Murray Goulburn (ASX: MGC) +15% from IPO price

Murray Goulburn (ASX: MGC) +15% from IPO price

Murray Goulburn Unit Trust (MGC) yesterday closed at $2.42, up 15% from Friday’s IPO issue price of $2.10.

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Murray Goulburn (MGC) 

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Murray Goulburn is Australia’s largest dairy foods company and has been established for more than 60 years. The company manufactures and markets a full range of dairy and nutritional products such as cheese, milk powder, butter and fat, drinking milk, liquid milk products and infant formula.

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Murray Goulburn processes over one-third of Australia’s milk supply and exports more than half of Australia’s dairy products. It owns and operates 11 dairy processing facilities across NSW, Victoria, Tasmania and China.

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Investment Highlights 

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– Australia’s largest milk processor and dairy foods company

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– Flagship brand is Devondale

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– Opportunity to invest at potential bottom of the cycle dairy prices

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– Beneficiary of a falling AUD

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– Strategy of expanding into higher margin, value added Dairy Foods

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– Manufactures products which are in high demand from Asia and brand Australia sells for a premium price. MGC will be a key beneficiary of Australia’s FTA with China

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– Attractive fully franked dividend yield

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Catalysts

The following are potential share price catalysts:

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– Rising dairy prices

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– Falling AUD

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– Earnings growth

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– New material contract wins. For example the Woolworths private label fresh milk contract for the NSW market is currently up for tender. If won, this contract could provide upside to prospectus FY16 earnings guidance. It would also lift the return profile from new facilities which currently have excess capacity.

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– Delivering new growth projects on time and on budget and announcement of further growth opportunities and/or accretive M&A.

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MGC’s Pricing Matrix

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MGC’s fundamentals based on A$2.10 issue price are:

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– 13.6x FY16 P/E

– 7.5x FY16 EV/EBITDA

– 7.4% FY16 dividend yield

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We look forward to following company developments over the coming years.

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The team at

IPO Society

The information contained on this website in no way reflects the opinions of IPO Society. It is provided for informational services only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. The information is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Detailed information may be needed to make an investment decision, for example: financial statements; a business plan; information about ownership of intellectual or industrial property; or expert opinions including valuations or auditors’ reports. The information contained on this website is not intended to be the only information on which an investment decision is made and is not a substitute for a disclosure document, product disclosure statement or any other notice that may be required under the Act, as the Act may apply to the investment.

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Murray Goulburn (ASX: MGC) +15% from IPO price