I've been living in Asia for over 10 years now. I made money out of BGA and sold those to buy MGC recently.
There are plenty of motivated sellers. Where 62% of Unitholders were farmers, recent reductions to the FMP have financially crippled some and they are looking to fill holes in their budgets. Who knows the extent? SP seems to be struggling to create new lows and Shorts have exited.
I originally wondered if there was something more insidious in the downgrade but Fonterra's move makes me think not.
It's been 11 months since Russia extended its dairy ban for 12 months which has contributed to the global dairy glut. I'm not sure they need to extend it again.
Media reports are that Directors were ULTRA CONSERVATIVE in their last profit downgrade.
The business structure does seem unwieldy but it has had nothing to do with events in MGC's short existence.
I see MGC's venture into Coles private label moreso as a marketing coup. Bega cheese and its export brand Kamaruka are extremely popular here. I've tried many from all around the world. NZ's Anchor butter and their milk, cream and yoghurt packaged through Nestle take the rest.
Australia's largest dairy producer with their product managed from happy free range cow to consumer and they beat Bega out of a large domestic market sounds great in promotional material. With exports increasing future production, costs will lower and that private label deal will be looking more valuable.
Hellou's dream of value added product sustaining the FMP may yet have legs. I'll be very interested to see May and June export sales.
March sales were interrupted by new year celebrations and April by Government import restrictions. Not to mention an AUD breaching 78c but back below 74c now and with another RBA cut to come, many economists espying AUD at 67c.
An investment with a quality product range and tremendous earnings growth potential seems too good to pass up on. A good long term investment at the current market price.
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