Thanks for clarifying. I mean, I have always been against a...

Thanks for clarifying.

I mean, I have always been against a takeover, but it is interesting the different methods for valuing one.

Honestly it seems like there may be a bit of a gap between theory and reality as takeovers can have strategic factors at play too. Just like particular assets, whole companies could have greater value as part of larger portfolio.

A2M is synonymous with the A2 milk category as a whole, in a way that cannot be said for any other IF or even dairy category.

Perhaps "intangibles" are captured in the valuation in a specific formalised way but my sense (very scientific - not) is that much remains uncaptured from a real world perspective.

However, one cannot argue with your latter point that we should all focus on EPS. Yes, it does take into account most things except one, which is the PE multiple that it should attract. A2M revenue is growing at a slower rate across 2021-2025 than it was across 2015-2020. Compounding the issue is that A2M's margins are half of what they were back then as well, meaning that EPS share growth is further restricted.

An analysis which simply compares the .40 EPS (presumably this was 2020) vs. perhaps .26 per share in FY25 does miss a couple of things.

What the market did not know at the time was that .40 EPS was built on a risky and unsustainable business model with a great deal of mismanagement that was waiting to be exposed by something like COVID. Product innovation had been neglected. The reliance on the high margin daigou channel came at the expense of developing other channel diversity. Both these factors (not needing new products, not needing to fight for margins) meant the company didn't utilise its capital appropriately i.e. for acquisitions or investing in manufacturing.

At .26 per share now, the company has a management that is doing all of these things, so the sales and EPS growth we do see is more sustainable and de-risked. At .40 EPS A2M looks to have attracted a PE of around 45 whereas at .26 the PE is around 23. For the reasons stated above, my own opinion is that the 45 PE was overvalued due to the unsustainability, of the company's earnings growth, whereas today's PE 23 is undervalued due to its being able to sustain its growth. It also has more levers to pull to grow EPS. Annual buyback, for instance, being a simple one I have argued for previously.