CDL & CDI ... Another Great Result

[Scrunch]

I’m guessing that the purchase price may be at least $1m per hectare, so has used up a fair chunk of cash on hand. Depending on subdivision section average size and lie of the land in terms of space required for roads and reserves, there may be 1,000 sections to be developed. In terms of not swamping the market, I’m assuming these will be developed and sold over quite a few years.

Decision of MCK to participate in the DRP and muted CDI May 2021 dividend level now makes sense.

Given yesterday’s announcement stated that settlement had already occurred, I’m surprised the continuous disclosure rules didn’t require an announcement as soon as the purchase was unconditional.

OIO approval disclosure in due course may detail the land purchase price.

Overall I’m happy that CDI have secured a significant land holding in a very desirable area, which will underpin their development pipeline for years to come.

Unless the area purchased increased after 1 Jan, the price is under$1m/ha. Note 16 af the annual report only noted $56.3m of land purchase commitments. 67ha was bought.
Its still unknown if this AR commitments figure also included some other smaller purchases because the atea of land it related to isn't stated.

[Southern Lad]

Note 16 af the annual report only noted $56.3m of land purchase commitments. 67ha was bought.

Well spotted Scrunch - makes sense that the December 2020 disclosure relates to the Havelock North land. If so, $840k per hectare and therefore a reasonable deal for CDI. Will keep an eye out for the OIO approval release in due course to confirm.

CDI do seem to make a habit of publicly saying the consideration on their transactions is confidential, which does nothing to keep shareholders informed and on side. Eventually the values come out due to financial reporting disclosure or public disclosure of land transactions but it would be far better from a shareholder transparency perspective if they just were open from the start.

[BlackPeter]

...

CDI do seem to make a habit of publicly saying the consideration on their transactions is confidential, which does nothing to keep shareholders informed and on side. Eventually the values come out due to financial reporting disclosure or public disclosure of land transactions but it would be far better from a shareholder transparency perspective if they just were open from the start.

If they agree confidentiality, they need to keep it. As well, it might not be in the best interest of shareholders if everybody is tooting commercially sensitive information around. Purchase prices are. Tell me any business which is publishing their purchase contracts? Obviously - for CDL it might just reduce their chances to get in future other property at reasonable prices, and some property not at all (if the seller does not want to get their consideration tooted around).

As a shareholder I expect a company to do what's best for the business, not to divulge sensitive information to whoever demands them ...

As a long term shareholder I am quite happy to see the results in the books - no need to know the details of every single deal.

No business would publish the commercial details of every deal to the public, and neither should CDL.

[macduffy]

Well said, BP. I agree completely!

Disc: Holding - and adding through the DRP.

[beetills]

Can anyone advise me what other land holdings they have apart from the recent purchase.I believe they also own a good chunk of land in Hamilton.

[BlackPeter]

Can anyone advise me what other land holdings they have apart from the recent purchase.I believe they also own a good chunk of land in Hamilton.

Did you check their annual report and investor presentation ? :): It contains all the info you are after ...

[podg]

thought there was an outside chance that interim result would be posted today. next week maybe.

[Southern Lad]

If they agree confidentiality, they need to keep it. As well, it might not be in the best interest of shareholders if everybody is tooting commercially sensitive information around. Purchase prices are. Tell me any business which is publishing their purchase contracts? Obviously - for CDL it might just reduce their chances to get in future other property at reasonable prices, and some property not at all (if the seller does not want to get their consideration tooted around).

As a shareholder I expect a company to do what's best for the business, not to divulge sensitive information to whoever demands them ...

As a long term shareholder I am quite happy to see the results in the books - no need to know the details of every single deal.

No business would publish the commercial details of every deal to the public, and neither should CDL.

I agree that if a confidentiality undertaking is given it needs to be adhered to, but my point is that CDI appears to be the driver of these given that most transactions they have are confidential. As a publicly listed company there are responsibilities to keep the market informed, and as a shareholder I would prefer to make informed decisions rather that trusting the company to do they right thing. Clarity around underlying details removes uncertainty and therefore maximises share value (assuming bad news isn’t being kept quiet). With land transactions, sale prices are a matter of public record once registered so why the need to keep under wraps (especially given it has already been settled)? Also in local districts, the sale price of property is often well known. Who is going to agree to a price on land worth $56m without fully understanding it’s value and having knowledge of recent market transactions?

A couple of CDI announcements where I think it would be useful for the market to be better informed on value to CDI include:

1. The sale price of the 3.8 ha of vacant Wiri land to Graeme Hart; and

2. The size and value of the project to design, build and lease a development on CDI owned land in Wiri - are we talking $3m or $30m?

Is the market well served by CDI reporting a second half FY20 that was below market expectations without any cometary from the company on the level of section sales signed up unconditionally that are yet to settle, perhaps falling into the next reporting period because tittles were issued in January rather than the expected December?

CDI has traditionally traded at a discount to market value NTA, which serves those willing to take a punt that the underlying value is better than the market fully appreciates, but it does a disservice to those shareholders wanting to sell in an informed market.

[LaserEyeKiwi]

thought there was an outside chance that interim result would be posted today. next week maybe.

it’s usually 1sr week of August, sometimes very late July.

[BlackPeter]

Here we are:

https://announcements.nzx.com/detail/376514


CDL Investments New Zealand Limited (“CDI”) made an unaudited operating profit after tax of $20.75 million for the six month period ending 30 June 2021 (2020: $13.74 million). Operating profit before tax was $28.82 million (2020: $19.08 million).
Property sales and other income for the period was $61.27 million (2020: $40.96 million). Net Asset Backing (at cost) for the period under review was 95.95 cents per share (2020: 85.9 cents per share).
The results reflect ongoing positive strength in the New Zealand property markets generally. The Board is satisfied with the current sales tempo and believes that the company should look to take advantage of the current positive market conditions and meet current demand.


Quite satisfactory result for the first HY - if I may say so.

Outlook: as usual - very conservative (looking at the future of the real estate market). They just love to under promise and over deliver, don't they?

[percy]

Here we are:

https://announcements.nzx.com/detail/376514



Quite satisfactory result for the first HY - if I may say so.

Outlook: as usual - very conservative (looking at the future of the real estate market). They just love to under promise and over deliver, don't they?

Pity they do not over deliver on their divie.

[BlackPeter]

Pity they do not over deliver on their divie.

Actually - I don't mind them leaving the money in the business. They did show again and again that they are able to grow shareholder funds and still paying a reasonable return as dividend :);

[macduffy]

I agree, BP. Better use of the money there than in my pocket!

[LaserEyeKiwi]

So looks like the recent massive land acquisition announced last month was worth ~$56 million judging by the "contractural commitments for land purchases"

Also interesting they are planning almost $25 million on capex in "investment property" which is triple there current retail property portfolio.

Whats also interesting is that MCK is breaking out the retail investment property in CDL as an all new seperate reporting segment. currently assets of just $8.4 million, but with that ~$25 million of capex planned it looks like MCK/CDL have large plans for getting into retail property ownership. I assume it's primarily driven by MCK to diversify its revenue base somewhat.

[Southern Lad]

but with that ~$25 million of capex planned it looks like MCK/CDL have large plans for getting into retail property ownership. I assume it's primarily driven by MCK to diversify its revenue base somewhat.

My pick is that the majority of the $25m relates to the Wiri Design Build Lease Industrial development project rather than the Rolleston or Preston’s Park retail. As I have noted previously, CDI have been cagey on details on the project. If I’m right, I’m expecting a sizeable revaluation gain on completion. Question is whether it’s a long term hold or whether the capital invested will be recycled (although the commitment is categorised as Investment Property so I guess in the short term it’s a hold).

[Scrunch]

Interesting that there was $5.101m spent on the purchase of investment property and no commentary on this I've spotted. The $56.258m land purchase commitment was unchanged on Dec 2020 so this wasn't part of that deal (or deals - its still possible that the $56.258m represents the 67.1ha and something else).

It would appear this $5.1m is just another smaller subdivision somewhere that was purchased and settled during the half year that adds to the future pipeline of development sales. To me its just a reminder that in addition to the bigger developments they do a few smaller bits around the edges.

[podg]

The supply constraints in the construction sector have some sites grinding to a halt. no word from cdl with regard to how their developments are progressing, or not, with this in mind ...

[LaserEyeKiwi]

The supply constraints in the construction sector have some sites grinding to a halt. no word from cdl with regard to how their developments are progressing, or not, with this in mind ...

Wouldn’t think the supply shortages talked about would be preventing CDL from developing sections outside the level 4 area. It’s more a factor for those building houses.

[podg]

yes, that's right. but to sell the sections, cdl requires buyers who are of the view they can build on those sections in a timely manner. which is why i pose the question ...

[podg]

well, some court action ..... somewhat out of the blue.

can't recall CDL having to vigorously defend anything before.

[BlackPeter]

well, some court action ..... somewhat out of the blue.

can't recall CDL having to vigorously defend anything before.

https://announcements.nzx.com/detail/379344

LOL - I assume (Winton - the applicant and a direct competitor to CDL) lost the deal and, being a bad looser tries now to reverse the deal by pi$$ing against the leg of the minister and the OIO for approving it.

There is a lot to say about businessmen who try to make business through the courts, but not a lot of it would be good.

Not sure though my money would be on the applicant :p, but I am sure another good day for the legal profession;


The judicial review action has been taken by the Applicant in relation to a
recent decision relating to CDLL's acquisition of land in Havelock North
which was advised to the market on 21 July and which has settled. The
Applicant is seeking, inter alia, an order setting aside the decision of the
Overseas Investment Office in respect of that approval and / or a declaration
that Ministers erred at law in making their decision to grant consent.

CDI and CDL Land are taking legal advice and will vigorously defend its
position insofar as it relates to the judicial review and the orders sought
by the Applicant. As the matter is now before the High Court, neither CDI nor
CDLL will be making any further comment at this stage.

[Sideshow Bob]

Winton don't have a good track record down this part of the world. Bought a chunk of land in Cromwell near Highlands, and wanted it all rezoned. Locals fought back and zoning didn't get changed.

Also have Northlake in Wanaka, and had a few issues - like turning the tennis courts into a 3 or 4 story hotel, trying to sue the local medical practice, stormwater etc etc etc.

[Scrunch]

https://announcements.nzx.com/detail/379344

LOL - I assume (Winton - the applicant and a direct competitor to CDL) lost the deal and, being a bad looser tries now to reverse the deal by pi$$ing against the leg of the minister and the OIO for approving it.

There is a lot to say about businessmen who try to make business through the courts, but not a lot of it would be good.

Not sure though my money would be on the applicant :p, but I am sure another good day for the legal profession;

That mirrors my thinking.

Also the fact they are trying to over-turn the deal means that CDL has also got it at an acceptable price because Winton wanted the deal.

[WAIKEN]

I assume CDL got such an outstanding deal that Winton are willing to spend a lot on legal fees to try and wrest it away.

[Sideshow Bob]

I assume CDL got such an outstanding deal that Winton are willing to spend a lot on legal fees to try and wrest it away.

Probably the last 2 months of house price inflation would probably cover it.....;)

[Southern Lad]

Well spotted Scrunch - makes sense that the December 2020 disclosure relates to the Havelock North land. If so, $840k per hectare and therefore a reasonable deal for CDI. Will keep an eye out for the OIO approval release in due course to confirm.

OIO Decision summary for Havelock North acquisition approval has been released: https://www.linz.govt.nz/overseas-investment/decision-summaries-statistics/2021-07/202100016

The purchase price on the land remains confidential, although I think everyone has worked it out from the CDI financial statements disclosures.

The Winton Property challenge could be seen as a wider attack on CDL seeking to effectively limit CDI’s future ability to get OIO approval for land purchases. If CDL has more difficulty buying land, then that’s not good for shareholders.

Given CDI aren’t long term land owners, hard to see how the foreign ownership of NZ land is contrary to NZ’s interests, other than a chunk of the tax paid profit ultimately leaving NZ.

[podg]

Some softening in the share price. All related to management movements? or is something else bubbling?

[clearasmud]

Some softening in the share price. All related to management movements? or is something else bubbling?

Probably the same reason the retirement stocks are out of favour atm ie fear of interest rate increases causing a drop in housing demand.

[LaserEyeKiwi]

The company trades below the market value of its assets (The NTA is not market based) so even if it announced tomorrow it was closing operations after all current assets were developed and sold - the share price shouldn’t be in danger of dropping by a significant amount lower than it already has.

[percy]

Positive update.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/384061/360937.pdf

[LaserEyeKiwi]

Indeed - some implied guidance there as well:


we remain positive and expect to be able to report results for this year comparable to 2020

as a reminder, 2020 result was a $30 million net profit.

[Grimy]

Thanks Percy. Certainly sounding good. I've been watching the share price track down as I'm quite keen to top up my (small) holding.

[macduffy]

A good, timely update. I was beginning to think the demand for residential sections would suffer under the "three houses per section" policy that seems to be the vogue at present.

[LaserEyeKiwi]

A good, timely update. I was beginning to think the demand for residential sections would suffer under the "three houses per section" policy that seems to be the vogue at present.

wouldn’t that policy have opposite impact? a section is much more valuable if you can build 3 dwellings on it vs 1 currently.

[BlackPeter]

wouldn’t that policy have opposite impact? a section is much more valuable if you can build 3 dwellings on it vs 1 currently.

Hard to say ... the section might be more valuable if you can build three houses instead of one, but it might be less valuable if your neighbor can build three houses instead of one.

Unfortunately - most sections have more than one neighbor section, so the total change well might be negative.

However - should not really matter for CDI given that they can (in a new subdivision) control what people are building ... they can pick the best out of both worlds.

[macduffy]

wouldn’t that policy have opposite impact? a section is much more valuable if you can build 3 dwellings on it vs 1 currently.

My thought was that in-fill housing on existing sections would lessen the demand for new sections. Maybe, maybe not?

[Southern Lad]

Indeed - some implied guidance there as well:

as a reminder, 2020 result was a $30 million net profit.

The FY21 half year profit result was up 51% on the FY20 first half, so if directors are only now expecting a full year FY21 result that is comparable with FY20 then the second half of FY21 isn’t that flash. I assume comparable means at the same level, however the word is a little ambiguous. CDI is talking up FY22 however.

With land sales, the result in any half year will always be a bit variable due to the timing of the issue of titles and therefore settlement dates.

Given the continuing firming of industrial property yields (as evidenced in this mornings PFI announcement), I’m expecting a substantial development profit on the two Wiri warehouses. CDI don’t generally book investment property revaluations rather just disclose the difference between market and cost in the notes.

With the IPO of Winton imminent, CDI may come under greater focus. Will be interesting to compare the fundamentals of both. CDI historically haven’t been a big blower of their own trumpet.

[The Punter]

Anyone have any idea how long this High Court challenge re Havelock North purchase by Winton sore losers will take- months or years? I can tell you now that that particular area of land will be very desirable to prospective home owners.

[LaserEyeKiwi]

Anyone have any idea how long this High Court challenge re Havelock North purchase by Winton sore losers will take- months or years? I can tell you now that that particular area of land will be very desirable to prospective home owners.

The chances Winton succeeds are very small (the court reversing an approved Ministerial OIO review without any apparent obvious error seems very low).

The whole think in retrospect was just PR theatre by Winton as they prepared their IPO (its the same reason they flooded TV with advertising this year - its not to sell houses, but to sell their shares in the IPO)

[podg]

It's that time of year again .... Where will the CDL numbers fall? The market can't seem to decided where the share price should sit ... $1.08 or $1.15 ... but volumes on the sell side are almost non-existent. i'll be satisfied if the dividend holds steady (3.5c) and there's some revenue growth from the commercial ventures. Would also be helpful to hear that builders/developers can get the supplies to keep up with completion deadlines.

[LaserEyeKiwi]

Looking forward to the earnings indeed. I am holding via MCK. Thought about taking a position in CDL itself, but the discount to assets in MCK was too great an opportunity since it owns two thirds of CDL anyway.

[Southern Lad]

In April 2021 CDL announced the sale if 3.8 ha of industrial land in Wiri to a company owned by Graeme Hart. See http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/371247/344861.pdf

As settlement was due for January 2022, I was expecting an update but nothing so far. The Dec 2021 year end result is probably a couple of weeks off if past release dates are anything to go by, so maybe we will get an update then.

www.qv.co.nz (http://www.qv.co.nz) does however contain the following detail for the property https://www.qv.co.nz/property-search/property-details/3255199/. This details a March 2021 sale at a tad over $29m. I wonder if this is the sale that was expected to settle in January 2022 or something different - maybe the contract date rather than the settlement date?

[LaserEyeKiwi]

CDL & MCK have announced results between Feb 8th - 17th over the last 5 years (17th, 8th, 13th, 10th, 17th for 2016-2021 results) so if that is a guide we might get them this week, and very likely by the end of next week.

[podg]

it's always a friday. short week this week, so probably next week. I'd forgotten about that Wiri sale. either way, it won't be part of dec-31 full-year result. still keen to know the final number. could just about go into a special dividend.

[podg]

CDL share price finishes the week on a strong note. on a day when the rest of the market was weaker.

[LaserEyeKiwi]

it's always a friday. short week this week, so probably next week. I'd forgotten about that Wiri sale. either way, it won't be part of dec-31 full-year result. still keen to know the final number. could just about go into a special dividend.

hopefully we get earnings tomorrow…

[podg]

Later this morning i'm picking. Fletcher building posted a very encouraging result, for them and the sector. Every reason to think CDL will do the same.

[LaserEyeKiwi]

Results are out: https://www.nzx.com/announcements/387507

[LaserEyeKiwi]

Summary of results:
-- Profit after tax $31.3 million (2020: $30.1 million)
--Profit before tax $43.4 million (2020: $41.8 million)
--Property sales & other income $92.1 million (2020: $88.8 million)
--Shareholders’ funds $286.4 million (2020: $257.1 million)
--Total assets $297.6 million (2020: $265.0 million)
--Net tangible asset value (at book value) 99.6 cents per share (2020: 91.7cps)
--Earnings per share 10.96 cents per share (2020: 10.75cps)

[BlackPeter]

Summary of results:
-- Profit after tax $31.3 million (2020: $30.1 million)
--Profit before tax $43.4 million (2020: $41.8 million)
--Property sales & other income $92.1 million (2020: $88.8 million)
--Shareholders’ funds $286.4 million (2020: $257.1 million)
--Total assets $297.6 million (2020: $265.0 million)
--Net tangible asset value (at book value) 99.6 cents per share (2020: 91.7cps)
--Earnings per share 10.96 cents per share (2020: 10.75cps)

Just love their balance sheet:

Total assets $298m, Total liabilities $11.2m (i.e. 3.8% - that's as lazy as it gets ...) and they still make a return on equity of nearly 11%! Respect!

[Sideshow Bob]

Solid.

Will be interesting to comparing to Winton - which is out next Thursday.

[hyinvest]

Solid.

Will be interesting to comparing to Winton - which is out next Thursday.

Can you please let me know how do you know the reporting date?

[LaserEyeKiwi]

Can you please let me know how do you know the reporting date?

Unlike CDL & MCK, most NZX listed companies announce in advance the date of their results announcements:

https://www.nzx.com/markets/NZSX/upcoming_results

[hyinvest]

Unlike CDL & MCK, most NZX listed companies announce in advance the date of their results announcements:

https://www.nzx.com/markets/NZSX/upcoming_results

Thank you so much for your time and help.

[LaserEyeKiwi]

So bizarre how thinly traded this stock is. On a results day they have basically not traded at all (just 145 shares traded)

[hyinvest]

So bizarre how thinly traded this stock is. On a results day they have basically not traded at all (just 145 shares traded)

As BP has pointed to the illiquidity of this stock being one of its main disadvantages.
According to 2020 annual report http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/369377/342631.pdf (p. 34), there are only 2853 shareholders.

[LaserEyeKiwi]

As BP has pointed to the illiquidity of this stock being one of its main disadvantages.
According to 2020 annual report http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/369377/342631.pdf (p. 34), there are only 2853 shareholders.

dont forget the custodial brokers only count as one shareholder. So if ten thousand people with Sharesies or Hatch or Craigs have holdings, they wouldn’t show up as ten thousand on the share register but instead just as one.

[hyinvest]

dont forget the custodial brokers only count as one shareholder. So if ten thousand people with Sharesies or Hatch or Craigs have holdings, they wouldn’t show up as ten thousand on the share register but instead just as one.

Thanks. That's a good point. However, it seems the number of shareholders was going down in general from around 3.4K (2010) to around 2.8K (2016) before sharesies was launched. It seems to me CDI is not one of the hot stocks that everyone wants to buy.

[podg]

A no-surprises report again. I hope they actually break out the champagne one year and properly celebrate with everyone just how well they have done in the past decade or so. There could be room for a special div even. Three months till the div is paid. Painful.

[WAIKEN]

Its great to see the true gap between MV and BV of the development properties
I calculate NTA at MV at around 1.60 31.12.21. Since then they will be adding more NTA
By 31.12.22 the NTA may be approaching 1.80.

[LaserEyeKiwi]

CDL updated their earnings report this morning with an addition:

https://www.nzx.com/announcements/387528


With regard to the Directors’ Review released as part of CDI’s FY2021 results announcement last Friday, the last paragraph of the Financial Performance section should have read as follows:

As at 31 December 2021, the independent market value of CDI’s property holdings was $359.7 million (2020: $292.8 million) which reflects the acquisitions made in 2021. At cost, the portfolio was valued at $209.1 million (2020:$164.8 million) in line with CDI’s accounting policies.

They had a typo in Fridays earnings version that listed the “At cost” value of $290.1 million (vs 209.1 million as the correct figure).

The correction now shows the true gap between the “at cost” value they give as their NTA, and the true market value of the company. Note that the independent market value of CDLs property holdings at $359.7million excludes the net cash on hand which exceed $70 million, meaning the true market value of CDL assets is north of $430 million / above $1.50c per share.

(So I agree with you Waiken in a ballpark NTA over $1.50 and approaching your $1.60 figure)

[WAIKEN]

Thanks Laser
Their retention of commercial property is a sound move adding more diversity to earnings.
Maybe they may look at a residential build to rent model like KPG are going to undertake.

[beetills]

Have share shares in a Yank co that does that.APTS now the subject of a takeover by Blackrock.Divies have been good as well as the SP increasing.Would love to see CDL do it.

[hyinvest]

As a beignner investor, I wonder why certain companies like to show the fair value gain on properties (e.g.PFI) as part of their income whereas others don't do that (e.g. CDI)?

[BlackPeter]

As a beignner investor, I wonder why certain companies like to show the fair value gain on properties (e.g.PFI) as part of their income whereas others don't do that (e.g. CDI)?

You might need to look into the interests of the majority (of) shareholders ... CDI is majority owned by a company group which has neither interest in nor any need to to brag with its wealth. It might well exist as a vehicle to hide wealth.

That's different for other companies who either need to compete for share holders (and management might be rewarded for high share prices) or who might have share holders who want to raise their "personal value" in order to boost their ego (imagine the infamous and unloved ex-US president).

[hyinvest]

You might need to look into the interests of the majority (of) shareholders ... CDI is majority owned by a company group which has neither interest in nor any need to to brag with its wealth. It might well exist as a vehicle to hide wealth.

That's different for other companies who either need to compete for share holders (and management might be rewarded for high share prices) or who might have share holders who want to raise their "personal value" in order to boost their ego (imagine the infamous and unloved ex-US president).

Very well explained. Many thanks BP.

[DarkHorse]

CDL updated their earnings report this morning with an addition:

https://www.nzx.com/announcements/387528



They had a typo in Fridays earnings version that listed the “At cost” value of $290.1 million (vs 209.1 million as the correct figure).

The correction now shows the true gap between the “at cost” value they give as their NTA, and the true market value of the company. Note that the independent market value of CDLs property holdings at $359.7million excludes the net cash on hand which exceed $70 million, meaning the true market value of CDL assets is north of $430 million / above $1.50c per share.

(So I agree with you Waiken in a ballpark NTA over $1.50 and approaching your $1.60 figure)

Thank you for pointing that out LEK - I'd used the incorrect figure divided into market value to calculate adjusted NTA - no wonder the total came out much lower than I expected!

[Sideshow Bob]

Winton came out with an announcement on the Havelock North land purchase, but CDL didn't.....

367877.pdf (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WIN/389862/367877.pdf)

[percy]

Winton came out with an announcement on the Havelock North land purchase, but CDL didn't.....

367877.pdf (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WIN/389862/367877.pdf)

No surprises there .A waste of time by Winton.Positive for CDI.

[BlackPeter]

Winton came out with an announcement on the Havelock North land purchase, but CDL didn't.....

367877.pdf (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/WIN/389862/367877.pdf)

They did now:

https://announcements.nzx.com/detail/389936

[LaserEyeKiwi]

No surprises there .A waste of time by Winton.Positive for CDI.

Yes a very cynical move by Winton. Probably also turned off a lot of potential investors into Winton (given that CDL investors would possibly also be the type of investors who would have considered putting money into Winton)

[LaserEyeKiwi]

Some interesting comments so far in the CDI AGM. Net income for the current financial year looks like it is already in very good shape with the comments that one huge $29m property sale in Auckland has generated a massive profit with an 80% gross margin. Lots of good comments regarding capital value uplift of long held land holdings. Also the size of the new commercial property assets (warehouses mostly) to be held long term are also interesting.

One feels the underlying market value of the companies assets is far larger than the book value assigned (which is based on acquisition cost IIRC)

[BlackPeter]

Some interesting comments so far in the CDI AGM. Net income for the current financial year looks like it is already in very good shape with the comments that one huge property sale in Auckland has generated a massive profit with an 80% gross margin. Lots of good comments regarding capital value uplift of long held land holdings. Also the size of the new commercial property assets (warehouses mostly) to be held long term are also interesting.

One feels the underlying market value of the companies assets is far larger than the book value assigned (which is based on acquisition cost IIRC)

It clearly is ... obviously, all subject to a potential correction of the property market.

BK said as well, that they expect the second HY to be a bit quieter than the very good first ... but that they expect overall for this year the same profit or better than last year. Historically they tend to underpromise and overdeliver.

He said the property cycle is in his view around 1:30 or 2 o' çlock ... i.e. we are past the peak (12 o' clock) and there is still some time to go before we bottom out.

He talked as well a lot about healthcare centers and retirement villages (well, I think not running them, but developing and supplying land). Some interesting diversification to come?

Anyway - steady as we go. Very solid company with a very healthy balance sheet (some might say too lazy), but as well with a quite healthy RoE ... I like the combination.

In my view would the current weakness be a good opportunity to accumulate.

Discl: I reached my limit (considering the low liquidity of the stock). Happy holder.

[hyinvest]

Is there a recording of the AGM?

[BlackPeter]

Is there a recording of the AGM?

Not to my knowledge ... but they typically release the slides to the NZX (they do this since I suggested that to them some years ago). Maybe you can take the role of promoting the idea of releasing as well a recording?

Here are the slides and the chairmans notes:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/392532/371178.pdf

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/392532/371187.pdf

[hyinvest]

Not to my knowledge ... but they typically release the slides to the NZX (they do this since I suggested that to them some years ago). Maybe you can take the role of promoting the idea of releasing as well a recording?

Thanks BP. I will do my best.
Last year, I tried calling Takeshi Ito, for a number of days, without any success. Hopefully this time will be better.

[kiora]

https://www.stuff.co.nz/business/property/129303752/high-court-backs-ministers-call-to-allow-58m-sale-of-havelock-north-land

[LaserEyeKiwi]

https://www.stuff.co.nz/business/property/129303752/high-court-backs-ministers-call-to-allow-58m-sale-of-havelock-north-land

Certainly makes Winton look like a bunch of clowns

[DarkHorse]

Indeed! “It is not open to Winton now to seek to have the consent decision set aside on the basis that the ministers failed to take into account information Winton chose not to provide,” I wonder how much their lawyers pocketed from bringing a completely futile case...

[beetills]

Last years results came 3/8.Announcement nearly upon us maybe?

[LaserEyeKiwi]

Last years results came 3/8.Announcement nearly upon us maybe?

Indeed - MCK & CDL should report interim results this week (has been as early as July 29th, and as late as Aug 6th over last 5 years).

[LaserEyeKiwi]

Interesting we havent had interim results yet - perhaps the new Managing Director (Stuart Harrison) is changing things up a bit in terms of reporting.

[buy_high_sell_lo]

Nothing from MCK either... waiting in anticipation

[beetills]

Maybe the new guy wants to pay a divy.

[LaserEyeKiwi]

Maybe the new guy wants to pay a divy.

An interim Dividend? That would be very unexpected - but warmly received of course.

[Scrunch]

I think they announce on the same day as the wider international group. This is a factor in why they are among the first to report June results. Any number of issues could be impacting the wider group results.

[silverblizzard888]

Interim Reports out:https://www.nzx.com/announcements/396683

Revenue $46.8 million
Profit $22.89 million

No dividend announced, company is cautious about the on going future and will likely conserve resources for this reason.

[buy_high_sell_lo]

Given their earnings this half and current spend on developing the land already in their portfolio to me it seems they aren't in a position to pay any dividend anyway.

[traineeinvestor]

Some preliminary thoughts:

1. even though cash/deposits and cash flow would easily allow payment of an interim dividend, I wasn't expecting any change to the past practice of only paying dividends annually (and I'd be surprised if anyone else was either)

2. the result was a solid one - in spite of the slow down on the residential property market and rising interest rates, the company still managed to maintain sales at a decent level. Given the policy of holding property in the books at cost rather than market value, it's difficult to make year-on-year comparisons on margins

3. the level of development property has increased from NZD186 million to NZD197 million. Again, given the differing times at which this inventory was acquired it's difficult to compare one year with another but it looks like they are not depleting the land bank

4. investment property has increased from NZD23 million to NZD33 million. As yet, the income from investment property is de minimus (NZD84K in the half year) but over time this can be expected to rise as the properties are completed and leased out. As a shareholder, I hope the company will continue to expand the investment property portfolio - at present investment properties represent approximately 11% of net assets

5. we will have to wait for the annual report to come out in about six months and read the notes to the accounts to see the market values of the portfolio but I would like to know whether they will continue to value all properties at cost (and show the difference in the notes to the accounts) or whether they will mark the investment properties to market (like other property companies do)

6. cash and deposits are at NZD 65 million. Although down on the NZD 83 million six months ago, the difference is explained by increases in development and investment properties. As a side note, rising interest rates will benefit the company. Finance income picked up in the six months in spite of the lower cash/deposit balance and should be even higher in the second half (subject to any investments they may make)

Very happy to continue holding.

[LaserEyeKiwi]

Given their earnings this half and current spend on developing the land already in their portfolio to me it seems they aren't in a position to pay any dividend anyway.

Eh? They are gushing money & have $75 million in cash & cash equivalents available and no debt. There normal annual dividend announced at year end results is $10m. But as mentioned last week - an interim dividend would have been highly unusual for the company.

[LaserEyeKiwi]

Some preliminary thoughts:

1. even though cash/deposits and cash flow would easily allow payment of an interim dividend, I wasn't expecting any change to the past practice of only paying dividends annually (and I'd be surprised if anyone else was either)

2. the result was a solid one - in spite of the slow down on the residential property market and rising interest rates, the company still managed to maintain sales at a decent level. Given the policy of holding property in the books at cost rather than market value, it's difficult to make year-on-year comparisons on margins

3. the level of development property has increased from NZD186 million to NZD197 million. Again, given the differing times at which this inventory was acquired it's difficult to compare one year with another but it looks like they are not depleting the land bank

4. investment property has increased from NZD23 million to NZD33 million. As yet, the income from investment property is de minimus (NZD84K in the half year) but over time this can be expected to rise as the properties are completed and leased out. As a shareholder, I hope the company will continue to expand the investment property portfolio - at present investment properties represent approximately 11% of net assets

5. we will have to wait for the annual report to come out in about six months and read the notes to the accounts to see the market values of the portfolio but I would like to know whether they will continue to value all properties at cost (and show the difference in the notes to the accounts) or whether they will mark the investment properties to market (like other property companies do)

6. cash and deposits are at NZD 65 million. Although down on the NZD 83 million six months ago, the difference is explained by increases in development and investment properties. As a side note, rising interest rates will benefit the company. Finance income picked up in the six months in spite of the lower cash/deposit balance and should be even higher in the second half (subject to any investments they may make)

Very happy to continue holding.

I think they will continue to value property at cost, seeing as parent MCK changed to that method just last year as well.

I’m not 100% convinced of there reasoning for it (the explanation being that it shows core operational performance and ignore variability of asset values) - and if I’m being cynical there is a possibility this is a long term play for eventually the majority shareholder to take the company private at a vastly discounted valuation. But that might cause hiccups for CDL operations regarding OIO etc so maybe not that realistic.

[buy_high_sell_lo]

Eh? They are gushing money & have $75 million in cash & cash equivalents available and no debt. There normal annual dividend announced at year end results is $10m. But as mentioned last week - an interim dividend would have been highly unusual for the company.

Historically they have always kept around 40 to 70 million cash on hand.
Given their cash on hand was 83million in the prior half and is now 75million this is why I have commented that they are spending on land and development costs which makes sense given that properties are at a discount right now.

But you are right historically they don't pay an interim dividend anyway.

[beetills]

SP in the doldrums not going anywhere.

[DarkHorse]

Does anyone know/recall how CDL fared during the property slump of 2008?

[BlackPeter]

Does anyone know/recall how CDL fared during the property slump of 2008?

Something like 50% down from 2007 peak to 2009 bottom.

Given that the recent peak was a bit above $1.20 ... 60 cts here we come?

I assume however that this property slump will be less significant than the 2008 one (i.e. we might be already there).

Anyway - holding - and certainly no intention to sell at current prices. Solid well managed company ... essential industry and and Mark Alexander indicated recently that we might miss the property bottom when we blink (i.e. he thinks it might come already this spring).

[DarkHorse]

Helpful thanks BP!

[Sideshow Bob]

Interim Report. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/398900/378763.pdf

FINANCIAL PERFORMANCE:For the six month period ending 30 June 2022 CDL Investments New Zealand Limited (“CDI”) can report that itmade an unaudited operating profit after tax of $22.90 million (2021: $20.75 million). Our operating profit beforetax was $31.81 million (2021: $28.82 million).

Property sales and other income for the period was $47.81 million (2021: $61.27 million). Net Asset Backing (at cost)for the period under review was 104.08 cents per share (2021: 95.95 cents per share).These results come despite significant downward changes to market conditions seen over the period.

The Board is pleased that CDI has been able to withstand some of the negative sentiment to date but we are also consciousthat the current trading environment will likely continue for some time and this will impact on our full year resultsto some extent.

PORTFOLIO UPDATE:The first half of 2022 has seen a lot of activity across our portfolio. CDI settled sales of residential sections in Auckland and Canterbury from its Kewa Road and Prestons Parksubdivisions during the first half of 2022. The settlement of our sale of commercial development land at Jerry GreenStreet, Wiri (South Auckland) is also recognised in the results.

We also purchased 4.85 hectares of land in north-east Hamilton adjacent to some of our existing land holdings andthis new holding gives us further economies of scale.A particular highlight of the last six months has been the progress with our warehousing ‘design and build’ projectsin Wiri. The first was completed in June and is now occupied by our tenant. The second is rapidly nearing completionand on track to be occupied and operational in the coming weeks. We have been very pleased with both of these projects, neither of which were badly affected by labour or supply chain delays.

The majority of our units at our other commercial local centre developments at Stonebrook and Prestons Park are also occupied and operational, and ourleasing agents are continuing working on tenanting the remaining units.We continue to work on the master planning and consent applications for the Iona Block in Havelock North andwe expect that the stage 1 consents will be issued shortly. This will ensure that we are able to commenceearthworks in Q4 2022 as planned. In addition, the stage 2 resource consent application is on track to be lodgedend September

2022.COMMENTARY AND OUTLOOK: Market conditions for the immediate future will be challenging. Interest rate increases, tighter bank mortgage lending criteria coupled with abnormally high inflation caused by global pressures will doubtless continue to befelt well into 2023.

For this year, we are aiming to match our 2021 results overall and to ensure that we haveprepared the groundwork for sales into 2023. That will not be an easy task given the current trading environment but we believe that it is a realistic one given our sales performance to date. We are targeting new sales in Auckland(Christian Road, West Auckland) and in Canterbury (Prestons Park) to deliver those results.

At the same time, those market factors will put additional pressure on highly-leveraged developers and owners who will be looking to offload land or other property holdings. CDI is not under that kind of financial pressure and will be actively positioning itself to use its resources to take advantage of suitable opportunities should they arise.

[blackcap]

Looks like a good result. HOwever I see they are also warning about challenging market conditions in the immediate future.

From memory, bought my first CDI shares at 35 cents back in 2005 (or thereabouts), they did suffer a bit through the GFC but after that rose strongly in line with the rest of the market. There is a feeling out there that they are perpetually "undervalued" due to their shareholder structure.

[BlackPeter]

Looks like a good result. HOwever I see they are also warning about challenging market conditions in the immediate future.

From memory, bought my first CDI shares at 35 cents back in 2005 (or thereabouts), they did suffer a bit through the GFC but after that rose strongly in line with the rest of the market. There is a feeling out there that they are perpetually "undervalued" due to their shareholder structure.

It was a good result, and yes, the immediate future might be a bit rough for everybody in the industry.

New houses are currently shooting in many places like mushrooms out of the ground and at the same time our government worked hard to get rid of potential buyers. Young people often prefer to join the exit queues at the airports instead of stepping on the property ladder here. Immigration has been stopped in its tracks by a xenophobe government. Our population is dropping (negative net immigration plus negative population growth).

I recon though the current immigration policies combined with the ineptness of our immigration department are not very sustainable. Just waiting for the tide to turn - and the need for places to live to increase. This is when CDL will be (again) very well placed.

[LaserEyeKiwi]

FYI these are the same results that were released last month.

[BlackPeter]

FYI these are the same results that were released last month.

Of course they are ... why should the mid year results change after the event?

[LaserEyeKiwi]

Of course they are ... why should the mid year results change after the event?

Yes - but seeing reaction as if this was a new announcement when everything in this report was already disclosed.

[beetills]

Another year another 3.5c but a lot better than nothing

[Sideshow Bob]

Another year another 3.5c but a lot better than nothing

EPS of $0.108, so at todays price of 75c, that's a PE of a shade under 7. 4.66% divvy yield.

Dividend costs them $10m, rest on to the balance sheet. NTA $1.07, and at that probably conservatively valued.

Market loves it.....:closed eyes:

[Sideshow Bob]

14462
...........

[clearasmud]

Another year another 3.5c but a lot better than nothing

Yes this business is capital hungry with a drp and a payout ratio of 33%.
Nta is $1.07, 40% about the current share price of 76.5c
Not much excitement here, no shareprice growth in over 5 years.

[traineeinvestor]

The $1.07 NTA is based on book value.

The actual NTA is actually higher because (rather unusually) CDL values it's development properties at the lower of cost and net realisable value (note 8) and values it's investment properties at cost less accumulated depreciation and accumulated impairment losses (note 9).

The investment properties have a book value of $36.4 million and a market value of $62.6 million (note 9). As these are intended to be held long term, the difference of $26.2 million needs to be added to book value of the assets to get the real NAV. This adds about 9 cents per share to the NAV.

For the development properties, I didn't see a number in note 8 to the financial statements for the current market value but given the policy of having it in the accounts at the lower of cost and realisable value, I would assume market value is likely higher than the carrying value of $203.1 million but how much higher is a complete guess (and any guess needs to reflect the likely taxes payable on realisation).

Based on the above I would be highly surprised if the actual tax adjusted NAV was less than $1.20 per share.

[Bob50]

Profit is the same/less than 2017. Yet NTA has increased 50% in that time. If my business was 50% bigger yet making no extra profit- I would be concerned.

[Fortunecookie]

The $1.07 NTA is based on book value.

The actual NTA is actually higher because (rather unusually) CDL values it's development properties at the lower of cost and net realisable value (note 8) and values it's investment properties at cost less accumulated depreciation and accumulated impairment losses (note 9).

The investment properties have a book value of $36.4 million and a market value of $62.6 million (note 9). As these are intended to be held long term, the difference of $26.2 million needs to be added to book value of the assets to get the real NAV. This adds about 9 cents per share to the NAV.

For the development properties, I didn't see a number in note 8 to the financial statements for the current market value but given the policy of having it in the accounts at the lower of cost and realisable value, I would assume market value is likely higher than the carrying value of $203.1 million but how much higher is a complete guess (and any guess needs to reflect the likely taxes payable on realisation).

Based on the above I would be highly surprised if the actual tax adjusted NAV was less than $1.20 per share.

I admire the management team of CDI and MCK. They have done an excellent job and I think they will continue to do so. I agree NAV is great, more or less came to the same estimate. But I cannot stop thinking it is a value trap. Sure you are unlikely to lose your money. MCK might move on travel sentiment, but I am quite exposed to a travel stock that it has yet to be played out in full. CDI may find it difficult in the next financial year given the relationship to interest rates/ housing market. Just my thoughts

[BlackPeter]

Profit is the same/less than 2017. Yet NTA has increased 50% in that time. If my business was 50% bigger yet making no extra profit- I would be concerned.

You might need to rethink this statement.

2017 was the middle of the (not just property-) boom with everybody making money and 2022 a tough second COVID year and property prices dropping.

Any property company delivering in 2022 time the same profit as 2017 (even with larger capital outlay) did an amazing job.

Context does matter ....

[nztx]

You might need to rethink this statement.

2017 was the middle of the (not just property-) boom with everybody making money and 2022 a tough second COVID year and property prices dropping.

Any property company delivering in 2022 time the same profit as 2017 (even with larger capital outlay) did an amazing job.

Context does matter ....


Yep agree .. and those dividends also have mysterious Imputation Credits attached too :)

[traineeinvestor]

You might need to rethink this statement.

2017 was the middle of the (not just property-) boom with everybody making money and 2022 a tough second COVID year and property prices dropping.

Any property company delivering in 2022 time the same profit as 2017 (even with larger capital outlay) did an amazing job.

Context does matter ....

To add to this, there is partial business transformation going on as CDI builds commercial properties to be retained for rental income. There is a lag between the money being deployed to buy the land, obtain planning etc approvals, build and then lease out.

[Southern Lad]

Noting that CDL is planning a large subdivision in Havelock North, given I assume that no construction has commenced it is unlikely the cyclone has had any direct impact.

Thinking of the ability to sell this land once developed, does anyone know how this land lies relative to flood plains, etc.? If these photo's are of the development site (Property developer seeks judicial review over Havelock North land purchase | Stuff.co.nz (https://www.stuff.co.nz/dominion-post/news/hawkes-bay/126435873/property-developer-seeks-judicial-review-over-havelock-north-land-purchase)), it looks to like rolling country which I assume is an advantage.

The events of this week may have changed demand for new subdivisions in the Hawke's Bay, but if the land is well located, maybe demand has been enhanced?

[Fortunecookie]

Noting that CDL is planning a large subdivision in Havelock North, given I assume that no construction has commenced it is unlikely the cyclone has had any direct impact.

Thinking of the ability to sell this land once developed, does anyone know how this land lies relative to flood plains, etc.? If these photo's are of the development site (Property developer seeks judicial review over Havelock North land purchase | Stuff.co.nz (https://www.stuff.co.nz/dominion-post/news/hawkes-bay/126435873/property-developer-seeks-judicial-review-over-havelock-north-land-purchase)), it looks to like rolling country which I assume is an advantage.

The events of this week may have changed demand for new subdivisions in the Hawke's Bay, but if the land is well located, maybe demand has been enhanced?

My guess for new projects, the building/development companies will go into a holding pattern until they hear more about the adaptation plan.

https://www.interest.co.nz/public-policy/119712/finance-minister-says-1-100-year-climate-events-now-more-regular-he-wants-long

[Sideshow Bob]

AGM Presos/Commentary

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/411869/394859.pdf

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/411869/394860.pdf

[BlackPeter]

AGM Presos/Commentary

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/411869/394859.pdf

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CDI/411869/394860.pdf

cheers - here are some "snippets" I noted:

While this years sales are roughly half of last years sales (YTD), margins are holding up compared to expectations.

It will be hard to match the 2021 / 2022 earnings (11cps each), but company expects to stay profitable.

No material impact of recent weather events on any of there developments or buildings

Current landbank equals (at average sales rate) 16.5 years.

Company is well cashed up ($71m as per end of April) and well positioned to use the depressed market to look for buying opportunities.

Well positioned of the future ... and quite optimistic.

[BlackPeter]

It was a good week for my NZ portfolio. 2 stocks passed the Golden Cross, and CDI was one of them.

So - Technical indicators looking good ...

Fundamentals looking good as well (remember the value of the landbank per share as well as a 10 year backwards PE of 8)?

Macroeconomic picture with more and more analysts talking about the real estate bottom reached looks good as well.

I like it when the indicators are aligned and pointing upwards ...

[Sideshow Bob]

https://www.nzx.com/announcements/415968

CDL INVESTMENTS TARGETS GROWTHDESPITE LOWER FIRST HALF SALES

NZX-listed property development and investment company CDL Investments New Zealand Limited (NZX:CDI) todayreleased its (unaudited) results for the six months to 30 June 2023 and reported an operating profit after tax of$5.02 million (2022: $22.90 million) on revenue of $11.97 million (2022: $47.81 million).

“The downturn we saw starting last year has continued into 2023 and this has impacted on our sales and revenueto date. We also did not have any one-off high value land sales like we did in 2022 which boosted our half yearresults by $29 million”, said CDI’s Chairman Colin Sim.“That said, we do expect market sentiment to moderate and improve over the remainder of 2023 and into 2024but we also recognise that current economic pressures will not result in any dramatic market upswing, at least thisyear”, he said.

CDI’s Managing Director Jason Adams echoed Mr Sim’s comments but also noted that the current climate createdsome potential new opportunities for CDI.“We are fortunate to have a very solid financial position with no external debt and good cash reserves, which isproving to be very beneficial for us as we look to secure land for future development and sales” he said.“In the past six months we’ve entered into agreements for 48 hectares of new land and we are actively looking atother opportunities that augment our existing development land portfolio, he said.

Mr. Adams also noted that CDI was looking to progress with consents for development at key sites.“At our Iona Block in Havelock North, the Stage 1 resource consents have now been granted and the developmentteam is busy obtaining infrastructure design approvals and preparing infrastructure provision agreements so thatwe can commence site works later this year to begin sales in the second half of next year. The resource consentapplications for Iona Stage 2 have also been lodged with Hastings District and Hawkes Bay Regional Councils”.

“We are also looking to add stages where demand warrants it at Prestons Park in Canterbury and we will pace thework accordingly. Both are critical to our future success”, he said.Mr. Sim said that CDI would remain absolutely focused on its core business during the remainder of the year inorder to maximise its revenue and profit.

“Land development and section sales are what we do and do best. We will be doing whatever we can to maximiseour sales for this year while also preparing the groundwork for next year and beyond. At the same time, we aimto enhance and expand our portfolio so that we can continue to provide our shareholders with consistent returnsover the years ahead”, he said.ENDS

[winner69]

BlackPeter usually first of the mark to tell us the good news

Where is BlackPeter these days?

Probably gone back home to enjoy a bit of warmer weather.

[Bob50]

CDI reported an operating profit after tax of$5.02 million (2022: $22.90 million) on revenue of $11.97 million (2022: $47.81 million).

The last few years they have allocated about $10 millions in dividends, about a third of the after tax profit.
it will be interesting to see if they keep that dividend this year.

In some ways it doesn’t matter in regards to cash flow as the majority shareholder whom holds about 70% of the company usually uses the dividend reinvestment option.

[Southern Lad]

In some ways it doesn’t matter in regards to cash flow as the majority shareholder whom holds about 70% of the company usually uses the dividend reinvestment option.

If you review the NZX notices issued in May each year for the increase in shares on issue as a result of the DRP, it looks like in the last half dozen years that it was only 2021 that MCK participated in the DRP scheme, the other years they have taken cash. From memory, 2021 was the year that CDI was acquiring the Havelock North land and MCK decided that they would support CDI by not taking a cash dividend.

[Sideshow Bob]

https://www.nzx.com/announcements/416397

NZX-listed residential property developer CDL Investments New Zealand Limited and its wholly owned subsidiary CDL Land New Zealand Limited are both happy that the Court of Appeal has dismissed the appeal brought by Winton Property Investments Limited of the High Court decision handed down last year.

In a decision issued earlier today, the Court of Appeal agreed with the High Court that none of Winton’s grounds of challenge to the consent decision could be made out and affirmed that the application for judicial review was correctly dismissed.

CDI’s Managing Director Jason Adams said that he was hopeful that this meant the end of this protracted litigation.

“We’re pleased that the Court of Appeal has made it very clear where things stand on these issues”, he said. “The judgment states that there has not been any prejudice to Winton, there was no error of law and that CDL Land and the Lowe family interests both acted in good faith”.

“We can now focus is on creating much needed residential sections and housing in areas where they are needed, not fighting pointless battles in court and this decision allows us to get on with and deliver our Iona development as well as our other projects in the Hawkes Bay”.
-ENDS-

[Not too Flash]

Interestingly Winton don't appear to consider this is worthy of an announcement to NZX ......

[blackcap]

Interestingly Winton don't appear to consider this is worthy of an announcement to NZX ......

Possibly material to CDI, but not material to WIN?

[percy]

The land at Worsleys Road,Cashmere Hills owned by Turners' Oxford Finance Ltd has been sold to CDL Land [a CDL company]
for $5.53 mil.
The land is likely to be divided into 60 sections.

[WAIKEN]

Great spotting Percy

[beetills]

Results can't be far away.Another 3.5c perhaps?

[ratkin]

The land at Worsleys Road,Cashmere Hills owned by Turners' Oxford Finance Ltd has been sold to CDL Land [a CDL company]
for $5.53 mil.
The land is likely to be divided into 60 sections.

Worsley road is fire central. Residents allowed back in today but when there a fire on the hills Worsley rd verty vulnerable

[Grimy]

CDI seem to be in free fall this week.

[beetills]

Another 3.5c coming our way.

[Sideshow Bob]

https://www.nzx.com/announcements/426800

Financial Performance

CDL Investments New Zealand Limited (“CDI”) recorded a profit after tax of $13.5 million for 2023 (2022: $31.2 million) which reflects the challenging trading environment seen over the past twelve months. While the Board is disappointed that the level of profit is significantly less than previous years, it is appreciative of the work put in by Management to achieve the results in 2023. The Board believes that CDI has established a platform for future revenue growth, particularly from the company’s newer residential developments.

Profit before tax for 2023 was commensurate with the company’s performance and was $18.7 million (2022: $43.3 million). Property sales, rental income & other income totalled $31.2 million (2022: $67.3 million). There were no one-off gains from land sales in 2023 as compared to $29 million recognised in the previous year.

At year end, CDI’s shareholders’ funds increased to $313.7 million (2022: $308.9 million) and total assets also increased to $319.2 million (2022: $313.7 million). Net tangible assets per share (at book value) also increased to 107.9 cents (2022: 107.0 cents).
CDI’s property holdings as at 31 December 2023 as independently valued was $412.6 million (2022: $405.4 million). This takes into account new acquisitions made in 2023 as well as the sales recorded. At cost, the portfolio was valued at $260.4 million (2022: $239.5 million) in line with CDI’s accounting policies.

Property Portfolio

In 2023, we purchased and settled a total of 37.5 hectares of land. Our acquisitions were in the Waikato, Nelson / Marlborough and Canterbury regions with the majority being new projects, not adjacent to existing land holdings. Management is working on development schemes and resource consent applications for these new acquisitions to allow development work to commence in the near term.

Post balance date, the purchase of 10.8 hectares of land in Nelson was settled during January 2024.

Residential sales in 2023 were strongest at Prestons Park (Christchurch) with a small number of sales coming from the Auckland subdivisions (Kewa Road & Christian / Tram Valley Road), which are now sold out.

Solid progress has been made at our Iona Block development in Havelock North where we have secured resource consents for Stage 1 and commenced construction. We are confident that works will progress to a stage where off-the-plan sales can start in Q2 2024. The Stage 2 resource consent has been lodged and is currently being processed by Hastings District and Hawkes Bay Regional Councils.

CDI’s commercial projects including the warehouses in Wiri, South Auckland and the neighbourhood centres located at Prestons Park and Stonebrook are performing as expected and contributed $2.5 million, representing approximately 8% of total revenue in 2023. The high inflationary environment during 2023 impacted lease conversion rates with a number of tenants unable to secure sufficient finance to proceed.

Dividend Announcement

The Board resolved to maintain its fully imputed ordinary dividend at 3.5cents per share payable on 17 May 2024. The Board carefully considered the dividend amount and decided to provide a consistent return to shareholders. This is a sign of the confidence the Board has in the company’s future prospects. The level of dividend will allow the company to retain enough cash resources to allow completion of its development work during this year.

The record date will be 3 May 2024. The Dividend Reinvestment Plan will apply to this dividend.

Summary and Outlook

The dramatic downward market shifts we encountered from the end of 2022 (which carried into 2023) should not continue into 2024. With a new government promising reform of convoluted consent processes and the prospect of some additional fast-tracking, we feel that residential property development as a whole should stabilise during 2024 and start to tick upward through 2025, if not earlier.

Market conditions are presenting some interesting opportunities which the Board has asked Management to assess and consider carefully. We are encouraging Management to broaden their horizons and look at property types and potential acquisitions in the residential and commercial spheres which they may not have considered previously.

For those reasons, the Board and Management currently expect CDI’s revenues and profits in 2024 to be better than those in 2023. Further updates will be provided as the year progresses. The Board and Management share an optimistic outlook for 2024, particularly if sales from Havelock North commence before the end of the year. We will be doing everything practicable to keep to our development timelines so our sales targets can be met.

I would like to offer my thanks to our loyal shareholders on behalf of the Board for your invaluable support during 2023.

Colin Sim
Chairman
26 February 2024