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Daily ShareChat: Comvita

By Jenny Ruth

Friday 12th June 2009

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 Jenny Ruth

Honey products company Comvita's normalised $1.6 million net profit for the year ended March was a good turnaround from the $1.4 million loss it made in the previous 15 month period, says Selwyn Blinkhorne at ABN Amro Craigs.

Although reported revenue was up 26.4% on the previous year, the company made three acquisitions totalling about $50 million in the previous period and Blinkhorne estimates excluding these sales were up about 15%.

While the results were mostly as he had expected, the company didn't declare a dividend and Blinkhorne had forecast a 2.5 cents-a-share payout.

Blinkhorne says the full impact of the 2008 acquisitions and recent cost reductions, including significant reductions in staff numbers, as the company focuses on margins, costs and working capital have yet to be reflected in its earnings.

"Our earnings forecasts anticipate further robust revenue and margin growth from new products, the impact of consumers not appearing to put health in the ‘discretionary spend' category and the benefits from a relatively fixed-cost distribution structure."
He is expecting a $3.1 million net profit in the year ending March 2010 and $4.3 million the following year.

Blinkhorne values Comvita's shares at $1.20 compared with their close on Thursday at 84 cents.

 

BROKER CALL:  ABN Amro Craigs rate Comvita (NZX: CVT ) as buy.

 

 

 



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