Valuation and Financial Analysis of McPherson Ltd Company
Added on 2023-04-20
11 Pages1928 Words208 Views
Introduction
McPherson Ltd Company is a dynamic consumer product involved primarily in the marketing,
distributing and doing business in a variety of health and beauty products throughout the Asia
Pacific, UK/Europe and North America. The expertise of the company lies in managing various
complex and a wide range of products and services that the consumers use in everyday lives.
The company has a diversified portfolio in the overall products and services it caters. Products
including kitchen households, skincare, hair care, and several accessories are some of the key
product portfolios of the company. The company is listed in the Australian Stock Exchange
with the ticker symbol “MCP” with a market cap of around 117.76 million and its current share
price to be around $1.13. The operations of the company are distributed globally in Australia,
New Zealand, South East Asia and the United Kingdom. The major competitors of the
company include Pental Ltd, L’Oreal Australia Pty Ltd, Unilever Australia Holdings Ltd, and
Asaleo Care Ltd (McPherson’s Limited, 2018). The financial report provides three valuations
scenarios of the company; base case, plausible (moderate to severe), and finally rise in global
temperatures of at least 2 degrees Celsius above pre-industrial levels.
First Valuation Scenario “Base Case”:
Business Strategies
McPherson Company has always had a wide range and variety of products and services in the
product portfolio of the company that has helped them garner better market share in Australia
and the rest of the world. The company has always tried to improve the focus on the core six
owned brand performance so that the growth of the company can be sustainable (IBISWorld,
2018). The increasing know how and the acceptance of the various products and services of
the company has led the company to increase both the domestic and the global revenue for the
company (IBISWorld, 2018). The company has always strategised to increase the revenue base
of the company both in the domestic and on a global basis. The same can be well seen where
the McPherson Company’s management has focused on increasing the global revenue of the
company as the acceptance, and the brand value should be diversified. In brief, below table
summarises the current MCP’s strategies as follows.
McPherson Ltd Company is a dynamic consumer product involved primarily in the marketing,
distributing and doing business in a variety of health and beauty products throughout the Asia
Pacific, UK/Europe and North America. The expertise of the company lies in managing various
complex and a wide range of products and services that the consumers use in everyday lives.
The company has a diversified portfolio in the overall products and services it caters. Products
including kitchen households, skincare, hair care, and several accessories are some of the key
product portfolios of the company. The company is listed in the Australian Stock Exchange
with the ticker symbol “MCP” with a market cap of around 117.76 million and its current share
price to be around $1.13. The operations of the company are distributed globally in Australia,
New Zealand, South East Asia and the United Kingdom. The major competitors of the
company include Pental Ltd, L’Oreal Australia Pty Ltd, Unilever Australia Holdings Ltd, and
Asaleo Care Ltd (McPherson’s Limited, 2018). The financial report provides three valuations
scenarios of the company; base case, plausible (moderate to severe), and finally rise in global
temperatures of at least 2 degrees Celsius above pre-industrial levels.
First Valuation Scenario “Base Case”:
Business Strategies
McPherson Company has always had a wide range and variety of products and services in the
product portfolio of the company that has helped them garner better market share in Australia
and the rest of the world. The company has always tried to improve the focus on the core six
owned brand performance so that the growth of the company can be sustainable (IBISWorld,
2018). The increasing know how and the acceptance of the various products and services of
the company has led the company to increase both the domestic and the global revenue for the
company (IBISWorld, 2018). The company has always strategised to increase the revenue base
of the company both in the domestic and on a global basis. The same can be well seen where
the McPherson Company’s management has focused on increasing the global revenue of the
company as the acceptance, and the brand value should be diversified. In brief, below table
summarises the current MCP’s strategies as follows.
Sales & Revenue Based on the Estimated Revenue Model:
Based on the above-forecasted model, in the year 2019, the company witnessing a growth of
36% in the skincare brand products, pharmacy products and through other export channels
compared to the year 2018. The total sales revenue from continuing operations for the company
will increase by an average of 4.8% annually, where the grocery brand Multix saw a major and
a steady growth rate of about 5.4% over the next five years. The demand and the revenue
growth rate of the health and beauty product division will be significantly contributed to the
overall revenue of the company. The higher profitability margin has led the management of the
company to focus on the growth ideas and expanding (Kallala et al., 2015). The focus of the
company is on high-profit margin products and services thereby bringing operational efficiency
in the business. Through, optimum utilisation of the resources in the form of reduced cost of
sales for the company has been the key reason for constant growth rate in the profitability of
the company (McPherson’s Limited, 2018).
Recent Communications to the market:
In 2018, MCP announced a change of director’s interest notice. It means that the company
hired new two directors (Alison Mew & Jane Mckellar), where they held 12,000 and 15,600
shares, respectively (Moelis & Company, 2016). By looking at their profile, Alison has 30
years of experience in quality, manufacturing, sales and marketing in a highly regulated
environment, operational solutions, and high experience in Pharmaceutical organisations. On
the other hand, Jane deeply involved in consumer-focused business transformation,
technology, marketing, digitalisation, divestments and enhance business performance. Not to
mention, the new incoming managing director (Laurie Mcallister), who has extensive
international experience in consumer goods, general management, R&D, Sales, innovation,
and marketing in Europe, Australia, and Asia. As a result, the new board of directors seems to
be promising and in line with the current company’s strategies toward business growth.
Another major announcement of MCP, issuing a notice of change interest of shareholders’
holding power (Investor Mutual Ltd increase from 10.08% to 11.09%. Which means Mutual
Ltd considered as a substantial shareholder who has full authority to influence the voting and
disposal of shares in the long-term. Finally, the company issued shares as a dividends buyback
(Dividends Reinvestment Plan DRP) with a discounted rate of 2.5% to assist the company to
re-invest and growth opportunities (InvestSmart, 2019).
36% in the skincare brand products, pharmacy products and through other export channels
compared to the year 2018. The total sales revenue from continuing operations for the company
will increase by an average of 4.8% annually, where the grocery brand Multix saw a major and
a steady growth rate of about 5.4% over the next five years. The demand and the revenue
growth rate of the health and beauty product division will be significantly contributed to the
overall revenue of the company. The higher profitability margin has led the management of the
company to focus on the growth ideas and expanding (Kallala et al., 2015). The focus of the
company is on high-profit margin products and services thereby bringing operational efficiency
in the business. Through, optimum utilisation of the resources in the form of reduced cost of
sales for the company has been the key reason for constant growth rate in the profitability of
the company (McPherson’s Limited, 2018).
Recent Communications to the market:
In 2018, MCP announced a change of director’s interest notice. It means that the company
hired new two directors (Alison Mew & Jane Mckellar), where they held 12,000 and 15,600
shares, respectively (Moelis & Company, 2016). By looking at their profile, Alison has 30
years of experience in quality, manufacturing, sales and marketing in a highly regulated
environment, operational solutions, and high experience in Pharmaceutical organisations. On
the other hand, Jane deeply involved in consumer-focused business transformation,
technology, marketing, digitalisation, divestments and enhance business performance. Not to
mention, the new incoming managing director (Laurie Mcallister), who has extensive
international experience in consumer goods, general management, R&D, Sales, innovation,
and marketing in Europe, Australia, and Asia. As a result, the new board of directors seems to
be promising and in line with the current company’s strategies toward business growth.
Another major announcement of MCP, issuing a notice of change interest of shareholders’
holding power (Investor Mutual Ltd increase from 10.08% to 11.09%. Which means Mutual
Ltd considered as a substantial shareholder who has full authority to influence the voting and
disposal of shares in the long-term. Finally, the company issued shares as a dividends buyback
(Dividends Reinvestment Plan DRP) with a discounted rate of 2.5% to assist the company to
re-invest and growth opportunities (InvestSmart, 2019).
Assumptions to “Base Case”:
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