CDA - Codan Limited
- Thread starter Trader Paul
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Damn it why didn't he tell me
The curse of over promise and under-delivered, they need to talk to CCP management before and after GFC bungle on how to keep the market informed
Still isn't a bad business, the market now need to adjust to their sky high optimism
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He already sort of has. One of his managers, Tim Kelly, was on Your Money Your Call a couple of weeks ago and responded to a viewer's question about CDA. He said the fund no longer had a position. Also RM has been saying his fund is now only 40% invested and is cashed up. Makes you wonder what fund managers find out in those little tete a tetes they have with company managements.
I bought another 5000 today @2.26 but it was sort of accidental. If it pulls back to 1.50 I might have another nibble
If Codan only manages to perform like this weaker Dec Half over FY14 well that's still about 20c eps, so a 2 buck share price seems very fair value on that scenario. The newish mine communications and technology division and the radio division might start to get some traction late FY14
Who knows though - who's going to be confident in any outlook statement they make now?
As the creaky wheels of Skaffold turn, subscribers might get an downgraded valuation of CDA in a week or so - will report here if that happens. By the way - commonly big differences in Skaffold valuations and those of the RM crowd even though they developed and spruiked the program. They regularly and wildly contradict each other - maybe because the RM group gets a lot of its views from discussions with management? For instance RM and co like SIV, SEK and BGL but you'd steer well clear of them if following Skaffold
Glooommm
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Based on my rough expectations outlined earlier in this thread I'm in for some at $1.65....but its not going into my core holdings - this is still feeling quite spec until management proves themselves to be trusted/gives some further confirmation that the earnings difficulties are not terminal.
Happy to buy in on this basis at this price.
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Yes I bought a few more today too @ 1.70, but I'm not at all sure of what I'm doing.
Motley Fool Share Advisor put out a note to subscribers today advising a hold recommendation, down from a buy. They made some good points and unlike me making the rash assumption of the revised H2 profit guidance being repeated over FY14 (my low case), they of course point out that this disappointment has been a Q4 development. suggesting that Q4 profit after tax contribution might be around $5.5m, and if you took that as a base for FY14 you're only looking at NPAT of $22m, or eps of about 12.4c.
Quote Motley Fool:
" If next year is poor...
If we assume that the company was having a strong third quarter at the time of the above announcements, and that H2 was expected to be in line with H1, it is reasonable to assume Q3 profit would have been around $13 million. That means Q4's net profit could have conceivably been around $5.5 million. If we take this Q4 result and extrapolate it for all of FY14, that would mean net profit after tax of about $22 million.
At the current market capitalisation of $336 million, that'd give us an FY14 price earnings ratio of around 15.3 times (@ 1.90)
If recovery is swift...
On the flipside, if the company can deal with its issues and/or the "instability" is overcome in Q1, we may see an impaired first quarter, and the rest of FY14 return to trend. That might give us around $5.5 million in Q1 of FY14, before returning to the higher profit levels of recent quarters of around $13 million -- for a full year number of about $44 million -- broadly in line with this year.
That'd put the FY14 P/E at 7.6 times (@ 1.90)
Of course, neither of the above are absolute outside numbers -- things could deteriorate to a lower profit than the 'poor' outcome outlined above, or growth in other markets could help push profits higher than the 'swift recovery' case."
Also:
"Woefully missing from the announcement are some key details:
What markets, specifically
How many countries
What proportion of sales and profit those countries represent
How long the instability has been impacting sales
How the rest of the company's operations have been performing
When the "government elections" are due
Why the company has confidence that the instability will be resolved
More importantly, management's description of FY14 as "successful" is over-simple, but still tells us what we need to know -- that the company doesn't know enough to be able to predict, with any level of confidence, the impact on next financial year, despite the upbeat wording."
Motley Fool Share Advisor put out a note to subscribers today advising a hold recommendation, down from a buy. They made some good points and unlike me making the rash assumption of the revised H2 profit guidance being repeated over FY14 (my low case), they of course point out that this disappointment has been a Q4 development. suggesting that Q4 profit after tax contribution might be around $5.5m, and if you took that as a base for FY14 you're only looking at NPAT of $22m, or eps of about 12.4c.
Quote Motley Fool:
" If next year is poor...
If we assume that the company was having a strong third quarter at the time of the above announcements, and that H2 was expected to be in line with H1, it is reasonable to assume Q3 profit would have been around $13 million. That means Q4's net profit could have conceivably been around $5.5 million. If we take this Q4 result and extrapolate it for all of FY14, that would mean net profit after tax of about $22 million.
At the current market capitalisation of $336 million, that'd give us an FY14 price earnings ratio of around 15.3 times (@ 1.90)
If recovery is swift...
On the flipside, if the company can deal with its issues and/or the "instability" is overcome in Q1, we may see an impaired first quarter, and the rest of FY14 return to trend. That might give us around $5.5 million in Q1 of FY14, before returning to the higher profit levels of recent quarters of around $13 million -- for a full year number of about $44 million -- broadly in line with this year.
That'd put the FY14 P/E at 7.6 times (@ 1.90)
Of course, neither of the above are absolute outside numbers -- things could deteriorate to a lower profit than the 'poor' outcome outlined above, or growth in other markets could help push profits higher than the 'swift recovery' case."
Also:
"Woefully missing from the announcement are some key details:
What markets, specifically
How many countries
What proportion of sales and profit those countries represent
How long the instability has been impacting sales
How the rest of the company's operations have been performing
When the "government elections" are due
Why the company has confidence that the instability will be resolved
More importantly, management's description of FY14 as "successful" is over-simple, but still tells us what we need to know -- that the company doesn't know enough to be able to predict, with any level of confidence, the impact on next financial year, despite the upbeat wording."
Interesting thanks Finicky.
Boy was I wrong!
And market is probably thinking that downgrades usually come in twos (at the least)...
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It seams the share price has tanked because of the lack of quality information in the announcement. As a shareholder I find this a little frustrating.
Iv had a look at the countries CDA sells detectors in and researched which ones seam to be in ‘civil unrest.’ The main countries CDA sell detectors in are:
• Sudan
• Guinea
• Tanzania
• Cameroon
• Nigeria
• Mali
According to the Australian government website ‘Smart Traveller’ the following countries have this warning.
• Guinea – Do not travel
• Sudan – Do not travel
• Tanzania – Exercise a high degree of cation
• Cameroon – Exercise a high degree of cation
• Nigeria – Reconsider your need to travel
• Mali – Do not travel
From my research the only countries due to have an election soon is:
• Guinea - on the 30th of June 2013. The smart traveller site states “Regular protests are expected in the lead-up to the election, and as a result the security environment remains volatile at this time.”
• Mali – July and August 2013. The smart traveler site states, “Demonstrations may occur in the period surrounding the elections.”
Im unsure of how much revenue is made from these countries individually so its very hard to tell what impact the ‘civil unrest’ could cause to their profits long term. The other thing to keep in mind is the fact that many of these countries have experienced ‘civil unrest’ for some time and fighting in many of these countries is nothing new. So has this stopped sales in the past? It seams not…
If your thinking of buying more shares in CDA, I think you need to be confident that the ‘civil unrest’ will calm down as a result of the elections in Mali and Guinea. You also have to be confident that the gold price decline hasn’t slowed down sales, and finally you have to be confidant that sales will expand into areas such as South America as well as continue in Africa into the future.
I think we need more information from CDA on this one…
What do you guys think?
Iv had a look at the countries CDA sells detectors in and researched which ones seam to be in ‘civil unrest.’ The main countries CDA sell detectors in are:
• Sudan
• Guinea
• Tanzania
• Cameroon
• Nigeria
• Mali
According to the Australian government website ‘Smart Traveller’ the following countries have this warning.
• Guinea – Do not travel
• Sudan – Do not travel
• Tanzania – Exercise a high degree of cation
• Cameroon – Exercise a high degree of cation
• Nigeria – Reconsider your need to travel
• Mali – Do not travel
From my research the only countries due to have an election soon is:
• Guinea - on the 30th of June 2013. The smart traveller site states “Regular protests are expected in the lead-up to the election, and as a result the security environment remains volatile at this time.”
• Mali – July and August 2013. The smart traveler site states, “Demonstrations may occur in the period surrounding the elections.”
Im unsure of how much revenue is made from these countries individually so its very hard to tell what impact the ‘civil unrest’ could cause to their profits long term. The other thing to keep in mind is the fact that many of these countries have experienced ‘civil unrest’ for some time and fighting in many of these countries is nothing new. So has this stopped sales in the past? It seams not…
If your thinking of buying more shares in CDA, I think you need to be confident that the ‘civil unrest’ will calm down as a result of the elections in Mali and Guinea. You also have to be confident that the gold price decline hasn’t slowed down sales, and finally you have to be confidant that sales will expand into areas such as South America as well as continue in Africa into the future.
I think we need more information from CDA on this one…
What do you guys think?
I think I wished that I'd not bought this morning at $1.70
Thanks for the research Trainertom, this proves useful but only serves to raise greater doubt in my mind about the openness of the management.
PS. First time poster. Great forum guys.
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Primary research Trainertom16 - a novel approach
Well since no-one has mentioned it I'll add that 5 directors bought on market yesterday the 18th, and two weren't token amounts either: M.D McGurk added 32,000 shares and Klingner bought 60,000
I had a bid in for some at 1.555 which was same as the last trade but it didn't catch a wave
Well since no-one has mentioned it I'll add that 5 directors bought on market yesterday the 18th, and two weren't token amounts either: M.D McGurk added 32,000 shares and Klingner bought 60,000
I had a bid in for some at 1.555 which was same as the last trade but it didn't catch a wave
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Added a few more of these back a week or so ago from a bid that I left sitting @ 1.555
Reason I'm posting is that David Buckland of Montgomery fund was on 'Your Money Your Call' tonight and responded to a viewer question on Codan. He thought the correction post the earnings downgrade was overdone and the fund re-entered the stock in the 1.50s, after having sold the whole of a large position prior the announcement in the $3+ range. How nice for them. He said he valued CDA at $2
Skaffold did eventually make a belated adjustment to their valuation of CDA. One of the two analysts covering changed his estimated eps on June 20 by my observation. At least that was when Skaffold registered his new input. That was one weekend and 4 trading days after the downgrade. The other analyst's input stayed the same for so many days that I stopped checking and only noticed today that he's changed. If the estimated eps don't change nor does the Skaffold valuation - and I'm paying $1,330 p.a for this.
Skaffold's estimated eps for FY14 is now 22c with the two analysts inputs within a cent of each other. Only one is forecasting for FY15 and he thinks 27 cps. Valuation now is FY14:$2.97, FY15:$3.53
Bit of a change there from prior valuation and margin of safety - makes charting look a quite attractive alternative.
Reason I'm posting is that David Buckland of Montgomery fund was on 'Your Money Your Call' tonight and responded to a viewer question on Codan. He thought the correction post the earnings downgrade was overdone and the fund re-entered the stock in the 1.50s, after having sold the whole of a large position prior the announcement in the $3+ range. How nice for them. He said he valued CDA at $2
Skaffold did eventually make a belated adjustment to their valuation of CDA. One of the two analysts covering changed his estimated eps on June 20 by my observation. At least that was when Skaffold registered his new input. That was one weekend and 4 trading days after the downgrade. The other analyst's input stayed the same for so many days that I stopped checking and only noticed today that he's changed. If the estimated eps don't change nor does the Skaffold valuation - and I'm paying $1,330 p.a for this.
Skaffold's estimated eps for FY14 is now 22c with the two analysts inputs within a cent of each other. Only one is forecasting for FY15 and he thinks 27 cps. Valuation now is FY14:$2.97, FY15:$3.53
Bit of a change there from prior valuation and margin of safety - makes charting look a quite attractive alternative.
skc
Goldmember
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Only 2 analyst covering the stock... it feels dangerous to use analyst earning estimates in this instance.
In fact, one might argue it's dangerous to use analyst earning estimates in all situations. This from the AFR today
http://www.afr.com/p/business/chant...me_clean_as_downgrades_PU7naBrzKEsCL7VP6Bz3CP
Garbage in, garbage out.
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Update - Weekly
galumay
learner
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What have i missed? (Down 20% already today.)
Their outlook statement suggests that future profitability will most likely mean revert to levels seen in the first half of 2011 and 2012 for 2014. They seem to be implying that the 2013 result was a bit of a flash in the plan. Also more and more "seasonal" excuses as to why this may be is not a good look (they even tried to blame Ramadan!).
Country Lad
Off into the sunset
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It reported today. Revenue up 36.2%, Profit up 96.2%.
Market must be concentrating on the outlook statements such as:
Cheers
Country Lad
galumay
learner
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OK, I had read the AP and didnt see it as warranting that sort of effect!
I took it as an opportunity to enter a share that has been on my watch list for a while, I missed the last opportunity, but in this time at 1.85.
skc
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Sometimes it feels like the market has the memory of a goldfish. The last 6 months has been shocking by CDA from a disclosure point of view. They said nothing is going on when the share price first started to fall, only to reveal later that profit would be down. They even blamed civil unreset in Africa (which is nothing new), yet now they are just saying that FY13 was an abnormal peak.
So going forward earnings would be around $20-24m? This makes today's price about right imo.
So going forward earnings would be around $20-24m? This makes today's price about right imo.
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I sold at about $1.60, for a small profit, a bit after that downgrade came through (in hindsight I should have sold when it was over $3). I didn't see how it was sustainable and I had a better use for the cash. For a while the SP kind of ran away again over $2 but the outlook statement confirmed what I thought when the initial downgrade happened, that this was a big outlier unlikely to be repeated.
