Heyy again Seuss! Was wondering how quick you’d pop your head back up!
I get the doubts about scale and production costs, small dairies rarely profit overnight. But that’s exactly why AHF pivoted from low-margin fresh milk to premium infant formula, backed by the new ex-a2 Milk veterans.
It’s less about churning out bulk litres and more about turning fewer litres into higher-margin sales, particularly in Asia’s massive formula market. Sure, making your own tins is cheaper at huge volume, but AHF’s playing a different game: a tight, premium niche focused on brand reputation rather than brute-forcing scale.
Crucially, if Andy Zhang taps his extensive Chinese distribution network… already moving serious volumes for other brands and if AHF hits even 0.5% of the revenue a2 Milk currently does in China, we could see EBITDA margins of 15-20% fueling a 30x-40x multiple quite easily.
After all, Andy Z and company are the equal largest shareholders in the company…
When you run those numbers, a share price north of 40 cents in the next couple of years stops sounding like fantasy and starts looking like a well-timed growth story. That’s the real potential of high-margin formula with lean operations, not a race to flood the market with raw milk volumes…
AHF Price at posting:
6.0¢ Sentiment: Buy Disclosure: Held
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