CLV - Clover Corporation

[systematic]

Well done SC (wish my theoretical buy on open wasn't theoretical!)

 

[greggles]

There were many doubters over the years, it hasn't been a linear journey for the business or the share price, like so many success story's its a matter of discovering potential and having patience, and rewarding good responsible management by simply sticking with them..

And Clover Corporation continues kicking goals.

 

[HelloU]

do they sell little black things to bal now?

 

[So_Cynical]

All time high today $2.69 ~ i figured the price would pop on the dividend announcement and record
revenue and profit, in a low growth world growth stocks are new new big thing, cept not so new.

 

[So_Cynical]

Above $3 today - new all time high, SOL did some selling earlier in the week, probably for the first time ever.

 

[Trav.]

CLV is another trade of mine and currently doing ok. entered 2/01

a couple of big swings over the last few days and hopefully this settles down a bit
Average / Low volume
Weekly and daily trend up
Entry on pivot point
I have resistance drawn @ 2.80 so if we can get through that area I will be a happy camper.

 

[Dona Ferentes]

the Sept 2019 profit announcement, with sales up 21%, NPAT up 33%, (always a good set of jaws), plus a dividend and manageable net debt of $5.2mill brought some interesting commentary:
- Sales of new products fuel growth and profitability
- Clover’s focus on expanding sales into new territories delivers growth
Looking forward
Clover continues to have a strong pipeline of opportunities to grow its market share in IF and to diversify into new adjacent markets. Whilst legislation in Europe to increase DHA in IF in 2020 and likely similar changes in China in future years provide good prospects for growth, we are seeing pressure on margins due to increased competition.

Since then, there has been a remarkable shift in nutritional posturing ... with plant based protein gaining momentum and taking market share from animal protein, for a variety of reasons.

Next cab off the rank is likely to be marine sourced protein substitution. The role of aquaculture has grown in response to demand, as supply from pelagic sources becomes more expensive and harder to find. (a third of the world's oceans are over-fished and seafood consumption is at record levels). And now, food technologists are looking at the 200+ fish and other seafood types (animal protein has 30 sources/ tastes at max), with the aim to launch new frozen lines, including plant-based crab, fish burgers and white fish.

Meantime ....Omega-3 fatty acid production levels, essential for human health, have fallen in farmed fish since over-fishing concerns spawned a switch from feed rich in oily fish to soy and other alternatives. In one response, Johnathan Napier and his team at Britain's Rothamsted Research, an agricultural science centre, have genetically modified plants whose seeds produce the two key acids that make up omega-3. "If we can use a land-based source of fish oils as a way of augmenting or adding to the stuff from the oceans, then we can relieve the pressure on the oceans," he says, adding that the result would also be far more affordable..
https://www.afr.com/companies/agric...comes-the-vegan-tuna-sandwich-20191122-p53d7y

How this impacts on Clover's core business remains to be seen.

 

[Dona Ferentes]

Like everything, CLV has been belted. The steady build from late 2017 around 50c to over $3 saw a rapid drop to sub $1.40 a few days ago, significantly losing another 20% after bringing 1H2020 results out.

- net revenue up 9.8%
- net profit up 3.4%
- spending up on research, marketing, business devt across globe
- prudent cash preservation .... no dividend
- Covid-19 affecting market conditions but not results or forward orders (so far)

China looms as a worry; min DHA levels not yet legislated, so inventories stayed low. Also, they want to encourage local brands (the usual story). Cross border e-commerce continues.

“Our employees in China were not allowed to leave their house for 60 days, other than for medical and food supplies. They went back to work Monday”
P Davey, CEO, Clover Corporation Ltd

 

[Dona Ferentes]

Following the first half results, Clover Corporation has experienced strong demand from customers globally, with an increase in forecast demand coming in the fourth quarter from infant formula manufacturers, which the company believes is primarily driven by the market’s reaction to COVID-19. It is believed consumers are buying additional products which has depleted the pipeline fill into distribution warehouses and retail outlets. This is likely to have been exacerbated by company and country isolation activities.

also getting a one-off benefit from currency movements.

Clover believes that much of the increased demand reflects China re-filling a depleted pipeline post the COVID-19 impact, as well as other countries experiencing higher demand as end consumers stockpile product during isolation. It is too early to state the full impact of the above market movements as the current forecast-to-order placement is very fluid. The situation driven by COVID19, the depreciation of the Australian dollar and high existing Clover inventories are mostly one-off events, and we expect demand patterns will return to a more normalized pattern in the next financial year.

Previously, the company had indicated that performance in the second half of FY20 would be similar to the results in the second half of FY19 (which is seasonally stronger than the first half). The Board now expects a stronger second half FY20 performance, assuming forecast demand results in fulfilled orders and the global situation remains in the current state.

The Board will consider reinstating company dividends at the end of the financial year in line with results

 

[Dona Ferentes]

expectations seemed to be built in for a good Annual Report, released 18/9, but it was not the case. Covid hasn't helped.
Negatively, the new NZ plant taking longer to get operating; and finding it hard to build volumes with customers. Any reaching into new markets has been held back by travel restrictions. New products put on hold.

on the plus side, home sales lifted with stocking of pantries, but this may be a one-off.

will pay a 2.5c dividend.

 

[Dona Ferentes]

Soul Patts SOL has been selling down ... now just above 20% holding.

Weakness in Clover performance to continue, I suspect.

 

[So_Cynical]

Weakness in Clover performance to continue, I suspect.

Revenue and profit chart from the new ASX website - looks very healthy all things, China and COVID
considered, over 4 years revenue has doubled and profit quadrupled, share price quadrupled as well.
~

 

[Dona Ferentes]

Healthy growth, though RoE stalled.

( HOLD a few, and still above entry point. Is it a Covid induced hiccup; do I move on or wait for renewed growth?)

 

[Dona Ferentes]

not so fast. Tripping over untied shoelaces; not looking where they're going

Following the release of full year 2020 results, Clover Corporation has experienced reduced demand with lower than originally forecast orders coming in the first quarter from infant formula manufacturers. The Company believes the reduction is primarily driven by the market's recalibration following a significant increase in fourth quarter FY2020 orders, as indicated in the full year 2020 results and commentary.

Clover indicated on 20 May 2020 that, “the majority of the higher than usual inventory position will be worked through in the second half of the financial year and therefore provided a one‐off benefit.” “Looking forward Clover believes that much of the increased demand reflects China re‐filling a depleted pipeline post the COVID19 impact, as well as other countries experiencing higher demand as end consumers stockpile product during isolation. It is too early to state the full impact of the above market movements as the current forecast‐toorder placement is very fluid.”

On 18 September 2020, the company stated that “Uncertainty from COVID‐19 has the potential to impact both positively and negatively. The higher retail demand for infant formula in Q3 & Q4 FY20 may have been a “one off”, with possibly reduced demand in 1H FY21. Clover continues to engage with its customers to maintain its market position with orders for first half FY2021 at this point expected to be consistent with those of first half FY2020.”

As a consequence of this continuing uncertainty, Clover now expects revenue for the first half of FY2021 to be down 15% to 25% on the first half FY2020.

--- and so went the SP; down 15% (and likely to languish there)

 

[Trav.]

Ouch....that definitely doesn't look good.

It is amazing the the SP drop reflected the upper end of the forecast.

 

[Dona Ferentes]

Ouch....that definitely doesn't look good.

It is amazing the the SP drop reflected the upper end of the forecast.

my my.... is there a cautionary tale here, or should sloppiness and lack of attention to detail become the norm?

I have held some CLV in my 'boring' basket for a year or more, entry price $2.00. Held it up and down, then when the downgrade came, decided to offload... at 1.75. Duly did so, but didn't look and put on a BUY not a SELL. So I decided to pick up the ff dividend (went ex - on 27/10) and now I've now held my double helping for a while. Will wait for the 45 days before deciding what to do.

 

[peter2]

Was looking at this chart also. The recent break-out of 1.85 triggered my momentum strategy to issue an alert. A good looking reversal opportunity here.

I read the reason for the price selloff in Oct. The reason, China destocking after Covid buy up seems a bit flimsy. Seems like they didn't know. The good news is that there's nothing amiss with the business and the market overreacted.

Hold that double possie, bank the divs and look forward to getting back into the green soon.

 

[So_Cynical]

(Sept 2019) Above $3 today - new all time high, SOL did some selling earlier in the week, probably for the first time ever.

And now SOL buying a few, Perpetual buying last week, some funds seeing value at the current prices.

 

[So_Cynical]

Trading at around the 5 year low, the Annual report commentary was upbeat, the spray plant in NZ should be running at capacity this year, world markets open again, lots of baby's, Clover has cash and operates at a health profit and pays fully franked dividends...all good.

 

[Dona Ferentes]

And now SOL buying a few, Perpetual buying last week, some funds seeing value at the current prices.

SOL , a long time advocate/ investor in Clover, has dropped its holding to below 20% recently.

(not holding, off radar)