Chart Update, page-8516

I think I'm sounding like a broken record, but I keep re-iterating that $11 is what I see as fair value. I'm not quite sure why people are bothering to touch this at these levels. I'ts not downramping or whatever people like to call it. It's simply calling it as it is.

The company has told the market that the current FY is a year of investment for future growth. Anyone who has been in the market long enough knows that when a company says that, you keep a wide berth until they can prove that the investment is reaping rewards. It also gives management an excuse to justify a poor year, because it's all in the name of investing for the long term. The 2020 FY result is not going to be pretty, IMO. The first 4 months is going to underwhelm relative to consensus, IMO, which is why the share price is languishing. Consensus still has bullish forecasts for FY20, so that isn't going to help when they miss consensus by quite a margin, IMO.

The company has peaked in terms of its profit margins and growth. I don't think there's any doubt about that. It's going hard into fresh milk in USA, which is going to continue eating away at margins, not to mention that they continue losing a truckload of money there. The days of 30%+ growth are gone. I think they'll be lucky if they get 15% growth this year. I actually think that's why management have called this a year of investment. They know the low hanging fruit of growth is drying up and need to temper forward expectations about growth. I have it still trading on a forward PE of more than 30. I'm struggling to see how current valuation is justifiable based on that. Sure BAL got a TO at a higher premium to what A2M is trading on. But BAL is worth a fraction of A2M. That reduces the pool of companies that could lob a TO bid dramatically. Simply saying that it should trade on a similar multiple to what BAL is being taken over at is too simplistic.