Ann: FY17 Analyst Pack, page-24

First 24 Last

Share
Profile

Follow
sk22

474 Posts.

23/08/17

12:38

Post #: 26691714
Share

Originally posted by travelightor ↑

@sk22

I believe your comparison is misleading.

When Aldi entered Australia, it was already a big business in Europe. In fact, it was a big fish already operating in a big pond, which then decided to enter a small pond (Australia).

In the beginning, for fresh produce and other perishables, it's true that Aldi's buying power in Australia was nothing compared to WOW/Coles. However, for some categories such as nappies, its buying power was already bigger than WOW/Coles combined.

On top of that, the parent company was able to afford years of losses in Australia to ensure Aldi gains a firm foothold in the country.

This is clearly not the case for NEA in the US. NEA in Australia is like a fish in a small pond, which then decided to go into the big pool (US) and tries its luck. The resources of NEA's Australian operation is not strong enough to maintain continuous losses in the US. This is why NEA has to raise capital every now and then to top up its cash balances.

Although the image capturing technology is transferable from Australia to the US, the product that NEA can sell in the US has to be manufactured from scratch, i.e. thousands and thousands of images of the American landscape taken (Pictures of Sydney Opera House is useless for a customer in New York). To make things harder for NEA, the same images have to be regularly retaken to ensure that they are up to date and useful for its customers.

Going back to Aldi, this is clearly not the case with the same brand of nappies that Aldi sells worldwide. No matter what the colour of the skin of the babies' bums, the nappies sold in Germany or US or Australia will work equally well to contain these natural byproducts of human.

Until the US operation becomes self-sufficient, I am happy to watch from the sideline and not risk my capital in NEA. The risks of failure are still too high for me.

Expand

No I don't think my comparison is misleading but you may have failed to understand my point. Point was initial start up costs will be high and in the first couple of years the costs may outweigh the revenue coming in. This was certainly the case with Aldi when they entered the Australian market.

NEA Price at posting: 68.5¢ Sentiment: Buy Disclosure: Held
4 Upvote

0 Great analysis

Reply

Top Stories

A3D

Defence MOU for propulsion systems pushes Aurora Lab shares higher

TIG

Tigers Realm's US$49M sale of Russian assets – to a Kremlin-adjacent billionaire – set to go ahead

NWH

NRW Holdings inks $109M deal with BHP for works at Jimblebar

RAG

Ragnar impressed by 11.55 metre pegmatite in Sweden, anticipating further mineralisation

ASX Market Open: ASX200 to open flattish after Wall Street weakens on hot US inflation data | October 11, 2024

MKT

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

Week 41 Wrap: HotCopper asks “Back to Mongolia?” for Elixir; US CPI comes in at 2.4%; eyes still on China

IMA

Issues emerging as Australian companies tackle critical minerals challenge

SHN

Sunshine Metals kicks off copper gold drilling at Truncheon; Highway East targets

CXU

Cauldron Energy reports "excellent" uranium assays in latest drill run

There are more pages in this discussion • 106 more messages in this thread...

First 24 Last

Add NEA (ASX) to my watchlist

Ann: FY17 Analyst Pack, page-24

Top Stories

Defence MOU for propulsion systems pushes Aurora Lab shares higher

Tigers Realm's US$49M sale of Russian assets – to a Kremlin-adjacent billionaire – set to go ahead

NRW Holdings inks $109M deal with BHP for works at Jimblebar

Ragnar impressed by 11.55 metre pegmatite in Sweden, anticipating further mineralisation

ASX Market Open: ASX200 to open flattish after Wall Street weakens on hot US inflation data | October 11, 2024

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

Week 41 Wrap: HotCopper asks “Back to Mongolia?” for Elixir; US CPI comes in at 2.4%; eyes still on China

Issues emerging as Australian companies tackle critical minerals challenge

Sunshine Metals kicks off copper gold drilling at Truncheon; Highway East targets

Cauldron Energy reports "excellent" uranium assays in latest drill run

Featured News