MET - Metlifecare - one for the fundies?

[Beagle]

Totally agreed...look at KPG...down 8.5% on valuation....that saying their portfolio exposed to retailer.

Around 15% down on NTA.

So....let say 20% shaved off MET NTA of $7....then we still got $5.60

Retail malls and retirement homes are two very, very different asset classes.

First there's the issue of whether they're entitled to withdraw the offer at all.

Second I modelled up a 7.5% projected decline in residential real estate prices that's the average of what economists are expecting in the year ahead and assuming a 2.5% increase in the first two months of 2020 when the residential market was going gangbusters I came out with an estimated NTA in April 2021 of $6.16 if indeed the market does in fact drop 7.5% over the year ahead, which is by no means certain.

Lastly there's the issue of accrued earnings between now and April 2021 so if you're going to base a current takeover on future expected NTA you have to account for future expected underlying profit over the year ahead and working on say $90m that's 42 cents per share which would give an expected future NTA as at April 2021 of $6.16 + 0.42 = $6.58, (I reiterate, only if in fact average real estate prices fell by 7.5%) When you add in the extra 17 cents earnings I refer to below that sheets it all up to $6.58 + 0.17 = $6.75 so even if residential real estate does drop by 7.5% over the year ahead to April 2021 there's still $6.75 of value counting earnings to that period which is not materially dissimilar to the $7 proposed takeover price.

There's also another issue nobody has touched on to date. NTA was $7.00 as at 31 December 2019 By the end of May 2020 the company will have a further 5 months of accrued earnings and going off the mid point of the companies own forecast for FY20 of $86.5m on 213m shares, that's 41 cents per annum of earnings or about 3.4 cents per month so on 5 months accrued earnings to the end of May 2020 there's another 17 cents of accrued value right there !

In other words there is already a 17 cent buffer of extra value built into the current deal of $7 and are getting $7.17 of value for $7.00.

Talk of a heavily revised offer does not sit comfortably with me and would not get my support. I'd rather the company sued for specific performance or damages and if we can't get a full and fair price I'm more than happy to keep my shares long term.