MCK - Millennium & Copthorne Hotels.

[Waltzing]

"I do feel both the business market and the tourism markets may end up being permanently weakened. "

what may well be weakened is the IB sector as china is now fast becoming a serious Soviet style prison camp.

Speakers blaring out propaganda in villages. All business now required to hold training sessions for mind control. The CCP must have been appalled at the lack of attendance at it commemorative movies.

The gambling centres might be at risk of being shut down next if they cant control the population. Unlikely but the CPP could start restricting travel abroad and who knows where its all going next.

[greater fool]

fool.png


Change of content.

[BlackPeter]

Half year results are out. Very satisfactory, particularly given the circumstances :

http://nzx-prod-s7fsd7f98s.s3-websit...522/351339.pdf

MCK as a group made an unaudited profit before tax and non-controlling interests of $41.36 million for the six month period ended 30 June 2020 (2020: $26.26 million). The main contributors to these results were sales of residential sections from our majority-owned subsidiary CDL Investments New Zealand Limited which continues to trade strongly and the sale of the Copthorne Hotel Christchurch Central land in May 2021. Four apartment sales at the Zenith Residences in Sydney settled during the last six months also contributed to this result.
MCK has therefore recorded a profit after income tax and non-controlling interests of $25.34 million (2020: $34.09 million) on group revenue for the period of $98.36 million (2020: $84.74 million). Our earnings per share for the period decreasing to 16.02 cents per share (2020: 21.55 cps) reflecting the impact of last year’s one-off tax credit from the Government’s COVID-19 Business Continuity Package. MCK’s Net Tangible Assets per share as at 30 June 2021 which was $4.86 per share (2020: $4.44 per share).

Clearly - not just a boring hotel chain ... the real money is in real estate - and that's more than just their CDL gem.

[LaserEyeKiwi]

Yes very well managed. The stock in my option continues to be one of the biggest bargains on the NZX.

Some highlights for me after a first run through the result:

- Upbeat guidance:

"Looking at the second half of 2021, MCK said that it was aiming for an overall result which was an improvement on the previous year.

“CDL Investments is well on track to better its 2020 performance and we are also looking at more sales at the Zenith Residences in Sydney which will all ensure that MCK as a group remains profitable”, said Mr. Chiu.


“We have also assumed one or two changes of alert levels or mini-lockdowns in our planning before the end of the year and we believe our targets are still achievable even if such an event or events were to happen”, he said."

- Hotels continue to operate above breakeven despite virtually no international tourism and ~40% average occupancy (even while impacted by some short NZ alert level changes/lockdowns during 2021). The company operations are now extremely efficient and once inbound travel restrictions start to ease up the company will undoubtedly be more operationally efficient than pre-pandemic.

- Net Tangible Assets (NTA) per share increases to $4.86 from $4.70 in last 6 months (and up from $4.44 12 months ago).

- Massive cash & cash equivalents holdings at reporting date: $93.4 million cash in 100% owned MCK segments, and $132.5 million cash in 67% owned CDL. (CDL announced a giant land acquisition after balance date which is included in the $56 million of future contractual commitment under "land purchases" in MCK results page 11). MCK shareholders share of cash at balance date is $182.2 million or $1.15c per share in cash.

- Looks like a nice gain on sale from the former Copthorne hotel land in Christchurch Central (abandoned since 2011) - $10.2 million above the book value.

- New reporting segment (!) "Investment Property - comprising rental income for the ownership and leasing of retail shops" $8.4 million of assets. Future contractual commitments for Capex on investment in Investment Properties is $24.7 million.

- Zenith apartment sales (and rental) continue to bring in a steady stream of income and prospects looking better than expected with comment: "buyers are showing renewed interest in inner city apartments" Despite the steady sales rate, the total Zenith assets continue to appreciate in value, increasing by $4 million over last 12 months.

[thebdogg]

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.

Not seeing any evidence of this. Based on QuickFS numbers the book ratio has never gone over .52 since 2011:

Price-to-Book at year end 2011 to 2021: 0.26 0.31 0.44 0.46 0.52 0.50 0.46 0.44 0.37 0.45

[thebdogg]

Just as a comparison, same numbers for CDI:

Price-to-Book 0.80 0.78 0.72 0.66 0.61 0.53 1.33 1.10 1.10 1.15

[LaserEyeKiwi]

Not seeing any evidence of this. Based on QuickFS numbers the book ratio has never gone over .52 since 2011:

Price-to-Book at year end 2011 to 2021: 0.26 0.31 0.44 0.46 0.52 0.50 0.46 0.44 0.37 0.45

Not sure what figures you are using, but in July 2018 MCK traded at $3.30c per share when NTA was $3.72c per share, so P/NTA was 89%.

[greater fool]

A pyramid Unfinished.png

An unfinished pyramid............................

[LaserEyeKiwi]

Some good news today for MCK, with the news that borders will be reopened in “early 2022”, with trials starting from October 2021.

The new rules are good for MCK in two ways: There will be an increase in visitors obviously (and with it an increase in demand for hotel rooms), and the MCK properties currently in the MIQ hotel pool will still be required for MIQ as the 14 day MIQ requirements remain for those coming from high risk countries and/or those who are unvaccinated.

[LaserEyeKiwi]

https://www.nzx.com/announcements/378272

pretty much what you would expect for level 4, and good to see them stating they are on sound financial footing and also taking full advantage of wage subsidy again.

--Cancellations received to date exceed 9000 nights across all of our properties. The current estimated revenue that has been lost due to these cancellations does affect the profitability of MCK’s hotel operations but is not currently expected to affect MCK’s group financial position in a material way. We will continue to keep the market updated;

An application for the wage subsidy has been submitted for employees located at the hotels and corporate offices which are closed.