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Thread: Comvita - CVT

  1. #1571
    ShareTrader Legend Beagle's Avatar
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    Good summary Balance. Add in that this company is second to only PEB on the NZX in terms of its inability to forecast anything. Their track record of consistently having massive misses with forecasts over many years is truly confronting, so much so they would simply be better to stop forecasting altogether and simply report the results.
    Very good stock to avoid.
    Last edited by Beagle; 23-01-2020 at 11:12 AM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  2. #1572
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    Quote Originally Posted by Beagle View Post
    Good summary Balance. Add in that this company is second to only PEB on the NZX in terms of its inability to forecast anything. Their track record of consistently having massive misses with forecasts over many years is truly confronting, so much so they would simply be better to stop forecasting altogether and simply report the results.
    Very good stock to avoid.
    Would have some takeover appeal except:

    1. They now have a hard core 17% shareholder in there & another (probably really pissed off - having paid $10.60 & $7.25 per share) 10% shareholder now so nothing is going to happen,

    2. Other players have bought into the industry and set up their own brands and distributions successfully.
    Last edited by Balance; 23-01-2020 at 11:29 AM.

  3. #1573
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by Balance View Post
    Would have some takeover appeal except:

    1. They now have a hard core 17% shareholder in there & another (probably really pissed off - having paid $10.60 & $7.25 per share) 10% shareholder now so nothing is going to happen,

    2. Other players have bought into the industry and set up their own brands and distributions successfully.
    One wonders how Westpac are feeling about being potentially stung for $100 million ? No worries because that honey mountain of stock could be easily liquidated, (cough cough,... has anyone got a medicated honey lozengier they could give me). They'll want to have confidence any new CFO the company may be able to hire won't be pulling beeswax over their eyes.
    Last edited by Beagle; 23-01-2020 at 01:51 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  4. #1574
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    Quote Originally Posted by Balance View Post
    Comvita issues are that:

    1. The golden days of super high margins for its products are over,

    2. The company's cost base is too high,

    3. Competitors (like Hong Leong group and China players) have entered the market - they have deeper pockets and superior distribution & marketing network in China & Asia,

    4. Competitors have locked in supply contracts with numerous bee-keepers, depriving CVT of the abundant supply it used to access,

    5. The new MPI standard has leveled the playing field - CVT is no longer the only standard bearer of quality manuka honey,

    6. Much of the manuka honey out there are multi-flora, not mono-flora.

    7. Management and board have for 4 years showed no progressive ability to tackle and manage the above issues (refer post #1565)

    Let's see what the new CEO can do.

    My expectations are that he will initiate a massive write-down, necessitating a capital raising and several years of 'repositioning' - even while its competitors move ahead.
    Let me point out some potentials.

    1. CVT is Number 1. honey brand sales in China. It has got large amount of loyal customers. Word of mouth will make the base even larger. Sales were over $50m in China of 2019 FY. China market size is $1.5b. It's highly possible for CVT to substantially increase market share in China.

    2. Similar opportunity exists in North America with market size nearly $500m there.

    3. New CEO successfully made Methven go private at nearly 40% premium on SP. It's possible he will do the same thing in CVT.
    Last edited by Lease; 24-01-2020 at 01:31 PM.

  5. #1575
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    The above points are good thoughts, but this company isn't a new company, its been one that's failed to recover. It's possible the CEO pulls a trick out of his hat and drives the SP up. Best thing would be Chinese take over imo

  6. #1576
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    Quote Originally Posted by Lease View Post
    Let me point out some potentials.

    1. CVT is Number 1. honey brand sales in China. It has got large amount of loyal customers. Word of mouth will make the base even larger. Sales were over $50m in China of 2019 FY. China market size is $1.5b. It's highly possible for CVT to substantially increase market share in China.

    2. Similar opportunity exists in North America with market size nearly $500m there.

    3. New CEO successfully made Methven go privately at nearly 40% premium on SP. It's possible he will do the same thing in CVT.
    To consider:

    1) Being #1 is sales doesn't necessarily mean you make a profit.
    2) EVERY Manuka honey company which is struggling in China is now going after the US, it's alot harder to get penetration and scale there. Companies which have supply arrangements to large retailers over there (i.e. Costco) are not seeing the volume growth they thought would be there and are having to work alot harder than during the China boom....
    3) If the SP gets beaten down more then a 40% premium would look pretty good...
    Last edited by kiwidollabill; 24-01-2020 at 01:01 PM.

  7. #1577
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    Quote Originally Posted by kiwidollabill View Post
    To consider:

    1) Being #1 is sales doesn't necessarily mean you make a profit.
    2) EVERY Manuka honey company which is struggling in China is now going after the US, it's alot harder to get penetration and scale there. Companies which have supply arrangements to large retailers over there (i.e. Costco) are not seeing the volume growth they thought would be there and are having to work alot harder than during the China boom....
    3) If the SP gets beaten down more then a 40% premium would look pretty good...
    CVT did report net profit before tax in China was $5.8m in 2019 FY even though overall the company made huge loss that year. I think if CVT could reach larger scale of consumers, it would made more profit.

    I feel take over bid is highly likely given the fact CVT biggest shareholder is a Chinese.

  8. #1578
    ShareTrader Legend bull....'s Avatar
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    just back from fishing , share price is up makes a change. anyway bad management is the main cause of trouble i reckon. the major s/h keep taking shares instead of cash latest example being the buyout of the china joint venture , so they obviously rate the company otherwise would have taken all cash.
    one step ahead of the herd

  9. #1579
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    comvita is up today people must be buying more for the potential manuka health benefits in combating corona virus?
    one step ahead of the herd

  10. #1580
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    Quote Originally Posted by bull.... View Post
    comvita is up today people must be buying more for the potential manuka health benefits in combating corona virus?
    Good timing with your foray into Comvita....did u have inside info about this virus thing
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

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