Perhaps because holders have researched the company they've invested in, where as non-holders are just jumping on the down-ramping bandwagon??
I switched off from these threads a few days ago cause of all the unsubstantiated down ramping that's going on. It's easy to fling doubt and negativity around, but harder to do research and share factual information!
So here are a few of my thoughts on some of the potential issues BAL are facing:
Take-over: Highly unlikely. Approx. 58% of shares are held by the top 20 shareholders. I very much doubt they will sell this golden goose.
Cashflow problems: Highly unlikely. BAL had next to no debt as of 30/06/16 (refer pg. 70 annual rpt), and stated in their 02/12 Business Update that the "balance sheet remains strong supporting future growth". In addition, in FY16 BAL had already been making provision to increase stock in FY17 (refer pg. 64 annual rpt), so overheads for Fonterra stock have been spread (at least in part) over two financial years, and not been born solely in FY17.
In addition, right at the end of the 02/12 teleconference, Laura advises that BAL is not funding the discounting by resellers on China e-commerce platforms. Whilst it's not explicitly discussed, I am assuming that BAL is funding the discounting/price matching they are doing on their own flagship store, so whilst this will diminish profit, BAL are not funding all the discounting currently taking place in China. And a reminder, that in FY16 the EBIT margin for China was much higher at (33.6%) versus Australia (19.9%).
Stock write offs: Highly unlikely. Formula has a three year shelf life. This time last year, nearly all stock was exhausted, so logically, the vast majority of stock has been manufactured sometime in 2017. I can't see how an stock write-offs would be necessary in this financial year (and in the meantime, they are an asset on the balance sheet, not a liability).
Loss of Market Share: This is the harder point to clarify. I think the Aztec graph published in the SMH supports claims by Daigou's that they are shifting more A2M then BAL, but in no way is that one graph comprehensive enough to determine a conclusion. I suspect that people have lost sight of the fact that BAL is now a global company, and we can't make a judgement on their market share/sales volumes by only considering Australian domestic statistics. I posted about this issue at the time:
https://hotcopper.com.au/posts/21250838/single
So - am I nervous about what the announcement will be.... absolutely! And the sooner they make it, the better for everyone.
But I still lean towards the announcement is about providing a better insight into BAL's future in an effort to stabilise the share price and in still confidence and understanding about how BAL is progressing with China distribution channels.
Hopefully we won't have to wait much longer!
