Mogul, Im also in. Going to bottom draw this and look again in 5 years.
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Mogul, Im also in. Going to bottom draw this and look again in 5 years.
[QUOTE=Mogul;808616]This week I have taken a modest position in Millennium and Copthorne (MCK) as a counter cyclical deep value investment. Share price $1.80 for ordinary shares (or $2.00 for preference shares) vs net asset backing $4.52 per share. MCK has no net debt, in fact net $98 m in bank, so no liquidity issues and potential to either acquire more properties at deep value or buy back shares.
Of that net $98m in the bank, a net $54m of this sits with CDI. While MCK may be able to get their hands on 66.26% of this via their shareholding, the other 33.74% (equivalent to $18.2m) belongs to the CDI minorities.
MCK could of course sell or wind down CDI - either would unlock significant cash for MCK.
Their other hidden asset is their failed hotel in Australia. They have converted it into "Zenith" apartments are are slowing selling them. https://australia.trovit.com/propert...th-potts-point
People were trying to tell me in February they were good buying at $2.50. Percy was on to it suggesting they might be good value at $1.50.
My updated view is that tourism will be gravely affected for MANY years to come and I expect at the minimum at retest of 5 year lows of $1.40.
Historical NTA for the tourism industry no matter whether its the theoretical historical value of planes, cruise ships or hotel's is rendered completly meaningless by a crisis of this magnitude.
It is an existential crisis, make no mistake. I commented in February, TA gave no encouragement. TA is your best friend at times like this and renders FA almost completely meaningless.
Brierley Investments brought UK hotel chain Mount Charlotte,now Thistle Hotels.[Read their history.on Google].
What I clearly remember was Paul Collins stating they were a big mistake "as it took a very long time for hotels to return to their former value".
In fact I think Mt Charlotte was the investment that destroyed most of BIL's wealth.
From what I know MCK relied on mainly Chinese tour groups.Perhaps in 5 years time they may return to their former value,perhaps it will take 10 years.
Sorry Mogul, I am with Percy on this one. Things won't return to anything like normal for MANY years. Half NTA is nothing when its comes to a long hard grind over such a long timeframe as most if not all your discount probably gets eaten up with operational losses. (Think AIR for a good analogy).
By comparison MET, another form of property investment. I have been buying at half NTA and they came out the other day and forecast underlying profit would be barely changed on last year...that's the sort of half priced NTA buying that makes sense to me in this recession. Its all about cash flow my friend.
Mogul I wish you well.I like cash flow.When we look at a company like EBO we see something like 10 stock turns,a year.I like to think of myself as CFO of any company I invest in.First thing I do every morning is see how much cash has gone into the bank account overnight.Cash means I can pay bills,staff wages,insurance,rent etc.No cash coming in, the business starves.Hotels without guests starve.A property development company lacks cash flow as it takes years from buying a property, to selling sections,and receiving cash.Cash going out developing roading,sewers etc is cash out,not cash in.
So my worst nightmare would be being MCK's CFO ,going to work every morning and just watching the cash going out,knowing it will be years before cash starts coming in.
AIR CFO's job would have been great for the past few years,with all the punters paying for their flights, months before they took them.I would have been the first to work every morning,looking at all that money coming in every night..
Although I think I would have taken early retirement a month or two ago..
Jolly sure I would not have used my retirement funds buying a motel or hotel...lol.
https://www.stuff.co.nz/business/pro...vid19-pandemic
MCK started doing it a month ago.
Going to be a very long road ahead for our tourism sector unfortunately.
There was an item on RNZ business a few days ago.It indicated that already one major hotel investment group was interested in potential acquisitions in NZ. I guess a counter cyclical investor prepared for several years of scant returns . McK a potential acquisition target as the only NZX listed hotel chain company??'
What are others opinions?