CVT-Comvita

[Teitei]

Not good at all.

https://www.nzx.com/announcements/411837

The Me Today Group has now completed the honey harvest and finalised all manuka test results. The total yield achieved from the Hive Placements was 61 tonne of honey. The yield was down 50% on what was expected from an average season. However, the quality of the Manuka Honey was also down significantly meaning the value of the honey harvested was much less than expected.

Including depreciation, the total cost of the Harvest was $2.8m; the estimated value of that honey has been determined at $700k meaning a total write-down of approximately $2.1m will be included in the 2023 financial result.

[Teitei]

Asked a beekeeper in Gisborne a few weeks ago and he said that the industry is sitting on several years' stock of low quality manuka honey but low stock of high quality manuka honey (ie. UMF >15).

Was at Costco just the other day and saw Egmont Honey UMF 10+ (1 kg) on special at $59.95. Was rather surprised as most of the heavy discounting in the market have been for the low grade UMF 5 and multi-flora manuka honey.

Sign of the times.

Return visit to Costco today to pick up some Black Angus grain fed beautifully marbled thick Scotch Fillet steak (double the price of NZ grass fed) to give an idea of what Costco sells (not just cheap stuff!)

and

very surprised to see same Egmont honey now on special at $29.95 ($59.95 less rebate $30).      

Looks to me like the industry has serious over-supply issues with lower grades manuka honey to get rid of!

[Auto Rower]

Significant progress again for Comvita in the chinese market .
 with this new deal signed .
 Thanks to Hippi

 They do seem to be a well run company pushing to go places

[Left Field]

Further progress for CVT.....Honeyworld acquisition.

https://www.nzx.com/announcements/414170

Comvita Limited (NZX:CVT) today announced that they have acquired specialist honey retailer HoneyWorld Singapore and its consumer brands in a transaction valuing HoneyWorld at SG$8.5M (NZ$10.36M).
HoneyWorld is the largest Mānuka honey retailer in Singapore and represents a highly strategic acquisition into a business that is the market leader in core Comvita categories in one of Asia's premium growth markets.

Combined with their existing business in this market Comvita's market share in the Mānuka honey category in Singapore will be around 50%. Together, Comvita and HoneyWorld have identified incremental opportunities to further grow household penetration and share of the category in this important market over time.

This acquisition will be immediately accretive to Comvita with a HoneyWorld forecasted 24% increase in return on capital employed (ROCE) once integrated. For the Comvita group this acquisition is forecast to deliver a 22% improvement in EPS. HoneyWorld is forecasting revenue in FY24 of over SG$13M (NZ$15.85M). The acquisition is to be debt funded.

[Teitei]

Further progress for CVT.....Honeyworld acquisition.

https://www.nzx.com/announcements/414170

Comvita Limited (NZX:CVT) today announced that they have acquired specialist honey retailer HoneyWorld Singapore and its consumer brands in a transaction valuing HoneyWorld at SG$8.5M (NZ$10.36M).
HoneyWorld is the largest Mānuka honey retailer in Singapore and represents a highly strategic acquisition into a business that is the market leader in core Comvita categories in one of Asia's premium growth markets.

Combined with their existing business in this market Comvita's market share in the Mānuka honey category in Singapore will be around 50%. Together, Comvita and HoneyWorld have identified incremental opportunities to further grow household penetration and share of the category in this important market over time.

This acquisition will be immediately accretive to Comvita with a HoneyWorld forecasted 24% increase in return on capital employed (ROCE) once integrated. For the Comvita group this acquisition is forecast to deliver a 22% improvement in EPS. HoneyWorld is forecasting revenue in FY24 of over SG$13M (NZ$15.85M). The acquisition is to be debt funded.

So acquisition of $10.36m will generate an EPS increase of 4 cps (was 18.2 eps in 2022 so 22% = 4 cps) which equates increased NPAT of $2.8m.

Taking into consideration it's debt funded so say 6% (so interest cost of $625,000) and tax of 28% means EBIT of $4.5m from HoneyWorld!

So CVT is buying HoneyWorld on an EBIT multiple of 2.3X?  Or ROI of 43.5%!

What an outstanding acquisition!

Question - why would the Singaporeans sell at that kind of giveaway price?

[winner (n)]

Share price 4 bucks next week I reckon on that sort of news

[Left Field]

Holders should be happy.

https://www.nzx.com/announcements/416745

Headlines
- Record revenue $234M +12.1% vs PCP
- +$25M and +12.1% vs PCP
- H2 revenue +17.4% vs PCP
- All market segments showed double digit revenue growth
- Greater China revenue over $100M for the first time
- Ecommerce share of revenue 41.7% +19.1% vs PCP
- Gross profit 58.0%, normalised 59.5%* in line with plan
- Operating profit $24M +18.7% vs PCP
- $33.5M EBITDA after ERP +11.4% vs PCP
- NPAT after ERP $13.1M +2.8% vs PCP
- Record investment in our brand $30.5M supporting strong revenue growth
- Net debt $53.4M in line with forecast
- Inventory $136M +3% vs PCP
- Positive operating cashflow of $8M, $29M H2
- Fully imputed final dividend of 3.0 cps declared
- Full year FY23 dividends of 5.5 cps in line with PCP

[Shareguy]

After the poor result (in my opinion) that was deemed to be a good result, are we surprised that the chair and past ceo has sold shares.

Hewlett Investment Trust - sale of 120,000 ordinary shares to meet personal financial commitments of the Trust

Hm.... Reminds me of A2.

[Shareguy]

A downgrade, maybe the first of three. Makes sense that the directors sold shares.

https://www.nzx.com/announcements/422379

[winner (n)]

A downgrade, maybe the first of three. Makes sense that the directors sold shares.

https://www.nzx.com/announcements/422379

Full year ebitda could be UP 10%+ .....and F25 ebitda still $50m

This really is a confirmation of guidance given at full year result .... Comvita is forecasting double digit EBITDA growth in FY24

[winner (n)]

Dave always does a great sell job, his rave must have impressed the judges for these Awards

In BusinessDesk (and paid for by Comvita)


(NZX:CVT), the premium natural health and wellness products provider, proudly announces its significant achievement in winning the coveted Best Growth Strategy category at the annual Deloitte Top 200 Awards.

Comvita CEO David Banfield stated, "We're thrilled to receive the Best Growth Strategy award at the Deloitte Top 200 Awards. This recognition is a testament to the hard work and dedication of the talented Comvita team, around the world and here at home in Aotearoa New Zealand, who've played a crucial role in driving our recent growth and success."

Comvita's consumer focus and transformation program, has a focus on sustainability, social and environmental impact and connection to its amazing founding philosophy nearly 50 years ago. This has resonated with discerning consumers in their key markets around the world and has enabled Comvita to achieve strong levels of growth. Looking ahead, Comvita remains on track to deliver its 2025 EBITDA target of c$50M (20%) as they celebrate their 50th year.

[snapiti]

I see the manuka honey industry has turned out to be another ostrich egg investment.
No buyers want even the medical grade.
My spys tell me the 2 main healing chemicals in manuka honey can be made in the lab and added to any grade of manuka honey.
 

[winner (n)]

Another good rave from Dave ....all bright and rosy when things come right

But another sales and profit downgrade

A few different profit measures mentioned but this is the one that matters -Comvita's unaudited NPAT (Net Profit after Tax) for the period is expected to be a loss of $3.2M ($0.8M NPAT after ERP) compared to a profit of $4.2M in the prior period.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CVT/425571/411890.pdf

[Shareguy]

What a shocker.  From Craig's this morning

•   CVT – STOP PRESS – Comvita has released a further trading update ahead of its February interim result (it initially downgraded in late November) – it now expects 1H24 revenue and EBITDA of $103m (-8.1%) / $9.5m (-32%) respectively. It's FY24 Revenue/EBITDA guidance is now $225-235m/$30-35m (from $33-38m) ... representing a circa 9% FY24 earnings downgrade. CVT note their FY25 EBITDA guidance for $50m remains "feasible". As of 31 Dec CVT have net debt of c$85m, inventory of $143m and anticipate an interim loss of $3.2m ($4.2m profit in PcP) ... more from Josh Dale later but in early trading CVT has been marked down c8% and is currently trading around $2.05 ... this is a decade low bar 'COVID capitulation day' in March 2020 when it briefly hit $1.57.

[Mos]

The first post on this thread quotes a Craigs target price of $4.10. Demonstration that broker analysts are as fallible as the rest of us. There is no medical research showing benefits of ingestion of Manuka honey, only some benefits for wound application. It is a high cost low yield honey with a polarising taste profile sold for a very high price. Speculative. Prescient 2nd post on this thread by BlackPeter.
Disc. Do not hold.