I'm conscious of the fact that this is a CER forum, so I'll keep comments brief.
To be honest, I can't give an opinion on Valad. I don't feel good either way about a company until we've done a 'deep dive' research exercise which we haven't, nor are likely to do on VPG.
In general terms though, for both CER and VPG:
Commercial property valuations are dropping in Australia but we lack a lot of transactional evidence to suggest by how much. This may continue, it may not. Most REITs factored in revals at the end of June but there will be more to come this half. I am not familiar with the VPG portfolio but the blend of property types may give some indication of how values are going to hold up.
You will also want to think about how their occupancy rate is looking and how this and other factors could change and affect earnings in the future.
Buying anything at substantially below NTA, with a large enough margin of safety, is a proven investment style. I would caution here though that 'NTA' should be adjusted to account for your own valuation of the assets and liabilities rather than taking the company opinion on face value. If you go through the balance sheet line by line, you can restate the reported values based on your own assumptions. Once you have worked out your own NTA, you are looking to buy the stock at substantially less.
If you have calculated an NTA for VPG or CER and have bought stock considerably lower, the next hurdle is the waiting game. Theory and practice also suggest that very few people are able to pick the bottom in any stock, despite what you might read or believe. On this basis, you will also need to realise that there is a good chance your investment is going to drop in market value before it picks up. Especially in the current market.
As new information comes to light from credible sources (such as the company itself, industry publications, other companies in the same industry... NOT the popular media) then you can adjust your NTA calculation (up or down) accordingly. If the market price drops, then you can consider buying more or just hold on to what you have in the knowledge that over time the price will migrate upwards.
Companies or whole sectors can fall way out of favour but in time, the pendulum swings back again. The smart investors buy when everyone hates the company and sells when everyone is falling over themselves to get back in again.
Finally, I would caution against too much concentration in one industry. So if you have a large amount in CER/CNP already, putting the remainder in VPG may introduce a level of industry risk in your portfolio that you are unable to cope with financially or psychologically. We don't diversify across companies, but I try to avoid industry concentration in the small number of companies we do hold.
Good luck with VPG.
CER Price at posting:
12.0¢ Sentiment: Buy Disclosure: Held
