Daily ShareChat: Comvita

Honey-based products company Comvita unaudited sales, profit and net debt results for the year ended March are significantly better than its 2009 results and, while sales are as he forecast, the net profit and net debt are significantly better than his forecast, says Selwyn Blinkhorne, an analyst at Craigs Investment Partners.

Comvita said sales are up 19% to $85 million, net profit is $4.9 million compared with $761,000 the previous year and net debt fell to $11.6 million from $30.3 million a year earlier. Blinkhorne had expected a $4.2 million net profit and net debt of $23.8 million.

"Comvita states the result reflects a continuing strong trend in sales growth and overall operating efficiencies with lower inventories, global licensing rights proceeds and improved operating performance resulting in lower debt levels," Blinkhorne says.

"The potential of the $50 million of acquisitions in 2008 is now being realised," he says. The company bought Olive Products Australia, its Hong Kong distributor and New Zealand's leading medical honey producer that financial year.

"We have increased our earnings forecasts 12% to 16%, mainly attributable to lower interest costs on lower debt levels and increased our dividend forecasts by around 1.5 cents per share, with a consistent 40% payout," he says.

BROKER CALL: buy.

(Note:  Neil Craig is chairman of Comvita and Craigs Investment Partners).

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