Cedar Woods valuation, page-2

I've just been through past threads and some past data and found several interesting elements regarding valuation and ROE.

1/ Regarding ROE
- interesting to note that EBIT margin kept decreasing from 2016, from 37.4 % (close to historic high) to 12.5 % in FY 20,
- it was partly offset by the increase of the gearing from 16.9 % in FY 16 to 37.7 % in FY 20.
Overall, the gearing remains quite low for such a business and is in the low end of company's guidance (20-75 %).
On average, the gearing has been quite low : 27 % during the past 5 years and 24 % during the past 11 years.
As a result, there is some upside for their long term ROE, just by looking at their gearing (of course, if the rest of the elements to calculate ROE remain similar).

We may also also have a significant rebound of their EBIT margin this year, which could create more interest for the stock (I suspect that the EBIT trend may be one reason why the market has been cautious with CWP).
I still wonder if the bad trend for their margin is only due to the weakness of Perth housing market during that period. We should have some clear answer about this when the company publishes its FY 21 results.

2/ Regarding valuation
Some interesting past comments on previous threads regarding CWP (sorry for the ones who have already read them) :
- "NTA is based on purchase price of land", so "capital appreciation is not recognised, impairments are" (from Hankreardon, Feb 17)
- "last time they did a market evaluation (not revaluation though) was in 2012- the true NTA was at least 2 x accounting NTA" (same source).