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BAL - Bellamy's Australia

Discussion in 'Stocks 0-H' started by System, Aug 7, 2014.

  1. CanOz

    CanOz Every day above ground is a stellar day!

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    Chart of BAL, answer me this Rainman, is this equity still in an uptrend?
     

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  2. CanOz

    CanOz Every day above ground is a stellar day!

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    What about this equity Rainman, i 'think it could be in a bubble, should we exit?
     

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  3. Rainman

    Rainman Well-Known Member

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    But you've sold out of it - which brings us back to the original question: why do you recommend that others enter a very bubbly stock that you have already sold out of?
     
  4. CanOz

    CanOz Every day above ground is a stellar day!

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    Nah, I sold out because I went flat on everything except one currency position while on holidays. Otherwise I'd likely still be in BAL, or possible just exited, I didn't see yesterday's session result.
     
  5. skyQuake

    skyQuake Well-Known Member

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    What a result! Management moves everything forward by 2 weeks to support the share price :cool:
     
  6. skc

    skc Well-Known Member

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    Yes that was a very effective self-issued speeding ticket.

    I had a small short on it when it went into the news so had to scramble and flip at the match. End up cutting my loss to something pretty minimal...

    All of a sudden they are trading at ~PE 30x which is not really that much of a stretch.
     
  7. mcgrath111

    mcgrath111 Well-Known Member

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    Expected to see BAL drop sooner or later; did not see 43% though! :eek:
     
  8. skc

    skc Well-Known Member

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    No... not when the AGM was merely 6 weeks ago, and not when A2 just issued a sterling update a few weeks ago. This is a major shocker by all accounts.

    When a company's announcement starts with "FY17 is a transitional year" you know there's trouble. But no I didn't really think -40% was possible.

    With the new forecast of $240m revenue @ 20% EBIT margin, NPAT is going to be ~$33-34m (BAL has little debt, thank goodness) depending on the tax rate. This equates to EPS of 34.5c compare that to FY16 EPS of 39.8, a fall of some 15%. Now where it hurts is that consensus was looking for 63c a share (per article below). So it's a shocker.

    An AFR article after the fact.

    http://www.afr.com/brand/chanticlee...ss-after-share-price-collapse-20161202-gt2kan

    P.S. Lol now there's a class action thread on the other forum!
     
  9. Triathlete

    Triathlete Keep it Simple..!

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    I thought I would do a quick analysis on Bellamy's since we saw quite a drop last week.

    Now most of you know that I get my fundamental analysis using www.lincolnindicators.com.au

    as I do not have the time to do it myself.

    Using their assessment I always like to check the charts to see if things are lining up before I place my hard earned into any stock that may have potential based on Fundamentals.

    Now based on their previous analysis they had this particular stock as a Star Growth Stock,but looking at the last 3 months at no stage in my opinion was this a buy using Technical analysis and was actually trending down towards a Long term trend line.

    There was a number of exits that may have been taken and certainly an exit should have been taken once the trend line was broken (my opinion only).

    I have attached my chart ,I would like to here from those that may have been trading this particular stock or may have their own view regarding this stock.

    Cheers
    Triathlete :)


    Bellamy 04th Dec 2016.jpg
     
  10. Stomper

    Stomper Member

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    ASX: BAL 12/12/2016 08:42am AEDT Trading Halt

    The Trading Halt is requested under Listing Rule 17.1, pending the release of an updated announcement of the impact of trading conditions on the Company’s expected financial result.

    Not looking good, given that only 10 days earlier the Company issued updated guidance which saw their share price halve.

    Also not a good look that the CEO and Chairman sold two large parcels of shares in August”¦.

    29 August 2016
    As disclosed in the Appendix 3Y lodged with ASX today, Bellamy’s Australia Limited
    (ASX: BAL) Managing Director & CEO Laura McBain has sold 165,000 shares, and Chair Rob Woolley has sold 200,000 shares. Laura and Rob will be investing in personal assets and supporting private family investments.

    and more in March”¦.
     
  11. fanger

    fanger Well-Known Member

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    Any speculation on why they are suspended and for how long it might be?
     
  12. pixel

    pixel Well-Known Member

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  13. skyQuake

    skyQuake Well-Known Member

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    $1m cash left. Uh oh!

    Whatever happened to the $30m+ mentioned at the AGM?
     
  14. skc

    skc Well-Known Member

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    It's $1m net of debt so for all we know they burned more than $30m. What we do know is that a large part of that went into inventory... the number grew from $68m at end of Jun 16 to now $105-110m at end of H1 FY17. This doesn't include the shortfall payment either. It has been expensed but the cash hasn't been paid.

    Assuming this inventory is recorded at cost, it means they have some 7-8 months of inventory built up. It looks like these stock cant' be sold after Jan 2018 into China due to the regulation changes. Is there a write off coming?

    I listened to the Q&A and it feels that management are not truely on top of things yet. I don't get the feel that BAL's manufacturing strategy has been organised to respond to the Chinese regulation changes. Each manufacturer can only have 3 brands going into China... Is BAL considered a manufacturer or is Fonterra / Bega the manufacturer? Someone (a private investor I think) asked the question if BAL is sure that FSF will choose BAL as one of it's 3 brands... and there was no straight answer given.

    The acting CEO was the COO... surely he was as much responsible for the forecast/sourcing/contracting strategy that led to the current state of play?!The only mistake BAL made was forecasting - everything else was a response to that erroneous forecast. There doesn't seem to be anything in the material to explain how this might be improved.

    The deal with FSF is also interesting in that, there seems to plant a poison bill for any future change of control transactions. But is that really the case? If FSF terminates the contract on this provision, does it mean BAL is no longer up for the shortfall payment? IF so, doesn't it just give a 3rd party an incentive to buy a large stake in BAL in hope of triggering this clause? I am somewhat confused what FSF thinks it can achieve.

    Other questions I have relates to what else can be done to monetise the inventory? Can the raw ingredients be resold or have any alternate use? Can the finished products be "clean skinned" without destroying the brand?

    Anyhow... it's a pretty solid rise from the low today. We will have to wait until we see how much of this is short covering.
     
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  15. McLovin

    McLovin Well-Known Member

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    It's pretty poorly worded and ambiguous. The previous agreement has "change of control" termination rights. So does the new one. AFAIK, "effective control" is no different to "change of control".

    The way I see BAL is it's a manufactured milk company that owns neither cows nor manufacturing equipment. They got caught in a jetstream that sent their sales and gross margins ballistic in FY16. Unlike iron ore, or olive groves, it doesn't take too long to bring on capacity (cows or P&E) to meet an increase in demand. Margins at 10% over the cycle would be a pretty good outcome. With the build-up in inventory, and the slowing of sales, the price still looks pretty rich, imo.
     
  16. skyQuake

    skyQuake Well-Known Member

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    Agree, still seems expensive at current price = 13-16x unerlying EBIT
    I suppose the hedge funds short this are in the money by $10 or so, and don't really care to hold through the pain of wrangling a few more cents or even dollars out of it

    This is definitely a fresh take on 'turnaround story'
     
  17. JTLP

    JTLP Formerly known as JTC

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    Won't there be some overhang of a class action on this?
     
  18. skc

    skc Well-Known Member

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    The management speak is the supply chain whipsaw effect. Plus you have an unique situation where unsophisticated Dai-gu's were a large part on the supply chain so it exacerbated the perceived end demand. Then BAL went and undercut the Dai-gu's who helped create the demand growth in the first place.

    Premium and niche is probably where they should aim. I think they can achieve margins much higher than 10% with a premium positioning. What they don't have is much economies of scale because they don't manufacture themselves.

    A2M went for a run today on the back of no negative readthru from BAL's update. I think people are nuts to price A2M at current levels, given what we've seen in BAL and BKL.... on how quickly and unexpectedly demand and rules can change in this Chinese consumer game. Where's the margin of safety?

    Probably some impact but it probably won't kill BAL.

    May be BAL can simply use the inventory to settle the class action claimants once and for all. Solves 2 big problems with one stone.
     
  19. galumay

    galumay learner

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    GOLD!! That had me spraying my glass of fine red wine all over the screen!

    going from the subime to the ridiculous, maybe they could do an equity for inventory swap with SGH and help them with their class action too!
     
  20. Boggo

    Boggo Well-Known Member

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    Didn't hear all of the interview but caught most of it on the drive back from Queensland.
    Didn't catch who the commentator was that was being interviewed on the ABC, some investment advisor and he was using this company as an example of where people blindly follow company produced fundamental data that sound good but in reality the company has no supporting foundations and were at the mercy of foreign import rules.
    He was very negative on some of what is being peddled as sound reporting as in this example where expectations were based on assumptions.
     
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