CDL & CDI ... Another Great Result

[Snoopy]

Here is some thing you may find of interest.
MCK's share price [$2.49] is 52.98% of their NTA.[$4.70]
SFF's share price [$1.02] is 31.20% of their total share holders equity [$3.20].
"Not a lot of people know that."

NTA is useful when there is a growing demand for a certain class of asset, which means that those assets on the books have real value and trade at a 'replacement discount'. However, when there is a surplus of assets, the underlying value of those 'assets on the books' reverts to that of the asset's earning potential with the current business model, or for an alternative use. Right now in a Covid-19 world, there isn't a shortage of hotel beds. So it is not surprising that listed hotels trade at less than NTA. Even in times of 'better tourism', existing hotels tend to trade at less than NTA because they will have a hard time competing with the latest new build hotels. Hotels can be reworked into apartment accommodation for sale, an alternative use, which is, I think, the case for MCK's Zenith apartments in Sydney.

OTOH with livestock processing, alternative uses of these are assets are scarce, there is automation creeping into the industry and animal numbers are falling. That means that some of the legacy meat chain assets probably don't have a value anywhere near their build cost. So it is no surprise that collective meat processing assets trade at well under NTA. For alternative use, I guess you could put a hammock between two meat hooks as low cost backpacker accommodation. That would increase the income potential of the asset that should see the share price get closer to NTA. You would just have to make sure the night guests were well out of there before the chain started up for the next day though!

SNOOPY

[Sideshow Bob]

OTOH with livestock processing, alternative uses of these are assets are scarce, there is automation creeping into the industry and animal numbers are falling. That means that some of the legacy meat chain assets probably don't have a value anywhere near their build cost. So it is no surprise that collective meat processing assets trade at well under NTA. For alternative use, I guess you could put a hammock between two meat hooks as low cost backpacker accommodation. That would increase the income potential of the asset that should see the share price get closer to NTA. You would just have to make sure the night guests were well out of there before the chain started up for the next day though!

SNOOPY

Snoopy is right, who wants an old meat plant aside from its land value (and many have a decent chunk of land). While it is the wrong thread to perpetuate this line of discussion, but property, plant & machinery only about 36% of their assets - trade/receivables/inventories are about 56% of total assets (note total assets rather than net assets).

[percy]

NTA is useful when there is a growing demand for a certain class of asset, which means that those assets on the books have real value and trade at a 'replacement discount'. However, when there is a surplus of assets, the underlying value of those 'assets on the books' reverts to that of the asset's earning potential with the current business model, or for an alternative use. Right now in a Covid-19 world, there isn't a shortage of hotel beds. So it is not surprising that listed hotels trade at less than NTA. Even in times of 'better tourism', existing hotels tend to trade at less than NTA because they will have a hard time competing with the latest new build hotels. Hotels can be reworked into apartment accommodation for sale, an alternative use, which is, I think, the case for MCK's Zenith apartments in Sydney.

OTOH with livestock processing, alternative uses of these are assets are scarce, there is automation creeping into the industry and animal numbers are falling. That means that some of the legacy meat chain assets probably don't have a value anywhere near their build cost. So it is no surprise that collective meat processing assets trade at well under NTA. For alternative use, I guess you could put a hammock between two meat hooks as low cost backpacker accommodation. That would increase the income potential of the asset that should see the share price get closer to NTA. You would just have to make sure the night guests were well out of there before the chain started up for the next day though!

SNOOPY

Perhaps we should look at the old fashioned way of comparing companies,ie EPS, PE yields and market cap.?
..........................EPS................PE... ......Yield,....Market cap
MCK..................43.58..cps........5.76....... 0%............$264.7mil with MCKPA ($130.2mil] =$394.9 mil
CDI....................10.76.cps........10.41..... .3.13%........$322mil.
SFF....................35.37..cps........2.85..... ..5.347%.......$101.3mil

[LaserEyeKiwi]

Perhaps we should look at the old fashioned way of comparing companies,ie EPS, PE yields and market cap.?
..........................EPS................PE... ......Yield,....Market cap
MCK..................43.58..cps........5.76....... 0%............$264.7mil
CDI....................10.76.cps........10.41..... .3.13%........$322mil.
SFF....................35.37..cps........2.85..... ..5.347%.......$101.3mil

have to combine MCK & MCKPA (Preference shares) to get total MCK market cap. Based on your above figures the business would only be worth $55 million more than their 66% CDI shareholding.

[percy]

have to combine MCK & MCKPA (Preference shares) to get total MCK market cap. Based on your above figures the business would only be worth $55 million more than their 66% CDI shareholding.

Have added the MCKPA's to my post.

[Southern Lad]

CDI (and MCK) AGM’s were held virtually today. CDI sales for the four months ended April 21 were $35.7m verses $19.8m last year. The point was made that sales were lumpy (presumably coinciding with obtaining title for stages of subdivisions), but none the less a good start to the current year. Directors expressed confidence in acquiring additional land, funded from the cash on hand of $122m at 30 April 2021. Sentiment was that vendors expectations on selling undeveloped land were getting more realistic and being a cash buyer provided CDI with a relative advantage. All in all director’s were sounding cautiously optimistic on the future.

[podg]

just a couple of weeks or so till the half-year figures are out. As the government makes increasingly louder calls for, and incentives to, build new houses, CDL sits pretty. Will it show up in the interim's numbers? Keen to read what the chief says about the next 6 months

[traineeinvestor]

just a couple of weeks or so till the half-year figures are out. As the government makes increasingly louder calls for, and incentives to, build new houses, CDL sits pretty. Will it show up in the interim's numbers? Keen to read what the chief says about the next 6 months

Also looking forward to it but expect the usual conservatism in the outlook.

Side note: worth remembering that higher prices for land affect both both revenues and expenses.

Disclosure: hold

[LaserEyeKiwi]

just a couple of weeks or so till the half-year figures are out. As the government makes increasingly louder calls for, and incentives to, build new houses, CDL sits pretty. Will it show up in the interim's numbers? Keen to read what the chief says about the next 6 months

I don’t expect much different to what was revealed at the recent AGM, which had performance details through April, not much would have changed in 2 months.

disclosure: Hold MCK

[podg]

The market seems to be expecting something worthwhile. A new, all-time, historical, never-before-seen lifelong high of $1.16 was recorded today. Is $1.20 an easy target now?