CAV - Cavalier Corp (Carpets)

[winner69]

The other thing I forgot to mention is that Godfrey Hirst seem to run rings around them and they are a fierce competitor

Especially so in the commercial sector

[Lizard]

The other thing I forgot to mention is that Godfrey Hirst seem to run rings around them and they are a fierce competitor

Especially so in the commercial sector

I'm not sure if you're being serious or stirring the pot here?

[Lizard]

Okay, time to watch a little more closely... share price collapsing - pick your cause:

• ACC finished their latest buying spree?
• Hills Floorings announces liquidation?
• Impending results season?

I think there is a possibility they may have taken the retrenchment drive a little far - perhaps raising equity (or maybe a debt issue?) would have been a complementary option to staff and inventory reductions if things are that tough?

There comes a point where spending-money-to-make-money has to pre-empt cutting costs and freeing up cash.

[baller18]

CAV has a price/book value of $1.13 atm... Is it undervalued or is something wrong with the company fundamentally?
Stockholders equity value at $1.239
So if it goes to $1 will it be a good buy?
Is CAV going through cyclical losses?
Will it turn itself around?

[winner69]

Okay, time to watch a little more closely... share price collapsing - pick your cause:

• ACC finished their latest buying spree?
• Hills Floorings announces liquidation?
• Impending results season?

I think there is a possibility they may have taken the retrenchment drive a little far - perhaps raising equity (or maybe a debt issue?) would have been a complementary option to staff and inventory reductions if things are that tough?

There comes a point where spending-money-to-make-money has to pre-empt cutting costs and freeing up cash.

Colin McKenzie said about the restructuring of manufacturing 'The cost benefits that will flow through from the beginning of 2014 are EXPECTED to be significant and the LIKELY payback for the consolidation is expected to be within two years' (as quoted in NBR)

History would say that these benefits are not certain to be captured and if they are history also says CAV will then come across other hurdles that need to be overcome and then another 2 years for a payback.

They are in a sunset industry but I will give them some due that they have sort of seen that and are now pushing synthetics hard .... even though Hirst tore them to shreds in the courts about their misleading advertising of the 25 yeat guarantee. (see Hirst are playing hard and I feel they have more energy and desire to win)

Ouch 25 year guarantee on synthetic carpets .... seems to limit future sales somewhat eh

Lizard - being serious here.

[baller18]

If you want to learn how to catch falling knives, I suggest you check out a movie called " The House of Flying Daggers " The lady in that movie can catch falling knives with her eyes closed, and still look well above average.

haha yes have seen it!! Only if we could do that with shares...
We'll all be on a yacht together!!

[bulltrap]

So CAV going below 150 is your fault

Still can see 120 odd here

Third post and already moving the market! Not bad

[Snoopy]

I am cautiously optimistic in regard to their business prospects.

However, I wish the market would price a little more risk in to make the investment odds stack up...

Positive cashflow in the first 6 months came from significant reductions in inventories and receivables and was used to reduce debt to a more comfortable level. It seems to me that cashflow will likely have remained very tight during the second half and may continue to provide constraints around growing the business. So although they have done well to get this far without a capital raising, it would still seem possible. (Wonder if they could tap the NZDX for cash?).

I keep watching CAV, but hard to get excited unless offered an entry in the $1.10 - $1.30 region.

I agree that a capital raising is a possibility. Total debt is some $70m based around a net profit of $4.3m (FY2012) makes for a pretty ugly minimum debt repayment time.

MDRT = $70m/$4.3m= 16.2 years

The problem is this business is structured for profits around $14m to $17m per annum, which is what they did earn from FY2008 to FY2011 inclusive. Until profits look like being restored to a consistent level, the capital raising risk looks too great. Maybe if the cash issue comes that will be the time to jump in.

Incidentally, I don't agree that Cavalier is on the way out. Perhaps woollen carpets will not regain the popularity they had in the 1970s, before synthetics were around. But when I replace the carpet in my house I won't be considering synthetic. The fire retardant properties (or lack of) are enough to rule synthetic out for me, whatever the price savings.

SNOOPY

[macduffy]

Incidentally, I don't agree that Cavalier is on the way out. Perhaps woollen carpets will not regain the popularity they had in the 1970s, before synthetics were around. But when I replace the carpet in my house I won't be considering synthetic. The fire retardant properties (or lack of) are enough to rule synthetic out for me, whatever the price savings

Cavalier is, rightfully, well known for its quality wool carpets. Since the acquisition of the Ontera carpet tile business - which I assume are largely synthetics? -the business has diversified somewhat from its wool carpets/ wool buying/scouring base. I don't see any numbers on the respective wool/synthetic volumes or revenues but I wonder if anyone has any insights here?

Or am I completely wrong in that the carpet tiles are also mainly wool?

Edit: I've just noticed in the 31 Dec 2012 half year report that CAV "..expect to launch Cavalier's new high-end synthetic products before year end...

[percy]

Incidentally, I don't agree that Cavalier is on the way out. Perhaps woollen carpets will not regain the popularity they had in the 1970s, before synthetics were around. But when I replace the carpet in my house I won't be considering synthetic. The fire retardant properties (or lack of) are enough to rule synthetic out for me, whatever the price savings.

SNOOPY

May I suggest you spend $10 or $12 on a smoke detector.They work with both synthetic and wool smoke.
After a good house fire neither carpet is any good.
lol.