Since the traffic flow on my blog is not heavy, I can share more freely on my recent study on MUI. If my readers like the idea, they need do further research. On timing and crowd sentiment, I cannot help them.
The story of MUI's turnaround plan was published frequently in megazine and newspaper lately. At first glance, most people will run away because it is very complicated, me too! However, I crawl back again trying to understand how much this company worth. iCapital closed end fund made a very handsome gained from William Cheng restructuring of Lion Diversified. Now they rated MUI a long term buy, so I took interest in it, esspecially Khoo is also buying the company shares very regularly.
The key catalysts of unlocking value of this company will depend on:(analysis based on 30 Sept 07 financial results)
1. Make the company less complicated and make it easy for people to understand and value the company
2. Get rid of debt
There is 873 mln debt on its balance sheet, however, it also has 884 mln of cash and near cash. So, theretically speaking, the company is in net cash position.
3. The company incurred losses of 700,000, however if you remove the finance charges of 27 mln, it would have net income of 28 mln. Annualized EPS will be 0.058/share, tagging at PER 9, the company worth 0.52/share, provided item 2 is done.
4. The hidden values of the company are in its property and Laura Ashley . The property on its balance sheet carried on cost, never revalue since they bought these properties and land. The estimated value of the propety today is about 1.1 billion, 0.57/share Value unlocking realization is only possible provided they continue to dispose. They have been disposing their hotel properties like nobody business to cut debts from 5 Billion to what it is today.
5. Market capitalization of Laura Ashley based on its 34% controlling interest worth about 368 mln or 0.19/share. Will they sell it or let the unit contibuting earnings?
If Khoo has personal interest, what is the probability the five points mentioned above will happen?
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