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aparbery

53 Posts.

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05/06/16

20:44

Post #: 17956813
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Originally posted by Andyrooo ↑

I agree with Ashok Jacob. Many of the world's reputable financial commentators have been making similar forecasts for a decade now.

I have had a substantial whack at MGC at an average cost of $1.05. I just can't figure out whether this will be a fivebagger or a tenbagger. I know many will scoff at that but that's always the case. As famed NZ philosopher Rachael Hunter once said. "it won't happen over night but it will happen'"

Based purely on the last profit downgrade I'd value MGC at $1.20 to $1.40 as elaborated upon in previous posts. However valuations are based on future maintainable earnings and I see MGC's future earnings as much brighter. I feel fair value is between $1.50 and $1.80.

You stated MGC'S market cap at 205 million but it only represents about 40% of MG Co op. So MG's current market value is about 500 million. That is still only about half of BGA. MG used be worth twice BGA. Should it return to its old glory days that would value MGC at close to $4.00.

BGA is currently valued at a P/E of about 40. I have no doubt BGA has a bright future in Asia and the P/E is justified. However why not MGC too? Devondale is an established brand name already.

The Board was ultra conservative with their 2016 profit forecast at their last downgrade. Since then the AUD has fallen markedly, GDT has improved impressively especially compared to the 1st quarter and domestic sales have improved. It should be expected that profit will be closer to 50 million than the forecast 40.

A 500 million company with a profit of 50 gives a P/E of 10. Why should BGA have a P/E of 40 compared to MGC'S 10???

Again, I feel MGC's current fair value is between $1.50 and $1.80. The catalyst for a market value upgrade will be the 2017 FMP announcement at the end of June but I have no doubt the Board will be ultra conservative. The next upgrade after that will be the 2016 profit announcement come August?

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Because Begas better, that's how the add goes.

MGC Price at posting: 99.5¢ Sentiment: Hold Disclosure: Not Held
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0 Great analysis

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