None of the negatives that you and others have highlighted are new. I am content with the update as the board/management seems to be making the necessary decisions.
The key decisions and achievements for me over the past few months have been:
* Replacement of CEO and CFO
* Secured Working Capital facility. Not great for any company - but necessary. Once the company has less cash stuck in Inventory it doesn't have to rely on it anymore.
* Re-negotiation of supply agreements.
@asb83 It will take a few months to impact because of production lead times. Production in 2H17 and FY18 will be reduced by 45-50% (versus 1H17) so Inventory can be sold down.
* Consolidating inventory with a single strategic reseller in China to prevent inventory build-up and subsequent discounting. In general, the company has reduced retail promotions and ceased them all together on Tmall which is very important to not undercut the Daigou.
* Launched Daigou marketing campaign with specialist advisor. Together with the reduced or ceased discounting this should hopefully win them back.
* +1600 store increase in China offline distribution
* Write down of Inventory. Please note that BAL is writing down ingredients, not finished goods. I would be surprised if the write-offs would exceed current projections. If I were the Board/Management, better to take all the pain now as the situation is pretty dire and set the company up for a good FY18.
All of this should get the company back to positive cash flow by mid H2 2017. People can be skeptical about any promises or projections but in my view the Independent Directors have really stepped up and have actually been quite honest about the issues in the recent communications as opposed to previous management. I also explain this in more detail in the following post: (
https://hotcopper.com.au/threads/th....3230807/page-4?post_id=22689329#.WK-kYDt97IU)
Even with all the issues and $8.5m write downs BAL still achieved H1 NPAT of $7.2m. Obviously there are still concerns, but with a ~$430m market cap this might already be priced in (famous last words) and BAl could look pretty cheap coming FY18.
