BKL (ASX) Ann: Shareholder Briefing-BKL.AX

I went to the shareholder briefing today. I have been going to the BKL shareholder briefings for a few years. You used to get about 20 elderly people (often ex-employees) who turned up for the sandwich and show bag. Last year that was about 50 people - mainly old and a few suits.

This year - about 200 (my guess and probably on the low side) with PWC presenting, lots of suits and a lot of Chinese people. The first question in Q&A was from a Goldman Sachs representative which demonstrates how much the crowd has changed.

In some ways the presentation's message has not changed over the years. We are in Asia for the long term and have been there for 40 years. Yes there will be ups and downs and it will be hard at times but the rewards will be too great in the end not to suffer the down times. While it was not touched on in detail - supply of product is more of a risk than demand. The campus at Warriwood was running 5 day shifts 12 months ago. It is now running 5 days 24 hours per day. And productivity is being increased from 2 to 8 fillers per line (fillers are the machines that put the pils in the bottle so 8 is much much faster) and robots being installed to box the bottles etc. So a lot of capacity is available on the bottling plant. Whether this is the case all the way down the supply chain to the "krill fishermen" is not a question that was addressed.

Demand - BKL currently have less than 1% of the total Chinese market so even if they doubled or tripled (or more) their sales in China they would have hardly started to reach the potential demand for their products. I think that BKL is very surprised, in a happy way, how the demand for their products in Asia (China in particular) have literally exploded over the last 3 years. BKL has always thought that one day they would do well in Asia but when it happened they weren't really prepared!

In light of the above, barring some nasty surprise, the Blackmore's Asian story is only just beginning. Even though it took 40 years to get through the first chapter. And I wouldn't be surprised to see BKL's share price hit $1,000 in the next ten years.

It is truly refreshing to see an Australian company have the strategic vision and perseverance to be successful in Asia. It is hard to think of any other Australian company that has had success in Asia with the retail consumer (BHP, Rio et al have obviously been successful but this is at at business to business level). I suppose it has a lot to do with the Blackmore family having a controlling stake in the company so that can undertake long term strategic planning and not worry about the short term up and downs.

Whereas the companies that are owned by institutions are worried about missing target for 1 quarter........... so the strategy changes alot.

And the show bag was excellent and the lunch was very well done on the lawn under a marque.

Everything that BKL do is absolutely first rate.

Regards,

BSP

DYOR, NFA, GLTAH, IMHO etc.