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1.48% $8.89 korvest ltd

Madamswer, Your input to this forum is detailed and considered,...

  1. Alltypes
    37 Posts.
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    22/10/19
    13:59
    Post #: 41008450

    Madamswer,

    Your input to this forum is detailed and considered, a real valuable resource to many of your loyal followers.

    You have been a long time follower (and investor for that matter) of Korvest and whilst your somewhat optimistic outlook for Korvest is a reasonable assessment given the current industry outlook, history suggests that one should remain cautious about management’s ability to execute.

    I agree that the government pipeline of potential infrastructure spend is absolutely enormous and a bonanza for all related contractors, suppliers and manufacturers.

    However. . . the boom is already here and has been for some years now, you reside in Sydney, name a time when you last saw the same amount of construction activity, I can tell you exactly when it was, in the lead up to the 2000 Olympics.

    The level of activity is not just occurring in NSW either, its virtually the same in every other State, it is the busiest time that I can remember across Australia.

    The point is, now is the time that Korvest should be in the peak of their earnings, and to not be hitting the high numbers right now means that ‘the spoils’ are being shared amongst other growing competitors.

    Whilst Korvest management draw attention to the failure of other competitors, those in question were of insignificant size to have any real impact other than to cause some price aggravation.

    The real difference between the current decade just gone, compared to the one prior (which produced the strong growth and profit trajectory) was mostly related to business expansion – new locations, new products, new market segments.

    Whilst acknowledging the purchase of titan / power step some years back, there has been no other significant initiatives to grow the business, and hence the reason for it being a laggard.

    I would be interested to see a percentage of current revenue related to new geographical regions, markets or products expansion – but no such number will be revealed and it would truly expose the inaction of management.

    Whilst Alex’s departure a few years back was an absolute ‘no brainer’, essentially the management team has not changed, and so one can reasonably look at the last 10 years and suggest it to be reasonably representative of the future ahead.

    What’s more, (and it has been a gripe of investors), is the lack of ‘skin in the game’ from the management team, the large majority of shares they have are those that were ‘gifted’ through low hurdle rate executive options.

    Executives salaries are already at the top end given the business performance (possibly above), there is no incentive to do anything other than ‘more of the same’.

    Anyway, no need to take my word for it, the below graphs tell the story, interesting that the only graph (15 years) heading north is that of ‘depreciation’(which normally results in increased productivity and profitability outcomes) –



    https://hotcopper.com.au/data/attachments/1783/1783911-f2f132cefe0aaa3d66fb7eb4fcdb9ee9.jpg

    KOV Price at posting: $3.20 Sentiment: Hold Disclosure: Held
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