The business is a small one and came from an obscure background (APA Financials) but it started out with and still has a good foundation in dairy farm aggregation and was focused on that with a path to a production target of 50 million litres of milk per annum (ignoring the more relevant kg/ms measurement for now).
If they had continued on that path their market visibility would have been alot less than what it is now and the business still would have been a good business with potential to grow both in the SW region of Victoria and using that farm pod model elsewhere.
Surprisingly quickly they switched in to a vertical integration style of business by acquiring CDC and that has changed their business model and created a heightened awareness in the market evidenced by the rush on the shares in December pushing the price through to its highest levels. With this switch of business model comes greater responsibility and a more matured approach to their legal structure, governance, management and shareholder engagement and in all these spaces they are attempting to catching up. Some of what is proposed is not to some shareholders liking, including mine. But these still dont deny AHF is a good business model with lots of growth potential in the near-term and beyond.
Am I still a supporter of AHF? Yes, for it is a good business as it is and it also has potential, in fact its potential is blistering and not in the light of thought areas that many think but that potential will always be tempered by the appetite of those in control and the degree of risk the Board sees as appropriate including capital management.
Am I despondent by the shareprice? Not really, but am disappointed the shift in strategy didn't delight to the market to the extent of the mid-30 cent range perhaps the rush in December is partly at fault, perhaps the market coming off agri-investments is partly at fault, perhaps many other things but I am still comfortable with the share price in the 20's.
My concerns have been expressed, I would have thought fairly clearly, in another post and I dont want to dwell on them as I have stated my views on them and others can do the same. Those are not death knell concerns but more about positioning for going forward and upwards successfully.
Dont expect China to be the saviour in terms of buying all the product CDC can produce.
Dont expect China to be the saviour in terms of buying AHF as a takeover.
Dont expect the price to fly north in a hurry until the full financials for this current year are released and ingested.
Do expect some dilution as more capital is secured through placements for acquiring farms.
Do expect an improvement in the free cash position on a monthly basis with CDC no part of the company and the synergies that arise from this acquisition.
Do expect earning to be accretive.
Hang in there, many others are and out of all the dairy plays that are beyond looking, talking and thinking AHF is still an outstanding one, for now.
AHF Price at posting:
24.0¢ Sentiment: None Disclosure: Not Held
