MPG - Metro Glass

[percy]

I reckon some of you are a bit mean spirited in writing Metro off completely so quickly ...some to the extent of almost calling their total demise.

This business has essentially been operating for well over 50 years (maybe even longer). It’s always been the market leader and has seen off the competition in all those years. Some old competitors no longer exist and some new entrants have come and gone.

Viridian (once Pilkingtons) been around a while. The great CSR bought them and were going to kill the likes of Metro. Metro won that battle and Viridian after never making much money have apparently been put up for sale.

A new entrant will no doubt have some impact on Metro but possibly not to the extent you guys think. Glass guys are pretty resilient - just count how many fingers they’ve lost.

Worst thing going for Metro is thats it’s listed company and shareholders (esp fund managers) being the impatient greedy lot they are maybe will hinder their efforts in fighting off this new entrant.

185,378,086 shares on issue gives at 53 cents a market capitalisation of $98,250,386.
From the balance sheet,year ended 31st March 2018, we see total assets of $300,787,000 with shareholders equity of $160,336,000.which gives an equity ratio of 53,30% which we would expect of a manufacturing company.
However, the picture changes should we deduct the $159,487,000 of intangible assets on the balance sheet, leaving only $ 849,000 of "real" equity ie 2.82% supporting $300,787,000 of assets.
I would question the real value,if any, of these intangibles.
A 1 for 1 rights issue at 50 cents would raise $92.5 mi increasing "real" shareholders funds to approx $93.35 mil, still only giving an equity ratio of 31%.But who would support it.?...........Not flash.

[winner69]

185,378,086 shares on issue gives at 53 cents a market capitalisation of $98,250,386.
From the balance sheet,year ended 31st March 2018, we see total assets of $300,787,000 with shareholders equity of $160,336,000.which gives an equity ratio of 53,30% which we would expect of a manufacturing company.
However, the picture changes should we deduct the $159,487,000 of intangible assets on the balance sheet, leaving only $ 849,000 of "real" equity ie 2.82% supporting $300,787,000 of assets.
I would question the real value,if any, of these intangibles.
A 1 for 1 rights issue at 50 cents would raise $92.5 mi increasing "real" shareholders funds to approx $93.35 mil, still only giving an equity ratio of 31%.But who would support it.?...........Not flash.

All depends on what the goodwill represents really.

Metro’s goodwill was generated from acquisitions of companies, albeit one of them from a PE restructure from a heavily indebted broke company. Might have been ‘over valued’ at the time but who knows. The Metro brand/name/business is worth something.

A bit like Turners - $170m of intangibles (mainly from acquisitions) which is very high relative to $213m of equity. All those intangibles are worth something eh even if not backed uo by anything tangible.

[percy]

For a company going forward, Intangibles I accept have "some" value,however they quickly lose any value when a company goes backwards.
To me MPG does not look like a company which is going forward.

[winner69]

How to collect $244m from keen punters

PE promoters just as good as used car salesmen

https://www.metroglass.co.nz/media/1...2014-20-mr.pdf

[BlackPeter]

How to collect $244m from keen punters

PE promoters just as good as used car salesmen

https://www.metroglass.co.nz/media/1...2014-20-mr.pdf

As usual - the most important statement in the prospectus:

No guarantee
No person guarantees the Offer Shares offered under this Investment
Statement. No person warrants or guarantees the performance of the
Offer Shares or any return on any investments made pursuant to this
Investment Statement.

[percy]

How to collect $244m from keen punters

PE promoters just as good as used car salesmen

https://www.metroglass.co.nz/media/1...2014-20-mr.pdf

Used car salesmen have a lot better reputation than a great number of people,including lawyers, politicians, and PE promoters.
Trustee folk.
Note.Turners give a money back guarantee, and also vehicle warranties,none of the above do.!

[winner69]

As usual - the most important statement in the prospectus:

There is a section on the risk of a new competitor entering the market

[Beagle]

However, the picture changes should we deduct the $159,487,000 of intangible assets on the balance sheet, leaving only $ 849,000 of "real" equity ie 2.82% supporting $300,787,000 of assets.
I would question the real value,if any, of these intangibles.
A 1 for 1 rights issue at 50 cents would raise $92.5 mi increasing "real" shareholders funds to approx $93.35 mil, still only giving an equity ratio of 31%.But who would support it.?...........Not flash.

Well said. Fact is MPG was touted heavily as a growth company and goodwill was calculated upon a whole bunch of assumptions about ongoing compound growth which simply haven't happened and are now looking like amounting to ongoing contraction. The fundamental basis behind the goodwill calculation is systemically flawed.

As recently as the 2017 annual report we had senior personnel coming out with these sort of statements that are nothing but utter tripe e.g. Sir John Goulter - Chairman "As a growth business Metro Glass is continuing to invest... Elsewhere... Metroglass is working to develop the capability and capacity to deliver strong growth in both volume and product complexity...
And Nigel Rigby MPG is in good shape and continues to generate good financial results verses its peers in the industry. While the company is undergoing a steep learning curve...

For goodness sake, they had to hire external consultant to tell them what was glaringly obvious to almost everyone else but themselves, that they are a cyclical building products supplier operating in an industry notorious for tight margins. Why are they in a steep learning curve when the business has been operating for decades. Was this in fact a desperate cry for help by Rigby admitting he was completely out of his depth ?

Talk of strong growth in 2017 was the stuff of some fantasy fiction novel, and always has been since the company listed.
People were sold a very ordinary barren (cyclical) mutt riddled with flea's and mange and it was dressed up like a pedigree Beagle who had just won Crufts show dog of the year and we were told it would produce many litters of pedigree puppies.

Now returning to Percy's well made point. There is a very large difference in the price of a mangy flea infested mutt and a pedigree Crufts show dog of the year. I suspect the true value of goodwill is a mere fraction of the asserted value in the balance sheet and that fraction is a very, very long way south of half.

Nobody would support a capital raise Percy, the complete B.S. this company has continually fed the market has totally destroyed trust and market confidence.
If people must bet on systemically compromised mutts its far better in my opinion to wait until it breaks back up though its 100 day MA (assuming that will happen at some stage, I don't recommend holding your breath).

Said mutt did bite this dog and once bitten twice shy as far as I am concerned. This business is in systemic decline as we come down off the peak of the building boom.
Where's the bottom ?...that as they say is the $64,000 question. I think it could be zero if the banks get skittish and start calling the shots.

[winner69]

Sounds like Metro are dead and beyond resuscitation and the last rites being given

If I knew how to do such things I could set one a poll to guess how long it is before the administrators are appointed.

Be ironic if there is a decent profit upgrade on Monday ....grapevine says they’ve had a good first half.

[percy]

Fear of failure focusses the mind.
A wonderfull aphrodisiac, which drives a great number of business people.