I am really liking Alcicion as my current best pick of companies that are pre-profit or not yet at positive cash flow.

They have some good reference sites so prospective customers have actual real use situations to look at when making a purchase decision. 

Customers seem quite sticky and I expect low churn as it is not so easy to change once you have a system embedded.

From the conference call I took out the impression that growth in expenses should slow going forward and as there is a good pipeline of opportunities new sales should provide a good boost to the bottom line.

With the recurring contracted revenue the company revenue is pretty easy to predict and there is upside potential from any new contracts. Alcidion saw a 36% jump in first half revenue to $11.1m and the great thing is that revenue already contracted for FY21 is $21.7m.  Without any new contracts that is already going to be revenue of 17% above FY20 full year result.

If there is continued contract wins and growth in recurring revenue that should see the share price increase over time.

There is $12.5M of cash on hand but I have to consider that there is still a possibility of another capital raising being needed before ALC gets to profitability.

I think a this stage the company is a low risk with a good upside potential.  I hold and am hoping for good things over the coming years for this company.  Hoping to see recurring revenue growth for years to come.

Disclosure-I have a small holding, have been looking to add more.

The last result displays how much A2 relied on the retail daigou channel. this has been almost wiped out and IMO the big question going forward is will this channel re-establish itself and will it be as relevant.

BULL POINTS 

Smaller biz's like US and Aust Liquid milk doing ok. Brand still strong in China in IMF. Mgt trying to clean up inventory situation, took a $23m provision (enough?). Progress in MBS was good, although i consider this a good biz not a great biz. Corporate daigou seeing some green shots?

BEAR POINTS

Business momentum still negative, downgrading. Sales poor which is understandable given the situation but hard to accept mgt's initial bullish read. Hard to see high profitable growth without retail daigou, ie channel mix is deteriorating, mainly because retail daigou was so high. that is good but not great. the recent acquisition of MVM looks overly optimistic given the lower growth, hard to see it making sense in next several years. CBEC channel is problematic, pricing poor and inventory slooshing around. same for everyone. Competition has become tougher but with A2 at 2-3% share still room to grow.

WHERE TO FROM HERE

I think it is now obvious that the retail daigou channel made A2 a great biz and without it A2 is only a good biz. will this channel come back? probably needs intl borders reopened, which is not soon. will it still be as efficient and profitable?..dont know ..maybe. I think A2 is a good biz but I would like to buy it without paying for the retail daigou return. so that becomes the big potential upside. My best guess of this is good risk adjusted buying $7.50-8.

this is only an opinion not advice. DYOR