Cedar Woods (ASX:CWP) announces major site acquisition

The Cedar Woods share price remained relatively flat today after the company announced its latest Melbourne land acquisition. We look at the company's position and projections.

Gretchen Kennedy

Gretchen grew up in a small Connecticut town where she learned to read The Wall Street Journal as part of the grade six enrichment program. She moved to Australia in 2002, earned a Master of Arts (Professional Writing) and went on to spend eight years writing on Wall Street. In June 2018, Gretchen returned to Australia and has since developed a keen interest in all things ASX. In December 2020, she started writing for the Motley Fool. Gretchen's usually writing something, reading a book or chasing her dogs around.

Published January 13, 2021 5:28 pm AEDT

The Cedar Woods Properties Limited (ASX: CWP) share price closed relatively flat today, up just 0.47% to $6.40 per share. This is despite Cedar Woods announcing earlier today that it has acquired a 21 hectare site in Melbourne's north.

So what does this mean for the company? And how has the Cedar Woods share price performed recently?

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Expanding an existing project

The 21.7 hectare site acquired by Cedar Woods is adjacent to the company's Mason Quarter project in Wollert. Combined, the new parcel and existing project accommodate a master planned community of approximately 800 lots plus two school sites.

Discussing his opinions about this developing community, Cedar Woods managing director Nathan Blackburne said: "We've seized the opportunity to acquire a neighbouring site to leverage the Mason Quarter brand and the amenity we will establish within the Wollert community."

How has Cedar Woods performed recently?

Over the past 12 months, the Cedar Woods share price has taken a roughly 23% dive.

In its financial year 2020 annual report published in September 2020, Cedar Woods reported a revenue of $260,660,000 which was 30.5% lower than the prior year. The company's net profit after tax also crashed 57% lower coming in at $20,899,000.

In the annual report, Cedar Woods goes on to highlight that the company's overarching strategy is "to grow and develop our national project portfolio, diversified by geography, product type, and price point, so that it continues to hold broad customer appeal and perform well in a range of market conditions."

During the 2020 financial year, Cedar Woods had settlements for 24 projects. To date, this number had grown to 30.

2021 financial year so far

Cedar Woods reported an 11% increase in its pre-sales business in the company's first quarter 2021 financial year update. This increased the pre-sales business from $409 million in 2020 to $454 million in 2021. The company advised that 60% of this business is expected to settle in the 2021 financial year, with the remaining balance contributing to earnings during financial years of 2022 and 2023.

Regardless of stunted economic conditions brought on by COVID-19, Cedar Woods believes that the company is well-positioned due to its "strong balance sheet, low debt, and over $110 million in undrawn finance facilities at quarter end, available to fund operations and acquisitions."

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