CDL & CDI ... Another Great Result

[traineeinvestor]

Just coming from their virtual AGM. I guess this seems to be new for them as well - haven't seen yet any AGM where they rushed that quickly through the questions ... It was something like - here are the movements, no questions asked - meeting closed (roughly in the speed you can read that).

Next time I better prepare and enter the questions before the meeting, no chance to do that at question time.

But anyway - the presentation was interesting ... and I was pretty pleased to hear that their business up to end of April 2020 was better ($18.8m sales) than for the same time frame last year ($14.9m sales), despite 2019 having been their best year so far.

http://nzx-prod-s7fsd7f98s.s3-websit...700/323223.pdf

Sounds as well they are quite happy with the margins they are able to achieve "We get the prices we planned for"

They expect however some softer demand in Q4 2020 and FY 2021, but predict to be profitable for FY 2020.

Great company - and in my view ways undervalued ...

Thanks for the report.

The having plenty of net cash on hand during times like these is definitely a good thing.

Disclosure: held

[podg]

CDL has always had plenty of cash on hand. It was certainly put to good use post-1998 Asian financial crisis, after the 2008 GFC and ... the next 12 months we hope. Every reason to think the same discerning approach to land purchase will apply in the near term. That said ... will the company heads ever be convinced to change the current accounting policy and value CDL's assets at net realisable value, rather than cost ??

[macduffy]

CDL has always had plenty of cash on hand. It was certainly put to good use post-1998 Asian financial crisis, after the 2008 GFC and ... the next 12 months we hope. Every reason to think the same discerning approach to land purchase will apply in the near term. That said ... will the company heads ever be convinced to change the current accounting policy and value CDL's assets at net realisable value, rather than cost ??

At least they're consistent with their treatment of assets! None of this quick change stuff to make life hard for investors.

[podg]

consistent, yes .... and we all know where we stand with that approach .... but to have on their books a large block of land purchased for development at the price they paid for it for several years previously undervalues the asset and the company.

[podg]

I don't have a problem either because it's been the accounting policy for quite a while and as such, there's no surprises with each result. And, as you correctly point out, it is straight forward enough to calculate the NTA. However, the share price seems to have been undervalued since that policy was adopted. Also, when you factor in some healthy dividend returns over the same period, it seems even more undervalued. Some observers have valued CDI at $1.30 or more, when the share price was in the 85-90c range.

Valuing at the lower of cost and market value rather than Valuation means they can record the profit when they actually sell the sections. I don’t have a problem with this approach given that they also disclose the market value, so it is easy to calculate what the NTA would be if land were to be include at valuation rather than cost. The positive variance foreshadows healthy profits in the next few years so long as property values don’t fall out of bed.

[traineeinvestor]

NZ Herald this morning: https://www.nzherald.co.nz/business/...ectid=12334626

Behind the paywall it basically says that funding for commercial development and subdivision development has "essentially dried up."

Advantage to those like CDI who don't need third part funding.

[podg]

What a bonus it would be if city and district councils around NZ decided to sell some land for development rather than raise rates during this next period of economic recovery. win-win ??

[podg]

The Aberdeen team continue to sell down their CDI stake ... now at 6.3pc. would love to know who is buying ...

[macduffy]

The Aberdeen team continue to sell down their CDI stake ... now at 6.3pc. would love to know who is buying ...

I've probably taken a few - and I mean a few- off their hands recently.

[podg]

I've probably taken a few - and I mean a few- off their hands recently.

well perhaps that is a pointer to individuals, rather than institutions, taking a stake. Personally, i would prefer to see more shareholders on the register because the stock is so tightly held and has been for years. A few more shareholders might encourage more trading and attract more smaller investors