Quick question... how does BAL make money from Chinese buyers in Australia stripping Australians of their supply here? They obviously BAL need to raise the price that they sell the product over in China, to eliminate the black market economy that they are obviously not reaping any benefits from.
If anything, the constant supply issues currently experienced by Australian consumers could be detrimental in the short term. Brand damage, brand loyalty, etc. For example, people using Bellamys 3 can switch to organic milk, if they can't find the product, and depending on which research you choose to read has just as many benefits as formula.
Also, what is BALs ability to successfully ramp up production? What is the cost and do they have the capital to do so? Are they hamstrung by their supplier arrangements and/or capabilities? What is the likelihood of competitors (larger institutions) developing a rival product? Not to mention that there are 3 massive organic infant formula producers in the USA and several from Europe - wonder how their sales are tracking? Does BAL look better because its coming off a lower base? Is the made in Australia/NZ a fad, what differentiates Australian organic product from other countries and how much value are the Chinese willing to attribute to this in the long term? Will a drought in Australia this year impact their ability to source certified organic ingredients?
I would like to see more information from the company with regards to these areas of concern rather than generic comments - as increasing supply of organic ingredients (certified by NASAA) is a massive hurdle for many organic producers.
Given their current PE - the market is pricing in a fantastic result - good company - good story - but still has plenty of work to do to keep the growth rate up and to meet expectations.
TheGimp
BAL Price at posting:
$7.10 Sentiment: None Disclosure: Not Held
