CWP - Cedar Woods Properties

[finicky]

Deceptively great looking H1 result for Cedar Woods as pcp H1 last year was impacted by Covid delays in settlement. This half has benefited from some of those delays coming through, government stimulus and a few development stages being settled. The full year 2021 NPAT result that they are guiding for is not that great at $29m, considering that their record NPAT was over $48m in FY19. Still a very sound property developer though that I never regret holding.

 

[finicky]

12 month high today - well run conservative property developer to keep on a crash watchlist imo.

Held

Daily

 

[Dona Ferentes]

Cedar Woods has one of the largest development pipelines, with 9000+ lots across 30 projects in VIC, WA, SA, and QLD. The group focuses on residential land and townhouses across different price points, with the majority of their products eligible for government grants. The key drivers include high presale at $380m providing solid visibility for earnings recovery to continue into FY22/23, coupled with a strong balance sheet to take advantage of pipeline acquisitions to support ongoing growth.

Every newspaper headline points to a housing boom: with clearance rates of over 80% in most capital cities, and price increases of +8% since the September trough, making it the strongest recovery in 33 years (according to CoreLogic). So what had contributed to this turnaround (and even surge) in the residential market?

• Historically low-interest rates, with RBA forward guidance that rates are unlikely to rise until at least 2024
• Low mortgage rates, including 2 to 3 year fixed mortgage rates below 2%, making it cheaper to buy than rent in some regional areas
• Higher savings rates due to COVID spending restrictions provided larger deposits available for housing purchases
• FOMO – fear of missing out, heightened by low listings

additionally, the work-from-home thematic has increased the desire for more space, and less reliance to be close to the workplace is driving demand for detached housing, particularly outside major cities.

 

[finicky]

Chart - expecting further decline.
Key level of $6 broken, maybe down to 4.50? Maybe down to the Wuhan low? Trading at book value. Would be readying to buy at a lower price for the franked yield if not for my macro forebodings.

2 Year Daily

 

[divs4ever]

yes i keep on looking at this one at the wrong ( buying ) moments

thanks for the reminder i should probably calculate a 'dream' buying price

cheers

 

[finicky]

I was looking at CWP just yesterday among a few other prospects to tack on some. Decided property development too iffy with some going broke in W.A at the expense of pre-paid buyers, sub-contractors and employees. Also of course I am looking ahead to a general asset bust some time.

Q3 report today and guidance for FY22 of NPAT $35m (FY21 $33m)
Lots of pre-sales encourage them to guide to a significantly stronger FY23.
It's still trading at slightly less than book value and has a median ROE of about 9 over the last 4 years.
Today's rise has chewed up about two HY dividends and has gone ex for the H1 div but I expect yield for this year to be about 5.6% ff on today's higher share price.

Held

 

[finicky]

Strange chart development recently. Rising on receding volume. Reports tomorrow.
Held

weekly

 

[divs4ever]

i hold a few as well ( bought in March 2022 )

i was hoping to average down the toehold i have

that plan is going so well currently ( not down enough to tempt me to add )

mind you if the property scene descends into chaos , this will be a hard one to pick ( i was hoping they would stay more focused on West Australia )

 

[finicky]

Looks ok. Apparently sales have weakened in last months of fy22 but that's in the context of higher earnings guidance for fy23. Labour constraints easing (more builder enquiries for work). Still able to grow earnings in fy22 against higher costs. Yield of 6% ff against yesterday's close (full year div 27.5c)

Held

 

[finicky]

Have been wondering whether this stock has found a firm footing. It's got the usual litany of current problems I guess: higher mortgage rates, higher inputs energy and labour costs, discouraged buyers but it's got pretty cheap by past performance and has got near to testing the June low.
The recent chart closely resembles Fletcher Building (FBU) - see thumbed chart at bottom.
Fletcher buiding is a contrarian pick publicized by 'Allan Gray Australia Equity' in an exhausting article on Livewire.

Held
Not Adding

Cedar Woods

Fletcher Building

 

[divs4ever]

Have been wondering whether this stock has found a firm footing. It's got the usual litany of current problems I guess: higher mortgage rates, higher inputs energy and labour costs, discouraged buyers but it's got pretty cheap by past performance and has got near to testing the June low.
The recent chart closely resembles Fletcher Building (FBU) - see thumbed chart at bottom.
Fletcher buiding is a contrarian pick publicized by 'Allan Gray Australia Equity' in an exhausting article on Livewire.

Held
Not Adding

Cedar Woods
View attachment 148217

Fletcher Building
View attachment 148216

i hold a few FBU ( more than CWP ) i was trying to play regions ( of investments ) here

CWP was more in WA which has a solid commodity/export base , and PLENTY of room for new workers/settlers , and FBU more East Coast/NZ bias , plenty of opportunity for a rout/bloodbath ( and cheap buying points )

i suspect all the credit/debt excesses will come back to bite eventually ( but have no clue exactly when )

now maybe CWP has tweaked the strategy again but it was at one stage building smaller malls/regional shopping centres as well ( i would suspect IN their bigger land developments )

the property/REIT sector has plenty of pain due and loves it's gearing , so please be careful

but i love my bargains ( and am willing to risk cuts and burns to grab some )

 

[finicky]

the property/REIT sector has plenty of pain due and loves it's gearing , so please be careful

Yes a lot of negatives that are impossible for me to weigh up. One I didn't mention that has apparently caught out even conservative Cedar Woods is pre-selling units in a project where all the costs have rapidly risen and are not accounted for in the pre-sale price.
But on the other side of the ledger there is still high immigration (unfortunately) and a housing shortage.
But when tempted I remind myself that CWP was hit very hard in the GFC and got down 1 dollar.

Held

 

[divs4ever]

i wasn't in the market until very late 2010 , so would be still wringing my hands if i had ignored CWP around $1

property/REIT is a very tricky game , i have an eye for location ( and land value long term ) but , construction , staff and dealing with banks , nope not my strengths

that was why i wasn't sweating Evergrande , the only difference to the pre-sale and 'off-the-plan ' strategy was it was in China ( where the execution of senior management WAS an option on the table )

unless we go back to aboriginal-style ( living in temporary bark shelters ) we will always have these property cycles ( or one horrific collection of slums )

 

[finicky]

CWP @ 4.96

12 month high today for Cedar Woods according to Nabtrade.
Pretty good s.p recovery so far for an r/e developer in this climate?
I thought it was showing similar price behaviour to sector related Fletcher Building (FBU) but noticed that FBU has not followed CWP's chart progress. However FBU might be showing bullish signs having popped back into a horizontal trading range after falling out (see inset thumb chart). All just idle speculation.

CWP held, FBU not held

CWP Weekly (not showing today's 2.2% rise)

FBU WEEKLY

 

[finicky]

CWP kicking ahead, up 3.5%
Still at about book value, I'm about at break even for my long term holding. Been a solid ff dividend payer except for brief observances of crisis (GFC and Covid)
Count a W low as in?
All Data monthly chart shows a stock that doesn't meander around, it tends to either steeply climb the mount or tear down the slopes.

Held

ALL DATA MONTHLY

 

[finicky]

12 month high today. Weekly chart look ok to me.
Reports full year Aug 23.

Held

WEEKLY

 

[Dona Ferentes]

Historically low-interest rates, with RBA forward guidance that rates are unlikely to rise until at least 2024
Low mortgage rates, including 2 to 3 year fixed mortgage rates below 2%, making it cheaper to buy than rent in some regional areas
Higher savings rates due to COVID spending restrictions provided larger deposits available for housing purchases
FOMO – fear of missing out, heightened by low listings
additionally, the work-from-home thematic has increased the desire for more space, and less reliance to be close to the workplace is driving demand for detached housing, particularly outside major cities.

5 unsustainable / distorting thematics, in hindsight.

 

[finicky]

CWP @ 5.29
Down 10c or 2% in early trading.

FY23 results down on FY22
NPAT $31.6m (FY22 $37.4)
EPS 38.5c (FY22 45c)
DIV 20c (FY22 28c)

Capacity of builders down, labour shortage.
Interest rate and inflation damping demand and buyer sentiment.
Medium term outlook better - population growth, dwelling shortages, expecting interest rates to peak.

I have no problem with holding CWP which is currently at book value when a somewhat depressed FY23 ROE is 7.3%.

Held

 

[divs4ever]

CWP @ 5.29
Down 10c or 2% in early trading.

FY23 results down on FY22
NPAT $31.6m (FY22 $37.4)
EPS 38.5c (FY22 45c)
DIV 20c (FY22 28c)

Capacity of builders down, labour shortage.
Interest rate and inflation damping demand and buyer sentiment.
Medium term outlook better - population growth, dwelling shortages, expecting interest rates to peak.

I have no problem with holding CWP which is currently at book value when a somewhat depressed FY23 ROE is 7.3%.

Held

View attachment 161285

maybe we should be watching FBR BKW with this labour shortage trend

i hold CWP, BKW but not FBR

interesting times ahead

 

[finicky]

CWP being sold despite the upcoming 7c ex div date 27 Sept. Down 3.6% today.
Might be breaking its uptrend support. Below book value. Tempted to add a few on valuation, not the chart. Must check out FBU (Fletcher Building) for comparison.

Long Held

DAILY