By Jenny Ruth
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Friday 14th August 2009 |
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The key to honey products company Comvita's share price performance will be its ability to move away from high volume, low margin honey sales to the higher margin healthcare products, says McDouall Stuart.
"The recent success with gaining FDA approval for the woundcare products and the launch of additional products offers potential," it says.
The global woundcare market is estimated at $10 billion and Comvita achieved 53% growth in sales of medical products in 2009.
While the company has been acquisitive in recent years as it tries to achieve its sales target of $100 million and at least 25% of revenue from non-bee products by 2010, profitability hasn't followed and the strength of the New Zealand dollar has reduced profit margins, it says.
"The company appears to be regaining momentum with sales and profitability recovering in 2009. The first quarter of the current year has maintained its momentum from last year with sales up 30% and unaudited profit of $0.8 million, its quiet quarter, in line with all of 2009."
McDouall Stuart is forecasting net profit for the year ended March 2010 will be $2.8 million, rising to $4.3 million the following year, although sales are likely to fall share of the company's target at $83.6 million in 2010 and $93.6 million in 2011.
BROKER CALL: McDouall Stuart rate Comvita (NZX: CVT ) as buy.
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