When it comes to the timeframe of the outlook you are looking...

When it comes to the timeframe of the outlook you are looking at, you are looking short, but the next 6-12 months will be important for setting up CCX for a 5 year outlook if you are long.

I have a very high regard for the management team under Phil Ryan, who is probably second to none when it comes to rag-trade experience and strategy. The board are no dummies either.

The stock was sold off heavily after the release of the half-yearly which in the circumstances reflected a pretty good result.

Where the market got it wrong in my view was its take on the inventory build, which was a large contributor to the sell-off. The MBAs and finance grads sitting at the screens these days have been raised over the past forty years on a steady diet of lean production and just-in-time manufacturing as the only way to run ever-lengthening supply chains. It's origins lie in production systems developed by Toyota post-WWII to catch up with the American auto makers. So that's a lot of cultural baggage to overcome. In fact it's probably more than cultural baggage, it's business dogma and ideology, both of which are not given up lightly by people who have made careers out of it. Hence the sell-off that looked like someone being confronted by a brown snake. Market participants are going to have to rewire their brains for much more just-in-case inventory management in future. Some will no doubt find it tough. You can get an MBA or a finance masters by pretty well rote learning. But really good business strategists know their history and their political economy and are capable of original thinking.

There's been heaps written about the move away from just-in-time inventory management to just-in-case inventory management driven by supply chain disruptions recently and I won't repeat them here. But that's only part of the story. There is no need for a board to take a decision to make a very substantial investment in inventory if management haven't made the case to them that they can a) procure it; b) store it; and c) sell it at a decent margin and in a reasonable period of time to provide a return on the capital invested in the inventory in the first place. That in my view is what management did. They must have made the business case and that's why I think Australian Super (or one of their fund managers more likely), having probably spoken to CCX management, took a slightly contrarian view to the market and did quite a bit of buying at around the $4 mark. Like the rest of us they might have underestimated the size of the sell-off, but the buying made sense if you look at the inventory build is as a proxy forecast for where management and the board think sales will be in the next 6 to 12 months.

The broker consensus is a strong buy at these prices. Hope this helps.

All of course in my opinion and you will no doubt form your own views based on your research.

KOTJ