CDL & CDI ... Another Great Result

[Bling_Bling]

I've never heard of Beantown. What or who is Beantown?

[Burgerbun]

quote:Originally posted by PLYNCH

One of the big broking houses has put a buy on them.(Beantown I think)

now they put a buy on them....typical idiots


C9 had a buy on them at 24c, just before div. Made entry 22.4c.

so after more than 100% plus 2 years of divs

they put a buy.....

sounds like one of Belgs companies[]..except I think his is called Beanbrain....maybe a relative[?][B)]

[PLYNCH]

Beantown = Boston
Boston = Credit Suisse First Boston
Now called NZ First Capital I think.
They change there name so offen its hard to keep up.
Some people still call them Jardens.

[parker1other]

any one still holding cdl/mck I would apreciate coment from FA and those chart using investors/traders. The land banking aspect or NTA if you like interests me how can such an asset rich group of companies have such poor over all returns.?? is there enough liquidity as in numbers of shares traded daily for these roughies to be worth another punt.

thanks parker1other

[Lizard]

Hi Parker,

I don't hold any CDI at present, but I also find their asset-backing of interest. Though I don't see them as being a "punt" because the liquidity is very low and has been that way for many years.

I've often thought they'd be a good vehicle for younger investors saving for a first house - put a few $k into CDI every now and then and the value should be somewhat benchmarked to residential property values. Plus might get some benefit from the fact that you are investing in current land holdings at about half the value you could supposedly buy them.

If this was to trade at 15% discount to NAV based on updated market valuations like most other listed property generally does, the price would be about 61cps. Then again, CDI doesn't have the advantage of rental income in a quiet market.

It's hard to be sure when the next boom time will come along for CDI. Possibly a few years away. The shares lagged the residential construction market quite markedly in the last building cycle which made it a very low risk buy at the last low (from memory, about 15cps). Not sure that will happen again though.

[forest]

Hi Parker

I also noticed the high asset backing of MCK but the fact is that MCK's return on those assets was low last year ROE 4.1% (average last 9 years 7.4%). Many investors are looking for a return of 10% plus I think.

But remember MCK has 3 possible income streams
- CDL investments
- Hotels NZ + AUS
- Joint venture in China construction industry

CDL develops residential land and is very cyclic. The cycle must have just past its bottom and if immigration and confidence improves CDL should do better.

Hotels, about half the hotel nights are not locals. John Key is our minister of tourism, in theory he should be in a position to generate more people staying in our hotels.

And thirdly the Chinese economy is growing nicely so the construction industry should do well.

I think its fair to say there is plenty of potential.

[parker1other]

Thanks for the reply, i have looked on stocknessmonster as i dont have charting software
also when i speak to my broker they say these shares are not often researched in house
i am a long term holder and have made money out of the old company cdl.
I do find the present MCK< CDI listings confusing but go back to the current NTA and look at them as a property investment company, on that basis alone both entities seem sound. what do traders think???? buy, hold, sell or ??????

[forest]

Hi Parker, I agree that MCK is sound looking at the NTA. Because of the high NTA / SP I see very little down side.
As you mentioned there is little research carried out on MCK. But the way I look at it is that the company is in a cyclical sector. The average earnings in the last 7 years were 6.2 c and the average operational CF 8.6 c. To me there seems no reason why MCK should not have the same or better results averaging in the next 7 years specially considering that their NTA is so much better at present.
Those averages E and CF seems to me favourable if you consider todays SP of 45c.

I do not think you find many traders of MCK as their average dayly turn over is less then $20,000.

[winner69]

Copthorne chch apparently a goner in the quake ... not good for MCK

[blackcap]

Copthorne chch apparently a goner in the quake ... not good for MCK

surely covered by insurance Winner? Could be very good for them...

[Lizard]

CDI is a hard one to call at present... certainly at 30cps there is some value there, especially since the property valuers "realisable value" was about $70m higher than the recognised book value and market cap of $78m already falls short of the $95m NTA.

Trouble is, section sales slowed to a trickle in first half c.f. the good old days. With all respect to Christchurch residents, surely NZ total is in need of a few new section sales? Though at Harrowglen (Auckland) prices - starting at $295k - I can understand the argument for NZ land prices needing to pull back a bit...

[Lizard]

In a season where most of the results I've been watching have seen me yawn, this was one result that came up better than expected, with around $2.5m NPAT in second half (versus first half of $1.2m).

Independent value of land holdings increased by $3.3m to $162.7m, despite no new land purchases (and some obviously having been sold). So now about a $75m gap between realisable value and recognised "book value" - and, at 32cps, still trading at a discount to book value.

Pretty much paying out all the profits as div this year at 1.4cps - although it looks to me as though a large proportion of holders normally take the DRP on this one.

Still seems like a cheap way to buy land.

[Lizard]

Hi Sparky, I'm referring to CDI the land business, not MCK the hotel business...(MCK is a large holder of CDI though)

...if there is a "one-off" in this result, it is possibly land sales resulting from the Christchurch earthquake - which might still have a bit to bring in.

I had a look at MCK too - probably worth a write-up sometime, but will take a bit of time - I might wait till the Annual Report is available and can pick it apart a bit more easily.

[Lizard]

CDI currently my favorite property exposure. AGM presentation out yesterday and some excellent portents despite no obvious forecast - namely section sales YTD at April are 19 settled and 82 unconditional (total 101) c.f. a total of 40 at same time last year and 77 sold for entire 2011.

Current price 37cps for market cap of $99m versus land holdings of $162.7m at year end 2011.

[forest]

I agree with you Lizard that it is comforting to have such a large margin of safety between market cap of $99m and independend valuation of land of $162.7 mil. Add to that, this is a company with a very low operation cost structure, $10mil of surplus cash in the bank and the property cycle that looks like on the up.