A Valuation of Newfoundland and Labrador Liquor Corporation

Crown Corporations, Ian Madsen, Valuation

Newfoundland and Labrador Liquor Corporation, or NLC, is the monopoly Crown corporation which controls and retails all beverage alcohol in that province, aside
from restaurants and bars, to which it wholesales. Using an intrinsic value method, and discounting to the present, NLC’s projected future free cash flows, as the company is today, but taxed at statutory rates, the range of estimates is $1.8B to $12.8B, with a tighter range of a median (midpoint of the array of values) of $3.8B to a mean (simple average of the values) of $4.9B.

Under the market-based valuation system, the current, ‘as is’ – but now fully taxed-value. The range of estimates is $1.8B to $12.8B, with a tighter range of a median (midpoint of the array of values) of $3.2B to a mean (simple average) of $4.1B. Seven of eight available valuation metrics were usable. It needs to be emphasized that these values are all on the optimistic side, as the company has monopolistically high profit margins which may not be allowed to continue were the company to be divested.

Read the entire Valuation here: VS27_NFLDLiquor-Valuation_FB2719_F1