NZ based dairy business has gone from market hero to villain in just 12-months, we caught the “falling knife” too early ~$8 demonstrating how tough it can be pinpointing when enough is enough on the downside for a stock. Infant formula sales are struggling as the daigou (suitcase) sellers have dried up with COVID a major factor in the company’s problems, this also flowed through to inventory issues etc However with a market cap of only $4.5bn the company might interest a global goliath like Nestlé but either way we believe the next $2 is up as opposed to down which is appealing from a risk / reward perspective.
Not a great M&A target from an asset perspective but it does have some excellent brands / channels that could be split off by an acquirer who only wanted certain parts of the puzzle.
MM’s likes A2M around $6
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