Traditionally this company has been in very boring/traditional auto and construction businesses in AU and NZ. Coventry fasteners, auto gaskets, auto parts retail? in WA (divested 2012), hydraulic fluids, kitchen cabinet hardware (hinges).
They’ve been through some big changes. Renewed the management of most divisions, divested of auto parts business (except still making gaskets).
They are cashed up (over $50 million cash with a market capitalisation of 118 million) having sold the auto business in WA and all the real estate associated with it.
Revenue from continuing operations was up by 6% last year. The company has an on-market share buy back scheme registered with the ASX for 10% of the issued shares in the company, which, it appears, the haven’t used (ie, haven’t actually bought back any shares).
According to the Reuters Thompson data I receive, there is only one analyst following them. It would appear that to sustain the current dividends of 22c per annum (yield 7%) this will see a dividend payout of around (or a bit above) 100% over the next couple of years.
The most interesting thing about the company which I read last night however, is that they have an in-house IT department that has rolled out Oracle e-Business suite and database systems throughout the entire group and its subsidiaries in AU and NZ. They are Oracle accredited and Coventry has spun off the IT division as a separate subsidiary and they are going after other business. http://www.msservices.net.au Because they have IT offices in both Auckland and Perth they are marketing a “follow the sun” help desk offering targeting AU and NZ businesses.
At first, I thought having an IT business mixed in with an old fashioned hardware and auto parts manufacturing and distribution business odd. However, yesterday CYG announced that it had acquired MultiPro IT http://www.multipro.com.au/ which is another Perth based IT company. Quickly looking over their website, they seem an impressive outfit based on case studies of current and past projects. The main concern I would have though is whether the acquisition is going to be an exit strategy for the founder and managing director Mark Jackson (I found it interesting that in its announcement, CYG referred to Mr Jackson as “General Manager”. I wonder how that will go down when he’s the bloke who founded the company).
Anyway, all that has made me more interested in this company. Is anyone else following? I will do more research.
Be the first to comment