MRM (ASX) Ann: Trading Update

Originally posted by croasian ↑

I agree most "engineers" as with "investors" are inept and so don't deserve the title. They are complimentary skills though not mutually exclusive.
Here's the relevant quote right? I don't know about coding but don't need to either.
"This means that a great number of American businesses are quoted in liquidating value; that in the best recent judgment of Wall Street, these businesses are worth more dead than alive.
For most industrial companies should bring, in orderly liquidation, at least as much as their quick assets alone. Admitting that the factories, real estate, etc. could not fetch anywhere near their carrying price, they should still realize enough to make up the shrinkage in the proceeds of the receivables and merchandise below book figures. If this is not a reasonable assumption there must be something radically wrong about the accounting methods of our large corporations."
From my perspective you are arguing that the earth is flat. After a time I will give up pointing out that it is round - you are entitled to your point of view but respect is earned.

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The world is round? Perfectly round?

Come on man, if investing is pure maths and accounting, all those data providers would be Buffett.

Here's my takeaway from Graham's Liquidating Value guidelines:

LV = All assets minus all liabilities with the following adjustments to certain assets under a low or high range scenario:

· LOW: 100% cash; 75pc receivables and other, 50% inventory, 100% land, 15%(PE, intangibles, other nca)

· HIGH: 100% cash; 90pc receivables and other, 75% inventory, 100% land, 25%(PE, intangibles, other nca)

· Note: exclude long term assets held for sale.

Applying that to MRM:

The simple LV would have priced MRM at either negative or zero or at best $0.13/share.

Before the crash, the market has priced MRM at 12 to 13 times reported earnings. The oil crash and MRM's more creative accounting to show massive non-cash losses (and hence get tax returns while paying zero taxes)... that negative reported earnings kind of throw the earnings valuation models out.

So the current market price ranges are just pure guesses and speculation as to what the banks are thinking; how will the oil industry will perform.... But historically, the market has always priced MRM at or above its NTA.

Put these facts together, alone, and it's quite obvious that MRM is a bargain by any measure. And that's not from guesswork or wishful thinking either. Not from mere coding and fancy maths... just common sense.

Ann: Trading Update, page-40