Mountview Estates Share Discussion Threads

[jonwig] 26/11/2014 16:10

Three consecutive days of rises suggests a tipster has reminded clients of tomorrow. (Michael Walters?)

More two-way trading today - we should be prepared for some opportunistic traders to sell tomorrow unless news is exceptionally good.

[dt1010] 25/11/2014 18:28

A tip?

Buy Inland Homes, 58.75p now, Simon Thompson in the IC, WH Ireland and Finncapp all target it to go to at least 70p on strong results. AGM in December.

They develop in the commuter belt outside London, a market which is still booming. Telford Homes results tomorrow will prove this nicely and should reflect well on INL.

The share traded in a tight range between 43 - 50p for all of 2014. Broke 50p recently. New target is 70p.

[jonwig] 24/11/2014 14:34

They won't need that many, chector, if today's share price action is any guide! Though I didn't really suspect this to be a leaky company. Maybe just some optimists.

Seriously, though, they did say 'detailed' at the AGM (I think so ...).

Lots of trades today, low hundreds of shares each, fairly tight spread.

[chector177] 20/11/2014 21:23

DO you think a whole two sentences will be possible. :-)

[tmfmayn] 20/11/2014 08:36

27 Nov was stated in the last trading update. I'm just hoping the revaluation gives us a big number -- anything more than a sentence will be a bonus!

[jonwig] 19/11/2014 20:11

H1 results on 28 Nov last, so next Thursday or Friday, I guess. (Let's hope they observe a 7:00 start, like everybody else!)

We can expect anything from a sentence to a full document on the revaluation of trading properties, I hope.
And progress on finding a new CEO? That would be too much to expect.

[jonwig] 15/9/2014 06:34

Yes - they say it will come with the interims ... November, perhaps.

[eggbaconandbubble] 12/9/2014 17:53

Are we due a portfolio valuation soon?

[jonwig] 24/8/2014 09:48

Whew ... the markets open Tuesday, yes?

EDIT: so even an historically small margin of only 60% would still suggest a share price uplift of 25% from the current £80!

[tmfmayn] 24/8/2014 09:42

Hi jon,

Argh, I have just realised my multiplyer was 60% and not 160%. So your sums are right :-)
Mayn

[jonwig] 24/8/2014 08:59

Thanks Mayn.

I've followed your method (why didn't I consult the note ...?) but get a much bigger figure:

TPs cost £321m.
Margin 160% gives Gross profit £514m, Net profit £406m, so Net proceeds £727m.

Asset value = £727m + £29m [inv props) - £80m [debt] = £676m or £173 per share.

I'm prone to making elementary errors!

Incidentally, selling the company rather than the assets would avoid some costs and tax, I believe, though the buyer might want a discount for that. And a buyer should be willing to pay a premium for the staff experience.

[tmfmayn] 23/8/2014 19:49

Hi Jonwig

"Can we conclude that the mark-up from purchase to sale is nearly 100%?"

I think it is over 100%. If you look at the sales related to property disposals, and the cost of those sales (i.e. the original cost of the properties) in the accounting notes, then the figure came to 121% in FY14. Over the years the figure has been as low as 76% (2009) and as high as 245% (2008) and has averaged about 160%. So more than double. Of course, the premium is produced by rising house prices as well as the discount disappearing as and when the tenant dies. At the AGM Graham Murphy quite rightly noted the premium in FY14 was the second lowest for the last 15 years, which does seem odd in the current housing climate. But I guess the margin is all dependent on which properties come available for sale in any year, which could be quite random.

Anyway, my sums indicate that if MTVW could sell all of its trading properties at a 160% premium, pay tax on the gains, pay off its debts and realise book value from its investment properties, then the NAV could be £109 a share.

I too was at the AGM, but I did not click your real name with your user name here until after I had left the meeting!

Mayn

[jonwig] 23/8/2014 17:52

Hi topvest.

Break-up of Concert Party suggests possible outer, yes. And new CEO will be chosen on what premiss?

I notice the presentation suggests they may be looking to buy complete companies - margins there will probably be lower?

Incidentally, I mentioned Grainger as the biggest quoted rival. There's a much larger company, William Pears. Though privately-owned, this is FTSE250 size!

[topvest] 23/8/2014 14:47

Thanks for the reporting on the AGM. Yes, very interesting indeed. The possible exit comment is a particularly interesting comment. It may well be the time for the family to crystallise their investment if there is no obvious candidate to take the business forward. Presumably, now is the best time (or close to it) to sell this business as property prices are pretty strong and better to sell the business before the market diminishes too much in size. They can't buy as many regulated tenancies as they can sell.

Why do the portfolio valuation now? It does points to a possible exit in the next 12-24 months as presumably this valuation would be very useful to a bidding party. Has to be worth £100 or so to some other party.

[jonwig] 23/8/2014 10:08

The presentation is on the website now. Link here (click "AGM Presentation 2014):



Some interesting bits:

• Finite amount of stock with an estimated 15-25 year life
• Existing portfolio returns should accelerate [p6]

This was clarified: since regulated tenancies haven't been created since (?)1989, existing tenants will be dying at an accelerating rate. However, returns should reduce as recently bought properties will command higher prices.
Special dividends coming up?

Also, pp 9,10: during the year, 152 RTs bought for £23.01m (ie. average £0.15m per unit) and a different set of 179 were sold for £48.36m (average £0.27m).

Can we conclude that the mark-up from purchase to sale is nearly 100%?

No, of course not, but I'm going to hazard (very speculatively!)that the current NAV of £68 per share will be £100 on the coming revaluation of TPs and a potential £120 on full refurbishment and sale.

[jonwig] 15/8/2014 06:56

Cheers coolen.

Noah's Ark - I take it you don't mean Russell Crowe this year?

[coolen] 14/8/2014 22:42

I have been a holder since Noah built his ark.

Just a note to thank JonWig for his shrewd questions at the AGM and for kindly reporting back to us. Many thanks.

[jonwig] 14/8/2014 18:59

Hi, greatgig... - thanks for reply.

Allsops are doing the valuation.

The presentation did have some numbers which I thought were significant - if it's not uploaded tomorrow, I'll contact them.

[greatgiginthesky] 14/8/2014 16:49

Many thanks for this post. I should be able to make the AGM next year, if MTVW remains independent at that time.

I suppose the response on the matter of the dividend was to be expected. And, fair enough, having a share that does not cut the divi is worth something on its own.

On the revaluation I expect the valuers to be working on the basis of a willing buyer, a willing seller and 3 months to market each property. On publication of the revaluation, I would expect the share price to move to a level equal to a discount of 10 - 20% on the full balance sheet value. The discount reflecting the large family holdings, which kind of preclude a takeover without family approval.

I am sure there will be a letter from GRI in the file somewhere along the lines of "when you're ready you know where we are". Not so sure, though, that it would be a cash offer. I'd rather have shares for CGT reasons.

Once again, many thanks.

[jonwig] 14/8/2014 08:44

I went up to London yesterday for the AGM, It was well worthwhile.

There was a presentation to begin with (it will be put on the website - not there yet).
Not much there which isn't in the AR, and I didn't take notes as I expect to find it on the website. Will come back to that.

A Mr Murphy asked some questions. (His wife holds 15.3% - AR p13.) He was really quite ignorant, I thought, of how quoted PLCs work. I won't go into details, as it's hardly worthwhile!
The new chairman got rather exasperated with him but handled it pretty well, considering. I'm told he's like that every year.

The fact that the search for a new CEO (when Duncan Sinclair retires) has already lasted two years concerned Murphy and another questioner. But there may be a sub-text here ... see later.

I had my own questions:

• that I thought the dividend was still a bit stingy.
It was pointed out that the dividend had never been cut, and was consistent with their cautious policy.

• what planning was taking place to re-balance the company as the number of regulated tenancies dries up.
They are aware of this, but gave no details.

• more details wanted on the form of the revaluation of trading properties.
Likely to be very detailed and undertaken annually thereafter. The revaluation will not take account of any potential uplift of a property when it comes vacant. In that sense, as I mentioned earlier, the values thrown up will be considerably in excess of the stated balance sheet values, but lower than the potential sales values.
Message - don't be disappointed when the numbers come out! (Late November?)

It was interesting to see Andy Brough in the audience. He holds lots of shares in his own personal capacity, not as head of one of Schroders' equity teams.

The best part of the meeting was the chance to talk to some other investors afterwards.
One long-term holder explained that the sub-text here was that part of the family wanted an "outer" - most probably a cash takeover. Reasons given match closely those mentioned by "greatgig..." above:

- break-up of concert party (remember, it totalled more than 50%),
- revaluation exercise to put a more transparent number on the assets,
- flexible but close retirement of CEO and no obvious or willing successor within the family.

Who might be interested? Grainger [GRI] was mentioned ... worth following their progress a bit more closely?

My own feelings - a definite "hold". I'm reluctant to actually buy more at this level, as I've been moving into cash recently in any case. But if there is a market correction, I'd add around £70 I think.

[greatgiginthesky] 05/7/2014 13:26

Yes. My take on the old Concert Party Agreement is that it bound all the members to vote in a particular fashion. However, now some members of the family are no longer part of that concert party AND the new agreement allows members to vote whichever way they wish to at a general meeting.
Another idle piece of speculation on my part surrounds the unfortunate death of Keith Langrish-Smith. His 307,000 shares are worth £27million and if held in his own name there would have been a substantial CGT liability on sale. However, now those shares will have been inherited at a new, higher base value for CGT purposes, thus making it rather more tempting for the new holders to be looking to cash in. As I say, just my idle speculation.

[jonwig] 05/7/2014 11:27

I think I was misunderstood: the current "valuation" of a run-down property will be higher than its cost (on the balance sheet), but won't reflect the further value to be added after refurbishment.

In other words, even a current re-valuation will understate the potential!

greatgiginthesky - re the Sinclair family split(?), asking for a current valuation can probably only have one interpretation, yes! Maybe one faction wants an outer.

[greatgiginthesky] 05/7/2014 11:03

But the properties are already listed on the balance sheet at "...the lower of cost and net realisable value." So, in theory, a valuation now should only ever result in a higher value than on the balance sheet.

[chector177] 03/7/2014 20:23

Seems a reasonable assumption. However Jonwig is warning most of the properties are run down and I think he is suggesting the valuation will have a negative impact