They keep getting their results out earlier each year, which reinforces that not only is it a really uncomplicated operating business, but that the internal accounting system is on-point .... an important tool for financial control and for the company's managers to remain on top of the issues at all times (which self-evidently is the case).
Often, a financial result that comes out at 5:00pm on a Friday afternoon - when everyone has gone mouse-down - contains bad news that management might want to attempt to slip under the radar.
Not KOV.
For it was indeed a quite stellar result; indeed like no other KOV result before it:
![]()
As part of the continual learning process, I always find it instructive to review my file notes for stocks I've researched.
A few years ago I thought that, when the recovery in KOV's EBIT Margin and ROE occurred, it might look something like this:
So EBIT Margin getting back to 9% and ROE close to 15% was my central scenario at the time of the formulation of those charts.
Well, forward to today, and I find that the EBIT Margin is 15% and ROE is 26% [*]... I was not even close! (When I do get them wrong in the future, would that I get them wrong in the same way that I've got KOV wrong!)
[*] And bear in mind, that 26% ROE is generated despite a very lazy capital structure. The balance sheet could easily be geared to generate even higher ROE, if the board was of such a mind (and I'm glad it isn't given the highly cyclical nature of the business).
And it was not just excellent at the headline accounting profit level - which, recall, had been flagged a few weeks ago - but also in terms of the strong cash flow generated; despite a very substantial inventory build (which I think is most prudent given the supply chain challenges, and especially the sizeable pipeline of work that lies ahead.)
Over the past 12 months, KOV management increased inventory by a highly significant 64%, from $12.4m to $20.5m, so more than an $8m increase. Despite that, the company still generated $4.0m in Operating Cash Flow and $2m in Free Cash Flow.
Specifically, in the second half, the company's net cash balance rose by $1.0m, despite $2.8m investment in extra inventory, as well as a $2.9m dividend having being paid.
Such is the organic capital generation of the business.
.
- Forums
- ASX - By Stock
- KOV
- Ann: 30 June 2022 Annual Results - Press Release
Ann: 30 June 2022 Annual Results - Press Release, page-5
-
- There are more pages in this discussion • 5 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add KOV (ASX) to my watchlist
|
|||||
Last
$8.89 |
Change
0.130(1.48%) |
Mkt cap ! $103.8M |
Open | High | Low | Value | Volume |
$8.88 | $8.92 | $8.88 | $8.364K | 941 |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 2000 | $8.80 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$8.89 | 1000 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 2000 | 8.800 |
3 | 5085 | 8.760 |
2 | 2812 | 8.750 |
1 | 574 | 8.730 |
1 | 250 | 8.700 |
Price($) | Vol. | No. |
---|---|---|
8.890 | 1000 | 1 |
9.000 | 1444 | 2 |
9.030 | 1012 | 1 |
9.130 | 2393 | 1 |
9.200 | 60 | 1 |
Last trade - 10.26am 28/06/2024 (20 minute delay) ? |
Featured News
KOV (ASX) Chart |
The Watchlist
LU7
LITHIUM UNIVERSE LIMITED
Alex Hanly, CEO
Alex Hanly
CEO
SPONSORED BY The Market Online