Tuesday, May 23, 2006

What I think of MTD Capital?

  • wat do u think of MTD itself....


I have done 2 blog postings on MTD b4.

Click on this link called
Map of mublings under the section called Archives on the left of the blog.

Search for the following 2 postings on it:
MTD Capital and MTD Capital & ACPi

RNAV valuation is usually used when one is looking at a holding company, which own substantial shares in other listed companies.

For example, say MTD owns shares in company A and company B.

So first they calculate the value o MTD shareholding in company A. And to calculate it, you multiply the number of shares MTD has in company A x the fair price of A.

Example: If MTD has 200 million shares in company A. And assuming the fair value of A is derived to be 1.00 then the value of MTD's shareholding in A is 200 x 1 = 200 million.

And then you do the same for company B.

And then you add both values up. And then divided by the current number of shares MTD has.

So where and how such valuations could go wrong? Well, one has to safely assume the fair value of company A and company B. And assuming one is successful in navigating such a task, one is then has to make another assumption. What is the discount to this RNAV which is deemed fair? For me, I find so complex. It's one assumption over another assumption over another assumption.

And for MTD, at this moment of time, it gets even more complex as MTD warrants has just expired, which means one does not know exactly how warrants will be converted into MTD shares. Which means one does not know for sure how many shares MTD will has in the near future. And if so, what is the RNAV of MTD?.

See the fuzziness of all this?

And if that is not enough, MTD has flip-flop its construction earnings to one of its subsidiary company? Which means unless we see some earnings report from this group of companies, everything will be extremely fuzzy?

And to compound things even more, MTD Capital has been making losses dues to provisions. So what can one expect? Yes, if we treat those provisions as a one-off issue MTD is making some money but on the other hand, how sure they will be no more provisions?

So isn’t this a complicated and complex situation?

Wouldn't it be more prudent if one adopts a wait-and-see approach until we know what is happening?

Like some folks say, why take a difficult betting option when there are easier and more viable betting option?

By the way, MTD Capital's corporate governance is pretty poor. Yes, one can assign hefty discount values to account for their poor corporate governance but do realise poor corporate governance remains poor corporate governance and it makes no difference in regardless of how much discount you apply for safety precaution (say isn't it more safe to avoid it totally? ) for at the end of the day they remain poor corporate governance.

Last but not least, these are my opinions of this stock as requested. If you think my reasonings is wrong, then it is wrong ok? Please make sure your own judgement and reasoning is sound in your own investing decisions. My opinions are mere second opinions.



12invest said...

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hhc1977 said...


i think u r building a cult around you........