CDL & CDI ... Another Great Result

[blackcap]

CDI Metrics update including the latest results.

Attachment 10316

I see they're still up to the old trick of announcing an exuberant H1unaudited Profit increase (up 25% on the pcp) to set a high expectation for a FY result, which then comparatively disappoints thus suppressing the SP.

I agree BP, the net asset backing makes this share a bargain on paper (as you have stated $1.21/share solely on the latest independent land valuations) , but given the ownership structure, their complete control, and nzx trading il-liquidity, I think it will always be a buy-cheap-sell-cheap share.

I would have thought there would be a lot more to announce than what was announced yesterday. Perhaps there's more to come in the next few months? .... and when are those elusive imputation credits going to see the light of day?

What is interesting to me is that the PE has compressed quite a bit since you started your graph. That is when other PE's are expanding.

So I think this would be a very cheap time to buy in to this stock, irrespective of their "old tricks" and structure. Or am I missing something that has caused the PE to contract so sharply?

P.s it might be nice to add dividends to your sheet as well as NTA per share based on valuation of property rather than book value.

[BlackPeter]

CDI Metrics update including the latest results.

Attachment 10316

I see they're still up to the old trick of announcing an exuberant H1unaudited Profit increase (up 25% on the pcp) to set a high expectation for a FY result, which then comparatively disappoints thus suppressing the SP.

I agree BP, the net asset backing makes this share a bargain on paper (as you have stated $1.21/share solely on the latest independent land valuations) , but given the ownership structure, their complete control, and nzx trading il-liquidity, I think it will always be a buy-cheap-sell-cheap share.

I would have thought there would be a lot more to announce than what was announced yesterday. Perhaps there's more to come in the next few months? .... and when are those elusive imputation credits going to see the light of day?

You are right - liquidity is clearly an issue. Not the stock you want to invest your emergency funds into.

Given the ownership structure is it as well unlikely we will see a quick return on their property gains. Over the long run I expect we will (but who knows, when ...). They say the stock market is a machine to transfer wealth from the impatient to the patient.

On the other hand - the current divvie alone turns out to be a 4.1% return pa - with taxes already paid (imputation credits), much better than a BBB bond these days.

And then, while the average SP didn't really increase last year (though there have been ups and downs) - over the last three or four years there was as well a nice capital gain. But even during the last year their would have been trading opportunities - sell at 95 cents and buy back at 85 cents anyone (though mind the liquidity)?

I do consider them as a quite sensible (and well performing) bond substitute as part of a balanced portfolio. If the SP grows as well, than this is a nice bonus. I do like bonus ;

[beetills]

Will a CGT have huge tax implications for a company like CDI?

[Vaygor1]

Will a CGT have huge tax implications for a company like CDI?

Personally I doubt it. ie....

Farmer:
Buy a farm.
Make a few improvements or let it go to the pack.
Sell the farm.
Difference = capital gain/loss

CDI:
Buy a farm.
Develop masterplan and obtain consent. Subdivide.
Put in roads, footpaths, street lighting, curbing snd channeling, potable water, grey water, wastewater, stormwater, electricity, fibre, shopping centres, parks.
Sell the sections.
Difference = amount of added value. Capital gain/loss component subjective.

[BlackPeter]

Will a CGT have huge tax implications for a company like CDI?

Good question.

The way I see it - they buy raw materials (in their case land) and improve this land by subdividing and development. They then sell on their products (the developed sections) and they pay the full taxes on whatever they earn (revenue minus cost of purchase and development) which includes any capital gain. I don't see what difference a CGT would make in their case.

It would be different if they would need to pay tax on unrealised capital gains (i.e. before they sell the sections) ... but I don't think that even Cindy's kindy would be stupid enough to propose that. This would be a killer for any business.

[BlackPeter]

Returning to the long term growth rate?

CDI-trend.jpg

With SP returning to the pink (long term growth) trend line - this might be a good buying opportunity? Only drawback I see is the lack of liquidity in the stock. Not good if one needs to sell fast.

Business seems to tick along quite nicely:

Christchurch + Rolleston:
https://www.prestonspark.co.nz/
https://www.stonebrook.co.nz/

Hamilton:
https://cdlinvestments.co.nz/magella...taff_hamilton/

Hawkes Bay:
https://cdlinvestments.co.nz/northwo...le_hawkes_bay/

... and I didn't realise they develop in Queenstown as well:
https://cdlinvestments.co.nz/morning...own_arrowtown/


Dislc: holding

[blackcap]

Returning to the long term growth rate?

CDI-trend.jpg

With SP returning to the pink (long term growth) trend line - this might be a good buying opportunity? Only drawback I see is the lack of liquidity in the stock. Not good if one needs to sell fast.

Business seems to tick along quite nicely:

Christchurch + Rolleston:
https://www.prestonspark.co.nz/
https://www.stonebrook.co.nz/

Hamilton:
https://cdlinvestments.co.nz/magella...taff_hamilton/

Hawkes Bay:
https://cdlinvestments.co.nz/northwo...le_hawkes_bay/

... and I didn't realise they develop in Queenstown as well:
https://cdlinvestments.co.nz/morning...own_arrowtown/


Dislc: holding

I was thinking of dipping in the toes once again and topping up. I thought the FY was very good and surprised the SP did not kick on. So these prices seen now are starting to become very attractive.

[BlackPeter]

I was thinking of dipping in the toes once again and topping up. I thought the FY was very good and surprised the SP did not kick on. So these prices seen now are starting to become very attractive.

Agree - the FY did look good. PE of 7 (based on last FY and current SP) is quite attractive. Add to that their consistent strong revenue CAGR of 31.6 and earnings CAGR of 33.9 - there is clearly money to make in property development, and they do know - how.

Not too worried about the future of their business either given the ongoing strong demand for residential properties ...

[blackcap]

Agree - the FY did look good. PE of 7 (based on last FY and current SP) is quite attractive. Add to that their consistent strong revenue CAGR of 31.6 and earnings CAGR of 33.9 - there is clearly money to make in property development, and they do know - how.

Not too worried about the future of their business either given the ongoing strong demand for residential properties ...

Yes indeed, there is ongoing strong demand for residential. They have a proven model, you mention the CAGR in both earnings and revenue. The liquidity is an issue but it always has been so that for me will not be a big factor, especially since I am holding for a medium to long term. You just need to be cognisant that they will always trade at a low PE multiple for a variety of reasons listed in this forum. The "late" dividend payment does not bother me one little bit. It is consistent year on year so you still get a dividend every 12 months. I do not understand why some have a problem with this. It does not matter when a company pays a dividend whatsoever. And at 3.5 cents its still a reasonable return on investment as well.

[BlackPeter]

Annual report is out:

http://nzx-prod-s7fsd7f98s.s3-websit...312/296920.pdf

CDL Investments New Zealand Limited (“CDI”) recorded a profit after tax of $33.6 million for the year ended 31 December 2018, an increase of 4.6%
from the previous year (2017: $32.2 million). This result is the ninth consecutive year of profit growth for the company.
Property sales & other income totaled $85.0 million (2017: $78.7 million). Profit before tax also increased to $46.7 million (2017: $44.7 million).
Shareholders’ funds as at 31 December 2018 increased to $210.6 million (2017: $186.1 million) and the Company’s total assets stood at $217.6
million (2017: $191.7 million). The net tangible asset per share (at book value) at balance date was 75.7 cents (2017: 67.1 cents)

Book value per share (not even taking capital gains into account) is 75.7 cents. Add a fully imputed dividend of 3.5 cents - and this share is currently trading below asset value.

Ah yes - and if we take their assets at their current (i.e. not just book-) value, than their real estate alone is worth $1.52 per share. Does 80 cents per share sound too dear for this?

On top of that - EPS seems to hang around 12 cents p.a. (don't expect further earnings growth this year - they said they need to be flexible with pricing to keep revenue up). 12 cent EPS for a 80 cent share, this is a PE of 6.7

Nobody should say that it is hard to find very friendly priced shares these days ... sometimes I don't understand the markets ;