Thursday, April 25, 2013

CDW Holding Limited

This post is on CDW Holding.

A link to the company is here

http://www.cdw-holding.com.hk/index.htm


I have examined the company over the long term .

The chart is downright ugly






You are seeing a massive destruction of value over the last eight years or so.

However, things are okay when looked at from a five year perspective





Their dividend over the last years is as below



Year Dividend Growth(%)
2012 0.011 42%
2011 0.008 1%
2010 0.008 -8%
2009 0.008 16%
2008 0.007 66%
2007 0.004 -65%
2006 0.012 -27%
2005 0.017 24%
2005 0.014



Now, you may say, okay, that is nice from a historical perspective, all good, so, what is next?

Short answer is that the value of CDW seems to be around 14 cents per share, which is what it is trading at currently.

The dividends are in USD, so, if you want some USD exposure in terms of future income at a 7.8% yield.

14 cents is a fair price to pay for CDW, however, due to momentum, it may head to 16.5 to 19 cents within a year's time.

I expect some yield compression to drive this.

I also expect them to declare a dividend of 0.8-0.9 US Cents for the year

The way I will look at evaluating this call is

a) Does the share price reach 16.5 to 19 cents from now till April, 25, 2014 ?
b) Does the company declare a dividend of 0.8 - 0.9 cents for the year ?

The returns expected are between 17-35% if you get in at 14 cents and liquidate at 16.5 or 19 cents respectively

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