MCK - Millennium & Copthorne Hotels.

**LaserEyeKiwi** · 29-07-2020, 01:57 PM

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)

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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

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

**LaserEyeKiwi** · 29-07-2020, 02:01 PM

Originally Posted by 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:

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** · 29-07-2020, 03:47 PM

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** · 29-07-2020, 03:57 PM

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** · 29-07-2020, 04:22 PM

Originally Posted by LaserEyeKiwi

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 ...

**beetills** · 29-07-2020, 04:52 PM

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

**Traderx** · 17-08-2020, 02:53 PM

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