Summary
The a2 Milk Company has experienced significant ups and downs over the past five years. After rapid growth, the company faced challenges starting in 2021 due to disruptions in the Chinese market, leading to a substantial drop in revenue and profits. However, a2 Milk has since focused on restructuring its strategy, including expanding its product range and enhancing its supply chain. This helped the company stabilize and return to profitability by 2023. Recent results indicate a slow but steady recovery, with cautious optimism for the future.
Catalysts
- Are there any products or services that could move sales or earnings meaningfully?
- Are there any industry tailwinds this stock is benefitting or hindered from?
Assumptions
- Where do you think revenue will be in 5 years time? and why?
- Where do you think earnings will be in 5 years time? and why?
Risks
- Are there any risks that your catalysts won't play out as expected?
- Are there any regulatory or competitor risks that could change the outcomes above?
Valuation
- Where do you think the business will be in 3, 5 or 10 years time?
- What do you think revenue and profit margins will be?
- What do you think the valuation multiple will be in the future?
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Disclaimer
Meistro is an employee of Simply Wall St, but has written this narrative in their capacity as an individual investor. Meistro holds no position in ASX:A2M. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimate's are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.