MCK - Millennium & Copthorne Hotels.

[Jim]

Is it correct that MCK shareholders are given discount to any of the hotels MCK owned. Please if any of the MCK shareholders there ?

[GTM 3442]

And whether it's only in NZ, or includes the Millenium, Copthorne and Kingsgate brands internationally. . . .

[Arthur]

From memory discount is 50% off rack rate + late checkout. Hotels have been so discounted lately that I have only used it once as they are often less than half the rack rate already. As far as I know it does not apply to overseas hotels.

[Jim]

How did you get the discount ? Did you ring the hotel or did you get a discount voucher from the share registrar quoting your holder number or ..........???

[Arthur]

They send you a card. You call the call centre to make a booking quoting the shareholder code. The hotel is meant to check the card but do not seem to. Cheers

[forest]

MCK results are a nice improvement on previous year.
Trading now at a PE of about 7, seems to me that there is some value.
Especially considering that the City Spring profits are not included.

What do others think.


MCK
22/02/2012 16:46
ADDRESS

REL: 1646 HRS Millennium & Copthorne Hotels New Zealand Limited

ADDRESS: MCK: MCK - FY2011 Chairman's Review

CHAIRMAN'S REVIEW

--Financial Performance & Financial Position

The Board is pleased to advise shareholders that for the year ended 31
December 2011, Millennium & Copthorne Hotels New Zealand Limited ("MCHNZ")
reported a profit attributable to owners of the parent of $20.6 million
(2010: $10.1 million loss). Given the earthquakes experienced in Canterbury
during 2011 and its effects on trading generally, this is a very creditable
result.

Clearly, the most significant events of 2011 were the Canterbury Earthquakes
in February and the 2011 Rugby World Cup in September and October. The
earthquakes and their related aftershocks have had and will continue to have
a significant impact on the Company's operations in Christchurch and other
parts of the South Island although the negative effects were partially offset
by the positive impact of the Rugby World Cup in Auckland and Wellington in
particular.

Although revenue and other income for the year decreased to $111.9 million
(2010: $115.9 million), MCHNZ's profit before tax, non-controlling interests
and associates showed growth from the same period in 2010 and increased to
$28.9 million (2010: $14.9 million) reflecting a number of one-off gains,
many of which related to the earthquake as well as increased productivity
during 2011. CDL Investments New Zealand Limited increased its after-tax
profit by $0.9 million to $3.8 million reflecting increased sales activity
and a more positive New Zealand property market. First Sponsor Capital
Limited made a positive contribution to MCHNZ's profit providing $4.6
million.

Earnings per share reflected the return to profit and the one-off gains at
5.90 cents per share (2010: -2.90 cents per share).

Shareholders' funds excluding non-controlling interests as at 31 December
2011 totaled $419.1 million (2010: $412.6 million) with total assets at
$660.3 million (2010: $630.8 million). Net asset backing (with land and
building revaluations and before distributions) as at 31 December 2011 was
119.9 cents per share (2010: 118.0 cents per share).

--Effect of the 2011 Canterbury Earthquakes

In the 2011 Interim Report, we set out some of the effects of the Canterbury
Earthquakes. By way of update:

? Reservations for Millennium Hotel Christchurch and Copthorne Hotel
Christchurch will not be accepted until 2013 at the earliest. Both hotels
remain in the 'red zone' and access remains restricted given the ongoing
aftershocks. Repair works have not begun on either hotel as a result but
both hotels have sufficient business interruption insurance to see them
through 2012.

? In November 2011, a confidential settlement was reached with the insurers
and the owners / landlord of the Copthorne Hotel Christchurch City (Durham
Street) for the damage / loss to this property. The lease on the hotel was
terminated and the hotel was demolished. The Company has no ongoing
liability for this hotel as a result. The Company's business interruption
claim from the February 2011 earthquake is still to be settled;

? Other business interruption claims for the February 2011 earthquake remain
ongoing and discussions are continuing with the insurers. A confidential
settlement of the claims relating to the September 2010 claims was concluded
in respect of the Company's Christchurch hotels.

As stated in the 2011 Interim Report, Insurance for the 2011/12 period was
renewed for the New Zealand hotels, albeit at a significantly higher premium
reflecting the current risk profile and pricing in the New Zealand market.
The Company has had the benefit of being able to access the Millennium &
Copthorne Hotels' global insurance policies and its insurers and this has
been beneficial in the handling and settling of claims.

As detailed in the financial statements, the cost to the Company in terms of
insurance excesses and other related expenditure in 2011 was approximately
$1.1 million. Provisions of $2.4 million were made in relation to the 2011
earthquakes and their after effects during the year.

On behalf of the Board, I do wish to extend sincere thanks to our staff, both
past and present in Christchurch, and to our Operations team for their
diligence during this extraordinary period.

--New Zealand Hotel Operations

Revenue for the New Zealand hotel operations (16 owned / leased / operated
hotels excluding 12 franchised properties) for the period under review was
$97.4 million (2010: $103.6 million). Hotel occupancy for the period was
down to 64.3% across the Group (2010: 66.3%).

The Company's hotels in Auckland and Wellington in particular benefitted from
the 2011 Rugby World Cup held in September and October enjoying solid
occupancies and achieving good room rates and yields. However, the ongoing
effects of the February 2011 earthquakes combined with soft visitor numbers
from historically strong markets such as the UK / Europe and North America
did affect the hotels in the Bay of Islands, Rotorua and Queenstown. Asian
markets are starting to show some signs of improvement and we are focusing
our resources on securing inbound business, particularly from China, which is
an increasing market.

--CDL Investments New Zealand Limited ("CDLI")

CDLI announced an operating profit after tax for the year ended 31 December
2011 of $3.8 million (2010: $2.9 million) and reported an increase in its
section sales from 54 in 2010 to 77 in 2011. CDLI is also expecting to
report increased sales in 2012 reflecting a more positive property market.
CDLI, along with its joint venture partners, successfully completed a private
plan charge for land located in Christchurch which is to be developed in the
near future and which was unaffected by the recent earthquakes.

CDLI has declared an ordinary dividend of 1.4 cents per share. MCHNZ's stake
in CDLI is currently 66.28%.

--Offshore Operations - Australia & China

In Australia, short term leasing of the units at the Zenith Residences
continued during the year with occupancy of over 95% recorded. While
marketing of the units has continued, no additional sales were made in 2011.

The Company's 34% associate, First Sponsor Capital Limited (FSCL), reported a
profit of US$ 9.5 million for the financial year ended 31 December 2011. The
Company's share of the profit is NZ $4.6 million.

As at 12 February 2012, 711 out of 726 residential units of the Chengdu
Cityspring project have been sold either under sale and purchase or option
agreements. 98.6% of the sales proceeds have been collected for those
residential units sold under sale and purchase agreements. In addition, 527
of the 709 commercial units launched for sale in July 2011 have been sold
either under sale and purchase or option agreements with 65.1% of the sales
proceeds having been collected. Revenue and profit recognition requirement
for the residential units is expected to be met in 2012. Proceeds from the
residential and commercial sales will finance the development of a 195-room
hotel, M Hotel Chengdu, which will be franchised by the Millennium &
Copthorne Group.

In November 2011, FSCL successfully tendered for two parcels of land in
Chengdu. Earlier in 2011, directors from MCK and Millennium & Copthorne
Hotels plc visited the area and met with local government officials. The
total area of land is approximately 270,500 square metres and will be able to
be developed as residential and commercial developments including a hotel and
convention centre.

In November 2011, the Company announced that it had increased its investment
in FSCL by an additional USD 30 million taking its stake back to 34%. The
additional capital was provided as part of a capital call to allow FSCL to
purchase the aforesaid Chengdu land. A waiver was obtained from the NZX in
order to proceed with the increase.

In 2011, after regaining control of its property operations in the Guangdong
province, FSCL commenced with a restructuring of its asset portfolio via the
disposal of some land parcels in Qingyuan and Huizhou, and buying out of the
minority shareholder of another land parcel in Dongguan.

--Dividend Announcement

The Company has resolved to pay a fully imputed ordinary dividend of 1.2
cents per share payable on 11 May 2012 (2010: 1.2 cents per share). The
record date will be 4 May 2012.

--Outlook

With the ongoing issues in Christchurch and the number of international
visitors still weak due to global economic conditions, 2012 will be another
challenging year for different reasons. That said, cost management at the
hotel operational level is currently good and the Company's other business
units are expected to be profitable. 2012 will also see the profit from the
Chengdu Cityspring development being recognized in the first half of 2012
which will also benefit the Company.

The Board and Management are therefore cautiously optimistic about the
Company's prospects over the coming year.

--Management and staff

On behalf of the Board, I thank the Company's management and staff for their
work and commitment during what has been a challenging and extraordinary
year.

Wong Hong Ren
Chairman
22 February 2012
End CA:00219874 For:MCK Type:ADDRESS Time:2012-02-22 16:46:13








© Direct Broking Limited 2005.

[ratkin]

Wouldnt get too excited , Rugby world cup has led to a few companies posting good results (sky city another) next year will no doubt be softer , and their insurance on the christchurch hotels will run out eventually. 2013 sounds a little optimistic for the chch properties

[stoploss]

Very frustrating stock this. Just reading the half yr report. Net asset backing now 129 cps. Pity they don't maybe sell a hotel and conduct a share buyback to close the gap to the share price.

[stoploss]

such is the NZX sometimes. same thing happening with NTL, RBC etc. a good asset play to sit on until the market stops being dumb!
hi Moosie I am still sitting, the gap gets wider ....is the market getting dumber ????




Shareholders' funds excluding non-controlling interests as at 31 December


2013 totalled $466.4 million (2012: $443.3 million) with total assets at


$719.2 million (2012: $686.1 million). Net asset backing (with land and


building revaluations and before distributions) as at 31 December 2013


increased to 133.4 to cents per share (2012: 126.8 cents per share).

[stoploss]

P/E ratio @ 5 (or 6.5 depends on what source you use...) looks pretty tasty!

very frustrating the company does nothing to close the gap ....

[ratkin]

Went to the p.o.box today , was a card for oversized item. Thought i had a present from someone. But no , it was an offer document from MCK bigger than a phone directory.

I really cant be bothered reading it , do i need to? Is it just telling us whats going to happen or are their shares we can apply for

[stoploss]

Hi Ratkin ,
you should read the covering letter .... Forget the phonebook. There are some options if you want shares in the Chinese property development company , do you want the script , do you want the shares lodged in a broker ac....or do you want to liquidate .........

[jonu]

I held some of these about 5-6 years ago and the sp then was about 71-72 from memory. Low divy and tightly held. At least they are consistent.

[ratkin]

Hi Ratkin ,
you should read the covering letter .... Forget the phonebook. There are some options if you want shares in the Chinese property development company , do you want the script , do you want the shares lodged in a broker ac....or do you want to liquidate .........

thx guess I better make the effort, think a capital return would be the easiest option

[stoploss]

thx guess I better make the effort, think a capital return would be the easiest option

Yea I'm with you , don't particularly want to be long property in China . Why the company got into this is beyond me.

[ratkin]

Good lord no, Chinese property is looking like a massive bubble very ready to burst! What a terrible executive decision!

Its not a terrible decision in that case. They are flicking the shares off (to us) Annoying part is that to take part in the block sale we have to provide a photocopy of our passport details, such a lot of effort for a lazy person like myself.
Might just sell all my shares in the next few days

[Snow Leopard]

... Annoying part is that to take part in the block sale we have to provide a photocopy of our passport details, such a lot of effort for a lazy person like myself.
Might just sell all my shares in the next few days

I find it very out-dated that whilst we can buy and sell existing shares with a few keystrokes and the click of a mouse, taking part in anything else involves old fashioned paper and signatures, sometimes an emailed scan of a document is acceptable but that is pushing the boundaries.

Recently scanned entire passports, birth-certificates, marriage certificates, education certificates & more for an upcoming change of country so I have little sympathy for you :p.

I definitely would not want to be holding equity in a Chinese property developer at the moment either.

Best Wishes
Paper Tiger

[ratkin]

I find it very out-dated that whilst we can buy and sell existing shares with a few keystrokes and the click of a mouse, taking part in anything else involves old fashioned paper and signatures, sometimes an emailed scan of a document is acceptable but that is pushing the boundaries.

Recently scanned entire passports, birth-certificates, marriage certificates, education certificates & more for an upcoming change of country so I have little sympathy for you :p.

I definitely would not want to be holding equity in a Chinese property developer at the moment either.

Best Wishes
Paper Tiger

Would it be easier to sell the new shares on market with ASB securities?

[Yoda]

For a stock thats gone up 90% in a year, it's not had much of a mention on the forum recently .
tourism certainly is giving it a boost .
PE of 8.7 . Could it go to 10 ? May be there are a few opinions here ? Always on small amounts , but seems pretty steady .

[percy]

For a stock thats gone up 90% in a year, it's not had much of a mention on the forum recently .
tourism certainly is giving it a boost .
PE of 8.7 . Could it go to 10 ? May be there are a few opinions here ? Always on small amounts , but seems pretty steady .

There was some discussion about MCK, on thread 2017Stock Picking Contest,page 2, posts #19 to #24 and post #28.

[Turtle2]

Recently bought a rather small amount at $2.70. Should be a good year.

[Lewylewylewy]

I notice that it's selling way below NTA. Is that because people don't believe the business is good enough to realise a profit relative to the value of assets with no likelihood of anyone buying to strip?

[Yoda]

There was some discussion about MCK, on thread 2017Stock Picking Contest,page 2, posts #19 to #24 and post #28.
Thanks, i,d missed that .

[percy]

Any one wanting to find out a bit more about MCK should go to www.nzx.com then type in MCK and read their overview, before going to announcements and reading MCK's interim report.

Of interest to us will be MCK's full year result which is due late February.

[percy]

I notice that it's selling way below NTA. Is that because people don't believe the business is good enough to realise a profit relative to the value of assets with no likelihood of anyone buying to strip?

I think you will find it is too tightly controlled for any take over,so maybe it comes down to earnings.

[macduffy]

I think you will find it is too tightly controlled for any take over,so maybe it comes down to earnings.

I've often thought about this. What are the chances of the majority owner deciding to buy out minorities at some stage - or is there some advantage in retaining NZX listing?

[percy]

The NZ listing
I've often thought about this. What are the chances of the majority owner deciding to buy out minorities at some stage - or is there some advantage in retaining NZX listing?

The NZX listing gives the advantage of having the market set the value of share price.
It is also easier to raise capital or to borrow, if the company is listed.
The problem for us shareholders, is whether the controlling shareholders will share the spoils with us.

[macduffy]

Yes, valid reasons, percy, although I would think that the parent company - and its ultimate parent, the Hong Leong group - would be able to borrow more cheaply than MCK. Current borrowings from the parent are shown at 2.27%, admittedly for a relatively modest $5.8m.

[percy]

Yes, valid reasons, percy, although I would think that the parent company - and its ultimate parent, the Hong Leong group - would be able to borrow more cheaply than MCK. Current borrowings from the parent are shown at 2.27%, admittedly for a relatively modest $5.8m.

Yes the Hong Leong Group would most probably be able to borrow cheaper than MCK.
It would make it easier for them to borrow, showing their investment in "listed " companies rather than "unlisted" companies.
Much easier for lenders to gauge "real" values.

[macduffy]

The other point to bear in mind is that the Hong Leong Group controls "only" 65% of Millenium and Copthorne Hotels plc, the owner of the company that owns 75% of MCK! So a takeover of MCK wouldn't be a simple matter.

[BlackPeter]

Yes, it is a very tightly hold stock with a Chinese majority owner. Low liquidity and all these things, but still - isn't this uptrend chart a beauty? Based on last years profits it still looks reasonable priced (PE 10), but than - yes, it has a tendency to trade at much lower PE's ...

8632

Discl:

holding (a small parcel);

[Toulouse - Luzern]

Yes, it is a very tightly hold stock with a Chinese majority owner. Low liquidity and all these things, but still - isn't this uptrend chart a beauty? Based on last years profits it still looks reasonable priced (PE 10), but than - yes, it has a tendency to trade at much lower PE's ...

8632

Discl:

holding (a small parcel);

My favourite shape "left hand site of Rangitoto"

[mani99]

Just wondering if anyone has any idea as to why the uptrend for MCK this year? I don't see news that would be causing this.

Not that Im complaining, my holding is up :-)

[stoploss]

Just wondering if anyone has any idea as to why the uptrend for MCK this year? I don't see news that would be causing this.

Not that Im complaining, my holding is up :-)

You haven't seen any news of the massive tourism boom ? Visitor arrivals continue to trend upwards as NZ is flavour of the month.

Here is an article from over a year ago .
http://www.stuff.co.nz/business/75443924/international-tourism-overtakes-dairy-to-regain-top-spot-as-our-biggest-export-earner

[BlackPeter]

You haven't seen any news of the massive tourism boom ? Visitor arrivals continue to trend upwards as NZ is flavour of the month.

Here is an article from over a year ago .
http://www.stuff.co.nz/business/75443924/international-tourism-overtakes-dairy-to-regain-top-spot-as-our-biggest-export-earner

This plus the fact that they hold a lot of CDI shares on their balance sheet ...

[mani99]

You haven't seen any news of the massive tourism boom ? Visitor arrivals continue to trend upwards as NZ is flavour of the month.

Here is an article from over a year ago .
http://www.stuff.co.nz/business/75443924/international-tourism-overtakes-dairy-to-regain-top-spot-as-our-biggest-export-earner

Good point!

[percy]

Bingo.!!!!!!!!!!!!!!!!!!
Full house.!!!!!!
A Cracker.!

[BlackPeter]

Bingo.!!!!!!!!!!!!!!!!!!
Full house.!!!!!!
A Cracker.!

Indeed, was so happy with the CDI results that I nearly missed this beauty:

o Profit after tax and non-controlling interests $40.4 million (2015: $21.7m)
o Profit before tax and non-controlling interests $70.5 million (2015: $40.0m)
o Group revenue $172.0 million (2015: $136.5m)
o Shareholders' funds excluding non-controlling interests $489.1 million (2015: $389.3am)
o Total assets $713.9 million (2015: $590.0m)
o Earnings per share (cents per share) 25.56 cents (2015: 13.70 cents)

nice asset backing as well ...

[Yoda]

Puts us on a PE of 11 ish ?

[Yoda]

http://uk.reuters.com/article/uk-mill-cop-hotels-results-idUKKBN15W0QO?il=0

Alternative news from uk side of the world

[Turtle2]

I am trying to calculate the fair value of NTA purchased with each MCK share. For this would I adjust the cost values of the development properties held by CDI and Zenith to fair value (approx 170m to 375m), and also take into account that MCK shareholders only 'own' 66.7% of CDI's NTA's? Have been doing some research on MCK and found this quite interesting, but am quite new so please correct me if I am wrong.

[Turtle2]

Was referring to the NZD 78.09m fair value that MCK placed on the Sydney Zenith Residences in note 11 of the financials, rather than the 52.2m cost value which is used in the statement of financial position.

[Turtle2]

Very interesting. Would you say the value is closer to cost then? Seems as though you know a lot about this!

[Turtle2]

No idea. Hence my interest in your assessment.

Even cost is a bit nebulous. Zenith apartments was previously operated as the Sydney Millennium Hotel. After taking external
advice it was decided to convert it to apartments for individual sale. The conversion did not go well; massive cost over-runs due
to the "discovery" of asbestos and subsequent delays and wrangling. So, take a starting cost price for the building, add large
development costs, add estimated sales costs, add a profit margin, now the apartments end up grossly overpriced for the market
and haven't sold. That's my take at least.

Thanks for the background. Wouldn't be able to add anything to that. For what its worth, based on the fair values in the financials I'd put NTA at $4.01 per share (based on 158m ordinary and preference shares), meaning they are trading at a 26.5% discount to NTA. Definitely seems like a large enough discount to cover any poor valuations or any correction in the property market to me.

[Jinx]

Really looking for some solid tourism diversification (other then thl) Mck is looking like a decent pick for this type of thing. Thoughts holders and watchers?

If anyone has any other tourism picks please post!
Thanks in advance!

[peat]

cant say the Palmerston North Copthorne was all that impressive this last weekend, but I do like the share. Revals could still occur and price is good relative to NTA.
The Auckland downtown is coming back on stream and the old Rendevous now being managed mid town
It needed to pull back from over the $3 mark and it did, so I am thinking a reasonable entry point.

[JoeGrogan]

Really looking for some solid tourism diversification (other then thl) Mck is looking like a decent pick for this type of thing. Thoughts holders and watchers?

If anyone has any other tourism picks please post!
Thanks in advance!

In my opinion fundamentally a great long term hold as liquidity can be an issue for short term holders. Book value well above share price, reasonable PE, growing sector, new hotel in Auckland CBD nearing completion (nearing may be the wrong word). One reservation is that they may find it hard to beat last years NPAT if CDL sales are affected by a declining property market.

Discl: Not currently holding, recently sold because of the liquidity issue. DYOR

[BlackPeter]

Half year results are out - and still improving on the 2016 result (which was popped up by a one off windfall).

https://www.nzx.com/companies/MCK/announcements/305046


MCK’s key results were:
• Average hotel occupancy across the Group 81.3% (2016: 82.3%)
• Group revenue and other income $104.14 million (2016: $95.71 million)*
• Operating profit before finance income $42.92 million (2016: $40.72 million)*
• Profit before income tax and non-controlling interests $43.91 million (2016: $41.08 million)*
• Profit after tax and non-controlling interests $24.23 million (2016: $23.79 million)*
*in 2016 there was a non-recurring gain of $4.31m from the Millennium Christchurch insurance settlement.

Only fly in the ointment I can see is the slightly retracting occupancy rate. Just wondering whether this is one of the early indicators that we as a country are milking the tourism cow a bit hard and starting to see the results to peak?

Just wondering whether this is an early indicator for the things to come for the whole tourism sector (THL and similar) ... MCK should be in that regard still pretty sheltered thanks to owning CDL (property development) as well as having less tourism (and more business) exposure than e.g. THL.

Discl: satisfied holder (small parcel due to low liquidity of stock);

[peat]

I like as well BP, but am still reviewing in detail.
Note that only half of the Lions Tour was in the period.
They say 1.9% incr in NPAT but if you take out that non-recurring insurance item from the previous half years accounts it was significantly higher.

However I am not certain whether we should take that out - there are a number of possibilities around this line item eg was it from a much earlier period ??
Also it could be (and should be from the insurers perspective) a genuine loss that would've been earned if not for the damage. so I'm still working through that...

[BlackPeter]

I like as well BP, but am still reviewing in detail.
Note that only half of the Lions Tour was in the period.
They say 1.9% incr in NPAT but if you take out that non-recurring insurance item from the previous half years accounts it was significantly higher.

However I am not certain whether we should take that out - there are a number of possibilities around this line item eg was it from a much earlier period ??
Also it could be (and should be from the insurers perspective) a genuine loss that would've been earned if not for the damage. so I'm still working through that...

as I said ... a solid result, not an outstanding result ;); But they are still in my books with a P/E of 10.7 and a 11% CAGR - not too shabby, either.

As indicated - I don't think they are too dependant on the (cyclical) tourism sector, and there is still a shortage of beds across New Zealand, i.e I expect them to stay in the coming year "well positioned". Nothing spectacular, but solid.

If we are talking about investment, I like boring ... and this one fits the bill ;);

[forest]

Maybe the result is better than it seem, if we consider Auckland waterfront hotel was not contributing due to refurbishment.

[peat]

Maybe the result is better than it seem, if we consider Auckland waterfront hotel was not contributing due to refurbishment.
yes
but the Grand Millenium was contributing .... that is a large hotel.

[BlackPeter]

Maybe the result is better than it seem, if we consider Auckland waterfront hotel was not contributing due to refurbishment.

fair enough ...but I assume they didn't count that into the lower occupancy rates? Or do you think they did ...

[forest]

BP you are right, been in contact with mck and they confirmed your assumption.

[BlackPeter]

BP you are right, been in contact with mck and they confirmed your assumption.

cheers for checking and letting us know :)

[JoeGrogan]

Been a while coming but auckland waterfront hotel opens.....

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11931722

Excited to see the extent to which the new hotel will affect earnings, even though its only a few months.

[JoeGrogan]

"Consent was also granted to City Developments' planned acquisition of 34.8 per
cent of Millennium & Copthorne Hotels, for up to about $1.3 billion, which excluded
a special dividend of about 38c per share.

The company was proposing to increase its existing ownership in Millennium & Copthorne Hotels,
which held interests in Millennium & Copthorne Hotels New Zealand and CDL Investments New Zealand,
which had interests in sensitive land and collectively assets valued at more than $100 million.

City Developments owners included Singapore's Hong Leong Group with 48.4 per cent.

Millennium & Copthorne Hotels via its interests in Millennium & Copthorne Hotels New Zealand
and CDL Investments New Zealand and other subsidiaries, had land interests in the Far North
District of approximately 5.23ha, Auckland Council region (27.86ha), Hamilton City region
(101.48ha), Rotorua District (1.01ha), Southland District (0.88ha) and Nelson City region (11.78ha)."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11985547

Interesting, thanks for sharing.

[JoeGrogan]

Surprising announcement, not too many details though, does say the magic words "earnings accretive" though :t_up:

https://www.nzx.com/announcements/313706

[Benny1]

Acquired a very small parcel of these shares through family interest's around Christmas time...

Haven't really sat down and had a good look at the company as of yet.
First impressions are quite conservative, "boring" ( which can be a good thing!), company with a reasonably consistent profit with a small dividend paid once a year.
CDL also seems to be going very well at the moment.
Not much liquidity which I can't decide if it's a good thing or not....
Like I say more research required....gut instinct tells me to add to my recent pick up...and forget about them for 10 years.....
Like the tourism sector and I have done very well up to now on my THL shares:t_up:

Hmmm...might be some reading to do this weekend!

Do like the new bar in the bottom of the new M Social hotel

[BlackPeter]

Acquired a very small parcel of these shares through family interest's around Christmas time...

Haven't really sat down and had a good look at the company as of yet.
First impressions are quite conservative, "boring" ( which can be a good thing!), company with a reasonably consistent profit with a small dividend paid once a year.
CDL also seems to be going very well at the moment.
Not much liquidity which I can't decide if it's a good thing or not....
Like I say more research required....gut instinct tells me to add to my recent pick up...and forget about them for 10 years.....
Like the tourism sector and I have done very well up to now on my THL shares:t_up:

Hmmm...might be some reading to do this weekend!

Do like the new bar in the bottom of the new M Social hotel

Tell us if your reading this weekend finds some interesting news ;);

The Pros as I see them:

acceptable P/E (15) in combination with a quite good and consistent growth rate (CAGR >10);
lots of hidden value on the balance sheet (including a sh*tload of highly undervalued CDL shares) - actually - the real value (if somebody would want to liquidate the assets) is well above the market cap;
exposure to the flourishing tourist sector;

The Cons:

low liquidity - clearly not the stock to put your emergency funds into ;);
majority shareholder has full control - and their interests might not be aligned with the interest of retail shareholders;

As I see it - one important feature of both CDL as well as MCK seems to be to hide asset values (note - I don't say this is intentional ;)). Retail shareholders might need to wait a (very?) long time until majority shareholder decides to change the relevant accounting policies (if at all) unless we have a takeover or some change in the legal accounting framework;


Discl: hold a smallish parcel of MCK and a medium sized parcel of CDL shares - and yes, there is a reason I hold more CDL;

[Benny1]

https://www.nzx.com/announcements/313928

Nice result..missed it last night so made for a surprise when I saw it this morning.
Hmm... Better do my homework that I have yet to do...
Between MCK & CDI these could be quite handy set and forget holds...

Discl ..hold small parcel of MCK....

[BlackPeter]

https://www.nzx.com/announcements/313928

Nice result..missed it last night so made for a surprise when I saw it this morning.
Hmm... Better do my homework that I have yet to do...
Between MCK & CDI these could be quite handy set and forget holds...

Discl ..hold small parcel of MCK....

Yep, solid result - and good outlook, given that two of their hotels just came "on-line", i.e. cost in 2017 and revenue in 2018.

Holding both MCK and CDI ... and having difficulties to decide which one to like more;

CDI did so far a better job of capital appreciation in my portfolio than MCK, but this is just a timing issue. Anybody holding both for more than 2 years would say the opposite (holding CDI for several years, but rather new to MCK);

MCK is obviously exposed to the cyclical tourism sector, which is sometimes good (like now) and sometimes not so good.

CDI - developing (non-speculative) properties - always in demand.

Both have ok-ish past PE's and very promising growth rates (which obviously will not continue to grow in infinity)

CDI - avg PE 17.4, backw CAGR 35.4
MCK - avg PE 15.2, backw CAGR 12.2

I think both are worth a punt ... just need to keep reminding me not to over-expose (low liquidity) ;);

[JoeGrogan]

Yep, solid result - and good outlook, given that two of their hotels just came "on-line", i.e. cost in 2017 and revenue in 2018.

Holding both MCK and CDI ... and having difficulties to decide which one to like more;

CDI did so far a better job of capital appreciation in my portfolio than MCK, but this is just a timing issue. Anybody holding both for more than 2 years would say the opposite (holding CDI for several years, but rather new to MCK);

MCK is obviously exposed to the cyclical tourism sector, which is sometimes good (like now) and sometimes not so good.

CDI - developing (non-speculative) properties - always in demand.

Both have ok-ish past PE's and very promising growth rates (which obviously will not continue to grow in infinity)

CDI - avg PE 17.4, backw CAGR 35.4
MCK - avg PE 15.2, backw CAGR 12.2

I think both are worth a punt ... just need to keep reminding me not to over-expose (low liquidity) ;);

Yeah very solid result, and as you say two of their hotels coming "on-line" this year to contribute to a full year of results will bring more of that growth we've come to see (New Plymouth contributes from Q2 from memory).

Book value is now 3.71 - can't complain with that margin of safety with current sp.

The good thing with MCK is that the cyclical tourism sector can be somewhat offset by CDI, so you get the best of both worlds.

Disc: hold both MCK and CDI

[DonQ]

Can anyone tell me what the deal is with MCK? Low payout vs earnings, and a share price half its asset value?

[Oliver Mander]

Check their Asset Revaluation as a %age of earnings.
(Ie, 'paper' earnings)

[peat]

Can anyone tell me what the deal is with MCK? Low payout vs earnings, and a share price half its asset value?
You're correct this stock has good valuation metrics however it comes with the risk for minority shareholders as to how that value may be crystallised for them. There can be no takeover premium attributable.

[percy]

Last year's interim report was announced on 4th August.
Not far away.
I am expecting it will be sound, as their May 31st agm presentation was extremely positive.
I finished my buying today at $3.20.

[percy]

Pleasing seeing a large shareholder increasing their holding.
Aberdeen Asset Management now own 12.8913% up from 11.8882%.

[Yoda]

The news this morning is saying we are running out of hotels haha. hopefully that's good for mck

[percy]

The news this morning is saying we are running out of hotels haha. hopefully that's good for mck

In that case it must be said MCK are "well positioned."....lol.

[Yoda]

https://www.radionz.co.nz/news/business/362496/apec-2021-needs-every-hotel-bed-in-auckland

[percy]

Interim result just out.
Stunner.!!!
EPS up 24.34%
Revenue up 22.44%

CDL operating profit up 24.91%


Outlook Positive.
Can't ask for more.

[janner]

Interim result just out.
Stunner.!!!
EPS up 24.34%
Revenue up 22.44%

CDL operating profit up 24.91%


Outlook Positive.
Can't ask for more.

Of course .. It has previously been terrible ... :-))))

[percy]

Of course .. It has previously been terrible ... :-))))

Never ever was terrible.

[BlackPeter]

Aberdeen Standard Investment topped up another odd 360k shares - holding now 13.2 %.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/323439/286230.pdf

I guess Scottish people recognize value when they see it ... ;);

[percy]

Aberdeen Standard Investment topped up another odd 360k shares - holding now 13.2 %.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/323439/286230.pdf

I guess Scottish people recognize value when they see it ... ;);

Not the only ones.!..lol.

[BlackPeter]

Unusual name for a Scottish person ;)

Address:
Aberdeen Standard Investments (Asia) Limited
21 Church Street #01-01 Capital Square Two Singapore 049480

Contact:
Wannaporn Sirijiiwanont +6623523354

I was obviously referring to their roots and their HQ:

http://contact.aberdeen-asset.com/en/contact/principal-offices

https://www.google.co.uk/maps/place/10+Queen's+Terrace,+Aberdeen+AB10+1XL,+Vereinigtes +K%C3%B6nigreich/@56.8866991,-3.4452574,7.96z/data=!4m5!3m4!1s0x488411d9111674a1:0x7e5b1b2cfef2b b3c!8m2!3d57.143574!4d-2.1212519

[BlackPeter]

So. If I drive a Honda. I'm Japanese, right?

Sigh - not sure what your point or intention is - but this is clearly a quite stupid remark in the context of this thread.

Aberdeen Standard Investments is clearly a company with deep Scottish roots. That is all I was commenting on. I did not comment on the nationality or race of the person preparing the SSH (though - by all we know, he might be a Scott, but this would be irrelevant in this context).

[macduffy]

https://en.wikipedia.org/wiki/Standard_Chartered

But what, if any, connection does Standard Chartered PLC have with Aberdeen Standard Investments?

[macduffy]

What's in a name?

Well may you ask. To those of us of a mature age it brings to mind the Dunedin based insurance company - Standard Insurance Ltd - which "failed" in the 1960's due to unauthorised dealings by its Sydney branch manager. Not only did investors lose their entire investment but the shares were partly paid, with an uncalled liability of ten shillings per share! But enough of this uncalled for diversion -and back to McK!

Apologies to all.

:)

[percy]

An excellent result out today
Dividend increased 25% to 7.5 cps.
Outlook cautious.

[percy]

An excellent result out today
Dividend increased 25% to 7.5 cps.
Outlook cautious.

The cautious outlook has caused the sp to drop 17cents or 5.7%.

[BlackPeter]

The cautious outlook has caused the sp to drop 17cents or 5.7%.

No - this was just to accommodate my (should I say nearly predatory) bid at 2.81. Price already going up again ...

[percy]

No - this was just to accommodate my (should I say nearly predatory) bid at 2.81. Price already going up again ...

You are "well positioned"..............lol.

[BlackPeter]

double bottom @ $2.80?

10490

This might be another chance to buy for less than $3 into a company with a NTA of $4.04, a PE of 9 (based on 2018 EPS and today's SP) a revenue CAGR of 10 and a Earnings CAGR of >20!

Assume market sentiment is currently a bit depressed due to the (quite unrelated) THL trouble. MCK runs hotels (Millenium and Copthorne) and owns real estate development (majority shareholder of CDL Investment).

Only big drawback I can see is the limited liquidity of the share market ...

[percy]

Take care.
Last announcement.Annual report.
Aucland Hotels.A lot of competition.Room tax and trouble getting staff, meant a poor outlook.
CDL property.Again a muted outlook.

Disc.I sold because of the poor outlook,and extremely low dividend yield.
Like you I added to my HGH holding.
.

[BlackPeter]

Take care.
Last announcement.Annual report.
Aucland Hotels.A lot of competition.Room tax and trouble getting staff, meant a poor outlook.
CDL property.Again a muted outlook.

Disc.I sold because of the poor outlook,and extremely low dividend yield.
Like you I added to my HGH holding.
.

Outlook from the latest annual report:


Although there are significant challenges
ahead, the Board is confident that MCK
will do well in 2019. We remain positive
about the year ahead and expect growth in
2019 although slower.

Does not sound like doomsday coming. Think as well that they are less impacted by tourism - Millenium and Copthorn are typically looking after business travelers (less cyclical and less cost sensitive). Thought as well that Auckland has still problems to host all the visitors for the America's cup - don't they?

So yes, growth will be slower, but it will happen.

Dividend yield: 2.7% - fully imputed, i.e it is net equivalent to a 3.6% bond; Agreed - not stellar, but better than some of the quasi-bond shares (AIA, FPH or similar) and comparable with recent BBB rated bonds (which don't offer the opportunity for capital appreciation).

[percy]

I have just reread The Chairman's Review.
I stand by my "take care" statement.
Very illiquid with 680 on the buy side ,and over 40,000 on the sell side.

[beetills]

Any body with any ideas what this may mean for MCK/CDL.
My opinion would be that they both disappear from the NZX unfortunately.

[BlackPeter]

Any body with any ideas what this may mean for MCK/CDL.
My opinion would be that they both disappear from the NZX unfortunately.

Not necessarily - the takeover offer is for the British company Millenium & Copthorne Hotels Plc, which is a majority shareholder of MCK which is a majority shareholder of CDI.

If this takeover goes through, than this does not change in itself anything for MCK and CDI, other that the majority shareholder of MCK has a new owner and board.

Obviously - it is possible that the new majority owner of MCK decides at some stage to make a takeover offer for MCK and / or CDI ... but this would be quite unrelated to the first takeover. If it happens than I would expect that both share prices would soar - both companies trade (despite being very profitable entities) well below their NTA's and at low PE's - and in a takeover they would need to commission an independent report.

[Scrunch]

Any body with any ideas what this may mean for MCK/CDL.
My opinion would be that they both disappear from the NZX unfortunately.

All three possibilities could occur, being a full-takeover of the subsidaries, doing nothing, or selling down their stake in the NZ subsidiaries.

The "Do nothing" option could result in a change in the dividend policy. I don't know if it would be an increase (get more cash out) or a decrease (retain cash to build the business).

The sell-down option could put pressure on the share price in the short term, but it would increase the liquidity which is likely to be favourable in the medium to long term.

You could get a ticker change for CDL because having City Developments Ltd (CDL) indirectly owning CDL could be a bit confusing.

[Scrunch]

If the NZ overseas investment office gets picky and doesn't provide its clearance in a timely manner could see MCK's stakes in MCK and CDL being floated. This would bypass the this regulatory approval within the takeover.

[kiora]

A serial underperformer. Is that going to change?
https://stocknessmonster.com/charts/cdi.nzx/
There is a lot not to like about this chart.
This time it's different?

[BlackPeter]

A serial underperformer. Is that going to change?
https://stocknessmonster.com/charts/cdi.nzx/
There is a lot not to like about this chart.
This time it's different?

Actually - this is the MCK thread, but hey, given that they are the majority shareholder of CDI - I shall take the bait:

Average EPS since 2010 for CDI was 7 cents per share, and there is a significant rising trend visible (in 2010 it was 1 cent per share and in 2018 it was 12 cents per share).

This makes a 10 years average EPS of less than 10. Ah yes - and earnings CAGR during this timeframe was 26. Not too bad, isn't it?

NTA at book value is 76 cents, but this is only because they keep their properties at the lower of purchase price and revaluation price in their books. Based on their latest valuation - their property assets are worth $338m - this makes (divided by 278m shares $1.21 per share.

And actually - for investors with an attention span longer than that of a fruit fly - there is even some uptrend in the share price visible ;):

10607

But yes, this (CDL) is a share for Buffett - type investors who are able to see deep value over yesterday's hype, who buy cheap and sell dear. Everybody else who just follows yesterday's momentum - just move on, nothing to see here ...

And btw - similar (but not quite as great) metrics as above would apply to MCK whose thread this is ... they (MCK) are in my books with a average backward PE of 12 and and earnings CAGR of 21. Still - quite juicy, isn't it.

Discl: hold both, but more CDI than MCK ...

[percy]

Take care.
Last announcement.Annual report.
Aucland Hotels.A lot of competition.Room tax and trouble getting staff, meant a poor outlook.
CDL property.Again a muted outlook.

Disc.I sold because of the poor outlook,and extremely low dividend yield.
Like you I added to my HGH holding.
.

Well a very weak first half as expected.
Talk that they will match last year's full year result, will mean they will have to go gangbusters in their second half.
And I very much doubt that will happen.
The last buyer at $2.71 has been taken out.Plenty of sellers should anyone want to buy any.

[audiav]

I exited today, after mulling it over for quite a few weeks. Only had a small holding. Got out at $2.73. Stayed in a few of their hotels recently on a road trip and nearly all need some sort of refreshing. Probably stayed in the wrong ones. Better places to park these $.

[percy]

I exited today, after mulling it over for quite a few weeks. Only had a small holding. Got out at $2.73. Stayed in a few of their hotels recently on a road trip and nearly all need some sort of refreshing. Probably stayed in the wrong ones. Better places to park these $.

Otepoti caught me out.
Thought it must on NI East Coast,,lol..

[greater fool]

Content moved. Nothing to see here.

[beetills]

Hope it means good news for CDL and MCK and by default me.

[BlackPeter]

Revised condensed Version, mostly links, commentary removed: 18 August 2019
Developed strategy based on these reports; ( somewhat dated )
https://www.westpac.co.nz/assets/Bus...2018_Email.pdf
http://www.sharechat.co.nz/article/c82f335e/nzx-listed-takeover-activity-hits-decade-high-in-2017-set-to-persist-this-year-bell-gully.html

https://www.bellgully.com/Shared%20D...s%20Update.pdf

https://www.chapmantripp.com/Publica...hts%202018.pdf
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11985547

The Scheme of Arrangement comments suit my strategic narrative;
https://www.russellmcveagh.com/getme...arch-2018.pdf/

Update 1: May 2018

https://uk.reuters.com/article/uk-mill-cop-hotels-m-a-city-developments/mc-hotels-agrees-to-sweetened-bid-from-cdl-valuing-it-at-two-billion-pounds-idUKKBN1E22BU
(https://uk.reuters.com/article/uk-mill-cop-hotels-m-a-city-developments/mc-hotels-agrees-to-sweetened-bid-from-cdl-valuing-it-at-two-billion-pounds-idUKKBN1E22BU)
https://www.linz.govt.nz/overseas-investment/decision-summaries-statistics/2017-12/201720083

Takeovers Panel Exemption
https://www.takeovers.govt.nz/exemptions/individual-exemptions/expired-exemptions/m-n/millennium-and-copthorne-hotels-new-zealand-limited-and-cdl-investments-new-zealand-limited-exemption-notice-2017/
(https://www.takeovers.govt.nz/exemptions/individual-exemptions/expired-exemptions/m-n/millennium-and-copthorne-hotels-new-zealand-limited-and-cdl-investments-new-zealand-limited-exemption-notice-2017/)
Looks like these two are potentially upstream transactions
https://www.linz.govt.nz/overseas-investment/decision-summaries-statistics/2018-04/201720066
https://www.linz.govt.nz/overseas-investment/decision-summaries-statistics/2018-04/201810035

Update 2: June 2018
Another security has been added to the takeover? TOP exemption includes!
https://www.linz.govt.nz/overseas-investment/decision-summaries-statistics/2018-05/201810007

Update 3: 3 Jan 2019
https://www.linz.govt.nz/overseas-investment/decision-summaries-statistics/2018-09/201810132a
Link is a scheme of arrangement application to high court for approval.

Update 4: 2 Mar 2019
Companies reported now. Increased earnings and profit. Up-tick in ord dividend.

Update 5: 10 August 2019
Reported Strait Times Singapore 8 June 2019
https://www.straitstimes.com/busines...pthorne-hotels

Update 6: 18August 2019.
Final Offer Doc. See: Part A-Conditions. Offer closes 1pm 27Sept (London)
https://ir.cdl.com.sg/static-files/bc093c08-345d-4f93-a8aa-a144cbcb93ac

Update 7, & FINAL! 14Sept 2019
Offer for MLC.LN declared unconditional. Offer remains open till 27th to allow
for final acceptances.
https://links.sgx.com/1.0.0/corporate-announcements/XGTKPL2KA0VSNQHW/12092019_MnC.pdf
(https://links.sgx.com/1.0.0/corporate-announcements/XGTKPL2KA0VSNQHW/12092019_MnC.pdf)
https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/exchange-insight/company-news.html?fourWayKey=GB0005622542GBGBXSTMM

https://www.straitstimes.com/business/companies-markets/cdl-takeover-offer-for-millennium-copthorne-hotels-turns-unconditional

In my opinion a takeover offer for MCK and CDL will be launched as early as Monday 16 Sept
2019 but possibly as late as the end of the month. DYOR.

Impressive collection of links, but most of them do not work. Any chance you can fix them?

[beetills]

NTA of 408 sp of 264.

[greater fool]

Original content removed. The ghost of STMOD does not permit deletion.

[BlackPeter]

Just wondering whether the disaster of the Auckland Convention Centre fire could have as well some sort of silver lining for MCK and other competitors in the industry?

Early days, but it is probably fair to say that hotel space in Auckland will stay for a bit longer at a premium ...

[percy]

Until The Convention is finished there will not be a lot extra demand .Still plenty of competition.
MCK's share price does not look too flash being under both its 100 day and 200 day moving averages.
Most probably reacting to the tourism slow down.

[BlackPeter]

...

MCK's share price does not look too flash being under both its 100 day and 200 day moving averages.
Most probably reacting to the tourism slow down.

The old saying goes - if you sit in a glass house you should not throw with stones.

Looking at MCK's performance - I guess everything is relative. Sure, over the last 2 years there have been better performers, but this does not mean it needs to stay that way with property prices on the up again (MCK owns lots of properties and is as well majority shareholder of CDI - a property developer with a large land bank in desirable positions and whose shares are currently on the rise again.).

If you compare them with the highly praised TRA (yellow line below), then you will notice that MCK (blue line) looks really flash :p despite some correlation between the two quite different stocks;

10823

Main difference however: MCK is basically a property company doing as well hospitality with a NTA of above $4 - high embedded value. I never would sell such a stock (unless I have to - takeover through the majority holder is currently a possibility). Buffet would like it, but in this case the Singaporean Kwek family is the majority holder (through various funds and majority holdings of companies). They learned one or two things making their billions.

TRA is basically a finance company with attached used car business and a long history of destroying shareholder funds. It has a quite low NTA (85 cents according to Reuters), even compared to the now quite low SP and some directors who probably put more time into trying to flog the company off than trying to grow it.

I prefer to buy good companies cheap (under the MA200), but each to their own.

[percy]

Take care.
Last announcement.Annual report.
Aucland Hotels.A lot of competition.Room tax and trouble getting staff, meant a poor outlook.
CDL property.Again a muted outlook.

Disc.I sold because of the poor outlook,and extremely low dividend yield.
Like you I added to my HGH holding.
.

Above posted on 23/04/2019 when I sold out at $2.95.
I prefer not only TRA for growth and dividends,but the following too;ALF,GNE,HGH,MEL,NPH,PGW,and SKL.
Currently I do not hold any shares [in NZ] in either the tourism or retirement sectors.

[jg8512]

I've looked at MCK a few times, one thing that always bothers me is the low return on equity (ROE). (I'm a buy and hold investor). ROE is low, average ~8.5% last 2 years.
eg, $62.0m NPAT in 2018 on $723.9m
$55.1m NPAT in 2017 on 663.7m of equity (including minorities in profit and total equity)

that's pretty unattractive - and implies the profits they are reinvesting aren't producing much incremental gain. But that is not that surprising ... as there is always a need to reinvest in hotel stock to keep it up to standard (and up with the joneses).

And looking at the profits versus capital investment for each of MCK's three segments (Annual Report, note one) you quickly sees that on current performance - the gem of the three segments is residential land development (aka CDI - which I hold) which made half the group profit on one quarter of the investment - but that hotels and residential property development are underperforming. (Worth acknowledging that MCK Hotels does revalue hotel assets to market - whereas CDI does not). CDI is battling some headwinds in 2019 ... which might be abating ... but all those new hotel rooms currently being built (plus or minus a few in central Akld) will presumably place pressure on occupancy and room rates in existing hotels for some time to come?

Based on this low ROE, I'm not yet convinced MCK is the sort of share an investor would want to put his/her money in? Or that this is about to improve much.
GLAH

[BlackPeter]

You are correct - ROE looks not very flash. Question is however whether ROE is a sensible measure to assess this stock.

According to the latest HY report do they have $731m in equity ... which would however cost you (at the current SP) only $273m to buy (which is their marketcap). What you would need to use to calculate your return is basically return on marketcap, and this looks significantly better.

MCK is basically an instrument for the Kwek family to (legally) hide money, and minority shareholders can participate in this schema. Obviously - there is a drawback. The hidden money can only be released if the Kwek family so desires, which may or may not be a long time to go.

But yes, you are right - CDI looks more straight forward as value investment than MCK (less hidden value). I hold both, but more CDI.

[Scrunch]

I've looked at MCK a few times, one thing that always bothers me is the low return on equity (ROE). (I'm a buy and hold investor). ROE is low, average ~8.5% last 2 years.
eg, $62.0m NPAT in 2018 on $723.9m
$55.1m NPAT in 2017 on 663.7m of equity (including minorities in profit and total equity)

that's pretty unattractive - and implies the profits they are reinvesting aren't producing much incremental gain. But that is not that surprising ... as there is always a need to reinvest in hotel stock to keep it up to standard (and up with the joneses).

And looking at the profits versus capital investment for each of MCK's three segments (Annual Report, note one) you quickly sees that on current performance - the gem of the three segments is residential land development (aka CDI - which I hold) which made half the group profit on one quarter of the investment - but that hotels and residential property development are underperforming. (Worth acknowledging that MCK Hotels does revalue hotel assets to market - whereas CDI does not). CDI is battling some headwinds in 2019 ... which might be abating ... but all those new hotel rooms currently being built (plus or minus a few in central Akld) will presumably place pressure on occupancy and room rates in existing hotels for some time to come?

Based on this low ROE, I'm not yet convinced MCK is the sort of share an investor would want to put his/her money in? Or that this is about to improve much.
GLAH

There is a degree of inconsistency in how various companies report the gain when properties increase in value.

Some companies report these gains as a revaluation of PP&E within total comprehensive income but not part of the net surplus. Other companies report it as part of the net surplus - the retirement companies are in this later group. If a property intensive company doesn't include revaluation gains in the net surplus, they will appear to have a low return on equity - this is contributing to your analysis of MCK.

If you look at the last two years as a collective P&L, MCK started 2016 with net assets of $552m. Total comprehensive income over 2017 was $122.5m. Over 2018 it was $73.3m. That's a 2yr return of 35.5% on equity or 16.4%/yr. This alternative calculation is almost double what you have noted above. If property values are going up, MCK has a very good return on equity.

Also, if you are choosing to calculate RoE on closing equity against P&L excluding revaluation gains over the last year, this will tend to understate the returns for low-div companies and companies with positive revaluation gains.

[Scrunch]

Also you can view new hotels as a negative.

I prefer to view it as a positive. It indicates that other participants in the hotel industry see sufficient future returns to build new hotels and invest at 100% of current market values. Why not share their optimism and buy MCK hotels at a significant discount to assessed valuations. Having a side-bet on CDL as part of your investment is also nice.

If the outlook for the sector was terrible, I'd be surprised if there was much new-build activity and some existing hotels would be being converted to other uses where a better return was available.

Disc holder

[percy]

Great opportunity for MCKers to load up.41,039 shares available between $2.51 and $3.25.Last sale was at $2.51 the 52 week low.
Very little competition with just the one buyer at $2.30 for 2,800.

[WAIKEN]

Dividend increase each year. Gross yield of 4.15 compares well to fixed interest returns
Very low debt
High level of cash on hand each year Dividend covered many times
Large and growing discount to NTA
Kwek family are subject to NZX regulations
They tried to take over Millenium on the LSE and were beaten back but the NTA gap closed
See below This is a no brainer investmentShareholders in Millennium & Copthorne Hotels (M&C) have escalated a row with the company’s directors over a £1.8bn takeover raid from its billionaire chairman. Two of the FTSE 250 hotel giant’s biggest investors have asked M&C’s independent directors not to recommend a possible offer from Kwek Leng Beng, who is also the majority shareholder.
The Singaporean tycoon’s investment vehicle, City Developments Limited, controls 65% of M&C and revealed this month that it had reached an agreement with the company’s board to buy out the other 35% of the shares.
Kwek is set to offer 552.5p a share for the rest of M&C, a 21% premium to its undisturbed share price. M&C’s shares closed at 586.5p on Friday, suggesting that investors expect a better deal.
In…

[beetills]

Buying land up north and building a new hotel.
Should this news be reflected in its sp or are MCK one of those shares that either stands still or slowly goes down.
NTA over $4

[percy]

Looks as though the market got really excited and moved the sp up a cent.
However MCK's chart still looks awful,so take care.

[Beagle]

Oh my goodness, you aren't kidding about the chart. Talk about a steady and sustained downtrend. That's ugly !!
Word on the street in Queenstown in September was there's lots of spare capacity. Tourism numbers just not the same growth anymore, not even close but heaps of new capacity has been built and still is being built. I got a lovely, almost brand new, hotel room in Frankton for under $150 a night. Hmmmm...wonder how much money there is in that and I wonder what the occupancy rate is like in the shoulder season ?

[BlackPeter]

Oh my goodness, you aren't kidding about the chart. Talk about a steady and sustained downtrend. That's ugly !!
Word on the street in Queenstown in September was there's lots of spare capacity. Tourism numbers just not the same growth anymore, not even close but heaps of new capacity has been built and still is being built. I got a lovely, almost brand new, hotel room in Frankton for under $150 a night. Hmmmm...wonder how much money there is in that and I wonder what the occupancy rate is like in the shoulder season ?

As usual - it always depends on the time frame you are looking at. 5 years chart not too ugly, isn't it?

10865

Have as well a look at their balance sheet - NTA from memory north of $4 per share - and given that they are the majority owner of CDL development are roughly 3/4 of their current marketcap already paid by the CDI shares they own. The hotels are basically free.

Clear deep value play .. but sure, if you need your money today than you might be (depending on when you bought in) a bit short.

Anyway - happy holder and in the money (wish I could have said the same about my TRA holding).

[Beagle]

For sure mate, it depends upon your timeframe but what's not in dispute at this point is that the shares are in a clear downtrend.

[BlackPeter]

Interesting back of an envelope calculation:

MCK declared in their last FY report (12/18) total assets of $898m and total liabilities of $174m, wich leaves a net equity of $724m;

Part of this net equity are roughly 185m CDL shares, which currently trade at 87 cents - that's roughly $161m

Current marketcap of MCK (@2.45) is $258m

Marketcap minus (current) value of CDL shares is $97m;

However - equity minus value of CDL shares is $563m;

Which means we can buy $563m (including more than $100m of cash and short term bank deposits) of equity for $97m;

Sounds like a deep value play ...

[Vaygor1]

Interesting back of an envelope calculation:

MCK declared in their last FY report (12/18) total assets of $898m and total liabilities of $174m, wich leaves a net equity of $724m;

Part of this net equity are roughly 185m CDL shares, which currently trade at 87 cents - that's roughly $161m

Current marketcap of MCK (@2.45) is $258m

Marketcap minus (current) value of CDL shares is $97m;

However - equity minus value of CDL shares is $563m;

Which means we can buy $563m (including more than $100m of cash and short term bank deposits) of equity for $97m;

Sounds like a deep value play ...

Out of interest, is the equity to which you refer skewed because of the MCKPA preference shares on the NZX? Not sure how its relates to, or impacts, the figures.

[BlackPeter]

Out of interest, is the equity to which you refer skewed because of the MCKPA preference shares on the NZX? Not sure how its relates to, or impacts, the figures.

Not quite sure I understand - how would this work?

[Vaygor1]

Not quite sure I understand - how would this work?

Your example uses solely the market cap for MCK's shares to arrive at $258M. I have no idea if that is the correct way to look at it, or if the market cap for their preferential shares (MCKPA, which are worth $3.20/share x 52.74 million shares = $169M) should also be added when comparing how the market is valuing the company in relation to its calculated/stated equity.

[BlackPeter]

Your example uses solely the market cap for MCK's shares to arrive at $258M. I have no idea if that is the correct way to look at it, or if the market cap for their preferential shares (MCKPA, which are worth $3.20/share x 52.74 million shares = $169M) should also be added when comparing how the market is valuing the company in relation to its calculated/stated equity.

Cheers - got you ... and you might well be right. Will have another look into that when I get around it.

[BlackPeter]

Your example uses solely the market cap for MCK's shares to arrive at $258M. I have no idea if that is the correct way to look at it, or if the market cap for their preferential shares (MCKPA, which are worth $3.20/share x 52.74 million shares = $169M) should also be added when comparing how the market is valuing the company in relation to its calculated/stated equity.

Interesting - and I guess your question is basically asking, whether the MCK preference shares are classified as debt or as equity to the company. Now - I am not an accountant ... and I would appreciate the input of somebody in the know on this subject, but it appears that even the accounting standards are not clear on this question:

https://blog.kpmg.lu/for-preference-shares-when-is-debt-classified-as-equity/

If we look into note 7 (page FIN-14) of their financial statements of their annual report (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/332311/296919.pdf), then they clearly classify the preference shares as equity. However - if somebody buys all the ordinary shares, they would have 100% of the control and the preference shares would be only a liability for them.

In any way - if anybody wants to liquidate the company they would need to redeem the preference shares, which means that for them it would be just another liability, i.e. no matter how they are classified we would need to deduct the redemption value of these preference shares from the "underlying company value".

Another interesting question though would be the redemption value of these preference shares (which I would assume is not the market value). Note 7 of above annual report values the outstanding 52.7m preference shares with $33.2m. If this is what the company would need to return to the preference share holders, than my calculation would not look too much different.

I calculated the underlying value of MCK (equity minus CBL shares) as $563m. If we remove as well the book value of the preference shares, than we still have left $529m which you can buy for $97m.

Still looks cheap to me.

Any bean counter around who could either confirm or otherwise highlight what I got wrong?

[Vaygor1]

..... Still looks cheap to me.

Any bean counter around who could either confirm or otherwise highlight what I got wrong?

Yeah. Look cheap to me too, regardless of how the MCKPA is treated.
Greater Fool, I recall you hold (or once held) a few MCKPA. Can you shed some light on this one?

Disc.
Hold a small amount of MCK, and comparatively, a lot more CDI.
Do not hold MCKPA

[greater fool]

Worthless content removed.
Better material here;

https://www.sharetrader.co.nz/showthread.php?11586-Recommended-Read&p=773620&viewfull=1#post773620

[BlackPeter]

Pref shares are capital. See note 7 of accounts.
Main differences to ordinary shares are: non voting, and redeemable by resolution of directors at price calculated
based on VWAP on-market NZX trades.
Originally issued @64cps, to raise ~$110m, primarily to fund the First Sponsor Group (mis)adventure.
FSG, a China based property development company, incorporated in Bermuda, headquarters in Singapore.
FSG a few years later, IPO'd to a listed Singapore company, and MCK-MCKPA holders received FSG shares via a share consolidation.
The pref shares $33m book value will be the post consolidation proceeds from issue.
:confused:


Thanks for that. I guess the 64 million dollar question now is - how much money would preference shareholders expect if these are going to be redeemed? Is the book value a sensible gauge for this?

[percy]

[QUOTE=greater fool;780628]Pref shares are capital. See note 7 of accounts.
Main differences to ordinary shares are: non voting, and redeemable by resolution of directors at price calculated
based on VWAP on-market NZX trades.



Interesting....................................... ........

[BlackPeter]

Oops:

10883

All up from here?

[percy]

2,660,300 traded at $2.35......................Interesting.

[BlackPeter]

2,660,300 traded at $2.35......................Interesting.

True. 2.5% of all issued shares.

According to the last annual report there are only 2 shareholders who could sell such a large parcel:


CDL Hotels holding (which belongs to MCK International which belongs to CDL Singapore which belongs to the Kwek family)
Aberdeen Standard.


Unlikely CDL sold some, which leaves only Aberdeen Standard (it seems to be their job in the team anyway to keep the price down). Question is - who bought?

Start of a full takeover?

[mfd]

True. 2.5% of all issued shares.

According to the last annual report there are only 2 shareholders who could sell such a large parcel:


CDL Hotels holding (which belongs to MCK International which belongs to CDL Singapore which belongs to the Kwek family)
Aberdeen Standard.


Unlikely CDL sold some, which leaves only Aberdeen Standard (it seems to be their job in the team anyway to keep the price down). Question is - who bought?

Start of a full takeover?

Aberdeen standard have sold a bunch of their CDL holdings this year, so seems likely it's them.

[greater fool]

.......more than 30 trading days since purchase.

[BlackPeter]

Not at all sure those two are the only holders with the required amount of stock.

10884

My pick from this list would be J.P. Morgan Chase NZ Branch
And if a takeover was on the menu, then CDLHHNZL is more likely the purchaser. Also, if you were going to
base a TO on a market VWAP, then you have just served an ace. :cool:

Ah ... share owners often hide behind "nominees" (banks and similar) who are holding the shares on behalf of a number of their (unnamed) clients. These nominees appear on the share register, but they normally can't sell or buy unless instructed by the owner - and they are very unlikely to do this for several of their clients at the same time.

This is the list of substantial security holders:

10885

- and, as you can see here:

10886

... there are only 2 holders with more than 2.5 million shares - and there happen to be only two substantial owners (o.k., if you assume that Aberdeen Standard Asia Focus and Aberdeen Standard investments (Asia) Ltd are independent from each other (I don't), than it would be three) .

Do your own maths ;);

[greater fool]

Content removed. Try this instead;

https://www.sharetrader.co.nz/showthread.php?11586-Recommended-Read&p=781312&viewfull=1#post781312

[BlackPeter]

Yup. Done the math thanks.
If you would like to take another "look" at the shareholder table I posted above you may notice the letters NZCSD after 8 of the
parties. NZCSD counts as only 1 'holder' in the Holdings Size table.

And I think it possible that a nominee could do a trade sale for all their "unrelated" parties at the same time.

Possible - yes, but likely? I guess we will see ... if it was Aberdeen (as I thought) than we would need to get a SSH over the next couple of days.

[Scrunch]

2,660,300 traded at $2.35......................Interesting.

The discount to market tends to indicate someone like a fund manager altering their view on the company and wanting to get out. There isn't sufficient on market liquidity so the broker has found buyers. If this stake has been offered off market for a while it would help explain the recent price weakness while CDL was increasing.

[WAIKEN]

Often that sort of sale can be a precursor to a takeover bid eg MET
Ive been watching the market activity as I have a substantial holding. It looked like an algo may have been operating and there was an attempt to hold the price down.
Lets hope a bid comes in at NTA

[percy]

The discount to market tends to indicate someone like a fund manager altering their view on the company and wanting to get out. There isn't sufficient on market liquidity so the broker has found buyers. If this stake has been offered off market for a while it would help explain the recent price weakness while CDL was increasing.

Agreed.............................

[greater fool]

Content passed use by date, removed.

[percy]

Aberdeen Standard have been a relentless seller for over a year.
Still holding 10,182,794,or 9.6538% I would expect they will keep selling for the foreseeable future.Take care.

[BlackPeter]

When I said; " I think it possible that a nominee could do a trade sale for all their "unrelated" parties at the same time."
BP responded with:



Likely. Yes, in my opinion. I've done the math, and reckon any J.P Morgan Chase client mandate can disappear as quickly as it arrived. Likely
quicker ( no accumulation phase needed).

So here are the top 20 mck holders from AR2017

10888

Now top 20 mck holders from AR2018

10889

Those J P Morgan Chase clients arrived in a sudden bunch it seems. Why couldn’t they depart just as quickly?


Interesting they apparently came with cdi shares as well :).

cdi Top 20 holders AR2017

10890

cdi Top 20 holders AR2018

10892

There were two big cdi movers between these annual reports; J P Morgan Chase and Adrian Ho. :p Spooky Spooky. :p



Well, what can I say?

Nice conspiracy theory but at the end the seller was Aberdeen Standard ... as I indicated from the very beginning ;);

https://www.nzx.com/announcements/345598

[beetills]

Article(behing paywall)says
MCK a spanner in the works for Catholic Church.
I presume that the RC church would like to rebuild on MCK owned property.

[greater fool]

Dated and dumped content.

[WAIKEN]

Tiny algo trades continuing. It seems like some manipulation is going on

[beetills]

Don't know about manipulation,just seems like SHARESIES clients spending a few bucks.
I know i do it all the time,a spare tenner and away i go.

[BlackPeter]

Head of Tourism Aotearoa says on National Radio things looking good (from 4:30):

https://www.rnz.co.nz/national/programmes/businessnews/audio/2018727069/business-news-for-16-december-2019

- While 2019 was a breather tourism industry is still trying to catch up with demand

Talking directly after him director of Colliers International says:

- domestic demand for hotel accommodation already 60% of total and increased this year
- strong demand for hotel accommodation across the country (with the exception of Auckland which is slightly down)

In my view looking good for MCK: hotels all around the country plus a strong shot in the arm thanks to their real estate holding CDI.

[BlackPeter]

Kwek Eik Shen moving onto the MCK board. He is the nephew of the (de-facto) majority owner Kwek Leng Beng. Kwek family clearly increasing its control.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/346607/314680.pdf

Just wondering whether this might be the prelude to a complete takeover? Recent share price moves could be a hint ...?

[beetills]

One of my 2020 predictions was the buyout of both companies.
Just hope if it happens its a bigin although to be fair i have enjoyed owning them.

[BlackPeter]

Happening here in NZ too, everyones buying out the N95 face mask. True MCK will lose out a bit on the reduced tourist numbers.




This isn't a common cold situation. Its an illness that is fatal to anyone without a strong immunity and it spreads quick. If this got into hospitals or even retirement homes you'd have many sick and elderly dying. The numbers low, but could well be much higher if it gets out of control or worse the virus mutates into something worse over time. Its about controlling it before it gets worse. Your reaction is why the NZ Government has done nothing. No one considers their economy more than China, if its taking tough measures you'd have to consider that its pretty serious.

Come on guys - follow the blizzard and sell - sell - SELL!

If you still don't panic, then just do me a favor and fill my order ... please .... :p;

BTW - time to get my tongue out of my cheek before I bite it ...

[percy]

Come on guys - follow the blizzard and sell - sell - SELL!

If you still don't panic, then just do me a favor and fill my order ... please .... :p;

BTW - time to get my tongue out of my cheek before I bite it ...

If you are the buyer of 10,000 at $1.50 ,and get them,I think you will be "well positioned."

[BlackPeter]

If you are the buyer of 10,000 at $1.50 ,and get them,I think you will be "well positioned."

So do I ... ;. Admittedly - I don't put my hopes too high - bull and silverblizzard are just not effective enough in spreading fear.

[percy]

Hard swimming against the tide.

[BlackPeter]

Hard swimming against the tide.

https://www.nzx.com/announcements/348166

A good result - both revenue and earnings are (slightly) up.

Given the amazing discount the market attributes to this company are they a steal ...

[Beagle]

If you are the buyer of 10,000 at $1.50 ,and get them,I think you will be "well positioned."

Possibly all they're worth in the current environment. Fresh test of multi year support at $2.50 coming up. I would expect very heavy discounting to be rampant for the foreseeable future as hotels clamour to try and fill huge numbers of empty rooms left vacant by risk averse non travellers. The significant increasing supply now coming on stream at places like Queenstown could not have come at a worse time for existing hotel owners.

I can't see anything to get excited about for current holders here. Unless one is getting them at a screaming bargain price this looks like a very good sector to avoid.

[BlackPeter]

Possibly all they're worth in the current environment. Fresh test of multi year support at $2.50 coming up. I would expect very heavy discounting to be rampant for the foreseeable future as hotels clamour to try and fill huge numbers of empty rooms left vacant by risk averse non travellers. The significant increasing supply now coming on stream at places like Queenstown could not have come at a worse time for existing hotel owners.

I can't see anything to get excited about for current holders here. Unless one is getting them at a screaming bargain price this looks like a very good sector to avoid.

Have a look at their balance sheet, beagle. Their main business is actually owning CDI shares :):

This is a deep value play anyway, but happy if you talk them a bit further down.

[Beagle]

CDI talking a slowing development book when the real estate market is booming :confused:

[BlackPeter]

CDI talking a slowing development book when the real estate market is booming :confused:

They talked last year a downturn in revenue and earnings and delivered a nice increase instead. Just a refreshing change from the otherwise usual over promising and under delivering. These guys rock.

[winner69]

OMG ....MCK and what’s happening re virus and they mention EXISTENTIAL CRISIS

that’s bad

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/350116/318972.pdf

[traineeinvestor]

OMG ....MCK and what’s happening re virus and they mention EXISTENTIAL CRISIS

that’s bad

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/350116/318972.pdf

The occasional existential crisis is no bad thing - everyone should ask themselves whether their lives are meaningful. :)

Given that the most recent consolidated accounts (i.e. including CDI) showed next cash/deposits of $98 million to which can be added whatever they earned post balance date, the present state of affairs will have to go on for a long time before they have solvency issues.

[BlackPeter]

OMG ....MCK and what’s happening re virus and they mention EXISTENTIAL CRISIS

that’s bad

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/350116/318972.pdf

I guess they need to demonstrate how bad things are to remind Cindy to include as well larger hospitility business into the rescue package.

But no doubt - 2020 won't look pretty, However - if any company has the balance sheet to survive such a crisis, than it would be MCK.

BTW - 40% of their income from their CDL holding ... will people stop buying property?

NTA per share $4.52. Current match price $2.29.

Forward PE (3 years) if I write 50% of this years expected revenues off): 8.4;
Forward PE (3 years) if I write all revenue off this year: 13.3;

Didn't manage to get my model into an actual loss situation (unless I start cutting into CDL's income as well or if they keep lots of staff they don't need).

Not sure, though how important the stock market listing is for the majority shareholder. Otherwise there might be a low ball takeover offer in the wings ...

[Leemsip]

Mogul, Im also in. Going to bottom draw this and look again in 5 years.

[Southern Lad]

[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.

[Arthur]

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/property/for-rent-zenith-potts-point

[Beagle]

OMG ....MCK and what’s happening re virus and they mention EXISTENTIAL CRISIS

that’s bad

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/350116/318972.pdf

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.

[percy]

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.

[Beagle]

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.

[percy]

Hi Percy, I agree it is a long term investment and the 5-10 year timeframe you mention seems appropriate. For the hotel part of the business, it requires belief that over the long term tourism will recover in NZ. If tourism doesn't recover in NZ over a 5-10 year timeframe I would be very surprised. Having a strong balance sheet with $98 m net cash (albeit with $54 m of that held by 66.3% owned listed subsidiary CDL) a provides the ability to get through some leaner years. The CDL residential development business did well after the GFC and I think there is a good prospect of that happening again after 1-2 quiet years. Bottom drawer deep value long term hold for me.

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.

[percy]

Fair enough. I’ll tell them not to call you if the CFO role comes up. I think Air NZ CFO role might be more stressful!

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.

[Balance]

Scenic Group are mothballing hotels to minimise losses for next 18 months, especially where they have two hotels in one location.

https://i.stuff.co.nz/business/121150004/scenic-hotel-group-mothballing-hotels-in-dunedin-and-franz-josef

I expect MCK will also employ this strategy to minimise losses. It seems a smart and simple plan whilst the tourism tide is seriously out. The have multiple hotels in Auckland, Queenstown, New Plymouth, Rotorua and the Bay of islands. So it would make sense to mothball some of these and possibly properties in other international tourist locations such as Te Anau. With staff costs gone and no net debt, the major remaining costs in mothballed hotels will be rates and insurance.

The tide is out but will come in again eventually. In the meantime we have smart management, no net debt and significant cash in the bank. Happy with this long term hold,

https://www.stuff.co.nz/business/property/120569099/millennium--copthorne-shutting-some-hotels-and-cutting-jobs-because-of-the-covid19-pandemic

MCK started doing it a month ago.

Going to be a very long road ahead for our tourism sector unfortunately.

[Sgt Pepper]

https://www.stuff.co.nz/business/property/120569099/millennium--copthorne-shutting-some-hotels-and-cutting-jobs-because-of-the-covid19-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?

[traineeinvestor]

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?

Any offer for MCK would either have to be made or supported by the existing controlling shareholder. As a result, any assessment of likelihood of that happening would have to look at their own financial condition - do they have enough cash to make an offer or, alternatively, do they need cash enough to be open to an offer? There are (obviously) other factors to consider but that would be one thing I'd look at.

Disclosure: hold CDL

[BlackPeter]

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?

Given that MCK (NZ) is majority owned by MCK (UK) which is majority owned by CDL (Singapore) which is majority controlled by the Kwek family - and given that I have not heard (and think it highly unlikely) that they did run out of money, would I say that the chances for a takeover offer by anybody else but by said billionaires family is remote and would not succeed.

It might be however well possible that they themselves (or one of their financial arms) try to buy the minority shareholders out ... given that the market cap is currently significantly below the book value.

On the other hand ... a listed MCK is an amazing instrument for them to hide wealth as long as it trades below 40% of book value (from memory). Why would they want to give that up?

[macduffy]

I agree, BP. Acquisitions don't have to be of listed hotel companies. There's plenty of other targets out there, bound to be some who would listen to a reasonable offer.

[BlackPeter]

Hey, there are such things as positive surprises: Just when I started to get used to a no dividend policy from nearly anybody I find not one but two nice dividend payments from both CDL and MCK freshly transferred into in my bank account.

Great stuff !

CDI paid a 3.5 cents (fully imputed) dividend per share. Not bad for a share one can currently buy for 76 cents.

MCK paid a 7.5 cents (fully imputed) dividend per share.

While I acknowledge that CDI's payment might be next year less (and MCK's probably nil) - still great stuff considering the tough times ..

[greater fool]

taken out the trash ..........................................

[percy]

I can only say good luck to Boon Pua,.
I would be beside myself if I was in his position.

[clearasmud]

Greater fool 8.23 million shares

[Southern Lad]

Value of shares issued under DRP was $1,279,884 out of a total dividend payment of $9,758,195 giving a participation rate of about 13%. Therefore pretty evident MCK opted to receive their cash dividend of $6,465,000. No doubt MCK have used to help fund their own dividend payment of $11,866,000 paid on the same date (15 May), about 75% of which was headed offshore to HQ.

[greater fool]

....................snip... about 75% of which was headed offshore to HQ.

More. ( if it did go offshore; CDLHHNZL is NZ company ) You've omitted the preference shares, of which they hold 85%.

[traineeinvestor]

Happy holder of MCK. Impressive they still expect to be profitable overall in 2020, with losses from hotels and residential development remaining a positive earnings generator. The meltdown has been a great opportunity to increase holding at 60% discount to NTA. Very strong balance sheet of both MCK and CDI positions them well to prosper long term and potentially take advantage of short term opportunities.

Given that (i) the residential development is all in CDI and only appears in MCK's through consolidation (ii) CDI has cash and no debt whereas MCK has net debt and (iii) it's not clear to me how much cash MCK is burning through on its hotels at the moment and (iv) nobody knows how long it will be before international tourists return in meaningful numbers, I very much prefer CDI to MCK at the moment. Also, the NTA numbers are as at last balance sheet date - they're not current and I'd be astonished if there isn't some downwards adjustments needed to reflect current realities.

Side question: does anyone know where I can find the terms and conditions of the MCK preference shares?

Disclosure: hold CDI not MCK

[jg8512]

Side question: does anyone know where I can find the terms and conditions of the MCK preference shares?

Disclosure: hold CDI not MCK

I had to email the company for it. could not find anywhere online

[greater fool]

In storage for later.....................

source............... https://www.sharetrader.co.nz/showthread.php?8467-MCK-Millennium-amp-Copthorne-Hotels&p=895391&viewfull=1#post895391


you are incorrect here - MCK traded at 80%+ of NTA a couple of times over last few years. Hitting that same level today would reasonably put it over $4.

Plus this company is a very different beast today compared to even just 5 years ago, with residential land development now accounting for a large portion of its revenue & profits now (even pre covid).

also worth reminding for those that are unaware, back in 2015 MCK spun off its China operations and shareholders received shares in a new Singapore listed company (or were paid for their shares if they did not want to Hold them) - that is not reflected in the share price history.

I also don’t know why people malign the Sydney Zenith operations - MCK has had a handsome return from this operation in the form of consistent rent and also frequently selling off units at large margins compared to their initial cost.

[traineeinvestor]

MCK hotels main source of guests is from NZ, good number business travellers. China second.

NZX website

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/247074/189353.pdf

Didn't know that - thanks for the info. :t_up:

[greater fool]

Content removed

[traineeinvestor]

See slide 10.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MCK/353704/323226.pdf

Once again, the resident lawyer fails to read the fine print. :scared:

(Sorry - more focused on CDI.)

[greater fool]

Content removed

[Sgt Pepper]

Ha. Not sure reading the MCK redeemable preference shares T & C's, is going to provide much enlightenment
on that subject

Did Millennium send out room discount voucher to their shareholders this year?
If so, I didn't get one.. poor me

[stoploss]

Did Millennium send out room discount voucher to their shareholders this year?
If so, I didn't get one.. poor me
If you book through the central reservations just tell them you are a shareholder . However sometimes the specials are better than the discount afforded to shareholders .

[Jay_]

If you book through the central reservations just tell them you are a shareholder . However sometimes the specials are better than the discount afforded to shareholders .

How does this even work? Do you need to own a certain amount of stock?

[stoploss]

How does this even work? Do you need to own a certain amount of stock?
They used to mail out a shareholder discount card , but with the advent of book a everything , air b n b getting 40% discount or whatever it was off the rack rate wasn’t that competitive . Never asked how many shares maybe a csn # , can’t remember .

[peat]

pretty good writeup of these two MCK and CDL by Brian Gaynor behind the paywall in BusinessDesk. https://businessdesk.co.nz/article/brian-gaynor-cdl-and-millennium-copthorne-successful-back-door-listings-but

CDL Investments, which has a sharemarket value of $224 million at its current 80 cents share price, is arguably the most efficient company on the NZX.
It has had 10 consecutive years of profit growth but has only three full-time employees, three board meetings each year and no debt


Millennium & Copthorne has a sharemarket value of $190 million at $1.80 a share, a substantial discount on its December 2019 net asset backing of $4.52 a share.


Way too much history in the article , scouring the past of these two back door listings - some of us will know those names Euro-Nat, Renouf and Ariadne and find it interesting - young folk , not so much.

[beetills]

They used to mail out a shareholder discount card , but with the advent of book a everything , air b n b getting 40% discount or whatever it was off the rack rate wasn’t that competitive . Never asked how many shares maybe a csn # , can’t remember .
Received my shareholder discount card with the interm report 2019..
''20%off the best available fully flexible rate applicable at time of booking""

[Sgt Pepper]

A pleasing but unexpected rise in share price, bought in at $1.80 two weeks ago now $ 1.94.

[WAIKEN]

The price is finally on the move, away from an irrational discount to NTA. Internal travel is now creating revenue for the hotels and this will increase as various bubbles are created with other safe countries. CDL will trade at a profit as people are still buying new houses. I believe the CDL profit and a modest full year loss for MCK could still result in a small profit for the current financial year. Also hotels planned by other parties are on hold and several hotels have shut down already- Hermitage in Mt Cook and Heritage in Hanmer. They are also in a strong position to survive a price war with competitors with their strong balance sheet.
I see a race up to 2.50 soon.

[LaserEyeKiwi]

Wow - this puppy can really swing in value with such low liquidity. Down 2% today on just $5k worth of daily trades.

At 5.5% dividend yield I’m getting very tempted to add more, but I would be going past my self imposed maximum exposure to any one stock.

[ratkin]

The price is finally on the move, away from an irrational discount to NTA. Internal travel is now creating revenue for the hotels and this will increase as various bubbles are created with other safe countries. CDL will trade at a profit as people are still buying new houses. I believe the CDL profit and a modest full year loss for MCK could still result in a small profit for the current financial year. Also hotels planned by other parties are on hold and several hotels have shut down already- Hermitage in Mt Cook and Heritage in Hanmer. They are also in a strong position to survive a price war with competitors with their strong balance sheet.
I see a race up to 2.50 soon.


Hotel occupancy aound the country is next to nothing, it will take more than a few kiwis taking a local break to make them viable. Only ones doing any good are those turned into covid incubation centres

[LaserEyeKiwi]

Hotel occupancy aound the country is next to nothing, it will take more than a few kiwis taking a local break to make them viable. Only ones doing any good are those turned into covid incubation centres

This in incorrect - Hotel occupancy in the main centers has increased significantly over the last month. You mention the Covid hotels - these are actually already a quarter of the large Auckland hotels (15 of 60), and they are all full with more hotels being considered now. What this means is that of course it is good for those hotel owners to have full hotels, but also it greatly reduces the number of rooms available in the city which in turn benefits the non-Covid hotels occupancy rates.

Regardless, MCK was expecting a much worse Lockdown environment when it gave updated 2020 full year guidance in which it still expected profitability, and there is little doubt the hotel operations are doing better than initially expected, and the extension of the government wage subsidy, favorable new depreciation & tax rules, and stopping of the new auckland council hotel fee is highly likely going to lead to better results than anticipated.

[LaserEyeKiwi]

Government today adds another 4 hotels / 1000+ beds to the border quarantine effort, and signaled more will be needed. One way or another things are turning out better than initially feared - a hotel is getting a massive long term bulk booking via the government, or it is in the ever decreasing pool of hotels open to the domestic market.

[LaserEyeKiwi]

At the daily CV press conference just now the air Marshall overseeing the managed isolation facilities Just blurted out that the government has signed 6 month long exclusive contracts with each hotel guaranteeing 100% occupancy. This is huge news for hotels participating (I’m guessing he wasn’t supposed to reveal this detail).

[LaserEyeKiwi]

Stock up 6% so far today

[sb9]

Stock up 6% so far today


At the daily CV press conference just now the air Marshall overseeing the managed isolation facilities Just blurted out that the government has signed 6 month long exclusive contracts with each hotel guaranteeing 100% occupancy. This is huge news for hotels participating (I’m guessing he wasn’t supposed to reveal this detail).

Wow, posts on ST forum does have the power to move and shake stocks :p, good on ya.

[LaserEyeKiwi]

Wow, posts on ST forum does have the power to move and shake stocks :p, good on ya.

that would be crazy if true!

Its up 8% now so I assume someone made a big buy.

[traineeinvestor]

that would be crazy if true!

Its up 8% now so I assume someone made a big buy.

23, 887 shares went through today. Not big volume but it shows how thinly traded MCK is.

[LaserEyeKiwi]

A reminder that MCK usually reports 1st half earnings in the first few days of August - so probably Monday Week I’m guessing.

Will be a very interesting call considering since the last update they have had at least a few of their hotels fully 100% booked out by the government for 6 month contracts.

[LaserEyeKiwi]

MCKs two premier Auckland properties (Grand Millennium & M Social) are confirmed to be in the government isolation pool (has been referred to as 100% occupancy minimum 6 month contracts.)

Just these two properties alone account for 642 rooms. Depending on the rate negotiated with government on daily rate for room & food etc, would mean the following revenue for MCK over a 6 month period, just from these 2 hotels alone:

$250 daily rate x 642 rooms x 182 days: $29 million
$300 daily rate x 642 rooms x 182 days: $35 million
$350 daily rate x 642 rooms x 182 days: $41 million

I do not know what the daily rate would be, but it has been stated that the $3000 fee that the national party proposed returnees pay did not cover the entire cost of a 14 day stay, meaning the minimum daily rate is higher than $214 ($3000 divided by 14 Days). It was also mentioned that additional people staying in same room would be charged $1000, and if that also didnt cover the cost entirely, it would imply the daily rate for one room is higher than $285.

[Southern Lad]

It is logical that the Government would be incurring other costs in addition to accommodation and food in running the managed isolation programme including security, rental of temporary security fencing, travel to and from Auckland airport (including domestic charter flights in some cases), and programme administration. Therefore $214 may be spreading far wider than hotel operator.

Although the rates payable to MCK and other hotel operators will be commercially sensitive, surely the Government has negotiated a significantly lower rate than normal average rates achieved for each property given 100% occupancy, no marketing costs or booking commissions, lower front desk staffing requirements, etc.

[LaserEyeKiwi]

It is logical that the Government would be incurring other costs in addition to accommodation and food in running the managed isolation programme including security, rental of temporary security fencing, travel to and from Auckland airport (including domestic charter flights in some cases), and programme administration. Therefore $214 may be spreading far wider than hotel operator.

Although the rates payable to MCK and other hotel operators will be commercially sensitive, surely the Government has negotiated a significantly lower rate than normal average rates achieved for each property given 100% occupancy, no marketing costs or booking commissions, lower front desk staffing requirements, etc.

thanks for the reply! Yes there will be additional costs involved that aren’t going to hotels, but it should be stressed that the $3000 (or $4000 for a couple) proposed still doesn’t cover the entire cost. A lot of the things you mention aren’t that large a cost considering they are spread over a large amount of people (transportation on a bus is spread amongst dozens of people at only a few dollars each, security at a hotel is across hundreds of rooms at ~$5 dollars a day per room) - and the vast bulk of the cost of isolating an individual or couple is the 14 days accommodation and 42 meals per person - all of which is provided by hotels. One other thing is the two tests - which are being done by a government owned lab, no idea how that woud be costed.

[BlackPeter]

HY results are out and they look amazing: https://www.nzx.com/announcements/357053

Who would have thought that MCK is reporting a quite solid half year profit (actually a record profit after tax) this half year after the lockdown? But before shareholders get too excited lets look at the details:


MCK as a group made an unaudited profit before tax and non-controlling interests of $26.26 million for the six month period ended 30 June 2020 (2019: $41.00 million). The main contributor to these results were sales of residential sections from our majority-owned subsidiary CDL Investments New Zealand Limited which traded well in the last six months. In addition, one sale of a sub-penthouse at the Zenith Residences in Sydney which settled during this period has also helped our overall result.

As a result of these property sales and a one-off non-cash tax credit of $20.06 million arising out of the Government’s COVID-19 Business Continuity Package, MCK has recorded a profit after income tax and non-controlling interests of $34.09 million (2019: $23.81 million) The group revenue and other income for this period were $84.74 million (2019: $110.61 million). However, earnings per share for the period increased to 21.55 cents per share (2019: 15.05 cps) reflecting the impact of the tax credit from the COVID-19 Business Continuity Package. This has also impacted on MCK’s Net Tangible Assets per share as at 30 June 2020 which was $4.44 per share (2019: $4.08 per share).

OK, so running the hotels over the last 6 months generated only a quite small profit ($3m) - but still - they made a profit, who would have thought!
CDI (check there) reported as usual a good result, which is obviously good for the majority shareholder (MCK).
The recent change in tax laws (allowing them to write off property again) added the lions share ($20m) to their HY profit of $26m. Unfortunately only a one-off.
Ah yes - and there was this one off property sale in Australia.

Still - quite amazing ... I expected at best a NIL in earnings .. and here they are and delivering the best (after tax) HY result ever!

Outlook is not quite that flash (that's the problem with one-offs, they are one-offs), but still - they do expect to make a (modest) profit for the full year.


No-one should be in any doubt that the outlook ahead for MCK’s New Zealand hotel operations will continue to be grim. The reality for the foreseeable future is lower occupancy, lower margins and minimal profit. We also believe that we have not yet seen the full extent of the economic effects of COVID-19. As economic conditions globally get worse, we expect still further falls in demand for travel and accommodation as people tighten their belts once again. The announcement that the APEC 2021 Leaders Meetings and associated events are to shift to virtual meetings is one indication as to where things are likely to head for our traditional conferencing and meetings business in the immediate term.

While we are aiming to reopen all of our hotels by the end of the year, this should not be taken as a certainty given that we do not know when our borders will be reopened to the rest of the world. Even when New Zealand is able to welcome visitors from overseas, we will be taking a cautious approach to ensure that we do not compromise the health, safety and wellbeing of our staff and guests.

On a positive note, MCK is not just a hotel company. As a “property company with hotel assets” any growth and indeed any profit, for the time being, will come from our property divisions in New Zealand and Australia. While they have not been as badly affected by COVID-19 as our hotel operations, we remain optimistic but cautious that sales will continue as forecast. Should market conditions change, both divisions are agile enough to adjust their operations as needed.

As well as ensuring that our hotel operations survive this difficult period, as a group, MCK is aiming to deliver an overall result that will see a profit, but we caution shareholders to moderate their expectations. To achieve an overall profit in this environment remains a challenge and is also dependent on many factors, several of which are outside our control. We are well aware of the enormity of the task ahead and we are committed to achieving our goal.


Who would have thought ... isn't it amazing to own really solid and conservative companies with solid balance sheets? I like the quiet performers nobody is talking about ...

Discl: very happy holder!

[WAIKEN]

Great analysis Peter
A massive discount for high quality and well placed assets that will continue to appreciate.
Covid19 will become endemic like the other coronaviruses that have been with homo sapiens for thousands of years according to carbon dated human remains. Possibly they have been with us for much longer.
Angela Merkel has stated she expects 40-60% of Germans to have been infected by mid 2021.
Travel will recover. Global health systems will adapt to Covid 19. eg Saliva tests with instant results, antiviral drugs and a vaccine on a par with those for the existing influenza family of viruses.
I am looking forward to increased dividends and an appreciating share price over the next ten years.

[Beagle]

https://www.voanews.com/economy-business/world-airline-recovery-take-longer-expected

Might have a nibble after a vaccine has proven to be effective. 100 day moving average line shows downtrend is still intact.
Outlook is sobering stuff. I hope shareholders have heaps of patience. I don't have enough for this one, Beagles can't wait years for a feed, its not in their nature ;), (best to know, acknowledge and work within your limitations eh) :)

[LaserEyeKiwi]

MCK - Millennium & Copthorne NZ Ltd - reports.


As expected, due to lockdown the hotel operations profit was significantly reduced (but still profitable). Also as expected, MCKs non-hotel operations (land development and Australian apartment sales) remained very profitable.


Big one time tax boost from changed depreciation tax rules (introduced by government in response to Covid) provides big boost to MCK after tax profits (though has no impact on the “before income tax” results I have listed below)


Important takeaway. For the full year the non-hotel operations are heading for around $33 million in net income.


Add to that the hotel operations which are still generating an operating profit, and the present market capitalization of $286 million looks very cheap (especially when considering hotels will eventually return to higher profitability as Covid impact eventually subsides)


======


For 6 months results ending June 30th 2020.


Net Income: $38.95 million (vs $29.7 million in 2019)
EPS: 21.55c (vs 15.05c in 2019)


Profit before income tax: $26.26 million (vs $41 million in 2019)


Segment profits after tax:


Hotel Operations: $22.8 million ($12.8 million in 2019)
Residential land Dev: $13.75 million ($15 million in 2019)
Residential prop Dev: $2.45 million ($1.75 million in 2019)


Segment profits before income tax:


Hotel Operations: $3.7 million ($17.5 million in 2019)
Residential land Dev: $19.1 million ($21 million in 2019)
Residential prop Dev: $3.5 million ($2.5 million in 2019)


Net Tangible assets: $702 million
NTA per share: $4.44 per share


=====


Current Market cap: $286 million
Current share price: $1.81c

[LaserEyeKiwi]

HY results are out and they look amazing: https://www.nzx.com/announcements/357053

Who would have thought that MCK is reporting a quite solid half year profit (actually a record profit after tax) this half year after the lockdown? But before shareholders get too excited lets look at the details:



OK, so running the hotels over the last 6 months generated only a quite small profit ($3m) - but still - they made a profit, who would have thought!
CDI (check there) reported as usual a good result, which is obviously good for the majority shareholder (MCK).
The recent change in tax laws (allowing them to write off property again) added the lions share ($20m) to their HY profit of $26m. Unfortunately only a one-off.
Ah yes - and there was this one off property sale in Australia.

Still - quite amazing ... I expected at best a NIL in earnings .. and here they are and delivering the best (after tax) HY result ever!

Outlook is not quite that flash (that's the problem with one-offs, they are one-offs), but still - they do expect to make a (modest) profit for the full year.



Who would have thought ... isn't it amazing to own really solid and conservative companies with solid balance sheets? I like the quiet performers nobody is talking about ...

Discl: very happy holder!

cant really call the Zenith apartment sales “one off” - they are selling these all the time - so will be generating income from that until all have been sold, and with $72 million in assets still remaining on the books for the Zenith, there are many years of income left from Sales in that segment.

[WAIKEN]

A laser precision observation Laser Eye.
The discount to NTA is even more absurd than than METs discount before the takeover ann.
Lots of cash on the balance sheet. They will also benefit from the tens of thousands of Kiwis not travelling overseas and the number of kiwis returning monthly which will increase as the Govt better manages quarantine facilities. We may have more than 2 hotels fully occupied as quarantine facilities.

[ratkin]

They were practically begging shareholders to book holidays with them.
What exactly is this wonderful discount they are giving?
In the past it has been just as cheap to book via one of the booking agencies

[BlackPeter]

cant really call the Zenith apartment sales “one off” - they are selling these all the time - so will be generating income from that until all have been sold, and with $72 million in assets still remaining on the books for the Zenith, there are many years of income left from Sales in that segment.

Fair enough. While they are "one off" (they can't sell anymore the ones they sold already and according to my knowledge they don't plan to build more of them), they do have some more "one offs" in the bag. Still - at some stage they will be all sold ... :crying:

[beetills]

20% discount if your a shareholder.Might even be more now.

[Traderx]

Just purchased a small holding in MCK. Fortress balance sheet (hopefully they are looking at distressed assets opportunities). CDL/CDI should be relatively unaffected by current dramas. Conservatively run, highly profitable in normal course of events (we will get back eventually). Margin of safety with discount to NTA (NB effective NTA is a bit lower than NZX quote due to pref shares).

Cheers

[Justin]

Aberdeen keep selling on 0.8?

[clearasmud]

Aberdeen keep selling on 0.8?
Got to end sometime.
These have a true post covid asset value of over 5.00 a share???

[Southern Lad]

I see there is some Board strife occurring at City Developments Limited in Singapore:

https://www.straitstimes.com/business/companies-markets/cdl-director-kwek-leng-peck-quits-after-clash-with-board-management

[WAIKEN]

Hotel and travel stocks and cruise ship had a boost in the USA as the Pfizer vaccine should accelerate overseas travel during 2021
Strong buying but a long way from NTA.

[LaserEyeKiwi]

I don't know what is happening today (up 14% as I type this on almost double normal volume) - no announcements that I can see.

Has the market suddenly woken up to the value of MCK now that multiple vaccines have been confirmed?

[LaserEyeKiwi]

Maybe has something to do with this media release from the majority shareholder:

https://au.finance.yahoo.com/news/global-hospitality-leader-millennium-copthorne-023000299.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAHhDbVMvhz_dVRa0WabzlUjSjsiT pDWoOHGbl5WkN25RiPUblo0l6N401euEk9-28KV1natKSqmaaR6N5BZcyEwaa4oWivXesaZUb4fArVSp18QCJ NnUSEbFF4ag7ho3_vqUdwTViZcTK64daUkdBnQmnnqOk4KAWLK D8xvOwMgl

[Tradernoob]

Congrats to those that waited patiently and believed in the value that is within this. Healthy gains for all who bought and held these few months

[LaserEyeKiwi]

The rocket ship continues.

Welcome to the club all you new MCK investors.

[ratkin]

It has been going up like a rocket ship, very happy holder here, but how much further can it go?
I think these hotels are actually doing pretty well out of covid, dumped all their surplus staff and
are lean and keen

[LaserEyeKiwi]

It has been going up like a rocket ship, very happy holder here, but how much further can it go?
I think these hotels are actually doing pretty well out of covid, dumped all their surplus staff and
are lean and keen

Also with considering how well their majority holding in CDI is doing in the current real estate environment. CDI has gained over 15% in November.

[ratkin]

Also with considering how well their majority holding in CDI is doing in the current real estate environment. CDI has gained over 15% in November.

Yeah have them both, just wish I had more, but not adding at these prices

[MauroNZ]

To the most knowledgeable guys, I see the SP truly moved in the last 5 years, Jarden indicates a 3% dividend. As I can't see as a growth neither a high dividend paying, then how do you see/rate this one?.

[Justin]

It has been going up like a rocket ship, very happy holder here, but how much further can it go?
I think these hotels are actually doing pretty well out of covid, dumped all their surplus staff and
are lean and keen

Have no idea how further can it go, but book value nzd$4.4 may can be indicate.

[LaserEyeKiwi]

To the most knowledgeable guys, I see the SP truly moved in the last 5 years, Jarden indicates a 3% dividend. As I can't see as a growth neither a high dividend paying, then how do you see/rate this one?.

Not sure where that dividend calculation is going wrong, but including supplemental and full imputation the dividend is over 4%.

Like Justin said the true indication of where this will go is right there in the NTA value, and just look at normal earnings from last two years of pre-covid operations: 31c per share. Current share price reflects a price/earnings ratio of only 7.7x if you think earnings will eventually return to previous levels.

[ratkin]

Looking at the bigger, long term, post covid picture, the big concern would be business travel and conferences. It will go one of Two ways. Either the world will move to video conferences and abandon the hotel jollies, or there will be a big reaction against working remotely, as people will be getting totally sick of it.
that report a few posts back did mention there would likely never be a return to pre covid levels.

Once the vaccine arrives, and all the hotel covid contracts end there could be a lull in occupancy levels. We do not know how lucrative the covid contracts are, but they are probably quite substantial.

[LaserEyeKiwi]

Looking at the bigger, long term, post covid picture, the big concern would be business travel and conferences. It will go one of Two ways. Either the world will move to video conferences and abandon the hotel jollies, or there will be a big reaction against working remotely, as people will be getting totally sick of it.
that report a few posts back did mention there would likely never be a return to pre covid levels.

Once the vaccine arrives, and all the hotel covid contracts end there could be a lull in occupancy levels. We do not know how lucrative the covid contracts are, but they are probably quite substantial.

- MCK gets half its profits from CDI (not related to hotels in anyway).
- MCK hotel portfolio includes many central properties in main centers where real estate prices have surged dramatically. If there is a long term trend away from hotels, these properties can easily be converted to residential, which can either be rented or sold (see the Zenith property in Sydney)

[LaserEyeKiwi]

Prime Minister announced today that travel bubble with Australia to open in first quarter 2021:

https://www.stuff.co.nz/travel/news/300183286/travel-bubble-with-australia-coming-in-early-2021-prime-minister-confirms

MCK should be jumping on this news, strange to see no upward movement yet.

[ratkin]

Prime Minister announced today that travel bubble with Australia to open in first quarter 2021:

https://www.stuff.co.nz/travel/news/300183286/travel-bubble-with-australia-coming-in-early-2021-prime-minister-confirms

MCK should be jumping on this news, strange to see no upward movement yet.

They will lose all their captive guests, probably doing very well out of being covid centres

[LaserEyeKiwi]

They will lose all their captive guests, probably doing very well out of being covid centres

MIQ hotels are still rented by government on long term contracts through 2021, and will still be needed for everyone else entering NZ from places other than Australia (likely any that are dropped out of the pool would be the regional hotels). Having said that, MCK only have a few hotels in the MIQ pool currently anyway, and one of them is just a management contract instead of company owned.

The benefits of our largest inbound tourism market (By far) reopening will far outweigh any drop-off in revenue from MIQ (if any).

[miscer]

Surely there should be a more significant increase over the holiday period (new years ect)

[Southern Lad]

MCK has closed its Millennium hotel in Queenstown citing unsustainably low occupancy levels:

https://www.odt.co.nz/business/millennium-hotel-ice

A longer term view would say no better time than the present to ‘make improvements’ due to the low opportunity cost of minimal lost revenue as a result of disruption. Will be interesting to see how extensive the improvements will be.

Guess we will get a better sense on how bad hotel trading is when the full year results are released in a couple of weeks (if last years timing is anything to go by).

[LaserEyeKiwi]

Interesting report saying domestic spending on hotels has increased significantly year on year (to help offset the loss from international tourists). Maybe the MCK assets in the main centres has held up better than in the foreign tourist locations like Queenstown. (also the MIQ government rental contracts will help MCK - both directly on the hotels in MIQ pool, and also removing competing hotel beds from the market.)

https://www.interest.co.nz/personal-finance/108803/kiwibank-economists-have-been-tracking-our-spending-and-we-are-still-doing

12262

[LaserEyeKiwi]

MCK has closed its Millennium hotel in Queenstown citing unsustainably low occupancy levels:

https://www.odt.co.nz/business/millennium-hotel-ice

A longer term view would say no better time than the present to ‘make improvements’ due to the low opportunity cost of minimal lost revenue as a result of disruption. Will be interesting to see how extensive the improvements will be.

Guess we will get a better sense on how bad hotel trading is when the full year results are released in a couple of weeks (if last years timing is anything to go by).

Makes a whole lot of sense:


"Our two Copthorne hotels in Queenstown remain open and we look forward to welcoming guests now and into the future to these hotels,’’ the spokesman said.‘‘Having recently completed building works at Copthorne Hotel Lakefront we will take this opportunity to make improvements to the Millennium Hotel Queenstown before reopening at a later date.’’

[Norwest]

A longer term view would say no better time than the present to ‘make improvements’ due to the low opportunity cost of minimal lost revenue as a result of disruption.

Absolutely agree, great time to be doing it.

I just came back from staying at the Copthorne Lakeview (not to be confused with Lakefront), I got the last room and it was fully booked, I even got a call the day I was arriving to make sure I was coming as they had a "wait list".

The hotel itself is in dire need of a complete refurbishment. That may be next after they complete the Millennium Hotel in Queenstown.

[LaserEyeKiwi]

ALERT: MCK will release results tomorrow!

OPERATIONAL UPDATE – 16 FEBRUARY 2021


Millennium & Copthorne Hotels New Zealand Limited (NZX:MCK) provides the following update with regard to the impact of the COVID Alert Level changes made by the New Zealand Government on Sunday evening:


--All of our owned and operated hotels have received multiple cancellations for bookings over this week and the following weeks in February. Some events which cannot be held under Level 2 and Level 3 restrictions have also had to be cancelled and, where possible, these have been postponed to a new date.


--The current number of cancellations and deferrals varies from hotel to hotel and these disruptions are impacting on MCK’s February 2021 revenue. Given that individual travellers and businesses are still adjusting and do not know how long the current restrictions will continue for, we are not presently able to forecast the exact impact on our H1 2021 financial performance from these cancellations.


--MCK will be releasing its FY2020 results tomorrow, 17 February 2021.

ENDS
Issued by Millennium & Copthorne Hotels New Zealand Limited

[LaserEyeKiwi]

Summary of results:
• Group revenue $172.0 million (2019: $229.7m)
• Profit before tax and non-controlling interests $50.9 million (2019: $85.4m)
• Profit after tax and non-controlling interests $46.0 million (2019: $49.7m)
• Shareholders’ funds excluding non-controlling interests $743.6 million (2019: $715.3m)
• Total assets $987.9 million (2019: $1,008.2m)
• Earnings per share (cents per share) 29.05 cents (2019: 31.39 cents)

MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LOOKS TO THE FUTURE AFTER “HORRID” 2020.


Millennium & Copthorne Hotels New Zealand Limited (NZX: MCK) today reported its preliminary results for the year ended 31 December 2020 and announced a profit after tax and attributable to owners of the parent of $46.0 million on total revenue of $172.0 million.


“Our results are not from our hotel operations, rather they reflect the contribution from our property development operations such as our majority-owned subsidiary CDL Investments and a significant tax credit which was recorded during the year”, said MCK’s Chair Colin Sim. “The headline numbers mask the fact that 2020 has been a horrid year overall for our hotel business and its impact will continue to be felt well into 2021 and beyond”, he said.


MCK’s hotel operations made a small profit before tax of $1.9 million in 2020, a decline of 94% on the previous year.


“It has been like owning a shop where over 70 percent of our customers were stopped from entering it”, said MCK’s Managing Director Mr. B K Chiu.

“Of course we are fully supportive of the health response over the course of 2020 but the fact is that our business was devastated. Our 2021 occupancy so far, especially in key tourist destinations, is significantly less than what we saw twelve months ago”, he said. “Nevertheless, our strong balance sheet and an agile organization sets us up to manage the new demands for recovery and to make future investment decisions” he added.

By comparison, MCK’s property development activities in 2020 were “remarkable” and as well as CDL Investments’ strong result, contributions also came from the sale of apartment units at the Zenith Residences in Sydney.


“Our property development activities will continue to be the critical element in bolstering MCK’s profitability for the foreseeable future and we’re committed to providing support as required to allow them to do well”, said Mr. Sim.


MCK also signaled that it was continuing to refurbish and reinvest in its properties and announced that major refurbishment works has been completed at Copthorne Hotel & Resort Queenstown Lakefront in Q4 last year and that works would shortly commence at Kingsgate Hotel Greymouth and Millennium Hotel Queenstown. Other hotels such as Millennium Hotel Rotorua would also be looked at for refurbishment during the course of 2021.


While MCK was profitable in 2020, the Board resolved not to declare a dividend for the 2020 year and will instead deploy the funds for refurbishment and reinvestment in its hotels. This will also allow MCK to ensure it has sufficient capital reserves to continue to trade as well as optimize its financial resources in its recovery runway objectives.


Speaking to the year ahead, Mr. Sim noted that trading conditions would continue to be difficult for MCK’s core business.


“While we don’t expect 2021 to be as bad operationally, things will remain difficult. Kiwis do have freedom of movement within New Zealand that is the envy of many other countries and they are travelling but a return to pre-COVID revenue levels and profitability within our hotel operations may be many Matariki away and will depend on factors that are completely outside our control”, he said.


“MCK has shown its resilience and its ability to survive during the toughest circumstances. We are cautiously optimistic about the future as we work towards a successful recovery.”




Summary of results:
• Group revenue $172.0 million (2019: $229.7m)
• Profit before tax and non-controlling interests $50.9 million (2019: $85.4m)
• Profit after tax and non-controlling interests $46.0 million (2019: $49.7m)
• Shareholders’ funds excluding non-controlling interests $743.6 million (2019: $715.3m)
• Total assets $987.9 million (2019: $1,008.2m)
• Earnings per share (cents per share) 29.05 cents (2019: 31.39 cents)




ENDS
Issued by Millennium & Copthorne Hotels New Zealand Limited Enquiries to:
B K Chiu
Managing Director
(09) 353 5058

[LaserEyeKiwi]

Fantastic EPS result: 29cps is a PE ratio of just 7.5x at current share price of $2.17c
Also look at the NTA: now at $4.70 in assets per share - meaning the stock is trading at just 46% of underlying asset value.
https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/11b6c830-28bb-4844-9dd5-60b9ec412ae4

[BlackPeter]

Fantastic EPS result: 29cps is a PE ratio of just 7.5x at current share price of $2.17c
Also look at the NTA: now at $4.70 in assets per share - meaning the stock is trading at just 46% of underlying asset value.
https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/11b6c830-28bb-4844-9dd5-60b9ec412ae4

You are right ... this looks like one of the Buffet type low price / high value games. Still suspect that SP might even drop a bit from here due to dividend cancellation - might be an opportunity to accumulate.

[porkandpuha]

You are right ... this looks like one of the Buffet type low price / high value games. Still suspect that SP might even drop a bit from here due to dividend cancellation - might be an opportunity to accumulate.

Surprised APL didn't get more attention last week based on this reasoning. It's trading at a premium on NTA and paying a dividend.

[BlackPeter]

Surprised APL didn't get more attention last week based on this reasoning. It's trading at a premium on NTA and paying a dividend.

APL? What APL do you mean and how is this related to MCK?

[LaserEyeKiwi]

Actually unless I'm missing something, the ex-cash PE ratio is now 4x.

there is $160 million net cash ($198 million cash minus $38 million in debt), and with only 158 million shares outstanding that equals a net cash amount of $1.01 per share!

With shares at $2.20, the ex-cash share price is $1.19c, so with 29c eps the PE multiple is just 4.1x currently.

[LaserEyeKiwi]

Seperate announcement of Leslie Preston being added tot eh MCK board. Could be an interesting development, with her experience as CEO of a holiday home management company. Might be an indication that MCK will explore some alternative business models for some of its Hotel properties perhaps.

MCK: Leslie Preston appointed to the Board

17/2/2021, 9:02 amADMINLESLIE PRESTON APPOINTED TO THE BOARD OF MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED

Millennium & Copthorne Hotels New Zealand Limited (NZX:MCK) advises that the Board has appointed Leslie Preston to its Board with effect from 1 March 2021.

Originally from New York, Leslie Preston founded Bachcare Holiday Homes (“Bachcare”) in 2003 and was CEO and a director until 2020. Under her leadership Bachcare grew to become the leading full-service holiday home rental management company in New Zealand and was named one of The World’s Top 20 Vacation Rental Companies in 2019.

“I am delighted that MCK has been able to appoint Leslie to the Board after a very careful and extensive search process. She is very well known in the industry and will bring her in-depth knowledge of the New Zealand markets as well as extensive commercial acumen to our company”, said MCK Chair Colin Sim.
Leslie has worked for KPMG Peat Marwick and Bankers Trust in the United States and for Boston Consulting Group and BellSouth / Vodafone in New Zealand. Her senior management experience has included roles in marketing, customer and corporate operations as well as business strategy. She holds an MBA from Stanford University Graduate School of Business and a BA (Cum Laude) from Franklin and Marshall College, Pennsylvania.

“I am pleased to be joining the Board of one of New Zealand’s hotel industry leaders and see this as another opportunity to contribute to the tourism sector especially in these very difficult times. I am therefore looking forward to helping MCK deal with the significant challenges ahead”, she said.

The Board has determined in accordance with NZX Listing Rules that Ms. Preston is an independent director. Ms. Preston will be seeking election at MCK’s 2021 Annual Meeting of shareholders which is scheduled for 25 May 2021.

[Rawz]

You are right ... this looks like one of the Buffet type low price / high value games. Still suspect that SP might even drop a bit from here due to dividend cancellation - might be an opportunity to accumulate.

The problem is basically the entire company is owned by some wealthy Malaysian family (by memory). 90% ownership sort of thing. So you can invest at low levels and only hope they complete a full takeover. Otherwise the shares a barely traded.