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Me Today Limited – Quick Analysis

Me Today Limited is a company that sells vitamins and women’s skincare products. They currently have a website for online sales and a Facebook page with a small ~1k following. Their main point of distribution seems to be through NZ pharmacies owned by Green Cross (Life and Unichem brands). Their vitamin products are slightly expensive compared to comparable (and higher end) supermarket alternatives. I don’t know anything about their skincare products, but they look cheap (no fancy bottles, simple packaging and plastic – so not on trend on that front).

They state that they have plans to take the business global, and according to their NZX announcements there is interest from abroad (talk of Australia & China). I expect some significant marketing costs associated with the Chinese distribution, as they mention that they have people on the ground there and are “…engaging with Chinese based marketing specialists”.

I should probably research the directors because it’s a new company to the NZX, but I’ll look at searching for value financially to decide if that’s even worth my while (because if the stock is too expensive, I won’t be buying any, anyway). Notably, Blackcap from the Share Trader forum has suggested that the owners (Adam & Michael Sorensen) of Hunter Holdings Limited, which owns 12.06% of Me Today Limited, are related to infamous director John Sorensen. This does not bode well for any investment case.

Me Today Limited arrived on the NZX through a reverse listing, with a Market Capitalization (MC) at the time of writing of ~$54m. They have $4.2m cash in the bank (with accumulated losses of ~$5m) and are loss making (operating loss) to the order of $815k (excluding ~$4m listing related costs). I believe (from memory) the NZX charges $16k a year to remain listed, so if we’re removing listing costs, we should at least deduct $16k so this cost is represented in any modelling. Revenue was $639k.

In order to prospect for value in this company, I will make assumptions of growth and associated assumptions of profitability. These will initially be somewhat optimistic, after which I might run a more pessimistic scenario to try to work out the range of risk.

So it seems that NZ revenue is $639. We could assume that Oz revenue could be 5 times that based on the fact that Oz has 5 times the population of NZ. This is a difficult assumption to make, because spending behaviors might be different and the distribution channels might be different (i.e. they might get deals with supermarkets or health shops instead of pharmacies). I think it’s a fair assumption that they get a deal with the pharmacies in Oz because I think it’d be the same group that’s in NZ. China will be a very different story – they like foreign products, but they want things to look high end, which (in my opinion) Me Today products do not. Consequently I will assume 4x NZ revenue in Oz + 1x NZ revenue in China.

Regarding costs, I will assume (probably incorrectly) that admin costs remain the same for the year, cost of sales (AKA Cost Of Goods Sold [COGS]) are directly proportional – which will obviously vary depending on which product ranges are more successful, marketing and sales costs are proportional (possibly slightly more expensive for Oz in reality, and significantly more expensive in China), and I’ll assume that the “marketing services provided by a customer” are proportional as the customer is probably the same in OZ, and they’ve already inferred that costs will be higher in China due to the marketing specialist engagement.

Based on the above, lets define the NZ cost as $0.5m (COGS + S&M, with a little rounding up from $485) and the fixed admin costs of ~$0.9m remain. Actually, I’m going to round that up to $1m because let’s be honest, they’ll probably need to hire another person, they’ll have additional costs associated with foreign dealings, I’ve not added the $16k annual listing fee for the NZX, etc. I think that’s optimistic and fair.

Based on my assumed costs and revenue, this could mean that next year Me Today could make a revenue of $3.8m (6x $639k) against costs of $4m ($1m + 6x $0.5m). So, they might optimistically go from an operating loss of $0.8m to an operating loss of $0.2m. Not super exciting for a small company, but that would set them up for profitability in future years.

Assuming that they get the same traction the following year, and grow profitability by $0.6m, they would be looking at a maiden profit of $0.4m, then about $1m the following year.

Even with these optimistic numbers, that would put them on a MC – profit ratio of 55. Assuming a 100% dividend payout, that would be a dividend after 2 years growth of 0.55% after tax.

For me, this optimistic model shows that there is no value in the share price and it is not worth doing any further research. This company would be worth looking at again if future growth goes well.

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NZX

Me Today Limited (NZX:MEE)

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