Mountview Estates Share Discussion Threads

[jonwig] 05/12/2014 08:52

It will have helped. Buyers of lower-value homes will pay less duty.

But I think we're in the middle of a serious re-rating of this stock, which will only be dented by a house price crash.

[eggbaconandbubble] 05/12/2014 08:12

Jonwig, Do you think slight upward movement last two days anything to do with George's stamp duty?

[eggbaconandbubble] 02/12/2014 12:36

"This is doin me 'ead in".
But we're looking good. Right? Under valued, and the share price is moving up again today.
TP £1.10?

[jonwig] 02/12/2014 09:11

No, just their trading properties were revalued.

Go to the balance sheet, find the trading properties (£317,651,000) and add £348m to it.

When you next see a balance sheet (at FY stage) the revaluation won't appear, as it's off-balance sheet. IFRS demands current assets at lower of cost and current value.
So you'll need to do a separate calculation again.

It's irrelevant to the calculation, but borrowings aren't £89m: look at the liabilities section of the balance sheet.

I suspect you're looking at a third-party source instead of the company's own numbers.

[eggbaconandbubble] 02/12/2014 08:57

Allsop valued all the properties they have at £666m.
They have debt - borrowings of £89m
Ergo basic net asset value is £577m. (666-89) approx. £148 per share, in theory. Something a bit less in practice.

Where does your £318m figure come from?

[jonwig] 02/12/2014 08:35

Stated by company in header to H1 results.

Alternatively, divide balance sheet equity (£276.4m) by number of shares (3.9m).

Then go to balance sheet and, add £348m to equity and repeat the calculation.

[eggbaconandbubble] 02/12/2014 07:58

OK, not totally disagreeing with you (yet!) but where do you get the figure of £71?

[jonwig] 02/12/2014 06:45

egg - no, the net asset value has risen by £666m - £318m, or £348m. This is £89 per share.
So NAV rises from £71 to £160 per share.

[eggbaconandbubble] 01/12/2014 20:42

£666 million less net debt of £89 million = £577 m or £148 per share. Less costs of disposal etc. etc.
Still good value at £92.

[jonwig] 01/12/2014 20:14

A brief comment in IC, with the conclusion:

The shares rose over 6 per cent on the news, but still trade 42 per cent below the book value of £160 a share that has emerged from the revaluation. Part of that discount is deserved: the Sinclair family control Mountview's shares tightly, so the value cannot be crystallised by takeover. But it still suggests considerable upside for long-term shareholders. Buy.

Of course, some of the family may be courting a takeover!

[jonwig] 28/11/2014 08:40

Or be taken over?

They've just done some free due diligence for a potential bidder!

There was some discussion of your points around AGM time - post #100 onwards.

[eggbaconandbubble] 28/11/2014 08:18

Thank you. That all makes very good sense and understanding of the company.
From that, what is clearly happening, is that the original business concept of buying up these tenancies is fast disappearing and now going out with an acceleration of profits, till the final drop off.
Hence I can understand certain shareholders' (or spouses thereof)concerns on the future direction of the company, and indeed their apparent difficulty in recruiting a replacement CEO(?).
Maybe they will wind it up or go into run-off as you put it.

[jonwig] 28/11/2014 07:35

egg - "as is" is my understanding.

But of course, property valuation is based on experience of similar properties. If, as is happening, regulated tenancies are being keenly sought by investors with development in mind, property values will be bid up.
So it's inevitable that current valuations will reflect an element of potential.
It will also mean that MTVW will need to pay more for a property, and margins will be tighter.

Tenants are getting older and vacancies are happening more quickly now. This means MTVW's income will improve more quickly.
(The eps figures for the last H1 seem to bear this out. And the steep dividend increase might reflect the fact that it's getting harder for them to spend their cash wisely.)
However, because supply is limited, the income stream will dry up sooner.

So MTVW needs to diversify or, effectively, go into run-off.

[eggbaconandbubble] 27/11/2014 21:46

OK, Jonwig, can you please clarify for my simple mind. If a property has a sitting tenant paying one third the going rent, was the valuation given as is, or on an assumption of the value if the tenant pops his clogs tomorrow and a full market rent / sale can be achieved?

[topvest] 27/11/2014 18:01

Excellent results indeed. Mountview Estates and Daejan Holdings are both doing very well.

[jonwig] 27/11/2014 15:43

mad - the revaluation, as I understand it, is of properties "as seen" and current sale, no assumption of any future benefit.
I spoke to one of the auditors at the AGM, and he confirmed this.

Added value would come from tenant exit, free market rents thereafter, and refurbishment. Downside, potentially, from London house prices, of course.

[mad foetus] 27/11/2014 15:01

jonwig,
do you know if the valuations of the properties in their current state and taking into account the fact they are tenanted? i.e. are you suggesting that if Mountview refurb then that could materially improve the value of the properties or do you think the valuation assumes a degree of refurbishing?

[jonwig] 27/11/2014 14:46

In post #108 I suggested:

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

and thought not ...

... but the mark-up from purchase to now is 100% and sale isn't necessarily in mind. These properties, for the most part, still have sitting tenants in regulated tenancies with need for refurbishment. The mark-up to £160 per sh is not the end of the story.

[jonwig] 27/11/2014 12:56

tiswas - yes, the AGM was discussed last August: at least two posters here attended.

Mad f - the family concert party has effectively been disbanded, with some wanting an outer, maybe, hence the revaluation.
Lack of a successor CEO, and the glacial pace in finding one is another cause of dissent.
Will the company be "in play"? Some at the AGM thought so.

[mad foetus] 27/11/2014 12:35

Interesting tiswas. It may be that some members of the family are voting against each other. However, I suspect part of it may be that the company falls foul of some of the PIRC guidelines and a lot of institutional investors follow the PIRC guidelines as a box ticking exercise. Some of the PIRC requirements are ridiculous, particularly for asset holding companies. But it is a good spot.

[tiswas] 27/11/2014 12:32

Hi

Bought in over the last couple of months ahead of the revaluation. Some very interesting comments on this thread.

What really struck me was the number of votes against the AGM resolutions this year, especially for what should be non contentious issues and a "family" company like this one.



Has this been discussed before?

Thanks

[mad foetus] 27/11/2014 09:14

I saw that jonwig, though I don't know if institutions have weightings in quite that way. Money observer has had a separate infrastructure grouping for some time, though even within the sector there is a huge amount of difference. As there is between something like Mountview and SREI. As ever, understanding what the businesses do and what they aim to return is the key.

[jonwig] 27/11/2014 09:04

Thanks, mad. (Forgot to add that dividend for year potentially doubled to 300p.)



Incidentally, you may have seen the link I posted on the HICL, JLIF and GCP threads.
If infrastructure funds are given their own sector status, maybe institutional investors can rebase their portfolios with a bigger weighting.
You might have some thoughts to add ... eg. crazy notion!

[mad foetus] 27/11/2014 08:50

Good call this one jonwig. Unfortunately I have to agree trades in advance with the wife and we hadn't got around to discussing this one before the sharp rise. But the valuation looks incredibly cautious so I think there is plenty of mileage.

[jonwig] 27/11/2014 07:16

Well, here are the H1 results - on time at 07:00:



Here's the key sentence, but we have to wait until the full year for details:

This valuation has been completed and, as at 30 September 2014, the trading stock has been valued at nearly £666 million. This is more than double the current book value of £318 million which, in accordance with our Accounting Policies, is stated at the lower of cost and net realisable value.

I make the NAV a modest £160 per share if the revaluation were admissable.
And the trading results look rather good, too!