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.

[bottomfeeder]

No issue with legal fees....the deposit that buyer paid. .. MET can use the fund

Not usual to pay a deposit on a takeover. They may have bought a stake on the open market, after all they are not buying the bare assets. So I would say legal fees on an unsucessful court case will be shareholders money down the drain. If this brings the SP under $4 tomorrow, good. I will buy as many as I can afford

[King1212]

Yes....I am aware with Master Beagle....I am just comparing the worst....20% off from current $7. Worst case scenario!

[Beagle]

I'd rather keep my shares at $5.60 mate. (Some people might infer from that comment I am interested in buying more at around this level and they'd be right to infer that).

[King1212]

Kapai Master Beagle! Will keep buying then....

[Chiefy14]

Are the ORA's struck on a fix priced basis (i.e fixed percentage of market value as at point of sale)? Trying to get my head around the impact on NTA from the ORA leverage should property values decline. Vast majority (if not all) of statutory profit is through revaluations, and "underlying earnings" lean heavily on gains (losses) on resale

[bottomfeeder]

I don't like to chase the share price of a rising stock, but I bought some more under $4.30. The main reason is a hedge for the coming inflationary effects on the economy, from all of the government spending. I feel confident also that the SP will reach $5.00 easily when the funds getting out finally sell their last shares. I don't feel like paying any more than the $4.30. But never say never.

[Cyclical]

I don't like to chase the share price of a rising stock, but I bought some more under $4.30. The main reason is a hedge for the coming inflationary effects on the economy, from all of the government spending. I feel confident also that the SP will reach $5.00 easily when the funds getting out finally sell their last shares. I don't feel like paying any more than the $4.30. But never say never.

Yeah, I said further up that I think we'll be seeing further volatility on this one until we know for sure one way or the other what is happening with the take over. Bit silly really as the fundamentals are still good regardless. Wouldn't be surprised to see it dip back into the $3.something when APVG comes back making the wrong noises. Better keep some powder dry just in case.

[King1212]

Bought another parcel! Bless me Master Beagle!

[Beagle]

Yeah, I said further up that I think we'll be seeing further volatility on this one until we know for sure one way or the other what is happening with the take over. Bit silly really as the fundamentals are still good regardless. Wouldn't be surprised to see it dip back into the $3.something when APVG comes back making the wrong noises. Better keep some powder dry just in case.

Bought another parcel! Bless me Master Beagle!

See above. Think long term.