Tried to put in a new thread but wasn't working...Anyway
CWN has been my research project over the last couple of months. I have recently topped up in the low $12's and now touching on my portfolio limit. My high-levels comments are as follows:
- CWN's market cap at $12.50 ~ $8.82bn
- CWN's investment in MCE at current share price is approx A$5.59bn, down from the A$7.2bn at 30 June due to the fall in the MCE share price offset by the falling A$.
- Thus, at current share prices you are buying the Australian business, Aspinals, and the other development projects for $3.2bn. These businesses produced profit after tax of $596m in 2014, and EBITDA of $838m. I believe there may be some group overheads that would need to be allocated to this however.
By my calcs, that gives a p/e of 5.4 for a monopolistic business with long dated licenses and growth potential, particularly for Sydney.
I have simplified the above, as I have not reflect any capital gains tax payable on the disposal of the MCE shares for example, but the points above still hold. Any further weakness in Macau will obviously further reduce the value of the investment in MCE. I also calculate that dividends from MCE paid in cash to CWN should be in the order of A$150m in FY15, up from A$94m in FY14. This doesn't affect profit numbers, but does increase free cash flow and ability to pay dividends.
CWN Price at posting:
$12.33 Sentiment: Buy Disclosure: Held
