Ann: FNP Conference Call, page-105

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Dpowell

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25/07/20

16:55

Post #: 46066052
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Originally posted by TriOptimum: ↑

Has anyone made the comparison to the fallout from Bellamy's profit downgrade in December 2016? The SP dropped from around $12 to about $4 after a month-long trading halt.

No two companies are ever the same, but there seem to be parallels: overproduction leading to too much inventory and low cash, requiring assurances of support from lenders, and a careful review of the business by the Board after the problems came out and key mgmt personnel departed. As well as the very obvious parallels of both coys being heavily reliant on a China dairy demand strategy.

Bellamy's recovered from that dowgrade and the SP eventually hit a new high of $22.08 in March 2018, although it wasn't happily ever after. It got back down to about $7 less than a year later before see-sawing in a band of about $2 ahead of the coy's takeover by Mengniu last year with a final payout to shareholders of about $13 per share.

Of course the Bellamy's scenario didn't happen during a global pandemic, and I'm sure many can point to major differences - not sure that fraudulent conduct was alleged in that case - but to me the parallels are interesting and I'm surprised they haven't been discussed more in the press coverage of FNP - unless it has and I've missed it?

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The Bellamys bounce after the initial SP destruction was driven by the insatiable Chinese demand for infant formula. Not sure they have the same appetite for cereal.

FNP Price at posting: $3.01 Sentiment: Sell Disclosure: Held
2 Upvote

0 Great analysis

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