Ann: Clover 2013FY Results - Investor Presentatio, page-10

re: Ann: Clover 2013FY Results - Investor Pre... G'day Marmaduke,
Your blog was an interesting read. I've lifted the below directly from it;

"The main reasons I believe cashflow will grow are:
1. Strong demand for infant formula from China, and no obvious reason why customers would change supplier.
2. New product sales are expected in 2014 resulting from 2011 initiatives.
3. New product sales are expected in 2016/2017 from current initiatives (preterm clinical trial)".

The 3rd point above is my main concern for the company going forward. I'm concerned with the huge jump in R&D they are forecasting in FY14 and no guidance as to how far ahead this R&D spend will extend - the preterm clinical trials are set to end late 2014. However will that be the end of the big R&D spend on it? – They are also currently developing the regulatory, manufacturing and commercial plans for the potential product(s). A lot of money, planning, time and company energy being spent on one potential revenue source.
They also advise the Potential for sales is FY2016.
That is a long time away. A lot of a "small" company put into one venture.

How confident are they? Who knows. As we are all aware - it's a trial.

What can happen?
"Innovation program with CSIRO Australian Growth Partnership program terminated due to not meeting technical or commercial milestones". This is what happened to a recent CLV project.

I'm not trying to say the company is a sell. In fact I hold a small parcel. And of course at some price it is value. If they stick with the current POR and the predicted R&D spend I expect the Div to be back to 1.5c for FY14. (Unless they opt to dip into cash reserve to keep the Div higher).

They could either burn through the R&D and come up with nothing or they could transform the company. If they come up with nothing bar an expensive gamble I think the company is worth more like 30-40c per share.

Just my valuation based on what they currently have minus the next couple of expensive years.