Case
Teaching Notes
Supplementary Resources
Abstract
The case examines the disastrous initial public offering of the fictional luxury brand company Mastery AG on the Frankfurt Stock Exchange. Master AG’s shares have fallen dramatically as the Chinese economy slows down and the luxury goods market begins to contract in the face of new anti-bribery legislation. Mastery AG’s shares are now close to worthless and the company wishes to delist yet can’t as it does not own 95% of the shares. Faced with a contracting market and the large costs of listing Mastery AG on the German stock exchange, the company must now decide what to do.
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved
Resources
Exhibit 1: The Development of the Mastery AG Share Price Since IPO on the Frankfurt Stock Exchange
Exhibit 2: China’s Domestic Luxury Consumption in Billion US$
Source: Authors’ own research based on various publications in China consumer goods platforms (www.chyxx.com, https://wenku.baidu.com, http://news.xinhuanet.com, http://caijing.chinadaily.com.cn, http://www.newsijie.com, http://www.sohu.com, http://finance.sina.com.cn)
Exhibit 3: Number of Chinese With at Least 10 Million RMB Over the Years
Source: Authors’ own research based on Hurun Reports, China Private Wealth Report by Bain Consulting and China Merchants Bank.
Exhibit 4: China’s Growing Middle Class
Source: Global Insight
Exhibit 6: Financial Data of Mastery AG Before and After Change of Supervisory Board of Directors
EUR in million | 2013 | 2014 | Change (%) |
Revenue | 167.1 | 175.1 | 4.8% |
Luxury | 104.2 | 120.7 | 15.8% |
Casual | 62.9 | 54.4 | -13.5% |
Luxury % | 62% | 69% | |
Casual % | 38% | 31% | |
Gross profit | 60.8 | 60.6 | -0.4% |
EBIT 1 | 12.3 | 10.7 | -13.4% |
Net profit | 5.4 | 3.8 | -30.3% |
Earnings per share in EUR 2 | 0.36 | 0.25 | -30.6% |
1 EBIT represents earnings before net finance cost and tax
2 The computation of earnings per share is based on net profit and 15 million shares.
Source: Mastery AG Annual Report, 2015
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved