A Valuation of Manitoba Liquor & Lotteries

Valuation of Crown Corporations, Crown Corporations, Liquor and Gaming, Ian Madsen

Using an intrinsic value method, and discounting to the present, ML&L’s projected future free cash flows, as the company is today, but taxed at statutory rates, the range of estimates is $12.13B to $84.91B, with a tighter range of a median (midpoint of the array of estimated values) of $21.23B to a mean (simple average of the array of estimated values) of $27.32B. Making allowances of bad debt of as much as 5 percent of outstanding loans, that is, by $1.55B, does not lower the estimated value of the company appreciably. Discounting for a bad-but-not-Great Depression-level of bad debt experience of 5 percent of the total loan portfolio, the range becomes a median of $20.20B to a mean of $25.99B. This version used adjustments to the free cash flow calculation which may not be fully reliable.

Read the entire valuation here: VS19_MLL-Valuation_MR2619_F2