Comvita — Update 1 March 2016

Comvita — Update 1 March 2016

Comvita

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Comvita

Joint venture with Capilano in Australia

JV formed

Food and Beverage

2 March 2016

Price

NZ$10.00

Market cap

NZ$400m

Net debt (NZ$m) 30 September 2015

59.8

Shares in issue

39.9m

Free float

83.4%

Code

CVT

Primary exchange

NZX

Secondary exchange

N/A

Share price performance

Business description

Comvita (CVT) is a manufacturer and marketer of honey-based products and fresh olive leaf extract products. The products are used for health, skin care and medical uses. Approximately 80% of its products are exported to Australia, Asia, North America and the UK.

Analysts

Moira Daw

+61 2 9258 1161

Finola Burke

+61 2 9258 1161

Comvita is a research client of Edison Investment Research Limited

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.

Year end

Revenue (NZ$m)

PBT*
(NZ$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

03/15

152.7

16.3

29.9

13.0

33.4

1.3

03/16e

206.9

26.1

45.2

18.0

22.1

1.8

06/16e

236.9

29.5

52.3

18.0

19.1

1.8

06/17e

247.3

32.9

57.5

23.0

17.4

2.3

06/18e

298.9

41.8

72.7

28.0

13.8

2.8

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments. Year end will change from 31 March to 30 June in 2016.

CVT has announced that it has entered into a Memorandum of Understanding with Australia’s leading honey marketer CZZ. Both companies market honey and manage apiary operations for the production of manuka honey produced from the Leptospermum tree. Manuka honey is sought after because of its medicinal properties and its impact on general health and well-being. CVT has announced that it has entered into a Memorandum of Association with Australia’s leading honey marketer CZZ. The incorporated joint venture will be owned 50:50 by CVT and CZZ. It will operate a number of Leptospermum honey producing apiary businesses in Australia to secure the supply of honey for the production of medical and natural health products.

Manuka honey is sought after because of its medicinal properties and its impact on general health and well-being. The Asian markets are particularly interested in these benefits and manuka honey is growing in popularity with Asian tourists visiting Australia and NZ and also with Asians in their home markets. As the standard of living increases so does the interest in health and well-being. In China, where pollution is an issue of much concern, there is increased emphasis and awareness of health issues. In our view these factors will continue to drive demand for manuka honey

The manuka honey market is supply constrained rather than demand constrained and therefore in our view the two major operatives in Australia and NZ joining forces to increase the supply of premium honey is potentially valuable to both parties.

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Wellington +64 (0)48 948 555

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New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Nexstim — Update 29 February 2016

Nexstim

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