New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Comvita (CVT) reported a weak 1H24 trading and FY24 guidance update, driven primarily by softer consumer demand in China and the loss of a key contract in North America.</li><li>The revised FY24 EBITDA guidance range of NZ$30m to NZ$35m (down ~-8% at the midpoint on the last guidance range provided in November 2023) requires revenue declines to stabilise and cost out initiatives to be implemented in 2H24.</li><li>We remain cognisant that Chinese consumer demand may remain subdued in the near term, affecting revenue recovery in CVT's largest market. </li></ul>

Comvita (CVT) reported a weak 1H24 trading and FY24 guidance update, driven primarily by softer consumer demand in China and the loss of a key contract in North America.The revised FY24 EBITDA guidance range of NZ$30m to NZ$35m (down ~-8% at the midpoint on the last guidance range provided in November 2023) requires revenue declines to stabilise and cost out initiatives to be implemented in 2H24.We remain cognisant that Chinese consumer demand may remain subdued in the near term, affecting revenue recovery in CVT's largest market. 

<ul><li>Comvita (CVT) reported a weak four month trading update, but pointed to an optimistic outlook for 2H24 when providing first-time FY24 revenue and EBITDA guidance.</li><li> CVT's key Chinese and North American markets have been challenging, primarily due to a slower economy and a pull-back in discretionary spending respectively.</li><li>CVT has pointed to stronger November trading (which includes 11.11) in its main Chinese market, as well as robust growth in its retail store channel (largely in Asia) as indicators that demand is recovering and adverse trading to date is mostly timing-related. </li></ul>

Comvita (CVT) reported a weak four month trading update, but pointed to an optimistic outlook for 2H24 when providing first-time FY24 revenue and EBITDA guidance. CVT's key Chinese and North American markets have been challenging, primarily due to a slower economy and a pull-back in discretionary spending respectively.CVT has pointed to stronger November trading (which includes 11.11) in its main Chinese market, as well as robust growth in its retail store channel (largely in Asia) as indicators that demand is recovering and adverse trading to date is mostly timing-related. 

<ul><li>Comvita (CVT) announced a reasonably robust FY23 result which was broadly in line with our expectations.</li><li>The key positives were (1) limited impact from Cyclone Gabrielle (CVT received a small net gain from insurance proceeds), and (2) normalised earnings, excluding one-off and transformational items, demonstrated solid double digit growth. Key negatives included (1) higher net debt and inventory at FY23 year end, and (2) lower than expected guidance for FY24, which includes higher transformation expenses versus FY23. CVT's FY24 guidance is once again "double digit EBITDA growth", consistent with outlook for FY23.</li><li>The key unknown for CVT is to what extent slowing demand in key markets can be offset by channel and product expansion, especially in its key Greater China market. </li></ul>

Comvita (CVT) announced a reasonably robust FY23 result which was broadly in line with our expectations.The key positives were (1) limited impact from Cyclone Gabrielle (CVT received a small net gain from insurance proceeds), and (2) normalised earnings, excluding one-off and transformational items, demonstrated solid double digit growth. Key negatives included (1) higher net debt and inventory at FY23 year end, and (2) lower than expected guidance for FY24, which includes higher transformation expenses versus FY23. CVT's FY24 guidance is once again "double digit EBITDA growth", consistent with outlook for FY23.The key unknown for CVT is to what extent slowing demand in key markets can be offset by channel and product expansion, especially in its key Greater China market. 

Comvita - FY23 Result — Extracting Profits

<ul><li>Comvita (CVT) has acquired Singaporean honey retailer HoneyWorld at a price of SG$8.5m (~NZ$10.4m) in a materially earnings accretive deal.</li><li>The acquisition raises CVT’s total share of the Manuka honey category in Singapore to ~50%, and will be fully debt funded.</li><li>HoneyWorld’s FY24 revenue is expected to be in excess of SG$13m (~NZ$15.9m).</li></ul>

Comvita (CVT) has acquired Singaporean honey retailer HoneyWorld at a price of SG$8.5m (~NZ$10.4m) in a materially earnings accretive deal.The acquisition raises CVT’s total share of the Manuka honey category in Singapore to ~50%, and will be fully debt funded.HoneyWorld’s FY24 revenue is expected to be in excess of SG$13m (~NZ$15.9m).

<ul><li>Comvita (CVT) has announced the acquisition of HoneyWorld (HW), a Singaporean specialist retailer of Manuka Honey, for SG$8.5m (NZ$10.4m)</li><li>HW's current and forecast earnings were not specifically disclosed, but the deal is expected to add +22% to CVT's forecast FY24 NPAT, and ~NZ$15.9m to FY24 group revenue</li><li>We view CVT's increased focus on bricks-and-mortar retail positively, reflecting: diversification of channel risk, increased access to new consumers, and reinforcement of CVT's premium brand positioning.</li></ul>

Comvita (CVT) has announced the acquisition of HoneyWorld (HW), a Singaporean specialist retailer of Manuka Honey, for SG$8.5m (NZ$10.4m)HW's current and forecast earnings were not specifically disclosed, but the deal is expected to add +22% to CVT's forecast FY24 NPAT, and ~NZ$15.9m to FY24 group revenueWe view CVT's increased focus on bricks-and-mortar retail positively, reflecting: diversification of channel risk, increased access to new consumers, and reinforcement of CVT's premium brand positioning.

New Zealand

Comvita Limited supplies and markets natural non-prescription health remedies. The Company's products include Munaka Honey, Honey, Bee Pollen, Royal Jelly, Manuka Oil, Selenium, and Comvita Woundcare 18+.

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