Greetings folks I have watched proceedings unfold over the last month just as I predicted they would an my Target I predicted of 1.30 called at 2.20 was reached
What a dramatic fall from grace from
2.36 high to 1.28 low in 2016 nearly half in value in just 5 months THATS decimation
I outlined the reasons why this would happen over n over here but all I got was abuse an told how wrong I was guess what I wasn't wrong
you all could not see the obvious about to happen an it was very obvious to me I've been around this is classic TA an FA
Chinese were always going to change the goal
Posts on these dairy Coys it was a given an I said it was many times
New players were always going to come in to the milk industry while it's on its knees
Global dairy prices are in the gutter there is massive over supply it will only get worse an earnings will suffer in my view
The chinese are picking up Dairys all over the world just like they did with iron ore they will be in the drivers seat going forward on supply demand a. Coys like A2m will struggle iny view
Price point is a huge issue for A2m most consumers will NOT pay 4.70 for 2 litres of milk when they can buy it for 2 dollars
It's simple economics for most consumers it's over priced like the DP
There are no more shortages for A2m stage 3 on shelves it's always available now at Coles an woolies I go to
Dairy farmers are walking of there farms in droves none of them has the capacity to switch to A2 operations an the margins are not there ATM
The global glut of milk infant formula an milk powder will see continued pressure on earnings going forward
What they thought they would earn an what they actually do could be severely impacted in future earnings
Add to that currency fluctuations add to that possible further regulatory change in China as they are masters at doing it
The chinese will do NO FOREIGN importer any favours chinese business will not stand by an let foreigners dominate any of its domestic dairy markets
Most could not see the macro economics that was painfully obvious to experienced investors like me that this was a train wreck unfolding the PE is a joke on what they earn it was always going to end in tears
I outlined what would happen if the chinese changed regulations re the grey market I was laughed at an abused you all still laughing ?
I am a humble person so I won't sit here an say I told you so just hope you guys have learnt some lessons out of it
I told you shorters were setting up for a big seek down an it happened
The shorts on this will keep winding up I would not touch this stock with a barge pole until
After the next earnings ANN
Hedge funds are playing n dads like a fiddle sucking in new money after the mother of all dumps an they will dump it again thats a given when they are ready
Ok let's think ahead here's how I see it
A2m intrinsic value is 1.06 Currently on my DCF
I would be looking to buy with a MOS if at least 15 per cent so my current valuation of A2M is 90 cents however I think on a earnings disappointment an the heavy shorting to come in my view a realistic chance is 60-70 cents this year
This has all the hallmarks of another MGC on earnings ANN day I can see A2M halving if they only just meet guidance or slightly miss
I fear this could well get absolutely smashed next earnings ANN if any hint of a bump in the road with expected bonanza earnings it will be very ugly
On the upside if they surprise with all the hype Id be surprised if there was any more than a 5 per cent spike
There is simply to many head winds for this an other dairy stocks the industry is in global calamity
I just can't see a catalyst for this stock with the way the global dairy industry is collapsing it's very reminiscent of the iron ore glut an how the Chinese swooped to stifle prices
Be very very careful people this is been set up
For a further very big fall in my view again hedge funds are playing retail investors on these dairy stocks
I do not like to see people lose money or get hurt financially on stocks like this hence why I was so vocal as I knew full well what was coming
Shorters will be back they just will let some fresh money come to play then go bang again IMO
GLTA it's going to be a even tougher ride dairy prices are falling off a cliff the whole dairy industry is in danger of real carnage in my view tread very carefully hedgiies will be back to slaughter these dairy stocks
A2M Price at posting:
$1.51 Sentiment: Sell Disclosure: Not Held
(20min delay)