do you buy a2 milk?, page-67

Comparing to davnet now @HomerJay

You truly are an amatuer.

A2M reported 18.7 million EBITDA after expensing once off costs of 8.1 million.

NPAT was just over 10 million to the half year. This was based off 139.1 million total revenue.

Full group revenue is expected to be up to 350 million and EBITDA in the range of 45-49 million for the full year.

So you can clearly see things are going pretty well. My expectation is pushing 30 million net profit after tax for the full year due to the lower revenues on the first half.

Yet you say we are overpriced?

Using a PE of 40 on 30 million NPAT we are actually priced fairly and as you already know the price of infant formula increased in the second half year. UK is expected to break even before year end fy16 and synlait also took on additional farmers recently meaning demand is growing.

So if you want to be cautious maybe buy the banks..they are good value..but for goodness sake don't say A2 are overpriced. The growth over the company over the last 5 years shows exaggerated growth which is why they trade on a higher PE.

For me personally A2 will be pushing well over 50 million NPAT in FY17 which means if I use a PE of 35 they will have a market cap up around 1.7 billion and I think the company can push to be roughly 2 billion depending on how China and UK growth continues.

Don't say 50 million NPAT is far off either. If you extrapolate the second half of FY16 it's not far off at all and I'm probably being conservative if anything.