A2M 0.00% $6.85 the a2 milk company limited

Fair value of $7.97

  1. 390 Posts.
    lightbulb Created with Sketch. 133
    Assumption:
    18 Sales grow by 100% (Revenue 2015-2017 historic avg growth rate) = 1046.2m
    18 NP grow by 298% (2015-2017 avg) =256m (imply EPS= 35.32cps)
    18 EPS grow by 248% (A2M 2015-2017 historic avg) = 28.97cps
    PE ratio of 22 will give A2M fair value of 7.97, a Market cap of 5,796m.

    Is it Possible? Will you pay PE x22 for A2M?
    If you do, do you think it is justified by A2M's:
    1. Pricing power?
    2. Management ability to increase operating margin?
    3. A massive increase in Sales? (From 523.1m to 1046.2m)
    4. New Product? Yoghurt? Cheese? Acquisition?

    I have to point out that management has done well to transfer that 55% revenue growth from 16-17 into NP of 298% growth (86.3mil in fy17/29mil in fy16) is quite an incredible achievement.


    If HC members can provide guestimate on the Sales in store from FY16 , FY17 and keep an eye on the shelves now, we may be able to come up with a closer value.

    For the time being, I think we are about 30+years away from $100.
 
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