powerful uptrend, page-15

I think the key feature to take away from this year’s CCP results presentation is the conservativeness of the 2013 guidance. Hopefully this conservativeness is typical of CCP’s initial guidance for the 2011 and 2012 years. If the previous pattern applies to 2013 then the 2013 results will turn out to be about 15% higher than currently being guided.

PDL acquisitions.
In each of the last two years, the low guidance for the following year has left investors with the impression with the feeling that the company had hit some kind of a PDL ceiling. Maybe that was their outlook at the time, however actual acquisitions were substantially higher.
2010 guidance for 2011 was $45-60m. Actual acquisitions were $92.6m, which was 54% above their highest guidance.
2011 guidance for 2012 was $45-66m. Actual acquisitions were $91.5m, which was 41% above their highest guidance.
2012 guidance for 2013 is $50-70m. I expect actual acquisitions to come in around $90m which is 29% above their highest guidance.

NPAT
The guidance for NPAT was less conservative than for PDLs.
2010 guidance for 2011 was $16-18m. Actual acquisitions were $21.0m, which was 17% above their highest guidance.
2011 guidance for 2012 was $21-23m. Actual acquisitions were $26.6m, which was 16% above their highest guidance.
2012 guidance for 2013 is $27-29m. I expect actual NPAT to come in around $33m which is 15% above their current highest guidance.

DIVIDENDS
The guidance for dividends also proved to be less conservative than for PDLs.
2010 guidance for 2011 was 17-20c. Actual acquisitions were 20c, which was in line with their highest guidance.
2011 guidance for 2012 was 23-25c. Actual acquisitions were 29.0c which was 16% above their highest guidance.
2012 guidance for 2013 is 29-32c. I expect actual total dividends to come in around 35c which is 10% above their current highest guidance.

If the current year’s results follow the pattern of the last two years, EPS will be between 60c and 65c per share. If we apply a PE of 12 to this we get an SP of $8.00 or better, which is a rise of 30% from where we closed today.

To me this brief assessment puts today’s disappointing market reaction into so type of longer term perspective.

IT's ALL GOOD!

Cheers
K