Metcash Limited (MTS)



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General Information
Company Name: Metcash Limited
Stock Code: MTS
Website: www.metcash.com
GICS Sub-Industry: Food Distributors
Market Cap ($M): 1,612
Equiv. Shares (M): 903

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 1.825 $ 1.805 $ 1.855 $ 1.805 $ 1.785 2,397,312 $ 0.040  2.241 %

Current Broker Consensus Recommendation more
Recommendation: Sell (4)
Recommendation Date: 18th Dec 2014
Brokers Surveyed: 3

Company Overview

Business Description:
Metcash Limited (MTS) is a wholesale distribution and marketing company specializing in grocery, fresh food, liquor, hardware and automotive parts & accessories. MTS operates predominantly in Australia and a smaller liquor business in New Zealand.

Strategy Analysis:
Food distribution is the main growth driver, realising solid growth and margin improvement through scale efficiencies. The lack of real competition from Coles has allowed larger format Woolworths to capture significant market share for superior earnings and margins while IGA independent stores, backed by MTS, find favour across smaller catchment areas. MTS will use its balance sheet to fund inventory expansion by easing credit terms for larger stores. The aim is to encourage independent operators to invest more free capital into stores. Improved fit out and customer service boost the shopping experience. Metcash reported NPAT down 13.1% to $82.0m for the half-year ended 31 October 2012. Revenues from ordinary activities were $6.34bn, up 3.5% from the same period last year. EBITA lifted 1.2% from $203.7m for 1H12 to $206.2m for 1H13. Diluted EPS was 9.75 cents compared to 12.24 cents last year. Net operating cash flow was $144.7m compared to $252.4m last year. The interim dividend declared was 11.5 cents compared with 11.5 cents last year. The company reported that it has revised its full year underlying EPS guidance to -2% to -6%.


Financial Summary
Year to Apr NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2016  F 202.7 22.8 9.7 7.5 13.7 8.0 100.0
2015  F 184.8 20.8 -21.4 8.3 12.5 7.3 100.0
2014  A 233.7 26.5 -15.1 12.5 18.5 5.6 100.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2014 A 2015 F 2016 F 2014 A 2015 F 2016 F 2014 A 2015 F 2016 F
Metcash (MTS) $1,554 M -0.0843 -0.2379 0.0037 6.0713 7.9667 7.9372 10.76 7.56 7.56

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
MTS 0.42 7.43 1.00 10.00 0.12
Market 0.90 15.0 1.19 1.94 1.48
Sector 0.63 19.4 2.24 5.02 0.94

Directors
Name Position Start Date
Mr Ian Rognvald Morrice Chief Executive Officer,Executive Director 12 June 2012
Mr Peter Leslie Barnes Non-Executive Chairman 18 April 2005
Mr Neil Douglas Hamilton Non-Executive Director 07 February 2008
Mr Michael Roy Butler Non-Executive Director 08 February 2007
Mr Michael (Mick) Peter McMahon Non-Executive Director 27 November 2013
Mr Edwin M Jankelowitz Non-Executive Director 18 April 2005
Mrs Fiona Elizabeth Balfour Non-Executive Director 16 November 2010
Mr Patrick Newton James Allaway Non-Executive Director 07 November 2012
Ms Tonianne Dwyer Non-Executive Director 24 June 2014

Management
Name Position
Scott Marshall CEO - Australian Liquor Marketers
Mark Laidlaw CEO - Mitre 10 Australia
Fergus Collins CEO - Supermarkets, Metcash Food & Grocery
Arian Gratwicke Chief Financial Officer
Gregory John Watson Company Secretary

Substantial Shareholders
Holding Name
75,446,836 (8.49%) BlackRock Group
55,970,784 (6.30%) Allan Gray Australia Pty Ltd
45,097,817 (5.08%) Lazard Asset Management Pacific Co
44,568,515 (5.02%) Maple Brown Abbott Limited

Calendar of Events
Date Event
30 November 2015 Report (Interim)
30 November 2015 Report (Prelim)
24 July 2015 Report (Annual)
22 June 2015 Report (Prelim)
09 January 2015 Div Pay Date
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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