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MCP - McPherson's Limited

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robusta

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MCP Operates in two distinct market sectors, namely, in the distribution of household consumer products (kitchen utensils, glassware, plastic bags, food wraps and aluminium foil, and beauty, personal and hair care products), and in the book and commercial printing industry.

Have had MCP on my watchlist for a while now, they operate in a highly competitive enviroment with a ordinary outlook but somehow manage to produce decent returns.

Anyhow they have recently proposed a demerger and reverse takeover of the printing business.

http://www.asx.com.au/asxpdf/20111118/pdf/422mg1vmw1xr53.pdf

Starting to put this one in the too hard basket, is the sum of the parts worth more than the whole business??

Someone may be able to find opportunity here and if so good luck to them.
 
Hi Robusta I was having a look at MCP and wonder on the timing of the demerger: the market is probably not in the mood to be marking up a book printing business or a consumer discretionary business at the moment...

But I like demerger situations - because as you say often 1+1>2, though more details about the proposal are probably required before there is clear evidence of value here in my opinion. And perhaps more worrying is the warning that HY12 profit will be 30% down on PCP due to "ranging decisions" of retail customers, whatever that means (I presume loss of orders for consumer products).
 
Huskar said:
Hi Robusta I was having a look at MCP and wonder on the timing of the demerger: the market is probably not in the mood to be marking up a book printing business or a consumer discretionary business at the moment...

But I like demerger situations - because as you say often 1+1>2, though more details about the proposal are probably required before there is clear evidence of value here in my opinion. And perhaps more worrying is the warning that HY12 profit will be 30% down on PCP due to "ranging decisions" of retail customers, whatever that means (I presume loss of orders for consumer products).
Click to expand...

The "ranging decisions" are probably due to WOW & WES strategy of pushing "own brand" products at the expense of importers and wholesalers like MCP.

MCP is trading at a good price if past performance can be maintained however the outlook is not so positive. I would be interested in more details on the printing business.
 
Huskar said:
For a good (though sardonic) explanation of "ranging decisions" see the recent Insider article on Funtastic...

http://www.smh.com.au/business/cold-hard-cash-continues-to-hold-its-appeal-20111128-1o37r.html

ps my favourite column
Click to expand...

The ranging issues are everywhere. GFF and SYM are two others that come to mind.
It would be interesting to see if Metcash's new slogan "Champion of brands" is going to work. TBH, can anyone tell the difference between Heinz bake beams vs Coles home brand?

I read the FUN announcements - it is absolutely crazy how many pillow pets got sold in the US... aren't they in a recession?!

This was pretty funny though...

It is enough to make you bite the head off your pillow pet.

Read more: http://www.smh.com.au/business/cold...-its-appeal-20111128-1o37r.html#ixzz1fFFJ2KUO
Click to expand...
 
skc said:
The ranging issues are everywhere. GFF and SYM are two others that come to mind.
It would be interesting to see if Metcash's new slogan "Champion of brands" is going to work. TBH, can anyone tell the difference between Heinz bake beams vs Coles home brand?

I read the FUN announcements - it is absolutely crazy how many pillow pets got sold in the US... aren't they in a recession?!

This was pretty funny though...
Click to expand...

Haha yes. A very wry sense of humour which I like. Pillow pets are clearly not a discretionary item btw?..
 
Huskar said:
Haha yes. A very wry sense of humour which I like. Pillow pets are clearly not a discretionary item btw?..
Click to expand...

So I'm holding this company at the moment, the demerger seemed to do them well but they definitely don't look to be world beaters.

Decent dividend yield ($0.17 per share, BellDirect has this at 7.4% div yield after tax) on a company that won't go broke anytime soon - based on my current understanding - is pretty much the only good story I can think of for MCP. Maybe a consumer confidence play could be had here?

Like previous comments have said issues with Coles and WOW really pumping their in house brands has hurt the bottom line a bit along with everything else in the market, however it looks like the company is reacting to this by investing more in care products which the big 2 don't sell as far as I know.

They are improving efficiency of their stock system and logistics. They also closed their Melbourne office last year as a cost cutting measure and merged it into the Sydney office. Doesn't sound like they are messing around.

Their NZ business also made money last year.

Another fun fact a big chunk of their Non-Current Assets (around 90%) is Intangibles like Good Will, which I guess is standard for a consumer goods company with so many brands? If you take the intangibles out their balance sheet becomes very lopsided to the liability side.

They also took on bit more debt (additional $20M) to fund the demerger and acquisition of new brands last fin year.

Last open was $1.850

Anyone else have some thoughts?
 
Awfully quiet on the MCP front. Do holders want to keep the 14%+ (annualised, grossed-up) yield a personal secret? Or is it too boring?
Technically, I also see the chance of a Cup & Handle pattern developing.
Seems worth a punt IMHO, and I'm on.

MCP CnH 22-02-17.png
 
I wish I held onto mine now. I bought just before that stock price crash having been suckered into the dividend trap. Not having looked into the company for a while I assume their whitegoods business has done well, because selling cling-wrap and freezer bags didn't seem like much of a defendable and profitable industry to me.
 
MCP w ltTargets 23-02-17.png


MCP - revised target $1.45, long-term possibly $1.69
I added on the break @1.26
 
Silly prices this morning, down 9% on divi date. I added to holdings in early trading.

Earnings were ok, should have a reasonable FY result. I think the stink of BWX is keeping MCP at these mid 120 low 130 levels.
 
Fantastic preliminary result. Dividend much higher - company will start providing forward guidance. Proven earnings growth and old legacy issues long gone. Virtually no debt. No excuse for this to trade below $2. I expect a 13 cent dividend next year.
 
I haven't been following this company for a few years but what a dog it has been. The CEO is doing well earning $800k base salary plus $600k incentives in 2018FY for running a company with a market cap of $150m (a cap that is less than revenue). I hope he is worth it and can turn this company into something worth investing in. I still can't get excited over kitchen consumables and low end cosmetics.

I see they have divested from their kitchen appliance business and are focusing more on health and wellness and cosmetics (beauty) into the chemist and grocery channels.

I also see they have bought a 51% stake in a health and wellness snack and milk powder drink (gut health, blah blah) maker with hopes of cracking into China. From yesterday's announcement:

"Through the new venture, McPherson’s will leverage its existing sales and marketing expertise to drive domestic distribution and export growth, particularly within China, whilst working with its venture partner to develop further Health & Wellness products to extend the brand portfolioThrough the new venture, McPherson’s will leverage its existing sales and marketing expertise to drive domestic distribution and export growth, particularly within China, whilst working with its venture partner to develop further Health & Wellness products to extend the brand portfolio."

Really? What existing sales and marketing expertise of selling FMCG into China do MCP possess? It will be interesting to watch if the business can turn around but its not a very exciting business IMHO.
 
Exactly- it was a dog. Key word - was. They have turned around. Proof is the last few results, balance sheet, and cashflows, dividends.

That’s why the share price is up 20% and approaching 5 year highs.

I’m glass half full - but that’s probably because I’m far in the green. Doesn’t need to be exciting to make money.
 
This was my largest single holding and as such I decided to de-risk myself. Sold 50% today - MCP is sitting very near 15 year highs. I expect a reasonably good 1/2 - but they derive significant growth and product sales from China - and I'll wait until this uncertainty has passed with coronavirus. Might add more later.
upload_2020-2-11_13-30-4.png
 
Poor result. Lower dividend. Borrowed to pay divi. Poor casflow. Asset reduction... Nothing good here. Just average.

Sold out.
 
.... a "leading supplier of Health, Wellness and Beauty products in Australasia and increasingly China, with operations in Australia, New Zealand and Asia. McPherson's markets and distributes beauty care, hair care, skin care and personal care items such as facial wipes, cotton pads and foot comfort products, as well as a range of kitchen essentials such as baking paper, cling wrap and aluminium foil."

Probably no real unique proposition. China is a 'double edged sword" these days. Well timed

upload_2020-2-19_18-32-5.png
 
Overreaction. MCP has done this before warn on profits only to come in not as bad.

They have minimal debt and good casflows so although i expect a writedown from the blackmores acquisition (mcp have a horrible track record) think 1.20 is a reasonable reentry point. They just did a raising at 2.20+ lots of flexibility here.

However MCP credibility has been shot and anyone who bought in the past 12 months will be very upset. Should be interesting to see what they do with the dividend.
 
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