MFB - My Food Bag

[SailorRob]

Something like that, maybe a bit less considering the realistic probability of growth, which is not realistic or probable, in my opinion. A 15% discount rate hurdle would immediately write-off this company as an investment opportunity. Their growth is flat already.

The valuation model I used also takes into account the current market capitalisation, which as it falls, so does the enterprise value (what a buyer might be expected to pay for the whole company right now ... not 'intrinsic' value [NAV, NTA?], whatever that is). As the market continues to discount the SP/Market Cap, the enterprise value on the model I've used is now ~$0.13 per share.

This is why I don't really like fundamental analysis, it's too nebulous and littered with assumptions (trying to predict the future), except perhaps to try to discover whether this is a long term viable and sustainable business. I've never seen two FA's agree on each others analysis. So we're left to make some assumptions and my assumptions, based on my fundamental value analysis, and technical analysis, is that this is not investable in it's current state.

It's cheap for a reason, perhaps many reasons. That doesn't make it a good investment, or even worth much more consideration, imo.

I actually don't understand any of this post.

[silverblizzard888]

Meanwhile, Harbour just keep a selling :

http://nzx-prod-s7fsd7f98s.s3-websit...697/396084.pdf

Harbour is also getting a haircut off Peb too, so they must be a desperate to cut losses.

[Baa_Baa]

I actually don't understand any of this post.

OK, maybe if I put it another way that might resonate with you. Would Warren buy into this company? If so why and if not why not? It's not obvious why you are even remotely interested in MFB.

[ValueNZ]

Baa Baa, why does your value estimate change dependent on market price changing? If your value estimate is always going to be lower than the market price obviously at no price you would be happy to purchase shares.

[Baa_Baa]

I actually don't understand any of this post.

I'm sure that you do understand it.

1. growth is already flat, no discount value other than 0% is useful or realistic. Anything else is optimistic.

2. enterprise value, or intrinsic if you like, will be close to market cap, which is what a buyer will be prepared to pay, if they offered to buy it, maybe with some premium to motivate a seller.

3. FA is full of assumptions, in my observations few FA's ever agree on their assumptions, so their FA value analysis always disagrees with each other.

4. MFB is 16 cents per share, it looks cheap, but is it really?

Does that help?

[Baa_Baa]

Baa Baa, why does your value estimate change dependent on market price changing? If your value estimate is always going to be lower than the market price obviously at no price you would be happy to purchase shares.

Enterprise value takes into account what the market (capitalisation) value is . No buyer of an asset will ignore what the market thinks it's worth, neither should a valuation of the company's worth, imo. Every company buyout is at a market cap + some premium to entice owners to sell into it. So it stands to reason, market cap should be a factor in valuing the enterprise.

So you're right, as long as the market discounts the value by devaluing the SP, the enterprise value will decrease as well.

It's not true that the enterprise value will always be lower than the market cap, if the market cap is increasing, so will the enterprise value, hence it's worth more or going to cost more for a buyer to take it over. But this isn't currently the situation with MFB, it keeps on going lower. Probably for a reason, is it really investable, or just a punt that it may be?

Fact is though MFB is growth flat and as I said, imo not investable. Too many risks and a market pariah. There's a lot of better places to put your money than a punt on MFB. But, if you like a punt, a gamble, a bet, well, maybe MFB is worth a shot, I wouldn't know and have no opinion on that except I don't gamble on losing shares.

[Rawz]

Enterprise value is black and white. It is what it is. Market cap + debt - cash.

Intrinsic value depends on the analyst and whatever their dreamed up future earnings are. EBO classic example of why I have given up using DCF models, look at gurus fisher funds piling into it this year… obviously they didn’t model EBO losing the CW contract. And I don’t blame them, who can’t predict such things

Nowadays I look at the PnL, balance sheet and cash flow statement. Then read the most recent report and look at the outlook statement and leave it at that. Otherwise you are updating your model a hundred times a year

[Rawz]

BaaBaa you can’t have a model where the answer is in the equation. That’s a paradox

[ValueNZ]

I think I must be missing something - Is there any reason why an investor would care about enterprise value?

[Rawz]

I think I must be missing something - Is there any reason why an investor would care about enterprise value?

Only to compare companies in the same industry that have different balance sheet make ups.

MHJ had nearly $100m cash on their balance sheet not long ago so you would want to use EV if comparing against another jewelry co that had say lots of debt on their balance sheet