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I think your valued readers would like your views on A2M given the last downgrade. Is this still a be patient for 2 to 3 years and it will recover or is the business model now in serious decline.
I genuine think the China stance inst going to improve and even once the borders open its obvious the CCP wont allow students to come to Australia. Thus, the diagou channel I would assume is over.
Being an avid reader of your views and after doing my own research I bought in at $10.5 and thus bleeding at the moment as the investment was fairly significant. However, I am happy to hold for even 4 years if I believe it can get back up to $10. However, after the recent announcement I have serious doubts.
I think your readers may appreciate an article from perhaps Tony Fetherstone or yourselves.
Cheers
A: Although I have been a buyer of A2 Milk, I feared a ‘fourth downgrade” which is what we got on Monday. Unfortunately, that didn’t leave me with a heap of confidence that all the bad news is out. Stock write-offs are easy to understand, but the challenges with re-starting the daigou trade and increasing competitive pressure impacting its Chines label brand remain headwinds.
The brokers have turned somewhat bearish. According to FN Arena, of the 7 major brokers, there are 2 buys, 1 neutral and 4 sells. The target price has been cut to $6.30, about 11% higher than the last price of $5.68. Range is a low of $5.00 to a high of $7.70.
I have been a big fan of this company – but I have to admit I have been wrong. I think the A2 brand and business is a valuable asset to a foreign competitor, potentially making A2M a takeover target. This will help to put a floor under the price. But in the short term, I can’t see the catalyst for the market to re-rate. Management has lost all credibility with the market. Time is on your side, buyers will need to be patient.
