A2M is a steal at $9.50.
It was at $11.89 on Aug 30, shortly after its FY18 results release.
What has changed since results release (negatives):
1. CEO sold all of her shares
2. Other directors also sold small parcels of shares
3. Uncertainty regarding CBEC e-commerce laws in China and the impact it may have to A2M
4. A slight dip in the markets
What has changed since results release (positives):
1. Q1 was in line with expectations with China standing out,
Revenue estimates by segment (I'm going with NZ$280 million), factoring price increases and market share statistics):
ANZ 190m
China 70m
UK & US 20m
- With no growth all year, that gives us NZ$1.12b (or >20% growth).
- Assuming growth continues there is no reason why 40% growth FY19 v FY18 is not possible.
- If CBEC results in no sales except China label (10% of total China sales), there is a $150m hole in the revenue forecast for FY19, however we will still be up year on year.
We need to ask ourselves whether the sell down from $11.89 to $8.14 had any real substance? My answer is NO. The worst case scenario is still revenue growth (of about 5%) and it is quite probable that we will have no CBEC issues come 1 Jan 2019 (either further delays to implementation or acceptance of A2M's tax friendly compliant approach).
Despite all this speculation, I'd expect:
- further broker upgrades
- Infant formula to be introduced in the US
- more Synlait shares acquired by A2M
- director share purchases in A2M
GLTA, I feel confident of $12 by AGM date. Fundamentally we are sound.
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