A2M - 'Overweight' and 'Buy' rating from LightForce - 12 Month Target AUD 2.00/share

I wonder if my analysis will get a re-run by our wonderful media friends, considering they would happily publish a 'SELL' rating from First NZ Capital Securities without publishing the full report for all to see?

If you're interested in why I've been putting a 'BUY' rating on A2M, please refer to my earlier posts debunking the conclusion that arises from the analysis of First NZ Capital Securities. Short summary as per below:

"If A2M could ramp up infant milk powder to double the supply for 2nd to 4th quarter of FY16, which means revenue from infant powder is $38M + $76M x 2 = $190M, and adding the revenue from the rest of circa $140M, that will give A2M revenue of $330M for FY16 and a likely EBITDA of $45M and NPAT of $30M. This is something that can be easily achievable. Hence all along I've been saying that A2M is still quite conservative in their earnings estimation, which gives room for it to issue another earnings upgrade sometime in 1H16.

If we want a same forward PE ratio of 56 as per BAL, and with forward NPAT of $30M, then A2M market cap is $1.68B, which means a share price of $2.24NZD, i.e. $2aud/share!!! So, not a surprise if A2M could double in price to $2 within the next 12 months. I'll put a 'OVERWEIGHT' and 'BUY' rating on A2M."