ATM - A2 Milk Corporation Limited

[Sideshow Bob]

as at 2015, 6.49m dairy cows in NZ, of which 1,253,993 were in Canterbury.

Less than .0035% of total, 1.8% localised in Canterbury.

Also, cull cow kill per annum is far more than 22k

I think we'll cope without them.

Added to that, they aren't all dairy cattle - there are some beef cattle, calf rearers etc affected. Not sure how many are associated with Van Leeuwen's in South Canty, but they were the first farm identified and have 16 farms in total - and have a number of farms affected by livestock movements. Understand they are supplying Oceania at Glenavy.

[mfd]

Yes it is but you don't replace 22,000 cows over night, even though not all are dairy cows some are calves but still. This is going to leave a huge whole is the milk supply change, some could be A2 herds. And I'm not sure if this will be the last of it.

A good opportunity for the unfortunate farmers to restock with A2 cows perhaps?

[Sideshow Bob]

A good opportunity for the unfortunate farmers to restock with A2 cows perhaps?

They would be silly if they didn't......

[Beagle]

They shouldn't hold their breath waiting for Fonterra to give them that advice lol

[Pipi]

as at 2015, 6.49m dairy cows in NZ, of which 1,253,993 were in Canterbury.

Less than .0035% of total, 1.8% localised in Canterbury.

Also, cull cow kill per annum is far more than 22k

I think we'll cope without them.

That is 6.49 million dairy cattle, not dairy cows. Considering most farmers try to rear 25% replacements each year, you have two years of replacements before they become dairy cows. Also those cull cows will still be culled. Many farmers are still on the back foot when it comes to numbers from when they cut back in the last big down turn. I think it will have more of an affect than you think.

But yes if it hasn't gotten into the A2 herds then ATM should not be affected.

[TideMan]

There seems to be a lot of confusion in this thread with affect/effect.
The cull will have a severe effect on some farmers. They will be affected emotionally as well. When will MPI effect the cull?

[couta1]

There seems to be a lot of confusion in this thread with affect/effect.
The cull will have a severe effect on some farmers. They will be affected emotionally as well. When will MPI effect the cull? That's why the word 'Impact' is the new verb to use, covers both bases without having to think about it.The cull will have a severe impact on some farmers. They will be impacted emotionally as well.

[IAK]

That's why the word 'Impact' is the new verb to use, covers both bases without having to think about it.The cull will have a severe impact on some farmers. They will be impacted emotionally as well.

While we're on it. The mycoplasm outbreak resulted from some loose biosecurity. Farmers have much to lose.

[iceman]

A good opportunity for the unfortunate farmers to restock with A2 cows perhaps?

I read somewhere yesterday that they will not be allowed to have animals on these farms for quite some time, maybe 2 years. A terrible blow for the farmers impacted.

[bull....]

a2 trade wars back on today

[JeremyALD]

a2 trade wars back on today

SP down 6%? Why there seemed to be no new news in that presentation

[King1212]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12021611

that what the sp dropped....

[RGR367]

a2 trade wars back on today

Yeah. Didn't expect it to go lower than 1300 when I put my wishful thinking buy order for 1305 last week. Still wasted a couple of hundred bucks there in buying :(

[JeremyALD]

A2 vs Atwo? That's ridiculous. Surely there copyright infringement on that

[BlackPeter]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12021611

that what the sp dropped....

And they even use the term "A2" (in the Chinese text). I thought that ATM protected this term? Well, maybe not in China ...


9592

http://pro.m.jd.com/mall/active/34Rbtvidy31ZnMAersux1UyxFA5A/index.html

Anyway - at least it does not look like they try to discount the product:

https://item.jd.com/6552509.html

408 Yuan for about 1 kg is roughly NZD 90. I think the A2 Platinum goes for something like NZD 50.

I don't think this is a reason to panic. Might be even good for the A2 story if they are not fighting it alone ..

[jimmybuffett]

From that NZH article: "He said that a2 Milk, as a pioneer in the A1 protein-free category, "considers itself well positioned to benefit from overall category expansion".
That's my takeaway, the whole market pie will start to look more attractive, sparking investment and excitement in all things A2 related?

[bull....]

nice longs yesterday and shorts today lol great stock to trade on the asx , bit of catch 22 for fund managers though biggest nzx component will wreck havoc on there returns because its so volatile

[JeremyALD]

From that NZH article: "He said that a2 Milk, as a pioneer in the A1 protein-free category, "considers itself well positioned to benefit from overall category expansion".
That's my takeaway, the whole market pie will start to look more attractive, sparking investment and excitement in all things A2 related?

I'm a bit confused is this actually why the SP is down or is it the investor presentation. I haven't seen a lot of coverage about nestle entering a2

[bull....]

I'm a bit confused is this actually why the SP is down or is it the investor presentation. I haven't seen a lot of coverage about nestle entering a2

as the market gets bigger its only natural the big boys will enter the market and divide the pie ... hence why you need a big player like fonterra at your side

[Beagle]

I think that it will increase the market penetration of A2 milk which will be beneficial to A2M. Remembering that A2M has first mover advantage and it takes years to build brand credibility. In effect Nestle running with brand Atwo adds further credibility to the science / brand after Fonterra conceding the science has merit. High price of Nestle's product leaves further significant scope for margin expansion for infant formula ? Possibly also increases the chances of a takeover.
Disc: Holding.

[James108]

Seems like all those Patents and IP didn't slow a competitor much. Atwo is already part of an established brand aswell. Don't understand how anyone could spin this as net good news.

Don't think it will be the end of the world for atm, still a holder and plan on staying a holder.

[44wishlists]

"ATwo" is not a brand. Nestle is launching it under the Illuma series, which is hugely popular in China and Hong Kong. But, "ATwo" only comes in Stage 2 and Stage 3 at present, while A2M offers the full range, between Stage 1 to Stage 4.

Also when considering what the impacts would be from Nestle upon A2M's sales, maybe worth a little time to check out the RRP for each of their own A2/Atwo IMF milk. May help to understand why I think it is a net good news.

[percy]

Cows produce either A1 or A2.
A herd of A2 cows will produce A2 milk, at the same price a herd of A1 cows will produce A1 milk.
I note 70% of Jersey cows produce A2 [ATwo] milk.
Take care.

[Beagle]

Cows produce either A1 or A2.
A herd of A2 cows will produce A2 milk, at the same price a herd of A1 cows will produce A1 milk.
I note 70% of Jersey cows produce A2 [ATwo] milk.
Take care.

I note you haven't been a believer at any stage Percy so have missed a remarkable opportunity here. Don't forget to ask KW to explain it to you.

[percy]

She has tried often.
Hopefully she has given up.?..lol

[Sideshow Bob]

Obviously few, if anyone on this site was aware of this development. Does raise a few questions in my mind......

- How are they identifying/testing the cows as A2?
- Where is it being produced? What potential volumes?
- Presumably no IP/patent infringement? Not like Nestle is a backyard operation.
- Surely Atwo is too close to A2? Presume Nestle have worked this through though?
- Do Nestle have any plans for any other markets - ie fresh?
- Nestle's developments must have been known by A2?
- What actions or strategy changes have A2 made because of this?
- Has this contributed to any executive share sales etc?
- How will this effect their pricing?
- As earlier suggested, will it broaden exposure to the whole A2 concept, with Nestle's deep pockets and marketing expenditure?
- Again as suggested, is it an opportunity on pricing?
- How much horsepower will Fonterra provide and how quickly - could it be about needing to grow volumes/supply asap?
- Does this mean that A2 concept is really going mainstream and given Nestle's move & Fonterra's change meaning it is going to get widespread acceptance??

[JeremyALD]

Obviously few, if anyone on this site was aware of this development. Does raise a few questions in my mind......

- How are they identifying/testing the cows as A2?
- Where is it being produced? What potential volumes?
- Presumably no IP/patent infringement? Not like Nestle is a backyard operation.
- Surely Atwo is too close to A2? Presume Nestle have worked this through though?
- Do Nestle have any plans for any other markets - ie fresh?
- Nestle's developments must have been known by A2?
- What actions or strategy changes have A2 made because of this?
- Has this contributed to any executive share sales etc?
- How will this effect their pricing?
- As earlier suggested, will it broaden exposure to the whole A2 concept, with Nestle's deep pockets and marketing expenditure?
- Again as suggested, is it an opportunity on pricing?
- How much horsepower will Fonterra provide and how quickly - could it be about needing to grow volumes/supply asap?
- Does this mean that A2 concept is really going mainstream and given Nestle's move & Fonterra's change meaning it is going to get widespread acceptance??

From the NBR article posted today a2 dosen't seem that worried about the whole thing and have stated it will most likely be a good thing for the whole market.

Atwo as a brand name is ridiculous though. A complete rip off.

[couta1]

A big shake of the tree today, stop losses triggered, weak hands panicking. I was flat tack at work but still managed to chase it down and sold some SML to buy more.

[Nasi Goreng]

Lots of good questions.

Mine is, is this company worth $10B, can they make $500m per year for the next 20 years.

[couta1]

Apparently illuma is a crap brand in China, rated below the local Chinese brands.

[percy]

A1 and A2 both come from cows.
Milk is a commodity.
Should customers want either A1 or A2 then dairy farmers will change their herds to suit.

[couta1]

A1 and A2 both come from cows.
Milk is a commodity.
Should customers want either A1 or A2 then dairy farmers will change their herds to suit. Good time to board the A2 train Percy, you know deep down you really want to.

[percy]

Good time to board the A2 train Percy, you know deep down you really want to.

The only milk I drink is a small amount with my tea or coffee.
I have a little Edam cheese in sandwiches at lunch time.
Otherwise I try to avoid dairy produce.

Nestle producing Atwo.
What about dairy farmers in Australia,USA,France,Germany,UK,Holland etc.?
A2tutwo4u.?

[Sideshow Bob]

The only milk I drink is a small amount with my tea or coffee.
I have a little Edam cheese in sandwiches at lunch time.
Otherwise I try to avoid dairy produce.

Nestle producing Atwo.
What about dairy farmers in Australia,USA,France,Germany,UK,Holland etc.?
A2tutwo4u.?

I'm trying to reduce my dairy intake also - but consumption and shareholding is something quite different.

Will be interesting to see what happens from here, and if we are still 'well positioned'.

[jimmybuffett]

Will be interesting to see what happens from here, and if we are still 'well positioned'.
With a growing population worldwide, demand for protein has to be increasing, any volumes that Nestle is going to produce will be coming out of existing volumes somewhere else in the dairy world, so it's not like any new volume has been introduced overnight, surely. I think long term this is still looking like a winner. But...from an investment point of view I am a newbie, so...?

[couta1]

With a growing population worldwide, demand for protein has to be increasing, any volumes that Nestle is going to produce will be coming out of existing volumes somewhere else in the dairy world, so it's not like any new volume has been introduced overnight, surely. I think long term this is still looking like a winner. But...from an investment point of view I am a newbie, so...? Everyone should take a deep breath until the real truth is known re the Nestle move.Word on the street is that Nestle are under fire for misleading baby milk tactics in Hong Kong and beyond and that their so called Atwo only contains 30% of actual A2 protein. Regardless it's all good for A2 as the pie has just got bigger and more of the world will soon be aware of, and want some of this great product.PS-Its a huge market and there is room for several players to do extremely well, think Coke&Pepsi, Apple&Samsung etc etc.

[Beagle]

Everyone should take a deep breath until the real truth is known re the Nestle move.Word on the street is that Nestle are under fire for misleading baby milk tactics in Hong Kong and beyond and that their so called Atwo only contains 30% of actual A2 protein. Regardless it's all good for A2 as the pie has just got bigger and more of the world will soon be aware of, and want some of this great product.PS-Its a huge market and there is room for several players to do extremely well, think Coke&Pepsi, Apple&Samsung etc etc.

Well said mate.
Some non-holders who've recently started sharing their "expertise" on the subject would do themselves a favour to stick to companies they know and understand.

[minimoke]

Well said mate.
Some non-holders who've recently started sharing their "expertise" on the subject would do themselves a favour to stick to companies they know and understand.That's a bit harsh. Opinions should be welcome and learning encouraged. Very few here are true "experts" in any NZ companies!

[bull....]

multiple gaps to fill on the charts , as history has shown practically every gap gets filled at some stage

by the way i enjoy reading all comments from anyone

[JohnnyTheHorse]

Technically there are some pretty bad breakdowns occurring. The break of support at 1250 could indicate a gap fill back to the ~950 support range. Let's see what happens once ASX opens and where it closes.

[bull....]

Technically there are some pretty bad breakdowns occurring. The break of support at 1250 could indicate a gap fill back to the ~950 support range. Let's see what happens once ASX opens and where it closes.

first gap is under 12 , they are talking about filling the gaps in asx too so see if they go for it too when they open

[Nasi Goreng]

its like a giant slippery slide

[Lorne Ranger]

Knee-jerk reaction from investors who deep down think their recent gains are too good to last. Theres great buying here I reckon.

[BlackPeter]

its like a giant slippery slide

that's anti hype, is it?

This is a high beta stock ... and the shorter's love it. I am always wondering who looses the money the shorter's gain from this stock? Probably the people who tend to panic every time the high beta creates a down swing? Sell low and buy high ...

BTW - SP still well above the MA50, MA100 and MA200. No need to panic, yet ;);

[whatsup]

Q, N Z prices seem to have levelled off atm but will the sell off return once Aust opens because of the amount of shares held by margin traders, stop losses etc ?

[BlackPeter]

Q, N Z prices seem to have levelled off atm but will the sell off return once Aust opens because of the amount of shares held by margin traders, stop losses etc ?

You mean the Australians have an amateur hour as well ;)?

[percy]

Well said mate.
Some non-holders who've recently started sharing their "expertise" on the subject would do themselves a favour to stick to companies they know and understand.

Should you be referring to my posts on this thread,you are correct.
I have no "expertise" on the subject,and no understanding of A2.
Never have done,and dought I ever will.
I have no love of cows,milk, or dairy produce.

[RupertBear]

Should you be referring to my posts on this thread,you are correct.
I have no "expertise" on the subject,and no understanding of A2.
Never have done,and dought I ever will.
I have no love of cows,milk, or dairy produce.

Aww Percy cows are quite cute! :)

[whatsup]

You mean the Australians have an amateur hour as well ;)?

No but Yes they are under the control of their margin providors with stop losses in places for such a sell off as we have had here in N Z today !! twt !

[Bazingaboy]

Had to drain my milk bath - the milk was going sour and I couldn't afford to replace it :(

[Sideshow Bob]

When will A2 have more supply than what they can sell?

"Be fearful when others are greedy, be greedy when others are fearful". I might have to pontificate on that over Easter.

[winner69]

Share price recovery well from days lows.

[hardt]

Nestle is piloting this product to gauge the market that is so clearly enticed by what A2 is offering.

Nestle is not seen as a premium brand in China, A2 is from the cleanest and greatest little country in the world which adds to the allure.

A2 has snagged a large portion of the market in China with very little trouble and I don't think another product to compete with is going to put much of a dent in their momentum.

A2 stock was tightly wound and the market sentiment of late has more to do with the recent pullback than the introduction of another product.

There is no point in being confident and having a small position...

[couta1]

Nestle is piloting this product to gauge the market that is so clearly enticed by what A2 is offering.

Nestle is not seen as a premium brand in China, A2 is from the cleanest and greatest little country in the world which adds to the allure.

A2 has snagged a large portion of the market in China with very little trouble and I don't think another product to compete with is going to put much of a dent in their momentum.

A2 stock was tightly wound and the market sentiment of late has more to do with the recent pullback than the introduction of another product.

There is no point in being confident and having a small position... Yes, agree ,more affected by the macro environment rather than the Nestle product, which may or may not be 100% A2, we don't know yet. BAL also down heavily today to prove your point. PS-A2 will always be a volatile stock and your need good oven mitts on to cope with the heat.

[percy]

Yes, agree ,more affected by the macro environment rather than the Nestle product, which may or may not be 100% A2, we don't know yet. BAL also down heavily today to prove your point. PS-A2 will always be a volatile stock and your need good oven mitts on to cope with the heat.

I find it easier to stay out of the kitchen.!!!...lol.

Trust every one can find A2 Easter eggs to enjoy.

[RupertBear]

Share price recovery well from days lows.

Geepers I didnt know whether to buy or sell today :confused: so I did nothing ;)

[Beagle]

http://www.sharechat.co.nz/article/54bc8f2b/market-close-nz-shares-drop-a2-falls-on-nestle-competition-fletcher-sinks-while-sky-tv-bounces.html?utm_medium=email&utm_campaign=MARKET%20CLOSE%20NZ%20shares%20drop%2 0A2%20falls%20on%20Nestle%20competition%20Fletcher %20sinks%20while%20Sky%20TV%20bounces&utm_content=MARKET%20CLOSE%20NZ%20shares%20drop%20 A2%20falls%20on%20Nestle%20competition%20Fletcher% 20sinks%20while%20Sky%20TV%20bounces+CID_3e7d7ccfe 537c62b795ba8b644ff8137&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle54bc8f2bmarket-close-nz-shares-drop-a2-falls-on-nestle-competition-fletcher-sinks-while-sky-tv-bounceshtml

Been a tough quarter for most markets including ours, down 1.3%. ATM is still up from ~ $8 at the start of this quarter so without that the index would have done considerably worse, like many other overseas indices have. Disappointing week for ATM shareholders but it must be viewed in context on how its gone for the first quarter of the year and its still up over 50% to date in 2018. Long term I don't think the Nestle move changes the long term strong growth prognosis for this company.

[couta1]

http://www.sharechat.co.nz/article/54bc8f2b/market-close-nz-shares-drop-a2-falls-on-nestle-competition-fletcher-sinks-while-sky-tv-bounces.html?utm_medium=email&utm_campaign=MARKET%20CLOSE%20NZ%20shares%20drop%2 0A2%20falls%20on%20Nestle%20competition%20Fletcher %20sinks%20while%20Sky%20TV%20bounces&utm_content=MARKET%20CLOSE%20NZ%20shares%20drop%20 A2%20falls%20on%20Nestle%20competition%20Fletcher% 20sinks%20while%20Sky%20TV%20bounces+CID_3e7d7ccfe 537c62b795ba8b644ff8137&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle54bc8f2bmarket-close-nz-shares-drop-a2-falls-on-nestle-competition-fletcher-sinks-while-sky-tv-bounceshtml

Been a tough quarter for most markets including ours, down 1.3%. ATM is still up from ~ $8 at the start of this quarter so without that the index would have done considerably worse, like many other overseas indices have. Disappointing week for ATM shareholders but it must be viewed in context on how its gone for the first quarter of the year and its still up over 50% to date in 2018. Long term I don't think the Nestle move changes the long term strong growth prognosis for this company. I reckon that Easton guy is talking a lot of normal broker dribble, blaming the Nestle product as the reason why A2 is down 9 2% for the week, while BAL is down 14%, and they don't sell A2 milk.

[RupertBear]

We you scoffing up a bit more milk today Couta or lying back enjoying your HLG results? :p

[NZSilver]

Bought back in after selling out in high 13s. This is an overall market movement pushing ATM lower at the moment with a bit of fuel to the fire re nestle (which I believe on its own is inconsequential). Basically if the Stock markets (mainly the U.S.) do actually crap themselves then this and a lot of other shares will drop. If we see markets rebound then ATM will head back to $14-15 range and then towards $20 by the end of the year. So it could be quite good buying at the moment, but it may get better. Hedge your bets..

[Beagle]

I reckon that Easton guy is talking a lot of normal broker dribble, blaming the Nestle product as the reason why A2 is down 9 2% for the week, while BAL is down 14%, and they don't sell A2 milk.

Yeah I noticed that. Ballamies fell $A1.76 today ! ATM was the outperformer.

[forest]

Long term I don't think the Nestle move changes the long term strong growth prognosis for this company. (Quote, Beagle)

I think that is quite possible, also I did a search to see if Nestle's Atwo formula is A1 free.
Could not find that spelled out therefor I think it is possible that Atwo contains A1 as well.
Atwo might just be a promotion gimmick.
What do others think?

[couta1]

Long term I don't think the Nestle move changes the long term strong growth prognosis for this company. (Quote, Beagle)

I think that is quite possible, also I did a search to see if Nestle's Atwo formula is A1 free.
Could not find that spelled out therefor I think it is possible that Atwo contains A1 as well.
Atwo might just be a promotion gimmick.
What do others think? I suspect it is not pure A2, plus it does not have Chinese regulation approval so can only be sold on the internet, along with quite a few other fake A2 products. I see another Herald beat up article today, those clowns just don't get it, A2 is a premium hot product, Chinese mum's won't settle for any unproven or fake product, they go for the best and are happy to pay the price for it.

[NZSilver]

I suspect it is not pure A2, plus it does not have Chinese regulation approval so can only be sold on the internet, along with quite a few other fake A2 products. I see another Herald beat up article today, those clowns just don't get it, A2 is a premium hot product, Chinese mum's won't settle for any unproven or fake product, they go for the best and are happy to pay the price for it.

Yeh fonterra only just got it...(and they invented it) So it may take the herald a few more years.

[dumbfounded]

Long term I don't think the Nestle move changes the long term strong growth prognosis for this company. (Quote, Beagle)

I think that is quite possible, also I did a search to see if Nestle's Atwo formula is A1 free.
Could not find that spelled out therefor I think it is possible that Atwo contains A1 as well.
Atwo might just be a promotion gimmick.
What do others think?

'Allo 'allo, I think the name says it is not - Atwo means it has both A1 and A2; hence Atwo :confused::p

[Beagle]

Locked in profits on one third of my A2 shares late last week. I still see huge potential but I decided to reduce my stake due to the extreme volatility and breech of the 30 day MA.

[couta1]

Locked in profits on one third of my A2 shares late last week. I still see huge potential but I decided to reduce my stake due to the extreme volatility and breech of the 30 day MA. Nervous holders should spend a few hours reading the hotcopper A2m thread, ignore the blatant downrampers and trolls, take note of the long term holders and the well researched to help clarify things in your own mind. IMO any further SP weakness will be temporal and driven by sentiment only, plenty of game players in action to scoop up shares from weak hands, fundamentals remain rock solid and the future outlook bright. PS-For those who think Nestle is any serious threat to A2, you need to do more research on the company and it's previous history in China with it's milk sales. PPS-The only threat I see from them is a takeover offer.

[forest]

Couta I agree, anybody thinking of selling is likely doing them self a favour by doing more research. Hot copper is a good place to spend some time on.
Reading the last 3 annual and interim reports would be an other.
The saying of the trend is your friend comes to mind.
Check the trends of revenue, cashflow, NPAT, Cash and cash equivalent, Margins. All very positive. How many companies have these trending positively at a high rate all at the same time.

As an example the last 5, six months periods, net margins were from 1H16 to 1H18 in that order: 7%, 9%, 15%, 18% and 23%.

FPH has a great profitable growth story even though it competes with the big boys, it does this by specialising. I see ATM in the same light.

[Beagle]

Thanks guys and yes I spent quite a bit of time reading the Hot Copper thread late last week. Technically this is looking a little bit weak having broken down through the 30 day MA. Well respected contributor KW thinks the same and for the record I didn't follow her by trimming my position. I was oblivious to her posts as I was so tied up reading hot copper I forgot to read the other N.Z. forum late last week. I simply feel more comfortable having no more than 1/7th of my net liquid assets in any one investment, that's just how it is and I guess there's not much point fighting you're core beliefs in terms of risk management.
Philosophy 101 "To thine own self be true" It just is what it is...I prefer to sleep peacefully at night and not have to worry about massive volatility in any one share having a serious impact on my overall position and am happy to accept the corollary of that, that I won't make as much money out of A2 going forward as I otherwise would have. That's okay, there's great gains to be had in the long run in SUM other places...more than one way to skin a cat when it comes to retirement planning.
Ironically, I feel now that Nestle are in on the science of A2, if their product doesn't go that well I feel the chances of a takeover is greatly improved...(still at peace with last weeks decision though).

Going to review a precious metal investment option this week...this one https://www.youtube.com/watch?v=tzoZe3ihxf8
Investment tip of the week. You can't take money with you when you die, might as well enjoy some of it along the way :D 4 way switchable exhaust sound is pretty sick !!

[see weed]

Locked in profits on one third of my A2 shares late last week. I still see huge potential but I decided to reduce my stake due to the extreme volatility and breech of the 30 day MA.
Tax man will be happy. But am sure you have that sussed. I have done the opposite and have been locking in losses for the last 4 weeks to get the profit down before 31/3/18:).

[bull....]

should lead the downside today fill the first gap on the nzx today , then only one to go at just over 9 sometime

[JeremyALD]

should lead the downside today fill the first gap on the nzx today , then only one to go at just over 9 sometime

I'll be spending most of my savings if it gets to $9. There's no way a bit of competition in one market justifies that big a drop. Remembering A2 has about 5% market share in China so there's a good chance of doubling that market share even with a bit of a healthy competition.

I'd be more worried about competition in AU where A2 has a very strong market share and produces strong profits.

[couta1]

I'll be spending most of my savings if it gets to $9. There's no way a bit of competition in one market justifies that big a drop. Remembering A2 has about 5% market share in China so there's a good chance of doubling that market share even with a bit of a healthy competition.

I'd be more worried about competition in AU where A2 has a very strong market share and produces strong profits. All the focus is on Trump and his big mouth at the moment, the Nestle product is a side issue.

[couta1]

Tax man will be happy. But am sure you have that sussed. I have done the opposite and have been locking in losses for the last 4 weeks to get the profit down before 31/3/18:). Protecting ones capital has no tax implications if your intent at time of purchase was as a long term hold, that is until we get a comprehensive CGT.

[Beagle]

03/04/2018 09:29
GENERAL
NOT PRICE SENSITIVE
REL: 0929 HRS The a2 Milk Company Limited

GENERAL: ATM: Response to recent media commentary

3 April 2018

NZX/ASX Market Release

RESPONSE TO RECENT MEDIA COMMENTARY

The a2 Milk Company notes recent media commentary around competitor activity
in the China market.

The Company has previously advised that it expects broader interest in the A1
protein free category generally given positive developments in the science
and the strong growth being achieved by the Company.

The a2 Milk Company considers it is uniquely positioned to benefit from
expansion of the category over time, with:
o A strong brand based on contemporary values with unique
channel-to-market strategies;
o Enhanced consumer credibility as the creator and pioneer of the A1
protein free proposition;
o Ongoing investment in R&D as the global leader and innovator of A1
protein free products;
o New Zealand and Australia sourced milk supply for products for end
sale in China;
o A comprehensive suite of intellectual property including patents,
trade marks, proprietary processes and know-how.

The a2 Milk Company is the only company engaged in the sourcing, processing
and marketing of solely A1 protein free dairy and nutritional products in
global markets. This core principle contrasts significantly with likely new
entrants who will need to consider how to communicate internally and
externally the benefits of a new A1 protein free variant whilst their
traditional range of products continues to include A1.

The infant formula market in China is vast with an estimated retail value in
the order of USD20 billion and volume exceeding one million metric tonnes.
There is a multitude of brands and recent experience of other businesses has
demonstrated how challenging it is to establish new products in the absence
of a strong and unique consumer proposition. The Company is confident that
the past investment in its brand has established a strong consumer franchise
which will continue to strengthen as its level of investment and distribution
continues to grow.

The Company continues to perform strongly in each of its key markets and in
particular has not seen any change in the growth of its China business.

For further information contact:
The a2 Milk Company Limited
Geoffrey Babidge
Managing Director & CEO
+61 2 96977000

[Leftfield]

ATM has today sought to reassure the market re the recent Nestle move. My take on this is no effect to-date and none likely.

RESPONSE TO RECENT MEDIA COMMENTARY

The a2 Milk Company notes recent media commentary around competitor activity
in the China market.

The Company has previously advised that it expects broader interest in the A1
protein free category generally given positive developments in the science
and the strong growth being achieved by the Company.

The a2 Milk Company considers it is uniquely positioned to benefit from
expansion of the category over time, with:
o A strong brand based on contemporary values with unique
channel-to-market strategies;
o Enhanced consumer credibility as the creator and pioneer of the A1
protein free proposition;
o Ongoing investment in R&D as the global leader and innovator of A1
protein free products;
o New Zealand and Australia sourced milk supply for products for end
sale in China;
o A comprehensive suite of intellectual property including patents,
trade marks, proprietary processes and know-how.

The a2 Milk Company is the only company engaged in the sourcing, processing
and marketing of solely A1 protein free dairy and nutritional products in
global markets. This core principle contrasts significantly with likely new
entrants who will need to consider how to communicate internally and
externally the benefits of a new A1 protein free variant whilst their
traditional range of products continues to include A1.

The infant formula market in China is vast with an estimated retail value in
the order of USD20 billion and volume exceeding one million metric tonnes.
There is a multitude of brands and recent experience of other businesses has
demonstrated how challenging it is to establish new products in the absence
of a strong and unique consumer proposition. The Company is confident that
the past investment in its brand has established a strong consumer franchise
which will continue to strengthen as its level of investment and distribution
continues to grow.

The Company continues to perform strongly in each of its key markets and in
particular has not seen any change in the growth of its China business.

[sb9]

ATM has today sought to reassure the market re the recent Nestle move. My take on this is no effect to-date and none likely.


Translation "what's the fuss about..."

[littletramp]

They raise a very good point when defending their position IMHO. How do other companies looking to enter this market explain the benefits of the A1 protein free varients, while still looking to promote their traditional range which includes A1?

[bull....]

na , fill the gaps what stock goes up 50% in 1 mth lol let alone the biggest company time to fill the gaps

[winner69]

Putting some colour around the A2 announcement its obvious that their outstanding brand metrics are the key to ensure their growth profile remains intact in the Chinese landscape. All this means the optionality value is enormous..

‘Gap filling’ the time to buy more

[dobby41]

They raise a very good point when defending their position IMHO. How do other companies looking to enter this market explain the benefits of the A1 protein free varients, while still looking to promote their traditional range which includes A1?

Do they need to explain it - if people want it they have it.

[whatsup]

Q, N Z prices seem to have levelled off atm but will the sell off return once Aust opens because of the amount of shares held by margin traders, stop losses etc ?

Wouldn't be too much of a hurry to buy in today as with Thursday last week once the Aussie market opened the S P took a dive big time ( margin traders hitting the stops ) which undercut the sell prices even though the N Z market had showed strength, in realty A2 is driven from the Aussies when it comes to price.
In my opinion the S P will be very rocky for another 3 months until the next financial results are released and it does not really matter what news updates company releases

[LAC]

They raise a very good point when defending their position IMHO. How do other companies looking to enter this market explain the benefits of the A1 protein free varients, while still looking to promote their traditional range which includes A1?
Why would it be difficult to differentiate the two while keeping and promoting their existing range? It will just be choice for the consumer right? Coming from a parent with a baby who had a few feeding issues, we had researched a good few Aptamil products until we found the one that worked, some caused immediate discomfort and vomiting, to now the one which completely works. We were told by many that he was intolerant to cow protein blah blah, yet it had nothing to do with that yet we did try all the types of formula which were all by the Aptamil brand, so I dont see why a single brand will have any issues promoting their existing products while introducing a new one. It is just more choice for a consumer whether they choose one with A1 or A2. ATM is a great company but I don't really see why a bigger competitor cant do the same product at larger scale in the future....
Can someone on ST please post some info on what make ATM unique?

[BlackPeter]

Why would it be difficult to differentiate the two while keeping and promoting their existing range? It will just be choice for the consumer right? Coming from a parent with a baby who had a few feeding issues, we had researched a good few Aptamil products until we found the one that worked, some caused immediate discomfort and vomiting, to now the one which completely works. We were told by many that he was intolerant to cow protein blah blah, yet it had nothing to do with that yet we did try all the types of formula which were all by the Aptamil brand, so I dont see why a single brand will have any issues promoting their existing products while introducing a new one. It is just more choice for a consumer whether they choose one with A1 or A2. ATM is a great company but I don't really see why a bigger competitor cant do the same product at larger scale in the future....
Can someone on ST please post some info on what make ATM unique?

Quite easy - they are (at this stage) the only company marketing ONLY A2 milk. Makes it much easier for them to explain customers the benefits of A2 milk without damaging their other products (which the others need to do, if they aggressively market A2).

They own as well a lot of IP making it easier to select A2 cows ... but obviously - everybody can do this, it is just a question of money :p. If cost and efficiency is not an issue, than everybody could produce A2 milk ...

Ah yes - and while everybody obviously can breed A2 cows and market A2 milk (though in civilized countries not under that name ... ), it takes time to do so, and you would need for the interim 2 sets of production facilities or cull all your A1 cows - to make sure there is no cross contamination from A1).

A2 (and its partners) have all this already setup - others first need to invest.

[Beagle]

Wouldn't be too much of a hurry to buy in today as with Thursday last week once the Aussie market opened the S P took a dive big time ( margin traders hitting the stops ) which undercut the sell prices even though the N Z market had showed strength, in realty A2 is driven from the Aussies when it comes to price.
In my opinion the S P will be very rocky for another 3 months until the next financial results are released and it does not really matter what news updates company releases

Many S&P 500 stocks will start releasing their first quarter 2018 results as soon as next week. With the huge drop in the company tax rate to just 21% there is widespread belief that we're looking at close to 20% net profit after tax earnings growth in the S&P 500 stocks this year. Their forward PE of just 17 is pretty reasonable considering that interest rates are still close to record lows.

[winner69]

One only has to read Chocolate Fortunes: the Battle for the Hearts Minds And Wallets of Chinese Consumers by Allen to understand that there is no instant miracle in China even for the likes of Nestle, Cadbury et all.

Small and specialised with a niche offering more chance of success than huge corporates where culture often gets in the way.

Good book with fascinating insights ....like I enjoyed the bit about one of the chocolate guys distributing chocolates through small shops in the hotter parts of China and couldn’t understand why the chocolates melted ...they realised that most small shops weren’t air conditioned ha ha

[percy]

Quite easy - they are (at this stage) the only company marketing ONLY A2 milk. Makes it much easier for them to explain customers the benefits of A2 milk without damaging their other products (which the others need to do, if they aggressively market A2).

They own as well a lot of IP making it easier to select A2 cows ... but obviously - everybody can do this, it is just a question of money :p. If cost and efficiency is not an issue, than everybody could produce A2 milk ...

Ah yes - and while everybody obviously can breed A2 cows and market A2 milk (though in civilized countries not under that name ... ), it takes time to do so, and you would need for the interim 2 sets of production facilities or cull all your A1 cows - to make sure there is no cross contamination from A1).

A2 (and its partners) have all this already setup - others first need to invest.

Google either
Gurnsey cow a2 milk.
or Jersey cow a2 milk.
Not exactly rocket science.
NB All milk from Holland Jersey is a2.

[Beagle]

The Company continues to perform strongly in each of its key markets and in
particular has not seen any change in the growth of its China business.

This is what people should focus on straight from the horses mouth..everything else on here including my comments are just opinions and as they say opinions are like...well you know what , everyone has one.

[couta1]

[
This is what people should focus on. Exactly, im sticking with my end of year SP of $20, or a takeover price of the same beforehand.

[misterx]

The fall is crazy... think the sp has dropped more than 15 percent in just last week.. I think I have a migraine sigh

[BlackPeter]

Google either
Gurnsey cow a2 milk.
or Jersey cow a2 mil.

NB All milk from Holland Jersey is a2.

LOL - how many sizeable operations marketing Gurnsey cow A2 milk can you name? Don't think that ATM's market stake is threatened by a boutique producer (their words, not mine).

But sure - and don't forget our very own diary herd in Canterbury; Current headcount: 1 (Dexter / Jersey cross). We are producing only A2 milk as well ;); I am sure ATM is shivering in their boots ;);

Percy - I think roughly 20 to 30% of all cows are producing A2-milk. The trick is just to identify them (its not just breed based - there are as well Jersey cows producing A1 ... though it is a smaller number), separate them and make sure they are bread separately and their milk is processed separately without contamination. Not cheap (until you have 100% pure A2 herds) - but absolutely, it can be done.

BTW - There is a reason that there are not that many Jersey herds around ... They do cost more in maintenance - Jerseys produce marvelous and creamy milk, but they are quite bad in looking after their calves (meaning higher mortality or more human intervention required). But hey, nothing you can't fix with throwing more money at it.

[winner69]

The fall is crazy... think the sp has dropped more than 15 percent in just last week.. I think I have a migraine sigh

And 20% off it’s high

Some punters define that as a crash ...more than a correction

[couta1]

The latest Herald article is headed, A2 milk share price tumble continues on Nestle threat. These reporters are so lame that that don't bother to open their eyes to see the true cause of the continued fall, that is unless they are serial downrampers who want to pick up cheap shares.

[BlackPeter]

And 20% off it’s high

Some punters define that as a crash ...more than a correction

Dancing today along the EMA 50 - and still ways to go to even come close to the EMA 100. Technically the share is in an unbroken uptrend. But yes, given the previous steep rise there is obviously lots of territory to cover for the SP to fall back and still stay in an uptrend.

[bull....]

a2 the fang stock of the nzx

[winner69]

Dancing today along the EMA 50 - and still ways to go to even come close to the EMA 100. Technically the share is in an unbroken uptrend. But yes, given the previous steep rise there is obviously lots of territory to cover for the SP to fall back and still stay in an uptrend.

Bitcoin gone below 200MA .....just a point of interest

[BlackPeter]

Bitcoin gone below 200MA .....just a point of interest

Confused :confused:. How do you milk Bitcoin and how do you know they produce A2 milk?

Always thought the idea of Bitcoin is to milk the investors :p ... but this is another thread.

[winner69]

Confused :confused:. How do you milk Bitcoin and how do you know they produce A2 milk?

Always thought the idea of Bitcoin is to milk the investors :p ... but this is another thread.

Maybe the charts are beginning to look similar .......

[hardt]

Every time there is a large correction, the ghosts of those that missed out on the best performing business ( not just a hyped stock ) on the market come out of the woodwork as if their views had just been validated...

A2 is all over wechat trade rooms, their momentum is not only here to stay, it seems to be gaining...

Only reason I am not buying currently is because I think it will go lower as the global market weighs it down, will be topping up when the market cools it.

[Beagle]

Confused :confused:. How do you milk Bitcoin and how do you know they produce A2 milk?

Always thought the idea of Bitcoin is to milk the investors :p ... but this is another thread.

LOL


Maybe the charts are beginning to look similar .......

I think you might be getting a little ahead of yourself mate. ATM still miles above its 100 day MA of about $9.70. Bitcoin on the other hand is starting to look pretty sick.
Actually any comparison between this and the FANG stocks is inappropriate. This company is making money, growing very strongly and probably trading on a FY19 PE of mid 20's, significantly less than most of the other top NZX10 stocks who are growing far more slowly.


Every time there is a large correction, the ghosts of those that missed out on the best performing business ( not just a hyped stock ) on the market come out of the woodwork as if their views had just been validated...

A2 is all over wechat trade rooms, their momentum is not only here to stay, it seems to be gaining...

Only reason I am not buying currently is because I think it will go lower as the global market weighs it down, will be topping up when the market cools it.

I have it in last year's balance sheet at $2.99 market value as at 31 March 2017, (at average cost $2.20). I agree that a lot of people that missed last year's growth are going to come out hating this simply because they are disappointed they missed out...human nature is not always a pretty thing to watch is it ! Clear uptrend remains intact. Happy to have right sized my holding and its still my #1 listed investment position, just ahead of SUM other high growth stock.

[Ted2]

Powering back up on Aussie opening!! First time I've been happy to say that Aussies might seem a bit smarter than us...................or just more optimistic?

[couta1]

Powering back up on Aussie opening!! First time I've been happy to say that Aussies might seem a bit smarter than us...................or just more optimistic? The penny finally dropped early this year that unless you are a serious trader, then going long on this stock is best, leave the manipulation and game playing to others, sit back, have a laugh and enjoy/endure the fun.

[NZSilver]

It will head back to $14.50+ ver good buying this morning under $12

[sb9]

Harbour Asset adds to a2 Milk holdings as stock drops 10%


https://www.bloomberg.com/news/articles/2018-04-02/top-investor-buys-more-a2-milk-stock-after-selloff-on-nestle

[Beagle]

Harbour Asset adds to a2 Milk holdings as stock drops 10%


https://www.bloomberg.com/news/articles/2018-04-02/top-investor-buys-more-a2-milk-stock-after-selloff-on-nestle

With the caveat that no investment team or individual gets every pick right I'd say Harbour are one of the better ones and it would appear I'm not alone in holding that opinion
https://www.harbourasset.co.nz/about-us/#e40

[sb9]

Another day and a different perspective, gotta love the media :p

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12025332

[BlackPeter]

Another day and a different perspective, gotta love the media :p

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12025332

Didn't we read these arguments on share trader before? They probably just read the relevant thread and compile it into another article ;);

[NZSilver]

$13.50-14 today, enjoy

[bull....]

$13.50-14 today, enjoy

dont you love the swings in this stock .... a traders dream

[t.rexjr]

"This core principle contrasts significantly with likely new entrants who will need to consider how to communicate internally and externally the benefits of a new A1 protein free variant whilst their traditional range of products continues to include A1," it said.

Pretty simple really. They don't have to market anything other than the theory A1 free may be suited to those that have digestive problems. There is no reason that they have to condemn one product to promote the other. Thats poppycock.

[misterx]

I feel like I'm getting old as twice as quicker with this stock lol

[minimoke]

Pretty simple really. They don't have to market anything other than the theory A1 free may be suited to those that have digestive problems. There is no reason that they have to condemn one product to promote the other. Thats poppycock.
so where are the warning labels on A1 milk?

[couta1]

Pretty simple really. They don't have to market anything other than the theory A1 free may be suited to those that have digestive problems. There is no reason that they have to condemn one product to promote the other. Thats poppycock. It's more a case of join the A2 revolution, or be left behind.

[hardt]

so where are the warning labels on A1 milk?

So you are saying companies would have trouble marketing A1 as being both hard to digest and perfectly fine...???

Reason why Nestle are giving it a go under a very small exclusive brand that is far removed from their S26 label

[Sideshow Bob]

I feel like I'm getting old as twice as quicker with this stock lol

Hopefully you are getting richer at a faster rate than you feel you are getting older!

[Pavan Sharma]

Nestle as competition shouldn't be much of a problem the "kiwi brand" is huge in China especially with anything to do with agriculture, the american stuff wont compete on the premium end.

[t.rexjr]

Nestle as competition shouldn't be much of a problem the "kiwi brand" is huge in China especially with anything to do with agriculture, the american stuff wont compete on the premium end.

Do people view Nestle' as American?
A1 free fits their nutrition direction. They tend to buy established rather than start from scratch. This may just be a toe in to test the water. Who knows...

[macduffy]

Do people view Nestle' as American?

Americans might! But the Swiss would be extremely upset if that was a view held by the market generally, the Chinese in particular.

;)

[couta1]

Americans might! But the Swiss would be extremely upset if that was a view held by the market generally, the Chinese in particular.

;) Nestle equals Melamine contamination in China, once burnt, twice shy, why go there when you can buy best of breed in A2.

[dobby41]

Nestle equals Melamine contamination in China, once burnt, twice shy, why go there when you can buy best of breed in A2.

I hear a degree of confirmation bias in some of these comments.
I hope ATM doesn't think this way.

[winner69]

From a TA perspective if ATM breaks out of the high 12’s , it's likely going into the low 13’s

[BlackPeter]

From a TA perspective if ATM breaks out of the high 12’s , it's likely going into the low 13’s

Classic ... :lol:

[gbogo]

just dropped 24c ($13.14 to $12.90) on only $130k of volume, pre-Oz open... that's unusual.. some news out? now $12.75 bid, $12.89 offered..

[bull....]

just dropped 24c ($13.14 to $12.90) on only $130k of volume, pre-Oz open... that's unusual.. some news out? now $12.75 bid, $12.89 offered..

trump announced another 100 billion in tarrifs

[Beagle]

trump announced another 100 billion in tarrifs

https://www.cnbc.com/2018/04/05/trump-asks-us-trade-representative-to-consider-100-billion-in-additional-tariffs-on-chinese-products.html

He's no better than a 2 year old playing in a sandpit. What does he expect that the other child will do when you throw more sand in his face ?
This is beyond ludicrous and risks undermining investment sentiment globally. How do companies make capex investment decisions in this climate ?
If you're a major industrial company in the U.S. looking at some XYZ new capital project you're simply going to put any project which might be impacted on ice.
Business confidence erodes and then so does consumer confidence.
Its very frustrating for everyone. He calls all this just normal negotiations and the art of a deal but I think he seriously risks destabilizing investment markets globally.
Investors will only tolerate this sort of thing for so long before heading for the exits.
Personally I am very glad to have a bob each way on the market and have just over 50% in cash and it will be staying that way for the foreseeable future.

[winner69]

ATM going into the MCSI NZ Index ..at expense of FBU ha ha

Thatll get the price up to $15 sooner than we thought

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12027151

[petty]

Perhaps this is the wrong forum for this question but perhaps Beagle you could provide some insight. My limited view in the China, US trade war is that this could benefit the likes of A2 and Synlait? US exports to China incur tarifs while NZ exports to China don't. Gives NZ the edge over US products into China?
Ignorant view I hold?

[Leftfield]

Perhaps this is the wrong forum for this question but perhaps Beagle you could provide some insight. My limited view in the China, US trade war is that this could benefit the likes of A2 and Synlait? US exports to China incur tarifs while NZ exports to China don't. Gives NZ the edge over US products into China?
Ignorant view I hold?

Don't want to steel Beagles thunder, but yes any US/China Trade Wars could benefit NZ coys due to NZ's existing Free Trade agreement with China. ATM is 'well positioned.' Sssooo like you I'm holding and happy.

[Beagle]

ATM going into the MCSI NZ Index ..at expense of FBU ha ha

Thatll get the price up to $15 sooner than we thought

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12027151

I'm on record on the FBU thread when the SP was close to $8 asking why anyone would even pay $5 a share for that flea ridden mutt. Was a pretty outrageous thing to say a few months ago but I think the sink hole FBU have created for itself may have quite some way to go yet. USPP noteholders have been known to play hardball before. If they're forced to do a capital raise in this environment I would think it would have to be at a deep discount to the current SP to gather enough support.
One or two fund managers are on record on NBR saying they think on a fundamental basis despite the recent correction FBU is still expensive. http://www.4-traders.com/FLETCHER-BUILDING-LIMITED-6492649/financials/ This probably the wrong thread to debate this but average analyst forecast for FY19 is about 61 cps. I don't think they'll make that and I'm more in the ~ 50 cps zone. Why would you pay more than 8 times that given the fundamental uncertainty overhanging this serial underperforming cyclical company ? Headed all the way down to $4 perhaps ?
Yes a change to MSCI index looks almost certain.

Perhaps this is the wrong forum for this question but perhaps Beagle you could provide some insight. My limited view in the China, US trade war is that this could benefit the likes of A2 and Synlait? US exports to China incur tarifs while NZ exports to China don't. Gives NZ the edge over US products into China?
Ignorant view I hold?
I wouldn't necessarily say that a trade war is good for anyone in terms of the share prices, (there's a pretty strong correlation between U.S. share prices and N.Z. share prices) but in a business sense yes it could be mildly beneficial for ATM and Synlait. I think the trick for all of us is to try and ignore whatever the latest political tantrum is about and focus on the growth. We got an update late April last year from ATM so I am hoping for another one this time around later this month too and then the MSCI index announcement in mid May, which is effected on 1 June. Should be a good couple of months coming up (barring some major exogenous shock).

[Valuegrowth]

Once investors recognize outstanding companies with no debt or low debt and lot of cash, there will be great demand for their stocks. Cash rich beauties have a long journey. Food sector is one of the growing sectors in the Asia-pacific region.New food trends are also growing in Asia.

[bull....]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12028460

a2 milk faces tougher road ahead


totally agree with the article

[Ggcc]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12028460

a2 milk faces tougher road ahead


totally agree with the article
I agree with the article as well, however increased competition is healthy. It may also prove that A1 free milk is the future, that is if others are hopping on the bandwagon in their droves....

[dobby41]

I agree with the article as well, however increased competition is healthy. It may also prove that A1 free milk is the future, that is if others are hopping on the bandwagon in their droves....

When A1 free becomes the norm it will no longer bag a margin over A1 - it will become the basic commodity at commodity pricing.
Not so good if you want A2 to be a 'special' product at the premium 'special' products enjoy.

[Filthy]

reckon we are still years away from that though

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12028460

a2 milk faces tougher road ahead


totally agree with the article

The article (actually PR release by Devon) is certainly noteworthy and all ATM shareholders should seriously consider the issues raised - but keep some perspective and balance on what it really means for ATM.

Question - why would Devon be so generous to share their negative research with the market?

Being ever cynical, one has to assume that Devon has either sold out of ATM or shorted the stock - which is their right and prerogative.

To give balance to the article, Devon must disclose its interest however - is it a shareholder or has it shorted the stock?

One has to be cynical these days with fund managers - we all saw Milford, the doyen of the NZ fund management industry sold out of DIL and then, spent a fair bit of time badmouthing the company in print and on air. Rumours swept the market at one stage that Milford was actually looking to buy back when the share price was crunched down to below $3.00 at one stage. Milford denied the rumours. Readers would note that Diligent subsequently was sold for $7.40.

Footnote : https://devonfunds.co.nz/sites/default/files/2018%20March%20Monthly%20Report.pdf

Devon Alpha fund's poor performance - obviously had too much PEB and no (not enough) ATM?

[couta1]

Devon, yeah, nah, ATM let's do this.PS-Harbour Assett Management have upped their stake, and I give them a whole heap more credence than Devon.

[Sideshow Bob]

One of the interesting aspects of the article is that it states that with the 'size and seriousness of Nestle as a global company, it is unlikely to break basic patent law', they have completely neglected the basic trademark issue of Atwo vs A2 issue. Again Nestle are not a tinpot outfit and know what they are doing, but surely are spoiling for a fight on this one??

[Beagle]

Harbour asset management are one of the biggest shareholders in ATM and their performance for the year greatly exceeds Devon for the year to 31 March 2018.
Looking further back Devon's performance is most underwhelming compared to Harbour for any comparison you care to make, 2, 3, or 5 years
Which fund managers view would you trust ?

[bull....]

exactly my point is harbours outperformance intirely due to overweight position in a2 ?

[Ggcc]

When A1 free becomes the norm it will no longer bag a margin over A1 - it will become the basic commodity at commodity pricing.
Not so good if you want A2 to be a 'special' product at the premium 'special' products enjoy.
That will be ages away. Things move slowly in the world and people don’t like forced change.

[couta1]

Holders need to keep forever mindful of the games being played by certain fund managers, games like downramping and saying the stock is overvalued whilst simultaneously loading up with shares, meanwhile the SP continues on it's upward trajectory.

[bull....]

a2 is influencing the stock exchange nz50 big time , one can now assume most fund managers have too have a large holding to mirror the index or else fall far behind the benchmark performance wise.

looking in the mirror what do you think will happen when a2 glory days are over? massive fund under performance ?

[Beagle]

exactly my point is harbours outperformance intirely due to overweight position in a2 ?

You are drawing a very long bow suggesting one stock's performance is entirely responsible for the whole's find's outperformance for the last five years.
This is only one of their many holdings and they have not always been overweight.

Some of your other recent bearish suggestions about impending doom for the market overall make a mockery of your user name.
Perhaps you should change you user name to gloomy bear ?

[RTM]

When A1 free becomes the norm it will no longer bag a margin over A1 - it will become the basic commodity at commodity pricing.
Not so good if you want A2 to be a 'special' product at the premium 'special' products enjoy.

Apple is still doing all right with iPhones. We've gotta hope that ATM becomes the APPLE of the Milk Proteins world.
Disc. Not a holder, have been concerned about patent issues for a long time. See post 7169 and some around there for some discussion if interested.

[dobby41]

Apple is still doing all right with iPhones. We've gotta hope that ATM becomes the APPLE of the Milk Proteins world.
Disc. Not a holder, have been concerned about patent issues for a long time. See post 7169 and some around there for some discussion if interested.

I don't think a comparison with Apple is relevant.
How much design goes into the ATM product?

PS - Apple isn't doing as well as they were.

[Southern_Belle]

Holders need to keep forever mindful of the games being played by certain fund managers, games like downramping and saying the stock is overvalued whilst simultaneously loading up with shares, meanwhile the SP continues on it's upward trajectory.Exactly this.....

[couta1]

World wide awareness of A2 milk has just started, the pie has just gotten bigger with Nestle and Fonterra jumping on board. ATM is a prime takeover target but hopefully not for quite a while yet.

[mfd]

I don't think a comparison with Apple is relevant.
How much design goes into the ATM product?

PS - Apple isn't doing as well as they were.

More relevant to compare to coca cola. Plenty of competition but a strong brand and IP protection gives them a strong position.

[Sideshow Bob]

Spooked a few - down 30c at the moment. Wait until the ASX wakes up.....

[couta1]

Spooked a few - down 30c at the moment. Wait until the ASX wakes up..... US market down over 2%, our market down only 0.4% as we speak, let's see if the Aussies take notice of the Trumpet.

[777]

Also whether Aussies take note of a tinpot fund manager in NZ

[sb9]

Oh dear...another week and another gashed up article in the coveted Herald. ATM is used to this kind of media bashing for years and this isn't new. And every time a negative article appears it galvanises itself much stronger.

Yes agreed Nestle is bigger and has stronger moat in Dairy industry, however that doesn't necessarily translate into any guarantees with new product offerings more so likes of A1 free milk products. If its so easy make a dent into that mouth watering Chinese market, so many companies could've done by now. And they definitely cannot match the quality of A2 milk from clean and greener pastures like NZ.

They (Nestle) have a very very long way to go before they can make any material impact on ATM's growth.

[bull....]

http://www.afr.com/markets/a2-and-csl-stock-valuations-are-too-high-says-garry-laurence-20180405-h0ydfk

In todays AFR ... big aussie fund says a2 expensive

The A2 Milk Company and CSL's stock valuations are too high, according to Perpetual Investments portfolio manager Garry Laurence, who says that investors looking for a business of similar calibre can buy cheaper equivalents overseas

Read more: http://www.afr.com/markets/a2-and-csl-stock-valuations-are-too-high-says-garry-laurence-20180405-h0ydfk#ixzz5C7odvC9z
Follow us: @FinancialReview on Twitter (http://ec.tynt.com/b/rw?id=cCUjAS_ECr5iWLacwqm_6l&u=FinancialReview) | financialreview on Facebook (http://ec.tynt.com/b/rf?id=cCUjAS_ECr5iWLacwqm_6l&u=financialreview)

[Nasi Goreng]

I don't think a comparison with Apple is relevant.
How much design goes into the ATM product?

PS - Apple isn't doing as well as they were.

Apple is doing just fine and has 1.3 billion devices using their operating system. They are growing top and bottom line so I'm not sure how they are not doing as well as they once were - but there are many doubters and you don't have to look too far to find them.

A2 is a milk company and they have a golden opportunity to grow their brand and presence before the market catches up. I don't see them as a take over target Couts... I may be wrong... but if I was a giant, I would put $10B into marketing and launching an in house product before I would buy A2. If you bought A2, what exactly would you be buying? I just don't see anyone coming up with $10B or $20B to take over A2, thats mega money.

[couta1]

http://www.afr.com/markets/a2-and-csl-stock-valuations-are-too-high-says-garry-laurence-20180405-h0ydfk

In todays AFR ... big aussie fund says a2 expensive HaHa, like I was saying, probably hoping to load up on cheap shares.

[Ggcc]

I laugh about these advisors. Some really are plucking figures out of the sky for valuations. You only have to look at 4-traders to find that some companies have 5 different brokers giving 5 different opinions on everything. The market dictates the price and the advisors are left guessing what the sp should be. Of course using your own mind is what matters and what sort of investment type of person you are. I am a 5 year investor so I don’t worry about the ups and downs and I do see this share worth more in the next 5 years.

[Beagle]

HaHa, like I was saying, probably hoping to load up on cheap shares.

Yeap mate there's no surprises that under-performing fund managers who don't hold are beating like calves lost from their mothers looking for a feed of nutritious A2 Milk :)

[Lease]

I don't think we need to worry too much about Nestle. Given the fact Dairy Farm still use "A2" label on its products, I can see "A2" word won't be exclusive used by ATM any longer. Maybe its patent has expired. However, ATM has built strong foundation in the major markets, especially in Aus and China, and it is the creator of "A2" milk.

For rivals like Nestle, it has launched "A2" products but it's hard to promote the "A2" is a better one as it still has large range of products including A1. If it said A2 is better, its products including A1 would suffer. If it didn't promote A2, just launch "A2" products, then it would actually do marketing for "A2" which ATM is a beneficiary. Because if A2 is not better, why should it launch A2 only products?

[Beagle]

Agree Nestle and Fonterra for that matter face a marketing conundrum with A2. How to promote A2 as the future without undermining their core business ?

[peat]

surely A2 is able to be promoted as for those with lactose intolerance , which doesn't say anything bad about A1

[Balance]

I don't think we need to worry too much about Nestle. Given the fact Dairy Farm still use "A2" label on its products, I can see "A2" word won't be exclusive used by ATM any longer. Maybe its patent has expired. However, ATM has built strong foundation in the major markets, especially in Aus and China, and it is the creator of "A2" milk.

For rivals like Nestle, it has launched "A2" products but it's hard to promote the "A2" is a better one as it still has large range of products including A1. If it said A2 is better, its products including A1 would suffer. If it didn't promote A2, just launch "A2" products, then it would actually do marketing for "A2" which ATM is a beneficiary. Because if A2 is not better, why should it launch A2 only products?

Excellent point.

Unless Nestle promotes A2 milk and infant formula as super premium - reinforces ATM position.

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12028460

a2 milk faces tougher road ahead


totally agree with the article

Share price action today says the other institutions are very happy to pick up stock courtesy of Devon's PR release?

[minimoke]

Agree Nestle and Fonterra for that matter face a marketing conundrum with A2. How to promote A2 as the future without undermining their core business ?Coke Cola seems to have no difficulty selling their "no sugar" range amongst their sugar products.

[James108]

Coke Cola seems to have no difficulty selling their "no sugar" range amongst their sugar products.

Exactly. It blows my mind that a huge competitor entering this segment with relative ease (i.e. is all their IP/patents worthless? who will enter next?) can be spun as a good thing.

I'm not saying its the end for ATM, they still have several advantages and I continue to hold but nestle entering with such ease can't be good.

[Beagle]

Coke Cola seems to have no difficulty selling their "no sugar" range amongst their sugar products.

I think we can turn this thing on its head. ATM is coke, "the real thing" and Nestle is Pepsi. How many adds have you seen for Pepsi max, the no sugar variety of Pepsi ? I can't remember a single one.

[couta1]

I think we can turn this thing on its head. ATM is coke, "the real thing" and Nestle is Pepsi. How many adds have you seen for Pepsi max, the no sugar variety of Pepsi ? I can't remember a single one. Apparently the new Nestle Atwo product is not exactly flying off the shelves, no surprises there.

[RGR367]

For most of us who caught the big wave, circa at 40-60 cents sp, does it matter now if a competitor enters the market? It just made what we already have a treasure to hold even more, doesn't it?

[BlackPeter]

surely A2 is able to be promoted as for those with lactose intolerance , which doesn't say anything bad about A1

Promoting A2 milk for people with lactose intolerance actually would be wrong.

If people are really lactose intolerant they can digest neither A1 nor A2 milk (lactose is in A1 as well as in A2 milk). However - there are many more people who think that they are lactose intolerant, than people who really are. Most of the delta (not lactose intolerant, but still have problems digesting regular milk) just can't stomach A1 milk, but are fine with A2 milk.

So - unless you belong to the small group of people who actually are lactose tolerant , you can drink A2 milk. A sub set of these people is able as well to drink A1 milk without immediate problems.

But than, even for these people there is always the nagging feeling in the back - does the consumption of A1 milk create long term health issues (particularly for baby's and toddlers)? A number of sources claim that the consumption of A1 protein leads to increased baby mortality (sudden infant death syndrome) and increased levels of autism and diabetes.

Here is a pro-A2 webpage:https://www.authoritydiet.com/a1-vs-a2-cows-milk-what-difference-benefits-nutrition/

and here is a more cautious assessment: https://www.healthline.com/nutrition/a1-vs-a2-milk

I haven't investigated the reliability of these sources, but if you can get A2 for your child (which is more natural anyway, human breast milk is A2), why take the risk?

[tipsy]

The Chinese are also extremely cautious about buying counterfeit products and have no concerns about paying a premium for the real deal. Atwo does sound like a knockoff of A2.

[Leftfield]

Nice to see ATM bounce back today after a pretty biased and questionable PR article from a poor performing fund posing as journalism.

To me the most questionable aspect to the article is the implication that A2's IP is weak or non existent. The reality is that it may be some years before A2 takes a legal action against Nestle, and then much will depend on whether A2 has been ‘adversely effected.’ It is simply too early to say whether at this stage there has been any adverse impact on A2.

When it comes to IP protection, think Sony, Samsung and Apple and you will appreciate litigation is a long term and expensive game, that is not to be rushed into.

For those of us who have been with ATM since the 50c days, we have seen it gain profitable market share of around 10% in Australia, and the UK against firmly entrenched opposition (much tougher than Nestle in China.) ATM has shown it doesn't need market domination. All it needs is a profitable niche.

I won't be scared out of my valuable holdings by such sham journalism and wii quietly wait till the company's next update before I make any judgements.

[Nasi Goreng]

Coca Cola has over 900 manufacturing and bottling plants across the world. Pepsi has over 700. Nestle have 447 factories.

A2 has a small shareholding in Synlait. A2 are growing, SML are doing the investing, when will A2 open their wallets and buy some stainless steel?

[Sideshow Bob]

More thoughts from Keith Woodford....

https://www.stuff.co.nz/business/farming/dairy/102947148/a2-milk-comes-of-age-on-the-world-market

[Balance]

More thoughts from Keith Woodford....

https://www.stuff.co.nz/business/farming/dairy/102947148/a2-milk-comes-of-age-on-the-world-market

Very good perspective vs the doom and gloom PR release by Devon.

Wonder if Devon has been shorting ATM? Would explain somewhat their dismal Alpha Fund performance.

[Nasi Goreng]

interesting last comment from Keith Woodward...

"The rate at which the A2 category grows will also determine the future farmgate premiums for A2 milk. Until now, the A2M has had minimal competition for the existing milk pools. This has led to market premiums being captured and largely retained by A2M rather than by their supplying farmers, or even A2M's processors."

[Beagle]

Very good perspective vs the doom and gloom PR release by Devon.

Wonder if Devon has been shorting ATM? Would explain somewhat their dismal Alpha Fund performance.

The name "Alpha" fund almost as disingenuous as their opinion piece masquerading as journalism.
Unfortunately people get sucked in by names.

[Ghost Monkey]

Back-slapping group thinkers hard at work today. Time to go home, fill up a glass of A2 milk and raise a toast to another successful day.

[Lego_Man]

Nice to see ATM bounce back today after a pretty biased and questionable PR article from a poor performing fund posing as journalism.

To me the most questionable aspect to the article is the implication that A2's IP is weak or non existent. The reality is that it may be some years before A2 takes a legal action against Nestle, and then much will depend on whether A2 has been ‘adversely effected.’ It is simply too early to say whether at this stage there has been any adverse impact on A2.

When it comes to IP protection, think Sony, Samsung and Apple and you will appreciate litigation is a long term and expensive game, that is not to be rushed into.

For those of us who have been with ATM since the 50c days, we have seen it gain profitable market share of around 10% in Australia, and the UK against firmly entrenched opposition (much tougher than Nestle in China.) ATM has shown it doesn't need market domination. All it needs is a profitable niche.

I won't be scared out of my valuable holdings by such sham journalism and wii quietly wait till the company's next update before I make any judgements.


With all due respect, you sound like you might be in love with the story, having made so much money out of it already. Devon are entitled to put forward their thesis in public. If it's rubbish as you say, it'll have no impact. Multiple voices and opinions are what makes markets more efficient.

Also as far as i'm aware, Devon have owned A2 but sold out completely around the highs. The position was profitable.

[Beagle]

With all due respect, you sound like you might be in love with the story, having made so much money out of it already. Devon are entitled to put forward their thesis in public. If it's rubbish as you say, it'll have no impact. Multiple voices and opinions are what makes markets more efficient.

Also as far as i'm aware, Devon have owned A2 but sold out completely around the highs. The position was profitable.

If that's the case how come their Alpha fund has given anything but an alpha performance ? Maybe they're simply not as good with their analysis as other fund managers like Harbour who really believe in the ATM business case ? Surely it couldn't be as simple as Devon talking their own book when they are short ATM..no, not possible seeing as they so "clearly disclosed" their invested position..oh hang on a minute...they didn't :ohmy:

[sb9]

If that's the case how come their Alpha fund has given anything but an alpha performance ? Maybe they're simply not as good with their analysis as other fund managers like Harbour who really believe in the ATM business case ? Surely it couldn't be as simple as Devon talking their own book when they are short ATM..no, not possible seeing as they so "clearly disclosed" their invested position..oh hang on a minute...they didn't :ohmy:

Yes, they have completely sold out the Devon Funds and they'll only realise in few years time what they've left on the table. Just like the Perich family of Freedom Foods who sold out too early in 2015 and in the process lost almost Billion dollar profit. A snippet from AFR...

"In late 2015, Freedom Foods, majority owned by Perich and other family members, sold its 117 million shares in the Kiwi milk company for $93 million (http://www.afr.com/brand/rear-window/as-a2-swells-what-could-have-been-for-tony-perich--20171010-gyy9rd).On Wednesday, another good profit result (referring to the latest HY Results) pushed A2's share price to a record $11.30 (30 per cent up on Tuesday's close). Which means those 117 million shares would today be worth a staggering $1.3 billion. Freedom Foods, and by extension Perich, left over a billion dollars on the table."

[Balance]

With all due respect, you sound like you might be in love with the story, having made so much money out of it already. Devon are entitled to put forward their thesis in public. If it's rubbish as you say, it'll have no impact. Multiple voices and opinions are what makes markets more efficient.

Also as far as i'm aware, Devon have owned A2 but sold out completely around the highs. The position was profitable.

All views are welcomed indeed, Lego_Man - all information is good information once it is properly assessed.

Disclosure of interest is however important to weigh how good or bad or reliable the information is.

BTW, Devon has never disclosed any shareholding in ATM.

https://devonfunds.co.nz/fund-updates

In fact, they have been consistently long cash or equivalents (30% plus) which will explain why they have not done as well as the market.

[JeremyALD]

Hard to say what competition will / won't do, but I can't see anything slowing down a2m's growth in China in the next few years. Its going to take a while for everyone to catch up and a2 have formed a good position.

I guess the USA could be challenging if a competitor came along as a2 dosen't have an established brand or position there. Maybe that's why they are pumping more into marketing in the US?

[Balance]

Yes, they have completely sold out the Devon Funds and they'll only realise in few years time what they've left on the table. Just like the Perich family of Freedom Foods who sold out too early in 2015 and in the process lost almost Billion dollar profit. A snippet from AFR...

"In late 2015, Freedom Foods, majority owned by Perich and other family members, sold its 117 million shares in the Kiwi milk company for $93 million (http://www.afr.com/brand/rear-window/as-a2-swells-what-could-have-been-for-tony-perich--20171010-gyy9rd).On Wednesday, another good profit result (referring to the latest HY Results) pushed A2's share price to a record $11.30 (30 per cent up on Tuesday's close). Which means those 117 million shares would today be worth a staggering $1.3 billion. Freedom Foods, and by extension Perich, left over a billion dollars on the table."




Thibnk of those who had faith and bought off Freedom Foods! $1.3 billion bonanza in 2 years!

[Valuegrowth]

Although livestock sector has bright outlook in the coming decade, time to time there could be some short term challenges as well. Those who can face those challenges successfully could become top winners.

Cash rich quality milk and meat companies with strong balance sheets should outperform others in the sector in the coming years. Although they could have growing demand for their products globally, time to time there could be short term challenges as well. Cash rich companies with strong balance sheet could emerge as strong competitors and thereby they will meet short term challenges successfully. Definitely, they will create long term shareholder value. Asian appetite for protein products will create opportunities for companies in New Zealand and Australia as well. New Zealand is famous for producing some quality stuff.

Globally, drought could be one of the challengers that industry will face in the future. Availability of arable land is another challenge. We don’t see any drought globally in the current year and we can reasonably expect better agriculture output and therefore good carryover stock for various crops this year as well. Innovative managers having good strategies and innovative ideas in this sector could make big difference.

In short, in this sector we should able to find some outstanding companies in the coming years. They may have some short term lean period in some period which is common to many industries but they should continually grow. Quality companies that can produce quality food will become ultimate winners.

According to some, sales growth in the huge Chinese market has been unaffected by the launch of a rival brand and that the company still holds a strong position. In my opinion there could be some competition. At the end strong competitor will become ultimate winner. I have seen this trend in the meat and milk sector.

So far, (ATM.NZ) was one of the beauties in the market during fast 12 months.

Will they become more beautiful in the future? We will not regret if we follow Companies with beautiful stories.

Can it also stay as a strong competitor while maintaining growth?

My main concern on this company is its extended P/E ratio. However, it seems growth players are willing to pay premium for this company and as a resul it got a high PE ratio during past 12 months. We should see more winners in the meat and milk sector in the coming years.

[hardt]

Similar with Citi's big fat sell rating at $2 early last year, if you don't agree with the approach taken to come to the negative coverage, don't follow or act on their insights or recommendations.

Devon funds had a rough year to say the least.
6.5% weighting in FBU construction -27%
5.7% weighting in GTN broadcasting - 36%
While selling out to a 33% weighting in cash
I somewhat agree with their 7.4% weighting in VGL

They are claiming Daigou are scary, unpredictable creature and have sent 2 analysts to China to study them in the wild...

They have also never owned a position in A2 milk as per their update at the end of CY17 below... - Why would Lego Man say that they did.

The other side of the story of our performance versus the market has been the stocks we haven’t owned, the most important of which has been A2 Milk. This stock has rallied over 190% in the past year and although it has been disappointing to not have been exposed to these strong returns, it does provide an example of our focus on capital preservation and risk management. We have known and followed A2 for a number of years and our experience has been that the company’s ability to execute on ambitious growth plans has been very mixed. They have built a successful fresh milk business in Australia but forays into the UK and US have not (yet) worked well nor did the company’s attempt to sell infant formula in China by way of direct distribution with a joint venture partner delivered the results expected. The company’s dramatic earnings growth over the last couple of years has been driven by sales via the informal “daigou” channel i.e. principally Chinese nationals in Australia purchasing goods to re-sell into China. The dangers with this channel are many and varied – visibility of the end customer is extremely limited, buyer behaviour can be very divorced from underlying demand, the distribution chain is long, complex and expensive and is always prone to “channel stuffing”, and finally most of these sales are technically illegal and subject to enormous regulation risk. We may well be wrong about A2 and they may continue to rapidly grow sales and earnings from infant formulas sales into China but we simply could not get sufficient comfort in the risk profile of the business to expose our client funds to it.

[Lego_Man]

Similar with Citi's big fat sell rating at $2 early last year, if you don't agree with the approach taken to come to the negative coverage, don't follow or act on their insights or recommendations.

Devon funds had a rough year to say the least.
6.5% weighting in FBU construction -27%
5.7% weighting in GTN broadcasting - 36%
While selling out to a 33% weighting in cash
I somewhat agree with their 7.4% weighting in VGL

They are claiming Daigou are scary, unpredictable creature and have sent 2 analysts to China to study them in the wild...

They have also never owned a position in A2 milk as per their update at the end of CY17 below... - Why would Lego Man say that they did.

The other side of the story of our performance versus the market has been the stocks we haven’t owned, the most important of which has been A2 Milk. This stock has rallied over 190% in the past year and although it has been disappointing to not have been exposed to these strong returns, it does provide an example of our focus on capital preservation and risk management. We have known and followed A2 for a number of years and our experience has been that the company’s ability to execute on ambitious growth plans has been very mixed. They have built a successful fresh milk business in Australia but forays into the UK and US have not (yet) worked well nor did the company’s attempt to sell infant formula in China by way of direct distribution with a joint venture partner delivered the results expected. The company’s dramatic earnings growth over the last couple of years has been driven by sales via the informal “daigou” channel i.e. principally Chinese nationals in Australia purchasing goods to re-sell into China. The dangers with this channel are many and varied – visibility of the end customer is extremely limited, buyer behaviour can be very divorced from underlying demand, the distribution chain is long, complex and expensive and is always prone to “channel stuffing”, and finally most of these sales are technically illegal and subject to enormous regulation risk. We may well be wrong about A2 and they may continue to rapidly grow sales and earnings from infant formulas sales into China but we simply could not get sufficient comfort in the risk profile of the business to expose our client funds to it.

Their last monthly says they bought and sold recently (presumably CY18). I guess they capitulated and went long before making a u-turn and taking full profits. Shows the pressures of the industry.

Anyway I think you need to be a little circumspect with NZ managers. Because of the relatively tiny pool of stocks to invest in, they just have to get one wrong and their peers smoke them. Doesnt make them stupid. Whereas the more diverse nature of offshore markets gives you more ways to skin the cat.

[hardt]

Their last monthly says they bought and sold recently (presumably CY18). I guess they capitulated and went long before making a u-turn and taking full profits. Shows the pressures of the industry.

Anyway I think you need to be a little circumspect with NZ managers. Because of the relatively tiny pool of stocks to invest in, they just have to get one wrong and their peers smoke them. Doesnt make them stupid. Whereas the more diverse nature of offshore markets gives you more ways to skin the cat.

https://devonfunds.co.nz/sites/default/files/Webinar%20March%2018.pdf - TT Fund were shorting A2 for the year to Feb 2018 weighted at -2.3%

Looks like they know what it feels like to short A2, their march update has both TT and alpha funds with a +3% weighting in A2M.

[Beagle]

They added a very large position in FBU late in 2017...enough said.

[bull....]

devon underweight a2 = poor result , harbour overweight = good performance just goes to show there performances will be decided by the fortunes of a2 lol

[JeremyALD]

I lol'd at the statement from Devon that ATMs growth agenda and execution has been "very mixed" and basically put it all done to luck and China. Are they actually serious? It's probably the fastest growing and most successful nz stock of all time!

[NZSilver]

Haha look at there earnings growth, look how fonterra has gone relying on the direct route, I think it'an oversight not to expose some of there clients capital to such a great buisness. Give the UK and USA chance Iits early days, look at their balance sheet no debt, look at nestle a 250 bil usd company Reacting to a2 - they see how good it is.

[dobby41]

A word of warning.
I am very late to the party but will be buying some shortly.
Past experience, for me, is that when I am late to the party the party stops when I get there.
I hope I don't repeat history here but you have been warned.

[causecelebre]

Interesting view in from interest

https://www.interest.co.nz/rural-news/93098/keith-woodford-describes-a2-global-shift-brand-category-and-consequent-competition

[dobby41]

Interesting view in from interest

https://www.interest.co.nz/rural-news/93098/keith-woodford-describes-a2-global-shift-brand-category-and-consequent-competition

Nice balanced article that discusses many things covered here (and some things that have had scorn poured over them.

[Balance]

Interesting view in from interest

https://www.interest.co.nz/rural-news/93098/keith-woodford-describes-a2-global-shift-brand-category-and-consequent-competition


More thoughts from Keith Woodford....

https://www.stuff.co.nz/business/farming/dairy/102947148/a2-milk-comes-of-age-on-the-world-market

Now I know some don't bother to read what's already posted!

[causecelebre]

Now I know some don't bother to read what's already posted!

Oh well i'll go back to silently looking at my charts rather than combing through a 8196 post thread for everything that has possibly ever been said about ATM and A2. I'll assume that someone else has already posted and won't bother

[peat]

article was probably worthy of being posted twice. but did raise some serious long term concerns, and also raised the matter of demineralised whey isolate (not made in NZ) which would seem to be key.

[RGR367]

Oh well i'll go back to silently looking at my charts rather than combing through a 8196 post thread for everything that has possibly ever been said about ATM and A2. I'll assume that someone else has already posted and won't bother

:cool: Don't go sulking with your charts. Just part of your learning to be mindful of what's already been said 'cuz you'll be left behind when the tide turns again if you're a bit slower on the news. GL.

[44wishlists]

Oh well i'll go back to silently looking at my charts rather than combing through a 8196 post thread for everything that has possibly ever been said about ATM and A2. I'll assume that someone else has already posted and won't bother

It will be a very wise idea combing through a 8196 post thread if you're serious about investing in ATM. And in fact, in the share market(s).

[bull....]

Is it trash or treasure one should ask themselves?

[causecelebre]

:cool: Don't go sulking with your charts. Just part of your learning to be mindful of what's already been said 'cuz you'll be left behind when the tide turns again if you're a bit slower on the news. GL.

I'll sulk where ever i like thanks.


It will be a very wise idea combing through a 8196 post thread if you're serious about investing in ATM. And in fact, in the share market(s).

DISC: I hold ATM



It would have been fairer to thank someone for trying to provide information that may help rather than being admonished for missing one post

Right, back to my sulking now....

[RupertBear]

Geepers ok so causecelebre posted a link that had already been posted, its not the end of the world. I would rather someone posted twice by mistake than didnt post at all. But sulking about it :scared: Naaa lets all move on :)

[Sideshow Bob]

Slightly off-topic, but a bit of a left-field purchaser for Happy Valley Milk (who are planning to specialize in A2 milk products)

https://www.msn.com/en-nz/money/business/australians-buy-fledgling-nz-dairy-company/ar-AAvJgLa?ocid=spartandhp

ASX Announcement

https://www.asx.com.au/asxpdf/20180410/pdf/43t36lmymp4kgy.pdf

[BlackPeter]

Slightly off-topic, but a bit of a left-field purchaser for Happy Valley Milk (who are planning to specialize in A2 milk products)

https://www.msn.com/en-nz/money/business/australians-buy-fledgling-nz-dairy-company/ar-AAvJgLa?ocid=spartandhp

ASX Announcement

https://www.asx.com.au/asxpdf/20180410/pdf/43t36lmymp4kgy.pdf

Interesting - Longreach Oil Ltd is an oil and gas exploration company.

http://www.longreachoil.com/

That's like NZO buying SML ...

I guess they probably have the money, but can they add any expertise to this venture?

[Leftfield]

Slightly off-topic, but a bit of a left-field purchaser for Happy Valley Milk (who are planning to specialize in A2 milk products)



I swear it isn't me!! :cool:

[Nasi Goreng]

Interesting - Longreach Oil Ltd is an oil and gas exploration company.

http://www.longreachoil.com/

That's like NZO buying SML ...

I guess they probably have the money, but can they add any expertise to this venture?

It looks like they are venture capitalists really and will change the business name to reflect their largest holding. Must be very cashed up and are looking at all this A2 opportunity and going after it. I imagine they will sell to the highest bidder once they have established some form of A2 rich supply.

[Sideshow Bob]

I swear it isn't me!! :cool:

Haha - you only own a small slice of the REAL a2 milk company? Not a large chunk of an imposter??

[whatsup]

I see ATM slip sliding away and it could stay that way until just before the next sales ann unless there is some earth shuttling news just like the Nestle news release, wheres the bottom for the time beaing ?

[couta1]

I see ATM slip sliding away and it could stay that way until just before the next sales ann unless there is some earth shuttling news just like the Nestle news release, wheres the bottom for the time beaing ?With shorters making up a third of the total shares traded lately, who knows, they can be like a virus. PS-Their incineration time will come again, as it did a couple of months back.

[BlackPeter]

I see ATM slip sliding away and it could stay that way until just before the next sales ann unless there is some earth shuttling news just like the Nestle news release, wheres the bottom for the time beaing ?

Depends on whom you ask ;);

$10.60 - EMA 100?

$9.50 to $ 10.50 - some gaps to fill??

$8.56 - EMA 200?

Your guess as good as mine ... but I don't think it will drop through the EMA200 :) unless the sky caves in ...;

However - something around $10 with a big resistance around NZD10,57 (AUD 10) and NZD10 (round numbers) sounds quite possible. Time will tell ...

[couta1]

A2 expands into South Korea, nice.

[Ted2]

A2 expands into South Korea, nice.

Nice.... and very timely. 50 million people in SK - not to be sniffed at!

[44wishlists]

Nice.... and very timely. 50 million people in SK - not to be sniffed at!

Yes, it is a very timely announcement. Giving a good supporting point for the recent SP softness after the Nestle news.

[Beagle]

Interesting that they're looking at initiating a premium A2 product blended with natural N.Z. manuka honey, see paragraph 7 http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/316790/277745.pdf.

What a way to go for wealthy young families to give their little prince or princess the very best possible start in life and sure to command a hefty premium price ! Maybe ATM is the interested party doing due diligence on Comvita lol

Expecting a ripper market trading update later this month too.

No worries... will be back to testing all time high's in due course.

[couta1]

Interesting that they're looking at initiating a premium A2 product blended with natural N.Z. manuka honey, see paragraph 7 http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/316790/277745.pdf.

What a way to go for wealthy young families to give their little prince or princess the very best possible start in life and sure to command a hefty premium price ! Maybe ATM is the interested party doing due diligence on Comvita lol

Expecting a ripper market trading update later this month too.

No worries... will be back to testing all time high's in due course. Shorters will be squealing like stuck pigs upon the next squeeze, I see a few ducks getting ready to line themselves up over the next couple of months.

[minimoke]

A2 expands into South Korea, nice.Oh dear. SML might need to produce more.

[couta1]

Oh dear. SML might need to produce more. SML will NEVER keep up with demand for this baby.

[sb9]

Oh dear. SML might need to produce more.

Sure they need to going by the following..

"The a2 Milk Company™ product range will be sourced from Australia and New Zealand, with nutritional products produced by our key supply partner, Synlait Milk Limited. Initial sales are expected to commence during the second half of calendar year 2018. "

Sorry Fonterra...

[Leftfield]

Shorters will be squealing like stuck pigs upon the next squeeze, I see a few ducks getting ready to line themselves up over the next couple of months.

Yep timely announcement that says "you're a mug to be selling your ATM shares now - just hold on."

Reinforces the current $12.00 to $14.00 range until the next announcement...(maybe next week?)

All on track for $20 by December?

[steveb]

I suspect all the A2 farmers supplying milk to Synlait for processing will now be busily buying up hives and planting Manuka!

[Sideshow Bob]

Yuhan is Korea's most trusted company for the last 15 years!

http://eng.yuhan.co.kr/Introduce/History/index5.asp

Other interesting reading on their site.

[winner69]

Hope ATM not becoming a hyped up announcement driven stock ..like some others

I remember the momentous day that Tip Top put hokey pokey into their vanilla ice cream. That was some event and changed the company’s fortune.

[minimoke]

Hope ATM not becoming a hyped up announcement driven stock ..like some others

I remember the momentous day that Tip Top put hokey pokey into their vanilla ice cream. That was some event and changed the company’s fortune.And now we are waiting for the announcement that Tip Top has put Hokey Pokey into its A2 ice cream.

[sb9]

Geoff Babidge interview on Skynews following y'day's announcement of their expansion into South Korea. Very pleasing and Geoff drops some subtle hints about their future plans. Enjoy....great to be ATM shareholder.

https://www.skynews.com.au/details/_5771046815001

[Ggcc]

The shorters must be busy today?

[hardt]

Hoping we continue to drift lower towards 100DMA over the next month... happy buying.

[Ggcc]

Hoping we continue to drift lower towards 100DMA over the next month... happy buying.
Bought some more today, but could have gone cheaper. Still my average is lower than these prices. I do believe good buying, but would love to see the price rise now haha

[hardt]

Bought some more today, but could have gone cheaper. Still my average is lower than these prices. I do believe good buying, but would love to see the price rise now haha

Wouldn't worry about downward pressure after such a massive run... blessing in disguise, without the bears this thing would not be worth buying.

[couta1]

Bought some more today, but could have gone cheaper. Still my average is lower than these prices. I do believe good buying, but would love to see the price rise now haha Always hard to time the bottom on any given day with this stock, shorters in control as they are with BAL at the moment.PS-You won't be worried about 20 cents odd here or there once the price hits $20 late this year/early next year.

[couta1]

Here's 3 treats holders have to look forward to between now and August(Excluding any additional surprise announcements like the SK one yesterday) 1.Probable trading update over the next couple of weeks. 2.Very probable inclusion in the next MSCI index rebalance, May 14th for announcement, effective June 1st. 3.Extremely probable stunning end of year result in August.

[Beagle]

Here's 3 treats holders have to look forward to between now and August(Excluding any additional surprise announcements like the SK one yesterday) 1.Probable trading update over the next couple of weeks. 2.Very probable inclusion in the next MSCI index rebalance, May 14th for announcement, effective June 1st. 3.Extremely probable stunning end of year result in August.

Agreed and also in June last year they updated the market again so two possible market updates before 30 June 2018. Behind the paywall article on NBR today stated that the CEO was very pleased indeed with growth in China, (code speak for a stunning market update coming later this month ?).

[JeremyALD]

I'm not so sure we'll get a trading update this month. Things seem to be tracking nicely as expected so there may be no need to update the market, unless they want to shut the shorters up again!

Definitely starting to get me tempted to top up, but think I'll wait to see if there's more downward pressure on the share price.

[kiora]

Has someone recorded this the wrong way round?Simple mistake?
https://stocknessmonster.com/announcements/atm.nzx-316867/

[Hectorplains]

Has someone recorded this the wrong way round?Simple mistake?
https://stocknessmonster.com/announcements/atm.nzx-316867/

No? Converted 1 .25m partly paid to fully paid. Still has 1.5m partly paid.

[Beagle]

I'm not so sure we'll get a trading update this month. Things seem to be tracking nicely as expected so there may be no need to update the market, unless they want to shut the shorters up again!

Definitely starting to get me tempted to top up, but think I'll wait to see if there's more downward pressure on the share price.

I'd be surprised if they didn't update the market as they'll know their third quarter results later this month and I would think there's material information in there that based on their past history the company is happy to update us with. I'm expecting a ripper update based on the CEO's confident statement about ongoing growth into China in yesterday's behind the paywall article and previous statements by the company about good January sales e.t.c.
Just the fact that they have finally managed to get adequate product supply since Synlait doubled their canning and drying capacity with new facilities in Auckland last November means product availability to consumers would have been good for the first time this quarter.

[forest]

I'd be surprised if they didn't update the market as they'll know their third quarter results later this month and I would think there's material information in there that based on their past history the company is happy to update us with. I'm expecting a ripper update based on the CEO's confident statement about ongoing growth into China in yesterday's behind the paywall article and previous statements by the company about good January sales e.t.c.
Just the fact that they have finally managed to get adequate product supply since Synlait doubled their canning and drying capacity with new facilities in Auckland last November means product availability to consumers would have been good for the first time this quarter.

The more time I spend learning about this company the more I am surprised about its growth. Normally companies with a larger market cap have limited grow potential.
ATM is now the larges public company by market cap in NZ and is more than likely growing its NPAT by over 100% for the year to 2018 compared to 2017.
But if that is not impressive the company is likely to have over $300mil sitting on standby which could go on advertising if that was ever needed.
Wondering if I am missing something, I try to be wary when investing but I can not see much to be wary about in this case.

[Sideshow Bob]

The more time I spend learning about this company the more I am surprised about its growth. Normally companies with a larger market cap have limited grow potential.
ATM is now the larges public company by market cap in NZ and is more than likely growing its NPAT by over 100% for the year to 2018 compared to 2017.
But if that is not impressive the company is likely to have over $300mil sitting on standby which could go on advertising if that was ever needed.
Wondering if I am missing something, I try to be wary when investing but I can not see much to be wary about in this case.

The company is really in early stages of growth - with much of the success to date having been on the back of the Chinese IF market. Undoubtedly management has been astute, and has been focused on the market, partnering up on production/processing - not having (much) money invested in stainless steel, or management time focused on production. Strong operating cashflows, money in the bank, lots of growth etc. Sure the PE is high (approx. 60) but still lots of growth initiatives still to come to fruition, and lots more on the horizon. Compare that to Bellamy's at about 164 and I know which I'd rather be holding.

Of course a lot of posters look at ATM through rose-tinted glasses (as I recognize I often do), but a lot of holders bought in sub $1 - so they are going to have a bit of a soft spot for this company. They are a long way above water, and I personally have done very well out of them, but like many not as well as I might or could have!! Like anything there is risk, especially around potential competitors and where that a2 space goes to - natural when A2 are doing so well. The company has a perennial history of under-promising and over-performing, and see nothing on the horizon to change this view. Even the announcement Monday with their Korean partner seems a very good partnership, and a reputable player.

The frustrating thing for holders is the share price volatility, and heavy activity of shorters. Also that A2 updates never come around fast enough......

[Sideshow Bob]

Even if they replicate the 1H 2018 result in 2H 2018, then their PE will be 45.

[forest]

Even if they replicate the 1H 2018 result in 2H 2018, then their PE will be 45.

More than likely ATM will make more than the $99m NPAT in the second half. This means a forwards 2018 P/E less than 45. Growth over 100%, all common indicators absolutely stellar and likely to improve. And all that cash pile, could well be growing by a $1m a day. Still trying to be wary but it is getting harder by the day.

[Beagle]

I'm expecting EPS of 30 - 35 cps this year and ~ 45 cps next year. I have them on a FY19 PE multiple in the late 20's. Market is forward looking.
I see considerable potential for ongoing SP appreciation in the years ahead and believe on FY 19's estimates the company is arguably one of the best value high growth stocks on the NZX. Just hold and have heaps of patience.

[forest]

I'm expecting EPS of 30 - 35 cps this year and ~ 45 cps next year. I have them on a FY19 PE multiple in the late 20's. Market is forward looking.
I see considerable potential for ongoing SP appreciation in the years ahead and believe on FY 19's estimates the company is arguably one of the best value high growth stocks on the NZX. Just hold and have heaps of patience.

I agree, its very hard to come to any other view. Makes investing a bit easier.:)

[Beagle]

I agree, its very hard to come to any other view. Makes investing a bit easier.:)

There was so much love for ATM at our February 2018 Auckland meeting from almost everyone there when they were ~ $9 I bought more as soon as the market opened on Monday thinking all those bright minds there can't possibly all be wrong :)

[hardt]

There was so much love for ATM at our February 2018 Auckland meeting from almost everyone there when they were ~ $9 I bought more as soon as the market opened on Monday thinking all those bright minds there can't possibly all be wrong :)

Anyone at the meeting dare to bag A2 as a passing fad?

[Baa_Baa]

Keep an eye on the 50EMA for a reliable (so far) support, for accumulation or buying opportunity. Currently bouncing off it again after range trading since the late Feb spike. Not a silver bullet by itself but clue #1 on the chart.

[Beagle]

Anyone at the meeting dare to bag A2 as a passing fad?

No, on the contrary there was so much love for it I'm surprised everyone wasn't ordering A2 milk based cocktails lol.

[forest]

Anyone at the meeting dare to bag A2 as a passing fad?

As Beagle mentioned above, a lot of love for ATM. It was not your typical discussion about a company, were there was talk about potential and caution.
If one had to give a reason to be cautions with A2M then "a passing fad" is likely all we can come up with at this stage.
However the fact that Fonterra and Nestle getting involved makes this feel that A2 is more than a fad.

[winner69]

Anyone at the meeting dare to bag A2 as a passing fad?

Instant dismissal if one bad word muttered

[Beagle]

You've got to admire the way they quietly keep evolving their product mix...with the latest little gem buried in a nice understaed way, (as usual) deep down in the South Korean launch article about a new variety of A2 infant milk powder blended with N.Z. sourced manuka honey.

Lets think about the impact of this for a minute.
This further differentiates their product from the likes of Nestle and others.
Suppose you are Mr and Mrs comfortably well off Chinese parents. Why wouldn't you buy the best product infused with the legendary manuka honey for your little prince and princess ?
Mercedes-Benz are doing massive business in China, why ? Because people think they make the best cars in the world and there's a lot of wealth in China. (Whether they are the best brand is quite another argument but I am simply giving the illustration of how wealthy Chinese customers are acting to emphasize the importance of this new manuka honey blended infant formula).

I think we could see a very astute play here where A2's platinum IF becomes the one infused with manuka honey and the gold standard becomes the one not blended, or perhaps the other way around depending upon whether their market research indicates people think Gold is more prestigious than Platinum.

[iceman]

You've got to admire the way they quietly keep evolving their product mix...with the latest little gem buried in a nice understaed way, (as usual) deep down in the South Korean launch article about a new variety of A2 infant milk powder blended with N.Z. sourced manuka honey.

Lets think about the impact of this for a minute.
This further differentiates their product from the likes of Nestle and others.
Suppose you are Mr and Mrs comfortably well off Chinese parents. Why wouldn't you buy the best product infused with the legendary manuka honey for your little prince and princess ?
Mercedes-Benz are doing massive business in China, why ? Because people think they make the best cars in the world and there's a lot of wealth in China. (Whether they are the best brand is quite another argument but I am simply giving the illustration of how wealthy Chinese customers are acting to emphasize the importance of this new manuka honey blended infant formula).

I think we could see a very astute play here where A2's platinum IF becomes the one infused with manuka honey and the gold standard becomes the one not blended, or perhaps the other way around depending upon whether their market research indicates people think Gold is more prestigious than Platinum.

Agree Beagle this was a very interesting development in the release. And as you friend Ogg says on a different thread, ATM may be a potential buyer of CVT :-)

[sb9]

Agree Beagle this was a very interesting development in the release. And as you friend Ogg says on a different thread, ATM may be a potential buyer of CVT :-)

I wouldn't think so iceman.

Why would ATM want to buy out whole of a manuka honey making company, just so that they can add that as one of the ingredients in a new range of product. Would they not be better off leaving that in the capable hands of their cornerstone manufacture SML to source it for them as part of their supply chain process?

[black knat]

Not really sure about the nutritional desiribility of adding sugar (honey) to infant formula. But I'm sure they will have that covered.