Member Info for alwayswrong

WB wouldn't be interested in NMC...based on his mantra of

'preferring to pay a fair price for an excellent company , rather than an excellent price for a fair one'

I stick to my own one based on the 'always wrong' principle of a company's short term share price ...this is because it's current price is based on a voting machine, rather than a weighing machine which it gravitates towards, and then overshoots in the longer term , and all the votes aren't in yet..

My belief is that it will weigh much heavier than its current price if it sells off its fertility segment or similar to remove all debt .

In my humble view, the current price of £7 is less than the aggregate sum that could be obtained from the selling of its different parts . Look at the segmental profit analysis in a foot note of their annual accounts..

Hey Sugs, I liked your post and reasoning on positions and will check it out against the actual result..
By the way just ignore Adz....with a bit of luck he will go over to the AVDFN board and take the Chinese restaurant discussions further .

A starter at 8 tomorrow no doubt, but I will be off and out at 10 because I have a dental appointment at 10.45 and the traffic where I live is dreadful..

Dogger...any offer made would be subject to proper due diligence, where everything was forensically examined rather than the superficial review undertaken by MW...which was hardly impartial, and released just after their short was set up and trailed before hand...
MW are hardly the BBC ..
The due diligence exercise will accompany any offer accepted...the skeletons if they exist would then be uncovered , which might account for any resistance that the NMC puts up..

The usual method for determining the offer price is based on a multiple of net earnings..
NMC are projecting annual earnings of £230 million for 2019..
1. If the NMC is categorised as being a company in decline ( a dog ) in other words their hospital contracts are be being wound down over say a 10 year period then an earnings multiple of between 6 and 8 times would be a fair offer...i.e. between £1.4 to £1.8 BN
£7.00 to £8.70 per share..

2..If the NMC were to maintain their existing hospitals in perpetuity, but not acquire any new hospitals ( cash cow ) then an earnings multiple of between 10 and 12 would represent a fair offer..
I.e. between £2.3 to £2.8 BN.. or £11.00 to £13.50

3..If , however , the NMC was still deemed to be a growth company ..I e. acquiring new hospital contracts ( rising star )then a minimum earnings multiple would be around 15 with a maximum of up to 35, depending on the planned levels of growth ..

This would make a fair sale price to be in the region of
£3.5 to £8 BN. or ....£17 to maybe up to £40 per share.

It follows therefore that all other things remaining equal , then unless the NMC is in decline and winding down,. the offer price of £2 billion being mentioned is a derisory one.

My understanding is that the NMC is still a growth company ...?? For information the share price earnings multiple ( PE ratio ) over the past 5 years has ranged been between 14 and 36...

I said all other things remaining equal because we have the overhang of the Muddy Waters report..

To be more precise a £2 billion sale would equate to £9.58 offer price per share, with each additional £100 million extra, adding an additional £0.48 to the share offer price..

Mr_Trad3R
1...My average trade price is £8.51
All..
1...Read MW report in full...flawed and misleading in that it presented questions to be answered as conclusions of wrong doing...the American way..guilty until proved innocent .
2...As a qualified accountant who has worked as an auditor in a hospital (King Khalid in Jeddah) there certainly are questions which need more disclosure , their debt level at 3.4 x EBITDA is very high for this kind of company which could be caused by paying too much for assets (look at goodwill figure) to friends and family connections , although abated somewhat by inflated hospital provision contracts..of course only a first impression/ gut feel...
3. My partner is out tonight and I have spent the last 3 hours downloading and chuckling at some of the other messages, however, I could have been downloading porn instead and my partner will shortly be on her way home ..

Calamari...thanks for that unwelcome truth about Sino forest and it's virtual timber...how did E&Y dodge the bullet from that one ?

Pearls...I fully agree with you ..to become debt free would take a one on one rights issue at about £6 per share....when the share price was £40 they could easily have just issued an extra 50,000 shares without anyone noticing .

Well yes I agree...it was a non committal mixed message article...if there was anything awry though, how did it get through Ernst and Young audit ? Having said that the ratio of Net Debt / EBITDA is very high at 3.4...the impact of this is that interest costs amount to over one third of profits before interest...that isn't healthy..
I wouldn't rule out the need for rights issue even though the clowns have been buying back their shares at over £12 a share !!

Very interesting article in the FT about the short attack on the NMC...at one stage, shorts amounted to 30 % of the free float stock , the day after the muddy waters attack, but have now reduced to 10 % and their view is that the smart money has already been made and that following the bears now would be extremely high risk...let's hope their right..

Poor realist, he must have been in at the beginning and saw his shares rise in value from £5.50 to £40 and then down to £7.00....so much for buy and hold forever !!

Mr Trader...
You missed off my average share price
It's £8.51

Me...'always wrong'...£30k invested at £8.05

Just a thought...rather than buying more to average down , and risk losing more, why not instead take out shorts to limit your losses.and maybe make a net gain if it drops to near zero which I don't think will happen

This remains a very profitable private hospital chain..if debts do become too burdensome then based on known certainty of futurr profit margins they have several credible strategies to de-risk..
1...Sell off parts of the business to raise funds and repay debt .
2.. Hold a rights issue to pay off debt ..yes shareholders stake will be diluted but half a loaf is better than none..
3..Sell all of the business to the highest bidder and distribute excess receipts to shareholders..
4...If all is in order and the MW report is unfounded, (NMC directors know whether it is or it isn't,) then sit tight and prove the MW report to be wrong and carry on business as normal which appears to be what they are doing now..how many times do they have to repeat what they have already said about being baffled with the current share price movement..
I suggest you read up about Burford because MW did exactly the same to them..

My opinion is that it's a short attack, a deliberate stunt to destroy the share price and profit substantially from subsequently buying back in, a tactic for which MW is allegedly renowned for..

If the debts (liabilities) were higher and were being hidden as claimed, then there must be a corresponding asset on the balance sheet which has also been omitted, or expense within the P&L account which hasn't been declared .. either way it doesn't make sense and wouldn't pass external audit scrutiny..

Make your own minds up but I am holding on to what I have , but not buying any more however tempting it might seem to be..

Don't you just love the Motley Fool...back in November they were recommending people to buy shares in the NMC at £25.00 ish....who are these clowns ??

Freeh report out today ??
I have worked out in the Middle East...any external report critical of local management will not get approval to be released unless and until it is watered down...

At the moment the intra day low of £7.64 just before 11am is holding...if it falls through this ...well the stone will gather no more moss..
Important to bear in mind though, that in the short term the share price is a 'voting' machine, but in the long term it becomes a 'weighing' machine..
At the moment we are experiencing a vote of no confidence..

Preserve Capital....the name "always wrong" relates to a company's share price....at £40 it was wrong and likewise at £8 it is wrong too....the aim is to buy in where it's much cheaper than its true fundamental value , and sell when it's far too expensive when compared to its fundamental value...to me the share price is on the wrong side because it's too cheap , but I am only basing that on information which is already in the public domain...if, for example NMC' lenders have informed them that they are intending to cut off all future funding and indeed call in existing funding , until the accusations made in the MW report have been resolved, then the share price is wrong again, but this time too high at £8.00....does that make sense ?

The shares being suspended, if it does happen, is an act designed to protect private investors like ourselves from losing too much money by cashing in at huge losses, due to our irrational fears of losing everything..
It gives the market some breathing space to pause and reflect on the underlying fundamentals.. generally speaking , more normality to the market returns..which presumably would happen in this case also...