On 28 Nov I wrote a post here on HotCopper titled ‘Fear of the...

On 28 Nov I wrote a post here on HotCopper titled ‘Fear of the Unknown’. In that post I discussed some probable reasons why it’s SP fell from $13.58 on 4 Aug 2015 to a low of $8.65. I attributed that fall to selling by US based shareholders and understandable but irrational fears of the unknown. Today CCP dispelled those fears!

I opened the post by saying “Up until the peak 4 August CCP had been widely regarded was a company that ‘kept on delivering’ year after year. That reputation is now in doubt, if not in tatters.” Today’s CCP announcement has without doubt restored its 'almost unique' reputation as a company that delivers higher revenues, profits and dividends year after year.

I said “I believe that completely separate from all of these market contortions CCP’s actual business is not in any material way suffering and they will deliver on their 2016 numbers.” Today’s announcement said the company was facing improved trading conditions and was on track to exceed its initial 2016 Guidance, more than vindicating my assessment.

I said “the threat that CCP could lose is Westpac banking facilities seems to be clinging on." And that "I would like to see CCP make a clearer statement around this perceived threat.” Today CCP announced that they had increased their Westpac banking facility limit from $75m to $85m. This increase dispels doubts about Westpac’s ongoing relationship with CCP.

I said, “a ‘beefed up’ Baycorp (by Encore) should not materially impact CCP’s business for many years to come.” Today’s CCP announcement showed no fear of any threats from Encore. I note that on 3 Nov Encore’s share price fell 14% to a new 12month low. Encore appears to be facing their own threats.

I summarised my 28 Nov post by saying “The current 2016 FY PE is approx 9 and the dividend yield is 5% making this a great time to buy.” Even after today’s 8% rise, CCP’s PE is still only 10 and the dividend yield an enticing 5%. With the fears and uncertainly dispelled, today is an even better time to buy CCP.

Brilliant performance CCP!

Congratulations to all of the management and staff.

K