Don't shoot me... I'm just the messenger. Blackmores share slide...

Don't shoot me... I'm just the messenger.

Blackmores share slide continues


Blackmores chief executive Christine Holgate said yesterday the weak market reflected a change in the buying habits of the Chinese.

• The Australian
• 12:03PM August 25, 2016
• Reporter
  Sydney
  @SarahJaneTasker
  

Vitamin’s maker Blackmores continues to be hit on the Australian market as analysts warn the company’s outlook pointed to a “severe deceleration”.
Despite the company yesterday recording an annual net profit of $100 million, a 115 per cent increase on the previous year, investors have punished the stock on concerns about Chinese sales.
Shares in the company lost $31.25 to close at $129.50 yesterday and the share slide continued today, with the loss of a further 2.3 per cent to $126.48.
Goldman Sachs has responded to Blackmores’ annual results by slashing its 12 month price target on the company from $164.50 to $120.
Blackmores flagged yesterday that the Australian wholesale market had softened in recent weeks and it warned of a fall in first quarter sales for 2017.
Blackmores chief executive Christine Holgate said yesterday the weak market reflected a change in the buying habits of the Chinese but she said there had been no fall in demand from people wanting to purchase health products.
Goldman Sachs analyst Andrea Chong said while the investment bank had expected some softness given regulatory disruption in China, Blackmores’ outlook comments pointed to a more “severe deceleration”.
The analyst said excess inventory in the channels selling into China and de-stocking because of regulatory uncertainty had fuelled the weak outlook.
“Visibility beyond the first quarter of 2017, and whether earnings decelerate further, is limited given a lack of clarity on inventory levels in the channel,” Ms Chong said.
Goldman Sachs cut its earnings per share forecast on Blackmores for next year by 20 per cent but Ms Chong said the bank continued to believe that the long-term potential for Blackmores to continue to grow in China remained sizeable.
“However, while there remains regulatory overhang in China, we believe the risk is that the near-term trend of earnings is negative as customers retreat from the category,” she said.
Goldman Sachs, in a client report on Blackmores, said the investment bank’s Tmall/Taobao tracker, which indicates retail sell-through, suggested a weakening in demand for the vitamin/health supplement category in July 2016, and also for Blackmores.
“Visibility on sell-in and inventory levels remains limited,” the report said.

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  http://www.theaustralian.com.au/bus...s/news-story/05132d0995e1b6aa7833ee4326c0c18a