Net Tangible Asset

[Sgt Pepper]

I have recently bought some Millennium Hotel (MCK) shares for $1.80. The NTA is $4.50. How important is NTA for the value of a share??

[Sideshow Bob]

A2 Milk - Share price $19.60, NTA $1.28

Depends on the share.

[winner69]

A2 Milk - Share price $19.60, NTA $1.28

Depends on the share.

Or SCY woth NTA 77c and shares zilch

[Stranger_Danger]

It means nothing at the moment, that is for sure. You should be more concerned with NSM - Net Speculative Momentum.

[Cadalac123]

For a company that runs on tangible assets, and who is dependent on tangible assets as a means of their valuation and revenue generation NTA can mean something

Don't be fooled into thinking it has a strict value or can act as a proxy for intrinsic value though

[Sideshow Bob]

I have recently bought some Millennium Hotel (MCK) shares for $1.80. The NTA is $4.50. How important is NTA for the value of a share??

Actually an interesting one as just looking at their Balance sheet, they have about $186m in cash & receivables (31/12/19), market cap of $211m....net assets of $807m - and pretty much all tangible assets.

[blackcap]

Actually an interesting one as just looking at their Balance sheet, they have about $186m in cash & receivables (31/12/19), market cap of $211m....net assets of $807m - and pretty much all tangible assets.

However if you take out the debt and liabilities, then net cash is almost zero. So the question must be, what do you think those property and equipment is worth. In the current climate maybe not so much? Well the market seems to be discounting it. Interesting.

[traineeinvestor]

Actually an interesting one as just looking at their Balance sheet, they have about $186m in cash & receivables (31/12/19), market cap of $211m....net assets of $807m - and pretty much all tangible assets.

That's for the consolidated accounts which includes CDI which is where most of the cash is held.

Agree that the discount to NAV is huge but (IMHO) the consolidated accounts have the effect of exaggerating the strength of MCK's balance sheet at least a little bit.

Also, as blackcap points out, there has to be a question mark over the actual value of the hotel assets in the current market conditions.

[Mr Slothbear]

Companies with a high proportion of intangible assets will significantly outperform those relying on physical asset such as brick and morter.

take A2 vs synlait as the perfect example

much easier to scale a brand or replicate software than to build a new factory


this is where warren b really stepped away from ben g who focus on NTA.

The secret to Sees candy and many of buffets favourites comes down to the intangibles

[percy]

Well I am happy to stick with my rule of seeking eps growth being higher than the PE ratio.
I also always deduct intangibles from the balance sheet,which gives me what I find a truer picture of the company's health.

[kiora]

I have recently bought some Millennium Hotel (MCK) shares for $1.80. The NTA is $4.50. How important is NTA for the value of a share??

Poor use of capital?

[clearasmud]

I have recently bought some Millennium Hotel (MCK) shares for $1.80. The NTA is $4.50. How important is NTA for the value of a share??
MCK get their assets revalued every year.
Of course nta is important.
Buying now is somewhat similar to buying a 500k house for 100k.
Is management good? Yes it is, which assures me.
Just topped up on the close.
Good luck to us.

[kiora]

MCK get their assets revalued every year.
Of course nta is important.
Buying now is somewhat similar to buying a 500k house for 100k.
Is management good? Yes it is, which assures me.
Just topped up on the close.
Good luck to us.

Good luck
https://stocknessmonster.com/charts/mck.nzx/

[LaserEyeKiwi]

Agree entirely - MCK is definitely the best pure value play on the NZX currently. It earned $84 million in operating profit last year, which gives a good indication of the earnings power of the underlying assets. Even in a worse case scenario where tourism NEVER returns at the same level (unlikely) - the hotels are still very valuable properties in highly desirable locations that can easily be converted to residential for rent or sale. While I expect the assets to be revalued down slightly over coming year, I think you are still looking at an eventual doubling in share price in the long term.

The company is being priced like a distressed asset, when in fact they are still guiding for profitability this year and looking to take advantage of others distressed position to pick up more cheap assets.

Someone above said that net cash is close to Zero, this is incorrect. They have $164 million in cash and cash equivalents, vs $67 million in debt.