A2M

It is easy to get interested again, in A2M, as it trades towards $4.

You can see the hope flicker from an improved revenue trajectory, both in the results below and in the management commentary about the outlook…

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…but it all flops over a bit when you read, but a bullet point later, that it isn’t expected to translate into higher earnings, as additional investment/marketing/promotional/distributional spend are expected to eat it all…

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Flogging milk (and formula) is competitive, unsurprisingly, and being 10% share anywhere is hard to do, hard to maintain, without spending a lot of money.

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They’ve got the balance sheet to keep it up, for a while at least, but it has the feel of a Pointsbet (PBH) or similar, in keeping the eyes and interest of consumers and their preferences.

At the least, in Aus, the demographic story isn’t so bad…

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…but it hard to imagine a worse revenue backdrop for selling infant formula than the below. Shrinking pies make for fiercely competitive dynamics.

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Mind you, how the above story fits with the US issues of no availability of supply re: the infant formula market is likewise difficult to square.

Still, not one for us, just yet.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

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