I agree and your right. However the problem that we are currently having isn't that. My follow shareholders need to pull their heads out and stop quoting things that don't apply to the issue at hand.
Management did there job and did it reasonable well. They produced a decent profit increase, decrease debt by a large amount and launched new products. Well done.
However, this isn't a private company. They aren't running a private company and you aren't invested in one. This is a large publicly listed ASX company worth over 150M and 140M in sales.
Shareholders should be entitled to a increase in the share price if the company does well. Which it did. Anyone who disagrees with that please put your hand up.
(If the company lost money or something bad happened, than fine...stock goes down 50% and we should take it like men as that's the risk in investing is stocks. That didn't happen though.)
Your saying, as I think many other shareholder are saying is IF the company does well, the stock price WILL increase. We've already done that, the stock not only hasn't gone up...it's gone down, a lot. This is serious.
Let's look at the numbers. The stock was carrying a P.E of 18-22 for 6 months before the full year numbers came out. Profit went up. Not just by 5-10% but, 35%. This means that if the stock price stayed at it's trading range of $1.10-$1.20 the P.E would have gone down.
If it's P.E stayed in the same area... We'd have a stock worth $1.42 today. We don't.
I'd take it further that the P.E SHOULD have expanded and pushed the 25 area giving us a stock price of $1.78.
So what the hell happened? The market...that little thing that rules all.
So what EXACTLY happened? As I've been saying...it's VERY easy. 2 things.
1. Management failure to update and be proactive with the market. Current shareholders and potential shareholders. Stocks ONLY go up if there are more buyers than sellers.
2. A result of #1 not being done by the management team. The volume has dried up and no NEW shareholders know about the success of the company and aren't willing to invest as the company doesn't want to talk to the market. Releasing your financial results isn't talking to the market nor is not sending out any news about the company...when there was...for 4 months!
The new concern is the chairmen. Mr.Simmons who I believe is driving the boat here and has decided not to buy back it's own stock. At these levels, the market has to ask themselves this question...
If the company won't even invest in itself...why should I?
and I have to agree with them here.
Going forward...if we leave things as is...and keep saying quotes from 50 years ago...over and over. The company according the est. should pull in 9.1 cents in profit in 11 months.
At it's current multiple...that should get the stock back up to $1.01...Yaaa!
What's I'm trying to say is if the company DOES produce the result...the returns WON'T follow.
In 12 months...Codan should produce in excess of 30M in cashflow. They have said they are going to put that into R&D and I assume some more debt reduction.
Even a small 5M buy-back program and by being more pro-active in talking to the market and shareholders addresses these issues and DOESN'T affect the capex plans.
Now in light of Mr.Simmons history and the FACT that Codan didn't tell shareholders or the ASX or where he worked before...I have to wonder if the company is now under control of the same person who caused one of the worst destruction of shareholder in Australian history.
CDA Price at posting:
81.0¢ Sentiment: Hold Disclosure: Held
(20min delay)
