TA price target 1.06 A2M, page-620

I'm no expert whatever on how to calculate fair SP value, but why all this emphasis on "market share"? It seems to me that market share can really only be relevant if the SIZE of the market and its profitability are known. The market size in China is growing because consumer demand for dairy is growing, and so are family incomes. It's also volatile because of government regulations.

Meanwhile European exporters, especially Danone, are pouring massive quantities of IF and other dairy products into China because of the world glut in milk, leading to strong price competition, which will expand the total market but could reduce its general profitability. You could have a big market share and still have trouble breaking even.

The dairy products being pushed into China are mostly just a standard mix of A1 and A2. Brands with unique points of difference such as A2M (A1-free) and Bellamys (organic) are hardly likely to lower their prices to compete for a share of the low end of the market.

As for the USA, why on earth would the company even think of pulling out of that market just when it's getting started? A2M is new and starting from zero in a market that is huge and in which many consumers currently can't tolerate milk. And the so-called competition in the US is so negligible it shouldn't even be factored into A2M's result.

I would have thought the company's ability to turn a profit will depend not on "market share" but on per-unit profitability. Even if A2M gains NO share of the present US dairy market and just establishes a significant clientele among NEW consumers who can't currently drink milk, it can make a tidy profit.

I've never been optimistic about a big revival in A2M's SP this time round. Even if the FY16 result is above expectations, a lot of frustrated holders will probably bail out, and no doubt the shorters will find a way to play games. My feeling has been for some time that FY 2017 is the one to watch, with interesting developments in UK and Europe, USA and NZ..