I was intrigue by the winding up of MIIF. This fund was a good dividend play and special situation. I thought it was worth a look given its 9.18% dividend yield with possibility of special payout.
It turned out to be a wasted hit. Not wasted valuation as I saved my capital at risk due to the background checks. It turned out that its 81.8% stake valuation with the minus of success fee would only be worth a punt at valuations of less than 0.075 or 0.066 (post-div).
The asset apparently though may be worth more to the person who buys it - current earnings of about 12m.
How was this model build?
I used the assumption that there was a winding up and three case scenarios
(20% probability) Worst case scenario (reaching the success fee) - sale at 77.6m
(50% probability) Base case - sale at NAV 120.2m
(30% probability) Bullish case - China Merchant Pacific was used as a comparable sales valuation
(adjusting upwards the value for dividend yield and downwards for p/b) - I got a value of 137.038m.
Finally - at 81.8% stake in HNE. I computed the cash payout to investors.
Totally not worth it. I would only buy things with a certainty of some sort of 15% return. At that measure, only at a price of 0.081 or 0.072 (post-div). That is a 17% downside from here.
If you are interested in the model, you may leave your email in the comment and I will send it to you.
