I've always wanted to own A2M but have never been a holder as I haven't been to prepared to pay a large multiple for the growth story. I was looking at buying at $10 but missed that boat (fortunately). Usually I regret not buying because the share price soon goes up. At some point there will be a strong rally as bargain-hunters see an opportunity. I would love to buy, but can't determine the value of this company with all the uncertainly. It's still too expensive as an agriculture-type company (TGR, ELD) and even BGA has a higher P/E ratio and is valued as a growth company after its acquisition spree. A2M is getting close to Coles' (inflated, in my opinion for zero growth) P/E ratio, but without a dividend to show for it.
For much of the past decade I've lived and worked in a first tier city in mainland China. My partner is Chinese. One thing I know for sure is the deep, imbedded feeling that foreign products are superior (better quality, cleaner, safer, etc.). It's a dominant theme in Mainland China. It is cultural, and will be very difficult for that idea to change. Chinese people and the government seem to be getting more nationalistic towards China but on an individual level, new-found wealth equals an ability to buy foreign products. There are relatively very few local, high-end fashion brands for this reason. People who can afford it buy imported products for status and for the assurance of quality. "I've worked hard, I deserve the best for me me and my family", is the attitude.
I am surprised when looking at the holdings of A2M directors. There hasn't been a single "Buy" transaction from a director aside from a couple of 'Exercise of Options' from one person. You'd think the directors would be loading-up because/if they know the company is grossly under-valued; but they haven't been. I've never seen a company board with less holdings by directors. Surely it would be almost an unspoken requirement and part of the company culture to buy shares. They have absolutely none of their own money at risk.
I dont know either why the company isn't buying back shares at these depressed prices (as GPT and AZJ is doing), announcing a special dividend, or looking to take-over a rival such as BUBs. If you look at the A2M and BUB graph for the past six or twelve months, the trajectory is virtually identical. There are clearly sector-wide issues. Perhaps a lot is happening behind the scenes, although the unnecessary guidance forecasts, which were then missed, are hard to explain. A lot of companies said they were unable to provide guidance; they under-promised and over-delivered during reporting season. A2M seems to have done the opposite. Recent negative comments from the ex-CEO about the company, including saying that A2M didn't even having an IT Manager when she started her role were hard to reconcile. The company has been caught-up in a mess with COVID but when I look at management decision-making I wonder if some things could have been done better.
We've seen the retail sector come back strongly, the travel sector rebound, after that it was the energy sector. I imagine the infant formula sector will be the last to recover from Covid as it needs a firm date for daigou to start to return; but recover it will. I am sure some damage has been done to demand in China -- especially if other companies are gaining market share there now. Things won't return exactly as they were pre-Covid, but there's a strong turn-around story here. Whether that is buying-in today, or at the ridiculous $6.01 price I've been reading there, I have no idea. I do know I'd much rather own A2M than BUBs as exposure to infant formula although I like BUBs' focus on countries in Asia outside of mainland China.
Unfortunately, for all the hours I've spent recently reading this forum, I haven't learnt very much. Mostly I've read angry personal attacks and witnessed the forum become completely dominated by a couple of members. It's kind of like going to the bar, playing the same Spice Girls song on the jukebox repeatedly, every ten minutes for the whole night, then arguing with other angry partrons at the bar, "Hey, I've paid my money and it's a free country. I can play that song as often as I like. It's my right.". Your only real choice at that stage is to get in a fight, or go to another bar.
Does anyone have information about why the directors aren't shareholders? Is there an obvious take-over target either here or abroad? Is A2M looking at markets such as Vietnam, Thailand or the Philipines? I went to Vietnam a couple of years... the place was booming. There's a huge number of people joining the middle classes in south-east Asia.
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