A2M - Risk Management, page-4

Regulations is a possible issue, but the bigger issue is maintaining sales growth. The drop since 1H results can be largely put down to the warning of lower IF sales for 2H due to seasonal reasons. Every other 2H has performed well above 1H.

Much of the gains for 2016 was associated with an expansion in IF market share in Aus, mostly destined for China via daigou. Some of this market share was taken at the expense of BAL and Aptamil. Some growth will come with increased Chinese birth rate, but they really need to keep taking market share to expand at a comparable rate unless direct market channels take over as the preferred strategy.

There could be room for some upside sales surprise for 2H17 given the Alibaba sales data kindly provided by Value123, but supply capacity may be limited until Synlait get their new wet mix facility, which could act as a brake on sales growth momentum. The stock has a market darling status, if growth is seen as stalling the SP will take a hit.

I think this is in a long term uptrend and is a buy right now. I'm seeing good value in holding overweight in the run ups to financial updates and taking some profit prior, this stock has considerable retail hype and has an irritating pattern of being sold down on the news, no matter how good. Would rather weight holdings to selected periods of likely good return than watch my holdings go up and down like a yoyo. GLTAH, DYOR and best wishes.