Minoan – Better Late than Never: Buy

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After years of waiting AIM listed Cretan property play/travel group Minoan (LSE:MIN) has finally got within spitting distance of getting planning consent for its Cave Sidero in Crete it announced today. Better late than never. Talking of which the news actually came out in the Greek press yesterday. Some subscription tipsheets will respond to the news. My twitter followers knew 24 hours ago as I tweeted out the link. Follow @tomwinnifrith to be ahead of the curve…

This news is big and makes the shares, at 12.75p, just look ridiculously cheap. Minoan has not actually got consent but it has been selected as one of the two lead projects to go for FastTrack consent. Cave Sidero has been mired in planning red tape for years. Greece knows that the project will create jobs and generate taxes and its politicians have been told by their new Masters in Berlin that this sort of farce has to stop. As such we can now look forward to CS getting full consent within a few months. So why does this matter?

On June 20th  Monaco based Candia Investment Corporation took a 10% stake in Cave Sidero for £2 million ( so meaning that Minoan has no cash concerns). Once Fast Track is approved it can, and I believe will, take a further 25% stake for £12.5 million.

So right now Minoan’s 90% stake is valued at £18 million. When Candia goes ahead it will have £12.5 million in the kitty and a 67.5% stake valued at £33.75 million.

Minoan also has a Travel & Leisure business that is profitable and should deliver a pre-tax profit for the group in the current year of at least £700,000 – next year will be materially higher.

Value T&L on a multiple of 10 and it is worth £7 million. CS is worth £18 million to £33.75 million (plus cash of £12.5 million).  That gives a sum of the parts valuation for Minoan of £25 million to £53.25 million. At 12.75p the company is valued at £18 million. This has been a dire tip from me as the Greek farce has dragged on (should that be a Greek Tragedy?). I first tipped it at 87p back in 2007. At least I was advising folks to average down at well under 10p but we all produce some duff tips and this is one of mine. Having said that, today’s news is a game changer and the stock looks a very strong buy at these levels.

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Comments

  1. Phil says:

    Share price is currently down nearly 9% following the news. Seems a very strange reaction to what should be a major break through for Minoan.

  2. Bob says:

    Phil

    Hence the City saying “better to travel than arrive”. The shares have been strong of late ahead of this long awaited news and so many shorter term investors have pocketed profits. The company has sadly been a perennial disappointment in the City and may well drift ahead of the next piece of news.

  3. laviniamalabe says:

    Tom

    Yes its been a dire tip but to be fair the reason for the bottom falling out of the SP was the political and bureaucratic minefield that Minoan has had to get through , the years of delays have meant that they’ve had a fair few fundraisings just to keep the lights on , Emed have had similar problems in Spain and i don’t think its a coincidence that both the Greek and Spanish economies are going down the pan . Duncan Wilson has done a good job since joining Minoan ,setting up and expanding the travel business which looks like its got many years of growth ahead of it and now the Cave Sidero project coming good , we could well see 87p again in the next few years.

  4. Bob says:

    laviniamalabe

    “they’ve had a fair few fundraisings just to keep the lights on” is an understatement. Presumably to also pay Christopher Egleton and others an obscene amount of salary/bonus for little return to shareholders over recent years?

  5. laviniamalabe says:

    Bob , yes CE has taken far too much out of the company over the years and that’s something that needs sorting.

  6. Bob says:

    Well we know how much Tom likes to attack these greedy pigs that eat from the trough. Here’s another classic chance.

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