CER (ASX) defabster..worried now?

Originally posted by seanmorr ↑

Seanmorr

No. Not worried in the slightest

Fundamentals stronger now than what they were 15 months ago when the share price was $1.50.

- No going concern risk. This risk diminished after 15 Jan. If CER or Super were to go into administration, it would have happened after a year of unsuccessful negotiations
- Unwinding of FX income and interest rate swaps with CNP
- Cost of debt significantly lower. Compare supplementals of 31 Dec 07, 30 June 08 and 31 Dec 08.
-ICR much stronger. I can confirm the ICR of 1.5 the company reported at the half year presentation was using a "look back" basis. ICR is signficantly stronger on a "look forward" basis. it is above 2.
- Continued strong performance of its portfolio. Occupancy 100% in Australia. Still a 92% in the US. NOI still on the rise in Australia but down slightly in the US. Non-discretionary focus is the reason for the strong operating performance

For there to be less than 2c equity in CER, the following would need to occur:

- The exchange rate would have to collapse to put the investment hedges way out of the money
- People would have to stop buying food in the US and other non-discretionary items
- Interest rates would have to soar as the current cost of debt is low. CER do not put appropriate hedges into place to take advantage of the current low US and Aust interest rates.
- Occupancy rates would have to fall dramatically both in the US and Australia. (Walmart stores and Supermarkets to close down)
- Banks to reneg on their stabilisation plan and force CER into admin. CNP would then be destroyed. Commercial property values will collapse in Australia as supply increases dramatically forcing banks to take major writedowns
- Even if CER goes into admin, properties would need to be sold at more than a 30% discount for us to realise no equity
- Basically it would be the end of the world as we know it

I know what I'll be doing at 10.02am Monday morning.

This is a 3yr hold for me. Im comfortable with my investment and am more confident now as opposed to pre 15 Dec 08.

Cheers