A2M 1.13% $6.25 the a2 milk company limited

Will A2 earnings stagnate

  1. 13,667 Posts.
    lightbulb Created with Sketch. 1290
    Well I'm moving one of my posts over here as it wasn't on topic with another thread.  I want to discuss the financials.

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    the 2nd half of fy16 is going to generate an estimated 30 million EBITDA. Using the 2nd half FY16 earnings if you were to state growth would be completely flat in FY17 then your looking at 60 million EBITDA in FY17 based off second half FY16 numbers. I don't believe growth could ever be flat because we know UK is already moving into break even/profitability on a month by month basis..infant formula demand and supply is still increasing as per the following info/news released by Synlait..

    http://www.synlait.com/site/uploads...attracts-28-new-Canterbury-milk-suppliers.pdf

    Based off 60 million EBITDA your going to get an estimated 42 million NPAT for fy17 is growth stays complete stagnant.  This has never occurred in the company's history.

    So say the share price didn't move. That means at the current price the company would be trading at a forward PE of roughly 28.  I don't believe this will occur.  The chance of this ever happening is unlikely since the lowest growth over the last 5 years was back in FY at 16.3% revenue growth.

    Below is a chart showing growth of A2.  I drew up some estimates based off prior years growth and results.  I accounted for a 56% growth rate based off prior years.


    A2estimates.jpg


    So for the naysayers and non believers..if you can show me where A2 will go wrong financially then I'm happy to listen.
 
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