Ann: Half Year Report - ASX Release, page-21

"Combination of turn around resulting in margin growth and discount to NTA of 35% makes this a decent medium term investment imo"

@Austosime,

There are two problems with that approach:

1. NTA for this company is a very fluid number: today NTA is, as your analysis rightly implies, 31cps. But three years it was close to 50c per share, so... (On a less sombre note, now that BOL's crane fleet is no longer being forcefully liquidated to keeps the banks at bay, NTA is unlikely to continue to be eroded... well, for the next few years, anyway).

2. But the bigger issue when using a "discount-to-NTA" approach is that, in isolation, it is not overly meaningful (other than in circumstances of a wind-up of the company in question). The price of a company relative to its NTA needs to be considered in conjunction with the financial returns being generated on a company's capital. Because, valuation theory dictates that if a company generates a financial return on its book value (i.e, its NTA when the value of Intangible Assets is zero, as is the case with BOL) that is equal to its Cost of Capital, then such a company should trade at a Price-to-NTA ratio of 1.0x (because it is neither adding or reducing economic value. And if a company generates a Return on Capital in excess of its Cost of Capital, then its Price-to-NTA ratio will be greater than 1.0x (because economic value is being created). But if ROC is less than the cost of capital - which it is in BOL's case - then Price-to-NTA will be less than 1.0x, i.e. the stock should trade at a discount to its NTA.