MCP - McPherson's Limited

[Dona Ferentes]

Poor result. ....

Sold out.

its all about timing?

McPherson’s Trading Update
➢ Settlement of Global Therapeutics acquisition, marking the establishment of the McPherson’s Health and Wellness Division
➢ Australian core owned brands performing well, with 5 out of 6 brands delivering year to date sales and contribution margin growth in comparison with last year
➢ Weaker than expected 11/11 trading event leads to excess Dr. LeWinn’s stock
➢ Reduced 1H21 forecast sales to ABM results in revision of underlying PBT in the range of $6.5 million to $7.5 million and withdrawal of FY21 underlying PBT guidance
➢ ABM is forecasting very strong growth of 40% to 50% in Dr. LeWinns sales to its reseller community in calendar year 2021
➢ Strong balance sheet with net bank debt of ~$10 million post acquisition of Global Therapeutics

--- underdelivering . OK once, but a serial event. China risk. New division. Mmmm.

 

[The Triangle]

its all about timing?
View attachment 115733

McPherson’s Trading Update
➢ Settlement of Global Therapeutics acquisition, marking the establishment of the McPherson’s Health and Wellness Division
➢ Australian core owned brands performing well, with 5 out of 6 brands delivering year to date sales and contribution margin growth in comparison with last year
➢ Weaker than expected 11/11 trading event leads to excess Dr. LeWinn’s stock
➢ Reduced 1H21 forecast sales to ABM results in revision of underlying PBT in the range of $6.5 million to $7.5 million and withdrawal of FY21 underlying PBT guidance
➢ ABM is forecasting very strong growth of 40% to 50% in Dr. LeWinns sales to its reseller community in calendar year 2021
➢ Strong balance sheet with net bank debt of ~$10 million post acquisition of Global Therapeutics

--- underdelivering . OK once, but a serial event. China risk. New division. Mmmm.

Buy low sell high... Every once in a while it works

 

[The Triangle]

Very swift! CEO/MD has resigned. I'm sure the SP will be down early, but once the dust settles the market should be happy with this result. Someone had to be held to account over how things have gone lately. Clicking your heels 3 times and saying china is not a strategy.

Wonder if BWX will be looking at this space and thinking about an MCP tie-up.

 

[The Triangle]

*Sigh* Terrible result again. Barely 1 million of actual profit. Negative operating cash-flow, dividend being funded by shareholders who went in for the capital raising.

Got out again this morning. I made a few dollars but ultimately got this wrong. One of the shorter holding periods. Was a good buy at 1.20 - but there are clearly structural issues in the company and the acquisition of black-mores vitamins is going to have to shoulder the burden of getting the ship turned around.

Also - anyone else see the line blaming lack of Chinese students and Chinese tourists for dr lewin sales drops? Considering the vitamins are partially traditional Chinese - it suggests to me the same mechanisms that have led to this current downgrade will also flow on to their new acquisition. They have also flagged a material downgrade to this year vs last year.

At least debts are still very low and manageable.

 

[Dona Ferentes]

McPherson’s shares have risen almost 20 per cent since last Thursday, when Kin Group subsidiary Gallin launched a surprise on-market takeover offer after building a 4.9 per cent stake over the last two months.

McPherson’s shares reached $1.46 on Friday before retreating to $1.42 today, exceeding Gallin’s $1.34 a share offer, which was pitched at a 9.8 per cent premium to the market price and was less than half the stock’s value in October 2020.

McPherson’s denounced the offer as “utterly opportunistic” and said the bid profoundly undervalued the company, which owns beauty brands including Dr LeWinn’s, Manicare, A’kin and Lady Jayne, and kitchenware brand Multix.

McPherson’s institutional shareholders seem to agree, raising the likelihood Kin Group will have to raise its offer price to secure seats on the board and launch a strategic review.

- pretty cheap premium for what could be a controlling stake. Still trading above offer..

 

[frugal.rock]

Had noticed recently that AEF have become a substantial holder on MCP.

With yearly results out tomorrow, I wonder what AEF is anticipating?
Any ideas @Dona Ferentes ?

Either way, the long term chart looks like it's got some decent overhead space, if indeed things have picked up?
Will be watching out of interest only. Always interested where the bigger fish are putting their dosh.

 

[frugal.rock]

Have been keeping my eye on this one the last few days. ?
Might have a nibble if it goes on with it from here, with an uplift in volume.

 

[Dona Ferentes]

Have been keeping my eye on this one the last few days.

what a tale of woe. Still stuck on sub $1 trading. Since the October 2020 plunge on volume (fundies bailing?) , there has been no recovery.

The latest Ann, yesterday, hasn't brought back the magic. MCP went from 88c to $1.02 when announced yesterday, and a day and a half later , back to 90c.

A series of formal agreements with relevant members of Chemist Warehouse Group to establish a unique strategic alliance with CWG, structured to deliver material commercial and operational benefits to McPherson's.

1. McPherson’s will be appointed as Chemist Warehouse’s exclusive long-term distributor of a select portfolio of Chemist Warehouse-owned or controlled health and beauty brands .... The range, which includes Wagner Vitamins, Wagner Body Science, Bondi Protein, Foster Grant, INC and Microgenics, and will be made available to all customers within the McPherson’s distribution network.
2. Chemist Warehouse will increase the portfolio of McPherson's brands which CWG currently ranges in Australia and New Zealand, to include Moosehead, Maseur, Fusion Health, Stratton, Sugar Baby and Happy Flora.
3. As part of the Strategic Alliance Chemist Warehouse will be issued approximately 14.1 million McPherson's shares on 1 July 2022, thereby becoming a substantial shareholder, with a holding of 9.9% of McPherson’s shares on a fully diluted basis. The shares will be issued at a value of $0.88 each.

..........................
and a week ago, some comment on the company:

Ally Selby: .... welcome to Livewire's Buy Hold Sell. I'm Ally Selby, and today we're talking about two of investors' favourite things, dividends and small caps. While small caps are hardly known for their dividends, these gems are really not as rare as you may think. So to analyse [some] of them, we are joined by Martin Hickson from 1851 Capital, and Ben Rundle from Hayborough Investment Partners.

Next up, we have McPherson's, which has an annual yield of around 5.8% and announced a dividend of three cents per share in February. Is it a buy, hold, or sell?

Ben Rundle (SELL): I think McPherson's is a sell. This is a business with an abysmal track record. Over the last 10 years, they've doubled the capital contribution to the business and significantly diluted the equity for no earnings growth at all. I think they come up with a new product every few years. It never endures. It's a sell.

Ally Selby: Well, they actually recently appointed a new chair. His name is Ari Mervis. He used to be a beer and dairy executive. Do you think he could turn the business around? Is it a buy, hold, or sell?

Martin Hickson (SELL): Unfortunately, I agree with Ben. I think it's a sell. It screams cheap. It's got a yield, but I think it's a value trap. They've had a lot of problems with a lot of their new products, Multix, doesn't have a lot of pricing power. We think it's a sell, as well.

 

[The Triangle]

what a tale of woe. Still stuck on sub $1 trading. Since the October 2020 plunge on volume (fundies bailing?) , there has been no recovery.

The latest Ann, yesterday, hasn't brought back the magic. MCP went from 88c to $1.02 when announced yesterday, and a day and a half later , back to 90c.

1. McPherson’s will be appointed as Chemist Warehouse’s exclusive long-term distributor of a select portfolio of Chemist Warehouse-owned or controlled health and beauty brands .... The range, which includes Wagner Vitamins, Wagner Body Science, Bondi Protein, Foster Grant, INC and Microgenics, and will be made available to all customers within the McPherson’s distribution network.
2. Chemist Warehouse will increase the portfolio of McPherson's brands which CWG currently ranges in Australia and New Zealand, to include Moosehead, Maseur, Fusion Health, Stratton, Sugar Baby and Happy Flora.
3. As part of the Strategic Alliance Chemist Warehouse will be issued approximately 14.1 million McPherson's shares on 1 July 2022, thereby becoming a substantial shareholder, with a holding of 9.9% of McPherson’s shares on a fully diluted basis. The shares will be issued at a value of $0.88 each.

..........................
and a week ago, some comment on the company:

Ally Selby: .... welcome to Livewire's Buy Hold Sell. I'm Ally Selby, and today we're talking about two of investors' favourite things, dividends and small caps. While small caps are hardly known for their dividends, these gems are really not as rare as you may think. So to analyse [some] of them, we are joined by Martin Hickson from 1851 Capital, and Ben Rundle from Hayborough Investment Partners.

Next up, we have McPherson's, which has an annual yield of around 5.8% and announced a dividend of three cents per share in February. Is it a buy, hold, or sell?

Ben Rundle (SELL): I think McPherson's is a sell. This is a business with an abysmal track record. Over the last 10 years, they've doubled the capital contribution to the business and significantly diluted the equity for no earnings growth at all. I think they come up with a new product every few years. It never endures. It's a sell.

Ally Selby: Well, they actually recently appointed a new chair. His name is Ari Mervis. He used to be a beer and dairy executive. Do you think he could turn the business around? Is it a buy, hold, or sell?

Martin Hickson (SELL): Unfortunately, I agree with Ben. I think it's a sell. It screams cheap. It's got a yield, but I think it's a value trap. They've had a lot of problems with a lot of their new products, Multix, doesn't have a lot of pricing power. We think it's a sell, as well.

Analysts got it right for once!

You have to ask some questions when a company goes from $3 to $0.70 in 2 years, and has 2 failed takeover attempts, and continually makes acquisitions which don't ever seem to pay off. Of all the heinous things which happen on the ASX I'm rather surprised to see ASIC taking action here, but still happy nonetheless to see some degree of justice brought to these elites. This did have me thinking - what is it that triggers ASIC? I've never once received a reply to any of the online complaint forms that I've filled out - so I'm thinking it's either a high-ranking politician who has been stitched up and makes it known that 'XYZ' needs to be investigated, or its the company itself which rats out its own people and thus makes prosecution much easier??? Who knows...

Thought about taking a 3rd dip into MCP as debt level is still very low and cash generation is still ok, adjusting for change in receivables I get about 9 million in operating cashflow for FY22, assuming 4 million in leases, and 2 million in capital a year that's about 3 million left for 'free' cashflow which I don't think justifies a market cap of $100m at 70cps or 6 million in dividends. I get a rudimentary EBITDA of about 7.5 million (not using MCP's EBITDA) which is close to my adjusted operating cashflow, so no warning bells there.

I put it back on my watch list, the half year results should be interesting and if they scrap/cut the dividend and this thing sinks to the 40-50 cent range I may revisit things.

 

[The Triangle]

well, 2 years on and they are at 40 cents and have scrapped the dividends

I said I'd reconsider at that point - but they've also sold the only part of their buisniess which i actively used (multix) and was probably the only thing worth money. All they have left is some junk makeup they keep flogging off to the chinese?

Anyways, cashflows still ok. But I'll wait again until HY results are out. NTA backing at 24 cents for a declining company trading at 40 cents in a saturated market? No thank you.