Shares in a2-only-protein baby formula and supermarket milk supplier a2 Milk Company Ltd (Australia) (ASX: A2M) have given up 2 per cent today, despite the company releasing no price sensitive news to the market.
Still, a2 Milk shares have rocketed 329% over just the past year largely on the back of the group's accelerating infant formula sales into China where EBITDA lifted from $9.2 million to $32.7 million over FY 2017. Revenues in China also grew from $38.2 million to $88.9 million as investors continue to bet heavily on sustainable growth in the region.
The business reports in NZ dollars and shares currently change hands for 65x trailing earnings with the stock trading on around 41x analysts' estimates as to FY 2018's earnings per share.
If these forecasts prove too optimistic on the basis of slower-than-expected top-line or margin growth the stock could be in for a big fall. The next trading update is likely to be at the November 21 AGM.
