A2M 0.00% $5.75 the a2 milk company limited

Whether the company reports sales of $580, $600 or $620 will be...

  1. 28 Posts.
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    Whether the company reports sales of $580, $600 or $620 will be interesting but should not be a major factor in future stock price (same for some variation on EBITDA). The company gave numbers for 4 months and implied that the company was on a safe path thru year end. And if outlook remains within range of growth expectations, revenue and ebitda is already priced in.

    For better or worse, I think the stock price is most sensitive to the company's outlook on China. The November comments made by the company showed confidence in every issue related to China, with no sign of concern. The list of risks associated with China isn't insignificant:
    - Increased regulatory hurdles for imports
    - Increased ecommerce governance
    - Diplomatic tensions overall between China and Australia/New Zealand/USA
    - Weakness in the Chinese economy negatively impacting middle class purchases

    Many companies, around the globe, have cited weak Chinese demand in fourth quarter of 2018 as a reason for disappointing results and/or a cautious outlook for 2019. If A2M joins this group, shares will suffer. It would take some other hugely positive strategic announcement to prevent a negative day.

    But if the company reports that they have not been negatively affected by any of the above issues, and remain optimistic without warning of future trouble, then I predict a v nice lift in share price. It will be a sign that A2M 1) As a company has superior management to deal with regulatory/governance/diplomatic hurdles, and 2) A2M products have so much demand in China that they are insulated from consumer weakness at the margins.
 
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