CAV - Cavalier Corp (Carpets)

[sb9]

Interesting to note their NTA as per NZX is 0.70c and they're trading at 0.25c. May be someone would be keen to mop them up or not??

[blackcap]

Interesting to note their NTA as per NZX is 0.70c and they're trading at 0.25c. May be someone would be keen to mop them up or not??

Depends if that NTA is a real NTA. Sometimes the NTA on the books might be .70 but someone only willing to give .25 for those assets.....

A quick squizz of the annual sees that the majority of that .75 is plant and equipment and inventories... not sure if there is any value there.

[sb9]

Depends if that NTA is a real NTA. Sometimes the NTA on the books might be .70 but someone only willing to give .25 for those assets.....

Fair enough, they seem to be disciplined with reducing their debt though year after year, not so sure about their business

[nztx]

Is CAV finally waking up ?

SP up 5c today

A fair bundle of Land & Buildings shot onto the market in past 3 or so weeks

Now the Chairman going as well & retiring as a director

https://www.nzx.com/announcements/356668

[Scrunch]

Is CAV finally waking up ?

SP up 5c today

A fair bundle of Land & Buildings shot onto the market in past 3 or so weeks

Now the Chairman going as well & retiring as a director

https://www.nzx.com/announcements/356668

The announcement today had three important updates.
>Bank debt reduced to $14.5m (bank debt was $20.5m last year and $31.5m the year before)
>Inventory was down to approx. $35m. Superficially this is good as inventory was $48m last year. Hopefully they aren't tricking the market and writing down the value of synthetic inventory then claiming a lower inventory value.
>If a sale and leaseback property deal is progressed, it will need shareholder approval

Even with the increase today to 27c, the market cap of CAV is still under $20m but market cap is above debt which is a good sign. The real unknown questions are what level of sustainable profit do they believe is possible from their new strategy?, how long will it take to get there (2025 is suggested in the press release) and if they are on-track to deliver (a big big if) when will the market start pricing success with the new strategy.

If you go back before the GFC, CAV has managed net profit percentages in excess of 5%. If the planned strategy were to return them to this sort of performance and generate sustainable $5m surplus's on say $100m of sales, it should support a share price around $1. The current share price is 27c so Mr market is still basically betting that this outcome won't happen and sustainable profits barely exceeding $2m are likely.

The property sale and lease back reference is interesting. Bayley's was marketing property with a rental of $3.1m/yr. I'm not sure what capitalisation rate is appropriate, but if it was 10%, this will bring in $31m of cash (less fees). Lower yields would generate a higher value and as a reference point, all but two of PFI's properties had a capitalisation rate under 10% in 2019.

With a property BV of $24m at the end of 2019, a sale at that price would be a profit on sale. The sale would clear all bank debt and leave Cavalier in a strong net cash position. The new rental costs would however hurt the P&L, but some of this would be offset by no interest expenses.

https://www.bayleys.co.nz/1902461

[kiora]

Could be just selling their jewels
https://www.interest.co.nz/Charts/Rural/wool-prices2
Raw wool priced halved in last year
Then sustainable surplus around $2.5 after lease payment?

[Ekrub]

Could be just selling their jewels
https://www.interest.co.nz/Charts/Rural/wool-prices2
Raw wool priced halved in last year
Then sustainable surplus around $2.5 after lease payment?

Fed Farmers approve. https://www.scoop.co.nz/stories/BU20...wool-focus.htm

[macduffy]

Fed Farmers approve. https://www.scoop.co.nz/stories/BU20...wool-focus.htm

Yes, we would expect Federated Farmers to approve. More importantly, what is being done to make wool carpets more attractive to buyers? There's been plenty of wool promotions in the past but price relative to the cheaper synthetics has been a problem.

Disc: Not holding.

[Sideshow Bob]

As a random question (in a tongue-in-cheek way), what do Greenies put on their floors?

Synthetic carpets, typically made from non-renewable petroleum products.

Or wool carpets, produced by methane emitters killing the planet, and although 'natural' goes through a reasonably heavy process to become carpet.

Just wondering....

[Waltzing]

bare floors.. wood.. viking style forest houses..as we do in sweden..