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Thread: Cavalier -- cav

  1. #1
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    Wink Cavalier -- cav

    Note that cav has a 11 cps div coming with today as the record date.

    sp has dropped 62 in the last 10 days.

    it is currently 2 cents lower than when the results were announced 4 weeks ago.

    and, not buys/sells today, so no movement from its crash low yesterday.

    so, is the market rational/irrational with respect to cav?
    scamper

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    I'd say it's just getting trashed, along with the rest of the market. A preponderance of sellers over buyers.
    Note it's up a couple of cents today - along with the rest of the market!


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    Scamper ex date is next Friday.

    Dividends

    The policy of paying dividends three times a year continues.

    The Directors have declared a fully imputed final dividend for the year ended
    30 June 2008 of 11 cents per share, an increase of 0.5 cent on the equivalent
    for the previous year.

    This final dividend, together with the first interim of 3 cents per share
    paid in December 2007 and the second interim of 6 cents per share paid in
    March 2008, gives a total of 20 cents - 1 cent up on the 19 cents per share
    for the previous year.

    The final dividend will be paid on Friday, 3 October 2008. The share register
    will close at 5 p.m. on Friday, 26 September 2008 for the purpose of
    determining entitlement to the dividend and will reopen on Monday, 29
    September 2008.

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    one of us has a misapprehension...
    besides, i didn't mention the phrase "ex-date", cos i'm not entirely sure what it refers to...

    but, if you buy today, you get the divi.
    and then, if you sell on monday, you still get the divi.

    so it seems that monday is the ex date, no? are we actually on the same page?
    cheers, scamper.

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    It looks like you're a week early, scamper. Relevant dates are 26 and 29 Sept according to announcement on CAV website.


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    scamper's a dope. thought today was the 26th...
    back to the kennel.

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    I don't know whether it is the times we are in or something else but many company announcements are starting to confuse (or cloud) the real picture ... and Cavalier is no exception.

    Like - after raving on how hard thing are going to be they say ...our earnings outlook for the year to 30 June 2009 as a range from $11 million tax paid (which would be almost 40% down on last year) to $13 million tax paid (almost 30% down on last year). ..... this doesn't so bad. H1 earnings were down 7% on last year (would have been more if it wasn't for the contribution from Ellison carpets) so things are going to get worse if Full year is going to be down 40% - the guidance doesn't specifically say that second half earnings are going to be down 65% does it. Thats some damage eh

    When they mention debt they talk about ratios and (purposely?) don't actually state a debt figure. In the narrative they do say equity is $83m (less than June 08 because the payment of last years dividend was higher than earnings) but overlook to specifically say that debt is $97m. Probably a lot of debt if icash flows are reducing to the degree that the earnings guidance imply.

    One other thing they did mention that inventories are increasing ... up tp $70m which is enough to support the next 6 months sales .... hope they don't make too much more .... maybe some cheap carpets coming up.

    Have they been transparent enough in their announcement ... headlines and comments are not too bad but in my mind some of the real stuff is missing

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    In saying all that at 170 odd is on about 10 times forecast earnings ... these days a pretty hefty multiple and in view of what might happen after June a bit high

    However CAV is on the face of it one of the less stressed companies on the NZX (solvency wise) so got something going for them

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    Default Longterm CAV Chart

    The market giveth - and the market taketh away....



    An illustration of why exit strategies are important.

  10. #10
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    What I hadn't noticed that CAV debt increased by $14m from December 07 to June 08 ($70m to $84m) and then by another $13m (to $97m) in the six months from June 08 to december 08

    Definitely going the wrong way .... but they say they do something about it

    Some also might say that they have been borrowing to pay the regular dividends

    Feltex had the iconic tag .... sure Cavalier Bremworth is just as iconic .... making carpets that NZers live on since the 50's
    Last edited by winner69; 21-02-2009 at 11:12 AM.

  11. #11
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    Quote Originally Posted by Phaedrus View Post
    The market giveth - and the market taketh away....



    An illustration of why exit strategies are important.
    Thats an amazing chart eh Phaedrus ... something for fundamentalists to envy

    In round numbers lets say CAV has gone from 170 to 550 (trebled) and then gone all the way back to 170 ... so shareholders return in those 8 years has been the dividend.

    Why do fundamentalists envy such a graph .... because it shows the sentiment of the market.

    In 2000 (start of P's chart) CAV earnings were about 20 cents a share / it was on a PE of 9 and trading at 1.5 times book value (all pretty respectable for a manufacturing company)

    At its peak of 550 odd in 2003 CAV earnings were 29 cents a share (only 50% more than a few years before) / its PE had expended out to 16 and it was trading at 5 times book value (bit rich eh)

    Now today earnings are what they were in 2000 ... about 20 cents a share / its PE is about 9 and it is trading at about 1.4 times book value

    So 'fundamentally' nothing surprising about todays price is there. CAV shareprice has not been dragged down by the malaise of the market .... it is 'fundamentally priced' about right

    Just highlights what happens during boom times and when on fundamentals things get 'overvalued'. CAV earnings over the last 10 years have generally been in the 20 to 30 cents per share (reached 32 cents in 2004). Cav has paid out a fair chunk of earnings in dividends so its equity has only increased from $60M TO $80M in the last 8 years or so. CAV earnings have consistently covered its cost of capital but not excessively or to the extent it deserves to trade much above 1.5 times book value. Pretty solid performing company ... what you would expect from a good old fashioned manufacturing company

    so the market was exhuberant in 2003 and 2004 ..... CAV multiples expanded and the share price shoot up to 550 ... on fundamentals overvalued ..... and probably a genuine value investor (if there is such a beast) would have bailed .... ironic ..... about the same time as the likes of phaedrus would have bailed as well


    What happens in secular bear and bull markets it is the multiples that change .... when stocks like CAV reach truly overvalued levels and when 100 or 200 day moving averages signal it take the winfalls and run ... think of it as present from god.

    Using Phaedrus's phrase 'the market giveth ... but don't let the market taketh away'

    Interesting stuff

  12. #12
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    Back in 1996 I bought 10,000 Cavalier for $15,750. Since then I have had $24,887 returned as dividend and capital repayment($3,500) and the shares I have now, 8750 are worth $15,020. This approx is a 7.4% net return. On top of that is what ever the $24,887 has earned over those 13 years.

    I have always thought it a well run company which is managed by people who don't have big egos to support. Not too many of those on the NZX these days.

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    I'm with 777 on this one. I too bought in 1996 and with thrice-yearly dividends, a share split and a buy-back, my CAVs have long since paid for themselves. Of course the sp has fallen from the giddy heights but it looks as if the market is finally wakingup to CAV's positives. These include the very astute purchases of Norman Ellison carpets and Ontera carpet tiles, and rationalisation in the wool scour sector. CAV's sp rose 7% last week, has been up every day this week, jumping 26c today alone. At 180cps it is roughly 60% higher than its 12-month low.

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    while the sp hasn't done much since your post, Lawso, it has consolidated at the higher level to the extent the chart is suddenly looking promising:
    30 and 90-day moving average crossover, downtrend broken.
    scamper holds some, and will be watching carefully to buy a few more.
    really like the 3x annual div, and 10% is quite good.
    do you think they'll lower the div next time round?
    cheers, scamper.

  15. #15
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    From all accounts all on track to deliver a pretty repsectable result in tough times for comapnies like these

    Hopefully debt will have come down .... they had enough stock when last reporting to last many months


    Shareprice back close to 200 .... wouldn;t surprise to see closer to 250 in a month or so post positive comments in the announcement

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