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Not sure about value, but I bet lots of chartists (your nemesis?) will be shorting this stock if $144 is broken.
At today's closing price of $148 the stock will actually look inexpensive if they can deliver a strong FY2017 profit.
Not sure about value, but I bet lots of chartists (your nemesis?) will be shorting this stock if $144 is broken.
Hi SilverRanger,
Why $144? Does anyone else have an opinion on a figure to start shorting this stock?
Cheers
PB
I would agree with Silver Ranger that a close below $144 could see a move down towards $125-$120 and worst case $110.
This is just my opinion as well and not a recommendation please do your own analysis.
At today's closing price of $148 the stock will actually look inexpensive if they can deliver a strong FY2017 profit.
BKL got smoked today.
I read the 4E report and saw numbers inline with expectations so I thought it'd do ok. But I was too busy trading when their non-price sensitive results announcement came out, which mentioned that Q1 FY17 is tracking lower than pcp. That surprised everybody and the bloodbath was on.
The market was looking for 15-20% growth in FY17 at least... so there'd be plenty of price target revisions tomorrow.
BKL @ today's closing price of $129.5 has a market cap of $2.23B... so it's trading at PE 22x (on NPAT $100m), which doesn't sound that high in this market.
Some of the reasons given by management of the weak Q1 forecast is that wholesalers are running down inventories, and that some of the "suitcase export trades" have moved up the value chain and not shopping at retailers anymore.
My guess is that.... the wholesalers got caught up in the hype and over ordered in the last few quarters. These started to normalised in Q4 and accelerated in Q1 FY17. I will be surprised if demand for BKL's product suddenly fall off without major issues like a health scare, recall etc. An alternate explanation is that Chinese regulations are changing "DaiGuo" behaviors in ways that BKL isn't on top of. May be another brand is a good enough substitute (less face it, Blackmore, Swisse, Nature's Way - what's the difference) is now easier to distribute in China after the new regulations.
Hard to tell from just one quarter. But definitely worth monitoring.
I think the market over re-acted to the bad news.
May be... there was a lot of certain growth priced in so a Q1 contraction is definitely unexpected. Share price can over react in a situation like this.
However, the news did create a lot of uncertainty. If the problem is only affecting this quarter then current share price is a great opportunity. If the problem is just the tip of something more fundamental then the share price may not recover.
I think you might get a decent answer by interviewing a number of Dai Guo's and a few pharmacies.
Strategic Comment
Last updated : 25 August 2016
BKL is a Star Growth Stock ...
[/B]
SKC et al
I do not hold BKL and always envious of it sky rocketing prices and to see what happened now.
I am reading your golden statement to interview pharmacists etc. I have not done so but have been watching the window dress up with BKL products in health shops and chemists for few months. The heavy discounts offered by some pharmacies also tell me something on over inventory.
Do not forget there are other products like SWISS and the market is over flooded with health products.
So purely from consumer perspective I have been staying away to buy Black more products - they are over priced. In addition when I read the labels on content, then I did not find value for money.
If there are other idiots like me who do not read the financial statements produced by BKL but just buy or reject to buy BKl Products - we know what happens in next quarter.
Thanks Triathlete. I am impressed that Lincoln update it's contents so quickly.
Thanks Triathlete. I am impressed that Lincoln update it's contents so quickly.
Yes I remember seeing the 50% off sale in my junk mail piles and thinking why they would want to do that... but I didn't think too hard about it.
Domino's regularly run 50% off sale as well so it may or may not be an indication of what's happening.
Another potential explanation for slow sales just popped into my head... it's very hard to see the direct benefits of taking health supplements. It's easy to see how someone suffering from certain health conditions would like to give these a try. And to give it a proper trial they must do that for at least 6-12 months. So with a surge in brand name and popularity starting some 18 months ago in China, may be the initial wave of trialists are rolling off, and the word of mouth becoming more mixed, as some consumers didn't see the desired health benefits.
Pure speculations... but it'd be interesting to know what proportion of BKL's customers are true, long term daily users vs transient trialists.
Actually, I was thinking BKL's product in this way (only initial wave of trialists) as well when the stock price keeps to be smashed recently. But you think about it, BKL's products have already in the market for so many years and have been carrying back to China by the chinese people here all the time, not only last 18 months. I think DaiGou starting popular around 18 month ago when people can easily set up a mini-shop on WeChat or other e-commerce sites. Since then selling volume of BKL's products expands quickly. BKL now is establishing their selling channels in China directly in a way similar at here.
If that's successful, China's market and potential for BKL's products are huge. I have the following reasons to be positive about BKL's product's future in China:
1. Chinese people spend a lot of money on health supplements, especially the aged people
2. Australian products are very well trusted in China
3. BKL's products are only available directly in China recently, might not all places yet
4. BKL's management team has a good track record to be successful in a competitive market
This a only my personal opinion for discussion, it might be not right.
So with a surge in brand name and popularity starting some 18 months ago in China, may be the initial wave of trialists are rolling off, and the word of mouth becoming more mixed, as some consumers didn't see the desired health benefits.
If that's the case, this may hurt:
View attachment 68027
Why are their provisions so low relative to inventory?
And do the raw materials ever go bad? (Doubtful, but worth asking)
Looking at Inventory vs Sales, they're clearly gearing up for additional sales that have not yet eventuated in Q1
EDIT: This may be the answer to the increase in raw materials:
"We are also holding inventory of scarce raw materials to give us access in a growing market to mitigate against the vulnerability of having core product lines out of stock."
Why was their provision in the previous period so high? 6% spoilage seems high, especially given the shelf life of the finished product. I seem to recall them saying last year that they were having real problems sourcing some raw ingredients to keep up with demand and maintain the quality control.
Seems we are getting closer to the above price ........anyone following BKL have a view.I would agree with Silver Ranger that a close below $144 could see a move down towards $125-$120 and worst case $110.
Morningstar has a similar value but with a very high "Fair value" uncertainty rating.Seems we are getting closer to the above price ........anyone following BKL have a view.
Stock doctor has a value of $148 on the stock..
Morningstar has a similar value but with a very high "Fair value" uncertainty rating.
I'm very hesitant to touch it.
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