Forum Archive Index - October 2000

["Herbert Ramsay" <herbertramsay@hotmail.com>]

I bought some CDL in March this year for 23 cents each, just after last 
year's result came out. At that time I ignored CDL's dividend yield, price 
earnings ratio and returns on shareholders funds. I focussed solely on the 
fact that its share price was a big discount to its NTA and the fact that 
its share price had plummeted over the previous 6 months (from 35 cents to 
23 cents). I believe I've learnt quite a bit about investing in the 
sharemarket since then and I think some of the reasons why its share price 
seems so cheap are:
A very low dividend yield (about 4%)
Very low return on shareholders' funds based on last year's result (about 
3%)
Its price earnings ratio isn't that low based on last year's result (about 
11).
I believe those three factors are very important.
Having said that, its prospects look good (especially due to its 50% owned 
subsidiary Kingsgate) so I believe its share price will slowly move up over 
time. Maybe it will get taken over due to the massive share price/NTA 
discount.
I haven't received another discount card from them yet. My first one has 
expired.
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