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MarketScreener Homepage  >  Equities  >  NEW ZEALAND STOCK EXCHANGE  >  Comvita Ltd    CVT   NZCVTE0001S7

COMVITA LTD

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Australia and New Zealand companies whiplashed by China import regulations

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04/06/2017 | 03:20am EDT
Jars of Comvita brand Manuka honey from New Zealand are photographed on the shelves of a health food store in Sydney

WELLINGTON (Reuters) - New Zealand and Australian produce suppliers are taking a hit as daigou, individuals who unofficially export their goods into China, reduce purchases of their products amid Beijing's constantly changing stance on cross-border e-commerce.

Scott Coulter, the chief executive of New Zealand honey producer Comvita Ltd (>> Comvita Ltd), which this week issued a profit warning, said daigou are instead working through stockpiles built up during a speculative bubble over the past two years.

"They're concerned about what the future might look like," Coulter said in a telephone interview with Reuters on Thursday. "They're just not committing to the amount of inventory that they were previously."

Daigou, unofficial shopping agents who transport goods into China from abroad either in personal luggage or by post, have become powerful exporters and their activities are increasingly scrutinised.

There was panic among daigou a year ago when China raised taxes and ramped up its policing on goods bought on overseas e-commerce platforms, but a lack of follow-through on that crackdown allowed the industry to flourish.

A Chinese Commerce Ministry statement on March 21 supported that by indicating a more relaxed stance, with smaller shipments being treated as "personal" packages.

Shares in Australian milk company Bellamy's (>> Bellamy's Australia Ltd) jumped 15 percent and vitamins firm Blackmores (>> Blackmores Limited) gained 13 percent on that statement, as anecdotal data suggested strong daigou growth.

But Comvita's experience of selling its luxury Manuka honey, prized in Asia for its reported medicinal qualities, shows the seemingly never-ending boom-bust cycle for exporters relying on grey channels into China.

The company's shares plummeted more than 17 percent on Wednesday after it slashed its forecast net profits for the year ending June to NZ$9 million ($4.88 million) from NZ$20-22 million estimated in February.

And despite the brief bump, Bellamy’s shares are trading down 33 percent so far this year. Blackmores stock has gained 5 percent after heavy losses of more than 50 percent in 2016.

Coulter declined to say what proportion of his company's sales went to China via informal routes, but said it was a big channel.

Coulter said he now believed it would take until next year or possibly longer for the daigou market to return to early 2016 levels. In the meantime, Comvita has struck a deal with official distributor Shenzhen Comvita Natural Food Co Limited that begins on July 1.

"We know that longer term the Chinese are likely to push more products through formal channels," Coulter said.

(Reporting by Charlotte Greenfield; Editing by Jane Wardell and Stephen Coates)

By Charlotte Greenfield

Stocks treated in this article : Blackmores Limited, Comvita Ltd, Bellamy's Australia Ltd
Stocks mentioned in the article
ChangeLast1st jan.
BELLAMY'S AUSTRALIA LTD -2.36% 10.77 End-of-day quote.50.89%
BLACKMORES LIMITED -0.18% 95.66 End-of-day quote.-21.45%
COMVITA LTD End-of-day quote.
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Financials (NZD)
Sales 2019 172 M
EBIT 2019 11,4 M
Net income 2019 3,12 M
Debt 2019 88,8 M
Yield 2019 -
P/E ratio 2019 63,24
P/E ratio 2020 22,16
EV / Sales 2019 1,66x
EV / Sales 2020 1,51x
Capitalization 197 M
Chart COMVITA LTD
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Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 2
Average target price 4,26  NZD
Spread / Average Target -0,93%
Managers
NameTitle
Scott Philip Coulter Chief Executive Officer
Neil John Craig Non-Executive Chairman
Julianne Keast Chief Financial Officer
Sarah Jane Kennedy Independent Director
Murray John Denyer Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
COMVITA LTD136
HERBALIFE NUTRITION LTD-5.77%8 493
BY-HEALTH CO LTD--.--%5 051
BALCHEM CORPORATION20.45%3 046
SIMPLY GOOD FOODS CO4.60%1 619
MEDIFAST INC5.41%1 564