Wcb Business Valuation

BUSINESS ANALYSIS & VALUATION

Warrnambool Cheese and Butter Factory Company Holdings Limited

ChenliFeng 3405063

YixiCai 3406739

Phanuphong Boonamnuayvitaya 3325956

INDEX OF CONTENTS

JAN 2013

1. EXECUTIVE SUMMARY 3

2. INDUSTRIAL AND COMPANY STRATEGY ANALYSIS 4

2.1 INDUSTRIAL ANALYSIS 4

2.2 COMPANY STRATEGY ANALYSIS 6

3. ACCOUNTIGN AND FINANCIAL ANALYSIS 9

3.1 ACCOUNTING ANALYSIS 9

3.2 FINANCIAL ANALYSIS 10

3.3 FINANCIAL RISKS 13

4 FORECASTS AND VALUATION 15

4.1 FORECAST 15

4.2 VALUATION 17

4.3 SCENARIO ANALYSIS 19

5 CONCLUTION AND RECOMMENDATION 20

APPENDIX 22

1. EXECUTIVE SUMMARY

This report provides an analysis and evaluation of the current and future prospective profitability, liquidity and financial stability of Warnambool Cheese & Butter Limited (WCB). Methods of analyses include the qualitative research on industrial and company strategies, the in-depth analysis on WCB’s accounting policy and the calculation of ratios in many areas, and then forecast and evaluation of share price as well as performance based on the various ratio analyses and assumptions.

Results of data analyzed show that most of ratios perform exceptional above its major rivalry, BGA. In particular, comparative performance is superior in the areas of profit margins and working capital management. However, there are areas of weakness requiring further investigation and remedial action by management especially relating to the short-term liquidity. Our finding suggests that WCB might encounter problems regarding to their ability to meet its short term-debt as WCB has minimal cash balance in the last 3 years. Despite the economic downturn and the slow growth in the diary industry, WCB maintain its sound performance throughout these periods. We believe that the worst period has already been passed and the deteriorating trend in share price since mid 2011 will revert after the economic condition is expected to recover during this year and...