A lot of negativity here, I’m not sure you guys understand what exactly is happening here. The Fundamentals are lining up as well as you’d ever hope to see. Here’s some factors off the top of my head....
1) First 4 months were brilliant. Excellent growth in sales, improving margins, profits accelerating. How much did they accelerate? Well, pre-AGM update our high (at that time) put us on a P/E of 69! The 4 months results, extrapolated for the yr. with no further growth, would bring that P/E down around 30;
2) New Chinese IF regulations for importers significantly reducing the number of products on market.
From
https://research.rabobank.com/far/e...nfant_milk_formula_registration_measures.html
“Undoubtedly, the new regulation will lead to a substantial reduction of the number of IMF brands in China, which currently stands at over 2,000—roughly 10% of which are licensed import brands. This means that an average domestic producer now has about 18 brands in its portfolio. Domestic manufacturers focusing on de facto OEM may lose a significant amount of business and the reduced scale may even make it hard to justify their existence. This may trigger a round of asset sale or exits by smaller players.”
3) Synlait opened a second state of the art facility and has capacity to double output of IF;
4) Brilliant performance at several mega-online sales events in China against international competition;
5) Growing market share in China (up to 5%+ I believe);
6) Price of IF up from $34.60 to $35.60 for stage 1;
7) Broker upgrades, Fund Managers recommending A2 as a buy, Macquarie Bank buys 35million shares (from memory);
8) Strong move into the USA, store footprint rising quickly, customers asking for the product, expansion into the North East (affluent region with 60million
potential customers);
9) jd.com announcement that it will be purchasing mega amounts of IF for its portal from select suppliers over next three yrs;
10) Two Senior Managers buying significant parcels on market;
11) A short attack which failed to materially move the share price to the downside (not sure how many shorts remain open at this time but feeling the pain, no doubt);
12) Technicals look great and should be attracting some money from the Chartists - higher highs, break of $8 etc.
13) Admitted to the ASX 100;
14) Peer Bellamy’s releases strong results.
The market is anticipating a strong half year result which we will see imo. What’s exciting for me, and gives me a lot of confidence is that the outlook also looks impressive, esp. because of Synlait’s increased capacity and the traction and growth we are seeing in the World’s greatest marketplace, the USA. We normally see a spike followed by a pullback post results announcement. I am an optimist but this American expansion is a pretty big deal in my eyes. I believe many a Broker and Fund Manager will be inclined to hold onto their shares because we may just hit the big time in the US.
Good investing and strong returns to all holders.
(20min delay)