Capilano honey have continued their impressive share price performance, they are currently trading at $6.12 / share.
Capilano is a honey packer, It buys bulk barrels of honey from bee keepers and then decants it into handy packs to be sold mainly through coles and woolworths, So It does not face the risks from virus and other things mentioned above as a single bee keeper would.
It has its main packing shed in Brisbane and a smaller packing shed WA, and it takes delivery of honey from beekeepers from right around Australia and can import honey if it needs to.
I actually like this business, I built up a position about 12 months ago and it has done really well for me, I still think it is a little undervalued, I think the full fair value would be around $5.25 per share, based on earnings.
I am happy to hold this little gem in my portfolio.
Capilano today announced that they are purchasing CHANDLERS HONEY.
They will use the packing equipment to get their mothballed packing facility in Victoria back up and running, this should bring about another 1000 tonnes of packing capacity online, if this goes ahead Capilano will have 3 packing plants, being the Main one in Richlands (Brisbane), another smaller one in WA, one in Vic.
They say reopening the packing plant in Vic will also help build relationships with beekeepers in Victoria, and should increase the honey supply Capilano have available to them.
It sounds like a pretty good plan, I only wish they were not using stock to complete the deal, they could have easily cash flowed this deal.
Hopefully there is a performance incentive attached to the shares? Management staying on?
Given that there is a shortage of honey though where are they planing to get the extra 1000 Tonnes from?
Hopefully there is a performance incentive attached to the shares? Management staying on?
Given that there is a shortage of honey though where are they planing to get the extra 1000 Tonnes from?
half-year result being a net profit before tax (NPBT) of $5.12 million, which compares to $2.45 million for the same period last year, before the impact of the Richlands fire and insurance reimbursements. Revenue has increased 34% to $57.9 million due to growth in domestic and export markets.
Net interest bearing debt has been reduced to $4.29 million, down from $7.59 million at the end of June 2014 and $9.75 million for the same period to December 2013.
Another fantastic report released today. Revenue up 34%, Normalized profit up 100%.
As I post this the stock has hit an all time high of $8.30 / share.
This little gem of a company has really shown it's resilience and brand power as it has increased profits in the face of a honey shortage.
How seasonal are their profits, due to various factors (for example I would assume Australians eat more honey in winter), how much does the weather impact on their supply / profit etc?
I read an article that said they where fully priced (at $9) but given the figures they are only on a PE of just over 10 assuming no variance in HY profits.
Anyone else buying this stock? Looks like it has doubled in the last year and might be a good investment.
How seasonal are their profits, due to various factors (for example I would assume Australians eat more honey in winter), how much does the weather impact on their supply / profit etc?
I read an article that said they where fully priced (at $9) but given the figures they are only on a PE of just over 10 assuming no variance in HY profits.
Profits are not overly seasonal, honey sells well all year round, however winter is a slightly bigger season. However the honey harvest is mostly at the end of spring and then another smaller harvest at the end of summer.
Weather is a big impact on supply, obviously trees produces less nector if they don't have moisture in the soil, supply over the last year or so has been the worst on record, however this season is shaping up a lot better. Profits have grown in the last 2 years though even in the face of the supply shortage, and capilano has taken some very good steps to secure more supply in the future, they bought a WA honey packer and recently another packer in VIC this will fortify supply in the future.
I originally valued they at around $5.00 when they were $2, however profits have really surged and the company has expanded since I bought in early 2013, So I think they could be worth closer to $13 now, but this is dependant on them maintaining profit levels around where they are now.
They have expanded market share to over 70% up from 50%, will this be maintained as the honey shortage fades, I don't know, but they have improved their offerings in the higher value honeys, so it's looking good.
Go into either woollies or Coles and look at the honey range, you will see the capilano brand in its various offerings dominates the shelf, also the other brands such as Wesco, smiths and Allowrie are owned by capilano.
There is no doubt that they are the dominate brand in Australia, the concern is that they have grown market share to an unsustainable percentage on the back of serious supply constraints.
The concept of improving earnings by increasing the higher end product range (spruiking health benefits) is a good one but again I think there is only so far you can take this.
My interest lies more in their ability to sell to overseas markets on the basis of world class honey. The potential price premiums to markets like China or Malaysia could be quite lucrative?
The recent profit upgrade certainly revalues the stock, if the second half only matches the first the stock is only on a PE 12, substaintially low for a stock increasing profit by 50+%
I hate making short term predictions, but if profit holds I think it will be worth $13 or more.
I still feel confident that if the second half results are as strong as the first half, they will be worth at least $13.50, so I am looking forward to the end of year results, I think this strong increase in dividend is a sign that the end of year results should be good.
I still feel confident that if the second half results are as strong as the first half, they will be worth at least $13.50, so I am looking forward to the end of year results, I think this strong increase in dividend is a sign that the end of year results should be good.
Is any one else following this company, I am surprised it doesn't have more of a following here. The share price has been going from strength to strength, Closed at $16.39 Today.
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