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CDA - Codan Limited

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Hey you are still alive! A few people missed you...

https://www.aussiestockforums.com/f...&page=6&p=790038&highlight=members#post790038
 
Could be the massive jump in inventories from $12m (7.5% of sales) to $43m (18% of sales).

Never a good sign.
 
Ouch hammer market didn't like outlook still hold for yield cos I got them cheap average wise..
It was an exciting ride for a while
 
Here's a link for the Russell Muldoon particle at Roger Montgomery's blog. You can read it yourself of course but in summary he suspects management is now erring on the side of caution in expressing its outlook, and he draws an inference from the company stating that it takes seriously its progressive payout of at least 50% earnings as dividends. From that he infers that FY14 will be at least 13c dividend implying 26c eps! Paraphrased, but I think that's what he was saying as I haven't gone back to reread it.

So I wonder if anyone here added a few more during this plunge? I did @ 2.26, 1.70, 1.56 during the June setback, but felt too full to indulge this time. I would probably add if something tripped the price down to 1.50. Support held well at 1.75 last two trading days.
It was a pretty good argument for adding between 1.75-1.80 given the upcoming 7c dividend and the pretty sure divs in FY14 amounting to a good 13 mth yield

Skaffold has drastically lowered its valuation for FY14 but who cares what they think? Intrinsic value of only 1.52 for FY14 and 2.32 FY15. They've been all over the joint valuing CDA in the last 6 months or so. The two analysts feeding the earnings estimate in for Skaffold's valuation seem just reactive rather than prophetic at all. They are pretty united now in their estimate of 15-16c eps for FY14, but more varied 19-22c eps FY15. I give them almost no credence now.

A GOLD RUSH FOR CODAN?
August 26, 2013 BY RUSSELL MULDOON
Montgomery Fund
http://rogermontgomery.com/a-gold-rush-for-codan/
 
Wonder what the bad news is this time! Its down over 10% the last couple of days.
 
Looks like management is still trying to talk themselves and the companies prospects up in the AGM, although, it does appear that it is losing it's lustre (as it always does) when the market realises that the company is really a lot more cyclical (and not defensive) as it previously thought.

Profit guidance 1H2014 is $10m. But it could go $3m either way. I'm not even sure why they bothered giving guidance. It seems like it's such a moving target with this company - very hard to get an idea of their long-term prospects (communications looks like it is in a tailspin to me, and the Minelab business hinges on everything going right politically and socially in Africa).
 
The SP action had been leading the downgrade which is on the way today (in a trading halt pending announcement).

It really has been noticeable to see the difference in good and bad management of certain companies over the past 12 months.
Pretty easy to go back and look at companies like CDA which are consistently misleading investors (CIX is another good example)...pretty hard to invest on a LT fundamental basis when you cannot trust those running your investment. I've learnt to make this one of my top criterion for getting out - as soon as I get a whiff of untrustworthy management...I am gone like the wind..
 

Who says you can't find repeatable patterns in charts...



P.S. Agree with CIX. Forecast guidance was reaffirmed a few times before they came out with the truth. Management was either lying or ignorant or both...
 
Hi
I am still holding Codan -currently taking a bath.
Any suggestions?


 
Grumpyoldman said:
Hi
I am still holding Codan -currently taking a bath.
Any suggestions?
Click to expand...

Remember back to the day you bought and ask yourself - what was it that made you buy.

Now zoom back to the present, does that reason still stand? What has changed? If you answer this question you will have a better understanding of what to do.

If you didnt own the shares, would you buy today?
 
It looks like a trading halt until tomorrow. If there is a panic sell on the back of a bad announcement it might be something worth while to pick up.
 
Grumpyoldman said:
Hi
I am still holding Codan -currently taking a bath.
Any suggestions?
Click to expand...

Sorry I rabbited on about this one now. I'm still in with all our shares and losing now from an average of around 1.60 at a guess. I've no idea of how it will be hit tomorrow but I'll be there peering at the ASX Price Sensitive Announcements well before the market opens. You can watch it here on the front page if you're of that mind:
http://www.asx.com.au/

No point worrying, the die is cast and personally I'm open to the option of adding if the shares are being 'thrown away'. That'll be a very subjective judgement, but I'm not fussy, just a tiny profit forecast for first half and expectation of H2 improvement will do me now in my humbled mood. Nothing tomorrow will make me sell, put it that way.

I'm telling myself that this has always been a quality company even though it has performed badly during a few years. It has turned a profit and paid a dividend every year of of the past ten.

GLAH
 
So Low of 63c since open on unprecedented daily volume with 1 hr of trading

I got up late!

$4m to $5m NPAT guidance H1

Take lower figure

If assume dismal performance repeated H2

Then $8m spread acros 177m shares

eps = 4.5c

Assume things will not radically improve in future years but not get worse ...

Apply P/E of 8

8 x 4.5 = 36c per share

The market's being generous! Paying a premium for growth prospects from this level of profit?
 

If gold mining is disrupted in Africa right now due to unrest etc the gold isn't going anywhere. It's just postponing the level of gold detection devices that will later be needed.

I also don't think P/E is a good way to value a company. You're just hoping the market pays enough attention to P/E and bases it's decisions on that ratio. I don't think this is true.
 
Valued said:
You're just hoping the market pays enough attention to P/E and bases it's decisions on that ratio.
Click to expand...

I use P/E for a rough look. It took me a couple of minutes while I was deciding whether to jump in. I'm not hoping for a lower price, I'm holding what for me are a lot of shares
 
finicky said:
I use P/E for a rough look. It took me a couple of minutes while I was deciding whether to jump in. I'm not hoping for a lower price, I'm holding what for me are a lot of shares
Click to expand...

I guess. The thing with P/E ratios is it's an indicator of perhaps what people may pay for a certain stock or a certain sector but it doesn't really tell you about the value of the company. There is cause and effect and I think P/E is the effect. I don't really like it that much. I think 36c as a target for this stock would be significantly undervalued. Of course, if you think gold detector sales will fall drastically then the stock would not be worth anything to you.

By the way, I should point out, that I don't really know that much about this company. I have never owned shares in it before today. It just looked like a sweet day trade. It's a shame I didn't have much money to put in. I hate when people owe me money and don't pay on time, costs me more than they realise. I bought at 0.67 though, so far so good
 
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