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?