• Australian (ASX) Stock Market Forum

CZZ - Capilano Honey

Discussion in 'Stocks 0-H' started by System, Jul 9, 2012.

  1. System

    System Administrator

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    Capilano Honey Limited (CZZ) is the largest packer and marketer of honey in Australia. Over its near 60 year history, Capilano has grown from its co-operative roots, distributing product to grocery stores around Brisbane, to become a widely recognised brand in Australia. Capilano has a market share of over 40% in retail honey sales in Australia's supermarkets and an international presence through its honey exports.

    http://www.capilano.com.au/investors
     
  2. So_Cynical

    So_Cynical The Contrarian Averager

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    Sweet a Honey stock :)

    Capilano was owned by The Guinness peat group (GPG) i think (or at-least part owned), GPG are selling everything and thus the ASX has its first Honey stock though i think they were listed on one of the smaller exchanges.

    Anyway a good industry to be in i would think, clean, healthy, in demand, very exportable....with the downsides being weather, viruses and predators...i will follow with some interest.
     
  3. McLovin

    McLovin Well-Known Member

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    Mariner has been trying to buy these guys when they were on the Bendigo exchange. I actually looked into them to try and get a few shares, with the belief that once they relisted on the ASX they'd get more attention and a higher price but there was no volume.
     
  4. springhill

    springhill Make the drill work for YOU

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    Viruses one of the biggest hazards with bees.
    Australia is one of the only countries which is still free of the varroa mite.
    Varroa mite rapidly accelerates the spread of Deformed Wing Disease.
    I think it nearly wiped out the entire population of honey bees on Hawaii when it hit.

    I have noticed a reduction in the number of bees in our orchard over the last 20 years.
     
  5. burglar

    burglar Well-Known Member

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    You should make an alliance with a beekeeper!
    But then, this idea can't be new to you.

    Sorry. As you were!!
     
  6. johenmo

    johenmo Well-Known Member

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    Add to that chemical usage, foulbrood (a bacterium whose spores last decades). The loss in pollination would be terrible. I worked for a bee-keeper when I was a teen. Was interesting. This stick will be interesting to watch.
     
  7. ParleVouFrancois

    ParleVouFrancois Well-Known Member

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    Interesting to see a few people already interested in this stock like I am! If only it had more liquidity! Cashflows were very healthy in prior years before the recent production interruption regarding an increase in overall capacity, so would be a good bargain buy if one was able to sit around for a few weeks waiting for a non-crazy seller!
     
  8. burglar

    burglar Well-Known Member

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    Runny honey, ... now that is funny!
     
  9. springhill

    springhill Make the drill work for YOU

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  10. Value Collector

    Value Collector Well-Known Member

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    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.
     
  11. springhill

    springhill Make the drill work for YOU

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    As some one in the horticultural industry, there is an anomoly here that needs to be raised which could have detrimental effects on the business activities of CZZ.

    Currently, Australia is just about the only country left in the world that does not have Varroa Mite, this parasitic pest has caused losses of billions of dollars worth of honey bee hives, worldwide.
    http://en.wikipedia.org/wiki/Varroa_destructor

    It is possibly only a matter of time before it establishes a population in our country, one of the most likely sources of entry is through the importation of foreign produce.

    I hope that this never happens in Australia, but the secondary effects of free trade are felt far and wide in terms of the spreading of pest and disease. No quarantine measure is perfect when there is an element of human activity involved.

    The chemical group of neonicotinoids should also be looked at when thoughts of honey bee population demise are discussed.
     
  12. Value Collector

    Value Collector Well-Known Member

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    Yeah, I have a very good understanding of the issues, but as I said in the post above I don't believe CZZ faces large risk from this. The main reason is that CZZ does not own any bee hives. CZZ are honey Packers. The bee keepers are the ones that own and operate and hives, CZZ just purchases Barrels of honey at the end of the season.

    CZZ purchase honey from right across Australia, from North Queensland to Victoria and across to WA, then they just pack it. If an area had lower production, they would just buy more from another area, they also have the option to import honey also.
     
  13. burglar

    burglar Well-Known Member

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    This so reminds me of a bad old joke:

    Two old ladies meet.
    "Aren't you worried about the Varroa Mite?" says one.
    "No. I get my honey from the Supermarket!" responds the other.
     
  14. Value Collector

    Value Collector Well-Known Member

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    Can you not see a difference in risk profile between a Bee keeper who relies on the 200 hives he managers and a honey packer who just buys barrels of honey on the open market?

    The Bee keeper would take a huge hit if he lost 50% of his hives, However the honey packer who buys honey from all over Australia faces no such risk. As I said if there was a supply shortage on the east coast they would just bring in more from the west coast, where there is a chronic over supply and is part of the reason Capilano have bought a packing shed and label over there, or as I said they can import honey from over seas.
     
  15. burglar

    burglar Well-Known Member

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    I see both sides of this! Do you?

    One Extreme:
    a-world-without-honeybees
     
  16. Value Collector

    Value Collector Well-Known Member

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    And what do you think the likely hood of both the Australian and overseas commercial honey bee colonies collapsing to the point there is no honey available for capilano to buy and pack.

    I mean you can take extreme risk views of any business, But you have to make assessments of what the likely real world outcomes are and how the businesses are likely to perform.

    Even in countries that have the mites there are still strong honey packing industries,

    What your basically saying is that investing in patties (makers of meat pies), put you at big risk of mad cow disease, Is the risk of mad cow disease real for cattle producers, yes, Is it a risk for patties, not really, they will just source their meat from other areas.

    And mad cow disease is so much worse than the mite, Even a Beekeeper who loses production because of the mite will still probably have honey to sell, it doesn't shut him down.
     
  17. So_Cynical

    So_Cynical The Contrarian Averager

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    Any mad cow outbreak in Aust would see the PFL Share price halve over night...due to the Aussie/Meat/Pie connection...even if the disease was found in one cow in Darwin and PFL sourced all there Meat from Melbourne abattoirs.
     
  18. Value Collector

    Value Collector Well-Known Member

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    So, would the risk of that happening be a factor in purchasing PFL today? Given that there is no mad cow in Australia currently, But it is possible that one day, somewhere in Australia there might be a break out, is that something that should factor heavily in todays analysis?

    And, would it affect patties long term outlook? I mean I have no doubt such news would cause volatility for a while, but what would be the long term impact?


    But, remember as I said Mad cow is much worst than the mite, A bee keeper that has mites in some of his hives can still sell the honey, He will just have lower production due to the affected hives, but he will still get a harvest.

    The point I am trying to make is that the comments that the mites (which are not even in Australia yet) should be some sort of determining factor in an investment decision in capilano is false.

    Capilano don't own bee hives, They own Zero bees, They buy barrels of honey and pack them into handy packs for resale, there is no chance that an appearance of mites in Australia would cause such a drop in production that capilano would not be able to source enough honey to keep their packing sheds running.
     
  19. qldfrog

    qldfrog Well-Known Member

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    but they need some bees...and by the way the world stock goes, this is not a given.
    worldwide, australia is the place providing new colonies.
    So what is the business of CZZ if there are no bees/no honey
    native bees production is a fraction of the european bees one
    I believe that is where the issue could be
    Crossing finger it never happen here but I would factor that risk if I were to invest,
    i agree CZZ could try to sell corn sirop instead but this is not exactly the same business..
     
  20. Value Collector

    Value Collector Well-Known Member

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    there are a million what if's you can say about any industry, It's a matter of looking at the facts rather than hyped up dooms day predictions.
     
    Wally Flynn likes this.

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