PZ Cussons - Less is more

PZ Cussons (PZC) is in transition. Both St Tropez (largely a US business) and Africa (mainly Nigeria) are potentially worth more to others than they are to PZC. Their disposal will reduce earnings volatility and balance sheet risk. Unsurprisingly, the market's focus is on when and how much but the emphasis should shift to PZC's potential post-disposals. PZC has been spread too thinly, making it overly complex for its size. Management believes that simplification will deliver a more effective operation capable of sustained revenue growth, driven by innovation and profitability, moving back towards historical peaks. Such higher margins could result in better valuation multiples. PZC trades on a prospective P/E of 12x.

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