A2M Valuation

I think A2M is fairly valued and future SP appreciation will be dependent upon the company being able to execute its strategy of expansion in US & UK markets.

The stock is currently trading at a PE ratio of ~50; and in order to increase valuation, it will have to demonstrate that it can maintain a growth rate of at least 70% yoy for next 4 to 5 years.

Growth in Aus & NZ will remain but probably slow down over next 2 to 3 years. There is only so much milk that we can consume and it will be difficult to find new incremental consumers who are willing to pay the price premium.

The biggest market is IF in China, the company already has a 5% market share and increasing it to 10% would only add another ~100m annually to the bottom line.

Therefore to deliver the kind of growth that current valuation demands, the company will need to execute its roll out in US & UK flawlessly. I think this is the most important aspect moving forward.

	Column 1	Column 2
1	Segment	1H 2018
2	Aus & NZ	116.4
3	China & Asia	48.3
4	UK & USA	(8.4)