Well I am happy to hang in there on this one. CDD - by my sums - they are running at about an adjusted annual NPAT of 28.6m. Still restructuring, much less personnel churn, int dev barely contributing (if they flogged off that division, that could be good cash on the BS, but possibly has a lot of leverage to improve). There doesn't seem to be much sabotage from previous business vendors within CDD, as they are still in profit. If they can get their ROE back to half of what it was previously they will be on a PE of 6.5, so SP could double or triple. They are still focusing on supporting their "grey hair" which is important to me, and is the right strategy IMO. Lots of risk - but I think it is worth holding. Their ROE could get back to 30% if they succeed. In that case the SP would be about $7 and a forever hold, or until they go acq crazy again.
In the past CDD has benefited from fractal events - like the BP disaster in the Mexican Gulf. ID can also be possibly be leveraged in the event of conflicts - as there are consultants who know the cities etc, are needed to rebuild gov departments etc - better than just relying on recon, troops and satellites. Every now and then there will be a giant windfall I expect. PE will be waiting for an upside fractal event to divest, once the restructuring is finished I suspect. A matter of patience for them.
And of course CDD could stay in the dog box if they fail. Still seems good risk weighted value to me.
All IMO
CDD Price at posting:
$1.11 Sentiment: Buy Disclosure: Held
