# CPK - CP1 Limited



## Kipp (4 March 2006)

When I was flicking through th annoucements board a couple of weeks ago I came across CPK, and a promising half year result.  The share jumped from $2.80 to $3.50 at the close of trade and has pretty much been there since.

But despite this massive jump it is still trading at a P/E of 3! 
Last years EPS was 102.5c, this years forecast 137... with dividend payouts of 55c.  At current SP of ~3.50 this would seem to me to be a massively undervalued share ATM- but I know very little else about the company and it's other projects (they have a big $61mill proj in surfers paradise as well).
CP1's biggest venture at the moment is Martha Cove.  Luxury apts down at Mt.Martha in Melbourne.  What I do know is that I personally wouldn't pay 1.5 mill to live in one, but they may still sell like hotcakes.  
CP1 is majority 53% owned by funds manager city pacific- which on a close glance appeared to have a pretty good solid history (~years or so).

Have a look at
http://www.cp1.com.au/CP1AnnualReport2005.pdf if you're interested.

Any thoughts [good or bad] on CPK or city pacific would be appreciated.


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## Kipp (4 March 2006)

*Re: Is this share massively undervalued? CPK- CP1 Ltd*

Let me see if I can just attach a chart... I think $6 is closer to where it should be trading, but there has to be some reasoning behind the cruel treatment the SP has received over the past 12 months... doesn't there??


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## bullmarket (4 March 2006)

Hi kipp

I don't follow CPK at all so unfortunately I can't help much re why the PER is so low 

All I can suggest is to keep looking into why the PER is so low.  Imo too many people blindly assume a stock is cheap when its PER is way below the average.

If I saw a company with a very low PER I would certainly want to know why before commiting any funds.  Maybe you've found a genuinely under-valued stock or maybe the market doesn't think their forcasts are achievable and/or sustainable.  Maybe the market thinks this years profits are due to mainly 'one-offs' and could return to more normal levels in future years.  Maybe with a market cap of only ~$79M (from commsec) and not being in any market indices it is slipping under analysts' radars....who knows...  

But I think you are following the right path in trying to find out why the PER is so low.

Good luck with them and I hope they go well for you if you buy some 

cheers

bullmarket


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## pch (4 March 2006)

A lot of property developers are trading at low PE (DVN - PE of 6) right now. 

I see this company operates in Vic and Qld. From what I understand of the property decline, NSW has hurt the most, but they were the first to peak as well.. The markets are factoring in the deflation of the property bubble impacting future earnings?


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## Kipp (4 March 2006)

bullmarket said:
			
		

> All I can suggest is to keep looking into why the PER is so low.  Imo too many people blindly assume a stock is cheap when its PER is way below the average.



Hi Bullie, 
yep, I agree that P/E isn't the be-all and end-all of a stock, but proprty isn't exactly super-high risk (although in saying that prop developers and builders do go bust) compared to other industries (telcos, mining).  But I still consider P.E. to be the best indicator of a stock.

As far as "sustainability" of the $1+ EPS goes, I suppose that's a fair comment because in 2004 Fin Year it was 6.2c (I'm assume because the comp was new and hadn't got many settlements in at that stage).  I'd certainly feel alot safer if it had been 80c+ for 10 years or so.

Anyway, most of the time when I post, I am really just hoping that someone who holds, or is in the property field will just jump in and give a more expert opinion than mine... 

appreciate your comments in my other P/E thread too


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## pch (4 March 2006)

Hi Kipp

I just read on another forum, and then checked the public announcements that CIY and CPK have had issues with ASIC over accounting issues. 

Combine this with a general bear property market you probably have your answer. Lots and lots of doubt and lots of negative sentiment - whether its justified requires a lot more research, but interesting to a vulture capitalist nonetheless 

dunno if I can paste the forum link here I've not had a good read of the AUP but its not hard to find..


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## markrmau (5 March 2006)

From recent announcements, I think the CIY ASIC problems have been resolved.

My guess is that the poor share price has to do with the fact that these guys are in mezzanine financing - the higher return but high risk property financing between what the banks will lend and what the developer needs. Westpoint recently went under on this sort of thing, but possibly there were dodgy dealings in the Westpoint debacle. CIY has much better management.

CIY has significant amounts of FUM (funds under management). However a lot of the FUM is invested in goldcoast / queensland property developments. If the gold coast goes belly up, I guess they are screwed.

I don't hold either CIY or CPK, but once took a small loss on CIY (before it jumped over $5 of course).

Any other thoughts appreciated.


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## pch (5 March 2006)

A friend of mine is a fee for service financial planner and I asked him about CPK and CIY. He told me he has been recommending against CIY products for similar reasons to Westpoint. He's anti mezzanine because of the risks..

Your dead right on the guilt by association with Westpoint, however this can be a good thing - look at Agribusiness back in 00/01 with the ATO 

Property is becoming a contrarian pick right now and probably offers some reasonable prices in a market that appears fairly valued across the board. Its still risky though, I've learned to take public company announcements with a grain of salt..


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## Kipp (5 March 2006)

pch said:
			
		

> Hi Kipp
> 
> I just read on another forum, and then checked the public announcements that CIY and CPK have had issues with ASIC over accounting issues.




Well... KPMG are their auditors, so I'm assuming their books aren't that dodgy.  Thanks for your input pch.  I suppose I am trying to stear clear of risky propositions at the mo' (while my investment capital is still so patheitcally small, but these are also the same conditions that can make you greedy and look for 70% returns!!!)  I assume "mezzanine debt" is a loan to the max, and this is true: their debt-equity ratio is not inspiring.

I'll keep CPK on my watchlist... it'd still be good for my confidence to see it return to the $6 mark.


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## Duckman#72 (10 March 2006)

markrmau said:
			
		

> CIY has much better management.
> 
> I don't hold either CIY or CPK, but once took a small loss on CIY (before it jumped over $5 of course).
> 
> Any other thoughts appreciated.




Hi Guys

I just bought into CIY over the past week. At around $3.40 I think it may have bottomed out and I think it's good buying. Two recent ASX announcements were positive (ASIC issue resolved out of court and revenue up significantly on last year - 11c dividend up at the end of March as well).

Duckman


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## Kipp (3 May 2006)

Strong Resistence previously at $4.00... potential breakout in the next few days/week?  Don't consider myself any kind of tech/analyst but shows the pettern as per breakout thread.  And CPK has a forecast EPS of $1.35 for the year (~60c dividends).

Any techies have an opinion on CPK?
P.S.  Don't hold any, but it's been on the watchlist since Feb


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## abucs (10 June 2006)

The company is having a meeting next Friday to approve a 5 for 1 split.
The stock has been quite illiquid since listing.
With CIY having 55% ownership of CP1 and the directors of both companies being the same personnel the approval is assured.

After the split is approved then each shareholder will receive 4 opions for every 5 shares they have but will have to exercise them within 6 months.

On the negative side, if all options are exercised that will be 80% increase in the number of shares in the company.

On the positive side the exercise price of the option is greater than the share price now so perhaps management are expecting a rapid increase in shareprice in the next six months. Otherwise the options will expire worthless and defeat the reason for the capital restructure - to retire debt.

What's positive about this company is that the parent company would get to see the best property deals on offer (they financce them) and they can choose the best ones for CP1.  Apart from the 55% owning by CIY, the directors own quite a substantive part of the remaing 45%.
That may be why the shares have been so illiquid.

CP1 has less than $200 million debt with an estimated $2 billion worth of potential sales in various stages of development.  If all options are exercised then CP1 will raise $90 million.

It will be interesting to see what is said at the meeting next week and what the prospectus for the upcoming options will contain.

Abucs owns both CPK and CIY.


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## countryboy (21 April 2008)

A few years later (2006 was last post!)and Im trauling through the leftovers of property trusts for value and more than a dead cat bounce! CPK sits at 30c and has announced a 3 c divy. From what I read its been pounded by its association with CIY.

Anyone else in this one?


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## Peachey (21 April 2008)

Yep, holding on for a redirection... only saving grace is that didn't have too much in it, now it's all about the challenge!


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## Gurgler (22 April 2008)

Nice to know there's company out there. At this price that's a 10% dividend. That alone may generate some interest up to May 12.


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## Runnamuck (5 May 2008)

Gurgler said:


> Nice to know there's company out there. At this price that's a 10% dividend. That alone may generate some interest up to May 12.




Yeah that was until the dividend was canned late last week. 

Share price took a pounding and rightly so.

I have a small parcel of these shares and am awaiting a bounce


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## Big_Daz (26 August 2008)

Has anyone been following this stock of late? 

SP down to 7c...in a trading holt.

Does anyone know the strength of their Martha Cove development?


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