Interesting picture of BLA's past, now and future

First of all I am a BLA holder who started to invest in it since Nov last year. I have met Mark Sowerby in person last year and we shared a 10 minutes’ conversation about start-ups in a semi-formal forum. I have to say I was very impressed with his knowledge about being an entrepreneur and I decided to learn more about the business he used to run. After a brief research on the business I decided to have small parcel of BLA share in my portfolio for diversification. From that point to Apr 2018 there was basically no nay-sayers on the HC BLA forum and the forum was actually dead quiet, as much as other blue chip stocks on HC.

Since the release of the shorter's report we now could see the forum is dominated by the down rampers in a sudden and they are telling people how they figured out BLA was fraudulent and it basically sounds like it is going to VA in the next week or so. Nevertheless, some of them have offered objective and due-diligence analysis behind their claims, which supported the argument for their positions. There are indeed a lot of questions yet to be fully answered by the BLA management.

I have witnessed the course how SLG and BAL fell from grace to hell in a relatively very short period of time and unfortunately BLA is following their path at the moment. We all know that SLG and BAL are now on separate path, one is barely surviving due to high debt level and is on the way to rebuilt and the other one became the market darling again, reaching record breaking SP.

Which prompts me to think what are the things that are common and uncommon between them?

I think the common things of the three are:

1. They once had a good track record of continuously generating good cash flow and EBITA on consecutive years
2. They have a product that is welcome by the consumers and is growing exponentially over a short period of time
3. They all have an ambition to expand their business scope and territories
4. They have a board that failed to be completely transparent to the market/shareholders/investors regarding the direction of the business is actually heading, until the crisis moments. BAL was once thought worth nothing as it is only an OEM milk powder business without its own farms and milk source, which leads to difficulty with acquiring China export licence; SLG made a terrible decision in purchasing an asset/business and created a huge debt wall BLA was considered overstating its real AUM and calculation/charge of their fees which is considered a not sustainable business model/Ponzi scheme.

The difference between them are:

1. BAL is selling a tangible product and BLA & SLG is selling their service.
2. BAL’s main market is China and BLA/SLG is Australia and the western world
3. BAL and BLA has no debt when the crisis happened and SLG is on a large debt which they were unable to service
4. BAL & SLG has a product/service that their funding crisis does not hugely affect their consumer confidence. BLA has suffered a lot and could potentially suffer more damage if their consumers lost their faith with the business.

So I guess the future path of BLA lies with their performance in the following areas:

1. The outcome of their external auditing work- this is fundamental to the confidence to the current and future consumers. The current SP has already factored in the moderate level of inaccuracy of their reported AUM figure so anything better than that could lead to a change of sentiment. The actual AUM changes in the next 3-6 months will give the market a good idea of this in my own opinion.
2. The change of management and business model to prove to the market regarding the sustainability of their ongoing growth. This will likely include a clear ongoing disclosure of their investment portfolio and fees schedule to the public. It might be good for market confidence for Mark Sowerby to become active in the BLA operation again.
3. The detailed ann of any good/bad news regarding their EBITA changes so the market is fully informed. Absolutely no sugar coated or ambiguous statement.

We will likely need at least 3-6 months from now for for all of the above to be evidenced before we could know how the direction of SP is going. At this stage, I think it is not a boat jumping scenario but you should all do your due-diligence for your own research. Good luck to all holders or non-holders/shorters.