Comvita - CVT

**Catalyst** · 14-10-2011, 01:22 PM

Just listened in on the conference call by the Comvita Chairman. Key points:

1. The company reitereated its recent net profit guidance of between $7.3 - $8.2m for FY12.
2. CVT have had recent correspondence with Cerabos but for information gathering only.
3. The company believes the $2.50 bid severely undervalues the company.

I would imagine the independent advisors report would use PE multiples of at least 15x - 17x and EV/EBITDA multiples of 8x - 9x on the FY12 forecasts (ie share prices of around the $4 mark).

This bid may spark further interest from other parties too.

Disc. Holding on.

**Felonius** · 15-10-2011, 04:12 PM

Phaedrus. I love your insights - so helpful. I need to take your advise extremely seriously henceforth as my capital has been savaged.

Bought into Comvita recently at $2 per share. The trick now is to identify the correct time to exit.

Thank you for making the effort to educate us.

**Catalyst** · 16-11-2011, 01:09 PM

A very good 1H result from CVT yesterday and confirmation that it is on track for FY net profit of between $7.2 - $8.3m.

The $2.50 offer from Cerebos will obviously not succeed. The question remains whether they will up their offer or a new bidder emerges.

I still think the Grant Samuels report (out this week or next week) would value the company using PE multiples of around 15x - 17x and EV/EBITDA multiples of around 8x - 9x on the FY12 forecasts (ie share price valuations of around the $4 mark).

Worst case scenario is the offer fails and no other bidder emerges. If that pans out I don't think the share price will fall too much. CVT will now be on people's radar.

Disc. still holding

**winner69** · 22-11-2011, 10:00 AM

NBR front page last week has a rave about director Taits purchase of 25,000 shares at $1.77 in August just before the takeover .... sort of saying Tait probably didn't know how they were 'tracking very well' (Chirmans words) .... yeah right

He's one lucky punter that guy Tait eh

**Catalyst** · 22-11-2011, 09:54 PM

"Reject offer. Indep val between $3.40 - $4.00".

Fairly predictable. I thought the indep valuation might have been a bit higher though.

At the current share price of $2.95 and using the company's 31 March 2012 net profit guidance midpoint of $7.7m (which they reiterated again today), CVT is currently trading on a PE multiple of 11.4x and a EV/EBITDA multiple of 7.0x. Hardly expensive stuff even if no other higher bids emerge.

**winner69** · 29-11-2011, 09:12 PM

Getting interesting ... Cerebos saying the company and Grant samuel talk a load a **** .... or something like that

Maybe 250 was a bit cheeky but $4 is outrageous

Would you buy a cash flow of $14m (if things continue to improve and keep on going to to plan) for $130m? Probably not considering the risk involved

Methinks Cerebos will say go 300 at tops and if you guys don't like that they'll walk away (and prob come back in a few years time and offer 200)

**Blendy** · 29-11-2011, 11:01 PM

yes, that sounds very reasonable. I think i will consider selling out soon and walk away with a tidy profit.

**sharer** · 01-12-2011, 03:56 PM

Threat by Cerebos to withdraw & instead set up a competing business could be a trifle depressing.
Comvita can really only counter that by turning in a stonking good performance for shareholders almost immediately.
That would mean a sudden switch from reinvestment in developing international business for CVT, towards maximising short term gain for shareholders instead.
There could be rational arguments to show such a switch just at the point where the previous strategy seems to be working well, would be to the detriment of the business, & therefore a reason to sell out. Possibly CVT is about to suffer a destructive clash of personalities.
While i was quite happy to be in CVT before the Cerebos intrusion, now i've been pondering the same questions as Winner69 & Blendy.
Seriously considering an exit fairly soon, with a view to re-entry later when smoke has cleared from the manuka groves.