BAL (ASX) Main Reason BAL Is Cactus!

Originally posted by usc75 ↑

Bellamys Are Not A CNCA Licence Holder Under China Law!

The China Licences belongs to Fonterra and Bega!

New China Laws:
In an attempt to clean-up its IMF act, China has introduced new major regulations.

In Australia, there only 8 legally registered CNCA Licence Holders. And Bellamys is one of the chosen 8.

Each of the 8 CNCA Licences, holders (8) can only process 3 brands each.

CNCA Licence Holder must be fully audited by Chinese Authorities; somewhat precarious.

Today in OZ, there are more brands than are allowed to export to China.

What This Means For BAL:
Apart from approx. $110m in stock, BAL has no Tangible Assets. It own "blends" or Intangible Assets-which no sensible bank will lend upon, especially given current BAL history and circumstances.

Furthermore, BAL is 100% China-dependent upon the goodwill (such that it is) of Bega and Fonterra-holders of the very valuable (or are they?) CNCA Licences.

Imagine if Bega or Fonterra decide to play tough? Imagine if they say: "Sorry BAL, but we're only to manufacture and sell our own brands?

In short, BAL is one step away from being Cactus!

What Value For BAL Shareholders?
As stated on a prior Post, currently IMO PE at best = 2x to 4x.

When the above finally sinks in-which it hasn't yet as Analysts, Stockbrokers, Media are asleep-then watch the proverbial "xxxx" hit the fan!

Up in smoke will go BAL script.

Option For Bellamys?
There are only 2 left:
1. CNCA Licence Holder Takeover of BAL? Could be by Aussie Co (e.g. Bega) or Foreign (Fonterra)?
2. BAL Takeover of CNCA Licence Holder? Could be in Austria, Australia or ??

DYOR

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A2M itself doesn't have a CNCA licence either. It relies on its manufacturer for this. Most IF companies don't own their manufacturing, so this is a mute argument.

Also, BAL would be in the top 3 brands for Bega and Fonterra, so it's not in their interests to play tough otherwise they are shooting themselves in the foot. As we've seen with Blackmores IF, entering this space isn't easy, so it's unlikely Bega or Fonterra will begin manufacturing their own brands. Bega's 50% partnership with Blackmores was a write-off, so they have already been bitten going down that path.

BAL are in medium-term trouble, however, they'll still be around in 5 years. They still make a truckload of revenue and once the current issues are sorted over the next 12-24 months, they'll still be very profitable. I'm happy to buy shares in my super account if things get ridiculous and it goes sub $3. At $3 it has takeover target written all over it.