Myer Holdings Limited (Myer) Essay Example
Prospective analysis – forecast
The previous reports have already approached the industry and financial analysis of Myer. This report will analyze the forecast, valuation and application of Myer, including forecasting the major data, valuating share price under four model and discussing the opportunity and challenge of Myer.
1. Forecast sales growth rate
As one of the most important indicators, sales can reflect directly Myer’s financial performance and influence other indicators. Therefore, the forecast of sales growth rate is the foundation for forecasting Myer. Based on the previous annual reports from 2007 to 2011, Myer’s sales are not optimistic and the average growth rate is negative 2.89%. The decline of both global economy and purchase power of consumers in Australia will lead to the depression of whole industry and unsatisfied performance of Myer in 2012. Additionally, growth of 20% online shopping shows that more and more consumers prefer to purchase online instead of in the shops . Therefore, negative 1% of sales growth rate for Myer can be assumed in 2012. However, Australia would have a weakening global economy impact and have strong national growth in the future . According to IMF, Australian economy growth rate is expected up to 3.5% in 2013 . Considering the previous performance of Myer, 2% of growth rate can be assumed for 2013. After that, 3% of growth rate can be assumed from 2014 to 2017 and the sales would approximately even to 2007. (See below chart) Previous years
'000 2007 2008 2009 2010 2011 Average rate
Sales 3,002,353 2,940,331 2,798,916 2,825,034 2,666,803 sales growth -2.07% -4.81% 0.93% -5.60% -2.89%
Future years 2011 2012 2013 2014 2015 2016 2017
Sales growth -1% 2% 3% 3% 3% 3%
2. Forecast ATO & calculate NOA
According to the past five years’ data, Myer’s Assets Turnover ratio (ATO) declined slowly following the decrease of sales, apart from 2011 down quickly. Therefore, the average rate 2.05 can be used to
The previous reports have already approached the industry and financial analysis of Myer. This report will analyze the forecast, valuation and application of Myer, including forecasting the major data, valuating share price under four model and discussing the opportunity and challenge of Myer.
1. Forecast sales growth rate
As one of the most important indicators, sales can reflect directly Myer’s financial performance and influence other indicators. Therefore, the forecast of sales growth rate is the foundation for forecasting Myer. Based on the previous annual reports from 2007 to 2011, Myer’s sales are not optimistic and the average growth rate is negative 2.89%. The decline of both global economy and purchase power of consumers in Australia will lead to the depression of whole industry and unsatisfied performance of Myer in 2012. Additionally, growth of 20% online shopping shows that more and more consumers prefer to purchase online instead of in the shops . Therefore, negative 1% of sales growth rate for Myer can be assumed in 2012. However, Australia would have a weakening global economy impact and have strong national growth in the future . According to IMF, Australian economy growth rate is expected up to 3.5% in 2013 . Considering the previous performance of Myer, 2% of growth rate can be assumed for 2013. After that, 3% of growth rate can be assumed from 2014 to 2017 and the sales would approximately even to 2007. (See below chart) Previous years
'000 2007 2008 2009 2010 2011 Average rate
Sales 3,002,353 2,940,331 2,798,916 2,825,034 2,666,803 sales growth -2.07% -4.81% 0.93% -5.60% -2.89%
Future years 2011 2012 2013 2014 2015 2016 2017
Sales growth -1% 2% 3% 3% 3% 3%
2. Forecast ATO & calculate NOA
According to the past five years’ data, Myer’s Assets Turnover ratio (ATO) declined slowly following the decrease of sales, apart from 2011 down quickly. Therefore, the average rate 2.05 can be used to