MGC - Valuation

I love it how USC, and all the bears come out when there is blood on the streets. Lets stick to facts here and valuation. This is a $3billion dollar revenue company/coop - that is not going away. Right now we have a sentiment issue rather than a factual valuation issue. The company didn't lose contracts, it didn't lie about profits - it aggressively forecasted sales which it missed. But GUESS WHAT. sales are still there.

1. revenue from $2.4b to $3b in the space of 2 years(old ceo wasn't great, but he didn't do a bad job, even if it was on low margin milk sales.
2. Revenue MIX, from 50% exposed to the global milk market to 30% due to positioning of new products
3. Even when farmgate milk price was below $5(2013).. it still produced a NPAT of $40m. with a much higher gearing ratio of 70%.
4. IPO investors mad they have lost money, but reality is they got hit with the risks outlined in the PDS. The company has actually done quite well here and raised $500m to put into new investments
5. If the company decided to just sit still, it could generate significant profits - but it is choosing to continue to expand and create its own brand away from the milk market. this is what FARMERS WANT... shielding from the volatile milk market.
6. its book to market ratio is somewhere around .3.. this is ridiculously cheap. its inventories may take time to clear, but they will clear. these are not perishable inventories.
7. Its forecast dividend for next year is 9 cents, that's >10% fully franked yield at this level
8. Brokers have targets in the range of 1.40-170.
9. It can cut employee levels to generate more income (they rose 25% yoy to 2500)
10. IT can cut capital expenditures to raise farmer payouts (it wont because it is looking long term).

You can bash this company all you want, but at this valuation it is a buy, I give no merit to the SGH law suit and the ACCC will see that they are guilty of aggressively forecasting than deception.
Yes - we may go lower in the short-term - lets face it, there is $5m turnover max per day, and it doesn't take much for sellers to take control.

I for one am looking through the storm and past this - asking myself the question - will this company be around in 2 years? will the revenues be maintained? will the farmers keep supplying milk? will china keep growing(1 child policy relaxed).

Be brave when others are fearful.

Goodluck all - PB.