Myer pitches bullish numbers
Sydney Morning Herald
Tuesday September 29, 2009
MYER'S private equity owners have pitched the valuation of the retailer below that of David Jones, but have pledged to ramp up earnings in the years following its plannedre-emergence on the stock market in November.Led by the chief executive, Bernie Brookes, Myer's senior management and advisers will kickstart an international roadshow in Sydney today to spruik the prospectus and win the backing of institutional and retail investors for the biggest float on the Australian Stock Exchange in about three years.Mr Brookes will have to persuade prospective shareholders to invest in the department store owner, valued at between 14.3 and 17.3 times forecast financial 2010 earnings.David Jones, which has been asserting its own retail strength since Myer first announced its intention to float, is trading at 17.8 times forecast 2010 earnings.At the indicative share price range of $3.90 to $4.90 when Myer lists on the market on November 2 it will have a market capitalisation of $2.28 billion to $2.768 billion and an enterprise value (including debt) of between $2.67 billion and $3.2 billion. The final price will depend on the level of interest from institutional investors and their allotment, to be decided at the end of next month.Some fund managers remained cautious on the publication of the offer details, viewing the upper end of Myer's valuation range as expensive in the economic environment.Brian Han, an investment analyst with Constellation Capital, said: "It is almost up there with David Jones. If you consider that next year we won't have the stimulus growth that we are enjoying right now, we will have to cycle against that next year without any stimulus, and with higher interest rates probably."Ausbil Dexia's head of equities, Paul Xiradis, said: "At the bottom of the range it looks interesting, at the upper range it looks expensive. The issue I will be focusing on is the level of debt that it has on the balance sheet, the effect on margins as things slow and the ability to cut costs."Surrounded by members of the Myer board and the store ambassador Jennifer Hawkins yesterday, Mr Brookes painted a bullish picture of the earnings trajectory. Myer plans to open 15 new shops in the next five years. A further 20 are due to open by 2020, taking the total to 100. Robust cashflows will be used to support this growth and fund a maiden full-year dividend of 20.5c to 21.2c a share fully franked.Myer's owners, TPG, Blum Capital and the Myer family, may not hang around for the dividend, and under the prospectus could sell all their holdings, walking away with a profit of about $2.6 billion.The retail offer opens on October 6 and will close on October 23.Malcolm Maiden€” Page 6
© 2009 Sydney Morning Herald
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