CDL & CDI ... Another Great Result

[BlackPeter]

One major national residential builder/ developer has increased his section prices by20% in ChCh as sellers of parcels of land and other subdividers have raised prices for land. CDL is in a very sweet spot. As well as a deeply discounted NTA we may see a healthy dividend increase as it will help MCKs result as would a revaluation of CDLs land.

From memory: CDL's policy is to keep their landbank at purchase value or at current valuation in their books, whatever is the lower. Given that do I not expect book values to change with any current revaluation :

However - any land price increases obviously will impact on sales price (and the sales revenue obviously does go into the balance sheet).

[Southern Lad]

CDI carrying of undeveloped land at cost rather than current value like retirement Villages and other NZ property companies understates the value here. As I said in an earlier post I see the NTA above 1.60.
The scramble for land by builders to capitalize on excess demand is pushing section prices ever higher.
I have walked around CDI s subdivision at Prestons Park in ChCh and spoken to sales people from several builders there. The demand is overwhelming. All the sections developed and underdeveloped are spoken for.
We could see another 10% added to my estimate of NTA during 2021 ie 1.75

Any increase in land values for CDI has an income tax effect given that they are subdividers and are therefore taxable on their land sales. For every $1,000,000 increase in land value, only $720,000 finds its way into an increase in the NTA. The other $280,000 ends up in the deferred tax liability.

Similarly, the difference between the land carrying value at December 2019 of $182.7m and the open market existing use value of $315.6m only increases effective Shareholders Funds by $95.7m rather than the full gross $132.9m

[WAIKEN]

Good point SL. i don't believe they will revalue. But its reassuring to know we have that additional value there.
CDL will pay tax but we get the ICs. Already we are on a gross yield of 4.674 ex NZX site. We have the capacity to double the dividend with all the embedded value to come on the market. Add to that our current PE of 8.85 - we could double the price. Most property based companies trade above NTA. This stock was flying under the radar until the astute fund managers at ACC discovered it. Smaller investors may be coming in.

[Southern Lad]

Latest stage at Preston’s Park (stages C1 and C2) released earlier this week. 15 out of 20 sections under contract already:

https://www.prestonspark.co.nz/stage-c1-and-c2/

Sections effectively selling as soon as they hit the market. Assume prices are being increased with each release as market continues to march along.

While sections selling this month will presumably be reflected in the profit for next financial year, profit for land developers can be lumpy in any half year depending on the date titles are available.

Does anyone know how many sections at Preston’s Park there are still to be released?

While this project has been hugely successful, key for CDI is what land they have in their land bank to deliver profits on over the next 3 or 4 years.

[DarkHorse]

"in a very sweet spot" is bang on. I'm almost entirely invested in Australian small caps these days, and rarely invest in property companies. But CDL is my biggest investment these days - couldn't go past the risk-reward there

[DarkHorse]

Up 30% in 2 months
Love to hear opinions from others, even if you don't hold atm. Esp those invested in the likes of SUM...pros and cons in comparison.

[clearasmud]

I feel this should be a 2 dollar stock.
It needs more turnover and a 4.5c dividend.

[percy]

Up 30% in 2 months
Love to hear opinions from others, even if you don't hold atm. Esp those invested in the likes of SUM...pros and cons in comparison.

I am very happy with my modest holding brought at 80 cents.

[nztx]

I feel this should be a 2 dollar stock.
It needs more turnover and a 4.5c dividend.

Possibly - but the well kept secret of alleged buried value appears to be not obvious to all
- coming through in trading result - is it not ?

A major incumbent stakeholder makes retail investors minorities & perhaps
with thoughts of what the major holder's long term plans for CDI may be
- take over, sell out of their majority position, whatever

Further upstairs haven't there been ownership changes of major holder stakeholders
or moves that likely looked that way in recent two years ?

Div isn't all that exciting, nor activity to perhaps inspire retail investors too much

As a share that's been around since Adam was a cowboy - it dont appear to be going anywhere fast
nor show future signs of anything but more of the same & a 3.5cps imputed dividend just once a year

Basically controlled by a listed hotel company (itself controlled from overseas) - it still hasn't
managed too much of something many would take a leap at grabbing a few shares in,
excitement or volatility that many other listed Companies have seen

The big question is where is it going ? More of the same ? or Increased dividend ?

The Empire appears quite happy with the way things are going at the moment, no changes
needed, major shareholder doesn't want any changes (or so it seems) doesn't need
to cash up it's stake etc etc

SP seems to drift up & down according to prevailing times trends & economic winds, possibly
wishfully in some eyes, but that's about as far as things go .. and who knows may continue
to just do so similarly well into the future ?


Sorry to burst a few balloons here .. maybe value of the underlying looks a bit better etc
the market is higher, so are many other stock prices .. but ..

Discl: Patient Holder

[macduffy]

We all need a few steady performers in our portfolios, I reckon. CDI plays that role, for me.