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Termination of coverage

Update | Food & Drink | 16 Oct 2017

Edison Investment Research is terminating coverage on Comvita (CVT). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.


From the hive to the shelf

Update | Food & Drink | 15 May 2016

Comvita (CVT) has put the building blocks in place to grow sales to more than NZ$400m within five years (we are estimating FY20 sales of NZ$440m) and at the same time improve margins and ROCE. In the last three years CVT's sales have almost doubled and the operational leverage has seen operating profit treble in the same time frame. In FY16 EPS increased by 45%, dividends were up 23% and ROCE improved from 12% to 15.3%.


Joint venture with Capilano in Australia

Flash note | Food & Drink | 02 Mar 2016

Comvita (CVT) plans to leverage its premium brand positioning, exploit its established distribution channels and use its control of raw material sourcing as a key competitive advantage. The JV with Capilano Honey (ASX: CZZ) (a honey sourcing operation) is part of this plan. Our forecasts and our c NZ$9.20/share valuation are under review.


More honey, more money

Update | Food & Drink | 15 Nov 2015

Comvita (CVT) achieved a NZ$8.7m turnaround in the six months to September 2015 pre-tax profit (y-o-y) to NZ$5.1m and upgraded its full year NPAT guidance to NZ$15-17m (a 46-65% increase y-o-y vs previous guidance of 35%. CVT's five-year strategic plan is to build sales to NZ$400m, with profit growth expected to outpace sales growth. The company plans to leverage its premium brand positioning, exploit its established distribution channels and use its control of raw material sourcing as a key competitive advantage. We have upgraded our forecasts and increased our valuation from NZ$7.16/share to a rounded NZ$9.20/share (a DCF of NZ$9.03 plus market value of Derma Science investment of NZ$0.185).


Honey in the pot

Update | Food & Drink | 12 Aug 2015

Comvita (CVT) is on its way to achieving NZ$400m in sales revenue byFY20. It continues to benefit from locking in its honey supply and theinvestments it has made in enhanced production facilities and therationalisation of its channels to market. Guidance for FY16 sales revenueof >NZ$180m and an increase in NPAT of 35% has seen us increase ourforecast FY16 EPS by 4.4% to NZ$0.355/share and our valuation fromNZ$4.73 to NZ$7.16. This, together with continued exploitation of operatingleverage, should help the company achieve its stated+ objective of yearon-year increases in ROCE above the FY15 level of ~12%.


Looking sweet

Update | Food & Drink | 01 Jun 2015

Comvita (CVT) has locked up about half its requisite honey supply through acquisitions and investments in apiaries. This, together with investment in augmented production facilities, the rationalisation of its channels to market, and optimising the product mix, should see CVT continue to expand its margins and lift its return on invested capital (ROCE) above the current level of ~12%. Our valuation of NZ$4.73 would increase to NZ$5.96 if the EBITDA margin was to rise from the current level of 14.9% to 18% over the next three years.


Rights issue and H1 results

Update | Food & Drink | 18 Dec 2014

Comvita delivered H1 EBITDA of NZ$0.6m and a post-tax loss of NZ$3.3m, slightly better than guidance. The company has also raised NZ$24.4m via a 1:5 rights issue at NZ$3.55 per share (cf pre-announcement share price of NZ$4.16). The proceeds from the cash issue will be used to reduce debt and to position the balance sheet for acquisition opportunities. The company has also provided earnings guidance for FY15, which has resulted in only minor changes to our estimates. Our valuation is NZ$4.13 per share, 13.2% above the current share price.


Manuka honey: health and well-being play

Initiation | Food & Drink | 28 Aug 2014

Comvita is a natural health products manufacturer and marketer focused on manuka honey, bee products and fresh olive leaf extract. It sells a range of manuka honey-based health products via a range of distribution and sales channels, and has an exclusive licensing agreement with Derma Sciences for medical-grade manuka honey based products to the professional wound care market. Our valuation of the company is NZ$4.57 per share, 23.5% above the current share price.

Derma Sciences

Complete wound care

Initiation | Pharmaceuticals & healthcare | 19 Sep 2013

Using cash generated from the slow-growing but stable traditional wound care business unit, Derma Sciences was able to invest in its advanced wound care unit, which has seen an annual growth rate of 40-55%. The company has also started a Phase III trial of DSC127, a drug developed for diabetic foot ulcers, which could generate peak sales of $400m+, and is the largest value driver for the stock. We think Derma Sciences' shares are undervalued based on its revenue growth perspectives and the risked potential of DSC127.