Buffett InvestorsNZX
Back
CVT.NZ

Comvita Is Back in the Black — But a $30M Rights Issue Changes the Math

The Turnaround Story Gets Real

For the past few years, Comvita (NZX: CVT) has been one of the NZX's most closely watched recovery plays. The manuka honey and natural health products company went through a brutal period of losses, inventory write-downs, and balance sheet pain. Now, finally, the numbers are starting to back up management's turnaround narrative.

The share price sits around $0.695 NZD — well off its 52-week high of $1.18 but significantly above the 52-week low of $0.455. The stock surged 17% on the day Comvita announced its return to profitability in February 2026. And now, with a $30 million rights issue currently underway, there's a pressing decision for shareholders.

H1 FY26: The Numbers That Matter

The first half of FY26 (to December 2025) showed genuine operational progress:

  • •Revenue: $118.0M NZD (up 18.3% year-on-year)
  • •Normalised EBIT: $10.0M NZD (up $10.7M from a loss position)
  • •Net profit after tax: $4.6M NZD (up $11.1M — a swing from loss to profit)
  • •Operating cash flow: $20.8M NZD (up $10.9M)
  • •Free cash flow: $16.4M NZD (up $14.4M)
  • •Net debt: $48.7M NZD (down $32.9M — the biggest improvement in years)
  • •Inventory: $68.3M NZD (down $52.5M — clearing the bloat that plagued the business)
  • •Full-year EBIT guidance: $14.3M NZD (maintained)

Revenue growing 18%, cash flowing freely, and debt falling sharply. For a company that was burning cash and drowning in unsold inventory not long ago, this is a meaningful shift.

What Comvita Actually Does

Comvita produces and sells manuka honey — New Zealand's premium honey variety, prized for its antimicrobial properties — alongside other natural health and skincare products. It sells through retail channels in China, Australia, the UK, and the US, with China being the critical market.

The company's problems in recent years stemmed from over-expansion into China during the post-COVID boom, followed by a sudden softening of Chinese consumer demand and a manuka honey oversupply situation in NZ. Management brought in a new CEO and began a methodical cost-out and inventory reduction programme. Those efforts are now bearing fruit.

Market cap currently sits at approximately $50M NZD — tiny for a business doing $118M in half-year revenue.

The Rights Issue: What You Need to Know

Here's where it gets complicated. Comvita is in the middle of a renounceable rights issue at $0.65 per share (1 new share for every 1.53 held), raising up to $30 million NZD. Key dates:

  • •Record date: April 22, 2026
  • •Rights trading period: April 21 – May 1
  • •Offer closes: May 7, 2026
  • •New shares allotment: May 18, 2026

The company needs a minimum of $25M in new capital. The funds will primarily go toward paying down debt — the $48.7M net debt figure is manageable but elevated for a company of this size.

At $0.65, the rights are being issued at a discount to market (shares are around $0.695). If you hold CVT shares before April 22, you'll receive rights that you can either exercise (buy new shares at $0.65) or sell on market. If you do neither and don't participate, your stake will be diluted.

The Bull Case

  • •The operational turnaround is genuine and showing in hard numbers — revenue, profit, cash flow, and debt all moved in the right direction simultaneously
  • •The rights issue, while dilutive, will clean up the balance sheet and remove a significant overhang
  • •With debt reduced to manageable levels and inventory normalised, Comvita can focus on growing revenue again rather than firefighting
  • •The manuka honey premium market is a structural opportunity — global demand for functional foods and natural health products is expanding
  • •Analysts have a consensus target of $0.80 NZD — implying roughly 15% upside from current levels

The Bear Case

  • •The share price at $0.695 is still 41% below its 52-week high — a lot of bad news has been priced in, but recovery trajectories can stall
  • •China consumer demand remains unpredictable; any further softening would hit Comvita hard given its revenue concentration there
  • •The rights issue at $0.65 creates ongoing sell pressure as shareholders who receive rights choose to sell rather than participate
  • •Full-year EBIT guidance of $14.3M is modest on a $50M market cap — the P/E re-rating thesis requires continued earnings growth beyond FY26
  • •This is a small-cap stock with limited liquidity; wide bid/ask spreads and thin trading volume make it difficult to enter or exit positions cleanly

What to Watch

The next major catalyst is the completion of the rights issue in mid-May. If the raise is fully subscribed (a vote of confidence from existing shareholders), expect the stock to stabilise and potentially re-rate higher. If participation is weak and the minimum $25M threshold is only barely met, it signals lingering investor scepticism.

Beyond that, the full-year FY26 results (expected around August 2026) will be the real test of whether the turnaround is durable or just a single good half.

The Bottom Line

Comvita's H1 FY26 numbers are the most encouraging the company has produced in years — a real return to profitability backed by strong cash generation and meaningful debt reduction. The challenge is that a rights issue complicates the near-term picture, creating dilution and price pressure at exactly the moment the business is turning a corner. For investors with a 12–24 month horizon and comfort with small-cap risk, $0.695 with a $0.80 analyst target and a cleaned-up balance sheet could be an interesting entry point — but only after the rights issue dust settles in May.

*Disclaimer: This article is for educational and informational purposes only. It does not constitute financial advice. Stock data may not be real-time. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.*