Posted: Mon Apr 19, 2004 10:47 pm Post subject: Cardno - Consulting Engineers

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Came across this float the other day and would appreciate any comments.

Yield looks healthy and reasonable growth prospects considering the size of the potential market. To my knowledge, only Worley and Coffey Int are similar listed entities in this field, so not much of a comparison base.

Ran a quick CGVI calculation over things and it appears to show some promise, acknowledging limitations given no history in a listed environment.

Price = $1.00
NTA = $0.307
DPS = $0.092
EPS = $0.139

CGVI = 38.4

Don't think the $4.5 million being raised will be able to purchase much. Perhaps its considering issuing script/cash for future takeovers.

http://www.cardno.com.au

Thanks, Bigred


new2waix



Joined: 08 Mar 2004
Posts: 93

Posted: Mon Apr 19, 2004 11:28 pm Post subject:

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I just had a quick play with 2003 numbers. Obviously will be worthwhile comparing past, present and future numbers.

What is the real reason for the IPO? Take advantage of the bullish market to raise some cash?

As always, please check these numbers before making any investment decisions...

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Analysis Summary: CARDNO 2003
x. Current Share Price $1.00
x. Number of Shares 34,344,922
x. Market Cap $34,344,922
x. Return on Equity (ROE) 18.64%
x. Return on Assets (ROA) 8.71%
x. Return on Invested Capital (ROIC) 10.30% **** Not correct (rough calc missing variables)
x. Earnings Per Share (EPS) $0.102
-- Earnings Yield 10.20%
-- Price/Earnings Ratio (P/E) 9.80
x. Dividends Per Share (DPS) $0.060
-- Dividend Yield 6.00%
x. NTA $0.32
x. Book Value $0.547
x. CVGI 30%
-- C1 (Value) 0.16
-- C2 (Growth) 0.13
--> Opt Buy $0.99
--> Opt Accumulate $1.26
--> Opt Hold $1.74
x. Free Cash Flow (FCF) $-
-- FCF per share $-
-- Cash Surplus/Deficit $0.04
x. Ratios
-- Current (CA/CL) 1.71
-- Debt/Asset 0.53
-- Debt/Equity 1.14


..




Judd



Joined: 09 Oct 2003
Posts: 69

Posted: Tue Apr 20, 2004 8:04 am Post subject:

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Just ask - and answer - yourself the following questions.

1. How much of the cash raised will be going to the vendors of the company?

2. How much of the cash raised will be going towards the cost of the float?

3. How much of the residue will be actually be held in the company's bank account?

4. How much equity will the vendors hold at the float?

Don't know anything about this company but sometimes the answers to the above questions are surprising.
_________________
Life was not meant to be easy, my child, but take courage; it can be delightful

Judd


FiL



Joined: 07 Mar 2004
Posts: 4

Posted: Sun Apr 25, 2004 12:03 pm Post subject:

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I’m tempted to invest in this since I’m into small caps.

However the float it going to raise 4.5 million of which 350,000 will be listing costs. The money is going into acquisitions and expansion of the business.

Secondly the directors and senior staff members will still own 87% of the company after the float. So the problem at the moment is that the vast majority of funds wont touch the stock since the floats so small and the ownership is concentrated.

Having said all that I hope to pick some up.


new2waix



Joined: 08 Mar 2004
Posts: 93

Posted: Wed Apr 28, 2004 5:48 pm Post subject:

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Has anyone done any further research on this company?

They seem to be aiming for growth, but not too sure on what exactly they intend to do with the raised capital and where they seek to attain this growth. Maybe they are just making the most of the bullish market?

I think the 2004 forecasts are a little optimistic, however if they are met, then a higher share price will be justified.

2004 Forecasts
EPS = 13.9
DPS = 10.5
Div Payout = 80%

Operating revenue change from 2002 to 2005
23%, 12%, 26%, 17%

NPAT change from 2002 to 2005
-24%, 117%, 22%, 17%

Return on Equity (ROE) from 2003 to 2005
18.64%, 22.80%, 26.65%

Return on Assets (ROA) from 2003 to 2005
8.71%, 10.66%, 12.45%

Ratios 2003:
Current (CA/CL) 1.71
Debt/Asset 0.53
Debt/Equity 1.14

Does anyone know of similar companies that are already listed?


egilmore



Joined: 02 May 2003
Posts: 1372
Location: Sydney
Posted: Wed Apr 28, 2004 7:55 pm Post subject:

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New , I like the way you are methodically presenting the FA's BUT with IPO's , do not project too much weight to past performance because the accounting of private companies are different from those of Public companies .
My suggestion to you is to consider the PROFORMA only .
Equity $18.79m
Shares 35.345m ( out of which only 13% will be tradable )
BV 53.2c
CGVI is C1 23.1 + C2 8.8 total 31.9

International biz 15% of turnover which is good for me ( don't like overseas ventures ) .

Having said that the illiquidity can be a bonus if they achieve what they promise in acquisitions and a disaster if not .
Cheers eG

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new2waix



Joined: 08 Mar 2004
Posts: 93

Posted: Thu May 20, 2004 11:38 am Post subject: Excellent Debut!

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What an excellent start for Cardno (CDD):


Stock Bid $ Offer $ Last $ Change* Open $ High $ Low $ Volume News

CDD 1.410 1.420 1.420 +1.420 1.480 1.480 1.400 621,399




Not bad from an issue price of $1.00!

Anyone take up the offer? Anyone have comments on where CDD may be headed in the next 6 to 12 months?

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egilmore



Joined: 02 May 2003
Posts: 1372
Location: Sydney
Posted: Fri May 21, 2004 11:18 am Post subject:

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At $1.62 the previous C1 ( at $1.00 sp ) 23.1 is down to 14.26 giving a new CGVI reading of sub 24 i.e 23.05
In hindsight I should have applied for shares in the IPO . The proforma analysis highlighted good performance ...cheers eG

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new2waix



Joined: 08 Mar 2004
Posts: 93

Posted: Fri May 21, 2004 2:17 pm Post subject:

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You're not the only one kicking yourself - 65% return in 2 days!

Not sure if my numbers are correct, but looks promising (or at least it did at $1). Also pays a divi.

Return on Equity (ROE) from 2003 to 2005
18.64%, 22.80%, 26.65%

Return on Assets (ROA) from 2003 to 2005
8.71%, 10.66%, 12.45%


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big red



Joined: 11 Nov 2003
Posts: 2
Location: perth
Posted: Fri May 21, 2004 7:43 pm Post subject:

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I am kicking myself also. Part of the problem having an 8 till 6 job is that some things just slip you buy ....

My thinking is that more opportuinties in this consulting area will present. Just a matter of looking for the next big opportunity....


mark100



Joined: 11 Nov 2003
Posts: 9

Posted: Fri May 21, 2004 11:43 pm Post subject:

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There was no point applying for shares. It was 10 times over subscribed and only employees of cardno and morgans best clients would have got an allocation.

I work for one of Cardno's main competitors (we are about 5 times larger) and can say that business is booming. This is being driven by the massive amount of infrastructure being built and also consolidation of the industry. Smaller players are getting bought out as they struggle to pay PI insurance premiums etc. The firm I work for has doubled revenue in the last 4 years from $150m to $300m this year.
We are puzzled however why Cardno went public for a meazly $4.5m.

cheers
mark

egilmore



Joined: 02 May 2003
Posts: 1372
Location: Sydney
Posted: Sat May 22, 2004 12:28 am Post subject:

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Hi Mark100
Who are the other players in this sector ?
Do u consider Coffey ( COF ) as one of them ?
Please post as much info as you possibly can ...cheers eG

Eg

In response to your query, to my knowledge COF and WOR (Worley) are the only companies in the same consulting industry.

Broadly speaking most of the big players in the engineering consultancy game are privately held, Connell Mott MacDonald, GHD and Sinclair Knight Merz. Therefore your opportunities to buy in are very limited. BTW, you will find these companies in the BRW Top 500 Companies from memory.

The companies operate primarily on a fee for service basis and occassionally profit share with developers, owners etc. Fees are usually lump sum for large projects and hourly rate for others. Work is won via tenders (governemnt sector) or through existing realtionships (private sector).

I work for one of the companies you mentioned. Over the last 3 years our revenue has increased from $150m to $300m through organic growth and acquisitions. Business is booming atm. Smaller practices are getting taken over due to PI insurance costs etc. Most work is won via tender although most of the bigger companies are on a 'panel of providers' with local authorities which gives us some jobs without tendering although a substantial amount of work is requied to get on the panel in the first place. We do not get time basis jobs very often, clients hate that - they want to restrict us to lump sum only!
As you say listed consultants are cardno, worley and coffey. Cardno gives exposure to basically all engineering disciplines eg water, structures, planning, envirnomental, transport, building services, asset management, geotechnical etc. Worley is very much leveraged to oil and gas and Coffey is more environmental and geotechnical. You would find that these 3 companies would rarely be competing against each other.
Rivals to Cardno would be Sinclair Knight, GHD, Kellogg Brown & Root, Connell Wagner, Parsens Brinkerhoff, Arup, Hatch, among others. Many of these are owned by overseas companies although the company I work for is owned by staff.

cheers
mark

Thank u mark100 n bigred .
I believe there's a fourth listed player soon to join the ranks .
This is a reverse takeover of Clifton Coney , using FCN as a backdoor listing . FCN listed late last year and now seeks a merger with an engineering company .
I have browsed in the the new prospectus but since we have stakes in COF n CDD have no interest in the new one .
Both companies that we hold have been good performing stocks for us .
cheers eG

new2waix , I am indebted 2u CDD . Your initial post in the float file encouraged me to read their prospectus . Was not able to buy thru the IPO but waited patiently in the corner for natural easing and fortunately picked some at 1.41 . Basis of my entry is FA though no 5y of listing is available , and the fact that this industry is CLASSICLY FRAGMENTED in a very definitive phase of CONSOLIDATION . It is pretty a simple formula . Smaller firms will not be able to refuse the temptation of joining forces and increasing the value of the stock that is issued to them upon acquisition .


Corporate Express ( CPX ) did to the stationery biz in Australia what CDD n COF could easily do to the Engineering Consultancy sector in the next 3 years .

ABS has done it in the Child Care Centres industry in the last 4 years .

TOLL n PATRICK - in their freight and handling sctors .

CDD has yesterday upgraded its FY05 ( 7 months b4 the deadline ! ) by 15-20% which shows great deal of confidence going forward .
I do not think the recent acquisitions are the last for this FY05 . It seems that this consolidation thru M&A will continue .

Cheers eG

eg,

CDD has been a stellar performer and seems to be in a good position within their respective industry to achieve continuing growth.

I can't take all the credit for alerting the forum to this stock as it appears Big Red was the one to have opened this thread.

However, very glad you have benefited from this thread and I assure you that many (including myself) have benefited from your own knowledgeable and insightful posts.

All the best,

n2w



Source: http://au.finance.yahoo.com

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Hit a new high on Friday 14/01/05 of $2.95 after intraday of $3.10 !
Anyone knows what's up or is it a late wakeup after the tsunami disaster ?
which has benefited the engineering company of COF ? ...cheers eG

Big Al
Do U know of this new acquisition for Cardno ( CDD ) : Buckland Engineers Australia, a Perth based structural and civil engineering consultancy working predominately in the resources sector?
We hold CDD shares ...Thanks in advance ...eG

http://imagesignal.comsec.com.au/asxdat ... 757914.pdf

No I don't eG. Read your link. Having worked there, if they're into providing engineering on the ops/maintenance side of things then that is a high margin, loads of work, limited risk area to work in. If they've found a niche with the larger miners in providing these kinds of services then cashflow will be nicely underpinned with high margins. I think there's several years to go in the WA mining boom re infrastructure spend.

CDD - CARDNO LIMITED 14/12/2007
UBS rates CDD as Neutral - No change to the rating after the company announced that profit for the first half of FY07 would increase by 30-40% which came in line with the broker's estimate for about 40% rise.
The broker stated that its forecasts have taken into account the recent share placement done by the company and does not allow for future acquisitions. But it believes that the estimates may be conservative given that the company has spent $100m in acquisitions over the past three years.

The broker views the stock as fairly priced and hence the $8.50 price target remains the same.

Target price is $8.50 Current Price is $8.05 Difference:$0.45 - (brackets indicate current price is over target). If CDD meets the UBS target it will return approximately 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June. UBS forecasts a full year FY07 dividend of 23.00 cents and EPS of 32.30 cents . At the last closing share price the estimated dividend yield is 2.86%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.92.

Market Sentiment: 0.5

The recent dilution of capital should be taken in account for 6/12 months going forward .
we hold CDD shares ...cheers eG

egilmore wrote:

CDD - CARDNO LIMITED 14/12/2007
UBS rates CDD as Neutral - No change to the rating after the company announced that profit for the first half of FY07 would increase by 30-40% which came in line with the broker's estimate for about 40% rise.
The broker stated that its forecasts have taken into account the recent share placement done by the company and does not allow for future acquisitions. But it believes that the estimates may be conservative given that the company has spent $100m in acquisitions over the past three years.

The broker views the stock as fairly priced and hence the $8.50 price target remains the same.

Target price is $8.50 Current Price is $8.05 Difference:$0.45 - (brackets indicate current price is over target). If CDD meets the UBS target it will return approximately 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June. UBS forecasts a full year FY07 dividend of 23.00 cents and EPS of 32.30 cents . At the last closing share price the estimated dividend yield is 2.86%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.92.

Market Sentiment: 0.5

The recent dilution of capital should be taken in account for 6/12 months going forward .
we hold CDD shares ...cheers eG

Its not bad

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 36.3 43.8 53.4 62.3
DPS 22.5 25.0 32.1 38.8

Is thsi company only Australia (WA) based?

thx

MS