Activist investor demands dividends from Coventry

A call to return more than $25 million to shareholders via a 60¢-per-share fully franked special dividend is the motivation for corporate raiders seeking to roll the board of mining services supplier Coventry Group.

• Updated Jun 22, 2014
• Sally Rose

Radzyminski leads raid to topple Coventry directors

Updated | Activist investor Gabriel Radzyminski is leading a share raid on Coventry Group, the $106 million Western Australia mining supplies company, in a move designed to roll the board.

• Updated Jun 20, 2014
• Sally Rose

• Investment banking

Metcash, Burson chase WA auto parts

The 74-year-old owner of the Veale Auto Parts business in Western Australia says he has held talks with three separate companies including Metcash and Burson Group about a potential sale of his business, but he’s not sure if he wants to part with it.

• Updated Apr 1, 2014
• Simon Evans

Coventry Group

Automotive parts, tools and workshop equipment distributor Coventry Group said it expected weaker market conditions to prevail in the current half as a result of the recent floods in eastern Australia. It said it would review the cost structures of all its businesses as it looked to counter an “intense” competitive market.

• Updated Feb 28, 2011

• Market Wrap

Weak fasteners hurt Coventry

A poor performance from its fastener operations should see profits down about 20 per cent at Coventry Group, and management says there are ’limited signs of market improvement’.

• Updated Dec 6, 2010
• Trevor Hoey

• Cars

Coventry Group (CYG)

The sharemarket has struggled to post gains over the past two months, but Coventry Group is one stock that has bucked the downward trend.

• Updated Aug 31, 2010
• Anthony Macdonald

• Cars

Coventry Group

Improvements in Coventry Group’s automotive parts distribution operations in Western Australia and South Australia helped deliver an improved result.

• Updated Aug 30, 2010

• Market Wrap

RHG rams home its advantage

A handful of junior names including RHG have recovered all or most of their losses from the market correction and this could set them up for a further rally in the August reporting season.

• Updated Jul 22, 2010
• Brendon Lau

Coventry Group (CYG)

Automotive parts distributor and manufacturer Coventry Group defended the more-than-30 per cent rise in its share price on Monday, and said that it was unaware of any reason for the move in response to an ASX price query

• Sep 18, 2009
• Khia Mercer

Coventry Group (CYG)

Goldman Sachs JBWere has made significant upward adjustments to its estimates for Coventry Group following the company's full-year results on Friday

• Aug 31, 2009
• Joyce Moullakis

Coventry Group (CYG)

Goldman Sachs JBWere has cut its earnings estimates for Coventry by 29 per cent to 48 per cent for the 2008-09 to 2010-11 financial years

• May 5, 2009
• Brendon Lau

• Market Wrap

Taking Stock

Brambles CLOSE $ 5

• Mar 25, 2009
• Paul Garvey; Matthew Cranston; Brendon Lau; Peter Wells;

Coventry (CYG)

The automotive parts and industrial product distributor has failed to partake in the sharp market rally since early March

• Mar 24, 2009
• Brendon Lau

Behind some rocky results lies a safe harbour

Coventry Group (CYG) is a West Australian distributor of auto and industrial products, with a small exposure to the manufacturing of automotive gaskets. While almost all things WA have been a source of investor euphoria in recent years, the same cannot be said for Coventry Group. Shareholders have lost 54.5 per cent in the past year, 26.1 per cent in the past three years and 13.2 per cent over the past five. The primary source of Coventry Group investor disappointment in recent years has stemmed from the poor performance of its auto parts distribution business. Over the past seven financial years, the auto parts distribution business has generated an average return on gross assets employed of 3 per cent. In financial 2007, annual auto parts distribution revenues were more than $242 million, with the contribution to group a loss of $8.2 million. The abominable performance of the auto parts distribution business is in stark contrast to the performance of the industrial products distribution arm, with financial 2007 revenues of $257 million, a return on assets of 15.8 per cent and pre-corporate overhead allocation earnings of $22.9 million. These figures need be viewed in the context of Coventry Group's market capitalisation of $76.8 million. A major factor behind the poor performance of Coventry Group has been an ill-timed expansion of its auto parts distribution arm to the eastern seaboard in the past decade. After many years of loss generation and with minimal prospect of an operational turnaround, Coventry Group has systematically been divesting its eastern seaboard auto parts distribution exposures in Victoria, NSW and Queensland, as well as the Northern Territory. Its residual auto parts distribution exposures are now focused on WA and South Australia, where historically Coventry Group has held significant market share and generated reasonable returns. While battling poor performance in its auto parts distribution business, Coventry Group has upped the operational challenge ante and embarked on a complete IT system overhaul, and on a move of its primary auto parts warehouse. As is often the case with changes of this nature, things rarely run to plan, and in financial 2008 auto parts distribution performance has been poor, with half-year losses of more than $5.5 million. In the medium term, I expect the performance of the auto parts distribution business to stabilise, losses to be stemmed and some value to emerge from the $65 million in capital employed in the division. As at last balance date (December 2007) Coventry Group had net tangible assets of $3.22 per share, against a last sale price of $1.95. In financial 2007, net borrowings within the company peaked at $76 million, and have since fallen to $55 million - post the divestment of poorly performing assets. In financial 2009, further asset finetuning is expected, with net debt likely to be closer to $45 million by June 30, 2009. Coventry Group remains an asset-rich company, with freehold property on the balance sheet believed to be worth more than twice the book value of $21 million as of June 30, 2007. The company carries provisioning levels, in terms of stock and debtors, that are considered morbidly obese and representative of recent poor operational performance. At a price of $1.95, Coventry Group is selling at about half its break-up value. Its industrial parts distribution and gasket manufacturing businesses generate earnings before interest, tax and amortisation of about $25 million per annum, which on a multiple of 7 times, net of debt, equates to $3.25 per Coventry Group share. In addition, I believe some value should be ascribed to the auto parts distribution business with $65 million in capital employed, or another $1.60 per Coventry Group share. While investment safe harbours are few and far between in the current market environment, I expect that the scope for further de-rating at Coventry Group is minimal in the medium term. Coventry Group is also well placed to benefit from a reversal of the Asian-sourced inventory deflationary wave that has challenged distributors, and manufacturers, in Australia and across the globe. I also suspect that buying into a company selling at less than half its break-up value, when the assets in question are strategically attractive, does possess some safe harbour traits in an equity market that is likely to remain character-building for the foreseeable future. * Frank Villante is chief investment officer at Souls Fund Management. Employees of Souls Funds Management are shareholders in Coventry Group.

• Jul 21, 2008
• Frank Villante

• Market Wrap

Taking Stocks

Coventry Group

• Jul 18, 2008
• George Liondis; Peter Wells; Patrick Commins; Nabila Ahmed; Gabriella Hold;