Comvita - CVT

[Fox]

Exactly my thoughts Roger whilst reading the outlook re. China concerns this morning. There seems to be a u-turn on what was said in the NZ Herald statement to what was said today in the announcement. Correct me if I'm wrong, but "not affecting the company's overall sales" is not at all the same as emergence of "uncertainty in the re-export market distribution channels". This extra doubt/risk is then said to be "reduced" through redirection of productions through alternative distribution channels. Pretty conflicting statements that have a lot of room for interpretation eh.

Any new regulations disrupting existing supply channels would surely have a negative impact on margins as channels would have to be reworked whilst demand and supply issues would drop off in the short-term due to any potential tax or issues in China. Also this reduction in uncertainty could be interpreted as not quite 100% reduction in harm, so there may be some hinting towards a tail off in sales and our growth.

This is a growth company which is priced on a modest multiple given its track record over the past couple of years of fantastic growth. Any hinting of negative sentiment towards the demand from their biggest market, China, where ~60% of the products end up, certainly raise some alarm bells in my head. An increase in risk/uncertainty on forward growth prospects will need additional rewarding in terms of the share price returns, which is why I suspect we have seen a drop in today's price. Also not to mention the possibility of some sort of information leak in the weeks leading up to today's announcement which was relatively strong.

Disc. - sold a couple

[kiwidollabill]

^ A crapload of CVT product enters China through the grey channel and will be recorded on the statements as NZ/AUS sales. I will be very surprised if the SLT is not concerned on how future regulation may affect their overall sales or at least management of their distribution chain.

[trader_jackson]

Less than 4 weeks ago http://www.nzherald.co.nz/business/n...ectid=11683336 Extract

Now hands up who thinks the herald accurately reports exactly what is said at all times, (sometimes in my experience), but anyway you be the judge if you think that gave a somewhat disingenuous view of whether the Chinese regulatory changes were having an effect or not.

I gathered the impression, perhaps incorrectly that there was no material change or effect on Comvita...obviously that's at a divergence to what's been said in the annual result commentary today.

On a strict interpretation what he said could be said to be technically correct, overall sales may not have been affected much because of growth in other regions but the regional sales to China obviously have been. Perhaps he could have been a little more forthcoming in what he said on 29 July ?...I am a little disappointed he wasn't.

Agree with Ratkin, volumes can be slim but would have been improved by a share split...oh well...another time perhaps.

I talked to a friend about this... couldn't believe that the Comvita chief executive could turn around and make such a claim, so quickly...

For me, seemingly never ending inventory build ups (that in percentages, are consistently increasing 2-3x more than revenue increases), margin decreases, concerning cash flows, dramatic recent increase in debt, and chinese regulatory uncertainty are all important things to be considered...

However what is more alarming to me, seeing this is a growth stock, is that management seemingly don't actually know there biggest market/opportunity, china, and what is really going on... making such a direct confirmation of "no it doesn't affect us" in this nz herald article 4 weeks ago, then a 'near hidden' U turn today of "hmm maybe it does affect us, but hopefully shouldn't too much", is concerning... then the fact the share price tracked down in the days/weeks leading up to results simply doesn't help...it would appear some not-so-sweet honey leaked out early

Good luck to the holders, but I will be waiting till they can confirm they understand their key opportunity/market, they stop increasing inventory dramatically more than revenue growth, show they can keep debt under control, and get back to at least operating cash flow positive

Disclosure: was very tempted, and expected/hoped to see pretty good results, instead got shocked left, right and centre

[Baa_Baa]

It's a brave bobby that buys a confirmed downtrend, this trusty weekly chart said "get out" the week ending July 15 and confirmed quickly afterwards, week ending July 22nd.

But it's been a heck of a good run prior so understandable that some (many?) will be sitting on big capital profits, reluctant to cut paper gains. The bounce failed three times (weekly basis) at the rising trend line support (now resistance). Todays fail at $10 support is a bad look. The indicators (not shown) are all over-sold already, but that's no guarantee of a turnaround, moreso the seller/buyer tension in the market.

Tight stops for the brave, save them from becoming the foolhardy. It could easily go lower on current sentiment, be nimble, next buyer support is about $8.23. Have a plan either way, just in case it bounces here.

Attachment 8249

Jmo, a TA perspective.

[Ghost Monkey]

I know its hard to believe that some of us are in business and have a lot of time pressure on us and don't have a lot of time at certain times of the day. When time allowed I had a deeper look at the issues. It is a solid result but there are growing pains, the two statements are not mutually exclusive DYOR

On the same boat. If only we all had as much time as winner eh? But I just can't help myself with regard to some of your posts, the sales pitch is just too much. You've been banging the strong growth (actually I think it was "sensational growth" mentioned a few months back) as well as share splits, first 10:1, then 5:1, on this one for months. Perhaps you should sprinkle some risk assessment over your honey and apples first before taking a bite? You need a bit of balance, like Balance eh?

Comvita has some great products and I still like their long term prospects but a healthy dose of caution is warranted.

Regulatory risk, not really a hell of a lot of research to back up some of the sensational claims made by sellers of manuka honey and the fact that everyone left right and centre seems to be jumping on the manuka honey wagon to riches at the moment, makes me wonder how this will all unfold. Jeez, I thought Comvita was expensive until I saw this lot.
umf-24-raw-manuka-honey-steens-250g-nz785u-front-900x900.jpg

Who in their right mind would pay for this????? Tulips anyone?

I don't buy the stuff anyone. Too expensive for too little benefit. Plenty of other good alternatives.

But all that aside, if China is really the driving force behind the sp over the last couple years, as it seems, whether through direct or indirect sales, then I'll be staying firmly on the sidelines. Things will get a lot worse when China goes 'kaboom'. I'll check back in after that.

I'm afraid Winner's bowling mates won't like my views though.......oops.

[horus1]

I am along term holder. They went to high when they went into a higher index. I will be adding to shareholding at these prices.have a fair ew shares. Good products ,that work and good company.

[winner69]

All this talk about the difficulty China might or not be putting up restrict access doesn't seem to be affecting the A2 Milk share price of late

[RGR367]

..............

Jeez, I thought Comvita was expensive until I saw this lot.
umf-24-raw-manuka-honey-steens-250g-nz785u-front-900x900.jpg

Who in their right mind would pay for this????? Tulips anyone?

Never seen it and since you haven't included the price I cannot really say whether that is really expensive compared to those made by CVT. But once I observed an asian lady getting all those CVT honey on the shelves at Pak N Save Porirua. All of more than 50 bottles straight to her trolley and she's still looking for more. And at more than $34 a pop then if I'm not mistaken, I say that's some big money for CVT. She was probably one of those "daigou" completing an order.

disc: not a shareholder and still reconsidering now if I ever want to become a holder after the report

[Ghost Monkey]

oops, sorry, you're right, I copied and posted the wrong link..my bad.

https://nz.steenshoney.com/steens-ra...ed-250g-nz785u

$385.99 for 250g. The market for this stuff has gone nuts and I wouldn't be surprised by a bit of a backlash. In fact the Herald the morning has expanded on recent claims of 'fake' product in the UK. From consumers point of view this is bad. God knows what is showing up in China.

http://www.nzherald.co.nz/business/n...ectid=11699668

[winner69]

Common sense prevailed (thanks ratkin and baabaa and hoop didn't email e)

Cancelled the rest of the order - will wait for sanity to return and then reassess

Now what to do with the few i got yesterday - stop loss is 950