MCK - Millennium & Copthorne Hotels.

[LaserEyeKiwi]

AF9CF24D-1F6C-4374-952D-C19C14BDBE04.jpeg
Just in case anyone missed it, Border reopening confirmed for tourists: April 12th for Australia, May 1st for all Visa-waiver countries (which includes Europe & North America).


https://i.stuff.co.nz/national/polit...untries-in-may

Needless to say this is highly positive for MCK, with their Queenstown hotels in particular going to be very busy over the forthcoming Ski Season.

[invest]

Expected a share price bump given the significance of the border reopening. Should be immediate cashflow and revenue impact as Australia is our biggest market, and heaps of people are waiting to come in.
Vaccinated Australians, including permanent residents, will be able to come to New Zealand without isolating from 11.59pm on Tuesday, April 12.
Fully vaccinated travellers from visa-waiver countries will be able to enter the country from 11.59pm on May 1.
About 60 countries and territories, including Canada and the United States, are on the visa waiver list.
https://www.nzherald.co.nz/nz/covid-...JAVZYREUFH7WU/

[LaserEyeKiwi]

Expected a share price bump given the significance of the border reopening. Should be immediate cashflow and revenue impact as Australia is our biggest market, and heaps of people are waiting to come in.
Vaccinated Australians, including permanent residents, will be able to come to New Zealand without isolating from 11.59pm on Tuesday, April 12.
Fully vaccinated travellers from visa-waiver countries will be able to enter the country from 11.59pm on May 1.
About 60 countries and territories, including Canada and the United States, are on the visa waiver list.
https://www.nzherald.co.nz/nz/covid-...JAVZYREUFH7WU/

I find the New Zealand market takes a little bit of time to react to this sort of news when it comes to the more thinly traded names like MCK. I would expect the share price to be higher by the end of this week (unless Putin/China cause more chaos that drags everything down).

[LaserEyeKiwi]

https://www.nzx.com/announcements/388965

MCK welcomes earlier reopening of NZ’s international border

16/3/2022, 3:30 pmMKTUPDTE

Millennium & Copthorne Hotels New Zealand Limited (NZX:MCK) is pleased with the announcement from the New Zealand Government earlier today that the international border restrictions currently in place will be relaxed earlier to allow fully vaccinated visitors from Australia into New Zealand from April 13 and from visa waiver countries such as the UK and the United States from May 2
.
MCK Managing Director Mr. BK Chiu welcomed the decision to bring the dates forward.
“We have been patiently holding our breath for this moment and we are delighted that the international borders will be reopening over the next few weeks. We are very much looking forward to welcoming our international friends and family back to New Zealand after such a long time”, he said.

MCK’s Vice President Operations Ken Orr said that MCK’s hotels would be accelerating their plans to match the new reopening dates.
“The announcement is heartening news and is very welcome for all hotels and tourism operators across New Zealand who have suffered great hardship over the last two years. Having international visitors back in New Zealand is great news for the country and will definitely make a difference to our trading performance particularly in the second half of this year”, he said.

-ENDS-
Issued by Millennium & Copthorne Hotels New Zealand Limited

[LaserEyeKiwi]

https://www.rnz.co.nz/news/national/...tem-winds-down

MCK’s M Social hotel in Auckland will remain in the MIQ pool until the end of June.

Millennium Grand, the company’s biggest hotel (management contract rather than outright owned), seems like it will be available - along with every other MCK hotel other than M Social - for the border reopening next month.

[LaserEyeKiwi]

Annual Report released today.

Important to note that the forward looking statements made in the chairman’s letter were prepared on Feb 16th, BEFORE the expedited border reopening was announced this month (MCK released a market update to address the positive impact from that on March 16th https://www.nzx.com/announcements/388965)
However what im interested in is the “Market Value of NZ Hotel Properties” listed in todays annual report on page 2: $567.6 million !!!

As a referesher, MCKs non-hotel assets include:
1. 66.29% ownership of listed company CDL Investments, current value: $209.6 million ($316,264,000 x 0.6629)
2. Australian property being sold (Zenith Apartments), current value: $61.7 million (listed on page 2 of annual report)
3. Net cash (form hotel & Australia property segments), current value: $96.6 million $50.264m in Hotel segment + $46.350 in Australian property segment)

Total value of MCK non-hotel operations: $368 million

MCK Total market cap (MCK + MCKPA) = $364 million

So currently MCK is trading at $4 million less than the value of just its non-hotel assets.

When you add the market value of the Hotel assets at $567.6 million, and exclude all non-CDL liabilities of $52 million (WITHOUT including other assets like accounts receivable) - MCK is trading at a ~$520 million discount to its underlying fair market value of its $884 million+ in net assets. The current share price reflects a 59% discount.

NTA at Market Value is $5.59 per share (vs current share price of $2.30)
​Annual Report link: http://nzx-prod-s7fsd7f98s.s3-websit...508/367432.pdf

[BlackPeter]

Annual Report released today.

Important to note that the forward looking statements made in the chairman’s letter were prepared on Feb 16th, BEFORE the expedited border reopening was announced this month (MCK released a market update to address the positive impact from that on March 16th https://www.nzx.com/announcements/388965)
However what im interested in is the “Market Value of NZ Hotel Properties” listed in todays annual report on page 2: $567.6 million !!!

As a referesher, MCKs non-hotel assets include:
1. 66.29% ownership of listed company CDL Investments, current value: $209.6 million ($316,264,000 x 0.6629)
2. Australian property being sold (Zenith Apartments), current value: $61.7 million (listed on page 2 of annual report)
3. Net cash (form hotel & Australia property segments), current value: $96.6 million $50.264m in Hotel segment + $46.350 in Australian property segment)

Total value of MCK non-hotel operations: $368 million

MCK Total market cap (MCK + MCKPA) = $364 million

So currently MCK is trading at $4 million less than the value of just its non-hotel assets.

When you add the market value of the Hotel assets at $567.6 million, and exclude all non-CDL liabilities of $52 million (WITHOUT including other assets like accounts receivable) - MCK is trading at a ~$520 million discount to its underlying fair market value of its $884 million+ in net assets. The current share price reflects a 59% discount.

NTA at Market Value is $5.59 per share (vs current share price of $2.30)
​Annual Report link: http://nzx-prod-s7fsd7f98s.s3-websit...508/367432.pdf

Yep, I noticed that as well ... though obviously - a hotel might not always return the full estimtated value when sold. Suppose however that opening the borders will help ;

Anyway - getting more than 500 million dollars worth of hotel assets basically as free bonus on top of their other assets when buying the company looks like a bargain. Great buying!

Obviously - the usual terms & conditions apply ... This company clearly would be a takeover game IF it would not be controlled by a roughly 75% majority share holder who clearly has no interest in selling (CDL are a real estate empire designed to grow wealth without showing it. The Kwek family clearly does not need cash and compared to some other billionaires are they not interested in bragging about their wealth either.

So - yes - great value, but realising this value is nothing the minority shareholders will be able to control.

[percy]

Yep, I noticed that as well ... though obviously - a hotel might not always return the full estimtated value when sold. Suppose however that opening the borders will help ;

Anyway - getting more than 500 million dollars worth of hotel assets basically as free bonus on top of their other assets when buying the company looks like a bargain. Great buying!

Obviously - the usual terms & conditions apply ... This company clearly would be a takeover game IF it would not be controlled by a roughly 75% majority share holder who clearly has no interest in selling (CDL are a real estate empire designed to grow wealth without showing it. The Kwek family clearly does not need cash and compared to some other billionaires are they not interested in bragging about their wealth either.

So - yes - great value, but realising this value is nothing the minority shareholders will be able to control.

Your bottom line is really the bottom line.

[LaserEyeKiwi]

Yep, I noticed that as well ... though obviously - a hotel might not always return the full estimtated value when sold. Suppose however that opening the borders will help ;

Anyway - getting more than 500 million dollars worth of hotel assets basically as free bonus on top of their other assets when buying the company looks like a bargain. Great buying!

Obviously - the usual terms & conditions apply ... This company clearly would be a takeover game IF it would not be controlled by a roughly 75% majority share holder who clearly has no interest in selling (CDL are a real estate empire designed to grow wealth without showing it. The Kwek family clearly does not need cash and compared to some other billionaires are they not interested in bragging about their wealth either.

So - yes - great value, but realising this value is nothing the minority shareholders will be able to control.

Depends what you mean by ‘“realising value”. In my mind the dividends will only grow as the hotel operations return to something approaching normality, while CDL profits continue pouring in and the cash pile grows ever larger from the sell down of Zenith assets.

also, the theory about a majority shareholder suppressing the stock price by 60% below market value of assets doesn’t hold for any other companies with majority shareholders, including the obvious example here of CDL investments, which trades at a 10-11x multiple despite its majority holder also having no intention of ever selling. MCK trading at a 10x multiple once hotel operations return to some sense of normalcy would see a share price above $4.

im still in accumulation mode so I don’t mind if share price remains depressed for a while longer - hopefully I will have reached my allocation limit before the earnings have returned to pre-pandemic levels. (probably 11 months time I would think)

[thebusinessman]

im still in accumulation mode so I don’t mind if share price remains depressed for a while longer - hopefully I will have reached my allocation limit before the earnings have returned to pre-pandemic levels. (probably 11 months time I would think)

What's a reasonable accumulation for you?