The Shares Researcher

Intro Mayr-Melnhof Karton (MMK) is a leading global manufacturer of cartonboard and folding cartons active in 33 countries with around 15,000 employees. MMK operates in three divisions: Pharma & Healthcare Packaging, Food & Premium Packaging and Board & Paper. The company promotes sustainable development through innovative, recyclable packaging and paper products. MMK has been listed on the Vienna Stock Exchange since 1994 and is still controlled by core shareholder families, who own roughly 58% of the share capital. The remaining 42% is free float. Valuation Especially in 2021 to 2023, Mayr-Melnhof has been very active in buying other companies (for example Essentra Packaging) or incurring large investment programs (for instance currently at its paper mill in Kwidzyn in Poland). Through these activities, net debt has increased from around €200 million in 2019/2020 to more than €1.2 billion in 2023.  Leverage ratios have also increased and ought to be reduced in the com...

In mid-2022, Agios Pharmaceuticals (NASDAQ:AGIO) was mentioned on this blog as kind of a special situation. It was explained that the company was roughly available at its cash value. Some of the value described seems to have materialized now and the stock increased from $17.60 to around $33.00. Because of many other excellent opportunities, this might be a good moment to cash in and realize the profit of almost 90% - congratulations!

Intro When is enough enough? Since Bayer closed the acquisition of Monsanto in 2018, the company hasn’t been the same. Bayer incurred huge litigation costs associated with the takeover, a lot of trust and reputation has been lost and the share price fell from more than €100 per share to below €30 currently. A debacle. Bayer generates around €50bn in revenues, of which 50% is from crop science, 38% from pharma and the remaining 12% from consumer health.   Valuation The big elephant in the room are the litigation costs and hence free cash flow is impacted by litigation pay-outs and also one-time costs for transformation to reorganize the business. Bayer currently trades below book value, showing a P/B of 0.85. Just recently, the company basically suspended its dividend (they still pay out a small minimum dividend which is marginal) for the next three years. Adjusted for the litigation effect, Bayer is still expected to generate an EPS of around €5-6, which translates ...

Intro Hong Kong Ferry Holdings is mainly engaged in property development and investment. As the name says, they also operate a ferry business and has expanded into the medical field. Major sources of income are currently rental income from properties and interest income on the cash reserves. Due to the large cash reserves, the company paid out a special dividend for its 100 th anniversary in 2023 of HK$1 per share besides its ordinary dividend. Warning: this is – again – a very illiquid stock and hence not suited for everybody.   Valuation The balance sheet as of mid-2023 can be summarized as follows: HK$3.5bn of non-current assets (mainly investment properties) HK$1.8bn of inventories (mainly properties in development) HK$1.8bn of cash With no financial debt, this leaves equity of HK$6.9bn. Compared to the market cap of HK$1.6bn, the P/B ratio stands at 0.23.   What’s next? At the current stock price, it is possible to buy this 100-year-old comp...

Intro Sounds like real estate, doesn’t it? Yes, it actually does. You believe real estate is a sound investment in this interest rate environment? It depends.  Before we get into Canadian Net Real Estate, a big disclaimer: this is once again a tiny cap with very low liquidity. So, if you need or want a lot of trading liquidity, this is certainly not something for you. Canadian Net acquires and retains commercial real estate leases in around 100 properties in Eastern Canada (focus on Quebec and Ontario) with a 100% occupancy rate as of Q3 2023. Some of the largest single tenant include Loblaws, Walmart or Sobeys. The contracts are on a triple net basis, meaning that the tenant pays all the expenses of the property, including real estate taxes, building insurance and maintenance. These expenses are in addition of the costs of rent and utilities. This is the major difference of triple net leases vs. normal commercial contracts where more costs are typically the landlord’s responsibili...