Maiden Dividend of 23cents probable, page-5

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hardt

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17/02/18

04:43

Post #: 31123774
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Originally posted by blackeyed ↑

Goldman expect a half year result of 400m revenue
According to a note out of Goldman Sachs this week, the broker has high expectations for Wednesday’s results release.
On the top line Goldman expects the fast-growing dairy company to deliver a 56% increase in sales on the prior corresponding period to NZ$400.6 million.
Whereas earnings before interest, tax, depreciation, and amortisation (EBITDA) is predicted to grow at an even quicker rate of 80% to NZ$119.6 million.
To achieve this the broker believes a2 Milk Company will achieve a gross margin of 48.5%, up from 46.5% in the first-half of FY 2017. This margin expansion is expected to be driven by a sales mix shift to higher margin infant formula.
Goldman will also be looking out for an increase in the sales generated from the mother and baby store channel. It accounted for around 8% of its infant formula sales in FY 2017, but the broker believes this could be closer to 15% in FY 2018 thanks to its increased presence and favourable regulatory changes in China.
Looking further ahead, the broker has forecast revenue and EBITDA growth of 54% and 74%, respectively, for FY 2018.
I expect this to be conservative. More likely 450 to 500. Second half is always about 15- to 20% more so we are looking at over 900m revenue for the full year.
With margins at 48.5 that 436.5 cash before tax interest and depreciation, Depreciation is nothing, interest is nothing tax will be about 20% or about 107m that leaves about 330m free and clear, earnings per share will be close to 45cents, on a growth p.e. of 28 that makes A2M priced at 12.88nz a share, (11.98 AUD). and a dividend of 23 or even 30cents for a full year is quite likely (or a big buyback).

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GS sees 400.6m Revenue and 119.6m EBITDA = 29.9% EBITDA margin

You are mixing gross margin up with EBITDA margin.

You see 450-500m Revenue at the same margin of 29.9% = 135-150m EBITDA

So your guess is around 300m EBITDA and like 190-230 NPAT for the year.

The dividend will be a negligible yield if they decide to pay one which I hope they don't.
I would prefer they held onto cash and search for more expansionary opportunities or acquisitions...

Last edited by hardt: 17/02/18

A2M Price at posting: $8.59 Sentiment: Hold Disclosure: Held
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