MCK interim results for the 6 months ending June 30th should be released this week (last year it was released Aug 2nd).
Will be a bit of a transition 6 months, with the border reopening during the period to visa waiver countries, but not fully reopened to all (that happened yesterday on Aug 1st). And during the same period the MIQ system was essentially closed, with MCKs two MIQ Auckland hotels exiting that, and reopening for normal bookings. The period also covered the period when covid became widespread in NZ, and while most have acclimatized to “Covid -everywhere” by now and are back to regualr travel plans, that was a little different earlier this year.
(The bumper bookings for the Aussie school holidays in Queenstown Hotels will be in the next 6 months results)
MCK subsidiary CDL (MCK owns 67%) will still be chugging along as usual generating plenty of cash, so that will buttress the hotel operations transition period for the most part, and Zenith (the Sydney apartments being gradually sold down) will likely provide some cash depending on how many more units have been sold.
I’m not expecting an interim dividend (MCK historically paid dividends once a year) - but who knows, MCK has plenty of cash.
Big thing to pay attention to will be the outlook going forward.
Last edited by LaserEyeKiwi; 10-08-2022 at 11:47 AM.
Interim Results are out, for 6 months ending 30th June:
(mandatory reminder that the MCK/CDL group has over $1 Billion in net assets at fair market value, that is hidden behind a “cost basis” accounting method, and a stock currently trading at $2.26 has a fair market value of above $6.60 per share.)
Net Profit: $15.4 million
EPS: 9.74c
NTA gain of 13c per share
Cash on hand: $157m (zero debt)
Operating segments & notes:
- Hotels Operations: ($2.896m) net loss
Obviously still heavily impacted by Covid and closed borders during 6 month period, as well as Omicron wave hitting NZ domestic market, but outlook improving with solid forward bookings for the summer.
- Residential Property Development (Zenith Sydney apartments): $2.934m net profit
4 apartments sold, still plenty of apartments left to sell ($29m worth on a cost basis)
=== CDL operations (which MCK gets 66% share) ===
- Residential Land Development: $23m profit
Strong performance continues from the residential land sales, despite the softening market. Guidance is for full year net income in line with last year. Added to its land portfolio during the period.
- Investment Property: ($0.08m) loss
First warehouse was completed during the period, with tenant occupying in last month of reporting period (hence hardly any income recorded for this segment). 2nd warehouse due to be completed and occupied this month. Good to see an alternative revenue stream emerging.
Cash & cash equivalents:
Gigantic cash pile: $181.8m across the group (MCKs share of that is $157m). Cash generated $1.058m in interest income for the group in the 6 month period.
Net Tangible Assets: Important to remember the company restated its NTA values on its “land and building” assets to a “cost basis” last year (as opposed to the fair market value, which they still listed in the annual report earlier this year as being worth ~$1 Billion). On their cost basis method, the groups net assets increased to $635.5m (up from $617.8m 6 months ago).
MCKs portion of net assets (cost value) is as follows:
Hotel Operations: $252.59m
Res. Property Dev: $82.328m
Res. Land Development: $176.528m (65.99% of $267.508m)
Investment Property: $21.832m (65.99% of $33.084m)
MCK Net assets (cost basis): $533.278m
Divided by 158,218,286m shares = $3.37 per share
MCK have the NTA updated to $3.33 per share today, so not sure where that 4 cents difference comes from, but probably some accounting explanation.
Using the fair market value from the March annual report, along with the latest cash balance and added proeprty assets the fair market Net tangible asset per share value is over $6.60 per share
Last edited by LaserEyeKiwi; 10-08-2022 at 11:48 AM.
What is the point of this company? Their return on assets and return on equity is consistently Low. Dating back last 8 years the ratio sits between 5-8%
The highest dividend yield ever was 2.78% in 2019.
They should sell everything and give the funds to shareholders. wonder if they sold up they would get LEKs $6.60 per share?
What is the point of this company? Their return on assets and return on equity is consistently Low. Dating back last 8 years the ratio sits between 5-8%
The highest dividend yield ever was 2.78% in 2019.
They should sell everything and give the funds to shareholders. wonder if they sold up they would get LEKs $6.60 per share?
Not really. Compared to NZX listed property companies ROA is very high, ROE is naturally not as high due to the lack of debt. If you want more exposure you could simply borrow and buy more MCK.
Paying out large dividends isn't the most tax efficient option and in the best interests of long term shareholders one could argue. Reinvesting to grow the BV is fine as sooner or later or very later it will be realised.
If you look at some of the assets they sold recently they were well above book value, so unless you think they are selling the best stuff, this should be reflective of the rest. They have no interest in pumping up the share price as they probably eventually want to take it out at a discount.
.... Net Tangible Assets: Important to remember the company restated its NTA values on its “land and building” assets to a “cost basis” last year (as opposed to the fair market value, which they still listed in the annual report earlier this year as being worth ~$1 Billion). On their cost basis method, the groups net assets increased to $635.5m (up from $617.8m 6 months ago).
MCKs portion of net assets (cost value) is as follows:
Hotel Operations: $252.59m
Res. Property Dev: $82.328m
Res. Land Development: $176.528m (65.99% of $267.508m)
Investment Property: $21.832m (65.99% of $33.084m)
MCK Net assets (cost basis): $533.278m
Divided by 158,218,286m shares = $3.37 per share
MCK have the NTA updated to $3.33 per share today, so not sure where that 4 cents difference comes from, but probably some accounting explanation.
Using the fair market value from the March annual report, along with the latest cash balance and added proeprty assets the fair market Net tangible asset per share value is over $6.60 per share
Hey LEK, great post!
Do you know how that fair market value is calculated? Do they use a cap rate similar to what the reits get? Or is it just pie in the sky stuff?
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Originally Posted by Rawz
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