Unprecedented demand, page-2

As time goes by the more intense and focused SML seem to become in ramping up supply and production, and that could be just due to a desire for greater volume and thus a greater bottom line, it could also be that they have re-negotiated incentivised margins with A2M.

I go to the agm’s, I’ve visited the Dunsandel site, I’ve met John Penno, I talk to others, I live within 40mins drive of their plant, it just seems to me that in 2016 there could be a lot more growth in a2 production than many are anticipating right now.

SML are going all out to take up surplus capacity as fast as is practically possible, the local farmers DO want the margins that come with a2 at a time when farm gate returns are low due to international commodity price pressures.

A2M I reckon upgraded guidance last week to set expectations for HY reporting based on an increase in November and early December SML production volumes.

I genuinely think it is probable that the rate of a2 conversion will continue to accelerate well into next year, how much of that acceleration is set into that guidance, well we don’t know, but it does seem clear that A2M have been conservatively increasing guidance incrementally over the last six months and may just continue to do so as and when they become sure that monthly a2 production growth becomes locked in.

As for the next guidance upgrade, I’d prefer A2M just stuck to quarterly reporting, this month by month updating just seems to drive too much volatility for my liking as a longie.