CNI, Centuria Capital Limited

[percy]

Well The Chairman, Mr.Roger Dobson, in his AGM speech certainly sent out a MUST BUY signal with use of the word "SIGNIFICANT" three times.!!
Other strong messages from the MD included "a strong growth trajectory and low gearing."
"The group is in an excellent position [this is a stronger buy than well positioned] to grow its core business."
Fantastic stuff.

[mark100]

Hi percy, I've been in and out a couple of times for no reward. At the moment I think its a poor quality business but worth keeping an eye on. The friendly society funds management division has basically being in decline (stable at best) since they listed back in 2002. They have sold out of the reverse mortgage and insurance businesses to unlock capital which will help build the property funds business. However last year the mortgage and insurance businesses contributed around half of underlying NPAT. I'm not sure the ramping up of the property arm will cover this hole this year at least.
At the moment I prefer TGP in the property funds management sector

[percy]

Thanks for your post Mark100.
I may be reading things the wrong way,but we had $55mil of net assets producing a net profit of about $9.1 mil.
The assets sold for $37.8mil were producing say $4.1mil of profit.
So we takeaway $37.8 mil from $55mil and we are left with $17.2mil of assets producing $4mil profit.
If they can produce $4mil from $17.2mil of assets,hopefully they can earn $8mil from the $37.8mil cash they have received [for under performing assets].

[mark100]

Yes I'm sure that is what they are aiming to do. A lot of equity (and debt) was tied up in the reverse mortgage business earning a low return. I'm just not sure how quickly they can ramp up the returns on the released capital. They first tried to launch their listed REIT almost 18 months ago and had to pull it. Only now (next month) will it finally be listed which shows the time it can take to get things going. I'm just wary of a hole in NPAT over the next 12 months

[percy]

Yes I'm sure that is what they are aiming to do. A lot of equity (and debt) was tied up in the reverse mortgage business earning a low return. I'm just not sure how quickly they can ramp up the returns on the released capital. They first tried to launch their listed REIT almost 18 months ago and had to pull it. Only now (next month) will it finally be listed which shows the time it can take to get things going. I'm just wary of a hole in NPAT over the next 12 months
Again thanks Mark100.
I agree with you it will be telling to see whether they can cover the NPAT hole over the next 12 months.
I don't know,but am hopefully they can cover it, and prove they can earn more from the released funds.They have had plenty of time to think about it,and from all their talk they are confident.
The share buy back should also help increase earnings per share.

[percy]

Just love those shareholder notices.
Directors just keep on buying.

[mark100]

Yes percy I've noted all that director buying. Very consistent

[DarkHorse]

Your posts are always worth reading thanks Percy.
I like to see consistent director buying too - although I note that there has been quite a bit over many years during which performance has been patchy - there were significant purchases by the same Messrs Done and Dobson in late 2010, after which the share price fell steadily - by about a third - over the following 18 months.
I do like your point about return on capital of the remaining businesses - certainly makes them worth a look.
They don't have a great long-term track record though...what do you see as being their core strengths / competitive advantage?

[percy]

Your posts are always worth reading thanks Percy.
I like to see consistent director buying too - although I note that there has been quite a bit over many years during which performance has been patchy - there were significant purchases by the same Messrs Done and Dobson in late 2010, after which the share price fell steadily - by about a third - over the following 18 months.
I do like your point about return on capital of the remaining businesses - certainly makes them worth a look.
They don't have a great long-term track record though...what do you see as being their core strengths / competitive advantage?

I agree with you about their track record.Mark100 has confirmed it . I don't have a view on their core strengths/competitive advantage.In fact, I usually stay away from this type of business,because I don't understand fund management businesses.
I have brought in solely because l think they have sold their under performing businesses for good money, and the reason they have sold them, is because they feel they can made better use of the capital expanding the retained part of their business.Go back to my rough figures in post No.3. If they do this their ratios will be very modest,and the sp will go a lot higher.So far there has been very little interest shown in this company,other than directors buying.There is suppose to be a share buy back,but I don't know when it is due to begin.The interim report is due late Feb,so hopefully the company will update progress.
Your comment-"certainly makes them worth a look" pretty much sums up how I see them.

[DarkHorse]

Fair enough! I can see why you'd invest a moderate amount based on attractive risk-reward factors. I don't understand fund management companies well either - could anyone with some knowledge of that industry shed any light on their prospects?

[DarkHorse]

Fair enough! I can see why you'd invest a moderate amount based on attractive risk-reward factors. I don't understand fund management companies well either - could anyone with some knowledge of that industry shed any light on their prospects?

[percy]

Well the market certainly liked todays announcement,marking CNI up 6 cents or 6.2% to an all time high of $1.02.
All read very positively to me,and appears they are using the recycled capital well.Increased divie too.

[DarkHorse]

Reads very positively to me too. Very rapid growth in FUM in property investments (spurred by low interest rates), and very reasonable price (under 14x 1/2 year underlying earnings) make it look very attractive right now.

[percy]

We have to be a little careful as a good part of the increase profit was from sales and performance fees,which will be hard to repeat.
Looks as though we may have to wait for the second half result to get a better picture of "normal" on going earnings.
Still the ratios [PE and yield], are looking very modest,and the out look very good.

[percy]

I notice yesterday's announcement, where CNI have appointed UBS Securities, to act on the up to 9.9% of the issued capital share buy back.This should underpin the sp.l doubt we will see the sp under a dollar again.Maybe $1.30 to $1.35 may be a fair target price?

[noodles]

I notice yesterday's announcement, where CNI have appointed UBS Securities, to act on the up to 9.9% of the issued capital share buy back.This should underpin the sp.l doubt we will see the sp under a dollar again.Maybe $1.30 to $1.35 may be a fair target price?
Well since posting this, the share buy back has started, there has been further director buying, and most importantly, I have taken a position. lol.

[percy]

Well since posting this, the share buy back has started, there has been further director buying, and most importantly, I have taken a position. lol.

Can't ask for a better endorsement. lol.

[DarkHorse]

I picked up some at $1.02 a week or so back. Glad to be in more good company :)

[noodles]

According to this Research, CNI is the cheapest of the fund managers. See pg.7
http://microequities.com.au/wp-content/plugins/media-administration/research-reports/BLA05032015.pdf

[percy]

According to this Research, CNI is the cheapest of the fund managers. See pg.7
http://microequities.com.au/wp-content/plugins/media-administration/research-reports/BLA05032015.pdf

Looks as though you and DarkHorse timed your buying to perfection.!

[Wolf]

"We have calculated the sector multiple based on a PE less NTA basis"

Found this statement in the report regarding valuation interesting.
I've never come across it before, how do you calculate Price/Earnings - Net Tangible assets :confused:
Could someone expand on this method?

Cheers

[DarkHorse]

Is anyone still holding? I have a small stake...disappointed with performance given sharebuyback. Recent results statement is big on 'strategic principles' but light on tangible comments on performance outlook. Any thoughts Percy or others?

[percy]

Is anyone still holding? I have a small stake...disappointed with performance given sharebuyback. Recent results statement is big on 'strategic principles' but light on tangible comments on performance outlook. Any thoughts Percy or others?

The result was not up to what I expected,so I sold.
Wolf.I have no idea what they mean.

[ziptie]

I have had this one on my Watch list for a little while,

The Prices sat around at 1.35-1.50 for quite some time until about a month or so ago it shot over 2.00

Any idea whats up?

[gazprom1]

Past 3 months has gone from 1.60 to 2.15. Possibly been undervalued and also with interest rates going lower it became a very attractive dividend play. Still has a yield of 4.3% at current levels. The centuria funds, CMA and CIP, have also seen appreciation in their share prices for the same reason IMHO.