Im also holding approx 95% of my portfolio in CER.
All other trades I make are short term trades.
I have spent countless hours researching CER. Ive read through every announcement made over the last few years many times over. Im going to go out on a limb here. Never in my life have I been more confident in a stock as I have been with CER.
When you mention Centro to anyone, straight away someone will pull a face and lose interest. A bit like when you go into an interview and you are unshaven and your shirt is tucked out. The candidate is not necessarily a bad one but people are going to give you an opportunity to showcase your potential.
CER is potential plus. Its gearing ratio of 64% as at June 30 is significantly lower than this today. In a previous post, I estimated the current gearing ratio in the low 50s. I beleive thats a conservative estimate also. In fact the fundamentals of CER have not materially changed in the last year. Yes property prices have decreased slightly in the US but the US dollar has strengthened significantly in the last year also.
Value of US properties at June 30 was US 6.1b. US liabilities was US 3.6b. Therefore the net benefit to CER will be 6.1b divided the current AUD/USD exchange rate less 3.6b divided by current AUD/USD rate.
Super LLC going into administration would ironically improve CER's gearing ratio! Currently CER has $2.7b in assets in Super and $2b in liabilities. That is a gearing ratio of 74%.
That is a worst case scenario. I dont think that'll happen. CER/CNP should be able to realise some equity in Super.
I dont think the pending legal action against CER is going to jeopardise CER's ability to trade as a going concern. What CER has going for it over CNP's legal action is
1) THe share price of CER fell significantly less in percentage terms compared to CNP just after the Dec ann. In fact CER was trading back at a dollar a week after the announcement.
2) CNP own 51% of CER. CNP obviously cannot be a party to the class action
Im holding CER for the distributions I believe they'll continue to pay in the future. I believe it will be much higher than 1.4c also. A definite long term hold for me.
Cheers
CER Price at posting:
10.5¢ Sentiment: Buy Disclosure: Held
