After reading
@DrBourse post which you can find
here, I decided to do some fundamental research on MIN myself and thought I would share what I found using the 2022 Annual Report which was released on the 14/10/2022. Part of this was inspired due to my current re-reading of The Intelligent Investor. Here we go.
Share price as at today is $88.79.
MIN is currently trading at 48x earnings based on the 2022 AR. Implied growth rate of the business at these levels (based on the simplified formula in Benjamin Grahams booked noted above:
Valuation = Current (Normal) Earnings x (8.5 + 2x expected annual growth rate) is 19.77%p.a. This would bring EPS to $11.23 in 10 years time and at current earnings multiplier levels, prices in the vicinity of $539 per share. On this assumption, and shares outstanding staying the same, market cap in a decade would be approx. $101.3 billion dollars. If you believe this is not sustainable, current prices are too expensive.
From a quick overview of the financial statements:
1. EPS down 72.5% YoY
This is about the only thing I can note without making some amendments to the financial statements.
See below for probable reason.
Free Cash Flow
Looking at the statements, net cash from operating activities in 2021 is $1.309B. Now we have to subtract the maintenance CapEx for which we are going to use Depreciation and amortisation which looks to be $258M. However, one thing that The Intelligent Investor teaches you is to read your financial statements from back to front because the back is where all the creative accounting happens. So, if we scroll to page 164 of the AR, we actually find that accumulated depreciation and amortisation for 2021 is $749M. This gives us free cash flow of only $560.4M, not $1.051B. that's $2.97 FCF per share on current outstanding shares.
Let us do the same for 2022. Net cash from operating activities in 2022 was only $279.8M. Maintenance CapEx for the same period (go back to page 164) is $940.7M which gives MIN for 2022
negative FCF of -$3.51 per share.
Debt
As DrB noted in his post, on the surface, total debt has increased by 83.19% from 2021 to 2022. However, it is actually worse than that I believe. As you can see below from page 188, there are commitments relating to the purchases of property, plant and equipment that are not recognised as liabilities, hence we need to add another $527.7M to the 2022 total liabilities. This brings the actual debt increase to 104.48% YoY.
Additionally, this reduces equity from $3.271B down to $2.743B, a reduction of 16.13%.
Debt to equity is now 184.75%.
View attachment 152637
Dividend Payout Ratio
Instead of using dividend per share / EPS, I instead like to use dividend per share / FCF per share as earnings does not always equal cash, as we can perfectly see this with MIN in 2022 with $1.8487 EPS to -$3.51 FCF per share.
Therefore, using the above, in 2021 we had a dividend payout ratio of $2.75 / $2.97 or 92.59%
In 2022, we had a dividend payout ratio of $1 / -$3.51 or -28.49%
There could be other things in the annual report that I have not found, however what I have found, for me, would be enough for me not to invest in this company at this point in time.
Find MIN 2022 Annual Report
here.