I would agee NT001 that a conclusive outcome to the scientific debate being positive as a result of the pending human trials would be a bonus on the status quo.
The debate in itself for now though is an exceptional marketing tool regardless of a long term outcome.
Debate --> Awareness --> Supermarket Sales
What some miss I think is two things, the first is the earnings sacrifice for growth, present eps does not value a high growth company, it’s long run cashflows that value growth companies.
The second is the gross margins that we see from the a2 proposition which will ultimately determine the value of cashflows of the company when cyclical. a2mc has the highest gross margins within the sector, they pay around 10% more at the farm gate for the a2 milk and sell it for 50% more across the retail counter.
Some may doubt that the UK, China and US markets will take off, fair enough, but we won’t know for another one to two years yet. For now though the company is performing ahead of forecast within Australia.
Let’s see what the half year brings, the new shorter establishment time markets, fresh milk, infant formula and UHT into China, and infant formula growth in Australia should be starting to register.