CEO sells 1 Million Shares on market., page-32

The issue with today's pricing is that it's probably not only pricing in earnings in FY16, it's probably doing that for FY17 as well, i.e. getting way too much ahead of itself. And not only that, people totally forgot that A2M is not only an infant formula producing company. They forgot that expansion in USA is going to cost the company quite a lot of money and it will continue to cost the company money for a few more years. Yes, USA market looks promising, but how long did A2M take to establish in Australia? 10 years or so?? How big is USA as compared to Australia? For it to just make a profit from California itself, it may take at least 2-3 years minimum. However, considering that the company wants to expand all the way throughout USA, that will take at least 5 years to break-even for the whole of USA market. USA and UK will be a cash-burner for the company and the punters these days don't understand the whole cash flow dynamics for the company. One only has to look at the Facebook UK division of A2M to see there's only very few 'likes' for whatever that they posted!! Go see it for yourself...there's no excitement there at all.

And also, I've actually been wondering why the company has only been reporting EBITDA guidance as oppose to NPAT guidance (niggling worry for me when I was still holding the shares). The only reason I could come up with is that A2M has really not got clarity of the once-off write offs or "incidental expenses" associated with rebranding in UK, farms establishment and distribution costs in USA and spending associated to "establish the science of A2 Protein". Happy for you guys to fill me in on this piece.

In fact, with the risks that are in place now, I would say that BAL has a more attractive risk-reward market proposition now (6-12 months investment horizon) as compared to A2M as it doesn't have cash guzzler like the UK or USA division. Note that I'm not saying that BAL should be valued higher, but what I am saying is that A2M is definitely overvalued by at least 20-30%.

As an analyst, I'll have to issue a 'sell' rating at current price levels.