Any research recently by Forsyth Barr or anyone one else that anyone can share a summary of? Thanks in advance; am holding.
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Any research recently by Forsyth Barr or anyone one else that anyone can share a summary of? Thanks in advance; am holding.
1 giant trade this morning..... i hope there is good news coming
Would it be an "on-sale" of shares resulting from the result acquisition?
Just a thought.
If I take their underlying earnings figure at face value and do a weighted EPS on that I can get $0.209 which would be on target.
But I must admit that I am 'a little disappointed' with this result at first glance (and with it being reporting season I am mainly doing first glances).
Will properly ponder over the accounts later
Best Wishes
Paper Tiger
why such the hit in share price?
I actually bought a few [more] CBL today and I am already three dollars something in profit on them!
This was after doing a revised valuation and coming up with a current value north of the share price, it came out, by coincidence, at three dollars something, but foolish me managed to delete the calculations instead of saving them.
More precisely I can remember that my one year forward value was three dollars thirty something.
Perhaps the most noticeable item in the results is the 'Foreign exchange translation adjustment' in the profit and loss which this year was a $9M8 loss and last year was a $3M9 profit (both pre-tax).
It would seem that we can expect potentially wild swings year on year purely as a result of currency movements.
Best Wishes
Paper Tiger
Thanks for update PT.Just looking at changes to shareholdings lately.4 traders http://www.4-traders.com/CBL-CORPORA...405978/company 219,677,168 shares /vs Nz companies
https://www.companiesoffice.govt.nz/.../shareholdings 235778031
Am I looking at same company?/OR How often does 4 traders update ???
Some reasonable volumes traded some days
If you want an accurate current shares issued number then the NZX website is generally the best source.
So for CBL [https://nzx.com/markets/NZSX/securities/CBL] you will see three columns labelled Activity, Performance, Fundamental.
In the Fundamental column of the five rows, usually, the fifth, Shares Issued, is correct.
You can not rely on any of the other four columns at all.
Best Wishes
Paper Tiger
Seems so. But also a vey schizo mkt atm with many stocks with good results being sold off , esp in the smaller caps. As a friend pointed out this selldown and PE compression starts in the smalls and can spread to the larger caps as a risk off sentiment spreads and volatility /mkt correction tensions mount.
Already back to my one year hence valuation of $3.3X - anything more is thus market irrationality :p.
Best Wishes
Paper Tiger
"The alignment of the management and the board, and their belief in the business, was shown by the limited sell-down of holdings at the IPO by Peter Harris and Alistair Hutchinson – they relinquished only 12 per cent and 16 per cent of their holdings respectively. Their combined shareholding is worth NZ$412.5 million (based on a NZ$3.75 share price)."
Nice to see management have a decent amount of 'skin in the game'.
Edit: On second thought forecasting a 2017 PE ratio of 11 seems to be a stretch when the guidance is only a 18-22% improvement on this years operating profit.
CBL ANNOUNCES CONDITIONAL AGREEMENT TO BUY US INSURER
Download Document 630.94KB
Reading through the reports SFS acquisition was in for 3 months of 2016 so 2017 will see a full 12 months of earnings flow through for that entity to the bottom line. The segment report gives some good detail of the entity splits.
US acquisition might add a little but they seem to be talking that down for anything meaningful in 2017, looks like a sharp price negotiated though.
I also see they are now included in the ASX 300 index as of 20 March 2017, not sure how much demand from indexes this puts on the stock.
Like what I see though. Tough to find good growth performing companies.
just to move this to the appropriate thread:
Hi Percy, I did buy some CBL during the recent drop (it just looked like a typical market overreaction and the fundamentals look good), and so far seemed to have done quite well with them. I agree however that I probably need to do some more due diligence before I move these shares to my bottom drawer.
Couple of initial reactions to your concerns: If I look at their insurance portfolio, than I don't see at this stage huge systematic risks (like the close sequence of devastating earthquakes which killed e.g. AMI). The only area I might be a bit concerned about is their underwriting of "builders warranty". Need to look deeper into the conditions, but something like that could probably turn into a problem if NZ builders create the next fad after "leaky buildings".
Having said that ... these are no 9/11 problems or earthquakes which let share values drop over night. A bit of basic TA and regular monitoring should catch issues like that before the company goes down the river.
Anyway I do appreciate your warning and intend to do a bit more homework on this one.
I have given you general warnings about insurance companies.
I rang a friend, who is an insurance agent, and asked him about CBL ,when they listed.His advice was to be very careful, as they are at the high risk end of the insurance business.That was enough for me to avoid them.
Take care.
ps an earlier poster on this thread did mention long tails,something to remember.I would just add very long tails.!!
OK - here we go ... looking forward to a robust and constructive review of my little SWOT analysis:
CBL is one of the newcomers in my portfolio and, after a few warning words from fellow posters about insurance companies in general did I thought it prudent to have another look into this stock before it ends up in my back drawer.
That's how they describe themselves: "CBL Corporation Limited (CBL) is a specialist insurer and reinsurer focused on credit and financial risk. CBL has eight offices spread across 25 countries and almost 550 employees. The company has been operating for over 43 years, and is listed on the ASX and the NZX Main Board."
"CBL specialises in writing building and construction related credit and financial surety insurance, bonding and reinsurance. CBL Insurance currently has an investment grade rating of A- (Excellent) and an issuer rating of a-, with both outlooks ‘Stable’, from A.M. Best Ratings Agency."
They experienced strong and consistent revenue growth (CAGR >30%) in the past combined with healthy and consistent EPS growth (exception: last year mainly due to currency write-offs due to strong NZ$ and one-offs related to acquisition).
At this stage they draw the majority of their income (GWP - gross written premium) from various European countries.
Strengths:
- strong and consistent revenue growth in the past. CAGR (7yrs): 32.6% p.a., forward CAGR (based on analyst estimatees): 27.6%
- "excellent" credit rating: A-, outlook stable
- healthy and consistent EPS growth since 2011 with (so far) one exception in 2016; underlying profit did still grow, but reported profit was down due to one offs (mainly acquisition costs and currency movements)
- forward PE of 10 combined with a forward CAGR of 27.6 - put the numbers yourself into the Graham formula
- increasing product and geographic diversity
- board members have lots of skin in the game. Actually, this is an understatement. Add the better part of the arms and legs to the skin ;): All board members have substantial holdings - and added up they hold even after the latest "selldown" still nearly 39% of all issued shares;
Weaknesses
- despite a rather strong balance sheet: it is still a quite small insurance company. One major slip-up or oversight might kill them;
- not sure its a real weakness, but the fact that they hold funds in the currencies they operate in means that a strengthening NZ$ impairs their income ... like it did 2016;
Opportunities
- enormous potential through international growth (Europe, SE-Asia, India, US, Mexico)
- growth opportunities based on European customers moving from UK competitors to their EU based daughter company CBL Insurance Europe
Threats
- potential to oversee a major risk in new legislations and economies due to (potentially) too fast growth
- Does the comparatively low SP (given EPS and CAGR) reflect the markets view of "too good to be true"?
- a black swan event always might be just around the next corner, and the history of insurance companies is full of them. One potential black swan I could imagine would be the builders warranty in case of any further systematic failure of NZ building standards (leaky buildings anybody); Obviously depends on where the courts would put the liabilities - they insure only builders liability, not the stupidity of bureaucracy; on the other hand ... their overall NZ exposure is rather small.
Examples for previous "black swan events" hitting the insurance industry in the past - examples to lookout for:
- A number of insurance syndicates forming part of Lloyds of London got bust when US courts started in the 1980'ies to award large punitive damages against (by Lloyds insured) employers in case of asbestos, pollution and health hazard claims. These cases sometimes went back to the 1940'ies ... "a long tail", but given that the insurers in the 1940'ies to 70'ies didn't understood the nature of these (for them future) claims, they couldn't build up appropriate reserves.
- HIH Insurance (Australian largest ... until 2001) managed itself out of existence due to combination of management incompetence, misrepresentation and open fraud (managers went into jail).
- AIG (the worlds biggest insurer) nearly wiped itself out by offering a new product of "credit default swaps" - basically an insurance against the default of certain financial instruments. Highly profitable until the GFC wiped the value of subprime mortgages and people started to claim on these swaps.
- AMI had enough reinsurance for one major earthquake, but not for a sequence of several earthquakes. It killed the company
While I do see the inherent risks for the insurance industry would I think that buying into CBL might be worth while the risk ... as long as the returns provide an appropriate reward for latter. If the Grahams formula makes any sense, than the potential gains are huge.
Interested in other peoples views. Any strengths, opportunities, weaknesses or threats I should add?
Discl: hold (a medium sized parcel);
DYOR;
Lloyds also got caught big time with insuring technology, such as computers, that became obsolete quicker than they thought they would.
Back to you and CBL.I think you now have a better understanding of CBL.
CBL see opportunities in Brexit situation.
http://www.nzherald.co.nz/business/n...ectid=11849115
I hold.
Chairman's Address to Shareholders
CBL MD address to Shareholders for AGM
Truly a global business now.Scale now in france.
At pains to clear up the FETA below.
Onwards and upwards ,hopefully.
The second item was the foreign exchange translation adjustment made in order to express our balancesheet assets and liabilities in a single reporting currency - New Zealand dollars. The foreign exchangetranslation adjustment is not a realised expense, and not a cash item, (which is why it is added back to netreported profit after tax when we calculate dividends). The adjustment in 2016 was a negative $9.8 million,compared with a positive adjustment of $3.9 million in 2015. Neither the positive adjustment nor thenegative adjustment mean anything insofar as measuring our underlying operating performance. This$9.8m foreign exchange translation negative adjustment in 2016 is required to flow through our Statementof Profit or Loss, and reduced our net profit after tax to $30.7 million, which is a reduction of 13.5%compared to 2015 net profit after tax.
Looking pretty cheap to me ... forward PE of 9.1 and this with a forward CAGR of 27.6 ;).
Feels like the SP just went through a local dip at 3.24 but now only 28 shares at 3.28 left.
Some more analysis 4 posts back .... but I know, we shouldn't talk too much about nice little earners, just drives the SP uphill - and who would want that?
DYOR
Discl: holding and just picked up some more at 3.25 :t_up:
Easy ...
Estimated earnings (EPS) for 2017: 27.7cents 2018: 37.7 cents 2019: 42.3 cents
(all according to 4-traders: http://www.4-traders.com/CBL-CORPORA...78/financials/).
Makes an average forward EPS of 36 cents.
Current SP (328 cents) divided by 36 cents equals 9.1 (well, limited to one digit after the dot).
Makes sense?
:ohmy: :ohmy: :ohmy: !
I am currently treating analysts estimates for both FY17 & FY18 with a reasonable degree of caution.
BW PT
Disc: Hold
Assuming a starting point of a 'normalised share-weighted FY2016 EPS' of $0.21 and assuming that the numbers being bandied about here for FY17 & FY18 are based off an equivalent basis,
then,
I regard them as too agressive.
Both are 30%+ YoY growth and proffer absolutely no allowance for the downside risks.
Best Wishes
Paper Tiger
No doubt - the 2018/19 EPS assumptions do look enthusiastic (lacking a better word). However - even if we reduce the (average) growth assumption to only 10% (meaning no further expansion, just organic growth) and the EPS to something like 25 (EPS13 - less than the 2017 consensus) does the share still look good value (still only half of what Graham's formula would compute).
And this is not taking into account the move into the US and all the Brexit related European growth opportunities with London losing its free entry into the EU (don't forget - CBL are a EU based business after all).
Happy to wait for history's verdict - and if the SP really only doubles (when the market wakes up), than I am happy to take this on the chin ... :p
Of course - it all can turn to custard ... it wouldn't be the first insurance company doing this trick, i.e. DYOR!
And the newest star in the NZX50 is .... CBL :t_up:!
https://www.nzx.com/companies/CBL/announcements/302622
They are joining the index on Monday, 19. June. Some opportunity for index funds to push the SP up ... the smart money obviously owns them already :p;
Discl: proud holder :cool:.
Although CBL fitted with my 'growth + dividend' approach, I was sceptical of CBL.
So far they have proven me very wrong, well done to all the holders.
make thAT XXXX:D
Highly unlikely, they are not a fire insurance.
Only theoretical option I could see is IF
a) the recent renovations (e.g. cladding) had anything to do with the spread of the fire AND
b) they did underwrite the liability insurance for the company which did the renovations AND
c) the company did not follow the local building regulations while doing the job (i.e. could be deemed liable) AND
d) courts see above breach as the cause (or materially contributing) to the event
So - in theory something like that might catch them at some stage ... but I would assume that in this unlikely case they would have reinsurance above a certain amount of damage anyway. In my view no need (for CBL stakeholders) to lose sleep over that right now.
No buyers out there for CBL so how can this share grow????
Never buy shares with the intention to sell them. Buy them with the intention to make money from them doing business.
Just watch them ratcheting up their revenues and margins, as they did in the past. The buyers will come from alone.
But yes, CBL is not a traders share. Low liquidity. This is a share for investors.
Irish acquisition, should add more strength to the European side of the business.
https://www.nzx.com/companies/CBL/announcements/303823
Through MA 200
Breaking out to a higher high, although on little volume today, charts starting to look healthier too.
Sure I saw on Friday another decent parcel of 100k crossed @3.69 from on stocknessmonster...
2 5 1:48:34 pm 360 6,000 $21,600 Off Market 3 4 1:48:23 pm 360 500,000 $1,800,000 Off Market 4 3 1:48:10 pm 360 70,649 $254,336 Off Market
Nice :)
Just noticed - both analysts on 4-traders just upped their target price. New consensus target is $3.95 (up from $3.73). Nice.
Obviously - day traders don't need to apply ;) - patience is here the game;
Forecasted EPS of .28 still seems a tad lofty to me, however, looking forward to being proven wrong in the HY update.
Source for EPS number: https://markets.ft.com/data/equities...asts?s=CBL:NZC
Why? Remember - they had this year already a number of EPS accretive acquisitions:
https://www.anzsecurities.co.nz/Dire...spx?id=4471793
https://www.anzsecurities.co.nz/Dire...spx?id=4394764
https://www.anzsecurities.co.nz/Dire...spx?id=4337501
The forecast given in the supplementary materials to the annual report was 18-22% underlying profit growth. So a calculation of a 20% increase is $55,440 mil, which is about .235 underlying EPS. Of course this forecast could be conservative and not take into account the full impact of these acquisitions, i guess we will find out soon enough.
FT states that 2016 eps was .198 this has to be underlying eps unless i am missing something? I think 4traders was the same but the site isn't loading for me to check right now. If they were using IFRS numbers then there is even less chance .28eps is reached imo.
Not sure I understand your logic ... and where your numbers come from
However 2016 EPS was 13.31 cents (check out page 24 of their annual report - quite at the bottom, or look into 4-traders). From memory - this was due to some currency fluctuations (i.e. no real money lost or gained - they just keep their money in the countries in which they need to pay out the claims). I was under the impression that FT gets their numbers from 4-traders (they frequently seem to copy the same errors ;)), but who am I to know. I hardly work with the FT database - too many gaps, not enough info.
So - why exactly does this make the 28 cents (or 27.7 cents actually) for 2017 still more unlikely? Any currency fluctuation might go this year into the other direction (actually this is highly likely) - and as I said - lots of money making acquisitions made ...
But anyway - I have no insider knowledge and in this market anything can happen. Not long until they announce it anyway ... lets just enjoy the thrill - shall we ;)?
Essentially my logic is that if they (CBL) are forecasting 18-22% growth in underlying profit which equals roughly 55,000m. Then NPAT, an IFRS number, is likely not going to be more than 55mil as underlying profit is typically more than NPAT as it does not include tax.
I concede that my logic may be flawed, however, i am just trying to make sense of the forecast on 4 traders.
Just add some "negative depreciation" (currency gain) to reflect on the currency losses from last year swapping back (not a technical term) and you might be there.
Look - I think I understand now your logic, but I don't think that it allows you to predict the IFRS EPS (without knowing what happened in the reminder of the balance sheet). Anyway - I find it hard enough to read an existing balance sheet - more so to predict a not yet released one ...
And hey - you might be right (depending on what the exchange rate fluctuations did to their accounts. Just too hard for me to put more effort into it at this stage ... given that the outcome (assuming currency fluctuations make the difference, as last year - just into the other direction) is hardly material ...
Well, after that silly trades last week, back to where it belongs with large crossing of 100K at 3.75 a piece. Bodes well for results next week.
Insurance 'accounting' is one big guess eh
Probably a prudent move .....but will a lot of punters not understand
https://www.nzx.com/files/attachments/263782.pdf
Not sure, whether "strengthening reserves" is that hard to understand, but yes, I guess they could have done that gradually over the years instead of taking this time a big chunk out of their profit and adding it to the reserve.
Anyway - in a way it is just moving dollars from one internal account into other internal account (and keeping them this way as well safe from the taxman). Not too concerned, though they clearly managed to throw with this move the optimistic analyst earnings forecasts at least for this FY out of the window.
Disc: hold;
They were going to miss forecast by a million any way so seems like an appropriate time lol. Wheres this growth at?
Have listed to management conf call at 1.30 and can say I'm quite comfortable with today's market news release and both CEO and CFO are very confident of future earnings.
There was lot of insurance jargon that at least I'm not familiar within the discussion.
Disc - was thinking of selling in the morning but after listening to conf call happy to continue to hold
That's correct winner, CFO sounded extremely upbeat about future prospects for CBL. And I did pick CEO mention that further good news will be provided at time of HY results day being 24th Aug, whatever that may be....
Finally, today's news release is all related to French insurance business and rest of their books have been put under extreme stress test (as per CFO's wording) and they look to be in good shape.
Bought a few more in the $3.30 to $3.32 range.
Price got away from me before I reached my quota.
If it comes back then I am ready.
Best Wishes
P. Tiger
Finished @ $3.15 . Has dumped before even lower on misinterpretation. Thanks for your posts folks.
You're easily entertained. Yeah i hold CBL on the ASX.
I am a bit surprised PT
this one has fat tails and thats exactly what the independent actuaries were reminding them about
and a lil ol kiwi company competing against European insurance giants?? What is their competitive advantage?
I am constantly surprised by the price that some people pay for shares and the amount of research they have not done on them.
So do Snow Leopards:
http://www.naturalhistoryonthenet.co...ow-Leopard.jpg
and they are provisioning for, apparently taking it in one hit!
You do your research and you attempt to define the risks and the rewards and then you put a price on what you believe represents good value.
You accept that depending upon the scenario that plays out you may loose or make varying amounts of money and you hope that as the circumstances develop you reassess those risks and whether to buy, hold or sell.
You do not put too much of your total portfolio in any one sector or company.
I am content to be in at the moment, I believe that they can grow their profits over the next few years sufficiently to justify that but I have suggested on this thread that some people need to be cautious of the publicly available future estimates for CBL.
Best Wishes
Paper Tiger
I think that the price will drop further. The reason I say this is that there have been two sharp drops with CBL previously, one in October last year and again in February this year. In both cases it was about two weeks for top to bottom.
I’m presently reading Richard Fairleigh’s book Taming the Lion – 100 Secret Strategies for Investing Success.
His strategy no 4.0 - Look for patterns and anomalies. Try to identify patterns and anomalies in the way markets behave.
Strategy no 8.5 - Trends represent the gradual dispersal of information. Information and analysis can take time to be dispersed through the market place. This delay in reactions causes prices to trend.
So I think a strong knee-jerk reaction with a down-trend for about two weeks and then the price will rise again. It did rise sharply from the bottom on 2 March this year.
surprise highlighted ....
Looks like markets need a bit longer to digest this amazing news, maybe they didn't highlight it enough?Quote:
- Full year FY17 guidance previously indicated total revenue growth of 12% - 15% on FY16, and underlying operating profit
growth of 18% - 22% on FY16*- CBL has delivered 35% growth in 1H17
- Operating profit is below expectations for the half year following prior year and current period reserve strengthening that
reduced operating profit- CBL expects 2H17 to result in continued strong growth in total revenue and maintains its guidance previously provided, but operating profit will remain below guidance by the amount of the prior period adjustments, although a resurgence is targeted for FY18
- CBL expects to be highly cash flow positive in 2H17 and current liquidity levels are expected to continue to rise
Anyway ... happy to wait for markets to wake up
Yes good result BP.Should put a solid floor under SP.
CBL seems to be a much misunderstood company.
I just hope that it is not me doing the misunderstanding.
Best Wishes
Paper Tiger
I hear what you say ... and share your feelings.
Having said that ... it is not that unusual for the market to misprice companies, and given that the number of insurance companies on the NZX is quite limited (are there more than 2?) and one of them (not CBL) not always smelling like roses ... Maybe it is understandable for the punters being ultra cautious ....