with the fear in the market, it might be worthwhile re-posting my comment re fundamentals. 12 points altogether that tick.
----------- I know Valad Properties (VPG) is a good company since a while ago and have recently been doing some research on the company. (refer to my posts yesterday on VPG forum).
My initial assessment indicated that it is a company with strong business fundamentals, experienced management and strong corporate governance. It has:
1. reasonably convervative capital structure with gearing of 33%,LVR of 50% (30 June 2008)
2. NTA of 95c (note that this does not include value of VPG's fund management business-refer announcement dated 9 Oct 2008) ,
NAV of 1.3/share (95% of FY6/2008 year-end level)
3. cash earnings seem to be very strong despite large FY2008 accounting losses of AUD248mln as a result of non-cash impairment charges of c. AUD240mln. it is noted that:
a. Management has indicated in its announcement in Oct. 2008 distributable earnings of 11.5c/share b. Interim dividend scheduled for 2/2009 cancelled due to current uncertainties; c. Distribution for FY2008 will be reassessed in Aug 2009 d. It is still quite likely there dividend (though lower than FY2007) may be announced in Aug. 2009. As VPG is largely not so much so controlled/influenced by the banking syndicate with regard to its activities given its low gearing, as CNP.
4. steady interest cover of 2.7x (covenanted min 2.0x)
5. Healthy debt maturity profile (with low level-ST revolver only due in 2009) and the remaining due in 2010 and beyond.
6. Share price fell significantly since 9 Oct 2008 when it announced customer default. however it should be noted that VPG's VCS exposure was by way of preference equity secured by 1st or 2nd mortgage over related assets. Refer announcement below.
7. Directors share purchases on market: "Staff and Directors¡¯ trading window reopened on 9 Oct. 2008.
Following numerous requests from staff, the Valad Board has decided to re-open the security trading window applicable to staff and Directors for "buy only" trades, from today (9/oct/2008) until its next planned open period beginning 30 October 2008. Several members of the senior management teams, as well as members of the Board have indicated their intention to purchase Valad securities during the trading window.
a. 8 Sept 2008 100,000 @$0.48/share b. 17-21 October 2008 purchase at around 10-11c/share by various directors value - $8000, 32,000 -several ones at c. 100,000 each time c. 14 Nov 2008 1mln for AUD66,513
8. Next employee share trading window will be starting from late Feb 2009.
9.Valad's strategy continues to be to reduce its balance sheet exposure to VCS via realisations, recycling positions into funds and the introduction of third party equity. This strategy is a priority for the Group with early cash realisations sought where possible and step in rights to be exercised where necessary.
Satisfactory results have been achieved in VCS asset disposal and recycling as evidenced by recent asset sale.
10. Due to its low gearing, it is unlikely to dilute shareholders' value via issueing of capital of paying fees as CNP has done.
11. The small market capitalisation makes it an acquisition target for Private equity firms or other big players as the REIT sector consolidates.
There was rumour in AFR that VPG has received opportunistic offer of 18-20c/share, which management declined.
12. No exposure to the US market (as confirmed by Investor service)
In view of the above, I see VPG as a good value share massively oversold and undervalued at current price of 8c and below directors purchase of c 10c-10.5c/share in Oct 2008.
If anything above is wrong, pls kindly correct me.
Thank you very much in advance.
Kind regards, Lavender689
VPG Price at posting:
7.4¢ Sentiment: Buy Disclosure: Held
(20min delay)