MAC, aren't we rather guessing in the dark here? You're picking an overall net margin of $10m on fresh milk sales. But do we have any idea of transport costs for liquid milk to China, which must be substantial but are not included in the COGS or gross margin. The COGS for the Chinese market would probably be close to that in Australia but it won't include transport, Jingdong's margins and general overheads such as the cost of a2MC staffing an office in China, all of which could reduce the net margin. One assumes all these costs are factored into the wholesale price to Jingdong to maintain a margin, but I don't see how we can deduce that margin from information available at this point, especially as the internet market is said to be fairly competitive.
And is the Jingdong deal the only sales operation for A2 milk? I thought there was also a substantial fresh milk sales operation through retail outlets, especially in Shanghai. Do we know anything about the margins/quantities for this? I know you've been keeping fairly close tabs on all this. I'm not saying your estimate of $10m is too high - it may be too low. But getting established in a new market is never cheap, especially in the first year.