CAV - Cavalier Corp (Carpets)

[Lizard]

I thought the result today didn't offer much to get excited about. Debt levels are creeping up again relative to EBIT, although still acceptable, but cashflow constrained by the need to tie up more $ in higher priced wool.

The angling over the WSI wool scours seems interesting. Do we presume that the offer to WSI to purchase the scouring operations for $40m is simply to put something on the table in order to get Commerce Commission ruling that would apply to purchase of the ex-Hubbard/SCF related shareholdings? i.e. potential full take-over offer for WSI?

Do we think they could fund that from bank debt? The third quarter results from WSI would make it seem attractive at current market cap. And if CAV are willing to throw around numbers like $40m for for the wool scours, why isn't WSI looking better bid?

[janner]

Why do you post such interesting Questions Lizard ??..

Especially when i am on my way to bed ??

There are so many stocks that need looking at..

Your thoughts on GFF.. nearly 14% return at todays price..

[winner69]

Cutting jobs and thinking about 4 day weeks as high wool prices make cheaper synthetic carpets more attractive .... demand down

At least doing something about protecting profit in the short term ..... but long term is this good

[Lizard]

Cutting jobs and thinking about 4 day weeks as high wool prices make cheaper synthetic carpets more attractive .... demand down

At least doing something about protecting profit in the short term ..... but long term is this good

Where's that sourced from, Winner? Google isn't handing me anything...

Maybe also a bit of politicking between buying groups who have consolidated in recent years and are now tending to source their own ranges from off-shore to put the pricing negotiations back in their court?

[minimoke]

Where's that sourced from, Winner? Google isn't handing me anything...

I'll help out: http://www.scoop.co.nz/stories/BU1110/S00178/cavalier-subsidiary-cut-42-jobs-on-rising-wool-prices.htm

Sad to see. On the back of Feltex and Godfrey Hurst closing down after the Christchurch earthquake - not a great industry to be in. Unless of course you are into nylon.

[Lizard]

Thanks Mini.

CAV is one of those companies that I am always a fan of, yet never own. In most of the last decade, the numbers just didn't seem to stack up, since I am terribly "cheap". But I suspect those getting the dividends would have been happy enough. Still a darn sight better investment than many other NZ household names turned out to be.

[winner69]

So sales down 20% so far this financial year and no guidance as to how this is going to affect profits

At least doing the decent thing and paying the divies out in cash instead of shares which may keep going down

Get through the tough times guys and maybe 2015 will be better for you

[Sideshow Bob]

Probably a double whammy - economy down and wool prices substantially up. Perhaps lived easy on the back of low wool prices?

[Lizard]

So sales down 20% so far this financial year and no guidance as to how this is going to affect profits

At least doing the decent thing and paying the divies out in cash instead of shares which may keep going down

Get through the tough times guys and maybe 2015 will be better for you

Probably pretty hard to comment on profits after one quarter - extrapolated for a year, might be too big a headache to contemplate with current gearing.

Cancelling the DRP and paying out in cash is a heart-warming acknowledgement of shareholder interests - so hope it favours them if they ever need to call on shareholder support.

Having just two markets and effectively just two products is always going to make a company more vulnerable. But CAV have historically achieved surprising consistency in performance. It will be interesting to see what they are able to do to turn this around.

[Lizard]

AGM time and sales now only down 18% instead of 20%.... but no interim div this year.... big step for CAV which has been a perennial for those wanting income over the past decade....

.... might be going back to GFC lows and maybe lower. Going to be a horrible first half and then we will see how long it takes to hit the next cyclical upturn.