attn: buffet, reggiemiller, swap & others

Dear All,

I have been reading your posts lately.
I certainly admire you guys very much and appreciate greatly your very vaulable comments on CER (and CNP) and value investing in general.

I used to hold CNP and sufferred huge losses naively believing that the banks will see the clear picture for CNP and do the right things accordingly. However, the twists in the process cost me dearly. I cut my losses recently and transferred to CER, which has got better fundamentals, is neater and better dividend prospects than CNP. It is also not as affected by the lawsuits as CNP, just to name a few good traits of CER. I am intending to hold it long-term but may sell a small parcel around 15 Jan.

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).

You guys have years of investing experience and have witnessed a lot in the past years, I would like to seek your comments on the company, and its likely value discovery and recovery journey, amid the current environment and given recent small (but % wise significant) sp recovery.

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

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.

FY2008 results AGM presentation is as follows:

http://media.corporate-ir.net/media_files/irol/14/147062/agmfinal.pdf

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.

http://library.corporate-ir.net/library/14/147/147062/items/310536/652316.pdf

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."

Does anyone know any details of "share trading window" and how it operates generally?

When is Valad's next trading window?

Directors on market purchases since Sept 08 are:

http://ir.valad.com.au/phoenix.zhtml?c=147062&p=irol-news&nyo=1

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.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.

In view of the above, I see VPG as a good value share massively oversold and undervalued at current price of 9c and below directors purchase of c 10c-10.5c/share in Oct 2008.

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.

Given the current market environment, I would like to seek your opinion on the company, and its likely price recovery journey based on what you've experienced in the past.

Recently there has been a ramp up to 12 c earlier this week and to 10c on 8 Jan and 9.1c close on 9 Jan - most probably due to fears about US unemployment news.

The latest close at 9.1c is below most directors' recent on-market share purchases.

Pls kindly provide me your valuable comments and analysis.

Will also appreciate if anyone could provide some technical analysis.

If anything above is wrong, pls kindly correct me.

Thank you very much in advance.

Kind regards,
Lavender689