CAV - Cavalier Corp (Carpets)

[macduffy]

I'd like to share your optimism, PSE - I'm a long time CAV shareholder - but I reckon the company has a long hard road to get the SP anywhere near $1 again. The lower NZD will make a difference but the trend against wool carpets seems to be entrenched now and CAV isn't prominent in the synthetic stuff. As for generating cash, last f/y operating cashflow surplus was a modest $650,000.
Good, though, to see one of the company's founders, Grant Biel, buying shares.

[winner69]

Hi Winner,
yes I topped up again a few weeks ago 36c despite all the people telling me I am an idiot for doing so.
The company is still pretty darn cheap but someone with deeper pockets than me is buying and driving the price up I guess.
Alan James has now retired so all the management that impressed me are now gone except for Biel sitting on the board and putting his money where his mouth is, I am not so bothered as I think they have put the elements in place for the recovery. Which for those that haven't noticed is already there with the AUD.
They were honest and they cared about shareholders interests which I think is really rare so well done guys. More marketing of wool would have been great but I can say I would never have done such a good job so I can't criticise.
I will be continuing to hold the company so I am not getting richer/taking profit.
People have said to me that you win some you lose some, but I only win so I was already rich
I consider that I make my profit when I buy and in time my judgement is always 'vindicated by the sequel'. Still a long way to go, I reckon this time next year if things go well then we will be looking somewhere north of $1 per share with some outrageously large dividend being re-instated.
Incidently I saw in the annual report that the gearing ratio peaked at 44% in 2011 and with the outlook for cashflow now very strong I am not worried about the debt. The first half included 1.7million of capital expenditure, even in a worst case scenario this business will generate a lot of cash.

You will be duly rewarded when Mohawk eventually front

[winner69]

Hit 50 cents

Wonder when the Mohawk announcement will be made?

[macduffy]

Hit 50 cents

Wonder when the Mohawk announcement will be made?

So, what's this about Mohawk, winner? I'd assumed that it was the weakening NZD that had caused a re-think on CAV.

[winner69]

There's been speculation for a while Mohawk will take over Cavalier. Just speculation and pub talk

Mohawk seem to like the Cavalier wool stuff. They are working together / alliances etc so why not control the lot and cheap direct entry into ANZ

Just speculation

[macduffy]

Yes, that would make sense. Convince the Biel and Timpson camps and Mohawk would be half way there!

[macduffy]

CAV sells its Aust carpet tile business and signals asset writedown.

[winner69]

Finally out. Some would say a $26m number is stunning

https://www.nzx.com/files/attachments/219690.pdf

Mountain of carpet unsold still there ($6m ones with th tile business)

Little steps forward PSE ...better than strides backwards

[percy]

Carpet is not like computer chips, I don't think they have a mountain of inventory relative to annual sales.
I think a fair bit is required for the business to operate.

I think the basic problem with this business is the amount of stock they hold, compared to sales.Rough figures look to be approx. $50mil stock on sales of $200mil of sales.Depending on timing only 3 to 4 stock turns.
You compare this to the likes of distributor EBO who are achieving 10 or more stock turns.
I would think they would need to achieve 6 to 8 stock turns to be viable.

[h2so4]

I think the basic problem with this business is the amount of stock they hold, compared to sales.Rough figures look to be approx. $50mil stock on sales of $200mil of sales.Depending on timing only 3 to 4 stock turns.
You compare this to the likes of distributor EBO who are achieving 10 or more stock turns.
I would think they would need to achieve 6 to 8 stock turns to be viable.

1.5 turns if you use cost of sales divided by average y/y inventory.
Oh no