Comvita - CVT

[winner69]

The new CEO might be useless / not rated but he could be the $15m man (increase in mkt cap since announced)

And CVT haven’t even started buying their own shares yet (to give to the CEO when he starts)

[winner69]

The new CEO might be useless / not rated but he could be the $15m man (increase in mkt cap since announced)

And CVT haven’t even started buying their own shares yet (to give to the CEO when he starts)

He’s the $25 million man now

Market seems to LOVE this new guy


If that’s the reason behind the price increase

[Lease]

CVT is world No.1 Manuka Honey producer. There aren't many NZ firms called world No.1(another can be FSF but it's too big to handle) and Comvita has got great brand awareness in China. Even it made loss last year. Sales in China were still up. This year's single day(11/11) which is China's black Friday, Comvita honey is No.1 sales among all honey brands at China's big e-commerce platforms of Tmall and JD.

CVT made profit at last quarter of 2019, I expect it will make profit for 6 months ended 31 Dec. and SP should be continuing up.

[Balance]

CVT is world No.1 Manuka Honey producer. There aren't many NZ firms called world No.1(another can be FSF but it's too big to handle) and Comvita has got great brand awareness in China. Even it made loss last year. Sales in China were still up. This year's single day(11/11) which is China's black Friday, Comvita honey is No.1 sales among all honey brands at China's big e-commerce platforms of Tmall and JD.

CVT made profit at last quarter of 2019, I expect it will make profit for 6 months ended 31 Dec. and SP should be continuing up.

No big hurry with this puppy imo.

Good that a new CEO is going to be onboard from 20th Jan 2020 but there's a few things he will want out of the way first.

David will want to clear the cupboard of all of its skeletons - so expect more write-offs and one-offs when CVT reports its interim next month.

Meanwhile, CVT is half way through its $650k purchase of shares for the new CEO as part of his employment terms?

Makes little sense (imo) to be buying shares during the low liquidity Christmas/New Year period which begs the question of how well the financial team there understands market dynamics?

[Balance]

No big hurry with this puppy imo.

Good that a new CEO is going to be onboard from 20th Jan 2020 but there's a few things he will want out of the way first.

David will want to clear the cupboard of all of its skeletons - so expect more write-offs and one-offs when CVT reports its interim next month.

Meanwhile, CVT is half way through its $650k purchase of shares for the new CEO as part of his employment terms?

Makes little sense (imo) to be buying shares during the low liquidity Christmas/New Year period which begs the question of how well the financial team there understands market dynamics?

https://www.nbr.co.nz/story/comvita-...hit-books-2021

More write-downs and expenses to be incurred as a consequence of strategy overhaul - totally to be expected.

Then, there's the capital raising to make sure the company is 'well-positioned' under the new CEO and 'new' chairman.

What mess the board and previous CEO have made of what should be an outstanding NZ story.

Really need to boot out Neil Craig whose chairmanship led the company into the mess it is in. Get rid of the bad smell.

[Cadalac123]

Can they just let a Chinese company take them over already so the shareprice can spike

[Lease]

Hopefully new CEO is able to sort out the issues.

In terms of valuation, CVT is definitely undervalued. In 2011, Cerebos offered $2.5 to acquire CVT. That time independent valuation showed CVT was worth $3.4-$4.0.

Now CVT revenue has increased by 1.2 times, profit(2018) up by 15 times, net assets up by 1.4 times. Yet SP is still under $3.

Plus CVT have successfully entered China which is the world largest consumer market. Can CVT perform like A2? not expect so but its SP should be doubled.

[bull....]

im started nibbling as a turn around play or most probably as a takeover target by the chinese esp if price keeps going lower

[kiwidollabill]

https://www.nbr.co.nz/story/comvita-...hit-books-2021

More write-downs and expenses to be incurred as a consequence of strategy overhaul - totally to be expected.

Then, there's the capital raising to make sure the company is 'well-positioned' under the new CEO and 'new' chairman.

What mess the board and previous CEO have made of what should be an outstanding NZ story.

Really need to boot out Neil Craig whose chairmanship led the company into the mess it is in. Get rid of the bad smell.

I still find it strange that the CEO in charge (Brett H) when they 'were suppose to be adapting to the market' has come up with the strategy and now the new chairman....

Reading between the lines we should expect alot of 'cost out' exercises with the new CEO

....to be a “low-cost producer of high-quality ingredients” sounds more like a Fonterra than an ATM

Doesnt paint much of an expectations of a growth company so I dont see the SP justified north of where they are for some time yet...

Devils advocate story is that they got suckered into the boom story of manuka (Brett H was touting $400M of revenue by 2020) went for growth of supply without focusing enough on the customer/market and now are in a bust when the world shifts against them - they're going into a commodity spiral... Certainly not the first time in NZ agribusiness and wont be the last (cannabis is the current poster child).

[BlackPeter]

Hopefully new CEO is able to sort out the issues.

In terms of valuation, CVT is definitely undervalued. In 2011, Cerebos offered $2.5 to acquire CVT. That time independent valuation showed CVT was worth $3.4-$4.0.

Now CVT revenue has increased by 1.2 times, profit(2018) up by 15 times, net assets up by 1.4 times. Yet SP is still under $3.

Plus CVT have successfully entered China which is the world largest consumer market. Can CVT perform like A2? not expect so but its SP should be doubled.

You forget that CVT had at that stage a huge and in no way justifiable hype premium for selling a miracle cure against every possible ailment. By now reality caught up and the market knows that they sell just another boring agricultural product without any particular health properties (well, not different from any other honey). Much of their product does not even comply with the standards for Manuka honey. Market has seen as well board and management consistently acting and forecasting over years in a highly incompetent manner.

Even if the 2011 valuation had anything to do with reality (what I doubt) - the facts have changed since then.

I see a poorly run agricultural producer with a forward PE (2019 to 2022) of around 600! This must be the order of magnitude google and amazon are running on, but they are both growth companies with management knowing what they are doing;

Even if I ignore for them the disaster years 2019 (and 2018 and 2017 which according to management all have been "one offs" which never will happen again) and assume against all reason that from now on they will deliver what a bunch of overoptimistic analysts seems to believe - an average EPS of 21 cents for 2020 to 2022 (remember, this is only if the weather conditions will be perfect which is unheard of for this company), they might be worth a PE of 10 - say $2.10 per share.

However - given that there is the real world and a bunch of managers who failed again and again ... If you are a betting man, I think there might be better horses around to bet on.