LOL, why don't you tell me what sort of profit margin BXN is going to make? What is their potential? Get real mate we all know you're trying to buy.
Now if you want fact:
Here's peer comparision for you:
- BUB has been around 10 years their revenue was $4.5m last year, that's less than 200,000 can, no profit.
- There were rumours that BUB was going to be taken over a few months ago, sending SP from 20c to 80c in a few weeks. Who would want to take over BUB? Would they be more interested in JAT which is significantly cheaper?
- What is so valuable about BUB and WHA? Oh don't tell me it's their products. It's their Australian heritage and their potential to grab CFDA, both of which JAT has, and more. BUB is spending $3m to expand distribution channels while JAT already has everything in place.
- Don't even get me started on BXN. But I don't go over there bagging them and I know many BXN holders are holding JAT or wanting to buy. It's all about potential they can achieve many years from now not the past not tomorrow.
Now about financials:
- Gross margin of infant formulas business is about 50%. So if JAT make $12m sales, their gross profit is $6m.
- NPAT margin is 15-20%. So JAT is looking at $1-2m NPAT with that target.
Now what more important is how quickly the business is going to grow? What potential?
The China IF market is estimated at $20b and growing due to abortion of one child policy. If JAT can grab 0.5% of that market we are looking at US$100m sales. That will give $50m gross profit and $15-20m net profit, which will justify a US$300-400m market cap as dairy industry PE is above 20. Half of that goes to JAT so US$150-200m market cap.
Now IF is just one of the many products that JAT can get into. Remember they aren't going to be a sole retailer with low margin like the past two years, that's only to build distribution network and customer base. They are getting into making of Australian products where the fat money is.
(20min delay)