MJS,Thanks for your post.I've been attracted to CIY for quite a...

MJS,

Thanks for your post.
I've been attracted to CIY for quite a while now and hold a few shares back in early 2003 ($1.50 range).

These are the things I like about CIY (covered by Tolhurst Noall):

(1) Growth in Funds Under Management has accelerated from $20m per month to $30m per month providing strong flow through benefits to CIY’s bottom line. FY04 forecasts are based on $30m per month growth in funds in H204 while FY05 forecasts have used a more conservative $25m per month growth rate.
(2) CIY has relatively low fixed cost base. I believes its
current structure will support revenue growth in the future, enabling it to maintain its strong margins.
(3) CIY has continued to follow a lending strategy that includes specific pre-sale requirements on development
projects. They only provide advances on a cost to complete basis. This provides a margin of safety
for future earnings.
(4) The company has no exposure to inner city developments or to inexperienced developers trying to capitalise on the property boom, alleviating any potential credit issues if interest rates rise.
(5) A $54m return is expected from investment in the Martha Cove development. Earnings are forecast to be spread over 3 - 4 years commencing in FY 04 – despite Baulderstone Hornibrook commencing stage one of the project later than scheduled. FY 05 profits from this project are forecast to be $18m.
(6) CIY has been able to achieve both growth in client numbers and growth in revenue from existing customers (50% of investors are repeat or multiple investors) – a very positive attribute for future earnings. They are currently targeting their advertising at those people with disposable income and in particular, those with self managed super funds.
(7) Continued strength in property development along the east coast in the lifestyle/leisure market.
(8) Potential for upward revisions of forecast earnings from the Martha Cove investment.

Like I said, I think CIY is a pretty good investment, whether you like capital growth or dividend yield.

Possible candidate for another upgrade now that 3rd qtr is complete. This would be the 7th consecutive upgrade if it happens.

Good luck to all.

Sauce