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09/03/16
07:52
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Originally posted by danginvestor
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From memory, the $2.10 NTA was after the $100M noncash impairment to vessels and $20M on its bases.
So while it's good to be conservative, we shouldn't really price 3.5 year old fleet with a solvent business for the scrap heap.
That and these assets are ships. They can be sold to any business anywhere in the world. All you need is a small crew with some fuel and food and off they go. Can even get paid for delivery by selling it as training or testing etc.
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After a merger like that with Jaya... we'd expect certain assets to be sold off. That's where some of the efficiency and synergies that's often blown out of proportion comes from.
Sure the storm then hit MRM and its industry shrunk and more vessels are available and less work etc., but who could predict this perfect storm? And what business could avoid these kind of cycles anyway?
So when this kind of perfect disaster hit, we can't really value MRM's current or short-term earnings as though that is their normal earnings. So more focus must be put on its book value, its assets, its position and reputation and its balance sheet etc. Not so much on its recent earnings . That's how I do it anyway.
I'll fire up my database tomorrow but from memory, if you average and cautiously estimate MRM's potential earnings from its assets when business is just back to normal, you'd be laughing at its aprox. $87M market price at 22cents. It's also quite funny at 40c too.
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When I read the reports and comments from Management, having read the financials, it worries me that these guys might say all those negative stuff to drive the price down so they can then do a management takeover.
I mean, we all know things are tough but come on Jeff, lighten up a bit will you.
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+1 danginvestor.
Although on the last point, I think management have been very honest and not tried to sugar coat the situation. They have no control over the oil price themselves, and they are just working to keep the company in the best position possible for the rebound.
Their no-bull reporting style actually made me more comfortable to keep buying during the dark days. As a result I now have an average buy price of 35.9c in my portfolio. After this week's bounce, my confidence in the recovery has been somewhat buoyed and I might yet but more.