Hi SectorLead. I haven't been on the STT thread the last few...

Hi SectorLead. I haven't been on the STT thread the last few weeks - made my debut as a newbie but obviously haven't followed up... all for good reason: busy, very busy with the new first home built, and planning upcoming proposal to the mrs - hoping to get a breather to catch up at xmas break (forced leave anyway) but it looks like now I'll be learning the hard way how to paint a brand new house! Thrilling thing to look forward to haha.

I would hope a multiple bagger on RDG soon would be very welcome - particularly as I could probably pay someone the $3-4k cash to do the paint job...

I don't know about taking plant at book value however. Or any fixed assets/PPE at book value - as they say , if you need to firesale or get out of fixed equipment and assets in a hurry, you typically see far different results compared to 'book value'. I remember the lesson from Warren Buffet on those fabric seamstress machines or whatever they were - or maybe I'm thinking of tiling - but one of his earlier ventures where book value was significantly higher than what was liquidated/realized, one of the times he lost a chunk of money and was taught a good lesson.

That said at 2.5c it was very much neutral or near cash backing - without taking into account fixed assets. At 3-4c I'm not sure of how much it could appreciate, all depends on what sort of 'multiple' you would put on earnings. Not much forecast guidance on what work the company could be doing to maintain previous results/cashflow - obviously if the same recurring work occurred they were generating a lot of cashflow , which would pump up share price even further if you ask me.

What would your best 'guide' in terms of a suitable earnings ratio be if the recent news eventuate in terms of developing the residential? Or at least price target?

You mentioned cup and handle at 4.1c - what would your TA assess the upside price target would be from there based off that?

I find it interesting that the announcement, quoting:

"

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This agreement is the first part of a broader framework agreement whereby Centrals and the HA have undertaken to work together to produce quality affordable housing and associated commercial premises on the site. In effect, the terms of the Contract for Sale provide for deferred payment for the land until completion as well as the HA providing an undertaking to purchase a number of apartments in the completed development. "

Interesting that a) no payment for land until the construction work is completed. And at that they have presales commitment from HA. and also b) their shift into residential construction given the whole property market now in WA - somewhat counter cyclical and contrarian if you ask me.

But if they can bed down a few key contracts for HA and provide affordable housing while bringing in the cash, then I guess it sets them up well for when the eventual upturn comes?

Wonder if we'll see the high 2s again... maybe when things die down again.