ATM - A2 Milk Corporation Limited

[couta1]

Well that's it for the week and I've just poured myself a nice big glass of Amarula with A2 milk, have a great weekend everyone.

[Baa_Baa]

Well that's it for the week and I've just poured myself a nice big glass of Amarula with A2 milk, have a great weekend everyone.

A lesson this week, only two out from what will be awesome results, watching how the big players collect their stock from the nervous, readying for the next leg up.

[steveb]

You would have to wonder why anyone would buy on the NZX before the ASX opens??
yes it's like groundhog day again.I was actually wondering if the Fonterra news was going to pull them down a bit,but the SP was doing well until aus opened

[see weed]

yes it's like groundhog day again.I was actually wondering if the Fonterra news was going to pull them down a bit,but the SP was doing well until aus opened
I am getting that gut feeling again. It seems the sp is struggling to get any lower. Is this the new bottom for now, and all up from here to where?

[couta1]

I am getting that gut feeling again. It seems the sp is struggling to get any lower. Is this the new bottom for now, and all up from here to where? The way it's going at the moment it will be a case of sell the rumour buy the fact come results day which isn't a bad thing.

[Ggcc]

I am getting that gut feeling again. It seems the sp is struggling to get any lower. Is this the new bottom for now, and all up from here to where?

I thought the same. Too early to say though and would only hop in now if I was in it for the Longhaul

[couta1]

I thought the same. Too early to say though and would only hop in now if I was in it for the Longhaul I'd hop in now for short or longhaul, profit to be made either way.

[see weed]

I'd hop in now for short or longhaul, profit to be made either way.
I am in for the long haul, short haul, and all the other hauls:). Have bought back most of the shares sold a couple of weeks ago, but are not quite 100% yet.

[couta1]

Haha looks like the penny has finally dropped for the local punters looking at the open today.

[see weed]

Just been looking at last Feb results. Revenue of $600 mil plus for six months. Looking forward to full year results, maybe $1.2billion which would be about $278mil. gain from last years $922mil. revenue. Couple of 100 million extra in the bank would look good. Anyone know how much a2 have in the bank now? It wouldn't be getting much interest at 1%

[Ggcc]

I believe we may well be on the slow climb until results day.... $1.2 Billion turnover is lower than what I expect. We will be near $1.3+. We will find out on the 21st of this month.

[Leftfield]

While we wait results, here's a good news story from the Australia Food Marketing Industry about A2's online sales success in China FYI.

Read it. (https://insidefmcg.com.au/2019/08/13/jd-strengthens-partnership-with-a2-milk/)

[Sideshow Bob]

yes it's like groundhog day again.I was actually wondering if the Fonterra news was going to pull them down a bit,but the SP was doing well until aus opened

If nothing else, at least they've been pumping the Anchor A2 ads on TV!!

[Snow Leopard]

10707

Brewed in Malaysia: [ click me for story (https://www.theborneopost.com/2018/10/03/vets-turned-entrepreneurs-launch-new-a2-milk-product/) ]

[Leftfield]

Thanks for posting Snow Leopard...... good to see A2 awareness growing in Asia.

[limmy]

10707

Brewed in Malaysia: [ click me for story (https://www.theborneopost.com/2018/10/03/vets-turned-entrepreneurs-launch-new-a2-milk-product/) ]
Which company sells this milk ?
Looks like the opposition trying to capture the market in Malaysia before ATM moves in ?

[sb9]

Just been looking at last Feb results. Revenue of $600 mil plus for six months. Looking forward to full year results, maybe $1.2billion which would be about $278mil. gain from last years $922mil. revenue. Couple of 100 million extra in the bank would look good. Anyone know how much a2 have in the bank now? It wouldn't be getting much interest at 1%

I think its very safe to assume that revenue of at least $1.3b is given, question is how much more on top of that will they deliver and more importantly what's the NPAT would look like.

Other key drivers would be US growth traction, china market share growth and any other strategic initiatives they may have in plan with their ever growing cash chest of at least or close to $500mln sitting in bank and earning bugger all interest.

[carrom74]

I think its very safe to assume that revenue of at least $1.3b is given, question is how much more on top of that will they deliver and more importantly what's the NPAT would look like.

Other key drivers would be US growth traction, china market share growth and any other strategic initiatives they may have in plan with their ever growing cash chest of at least or close to $500mln sitting in bank and earning bugger all interest.

$500M in bank...they can atleast part some to us Shareholders...I would love that!

[freddagg]

$500M in bank...they can atleast part some to us Shareholders...I would love that!

If they paid the whole $500 million out it would be 68 cents a share, I would rather they kept growing the company as fast as money will allow.

[Leftfield]

If they paid the whole $500 million out it would be 68 cents a share, I would rather they kept growing the company as fast as money will allow.

Totally agree, Over the last 5 years ATM has been growing my capital invested at an average of 130% pa (according to Share site). I doubt if they could have achieved this growth if they had been paying a dividend.

In addition, I prefer tax free capital gains to taxable dividends.

[couta1]

The Panic crew are back they obviously dont believe the Trumpet who blames the FED for the market volatility, it has nothing to do with his trade war mouth. Lol

[Balance]

Chartists reading A$14.60 as support level as I am?

[couta1]

Chartists reading A$14.60 as support level as I am? Charts cant predict Panic levels so who really knows.

[Bjauck]

Totally agree, Over the last 5 years ATM has been growing my capital invested at an average of 130% pa (according to Share site). I doubt if they could have achieved this growth if they had been paying a dividend.

In addition, I prefer tax free capital gains to taxable dividends. Yes. The tax burden is on those companies that actually earn income. So does the tax system ensure that taxpayers over-invest with shares with mostly capital price appreciation. When a market correction occurs the capital value of NZ shares thus takes a real hammering. The hardest hit being the unsophisticated and individual shareholders. This then scares many kiwis back to investing in land.
Then more companies relocate to Australia....

Disc. Still have a holding in ATM.

[Baa_Baa]

Chartists reading A$14.60 as support level as I am?

Yep, around there. A$14.57 closes the gap as well. I'd be surprised if it gets that low with results due in a few days, but with the Bond market wobbles I s'pose SP could do anything. Traders must be loving this, for moi it's an accumulation opportunity, down from A$17.30 ... who'd a thought it?

[Baa_Baa]

Charts cant predict Panic levels so who really knows.

Charts can't predict anything, that's not what we use charts for, no one has a crystal ball and a chart certainly isn't one. I'm sure you're tongue in check, but the chart helps to plan share sales and purchases giving an insight into timing on either SP rises or falls. They help with gauging market sentiment as well.

[Ggcc]

Oh I wish I had spare cash to be buying more at these prices

[couta1]

Oh I wish I had spare cash to be buying more at these prices Just sell for a loss and buy back more shares cheaper. PS-Not a risk free strategy mind you.

[dompf]

I bought in again ; can’t take the foundation away, no debt good outlook great company long term.

World markets are in in such a tantrum I believe good foundations are always key.

GL to all enjoy the highs and lows

[Ggcc]

Just sell for a loss and buy back more shares cheaper. PS-Not a risk free strategy mind you.
I am not selling at a loss though. I have thought about selling other shares to buy more ATM, but all the other shares have dropped as well. All except HGH

[couta1]

I am not selling at a loss though. I have thought about selling other shares to buy more ATM, but all the other shares have dropped as well. All except HGH Fair enough your modus operandi will be completely different from mine, I'm off to pour an early glass of Amarula and A2 milk(Looking at my A2 and BAL holdings today I reckon I need it)

[carrom74]

Query-Did Jane sell her shares this year? If she hasn't even when the share price crossed $18 is positive...and if has then for how much?

Also is there a blackout period for her on selling her shares(prior or later to the results announcement)?

Thanks in advance...

[couta1]

Query-Did Jane sell her shares this year? If she hasn't even when the share price crossed $18 is positive...and if has then for how much?

Also is there a blackout period for her on selling her shares(prior or later to the results announcement)?

Thanks in advance... She will sell around mid Sept.

[see weed]

She will sell around mid Sept.
Is Jane still paying off that tax bill? Have been talking to my accountant, and am getting back a nice big refund this year:t_up:. Don't worry about a2, the results are out soon, probably days away, and all will be good again:).

[see weed]

It comes down to frequency of trading and the intention at the point of purchase. Best practice is to have two accounts one trading and one investment and good clean record of trades. That is what I have now. One I probably sell once a year if at all and the other account where I having a ball with.
Hi longy, have pm you this morning about tax but not sure if it went through. If not, then will talk to you at next st meeting. sw.

[Leftfield]

Today Radio NZ's financial reporter mentioned Wed will see the release of FY 19 trading results for, "the market's Darling, A2 Milk."

Market Darling? Crikey I remember when it was deemed 'too risky', 'too frothy', and most institutions didn't follow it.

How times have changed. Good luck holders!

[Balance]

Today Radio NZ's financial reporter mentioned Wed will see the release of FY 19 trading results for, "the market's Darling, A2 Milk."

Market Darling? Crikey I remember when it was deemed 'too risky', 'too frothy', and most institutions didn't follow it.

How times have changed. Good luck holders!

And that will always be the way - institutions invest your money with the index in mind rather than taking risks to maximise returns. There is no upside to institutions shooting the stars out and then, burn out later - better to hug the index.

[silu]

Today Radio NZ's financial reporter mentioned Wed will see the release of FY 19 trading results for, "the market's Darling, A2 Milk."

Market Darling? Crikey I remember when it was deemed 'too risky', 'too frothy', and most institutions didn't follow it.

How times have changed. Good luck holders!

It's been a hell of a ride for sure. The mind boggles that they will have nearly half a billion in EBITDA from those humble beginnings. Bring on Wednesday!

[see weed]

It's been a hell of a ride for sure. The mind boggles that they will have nearly half a billion in EBITDA from those humble beginnings. Bring on Wednesday!
Yes, I am getting that funny little gut feeling again and am buying back in this morning before Ausi opens, just for a change. Wouldn't be surprised to see sp back over $16 pretty fast. That's my little punt for the day;).

[couta1]

Yes, I am getting that funny little gut feeling again and am buying back in this morning before Ausi opens, just for a change. Wouldn't be surprised to see sp back over $16 pretty fast. That's my little punt for the day;). Opposite for me sell a few in the morning and buy back in arvo, expecting plenty of volatility over the next few months.

[silu]

Yes, I am getting that funny little gut feeling again and am buying back in this morning before Ausi opens, just for a change. Wouldn't be surprised to see sp back over $16 pretty fast. That's my little punt for the day;).

$16 Aussie you mean right ;)

[see weed]

$16 Aussie you mean right ;)
Kiwi $, but the way it's going take your pick, I am back in fully at 100%:).

[see weed]

Yee Ha, Go you little beauty.:t_up:

[NZSilver]

I purchased more on Friday, sub 16 is very good value on my calculations.

[Ggcc]

Yee Ha, Go you little beauty.:t_up:

Lovely to watch isn't it. As Couta said volatility will be there big time and for some until results are announced, it maybe best to stay out of the fire.
I am excited to see their results but think turnover will be slightly under 1.3 billion. The news I am looking forward to are if they decide to implement a dividend or if they decide to buy more of Synait if it is worthwhile in the long run, following the debacle that is happening over there. Hopefully USA is expanding faster than bargained for and maybe they may have clearance to sell A2 IF. Good times good times and all shall be revealed on Wednesday

[silu]

Lovely to watch isn't it. As Couta said volatility will be there big time and for some until results are announced, it maybe best to stay out of the fire.
I am excited to see their results but think turnover will be slightly under 1.3 billion. The news I am looking forward to are if they decide to implement a dividend or if they decide to buy more of Synait if it is worthwhile in the long run, following the debacle that is happening over there. Hopefully USA is expanding faster than bargained for and maybe they may have clearance to sell A2 IF. Good times good times and all shall be revealed on Wednesday

I'm pretty sure Wednesday is when we find out. Personally I think China IF still strong and increased market share. Australia probably flat and NZ sales up. But most importantly I believe good growth% coming out of North America.
I can't see them paying a dividend for the foreseeable future. They are a marketing company so I assume that's where lots of the spare cash is going to.

[steveb]

Lovely to watch isn't it. As Couta said volatility will be there big time and for some until results are announced, it maybe best to stay out of the fire.
I am excited to see their results but think turnover will be slightly under 1.3 billion. The news I am looking forward to are if they decide to implement a dividend or if they decide to buy more of Synait if it is worthwhile in the long run, following the debacle that is happening over there. Hopefully USA is expanding faster than bargained for and maybe they may have clearance to sell A2 IF. Good times good times and all shall be revealed on Wednesday
If china are banning dairy imports from the USA,it could mean a milk lake could be on the cards for the US,would it not be better to concentrate on picking up any slack in china,and keep an eye on the prices in the US?

And yes for once I might have got back in at the right price,bought some on Thursday.

[see weed]

Opposite for me sell a few in the morning and buy back in arvo, expecting plenty of volatility over the next few months.
You are right, it's been that way for a couple of weeks now, but so close to reporting, time for a little lift, as a2 has done in the past a few days out. Over $100 million a2 shares traded so far in Aus today. Something feels different this time. What do you reckon, $17 by tomorrow afternoon:).ps, the last 3 days the highs are getting higher and the lows are getting higher, might be the start of next run up.

[couta1]

You are right, it's been that way for a couple of weeks now, but so close to reporting, time for a little lift, as a2 has done in the past a few days out. Over $100 million a2 shares traded so far in Aus today. Something feels different this time. What do you reckon, $17 by tomorrow afternoon:).ps, the last 3 days the highs are getting higher and the lows are getting higher, might be the start of next run up. Yes it went the opposite way today so I have a few thou more to buy to get back to square on numbers but avg buy price has now dropped by 10c. Will be interesting tomorrow to see if it keeps going up or pulls back in the arvo as it has in the past the day before reporting, I'd better get my tossing coins out.

[see weed]

Yes it went the opposite way today so I have a few thou more to buy to get back to square on numbers but avg buy price has now dropped by 10c. Will be interesting tomorrow to see if it keeps going up or pulls back in the arvo as it has in the past the day before reporting, I'd better get my tossing coins out.
You just got to bite the bullet, and jump in tomorrow morning before it hits $17. You could also buy half in the morning and half in the afternoon, if you are not confident of sp going up in afternoon. I find with a2 in an uptrend, it's good to just jump in, because if you don't, somebody else will. Same in a downtrend when that comes.ps I buy in both trends. But when they are only half way up, they are neither up naw down;)

[longy]

You just got to bite the bullet, and jump in tomorrow morning before it hits $17. You could also buy half in the morning and half in the afternoon, if you are not confident of sp going up in afternoon. I find with a2 in an uptrend, it's good to just jump in, because if you don't, somebody else will. Same in a downtrend when that comes.ps I buy in both trends. But when they are only half way up, they are neither up naw down;)

The chart is starting to look real good to me. I wish I have a bunch of spare cash.

[Southern_Belle]

Big Wednesday ....market braces for hefty lift in A2 profit .......bring it on ..... https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12259939

[dobby41]

Big Wednesday ....market braces for hefty lift in A2 profit .......bring it on ..... https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12259939

Wouldn't that already be priced in?

[silu]

Wouldn't that already be priced in?

You'd think so but I believe the NZX doesn't know how to price ATM properly hence why all SP movement is directed from the ASX nowadays. And the article kind of gives it away - it's a polarising stock. Despite all the success they had some people still think this is just another snake oil and science doesn't back up their claims. I for one don't care about the science. It's what people click on or put in their trolleys is what counts. Facts take a back seat which in general is a scary prospect but in this case I'm happy to ride it.

[JimmyTrade]

You'd think so but I believe the NZX doesn't know how to price ATM properly hence why all SP movement is directed from the ASX nowadays. And the article kind of gives it away - it's a polarising stock. Despite all the success they had some people still think this is just another snake oil and science doesn't back up their claims. I for one don't care about the science. It's what people click on or put in their trolleys is what counts. Facts take a back seat which in general is a scary prospect but in this case I'm happy to ride it.

I would say what studies are published are very strongly promoting that A2 beta-casein consumption over the A1 variant.

You may not be interested in the science but in this instance there is significant scientific backing. These studies are having significant coverage in media. It is true countries like China do like to procure "health foods" such as manuka honey which has been shown to have not many benefits other than being antibacterial but will pay a premium for the product, in this instance this is not the case (at least hasn't been proven otherwise to date).

I myself drink the A2 fonterra milk sold for the local market over the A1 and A1-A2 variants. After all got to support that SP!!

[dobby41]

You'd think so but I believe the NZX doesn't know how to price ATM properly hence why all SP movement is directed from the ASX nowadays.

NZX doesn't have to know how to price it for the expected lift in profit to already be priced in.
NZX only works on its own until the ASX opens then it just follows.

[couta1]

NZX doesn't have to know how to price it for the expected lift in profit to already be priced in.
NZX only works on its own until the ASX opens then it just follows. Well let's see what's priced in already tomorrow, kiwis might get a bit exuberant in the morning or not. PS-Just went out and bought a couple of bottles of Canterbury Cream for a $26 special after running out of Amarula so about to get the A2 out ready to mix.

[winner69]

Exactly as expected ..no surprises

Brilliant, and F20 will be just as brilliant

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/339477/305761.pdf

[couta1]

Exactly as expected ..no surprises

Brilliant, and F20 will be just as brilliant

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/339477/305761.pdf That report is one dam fine read.

[winner69]

That report is one dam fine read.

Good they going to keep on spending to grow eh

Talk of divie is premature ..even though they mention capital management

[Blue Skies]

Below market expectations. Market doesn't usually like those kind of surprises.

[Ggcc]

Great solid result, pretty much what analysts expected, so we might see a drop today.......... Who knows. I for one am happy with this result and will continue to hold.

[bull....]

Great solid result, pretty much what analysts expected, so we might see a drop today.......... Who knows. I for one am happy with this result and will continue to hold.

price ran ahead of result so wouldnt surprise me if it fell too. but good result again

[waikare]

Good they going to keep on spending to grow eh

Talk of divie is premature ..even though they mention capital management


Missed out on a divie again, perhaps next result, they can't for ever keep building the slush fund.

[silu]

Hmmm not sure what to think yet. It is in line with expectations but I was hoping it would be beating them. For a short-term outlook the ones that sold at $18 probably have done well. It will be interesting to see what happens when ASX opens. I think it might go sideways if not down a bit.

[silu]

Missed out on a divie again, perhaps next result, they can't for ever keep building the slush fund.

You won't see a dividend for at least another 5 years. Management has been very upfront about this.

[winner69]

Below market expectations. Market doesn't usually like those kind of surprises.

I’d say in line with expectations ......

[silu]

Below market expectations. Market doesn't usually like those kind of surprises.


Expectations $1.3b / Actual $1.3b
EBITDA $425m vs $414m
NP $297m vs $288m

Not too bad and only a small $ below expectations.

[sb9]

Nice set of numbers...they're executing as per plans and continue to grow year after year.

Wow..closing cash balance of $464.8mln, that is some huge pile of cash they're sitting on.

[bull....]

Nice set of numbers...they're executing as per plans and continue to grow year after year.

Wow..closing cash balance of $464.8mln, that is some huge pile of cash they're sitting on.

they will be able to buy fonterra soon

[couta1]

It's all about the outlook and that is fantastic.

[sb9]

they will be able to buy fonterra soon

Good chuckle...yeah right!!! lol..

[whatsup]

they will be able to buy fonterra soon

and that would be the best thing that could happen to Fonterra IMHO .

[couta1]

price ran ahead of result so wouldnt surprise me if it fell too. but good result again But it didnt run to $18 so still down on recent high by quite a bit however excellent result versus overcooked expectations means you could be right.

[pg0220]

and that would be the best thing that could happen to Fonterra IMHO .
LOL yeah, would farmers be better off in such a case?

[winner69]

Craig’s guy not entirely impressed

@MarkListerNZ
a2 Milk result looks a bit soft at first glance, relative to market expectations at least. EBITDA and net profit a bit below market forecasts, and a big step up in marketing spend will crimp margins over the next year or two. Expect a weaker share price today.

[sb9]

Good riddance UK, getting rid of dead sticks, better to focus on new growing and promising markets like US...

[Lease]

Good riddance UK, getting rid of dead sticks, better to focus on new growing and promising markets like US...

US market is not easy to break through. Think about NZ companies expanding to US: MHJ, Pumpkin, THL, etc.

[bull....]

Craig’s guy not entirely impressed

@MarkListerNZ
a2 Milk result looks a bit soft at first glance, relative to market expectations at least. EBITDA and net profit a bit below market forecasts, and a big step up in marketing spend will crimp margins over the next year or two. Expect a weaker share price today.

was up nearly 1 dollar before result so give it all back ya reckon

[sb9]

US market is not easy to break through. Think about NZ companies expanding to US: MHJ, Pumpkin, THL, etc.

Hmm..beg to differ in case of A2 though, different industry and different market dynamics.

[Muppett]

Hammer time 6 minutes away

[bull....]

Hammer time 6 minutes away

thats my line lol

[Muppett]

Lets predict..............$14.......an aimless guess

[silu]

$14.50-$15.00 today I reckon

[Muppett]

$14.50-$15.00 today I reckon
That would be good :-)

[bull....]

savage .............

[see weed]

$14.50-$15.00 today I reckon
And then where once hammering finished.

[silu]

And then where once hammering finished.

At the end of the day as they like to say.

[Ggcc]

A little overreacting I think

[Muppett]

Some guy on here is a genius. He predicted $14.60 a week ago.

[bull....]

few people taken to the wood chippers today

[Southern_Belle]

A little overreacting I thinkNZX a case of Buy in the morning Sell in the afternoon ....over reaction for sure

[Beagle]

Yes that's quite a reaction to a slight miss in average analyst expectations. The miss in net profit looks attributable to increased spend on marketing and staff.

[sb9]

NZX a case of Buy in the morning Sell in the afternoon ....over reaction for sure

Yeah, NZX trying to lead the way before ASX opens....good luck with that.

[bull....]

the asx usually is more brutal to stocks that miss targets

[steveb]

shorters will have a fielday

[see weed]

My condolences to holders selling out of such a good company at a lower price.

[bull....]

Yes that's quite a reaction to a slight miss in average analyst expectations. The miss in net profit looks attributable to increased spend on marketing and staff.

they increasing spend on marketing even more will reduce profit growth some going forward.

[couta1]

My condolences to holders selling out of such a good company at a lower price. No condolences from me I hope they lose heaps. Lol

[silu]

My condolences to holders selling out of such a good company at a lower price.

I'm in this long-term since 50c. Today it's going to hurt a bit and the dent in my overall portfolio is going to be significant but 5 years from now current price will look like an absolute bargain.

[trader_jackson]

Great growth, but Mr Market expecting more?
ATM even after falling 14% is probably still a bit overvalued,fair(er) value I reckon more around $12 mark .

[Muppett]

Hopefully it falls to $10-$12 ...... someone can surely justify this? I can't.

[bull....]

hrdlicker just on cnbc says investing in heaps more people for us market etc and heaps more on marketing to grow the brand. glad to see she more on growing the business than the share price

[RGR367]

This is the time when you really want this stock to be buying I guess. Last bought some at 1590 so I will need to average down a bit again. Just think of XRO then, no correlation for sure, when the price was really low when it was announced it will be moving to ASX. That's was gut feel on believing the dream for XRO. And this is when ML really helps. Still, GL to all holders and let's include the sellers as well :)

[Jay]

was the price that much ahead of itself - appears so
be interesting what happens in Aus

[couta1]

This is a classic example of why I seldom trust the market because it doesnt know how to price this stock, it's all over the place, trust yourself is the way to go when your dealing with the future this company has. PS-I am down a very large sum right now but still smiling and shaking my head at the overreaction.

[bull....]

the asx players will savage this i reckon down 20%? today

[Bjauck]

The market will react like a jilted lover.

[sb9]

the asx players will savage this i reckon down 20%? today

Waiting for that to happen once ASX opens, so I can add more for long term.

[Ggcc]

I had no choice I bought more.

[sb9]

I had no choice I bought more.

Its always a good idea (buy/sell) with stocks like A2 to wait and see till ASX opens..

[NZSilver]

Very good value at these prices, simple as that.

[Ggcc]

Its always a good idea (buy/sell) with stocks like A2 to wait and see till ASX opens..
Normally I would agree. I am taking a punt and hope it pays off

[couta1]

the asx players will savage this i reckon down 20%? today Spoken like a true Shorter.

[dreamcatcher]

Hits target and slaughtered :confused:

NEW GS TPs A$17.40/NZ$18.30 on CL BUY................

[zgnz]

A2 is a high growth stock so it's always going to be volatile, as the instos adjust their forward looking projections.

Like the momentum building the US (although costly.)

[Chanchay]

Normally I would agree. I am taking a punt and hope it pays off

I've done the same thing. A bit of a risk but surely the result doesn't justify more than a 15% reduction.

[couta1]

I've done the same thing. A bit of a risk but surely the result doesn't justify more than a 15% reduction. I see no risk just upside regardless of what the Aussies do.

[Leftfield]

Mmm just catching up with the results and market reaction. Not a happy day for my portfolio.

NZX SP price slaughter looks like an over-reaction to me (but time will tell.)

My biggest negative is the increased advertising/marketing spend, I just hope it is well targeted and well thought out.....in David Ogilvly's words, "I know half my advertising spend is wasted, trouble is I don't know which half."

[NZSilver]

Mmm just catching up with the results and market reaction. Not a happy day for my portfolio.

NZX SP price slaughter looks like an over-reaction to me (but time will tell.)

My biggest negative is the increased advertising/marketing spend, I just hope it is well targeted and well thought out.....in David Ogilvly's words, "I know half my advertising spend is wasted, trouble is I don't know which half."

Completely agree, time will tell on that one. However when you know Gross Margins pretty much stay consistent and their revenue just grew by 41% of an already large base, strip out those costs as assuming they will decrease in the future and this beast is really spitting out some cash and is highly profitable.

[longy]

Mmm just catching up with the results and market reaction. Not a happy day for my portfolio.

NZX SP price slaughter looks like an over-reaction to me (but time will tell.)

My biggest negative is the increased advertising/marketing spend, I just hope it is well targeted and well thought out.....in David Ogilvly's words, "I know half my advertising spend is wasted, trouble is I don't know which half."

I don't see much negativity with the report. I have no issues with the management spending money on business related stuff as it is a growth company still. The market is over reacted and A2 has been in this situation a couple of times before.

[dr_]

Craig off-loaded few volumes at open to shake up and the retails followed with that....compete over-reaction ....

[Ggcc]

I've done the same thing. A bit of a risk but surely the result doesn't justify more than a 15% reduction.
I got it for $14.36 so I feel happy for now

[NZSilver]

I got it for $14.36 so I feel happy for now
Yeah I doubled my holding at 14.35

[Chanchay]

The 9 million dollars in options going to one employee is a bit of a shock

[couta1]

The increased spend on marketing above expectation is the only reason that all projected metrics were not beaten, it's really that simple.

[silu]

Current pre-market matching on ASX at A$14.90. Maybe this time it was the NZX's turn of overreacting?
Still a great company btw. Happy to hold.

[Balance]

https://www.fool.com.au/2019/08/21/a2-milk-company-delivers-more-impressive-growth-in-fy-2019/

Excerpt : "According to a note out of Morgans, it was expecting the company to deliver EBITDA of NZ$431.3 million in FY 2019. Morgans was one of the most bullish brokers covering the company, with the market consensus estimate a little lower at NZ$420.6 million. As you can see above, a2 Milk Company has fallen a touch short of expectations."

[Balance]

Current pre-market matching on ASX at A$14.90. Maybe this time it was the NZX's turn of overreacting?
Still a great company btw. Happy to hold.

Too early to tell - likely to see sp react as the big volume done this morning on NZX cross over to ASX.

[silu]

Too early to tell - likely to see sp react as the big volume done this morning on NZX cross over to ASX.

I know. I expect 15-20% fall on open with recovery later on in the day.

[Balance]

https://www.shortman.com.au/stock?q=a2m

Shorts had been building up ahead of results so there will be short coverings today by recent shorts to lock in profits.

Have taken the opportunity with the current sp lift from the lows now to sell a few to lighten up on my over-weight position.

[longy]

The increased spend on marketing above expectation is the only reason that all projected metrics were not beaten, it's really that simple.

So the increased in spending on marketing has worked as those were predominately were in US and China.

[silu]

Yeah I doubled my holding at 14.35

By the looks of it well done. Got a good price.

[Ted2]

I just struggle to understand why so much credence is put on brokers and analysts opinions before a result. These people usually have no idea of what is going on anyway, so why should any company have to 'meet analysts predictions' or get scorched?? As noted above, great result, ton of cash, and only marketing spend increase stopped the company hitting the 'targets'. Hopefully the Aussies are smarter.............

[Balance]

I just struggle to understand why so much credence is put on brokers and analysts opinions before a result. These people usually have no idea of what is going on anyway, so why should any company have to 'meet analysts predictions' or get scorched?? As noted above, great result, ton of cash, and only marketing spend increase stopped the company hitting the 'targets'. Hopefully the Aussies are smarter.............

Works both ways - the market got hot and excited when the brokers and analysts were upgrading & recommending the stock and putting up higher valuations.

[couta1]

It's all about Fear and Greed, make a nice cup of tea and sit back and watch the games being played and have a laugh to yourself.

[longy]

It's all about Fear and Greed, make a nice cup of tea and sit back and watch the games being played and have a laugh to yourself.

I feel like another cup of tea and re watch the Bledisloe Cup 2 again. :)

[Balance]

Some feedback from a broker :

1. $44m loss from US of concern. Much higher than their expectations.

2. Second half margin at 28.2% lower than expected.

Exit from UK and huge increase in spending in US (est $90m) - both countries have not been happy hunting grounds for NZ companies.

[bull....]

the asx players will savage this i reckon down 20%? today

could be lol

[Balance]

could be lol

Not today.

There will be short coverings as shorters breath a sigh of relief and thank their lucky stars.

[Toulouse - Luzern]

Marketing
Other Costs
Salaries
high % increases here

[Beagle]

Marketing
Other Costs
Salaries
high % increases here

Yeap, fair to say the new CEO and the former one have VERY different approaches. Ms Herdlicka seems focused a fair bit on adding considerable robustness to the management skill set at quite considerable cost.

[sb9]

the asx players will savage this i reckon down 20%? today

Got a parcel at $14.20...will see how it plays out.

[bull....]

Got a parcel at $14.20...will see how it plays out.

14 has acted as support numerous times , i see today the rally which started at beginning 2019 may have broken the trendline up today if it holds down around current levels . time will tell

[winner69]

China ebitda margin a miserable 23% in H2 .....was 40% in H1

Hope it doesn’t stay this low

[sb9]

14 has acted as support numerous times , i see today the rally which started at beginning 2019 may have broken the trendline up today if it holds down around current levels . time will tell

Agree, bounced off lows for now but will be keeping a close eye over next few days...but good thing is my overall av price is under $3.

[bull....]

Agree, bounced off lows for now but will be keeping a close eye over next few days...but good thing is my overall av price is under $3.

nice average price , a wise person once said when presented with such wealth it doesnt hurt to take a little off the table esp when the bull is so old.

[sb9]

nice average price , a wise person once said when presented with such wealth it doesnt hurt to take a little off the table esp when the bull is so old.

Of course, did take some profits around $14 mark in Feb'18 when they announced Fonterra tie up along with HY results and market just went berserk. And my reason for buying back is seeing that price (nearly) presented itself again.

And yes, they missed the expectation a bit for this FY due to higher marketing spend and its easily fixable.

[Tomtom]

It's disappointing from the consensus perspective but nothing that an uplift in management quality couldn't rapidly fix. I have no unique perspective on that variable unfortunately, A2 just isn't in my wheelhouse, so I'll leave further commentary to others.

[Leftfield]

Got a parcel at $14.20...will see how it plays out.

Just a question of time IMHO. Way oversold today. Some big gaps in the TA above your purchase price waiting to be filled.

Been hard work sitting on my hands today, but I'm not a trader and am in for the long term. I still see this one outperforming most on the NZX. Safer than money in the bank IMHO!!

(ps even with today's decline, Share Site tells me ATM has averaged 110% pa over the last 5 yrs.)

GL to those buying today.

[sb9]

Just a question of time IMHO. Way oversold today. Some big gaps in the TA above your purchase price waiting to be filled.

Been hard work sitting on my hands today, but I'm not a trader and am in for the long term. I still see this one outperforming most on the NZX. Safer than money in the bank IMHO!!

(ps even with today's decline, Share Site tells me ATM has averaged 110% pa over the last 5 yrs.)

GL to those buying today.

Thanks for your thoughts lf.
Its way oversold at current levels, will be interesting what next few days will bring and it all depends on what Jayne explains in her follow on interviews with various media.

[carrom74]

Thanks for your thoughts lf.
Its way oversold at current levels, will be interesting what next few days will bring and it all depends on what Jayne explains in her follow on interviews with various media.

She has already started doing the rounds...not very surprised with the fall...
Its managing director Jayne Hrdlicka said investors had little reason to be disappointed with the result.
"I don't think you can argue with the quality of the result, either with what we delivered in fiscal year 19 or the investments we're making... we don't focus day to day what happens on sharemarkets," she said.

https://www.rnz.co.nz/news/business/397165/nzx-takes-a-hit-following-a2-milk-result

[couta1]

And she is right the company is just getting on with growing an awesome business, they cant divert attention to medicating a Schizophrenic market.

[zgnz]

Bloomberg interview with Jayne (https://www.bloomberg.com/news/videos/2019-08-20/new-zealand-s-a2-milk-building-brand-in-u-s-china-ceo-video)

[RupertBear]

I had no choice I bought more.

Same here Ggcc! :D

[see weed]

Congrats to all the low 14ers. You are already up a good 60c. So where to from here, after all the wobblies have wobbled? Looking good to me with a new up trend forming from 1.10 this arvo.

[Beagle]

I'm more than a little partial to a cup of milk with my supper and recently switched to A2 milk and the marketing hype is true as far as I am concerned. Feel the difference !

[couta1]

I'm more than a little partial to a cup of milk with my supper and recently switched to A2 milk and the marketing hype is true as far as I am concerned. Feel the difference ! Its all A2 in our household ,it just simply tastes better speaking of which it must be Canterbury Cream with A2 time of the day again. PS-With the volumes currently going through it wont be long before supply starts dwindling.

[Beagle]

Its all A2 in our household ,it just simply tastes better speaking of which it must be Canterbury Cream with A2 time of the day again. PS-With the volumes currently going through it wont be long before supply starts dwindling.

The preferred drink of discerning gentlemen especially after a day on the ski slopes :)

[couta1]

The preferred drink of discerning gentlemen especially after a day on the ski slopes :) Yes I think the upcoming ski trip will involve more slope time along with end of day drinks rather than day base market time the way things are looking, probably a good thing.

[Beagle]

Yes I think the upcoming ski trip will involve more slope time along with end of day drinks rather than day base market time the way things are looking, probably a good thing.

Still got to get you to trade shares in the cafeteria at Coronet ski field, on the chairlift going up, (nothing new so far) but also while skiing downhill on the M1 lol...I have to see this trade while skiing happen and am offering my guide dog services for free to ensure it does :D

[RupertBear]

Yes I think the upcoming ski trip will involve more slope time along with end of day drinks rather than day base market time the way things are looking, probably a good thing.

Spent the day skiing at the Snow Farm in Wanaka today. Bucket loads of fresh untracked dry powder! It was truely horrible :cool: Spent a late lunch in the cafe on my ipad buying more ATM shares :eek2: The snow should be great for your ski trip :D

[Balance]

Tomorrow will be when the official downgrades are released by the analysts and brokers - recommendations based upon revised lower forecasts & valuations will drive the sp over the short term.

A quick calculation shows the impact of lower EBITDA margin (-3.4%) of $56m on F20 forecast revenues of $1.66 billion. That will translate to an adverse NPAT impact of around 11% in F20.

Can see why the market shaved 12% off the sp today.

Then there's the increased marketing spend flagged for F20 (from 10.4% of sales to 12% of sales) = $26m increased cost. The unknown is whether this is to maintain or accelerate current sales trajectory.

Anyway, we will see tomorrow - can imagine the analysts furiously reworking their numbers (after being very positive) to less lofty numbers after discussions with the company.

https://www.moneymorning.com.au/20190821/why-the-a2-milk-share-price-went-down-today-lofty-expectations-asxu.html

"A2 Milk expects FY20 EBITDA as a percentage of sales to largely align with their 2H19 EBIDTA margin of 28.2%. And The Australian Financial Review reports that the EBITDA margin outlook consensus was 31.6%. Consequently, with downgrades potentially in the offing, the A2 Milk outlook section of the results presentation played a big part in today’s fall."

[couta1]

Balance you talk as if the market is rational and knows what it's doing, I'll let you in on a little secret, most of the time it doesnt. PS-Watch the big game players like UBS/Goldman lower their targets to mop up as many cheap shares as they can and extract mega fees from the shorters at the same time. Lol

[Balance]

Balance you talk as if the market is rational and knows what it's doing, I'll let you in on a little secret, most of the time it doesnt. PS-Watch the big game players like UBS/Goldman lower their targets to mop up as many cheap shares as they can and extract mega fees from the shorters at the same time. Lol

The market reacts short term to what the brokers and analysts say - recall how we were all rejoicing at the sp going ever higher a month ago as one broker after another issued upgraded valuations?

We are going to see the opposite from the brokers tomorrow so bracing oneself for the ride is simply prudent - irrespective of whether the market is rational or irrational.

[Baa_Baa]

Brokers/analysts upgrade ramp it selling into the rise. Same downgrade buying into the weakness. Rinse and repeat.

If you know their game and are prepared to either trade it just like they do, or ignore it completely, you’ll be winning. Fight it and feel the pain.

Very little changed today for ATM, still an outstanding company on a incredible growth trajectory.

[Balance]

Brokers/analysts upgrade ramp it selling into the rise. Same downgrade buying into the weakness. Rinse and repeat.

If you know their game and are prepared to either trade it just like they do, or ignore it completely, you’ll be winning. Fight it and feel the pain.

Very little changed today for ATM, still an outstanding company on a incredible growth trajectory.

No disagreement with you there.

[Beagle]

"A2 Milk expects FY20 EBITDA as a percentage of sales to largely align with their 2H19 EBIDTA margin of 28.2%. And The Australian Financial Review reports that the EBITDA margin outlook consensus was 31.6%. Consequently, with downgrades potentially in the offing, the A2 Milk outlook section of the results presentation played a big part in today’s fall."[/I]
Was quite busy doing real work today so here is my belated detailed analysis and thoughts.

For my money Balance has a good point. Herdlicka is spending money on staff and marketing with little or no restraint and it will obviously materially affect the EBITDA margin. Only time will tell if this is a better way to grow the company than Geoffrey Babbage's more conservative approach. The considerable inventory build suggests they could have sold more if the demand was there but it wasn't. In fact demand was short of production capability by quite a bit and that's a first to the best of my recollection. Maybe that's why marketing is being seriously ramped up ?

The other thing to keep in mind is sales and profit growth, (despite all the extra staff and marketing spend in FY19) has slowed quite considerably compared to last year. Net profit after tax grew 116% last year so ~ 47% growth for FY19 is clearly not nearly as impressive.
Likewise sales growth last year was 68%, just 41% for FY19 and that with heaps more marketing and headcount.

When we look at the 1H FY 19 v 2H FY19 split we see 1H sales of $613m generating $152.7m net profit and 2H sales of $691m generating just $135m net profit and its the margins in 2H shareholders get to "enjoy" going forward.
Its looks to me like Herdlicka is throwing a heck of a lot of money at the operation and growth is slowing quite materially whereas Geoffrey Babbage's approach was far more successful. Don't suppose he can be coaxed out of retirement ? Could be a rough few days ahead as analysts seriously revise their numbers.

Cash on hand amounts to 63.2 cps.

https://www.marketscreener.com/A2-MILK-COMPANY-LTD-11384022/financials/
Prior to this announcement average analyst view is for sales of $1,660m next year and 32% EBITDA margin.
Retuning this to the 28.2% EBITDA margin the company is now forecasting and everything else in the above average broker forecast for FY20 staying constant this gives revised NPAT of $326m for FY20, only 13% net profit growth next year on 27% sales growth and all this on vastly higher marketing and human resources costs.

$326m gives 44.4 cps earnings and at a closing price of $14.81 that puts ATM on a forward PE of 33.4. That looks a bit pricey to me for the expected growth rate, (has traded at lower rates in the past with much higher previous eps growth rates) and caution appears to be warranted.
Finally, no analysis is complete without a look at TA. Very clear break down through the 100 day MA today and the bounce this afternoon was fairly muted in comparison to the initial drop and did not recover above the 100 day MA.

Hmmmmm. Some real caution appears to be warranted here. All the numbers I am looking at tell me very clearly that profit growth is slowing down at quite a worrisome rate !

Disc Not holding and not intending to directly hold. Hold Kingfish and they hold heaps of ATM.

[JeremyALD]

Solid result, what other company with over 1b revenue is growing at 40% p.a. with 400m cash and no debt.

What ever did happen with the Fonterra partnership? Was such a huge announcement more than a year ago and now it's hardly ever talked about.

[Balance]

https://www.afr.com/companies/retail/a2-milk-boss-says-easy-daigou-sales-are-in-the-past-20190820-p52ix4

"The a2 Milk Company boss Jayne Hrdlicka says the easy revenue gains made in Australia and via daigou personal shoppers are a thing of the past and the milk and baby formula maker is building capacity for the long haul in China."

Game is changing and ATM is positioning itself with increased marketing and promotional spend in China (& Australia) to maintain growth momentum.

Let's hope the increased spend will result in significantly higher sales to offset the reduced margins.

[mondograss]

A good chunk of the extra inventory hold may well be related to the build up to 11\11 which has historically seen them struggle to keep shelves stocked. This will be what they're referring to when they talk about adding flexibility to their inventory, the ability to respond rapidly by putting a lot of product into big sales events.

[Leftfield]

Feeling a lot better after a good sleep! Another interesting day ahead.

Agree with Mondograss that inventory build likely to be related to 11/11.

Yesterday I expressed concern at ATM's Marketing spend going forward. The former CEO Geoff Babbage was adept at signalling increased advertising spending and then juggling that spend as the year progressed to ensure healthy end year financials. I hope the CEO Jayne learns from this.

My other concern was the foreign exchange impacts caused by Trump's trade wars. The high US$ makes ATM's planned US promotion more expensive, while devaluing the Chinese Yuan lowers ATM's sales returns.

Looking ahead, I see ATM's growth slowing to about 30%, however I'm not as pessimistic as Beagle with his FWD EPS of 44.4, rather I see FWD EPS at around 51c ( a 30% increase on current levels) which at a PE of 30 equates to a forward looking SP of around $15.33

That's all for me for a while. GLH.

[bull....]

Not today.

There will be short coverings as shorters breath a sigh of relief and thank their lucky stars.

time will tell. the shorts were piled on recently 18 mil odd shares so some people were clearly positioning for this pull back.

[Southern_Belle]

IMHO this feels similar to the early days of Xero. A polarising share that people either like or loathe. Each side will read the results & attach meaning to it as 'proof' of their position. Lots of volatility based on the mood of the day and analysis of every announcement and rumour.

Facts are if you bought in this time last year, you are still better off than having the money in the bank. My guess is, if you bought in today, this time next year you will still be on the winning side.

I bought Xero at around $5, rode the rollercoaster until $42 thinking only way is up. It plunged & felt sick at all the 'money I was losing' ..... fear got the better of me and sold out completely at $24 and took comfort as it kept sinking to $15 ...... now it is about $63 .... hindsight is a wonderful thing but it doesn't pay the bills ... or pay for the holidays.

Sit tight, ignore the volatility and learn the lessons that are best provided when you have skin in the game.

[Balance]

Morningstar has updated their research - valuation up 50c to $15.00 and for what it is worth, threy did have this one right when they valued ATM at $14.50 before!

[couta1]

I'll play the game with these Turkeys now the price has stabilised(Sort of) sell some for a loss and buy back more shares cheaper, see if the Kiwis are being the opposite to yesterday(A bit too enthusiastic)

[sb9]

IMHO this feels similar to the early days of Xero. A polarising share that people either like or loathe. Each side will read the results & attach meaning to it as 'proof' of their position. Lots of volatility based on the mood of the day and analysis of every announcement and rumour.

Facts are if you bought in this time last year, you are still better off than having the money in the bank. My guess is, if you bought in today, this time next year you will still be on the winning side.

I bought Xero at around $5, rode the rollercoaster until $42 thinking only way is up. It plunged & felt sick at all the 'money I was losing' ..... fear got the better of me and sold out completely at $24 and took comfort as it kept sinking to $15 ...... now it is about $63 .... hindsight is a wonderful thing but it doesn't pay the bills ... or pay for the holidays.

Sit tight, ignore the volatility and learn the lessons that are best provided when you have skin in the game.

Well thought out post.

Yes, the landscape is changing (in China), gone are days where easy money could be made through daigou channel as it was prevalent when Geoff was around. Now with changes in chinese online laws for personal shoppers, the company needs to look at long haul with more sustainable channels of sales penetration and that's what Jayne is doing.

As per article written in AFR, you can't expect continued growth in top line without investing bit like saying "can't have your cake and eat it too" ..

[Balance]

I'll play the game with these Turkeys now the price has stabilised(Sort of) sell some for a loss and buy back more shares cheaper, see if the Kiwis are being the opposite to yesterday(A bit too enthusiastic)

I am out of 2/3rd of my shareholding this morning - the game has changed for ATM (as articulated by Jayne herself) and the market will be cautious about how well the repositioning will deliver imo until the next update.

Nice to lock away some of that triple digit gains. :)

[Balance]

I'll play the game with these Turkeys now the price has stabilised(Sort of) sell some for a loss and buy back more shares cheaper, see if the Kiwis are being the opposite to yesterday(A bit too enthusiastic)

Be careful out there - I do think the game has changed and the intos may be adjusting their game accordingly? ;)

[dompf]

Be careful out there - I do think the game has changed and the intos may be adjusting their game accordingly? ;)

What a rollercoaster, I still dont believe the fundamentals of A2 has changed dramatically from a week ago to today; I'm just going to hold the handrail and hope I don't get swept off.

Will be interested to hear the strategy moving forward in Sep.

[mfd]

I am quite happy with the company's progress - the easy China gains could only last so long, time to plough the proceeds into building a more robust, diverse and sustainable business. Again with the Xero comparisons, they are better off churning their cash pile into building the company than sitting on it or throwing it back to shareholders for now.

Some are seeing the increased marketing spend as a downside, I am quite happy as the company's marketing had produced incredible results in the past and we are seeing this again with the huge growth in the US market.

Happy to hold and see how things go.

[tipsy]

I'll play the game with these Turkeys now the price has stabilised(Sort of) sell some for a loss and buy back more shares cheaper, see if the Kiwis are being the opposite to yesterday(A bit too enthusiastic)

Just did the same @ 15.24, thought I should lock in some profits, still holding onto a 1/3. Knowing my luck will shoot up in aus, but I'm feeling a little more relaxed now.

[couta1]

Just did the same @ 15.24, thought I should lock in some profits, still holding onto a 1/3. Knowing my luck will shoot up in aus, but I'm feeling a little more relaxed now. I guess Balance and yourself are a little different in that you are locking in profits whereas I'm locking in losses in order to get a lower avg and more shares when I buy them back. PS-Last large block avg equals $17.31(Ouch)

[Beagle]

I guess Balance and yourself are a little different in that you are locking in profits whereas I'm locking in losses in order to get a lower avg and more shares when I buy them back. PS-Last large block avg equals $17.31(Ouch)

I think it might be time to take a step back and reevaluate things mate. All the signs are there that growth is slowing quite considerably despite the really massive ramp up in marketing costs last year, up 83% and will be up massively in FY20 for even significantly lower profit growth. 12% of all sales going into marketing is a very serious marketing position to take. Surely the trend here is quite clear ! Massive growth in marketing to sustain much slower growth rates. Game changer !

[Balance]

Just did the same @ 15.24, thought I should lock in some profits, still holding onto a 1/3. Knowing my luck will shoot up in aus, but I'm feeling a little more relaxed now.

We are in the kind of market where sleeping well at night is an important consideration! So get comfortable!

[Balance]

I guess Balance and yourself are a little different in that you are locking in profits whereas I'm locking in losses in order to get a lower avg and more shares when I buy them back. PS-Last large block avg equals $17.31(Ouch)

Seems like the pattern is back - up on NZX and down when ASX opens!

[Lewylewylewy]

I continue to hold long, as the product is good and the valuation represents less than the size of the market opportunity.

I guess the question is around the cost of sales going forward.

[Baa_Baa]

I think it might be time to take a step back and reevaluate things mate. All the signs are there that growth is slowing quite considerably despite the really massive ramp up in marketing costs last year, up 83% and will be up massively in FY20 for even significantly lower profit growth. 12% of all sales going into marketing is a very serious marketing position to take. Surely the trend here is quite clear ! Massive growth in marketing to sustain much slower growth rates. Game changer !

https://www.livewiremarkets.com/wires/a2-milk-don-t-throw-the-baby-out-with-the-bath-water Another perspective

[Southern_Belle]

Selling out of Xero due to fear caused me more angst as I had a sum of money sitting idle in the bank.... Better the devil you know or in this case ... As a A2 holder I have made it my business to research, read and question aspects of the company, the people, the product and the market etc. If I had found a better place (for me) to invest, then my money would already be there.

The results announced yesterday is ONE piece of the puzzle with historical information and plans for the future. Multiple interpretations have come forward.

Certainties ....Jayne will sell her shares, Singles day sales results, Trump will tweet ... and uncertainties will surprise / spook the market.

[bull....]

didnt take out yesterdays high so might be bearish for the rest of day. probably all the people taken to the woodchippers yesterday still havnt sold yet as well still in disbelief

[Balance]

Went for a browse at the newly opened Chemist Warehouse in my neighbourhood.

Plenty of A2 IF on the shelf - wall to wall. No restriction on cans per customer.

Sign of the higher inventory carry or sign of the times?

[Snow Leopard]

Yesterday when the price went sub $14.50 I dived in the deep end, having dipped my toe in a few weeks ago. Between pressing the buy button and the order getting to the market the price dropped significantly and I bought at an average of $14.16.

I think I have a bargain.

All this sub 100MA and little profit growth ahead I dismiss. This company knows what it is doing and is thinking medium & long-term.

Glad they have dropped the UK. It has been obvious, to me at least, that they were wasting their time there.

Today I move into long term accommodation for the first time in years and so, at last, I have a bottom draw to keep stocks in.

[Raz]

Yesterday when the price went sub $14.50 I dived in the deep end, having dipped my toe in a few weeks ago. Between pressing the buy button and the order getting to the market the price dropped significantly and I bought at an average of $14.16.

I think I have a bargain.

All this sub 100MA and little profit growth ahead I dismiss. This company knows what it is doing and is thinking medium & long-term.

Glad they have dropped the UK. It has been obvious, to me at least, that they were wasting their time there.

Today I move into long term accommodation for the first time in years and so, at last, I have a bottom draw to keep stocks in.

If you buy in at at the right price, this is still worth a play...

[couta1]

Seems like the pattern is back - up on NZX and down when ASX opens! Worked well for me today now have an extra 500 shares at a new avg of $16.15. PS-This strategy is not for the faint hearted and can backfire. PPS-Beagle I'm standing firm like I have done with HLG and will follow the beat of my own drum.

[carrom74]

Worked well for me today now have an extra 500 shares at a new avg of $16.15. PS-This strategy is not for the faint hearted and can backfire. PPS-Beagle I'm standing firm like I have done with HLG and will follow the beat of my own drum.

Well done on your buy in...You have been right on HLG before and i hope you are right with ATM as well...

[Balance]

So are shorters covering or are they adding to their short positions?

If they are covering, Sp will come under pressure once they have completed the current round of covering.

If they are adding, then there will be a sharp rise in the so post their latest round of shorting.

Guess we will know in a week!

[bull....]

should get our bearish down move soon

[Beagle]

Clear break down through the 100 day MA adds further concern to the situation.
As a youngster paying my way through University, (no interest free student loans back then) I worked on my Uncle's farm each summer for a few years.
One thing he taught me and said its been that way since Adam was a boy is that low hanging fruit are a heck of a lot easier to pick than the others.
Even Jayne admits the low hanging fruit in terms of growth have now been picked...

Whatever happened to the much touted Fonterror link up ?

[couta1]

Beagle and Bull singing from the same songsheet, that there is as strong a buy signal as you'll ever get. Lol

[dompf]

I bought more. It wont last IMO (the hammering). Bought at 14.55 which I consider good value for a company I like.

[Beagle]

Beagle and Bull singing from the same songsheet, that there is as strong a buy signal as you'll ever get. Lol

LOL Doesn't happen often...I seem to remember the last couple of times it happened we both agreed that GNE was a great buy in the late $2's and MEL a great buy in the mid-late $3's, neither of which you agreed with. Hmmmm...do we see a pattern emerging or is it third time lucky for you :D

[couta1]

LOL Doesn't happen often...I seem to remember the last couple of times it happened we both agreed that GNE was a great buy in the late $2's and MEL a great buy in the mid-late $3's, neither of which you agreed with. Hmmmm...do we see a pattern emerging or is it third time lucky for you :D Well I've already been super lucky (Although I prefer the term savvy) with HLG (You know that XXXOS holding) so no need to buy any power companies certainly not in their current overpriced state, the only thing I regret is not having my original sized HLG holding but never mind. PS-Im more concerned with my BAL holding should their result not meet expectations than my A2 one, that could be catastrophic loss material.

[Balance]

So are shorters covering or are they adding to their short positions?

If they are covering, Sp will come under pressure once they have completed the current round of covering.

If they are adding, then there will be a sharp rise in the so post their latest round of shorting.

Guess we will know in a week!

Latest filing shows that shorters were rebuilding up their position prior to the results this week :

https://www.shortman.com.au/stock?q=a2m

6.5m more shares shorted since 1 August to 15 August.

[Baa_Baa]

Latest filing shows that shorters were rebuilding up their position prior to the results this week :

https://www.shortman.com.au/stock?q=a2m

6.5m more shares shorted since 1 August to 15 August.

Masterclass from the big broker/analysts these past few weeks. They wrote the music, played the instruments and conducted the orchestra. Bloody brilliant performance.

[couta1]

Masterclass from the big broker/analysts these past few weeks. They wrote the music, played the instruments and conducted the orchestra. Bloody brilliant performance. Brilliant yet gutter level brilliance and to think some on here have respect for these turkeys.

[Balance]

Brilliant yet gutter level brilliance and to think some on here have respect for these turkeys.

Better the devil you know than the one you don’t!

[Beagle]

Morningstar has updated their research - valuation up 50c to $15.00 and for what it is worth, threy did have this one right when they valued ATM at $14.50 before!

LOL I think this must be a first. Morningstar bang on the money !

[couta1]

LOL I think this must be a first. Morningstar bang on the money ! You need vision to see the true value of where this stock could go to, I mean how many would have believed XRO would be trading at $66NZ a few years ago? I for one wouldn't have but I can with A2 and $15 will be a long lost memory a few yrs from now, A2 is the future of milk IMO or should I say back to the future.

[freddagg]

You need vision to see the true value of where this stock could go to, I mean how many would have believed XRO would be trading at $66NZ a few years ago? I for one wouldn't have but I can with A2 and $15 will be a long lost memory a few yrs from now, A2 is the future of milk IMO or should I say back to the future.

Are you sure you wouldn't have Couta, I vaguely remember you buying Xero for $46 a few years ago, you must have expected it to get close to $66

[martinchnz1]

Do you not see risks around developments in "Animal Free Dairy".
Does A2 have any 'copyright' on A2 only milk, to stop such a company copying the same protein profile and producing the same product?
Obviously they have control of the A2 herd and supply in the mean time.

https://www.forbes.com/sites/lanabandoim/2018/11/16/perfect-day-partners-with-adm-to-make-milk-without-cows/

[couta1]

Are you sure you wouldn't have Couta, I vaguely remember you buying Xero for $46 a few years ago, you must have expected it to get close to $66 I bought it at various prices from $12 upward with highest price lot at $42.before it headed back down to $12.again, ended up doubling down to $22 before finally selling out at $25. I guess what I'm trying to say is I was being easily swayed by other people's opinions at the time without having a firm conviction and vision for the stock myself.

[Blue Skies]

You need vision to see the true value of where this stock could go to, I mean how many would have believed XRO would be trading at $66NZ a few years ago? I for one wouldn't have but I can with A2 and $15 will be a long lost memory a few yrs from now, A2 is the future of milk IMO or should I say back to the future.


Just purely from an investment point of view, my biggest worry about the future of A2 is does cows milk for human consumption have a big future ? The whole marketing concept is appealing to customers who perceive it is a less unhealthy option than regular milk, but it is still cows milk. Already plant based alternatives e.g. soy are being developed which are much healthier & far less damaging to the environment (e.g. takes 1000 L of water to produce 1 L of milk plus all the nitrogen run off etc). No other species drinks another species milk past weaning & cows milk has been associated with numerous chronic diseases in humans. Things are changing rapidly & I wonder in several years time if the market for A2 will have been replaced by an alternative & just seen as another overhyped miracle health product. Things that go up quickly have a tendency to fall just as fast, e.g. Comvita, Trilogy (rosehip oil ).

[couta1]

Just purely from an investment point of view, my biggest worry about the future of A2 is does cows milk for human consumption have a big future ? The whole marketing concept is appealing to customers who perceive it is a less unhealthy option than regular milk, but it is still cows milk. Already plant based alternatives e.g. soy are being developed which are much healthier & far less damaging to the environment (e.g. takes 1000 L of water to produce 1 L of milk plus all the nitrogen run off etc). No other species drinks another species milk past weaning & cows milk has been associated with numerous chronic diseases in humans. Things are changing rapidly & I wonder in several years time if the market for A2 will have been replaced by an alternative & just seen as another overhyped miracle health product. Things that go up quickly have a tendency to fall just as fast, e.g. Comvita, Trilogy (rosehip oil ). A bit like asking the question, when will we stop using fossil fuels completely, how long is a piece of string?

[freddagg]

I bought it at various prices from $12 upward with highest price lot at $42.before it headed back down to $12.again, ended up doubling down to $22 before finally selling out at $25. I guess what I'm trying to say is I was being easily swayed by other people's opinions at the time without having a firm conviction and vision for the stock myself.

I was just being a dick.

I agree that there is still enormous potential in A2 and I am optimistic that the share price will be close to $20 within 12 months

[RGR367]

Those who would not live or dream the dream for ATM are probably the same folks that missed it at lower than 80 cents like those XRO unbelievers before that missed that stock at less than a dollar. Sometimes a gut feel for a stock is way better than over analyzing it.

[NZSilver]

Just having a more detailed read of the report.

Major marketing spend will be currently going into US and China Mainland (M&B Stores)

US small revenue is probably getting disproportionate amount of marketing spend and is liquid milk sales. Very early days.

Still key focus is growing direct sales in Mainland China,

Here are rev numbers for CHINA AND ASIA and vs market spend overall (which majority will be mainland china as this is the push)
FY17 rev 88.9 mil (marketing exp 42 mil)
FY18 rev 233.6 mil (marketing exp 88.73 mil)
FY19 rev 405 Mil (HY19 171mil) (marketing exp 135 mil)

The revenue growth in China market for direct infant formula is very pleasing, and as sales grow marketing spend will grow but likely at a much slower rate. I believe this is a smart strategy going forward, as there will lower potential growth is Aus diogue market and more regulation from the Chinese government.

Crudely, on quick calculations increase $1 spent marketing (with some being other geographies) is growing the growth of revenue.

[bull....]

test the lows of the week today ?

[couta1]

test the lows of the week today ? That would be a no, make that a yes. Lol

[see weed]

Down $2bil. in 3 days. I don't think there is another company on the NZX that could do that and recover in 1 to 3 weeks or months. Will this have an effect on the rest off the NZX and drag it down or slow it up for a while?

[Baa_Baa]

test the lows of the week today ?

Ready, with cash, if it happens. That said, the spike high Feb'18 oddly enough is the same as yesterday's close (also the .786 fib retrace) and the low yesterday bounced off the 200EMA. Drilling down to an intraday chart today to follow the action.

[bull....]

Masterclass from the big broker/analysts these past few weeks. They wrote the music, played the instruments and conducted the orchestra. Bloody brilliant performance.

well said , all those upgrades and fan fare leading up to the announcement

[Baa_Baa]

test the lows of the week today ?

Boom! A2M 13.32 and now below.

[bull....]

Boom! A2M 13.32 and now below.

had to happen. and atm just above support again at around 14 or just below and a2m around 13. if you look at the uptrend of a2m since the beginning of 2019 it broke this week so im thinking a break of the supports if it happens could be nasty. time will tell.

[Balance]

Boom! A2M 13.32 and now below.

Looking grim ...

[nizzy]

hi, ATM owns a consumer brand called A2 (and have done excellent job building that brand, with a fair dollop of luck & good timing along the way).
They don't control the A2 herd or milk, anyone can move their herd that way. Others can (and do) sell A2 products but not under the A2 brand (which does get confusing).
Recall that Westland farmers (now supplying Yili) have a large concentration of A2 cows.
Disc: holder of ATM

[couta1]

Looking grim ... Savage week alright, I've had a very large sum wiped off my portfolio and it's only HLG that's keeping it in the green overall but that may change if BAL has a bad result next week.

[Balance]

Warren Buffett reminds us:

“Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence.”

[whatsup]

With the now recognised formula of $14.00 plus or minus 10% seems to be the trading range for now ( imo the S P will slosh trade around these levels until the AGM when it will increase/decrease due to up dates on trading )

[ratkin]

Just purely from an investment point of view, my biggest worry about the future of A2 is does cows milk for human consumption have a big future ? The whole marketing concept is appealing to customers who perceive it is a less unhealthy option than regular milk, but it is still cows milk. Already plant based alternatives e.g. soy are being developed which are much healthier & far less damaging to the environment (e.g. takes 1000 L of water to produce 1 L of milk plus all the nitrogen run off etc). No other species drinks another species milk past weaning & cows milk has been associated with numerous chronic diseases in humans. Things are changing rapidly & I wonder in several years time if the market for A2 will have been replaced by an alternative & just seen as another overhyped miracle health product. Things that go up quickly have a tendency to fall just as fast, e.g. Comvita, Trilogy (rosehip oil ).

we gave up on cows milk a few years ago and just use soy (pams light) Cows are on a bit of a sticky wicket at the moment. Will be artificial meat next, and in terms of being carbon neutral, anything cow is a dirty word, especially if it imported from a huge distance away, which covers just about all kiwi exports.

[Balance]

Another day of huge volume - 15.2m shares on ASX.

Add the 19.75m done on Wednesday, and the 7.7m yesterday = 42.65m shares.

Compare that to the 47.47m number of shares shorted at the beginning of the week.

Share has gone down on huge volume - what does it mean?



https://www.shortman.com.au/stock?q=a2m

[Baa_Baa]

Another day of huge volume - 15.2m shares on ASX.

Add the 19.75m done on Wednesday, and the 7.7m yesterday = 42.65m shares.

Compare that to the 47.47m number of shares shorted at the beginning of the week.

Share has gone down on huge volume - what does it mean?



https://www.shortman.com.au/stock?q=a2m

Bargains. Both bourse found support at their 200DMA’s closing nicely above. Sure has been quite the week.

Did you buy back your 2/3rds?

[Balance]

Bargains. Both bourse found support at their 200DMA’s closing nicely above. Sure has been quite the week.

Did you buy back your 2/3rds?

No.

Planning to keep at the 1/3rd level for the rest of the year - leave the big boys to play their game.

I have a hunch that most of the volume done this week is short-covering.

Means the sp has been held up as the shorters covered - which could mean a lower sp next week. Just as the sp was held down when the shorters were building up their position.

This time they seem to have got it right - in the short term.

[NZSilver]

When it comes to IF, milk powder is superior as it contains all amino acids and cofactors.

Soy, almond, other non dairy milks have huge environmental issues, you just aren't aware of them as it is occuring overseas.

NZ is very efficient at producing dairy as pasture based and there is growing demand. 95% carbon is used I production vs 5% transport to consumer, so much more environmentally friendly to produce in soil,climate,geography where the overall carbon to produce it will be less (NZ) cf somewhere else (say the farms they have in Saudi, europe, US). Farmers are improving environmental practices, and the bar is rising quickly, just a few useless buggers letting the team down. Many environmental improvements on farm are also improve farm economics.

A2 is doing just fine, just look at what the P&L and balance sheet are saying. Very good value at these levels, possible takeover target.

[Baa_Baa]

No.

Planning to keep at the 1/3rd level for the rest of the year - leave the big boys to play their game.

I have a hunch that most of the volume done this week is short-covering.

Means the sp has been held up as the shorters covered - which could mean a lower sp next week. Just as the sp was held down when the shorters were building up their position.

This time they seem to have got it right - in the short term.

My core holding is a decent way ahead of this latest rout, so not really concerned about it considering the future upside.

The 200DMA bounce today presented a too tempting opportunity to accumulate a few more, which at days end are up a few clicks as well.

You could be right, the volume was huge. I’ll happily flick today’s parcel if it comes under pressure, but equally happy to hold the core for the long term.

A challenging week, testing our strategies.

[Balance]

My core holding is a decent way ahead of this latest rout, so not really concerned about it considering the future upside.

The 200DMA bounce today presented a too tempting opportunity to accumulate a few more, which at days end are up a few clicks as well.

You could be right, the volume was huge. I’ll happily flick today’s parcel if it comes under pressure, but equally happy to hold the core for the long term.

A challenging week, testing our strategies.

Challenging is probably understating the week - from the anticipation of the results to the reality of the sp getting slammed down on what was really only a slight miss against expectations.

But to put the sp today in perspective, it is still 31% up YTD. So it is not nearly as bad as the week’s fall suggests.

So to me, the market still loves ATM - truly one of the great NZ success stories which other NZ companies must learn from.

The issue which will be taxing our grey matters for a little while yet is how successful ATM’s will be with its revised strategy in China and its US business. And what is a fair price to pay for ATM?

As Warren Buffett advises : "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.“

And ATM is a wonderful company!

[winner69]

Gross margins greatly improved in F19 v F18

Lower input costs per unit (milk) had a positive impact of $50m plus

Was milk cheaper this year or did suppliers get screwed good and proper.

[winner69]

Obviously the best people for the best jobs at A2 are females

Number of directors / senior execs up by 5 from 20 to 25

The extra 5 are all female

Good to see.

[Balance]

Gross margins greatly improved in F19 v F18

Lower input costs per unit had a positive impact of $50m plus

Was milk cheaper this year or did suppliers get screwed good and proper.

Real value add in action - compare & contrast with the nincompoops in Goonterra.

Why ATM will progressively eclipse Goonterra as the face of dairying in NZ.

[Beagle]

Obviously the best people for the best jobs at A2 are females

Number of directors / senior execs up by 5 from 20 to 25

The extra 5 are all female

Good to see.

Or is Jayne just engaging in her own form of confirmation bias and loading a whole of extra cost and overhead on the company ?
Whatever one's view it seems most of the analysts have now considerably adjusted their expectations for the next 3 years https://www.marketscreener.com/A2-MILK-COMPANY-LTD-11384022/financials/

I see the average view, (which quite closely aligns with mine expressed earlier this week in post #13668) is that eps will grow just 15% in FY20. That's got to be "an ouch" considering past growth rates ! More concerning is that average forecast eps growth over the next three years is just 19% per annum, which is obviously dramatically different to when Geoffrey Babbage was in charge.

Forward PE in the low 30's was fine when the company was growing much, much faster. Not intended as advice but one of my key filters to identify possible value accretion to my balance sheet is to look for stocks on a forward PEG ratio (Price earnings to growth rate) of less than 1. This was definitely a standout in previous years but not any more, currently 31.5 / 15, more than 2 !...which suggests to me the company is very poor value at this point even after the big correction.

Even reverting to my other valuation filter of no growth PE of 8.5 (even being kind and adjusting this no growth benchmark to 11 for the current ultra low interest rates) + 1G where G is the average growth over the foreseeable future (19) I get a forward PE of no more than 30. This suggests fair value 12 months hence from here to me is 30 x 45 = $13.50 and current value discounted by this year's expected growth rate of 15% is no more than $11.50. Ouch ! I know that won't fit with anyone else's view on the stock but I am quite happy to stick to my own valuation methodology that's worked for me.

I think its unlikely to fall to $11.50 in the short term, (but you never know). More likely is another 12-18 months of more sideways action, just like we have seen since Feb 2018, with wild swings around the mean average of about $14.

This has been a fantastic stock under Geoffrey Babbage's leadership. I am not impressed at all with the direction Jayne Herdlicka is taking. Of course she would say the easy growth gains have already been achieved and start spending like a drunken sailor on shore leave. That's what under achievers and over spenders always say to defend their position.

It should be quite obvious looking at the past sales and eps growth rates and the forward ones for the next three years the game has changed. Some will likely say that Jayne is investing for the long run and that's fine and good luck with that. I just think at this point the shares are still about 20% more than fair value for the average long run expected growth rate.

Disc: No position other than indirectly through Kingfish.

[couta1]

Nice number crunching Beagle but I'll bet you a few dozen bottles of cider that the share price will revisit $18 by the end of 2020.

[winner69]

Nice number crunching Beagle but I'll bet you a few dozen bottles of cider that the share price will revisit $18 by the end of 2020.

Shortly after Xmas I reckon ....once the market realises all that marketing money is generating real sales velocity.

[ratkin]

Shortly after Xmas I reckon ....once the market realises all that marketing money is generating real sales velocity.

When will it revisit 12 dollars?

[Snow Leopard]

When will it revisit 12 dollars?

About 3 seconds after the ASX opens on Monday :)

[couta1]

About 3 seconds after the ASX opens on Monday :) And not because of Jayne but rather a loose mouthed Trumpet suffering from NPD.

[Baa_Baa]

@Beagle that Marketscreener site is interesting, not sure how much faith to give it but of note was their forecast of a 2021 dividend … odd considering JH has expressly ruled out paying a dividend?

[Balance]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/339730/306127.pdf

Well, her time based rights to shares have been automatically exercised so will she sell her 242,000 shares?

[couta1]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/339730/306127.pdf

Well, her time based rights to shares have been automatically exercised so will she sell her 242,000 shares? Looks like she's ready for takeoff.

[Balance]

Looks like she's ready for takeoff.

Should be no adverse reaction if she sells I would have thought.

But with markets in turmoil, she is bound to get the blame if she sells and ATM sp falls.

[couta1]

Should be no adverse reaction if she sells I would have thought.

But with markets in turmoil, she is bound to get the blame if she sells and ATM sp falls. With the volume that's been going through some days lately her sale will mean diddly squat. PS-Im actually warming toward her as I reckon her strategy is actually future proofing the company, Geoff was the man for his time but not now.

[bull....]

hammer time today , be watching for a sustained break of support today/ tomorrow at just under 14 on the daily close