re: cnb..no sellers Hi Brunette, I'm not sure how closely you...

re: cnb..no sellers Hi Brunette, I'm not sure how closely you read the annual report, as on the first page after the table of contents is the Chairman's report which states, "The year 2003 will probably see lower earnings (but still good returns on equity) as the group's investment cycle shifts from inventory run-down to that of inventory rebuild."

This emphasises what I posted previously that the reason earnings were so good in 2002 was that the accounting booking of profits was held back until the projects were off the books, thereby giving a big boost to 2002's earnings. CNB will now have to find and development new projects which will take a few years for the profits to flow through to the bottom line.

I know what CNB's assets are worth because I have seen valuations of them and what the projected final sales value of them is as well.

As to the p/e being so low that CNB would have to have a big fall in profits to push the p/e up towards 10, I will explain why this will happen. If you take the Chairman's word that profits will be lower in 2003 because they have run down inventory and that it will take a few years for earnings to flow through from new projects, then it is probably reasonable to expect CNB to make profits similar to what they made two years ago.

For the year ended 2000, CNB made $2.6 million profit which would put CNB on a p/e of 18 if they make similar profits in 2003. Not such a low p/e after-all!

I am not sure how much you know about the building industry but I think you will agree with me there is a long leadtime in securing and developing projects which results in uneven cash flows which can increase profits dramatically in one or two years before the profits fall back just as quickly for the next three or four years until the projects are completed. This is why it is wrong to value CNB just on 2002's results.

I hope this has helped.

ps. are you going to CNB's agm on the 29th?