The Boat Fund had a cracking write up on DDR recently, they believe the margins will expand given ExpressData is no longer in the market. Further synergies to come out of new consolidated distribution facilities and cheap at these levels/yield. Once they show the ED acquisition is 100% bedded down I think it will run, MTU was like this, sideways around $5 as fundies would not touch it until this risk was lifted, then it ran to $10.
I think some of the cash flow issues raised were worse in the last 12 months as they bedded down ED and increased stock on hand levels. I think the model is sound and in essence is similar to SBB, buy goods and distribute... but without the patch of own stores. IT is more resillient than the rag trade though I feel. Australia population is growing as well http://www.abs.gov.au/ausstats/[email protected]/Lookup/3222.0main features32012 (base) to 2101
Main risk here is a massive recession, otherwise I see minimal downside from where we are. Unless like with any stock the board are covering up huge internal problems and structuring issues. I dont think this is the case, new companies have come on board, the model does not really require that many key personnel.
DDR Price at posting:
$1.78 Sentiment: Buy Disclosure: Held
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