@Investbest92 A2M's full year guidance for FY24 was mid single digits revenue growth, which they achieved at 5%
I believe they also met the market consensus with respect to EBITDA
They then provided an FY25 outlook of mid single digit revenue growth. The market consensus had been that FY25 growth would be higher than this.
If you recall, there had been favorable news about China birth rates increasing earlier in the year, and then just prior to the results, an announcement of resolution of legal dispute with Synlait. Whatever the reason, the SP was above $7 at the time of results. The market consensus for FY25 outlook is simply the amount of earnings that would be required in FY25 to justify this SP at the time of the reporting.
It has very little to do with existing sales and everything to do with what sales need to be in order to justify the valuation going forward.
The supply disruption they flagged, including the lack of detail given around it, has been the main problem here. That is why the guidance was lower than expected and management need to answer questions on this. Since then, relatively low export volumes each month have probably not helped shift the narrative.
Some positive signs though, in that A2M appear to be maintaining similar sales rankings in 11/11 (which suggest sufficient inventory levels) and Danone's report a few days ago highlighted signs of recovery in the IF market. A turnaround at Synlait would also be a positive given how disruptive their issues have been to A2M over the past few years.
A2M Price at posting:
$5.88 Sentiment: Buy Disclosure: Held
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