• Master sale proceeds supported overall net profit: Cedar Woods Properties Limited (ASX: CWP) revenues plunged 17% yoy to $178.6 million for the fiscal year of 2015, impacted by the weaker Western Australia market. Meanwhile, the group received $36 million of proceeds from the sale of the Masters Home Improvement Store driving the overall sales to $214.6 million, which is slightly higher as compared to the $214.5 million in 2014 fiscal year. As a result, CWP reported a net profit after tax (NPAT) increase by 5.6% on a year over year basis to $42.6 million for the 2015 financial year. Cedar Woods declared a fully franked final dividend of 16 cents per share, resulting to the total dividends to 28 cents per share for 2015 fiscal year, in line with the firm’s policy of distributing over 50% of full year net profit to shareholders. 

  
  Earnings performance over the years (Source: Company reports)

• Flexible balance sheet: The group decreased its net debt to $27.9 million as at June 2015, against $32.6 million in pcp, and accordingly the net debt to equity improved to 9.8% during the period from 12.5% in June 2014. The overall assets were enhanced to $410 million after including North Baldivis land acquisition on August 2015. However, Moody's has recently downgraded the ratings of CWP’s four classes of notes on the back of an increase in under-collateralization that resulted to an event of default. 

 
       Balance sheet highlights (Source: Company reports)

• Project Highlights: At Queensland, the Upper Kedron (Ellendale) Project received the first 480 lots approval from State Government in July. Ellendale is a 227 hectare master-planned community with 12km from Brisbane CBD. State Government approved that the balance 160 hectare of the land is appropriate for further residential development. For the WA portfolio, Cedar Woods Properties acquired new land at North Baldivis in August 2015. For the Mangles Bay Marina, Federal Department of Environment granted approval for the project, while the project is estimated to start construction by 2017 fiscal year. With regards to the VIC portfolio, housing construction at Jackson Green would start post the approvals. St. Albans got development Plan approval for first housing stage which would start developing from 2016 fiscal year. Williams Landing Shopping Centre finished stage 1 development. 

 
  Project portfolio in mature markets (Source: Company reports)

• Growth drivers: Western Australia’s land sales have been declining, with average Perth lot prices declining 2.5% to $256,000 since the last twelve months. But, the revenues have been witnessing growth across some of the corridors. Meanwhile, the growing population across Western Australia and Victoria is estimated to further drive the residential market. Western Australia and Victoria have reported a huge population growth of 1.6% and 1.8% respectively during 2014, as compared to the 1.4% national average. Queensland also witnessed a population growth of 1.4%, in which CWP started the Ellendale project at Upper Kedron this fiscal year. Meanwhile, Victorian Gross State Product is estimated to grow to 2.5% in 2016 fiscal year and 2.75% in 2017 fiscal year. Moreover, Queensland state budget recently improved its Gross State Product to 4.5% in 2016 and 2017 fiscal year as compared to 2% in 2015 fiscal year.  Western Australian State Government also increased its Gross State Product to 2.25% and 3.75% in 2016 fiscal year and 2017 fiscal year respectively. 

       
        Project pipeline (Source: Company reports)

• Stock Performance: Cedar Woods Properties shares tumbled more than 34.6% over the last fifty two weeks partly impacted by the slower Western Australia market and lowering credit quality. The stock delivered a negative returns of more than 16.7% year to date. On the other hand, Cedar Woods properties reported its presales of $153 million, which is a 10% increase on a year over year basis, and this is estimated to get settled by 2016 fiscal year. Lower interest rates have led to solid settlements in July and August due to improving funding capacity. Meanwhile, management also expects to generate net profit after tax for 2016 fiscal year in line with the fiscal year 2015, given the lower interest rates as well as stable migration which would drive the housing market demand. Landmark projects in three states are well positioned to drive the firm’s growth since 2017 fiscal year. Stock’s P/E is also trading relatively cheaper at 13x as compared to peers while dividend yield is 5.5%. Based on the foregoing, we give a “BUY” recommendation on the stock at the current price of $5.02

---

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
Copyright
Copyright © 2014 Kalkine Pty Ltd ABN 34 154 808 312. No part of this website, or its content, may be reproduced in any form without the prior consent of Kalkine Pty Ltd.
Kalkine is a trading name of Kalkine Pty Ltd ABN 34 154 808 312, which holds Australian Financial Services Licence No. 425376.