25 cents seems so insignificant relative to a $11 plus share price doesn't it
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Mmmmm not quite.
If you look at some of the forward projections as posted by Beagle you will see that the market is pricing on a forward PE which looks at some of the following;
· Likely sales growth between 30 to 50% = $NZ 1.3 to 1.5 billion. Korea will begin pumping and Frontera will re-launch A2 Milk in NZ from Aug 18. I also expect considerable hype re new A2 milk products (diversifying away from IF and raw milk.) There may be further Asian expansion, possibly Japan and possible news of a strategic partnership there. USA and UK will continue strongly.
· Likely FY19 EPS 35c to 40c (NZD) Some say .50c!
· Mounting cash reserves $NZ 500 mill. Expect some announcements re this. Furure dividends ( Maybe .10c?) More likely IMO is an investment in another related company…. (or both!!)
Current price pretty fair IMO. Forward price of $15 by later this year still my target.
they will have to ramp up marketing spend way more as global competitors enter the space in china more forcefully also entering new markets will require way more spend also to compete against bigger competitors.
the only reason i would see the price gaining from here is on the back of the bull market just like most other shares.
If I had a spare $8 billion would I buy A2 today and expect say a 10%pa return for many years into the future?
I don’t think I would
Maybe there is a ‘greater fool’ who would pay $10 billion for A2 in the next year or two ...if I knew that I might pay $8 billion today
In saying this I still have my ATM shares ....obviously only looking out for a short to medium term return
All of those companies to be fair have more defensive properties than ATM. Hard to get comparatives for ATM in their sector. I guess the relative PE of BAL is something to think about. My sense is the ATM SP is about fair and reasonable at the current level and its should move up in line with earnings growth over the next few years. For what its worth I have a 6% portfolio allocation and about 4% to Synlait. I think that's enough for me and am disinclined to add to either right at the minute.