Comvita - CVT

[Balance]

The one thing I haven't figured out is why are they forecasting only mid single digit revenue growth? That's more in line of a mature company no? I thought with China and North America the growth could be double digit or at the very least high single digit?

I love the margin improvement and bottom line growth but top line is still important.. gains from cutting middle management and simplifying the business only happen once.

Is it more a honey bee or production issue?

Under promise & over deliver - as opposed to the old management’s over promise & under deliver.

[winner69]

Good they upgraded full year Operating EBITDA to between 22.5m and 25.5m

Lets assume it's going to be 25.1m

That implies H2 is going to be 13.0m (FY 25.1m less H1 12.1m)

But they said Underlying EBITDA in H220 was 18.4m

So is Operating EBITDA going backwards big time in the second half of year v pcp

I have assumed Underlying EBITDA and Operating EBITDA are the same thing - maybe that's where I am wrong

Surely not - earnings going backwards

[winner69]

Even if you use just what they call EBITDA it's not that good

H221 guidance 14m v 13m pcp -- hardly staggering stuff

And then there's 40% more shares out there than a year ago - what impact on EPS

[Balance]

Good they upgraded full year Operating EBITDA to between 22.5m and 25.5m

Lets assume it's going to be 25.1m

That implies H2 is going to be 13.0m (FY 25.1m less H1 12.1m)

But they said Underlying EBITDA in H220 was 18.4m

So is Operating EBITDA going backwards big time in the second half of year v pcp

I have assumed Underlying EBITDA and Operating EBITDA are the same thing - maybe that's where I am wrong

Surely not - earnings going backwards

Good analysis, W69.

And I agree that it is not good that EBITDA should be going backwards when company is going through transformative changes in performance.

Says to me that we will see upgrades from CVT in the next 4 months leading to FY2021 results.

[Balance]

Hmmmmm - hope CVT is not relying on Daigou recovery to drive sales & earnings growth!


https://www.stuff.co.nz/business/124...9-will-rebound

Border closures as a result of Covid-19 have hindered the popular daigou honey trade, where international tourists, students and other private traders ship honey to China, but mānuka honey company Comvita is confident the market will recover.

[percy]

From CVT's 13th April update.
"The increase in range is caused by ongoing strong growth in its focus growth markets of China and
North America (offsetting ANZ and Hong Kong challenges), strong performance in the digital channel
now accounting for over 30% of group sales, continued efficiencies in production and good cost control."
Also in a previous announce they stated they aim to grow online sales [digital channel] to 50% of total revenue.
So the return, if and when it happens, of the daigou channel will see better results for ANZ,so CVT are not reliant on that channel.
It will be "the bonus".

[BlackPeter]

The one thing I haven't figured out is why are they forecasting only mid single digit revenue growth? That's more in line of a mature company no? I thought with China and North America the growth could be double digit or at the very least high single digit?

I love the margin improvement and bottom line growth but top line is still important.. gains from cutting middle management and simplifying the business only happen once.

Is it more a honey bee or production issue?

Well, I do see them at current as a solid agricultural business with appropriate P/E ... and I think that the forecasts sort of see the same thing.

However - it is well possible that stock or consumer market hype or both will catch them (like it used to catch e.g. ATM and SML during their better times for selling this magic milk more people can digest without problems) and reward CVT for selling this magic Manuka honey which cures everything and is good for eternal beauty as well - best thing after ingesting deer penis or similar ..

I'd consider this hype (if it eventuates) as a bonus - and this would be when the exponential earning rates come in :

Otherwise - with the right management - just a nice solid long term hold and dividend earner. Anyway, that's like I see it.

[winner69]

Good analysis, W69.

And I agree that it is not good that EBITDA should be going backwards when company is going through transformative changes in performance.

Says to me that we will see upgrades from CVT in the next 4 months leading to FY2021 results.

UPGRADES and more UPGRADES ... -good stuff

as Jenny Ruth proclaimed last week Comvita upgrade a milestone towards regaining credibility

[winner69]

Comvita EBITDA margin to be about 12% this year

Just imagine if they achieved EBITDA margin in excess of 25% ...like A2 do in a bad year

[Balance]

UPGRADES and more UPGRADES ... -good stuff

as Jenny Ruth proclaimed last week Comvita upgrade a milestone towards regaining credibility

'New' CEO knows how to play the upgrade story - bit by bit, always leave some in the kitty (just in case) and as we have seen market will progressively regain confidence and begin to price in PE expansion.