Wednesday, December 13, 2006

Maui Land and Pineapple (MLP) Update

Maui Land & Pineapple Co, the Hawaii based pineapple producer/land developer has continued to fly under the radar since our initial research. The company had a solid 2005 with revenues of $186.7 million, up from 2004's $153.2 million and net income of $14.6 million, from a loss of $400 thousand. Through the 9 months ended 9/30/06, the company reported revenues of $132.4 million, and net income of $8.7 million (vs $118.1, $9.7 for the same period last year).

We originally took a position in MLP because of its land holdings (28,000+ acres) in Hawaii. We were not crazy about their low margin pineapple business, but to us, that’s a freebie.

Resort segment: Kapalua Land Company
Nine Miles of Hawaii Beachfront

Part of Maui Land’s 28,200 acres include 22,800 in West Maui, including Kapalua Resort a golf community, which borders the ocean, and boasts 3 beaches, 2 hotels, 3 championship golf courses, 10 restaurants, and 700+ single family homes and condominiums. Oh, did I mention the 9 miles of beachfront property?

Approval for Expansion
The big news for MLP was the recent decision by the Maui Planning Commission which approved Maui Land's plans to build multimillion-dollar homes and a new private golf course at the Kapalua Resort. This potentially opens the door for the company to finally unlock shareholder value.

At it's current enterprise value of $263 million, that MLP's land is valued at about $9300 per acre, on an Enterprise Value/Acre basis, a calculation we are fond of here at Cheap Stocks. Granted, some of the land is preserved, and land utilized in the pineapple operation (6000 acres) is not nearly as valuable as the Kapalua Resort property. But, a compelling calculation nonetheless.

*The author has a position in this stock. This is neither a recommendation to buy or sell this security. All information provided believed to be reliable and presented for information purposes only.

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