went to the Home Show yesterday (OMG are Aucklanders insanely crazy about their homes) and it was telling. The retailer that they are aligned with (Flooring Xtra) did not even have any wool carpert on display - and had a very humble presence overall.

Meanwhile Carpert Court with the massive rhino had a huge presence with a total focus on "smart strand"

Cavalier were in there somewhere but go lost behind Godfrey Hirst and Feltex.

On another note I wonder if Feltex are winning the lions share of Chc business due to being the local player (Cav = Auckland centric)

Michael - interesting observations

Cavalier in there somewhere but got lost behind Hirst and Feltex - to me that is losing share to a hungry competitor who is adapting better to changing times. Does the old iconic company always struggle in this respect?

And looks like the synthetic carpet is being pushed hard by retailers - not good for Cavalier

Re Chch - to date most of the extra work has been fixing things up (insurance work) which prob doesn't involve carpet to the extent as plastering and painting trades. New houses and commercial work starting to gain momentum though. Feltex prob do well because they are more hungry anyway?

One thing about Auckland is that as homes get more insanely overpriced homeowners might find buying real carpet easier ... What's a few more thou when thevhouse is worth hundreds of thou more. Wool carpets are discretionary buy ...and wealth effect helps

winner69
16-09-2013, 04:06 PM
One of the triggers for buying carpets (and other redcocarating projects) is buying s house (an existing one)

Today's release from reinz still has the number of house sales growing strongly. Over the last 2 years house sales are up 40% and at just under 80000 in the last 12 months above the annual average number.

So where are increased Cavalier sales?

macduffy
01-10-2013, 02:44 PM
I had a bit of spare time today so went back to look into the question of what proportions of CAV's carpet sales are wool and synthetic respectively.

Note 27 to the accounts, Segment Reporting, reads, inter alia, as follows:

"In determining its reportable segments, the Group considered the criteria set out in paragraph 12 of NZIFRS 8 and was able to aggregate the Cavalier Bremworth, Norman Ellison and Ontera Modular operating segments into a single reportable segment.
In aggregating these three operating segments into one reportable segment, the Group identified similarities in the following: "

Then followed a lengthy justification for not reporting the three separately. I guess it amounts to the company regarding this as commercially sensitive - but it makes it difficult to judge how well, or badly, the company is faring against predominantly synthetic manufacturers.

winner69
11-10-2013, 10:59 AM
CAV been a big mover the last few days ... even topped the gainers list

Whats up .... by the way whatever happened to Whats Up .... he was a good guy

noodles
01-11-2013, 01:00 PM
I’ve recently finished accumulating a number of Cavalier (CAV) shares. I thought I would post on Sharetrader my thoughts as to why Cavalier Corporation represents deep value and likely to gain more over the next two years.

In a strongly performing sharemarket like the NZX, most NZX listed companies look like they are at full or fair value, without the adequate margin of safety that a value investor would demand.

Cavalier is presently one of the few stocks out there today that offered me sufficient margin of safety in an NZ equity investment.

Here are the reasons why I liked CAV enough to buy in:

1. It’s a cyclical “smokestack” stock, which was punished throughout the GFC, but has pulled itself together and is well primed to take advantage of the improving economy in NZ, and the hopefully improving economy in Australia (still yet to see signs of growth but not getting worse). CAV is “well positioned” to improve as construction and discretionary spending improves.

2. CAV has addressed concerns with its balance sheet by paying back debt. While debt remains high-ish, it has come down from 42 to 36%, which is probably ok for the foreseeable future (I’d prefer under 30%). Inventory has also improved, down from $63m to $57m.

3. CAV has addressed concerns with a deficiency in its business, which was the lack of a synthetic/nylon carpet. Wool used to be the favoured textile, now nylon is more popular. It has recently released to some market interest the “Habitat” range of synthetic carpets, at price points that suit medium to medium-high price buyers. This carpet is made by Cavalier but yarn supplied through a partnership with Invista.

4. CAV earnings are forecast to improve dramatically in 2014 as it pulls out of a difficult trading environment and some significant redundancies and scale-backs. It has mothballed excess production capacity and its workforce is 21% less than in 2011. Operating leverage has dramatically improved as a result. Earnings growth is forecast by brokers to improve from 9.7c actual in 2013 to around 22.5c in 2017 (assuming terminal growth rate of 3% in 2017). This suggests growth of around 18.5% per annum for the next five years, with big growth expected next year, and more normalised earnings growth thereafter.

5. CAV is trading on a dividend of around 3% based on a shareprice of $1.80, but I forecast this to improve to around 5% for next year on the basis of improved profits and cashflow. Its current 2013 dividend is 4cps (100% imputed), and it is forecast to double to 8cps according to broker reports I have seen.

The two favourite metrics I like applying to assess the rationality of a share price is the Ben Graham Intrinsic Value score, and the Peter Lynch YPEG score.

Using the Ben Graham Intrinsic Value formula, I get the following based on current EPS of 9.7c in 2013:

12% growth = $2.40
16% growth = $3.03
18% growth = 3.34

Using the Peter Lynch score of P/E divided by long term growth of 16% plus dividend yield of 3.1%, I get 18.5/(16+3.1), or a final score of 0.97 . Lynch seems to think anything under 1 is good value, anything under 1.2 deserves a sniff. Naturally, if you use the higher growth rate of 18%, then the score looks better, being around 0.87.

So applying my usual 40% margin of safety to an intrinsic price of 3.03, I get a margin of safety buy price of $2.16, which is roughly 34-36c more than the price I’ve been acquiring at. Using the Ben Graham IV calculations, I see around 67% upside on current known earnings and 16% growth.

Negatives:

a) Cavalier is only worth $120m market cap. It is not very liquid, and it took me several days to get the holding size I wanted. Obviously, if I needed to get out quickly, I’ve got a problem. But if someone else wants to get a sizeable holding into CAV in a hurry, then they will drive up the price ferociously.
b) Debt – if the cost of interest rises significantly, then CAV will find the higher debt to be an imposition on future earnings. Reducing the debt may be a bigger priority than reducing the dividend. 1c foregone in dividends equals almost $1m in debt repaid.
c) Carpets are substitutable and subject to competition. People can have wooden floors, tiles, rugs, and polished concrete instead of carpets. And even if they choose carpet, they can then choose a number of brands, and not just Cavalier.
d) Carpets are somewhat elastic in demand compared to other products in the building sector. People can choose to defer carpet replacement, but they can’t defer a leaking roof or perishing weatherboards in the same way.

For all that, I think there is at least almost 70% upside in CAV. Again – this is a value play based on anticipated improvements in the economic cycle, not a secular growth story on a company immune to economic fortunes. If Australia's construction picks up in the next 12-18 months, then CAV will sing.

Disclaimers: I am not an authorized financial advisor. I’ve posted what I have done, not want I want you to do. If you act on the comments of an anonymous poster on the internet called “Sparky the Clown” then you will have some explaining to do to loved ones if the investment goes sour. Do your own research. I am unavailable to enter into discussion on this post, but hope that it spurs on others to consider this company’s merits, or otherwise.

Sparky. Nice to have you back on the forum. I read your latest buy with interest and will do some research myself.

I would like to challenge you on using current EPS as an input to your growth rates as this is a cyclical stock. Wouldn't you want to use an average of the past few years?

macduffy
01-11-2013, 02:36 PM
Thanks for your thoughts on CAV, Sparky and more power to your fingers and brain! As a fellow shareholder ( but of much longer standing) I hope your positive views have corresponding results shareprice-wise!

winner69
01-11-2013, 02:38 PM
Sparky. Nice to have you back on the forum. I read your latest buy with interest and will do some research myself.

I would like to challenge you on using current EPS as an input to your growth rates as this is a cyclical stock. Wouldn't you want to use an average of the past few years?

Noodles take your pick on what eps to use over the cycle - from the heaps I know about Cavalier file

2013 was 9.7 cents as sparks said. Over the cycle maybe 18-20 is the average.

But wha sparks is doing is valuing it today and seeing what returns he could get with 'growth' back to normal sort of levels.

If you used the average eps over the cycle (say 20 cents even) wouldn't you have to assume that the 'growth' rate to use in sparks formula would be zero?

noodles
01-11-2013, 02:49 PM
If you used the average eps over the cycle (say 20 cents even) wouldn't you have to assume that the 'growth' rate to use in sparks formula would be zero?

Exactly. Close to zero growth over a cycle. I think it is wrong to use the bottom of the cycle for the input.

winner69
01-11-2013, 04:25 PM
Exactly. Close to zero growth over a cycle. I think it is wrong to use the bottom of the cycle for the input.

Bit more from the CAV archives

Revenues over the years ... except for the boom times in the mid 00's (recall 33,000 new houses were built compared to average 24,000) CAV revneues struggled to get much over $200m. Seems that normal times they do just OK and every now and again when the market helps them out they have the odd real good year. And maybe one of thise is on the horizon.

Even today revenues about the same as they were last century

So it all comes down to margin improvement ... and sparks sort of eluded to that

montana
05-11-2013, 09:40 AM
Looks like Cav is on the move - it's hit it's highest point in 12 months. Excuse my ignorance, but why all the sudden interest?

muss1
05-11-2013, 10:38 AM
After a lot of negative announcements it appears the market is pricing in the expected pick up in earnings. The pick up in earnings is due to the increasing building activity around NZ (and Aussie to follow at some point)

What is surprising is that recent rises are happening at the same time the price of wool is going up..

macduffy
05-11-2013, 10:55 AM
After a lot of negative announcements it appears the market is pricing in the expected pick up in earnings. The pick up in earnings is due to the increasing building activity around NZ (and Aussie to follow at some point)

What is surprising is that recent rises are happening at the same time the price of wool is going up..

CAV have a substantial wool scouring and trading business - the Elco subsidiary. Higher prices mean higher commissions and less pressure on margins?

muss1
05-11-2013, 12:42 PM
It is a negative for the wool carpet business though. Increases the cost of the end product - one of the reasons synthetic carpet is getting more of a look in. However, CAV have synthetics available now

winner69
05-11-2013, 01:04 PM
Sparks keep the price in the 180s when building his stake

Now the turn of spark's fan club of dedicated followers to keep pushing the price up

winner69
05-11-2013, 01:30 PM
you are all pushing the price up!! stop it !!! :)

Sparks has that effect

You AR happy sandboy then steve .....or we're you hoping to buy in the 170s

amalgam
06-11-2013, 10:55 AM
Sparks keep the price in the 180s when building his stake

Now the turn of spark's fan club of dedicated followers to keep pushing the price up Sparky I have a couple of other shares that need a bit of help from you---Cavalier have been stagnant for at least a year -one of my worst performing stocks--one post from you and they are off. Thanks

baller18
06-11-2013, 10:56 AM
that W bottom... sighs...

winner69
06-11-2013, 06:06 PM
You guys will get over 200 tomorrow ....a real milestone hasn't been there since early last year

Must be a few more to jump in yet ...not too late ....remember the share price has been over 4 bucks once.

777
06-11-2013, 06:56 PM
You guys will get over 200 tomorrow ....a real milestone hasn't been there since early last year

Must be a few more to jump in yet ...not too late ....remember the share price has been over 4 bucks once.

Bought some in 2003 at 5.05.

winner69
06-11-2013, 07:26 PM
Bound to get back that again .... beaten up post the GFC and the future looks a lot brighter for outfits like CAV .... unless the govt thinks carpet should be cheaper as well

Chart just for the memories 777 ..... and to give those holding today some comfort that CAV noy heading into uncharted territory .... been there before

baller18
06-11-2013, 07:31 PM
Bound to get back that again .... beaten up post the GFC and the future looks a lot brighter for outfits like CAV .... unless the govt thinks carpet should be cheaper as well

Chart just for the memories 777 ..... and to give those holding today some comfort that CAV noy heading into uncharted territory .... been there before
Have you got in yourself winner?

winner69
06-11-2013, 07:32 PM
777 --- 2003 was the year they made $30m EBIT and was trading at 4 times book value

Hells bells .... 4 times book value .... no wonder the share price fell so much .... a ridiculous valuation that was

montana
07-11-2013, 09:33 AM
What is driving the sudden share price increase - is it purely speculation, or have I missed an announcement relating to the industry/market? I bought in at 2.10 about 15 months ago just before it plummeted, so am reasonably excited about it's prospects. They were the first shares I have ever purchased, and am not particularly knowledgeable on all things NSX.

macduffy
07-11-2013, 10:00 AM
I think it's the market's "feel-good" mood generally - with exception of CNU!

Economy improving slowly; Christchurch re-build ditto; CAV's a cyclical stock; markets up - summer's on the way!

macduffy
07-11-2013, 10:01 AM
I think it's the market's "feel-good" mood generally - with exception of CNU!

Economy improving slowly; Christchurch re-build ditto; CAV's a cyclical stock; markets up - summer's on the way!

muss1
07-11-2013, 10:20 AM
Expected earnings are attractive due to building sector etc. CAV bottomed out recently and in the annual report indicated earnings had started to pick up again. NZ well ahead of Aus however. The recent SP increase in my opinion is down to the market becoming aware of it (probably in itself due to SP increase). It looked attractive a few months ago when it hit the double bottom (attractive from a fundamental point of view). It still looks attractive at this price based on forward expected earning so I think it's SP run should continue.

Read sparkys post a page or so
Back for a good run down

Disc: holding since august

winner69
07-11-2013, 10:59 AM
What is driving the sudden share price increase - is it purely speculation, or have I missed an announcement relating to the industry/market?

There was a bullish analyst overview the other day ....posted on this site.

montana
07-11-2013, 01:30 PM
Thanks for the overview guys, appreciate it.

winner69
08-11-2013, 11:27 AM
cmon guys keep buying ... see what happens when you stop

winner69
08-11-2013, 03:10 PM
jeez somebody better buy some quickly else a close at 181 will make the end of week chart look sad .... and trigger a sell off next week

I know only 10,000 odd shares but the line on the chart is what makes people happy

I reckon if I put a buy at 175 it just might get filled

Merc
10-11-2013, 12:20 PM
Bound to get back that again .... beaten up post the GFC and the future looks a lot brighter for outfits like CAV .... unless the govt thinks carpet should be cheaper as well

Chart just for the memories 777 ..... and to give those holding today some comfort that CAV noy heading into uncharted territory .... been there before
Your chart goes back to 1994 but I've only been able to find charts going back 10 years. Where did you get it from???
Reason for asking - trying to track the purchase price of some of my parents' shares where their paperwork has gone astray.

winner69
10-11-2013, 12:48 PM
Your chart goes back to 1994 but I've only been able to find charts going back 10 years. Where did you get it from???
Reason for asking - trying to track the purchase price of some of my parents' shares where their paperwork has gone astray.

If you really want to go back zonks use ft.com and their interactive charts --- no guessing the prices from the charts because being interactive you can see them

Here's their CAV version

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=CAV:NZC


Sales have been about the same level for years ..... even since 1987 the average prob about 2 bucks .... maybe that is its true place in life

Merc
10-11-2013, 02:16 PM
If you really want to go back zonks use ft.com and their interactive charts --- no guessing the prices from the charts because being interactive you can see them

Here's their CAV version

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=CAV:NZC


Sales have been about the same level for years ..... even since 1987 the average prob about 2 bucks .... maybe that is its true place in life

Thank you, very helpful.

Many years ago we were given the game "Takeover - The NZ Sharemarket Game." By the time we got it a number of companies had ceased trading and looking at it again now there are very few I recognize.

I've just looked it up on Google and it was published in 1986. Blue Chip Companies on the board include Equiticorp, Chase Corporation, Bexley, Ceramco...

My 87 year old mother last bought shares, including CAV, in the late 90s. Somehow I think it is time for a major review. A few years ago we tried to get her to use her Broker's managed fund (seeing we knew nothing about shares) but she declined. The problem is she did sell any she'd just dump it in the bank at an interest rate less than inflation rather than reinvest.

Risks for a Carpet firm? The craze for polished floors, synthetics and cheap imports...

winner69
14-11-2013, 12:32 PM
Well done guys ....getting your money out and buying again to pull it out of the downtrend

Jeez ....see DLX selling heaps more paint in nz .....think where paint goes carpet follows eh ....new houses and buildings they say the reason behind their growth

3 bucks next year?

muss1
14-11-2013, 12:43 PM
Well done guys ....getting your money out and buying again to pull it out of the downtrend

Jeez ....see DLX selling heaps more paint in nz .....think where paint goes carpet follows eh ....new houses and buildings they say the reason behind their growth

3 bucks next year?

And where there's paint there's fibre cement board. Go JHX. Their report today suggests Aus outlook improving and has shown through a bit in results. Good sign for CAV in Aus?

blackcap
19-11-2013, 09:25 AM
Read the AGM addresses out now.... don't know what to make of it. A real sweet and sour combo on initial thoughts.
Normalised earnings expected to be between 8 and 10 million. Not that great I would have thought.

That aside what was really worrying was that they did not mention that "they were well positioned". This sent alarm bells ringing my way. Until I managed to read "we have laid a platform for further growth" at which I let out an audible sigh of relief. :P

winner69
19-11-2013, 10:19 AM
Read the AGM addresses out now.... don't know what to make of it. A real sweet and sour combo on initial thoughts.
Normalised earnings expected to be between 8 and 10 million. Not that great I would have thought.

That aside what was really worrying was that they did not mention that "they were well positioned". This sent alarm bells ringing my way. Until I managed to read "we have laid a platform for further growth" at which I let out an audible sigh of relief. :P

Heck that is almost a profit downgrade

Guidance of 8 mill to 10 mill means 8 mill (CAV nearly always come in lower end of guidance, like last year eh) which isn't much more than the 6.6 mill last year is it. And some call this a turnaround ...tell me another one.

Hope seems to prevail still .......CEO says .slower start to year than we would have hoped ......main short fall has been margins and volumes in the carpet business he says .......omg he has hit their main problem on the head ....what a guru ......but things are looking better so we be ok eh (hope)

Seems like Hirst still hurting them big time ...... And that 'flood of imported synthetics' has changed market dynamics ......and the margin pressures will not go away.

And want that speech of the Chairman a shocker ....maybe the body language was more positive!

So 8 mill ....pe of 16 ....or if things go really really well a pe of 13. That's pretty generous for perennial underperformer.

Another year of value destruction coming up for CAV .....but then again Hooe is a real strategy.

winner69
19-11-2013, 02:17 PM
Those speeches haven't done much to excite the market eh

winner69
19-11-2013, 02:25 PM
You would have thought that headlines like
.Cavalier sees 2014 earnings growth of up to 51 percent

Would have got the price moving ......ESP the up 51% bit

Maybe the 161 price will happen ...please

muss1
19-11-2013, 02:31 PM
Assuming they hit the bottom end of the range the SP is about fair with a pe of 16.. Maybe everyone knew already.

I will be a bit disappointed if they don't hit closer to the upper end of the range. However, the lower end will still hit my growth target based on where I bought it. Time will tell whether they gain enough traction. I think they will with the range of products and the industry heating up both here and aus

winner69
19-11-2013, 03:10 PM
Assuming they hit the bottom end of the range the SP is about fair with a pe of 16.. Maybe everyone knew already.



PE of 16 - come on

I would contend people expecting more ..... even more than 10 mill which would give it a PE of 13

muss1
19-11-2013, 03:21 PM
PE of 16 - come on

I would contend people expecting more ..... even more than 10 mill which would give it a PE of 13

I agree.. There's definitely room to move on the pe front. 8mil is 20% EPS growth so maybe a pe of 20? $2.40.. That sounds a bit better

blackcap
19-11-2013, 03:24 PM
May I just add some anecdotal 2 cents worth. was speaking to a guy last night at badminton who owns 2 Carpet 1 franchises. I asked him a bit about carpet but Cavalier was definitely not high on his list. Too many problems with fading (wools) and when pressed he said he didnt care much for them. So somewhere along the line CAV have gone wrong. Ok they probably do tend more to the upmarket range but still this is the second person I have spoken to in the industry that does not like CAV :(

winner69
19-11-2013, 03:34 PM
I agree.. There's definitely room to move on the pe front. 8mil is 20% EPS growth so maybe a pe of 20? $2.40.. That sounds a bit better

Over the last 10 years CAV had a PE around 14 (in the good times for the market) and even then they disappointed .... rest of the time PE of 10 or under

10 -12 seems fair enough to me .... allowing for them coming from the depths of despair

winner69
19-11-2013, 04:08 PM
May I just add some anecdotal 2 cents worth. was speaking to a guy last night at badminton who owns 2 Carpet 1 franchises. I asked him a bit about carpet but Cavalier was definitely not high on his list. Too many problems with fading (wools) and when pressed he said he didnt care much for them. So somewhere along the line CAV have gone wrong. Ok they probably do tend more to the upmarket range but still this is the second person I have spoken to in the industry that does not like CAV :(

Though nobody is listening that's how I see it as well .....times have changed in the industry and CAV have not changed with it. Consumer choices/demand are different / routes to market through retailers and distributors now have different rules / in the commercial specification market CAV try hard but Geoffrey Hirst doing better (in NZ and particularly in Australia)

Top line growth hard to come by .... margins will never be what they were .... so how more many years can CAV save their way to making any reasonable profits (even at $10m NPAT not covering their cost of capital, ie value destroying) ... almost squeezed what they can out of the lemon.

Without radical transformation I would think $10m - $15m is the uppermost range of their profitability .... and as such CAV will only become at best a steady earner with a with a steady divie ..... and that's there lot ... so valuation is really how much are you prepared to pay for a 10 to 13 cent divie (in good times)

Just my rave ... consistent with what I have said over many years .... and even though generally been right what the hell do I know anyway

muss1
20-11-2013, 08:34 AM
Considering what you've just said winner - assuming you bought at a reasonable price available a few months ago - wouldn't you be happy to hold CAV for a year or so? Applying the numbers you outlined means decent SP growth over the next year or two is pretty likely. Even if all the ever manage to achieve again is mediocrity

winner69
20-11-2013, 10:30 AM
Considering what you've just said winner - assuming you bought at a reasonable price available a few months ago - wouldn't you be happy to hold CAV for a year or so? Applying the numbers you outlined means decent SP growth over the next year or two is pretty likely. Even if all the ever manage to achieve again is mediocrity

For a hold over a year or so i would look to stocks I only look to stocks that have a chance (in my humble view) of doubling .....and I don't see CAV as meeting this criteria.

And you are the one who uses the word mediocrity ...I think I said solid at best. They have good products that people want - the market is changing and now more competitive - they'll still make dosh .....but enough to get a shareprice to 3 to 4 bucks ....not really

And not really enough liquidity even to consider trading prices

winner69
20-11-2013, 10:49 AM
Here is some good stuff CAV are doing
http://www.cavbrem.co.nz/whats-new/news/new-christchurch-showroom-opens.aspx

winner69
21-11-2013, 04:59 PM
they held out for a couple of days but finally a couple of sellers relented .... hope they were locking in profits and not crystalising losses.

Might need to lower the 161 in case it gets hit if a few more sellers want out

blackcap
21-11-2013, 09:21 PM
Another anecdote. I am currently re-carpeting where i live. Now the carpet layer was telling me (in quite emotional and heated terms) that he disliked Cavalier and the way they do business. He felt they operate in a dictatorial manner to retailers (that sell their products) and as far as he was concerned, did not like them and did everything possible to ignore them and the idiots that run the company. Again its only anecdotal but its not nice hearing a lot of negativity from a variety of sources.

winner69
22-11-2013, 04:36 AM
Another anecdote. I am currently re-carpeting where i live. Now the carpet layer was telling me (in quite emotional and heated terms) that he disliked Cavalier and the way they do business. He felt they operate in a dictatorial manner to retailers (that sell their products) and as far as he was concerned, did not like them and did everything possible to ignore them and the idiots that run the company. Again its only anecdotal but its not nice hearing a lot of negativity from a variety of sources.

The times are changing / the way industry woks ....but CAV still do it the old way

Retailers / distributors have more channel power and are more demanding .....and influence the final purchaser more than before. CAV don't seem to get this and still believe the power of the cavalier brands will win out.

See mitre 10 say they are going into carpets ......that'll be a challenge to CAV if they want to play there .....I would think CAV would say mitre 10 won't get traction and our carpets don't belong in that space anyway

They will change one day but in meantime 10 mill npat will be a fantastic result

winner69
22-11-2013, 04:42 AM
They love dealing with the glamour side .....doing stuff with architects and designers

The Chch showroom is indicative of that.

They have some good wins, like Bremworth in award winning homes, carpet in the Hilton etc etc

Important channel is the specifier one .......very competitive ........but I believe that Geoffrey Hirst are gaining share here

blackcap
22-11-2013, 09:51 AM
Thanks Winner69 for your further insights into this company. You seem to know quite a bit about this company. I do have a small holding but its good to see that others are backing up what is being said and heard anecdotally. What I do keep in mind is that no denying the negativity out there the company does still make a profit and could even support a SP of $1.75 with NPAT of $10m. Sad really that they do not seem to want to relinquish their "old ways" to further enhance shareholder wealth. Lessons well learnt for me with my investment in this company.

noodles
22-11-2013, 10:33 AM
More anecdotes. Spoke to a Cavalier salesman last week. Said things were "picking up". He mostly worked in commercial.

DISC: Don't hold. I think 1.75 is a fair price. Not a bargain.

blackcap
22-11-2013, 10:39 AM
More anecdotes. Spoke to a Cavalier salesman last week. Said things were "picking up". He mostly worked in commercial.

DISC: Don't hold. I think 1.75 is a fair price. Not a bargain.

Cheers noodles. Seems to me the theme that is emerging is that CAV are aiming more at the commercial side and leaving the retail side in the lurch. That would explain the negativity I have heard from that sector re CAV.

muss1
23-11-2013, 09:18 AM
Some good (bad) anecdotes guys - appreciated. I'm interested to see where we will be in a few years. Most don't think CAV are the same company they once were with the changing carpet industry. I still believe they will improve enough to be a viable mid term investment.

Pick up in the commercial sales is obviously positive and will be interesting to see how this plays out in chch. A few of the anchor projects are hitting the drawing board

Winner - the 161 you keep quoting is actually my purchase price. Maybe we are singing from the same song sheet after all...

winner69
23-11-2013, 03:36 PM
Pick up in the commercial sales is obviously positive and will be interesting to see how this plays out in chch. A few of the anchor projects are hitting the drawing board


You would hope so as after all the building industry is on a roll and another driver of new carpet in existing house sales is also booming

Stats NZ report residential building activity up 23% in the year to June / commercial building activity up 13%. The trend in both of these has been increasing for the last 2 years

Existing house sales are up more than 20% as well and have been increasing strongly for 2 years

CAV say they are at the last in line to do things in a building but one would have thought that there would have been some action by now ....but CAV keep saying things tough.

I note DLX said sales in NZ were up 18% in 2013 v 2012, with the comment that construction and house churn were the drivers of growth. Where paint goes carpet often goes as well and about the same time (from what carpet layers tell me they are always complaining about the painting contractor getting the way) ....y o where is CAVs growth ..... maybe Geoffrey Hirst are 'stealing' them

Keeping a watching brief on how things develop

winner69
04-12-2013, 03:06 PM
Godfrey Hirst seem to be doing ok in nz

http://www.nbr.co.nz/article/godfrey-hirst-pulls-50m-dividend-profitable-nz-business-dc-149580

winner69
04-12-2013, 07:11 PM
Hirst sales in NZ in 2013 were $154m - up 8% on prior year

Cav NZ sales were $85m and down ~10% on prior year

Cav significantly smaller than Hirst in NZ ..... looks like they lost heaps of market share in 2013 .... and from what I hear still losing share,

Brain
12-12-2013, 02:43 PM
3.2 M shares traded today - exceptionally high volume for cavalier

blackcap
12-12-2013, 02:45 PM
3.2 Million were crossed at 1.70, so that trade was done off market as it were. Well on market but decided by both buyer and seller and done through a broker. So that explains the high volume.

baller18
13-12-2013, 01:48 PM
Man has ACC got too much money these days... they been buying up everything it seems

blackcap
13-12-2013, 02:22 PM
Man has ACC got too much money these days... they been buying up everything it seems

Yeah, the premium money has to go somewhere... :)

winner69
13-02-2014, 10:27 AM
I confessed on the NPX thread I have a morbid fascination with that company. Alas I also have a morbid fascination with CAV. Please get the man in a white coat to come and take it away

Anyway as with NPX here is a breakdown as to what has caused the shareholders to loss money in CAV over the last 3 years.

As with NPX the market has to some extent been forgiving and 'rerated' it by PE expansion. Maybe saying that things cant be so bad forever so we wont punish you fully.

Performance wise revenues are down but the killer (like NPX) has been the significantly margin contraction.

Looking forward - revenues likely to pick up but how much the big question. CAV says margins will get better through cost savings but market dynamics will put pressure on prices etc.

Current PE 17/18 when it was 12/13 before. The market might say that the 12/13 is all you really deserve so we could see a PE contraction (maybe even bought on by overall market sentiment)

So in a year or two we want to see a chart with positive impacts form revenue growth and margin expansion but if that PE shrinks a bit that will dilute the returns a little

More +ve signs with CAV than in the past but still some -ves. Still not for me but no doubt mu morbid fascination with CAV won't go away

winner69
28-02-2014, 03:20 PM
Well that was an exciting half year announcement

Helps if you have a **** year to compare to .... hell 140% increase in NPAT is good eh

Grew in NZ but Australia down. They say that reflects the two economies. I still reckon they losing share in Aussie and cant totally blame the economy for Aussie sales down

Done nothing to change my view

Still have this morbid fascination with CAV

https://www.nzx.com/companies/CAV/announcements/247667

Lizard
28-02-2014, 03:43 PM
Yes, fascinates me too. I'm still surprised they've scraped through without new capital, but banks seem supportive and keep renewing (and extending) facilities. Paying another 3cps div, so they must be confident, even though they've had to cut FY growth target and take the brakes off inventory reductions...

Like you say, NZ performing, but Aussie weak and forex won't be helping.

muss1
28-02-2014, 06:58 PM
Hmmm starting to lose patience. Will have a proper look over the weekend, but maybe my money is better off elsewhere. Should have listened to you eh winner. The previously announced guidance was just alright (from memory - don't have my notes handy), but now it's potentially below alright.

I should consider taking up a less time consuming sport than cricket. All this reporting on a Friday is a killer.

muss1
04-03-2014, 01:07 PM
Got out yesterday after doing some calcs. I could see an SP in the 130s at worst so that's plenty to convince me to get out. 200 at best, but likely somewhere in between. Plus the uncertainty around CAV still being competitive in the market and concerns raised by you folk. The stars aligned enough to make my decision relatively easy

winner69
02-04-2014, 08:22 PM
WOW - maybe in the 140's tomorrow at this rate

Maybe punters think Australia market a bit stuffed, NZ shouldn't be too bad for them though.

Industry talk is that CAV continues to lose market share to Godfrey Hirst and others.

Thread a bit disjointed now that Sparky deleted himself. But here's one post that remains. Maybe it wil all work out for CAV next year.


Originally Posted by SparkyTheClown
I’ve recently finished accumulating a number of Cavalier (CAV) shares. I thought I would post on Sharetrader my thoughts as to why Cavalier Corporation represents deep value and likely to gain more over the next two years.

In a strongly performing sharemarket like the NZX, most NZX listed companies look like they are at full or fair value, without the adequate margin of safety that a value investor would demand.

Cavalier is presently one of the few stocks out there today that offered me sufficient margin of safety in an NZ equity investment.

Here are the reasons why I liked CAV enough to buy in:

1. It’s a cyclical “smokestack” stock, which was punished throughout the GFC, but has pulled itself together and is well primed to take advantage of the improving economy in NZ, and the hopefully improving economy in Australia (still yet to see signs of growth but not getting worse). CAV is “well positioned” to improve as construction and discretionary spending improves.

2. CAV has addressed concerns with its balance sheet by paying back debt. While debt remains high-ish, it has come down from 42 to 36%, which is probably ok for the foreseeable future (I’d prefer under 30%). Inventory has also improved, down from $63m to $57m.

3. CAV has addressed concerns with a deficiency in its business, which was the lack of a synthetic/nylon carpet. Wool used to be the favoured textile, now nylon is more popular. It has recently released to some market interest the “Habitat” range of synthetic carpets, at price points that suit medium to medium-high price buyers. This carpet is made by Cavalier but yarn supplied through a partnership with Invista.

4. CAV earnings are forecast to improve dramatically in 2014 as it pulls out of a difficult trading environment and some significant redundancies and scale-backs. It has mothballed excess production capacity and its workforce is 21% less than in 2011. Operating leverage has dramatically improved as a result. Earnings growth is forecast by brokers to improve from 9.7c actual in 2013 to around 22.5c in 2017 (assuming terminal growth rate of 3% in 2017). This suggests growth of around 18.5% per annum for the next five years, with big growth expected next year, and more normalised earnings growth thereafter.

5. CAV is trading on a dividend of around 3% based on a shareprice of $1.80, but I forecast this to improve to around 5% for next year on the basis of improved profits and cashflow. Its current 2013 dividend is 4cps (100% imputed), and it is forecast to double to 8cps according to broker reports I have seen.

The two favourite metrics I like applying to assess the rationality of a share price is the Ben Graham Intrinsic Value score, and the Peter Lynch YPEG score.

Using the Ben Graham Intrinsic Value formula, I get the following based on current EPS of 9.7c in 2013:

12% growth = $2.40
16% growth = $3.03
18% growth = 3.34

Using the Peter Lynch score of P/E divided by long term growth of 16% plus dividend yield of 3.1%, I get 18.5/(16+3.1), or a final score of 0.97 . Lynch seems to think anything under 1 is good value, anything under 1.2 deserves a sniff. Naturally, if you use the higher growth rate of 18%, then the score looks better, being around 0.87.

So applying my usual 40% margin of safety to an intrinsic price of 3.03, I get a margin of safety buy price of $2.16, which is roughly 34-36c more than the price I’ve been acquiring at. Using the Ben Graham IV calculations, I see around 67% upside on current known earnings and 16% growth.

Negatives:

a) Cavalier is only worth $120m market cap. It is not very liquid, and it took me several days to get the holding size I wanted. Obviously, if I needed to get out quickly, I’ve got a problem. But if someone else wants to get a sizeable holding into CAV in a hurry, then they will drive up the price ferociously.
b) Debt – if the cost of interest rises significantly, then CAV will find the higher debt to be an imposition on future earnings. Reducing the debt may be a bigger priority than reducing the dividend. 1c foregone in dividends equals almost $1m in debt repaid.
c) Carpets are substitutable and subject to competition. People can have wooden floors, tiles, rugs, and polished concrete instead of carpets. And even if they choose carpet, they can then choose a number of brands, and not just Cavalier.
d) Carpets are somewhat elastic in demand compared to other products in the building sector. People can choose to defer carpet replacement, but they can’t defer a leaking roof or perishing weatherboards in the same way.

For all that, I think there is at least almost 70% upside in CAV. Again – this is a value play based on anticipated improvements in the economic cycle, not a secular growth story on a company immune to economic fortunes. If Australia's construction picks up in the next 12-18 months, then CAV will sing.

Disclaimers: I am not an authorized financial advisor. I’ve posted what I have done, not want I want you to do. If you act on the comments of an anonymous poster on the internet called “Sparky the Clown” then you will have some explaining to do to loved ones if the investment goes sour. Do your own research. I am unavailable to enter into discussion on this post, but hope that it spurs on others to consider this company’s merits, or otherwise.