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Thread: Comvita - CVT

  1. #1051
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    Quote Originally Posted by iceman View Post
    I find it interesting that we have all these discussions on CVT thread while a little noticed and much better run company in the same (sort of) industry headquarters just down the road is steadily increasing all the right numbers. Go SEK
    Seeka looks OK but the Chinese aren't gonna pay a premium for Chinese gooseberries when they can just grow it themselves.

    It's kinda like the difference between gold and silver, where both have similar properties but one of them has that "X" factor which makes it worth so much more. This is why this stock is so much more exciting, because it's so hard to value this unique X factor. Some people think it's snake oil and a fad, where as others regard it as a miracle food and will pay hundreds of dollars per kg. What ever the case it's rare, and highly sort after.

    Basically, the market is trying to work out the correct premium to add (if any). My opinion is that it should be significant given it's dominant market position, long trading history, it's vertical integration, and strong global brand awareness.

    More importantly, it can't be recreated. The Chinese have a reputation of copying, imitating, ripping off, and circumnavigating other companies. In this situation they have no choice but to make a take over.

    I'm sure you'll do well with Seeka. CVT is definitely more of a riskier stock, and not for value investors.
    Last edited by Ogg; 21-04-2018 at 01:24 AM.

  2. #1052
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    Ogg "More importantly, it can't be recreated. The Chinese have a reputation of copying, imitating, ripping off, and circumnavigating other companies. In this situation they have no choice but to make a take over." BUT NZ goosberries have a unique competitive advantage.Its all in the breeding,grower contracts(even in China) & branding. Chjnese may try to copy but can only pick off low hanging fruit

  3. #1053
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    Quote Originally Posted by Ogg View Post
    Seeka looks OK but the Chinese aren't gonna pay a premium for Chinese gooseberries when they can just grow it themselves.

    It's kinda like the difference between gold and silver, where both have similar properties but one of them has that "X" factor which makes it worth so much more. This is why this stock is so much more exciting, because it's so hard to value this unique X factor. Some people think it's snake oil and a fad, where as others regard it as a miracle food and will pay hundreds of dollars per kg. What ever the case it's rare, and highly sort after.

    Basically, the market is trying to work out the correct premium to add (if any). My opinion is that it should be significant given it's dominant market position, long trading history, it's vertical integration, and strong global brand awareness.

    More importantly, it can't be recreated. The Chinese have a reputation of copying, imitating, ripping off, and circumnavigating other companies. In this situation they have no choice but to make a take over.

    I'm sure you'll do well with Seeka. CVT is definitely more of a riskier stock, and not for value investors.
    Agree with your last sentence. I know its the wrong thread but Kiwifruit exports to China have grown from $123m in 2014 to over $400m in 2017, so don't agree with your statement that the Chinese can "just grow it themselves" !!
    Wish you well with CVT

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    Quote Originally Posted by kiora View Post
    Ogg "More importantly, it can't be recreated. The Chinese have a reputation of copying, imitating, ripping off, and circumnavigating other companies. In this situation they have no choice but to make a take over." BUT NZ goosberries have a unique competitive advantage.Its all in the breeding,grower contracts(even in China) & branding. Chjnese may try to copy but can only pick off low hanging fruit
    Quote Originally Posted by iceman View Post
    Agree with your last sentence. I know its the wrong thread but Kiwifruit exports to China have grown from $123m in 2014 to over $400m in 2017, so don't agree with your statement that the Chinese can "just grow it themselves" !!
    Wish you well with CVT
    They do grow it themselves, in fact they grow almost 5 times as much as New Zealand (Wikipedia). It's not even from NZ, it's a native plant from China, just lol. According to this article they have also had "problems" exporting to China too. Even the name Kiwifruit is just a marketing ploy, which they can't use over there so they have to use the brand name Zespri or something.

    I would question the long term outlook. Is the recent ramp up in sales just high end Chinese consumers buying while the market is in it's infancy? Would you be able to compete with the local domestic market there long term? The Chinese will want to protect their industry. It may have been a nice few years but sooner or later the door will close or exports will taper off with increased regulation.

    Look, we're all in the same boat here. Nobody is doubting New Zealand's agriculture industry and it's prime position on the door step to Asia. Everyone is doing well. However, there's a major difference between something that can easily be grown in 'the back of the rice paddy fields' and something that is unquestionable unique. I don't just mean unique, I mean exclusive. For example, you can say that USA has oranges or Ecuador has bananas etc but oranges and bananas grow all over the world so it's not exclusive.

    It's more than just slapping a "branding sticker" on it and saying it's from "clean, green, NZ". That's what Seeka is likely doing and having some limited success. It's still very much similar to what Tegal would do, "slapping a branding sticker" on a chicken and claiming it's gonna export it all over Asia, "yeah right" (Tui billboard).

    Will find out sooner or later just how much the Chinese will pay for Comvita. Anything less than $10 per share is likely going to be rejected by the board as they are well aware of the situation and judging by the last take over attempt they understand the true underlying value offered here.

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    If you saw the Kiwifruit orchards in China you might not want to eat it. Some of the growers wont even eat their own fruit.....

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    Quote Originally Posted by kiwidollabill View Post
    If you saw the Kiwifruit orchards in China you might not want to eat it. Some of the growers wont even eat their own fruit.....
    So why is Zespri planning on growing Kiwifruit in China then? I think if you read this article it provides a good overview of what we've been discussing (don't forgot to read the comments at the bottom). It's a pretty interesting read and relates to both Comivta, Seeka, and also A2 Milk:

    https://www.stuff.co.nz/business/ind...fruit-in-China

    The key take away to understand (and this is more of a personal view and a bit of a conspiracy theory) is that ultimately it's about "China first". From China's prospective their end goal is to have everything produced in China. In other words, they're not going to continue to buy over priced kiwifruit and infant milk forever. Their end goal is to effectively steal the (food) technology and then repatriate it back to China.

    Alot of these JV and partnerships are just a way for China to expedite this process. Yes, for a few years we get high prices for kiwifruit and milk but once their domestic market ramps up production and improves food safety that's when they'll switch back to local producers. What I'm saying is that eventually China will be able to produce good quality kiwifruit and milk and that's when they'll roll out protectionism rules and effectively shut out the global market. Say good bye to A2 and Seeka shares when this happens.

    And, that's what brings me back to Comvita, because if they try and do the above the can't, because it's EXCLUSIVELY only available here, and Comvita EFFECTIVELY has a global monopoly. That's why I'm expecting a huge take over premium.

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    Quote Originally Posted by Ogg View Post
    So why is Zespri planning on growing Kiwifruit in China then? I think if you read this article it provides a good overview of what we've been discussing (don't forgot to read the comments at the bottom). It's a pretty interesting read and relates to both Comivta, Seeka, and also A2 Milk:

    https://www.stuff.co.nz/business/ind...fruit-in-China

    The key take away to understand (and this is more of a personal view and a bit of a conspiracy theory) is that ultimately it's about "China first". From China's prospective their end goal is to have everything produced in China. In other words, they're not going to continue to buy over priced kiwifruit and infant milk forever. Their end goal is to effectively steal the (food) technology and then repatriate it back to China.

    Alot of these JV and partnerships are just a way for China to expedite this process. Yes, for a few years we get high prices for kiwifruit and milk but once their domestic market ramps up production and improves food safety that's when they'll switch back to local producers. What I'm saying is that eventually China will be able to produce good quality kiwifruit and milk and that's when they'll roll out protectionism rules and effectively shut out the global market. Say good bye to A2 and Seeka shares when this happens.

    And, that's what brings me back to Comvita, because if they try and do the above the can't, because it's EXCLUSIVELY only available here, and Comvita EFFECTIVELY has a global monopoly. That's why I'm expecting a huge take over premium.
    Over the past decade or two Chinas food safety standards and production have been improving "bigly"... yet their imports of premium overseas product has been rising rapidly
    The people who buy domestic products in China are the lower-middle classes., the premium imported products are there for the middle-upper classes.
    The culture is heavily centred around status, New Zealand is a brand to their consumers, a premium brand afforded by few.
    Remember Comvitas ( +A2M ) products are not being bought by your average Joe factory worker in China... The higher end consumer doesn't care what or how much of something is produced domestically in China end of story...

    https://cdn.auckland.ac.nz/assets/fo...drew%20Zhu.pdf

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    Quote Originally Posted by hardt View Post
    Over the past decade or two Chinas food safety standards and production have been improving "bigly"... yet their imports of premium overseas product has been rising rapidly
    The people who buy domestic products in China are the lower-middle classes., the premium imported products are there for the middle-upper classes.
    The culture is heavily centred around status, New Zealand is a brand to their consumers, a premium brand afforded by few.
    Remember Comvitas ( +A2M ) products are not being bought by your average Joe factory worker in China... The higher end consumer doesn't care what or how much of something is produced domestically in China end of story...

    https://cdn.auckland.ac.nz/assets/fo...drew%20Zhu.pdf
    Thanks for that link. Yeah, I agree with all that. However, it's pretty common knowledge though. The hard thing is predicting what the Chinese market will be like in 10-15 years from now.

    At the moment, all of the New Zealand food exporters are doing well, especially the leading brands. As the Chinese middle class grows it will make up a higher percentage of the market. That will likely create further demand for "local brands" and over time their reputation will grow to equal that of other international brands. Eventually the prestige of having something imported will fade and in opinion, only the top 1% of international brands will survive in China.

    Also, as China is a one party state, this change could happen quickly as regulation could easily be brought into place to help protected the consumer and their local economy. Unlike the Western world, there is no level playing field or 100% free trade there.

    I think this is what "China Resources" will be considering with their take over offer of Comvita, and why they see it as a good long term play. I believe that A2 Milk will eventually collapse or pull out of China (not anytime soon), as the Chinese will come up with their own local version and copy them. However, Comvita has to be taken over as they can not copy them.

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    Quote Originally Posted by Sideshow Bob View Post
    Farmers Weekly chat with Neil Craig

    https://issuu.com/farmersweeklynz/do...68707/60388817

    "Big inventory to guard against poor harvest"
    So why would a bad harvest impact so very very badly on sales and profitability then?

    Something smells badly and it's not the manuka honey or the ants!

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    Quote Originally Posted by Ogg View Post
    So why is Zespri planning on growing Kiwifruit in China then? I think if you read this article it provides a good overview of what we've been discussing (don't forgot to read the comments at the bottom). It's a pretty interesting read and relates to both Comivta, Seeka, and also A2 Milk:

    https://www.stuff.co.nz/business/ind...fruit-in-China

    The key take away to understand (and this is more of a personal view and a bit of a conspiracy theory) is that ultimately it's about "China first". From China's prospective their end goal is to have everything produced in China. In other words, they're not going to continue to buy over priced kiwifruit and infant milk forever. Their end goal is to effectively steal the (food) technology and then repatriate it back to China.

    Alot of these JV and partnerships are just a way for China to expedite this process. Yes, for a few years we get high prices for kiwifruit and milk but once their domestic market ramps up production and improves food safety that's when they'll switch back to local producers. What I'm saying is that eventually China will be able to produce good quality kiwifruit and milk and that's when they'll roll out protectionism rules and effectively shut out the global market. Say good bye to A2 and Seeka shares when this happens.

    And, that's what brings me back to Comvita, because if they try and do the above the can't, because it's EXCLUSIVELY only available here, and Comvita EFFECTIVELY has a global monopoly. That's why I'm expecting a huge take over premium.
    This isnt the first time they tried....last attempt saw the gold PVR cultivar stolen and planted en mass. They're doing it now very cautiously.

    You can get Australian Manuka honey.... their growth to China in the last 2 years has been strong, it scares the NZ industry to no end.

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