ATM - A2 Milk Corporation Limited

[tomm]

A war is going on , who can find the goodies ?

[Lease]

Conversely online sales are down which is pretty worrying as online shopping is huge in China (compared to the rest of the world). They say online sales are down due to daigou not spreading the word but that pretty concerning imo.

Well I believe their words on slower online sales due to daigou. If not, how to explain store sales are strong? It doesn't make sense for people to buy more expensive A2 products via stores if online products are available.

[winner69]

Babidge in NZ Herald

"The reality is that we are dealing with a very unusual, unprecedented event, which we are trying to navigate through," he said.

"This company has moved over a number of bumps in the road in respect of how it has developed. We have got a very strong brand and executive team has navigated through significant challenges,"

[Bjauck]

Babidge in NZ Herald

"The reality is that we are dealing with a very unusual, unprecedented event, which we are trying to navigate through," he said.

"This company has moved over a number of bumps in the road in respect of how it has developed. We have got a very strong brand and executive team has navigated through significant challenges,"
A clayton’s explanation - an explanation to give when you are not really giving an explanation!

[winner69]

A clayton’s explanation - an explanation to give when you are not really giving an explanation!

Babidge was probably hoping like anything that things wouldn’t turn really bad before his departure.

[alokdhir]

Unbelievable things have changed so much since AGM. I'm really disappointed. I no longer have a lot of trust in management. Had it been an unforseen disruption I would of been a lot more understanding, however their guidance was off by hundreds of millions. They knew the challenges.

I am with U ...ATM has lost my trust forever . I will never be a investor or trader in ATM anymore ...:t_down:

[Balance]

Babidge was probably hoping like anything that things wouldn’t turn really bad before his departure.

Didn't he and the other executives time the sale of their shares (close to the top of this year) so well!!!!

They had no idea of course then that things were rapidly turning to custard.

[alokdhir]

Learnt the hard way years ago like you - double up on the way up, not on the way down.

That way, you are buying more and more of a good story rather than buying more and more of a bad story (on the way down).

Agree fully ....I will add FPH or MFT any day

[ThaiJohn]

"The wisest rule in investment is: when others are selling, buy. When others are buying, sell. Usually, of course, we do the opposite. When everyone else is buying, we assume they know something we don't, so we buy. Then people start selling, panic sets in, and we sell too."

[Balance]

"The wisest rule in investment is: when others are selling, buy. When others are buying, sell. Usually, of course, we do the opposite. When everyone else is buying, we assume they know something we don't, so we buy. Then people start selling, panic sets in, and we sell too."

8 times out of 10, sell when executives are selling, especially when many of them are doing so.

ATM is the outstanding example this year of following the executives.
Likewise, buy when they are buying.

[Snoopy]

A clayton’s explanation - an explanation to give when you are not really giving an explanation!


Babidge was probably hoping like anything that things wouldn’t turn really bad before his departure.


I am with U ...ATM has lost my trust forever . I will never be a investor or trader in ATM anymore ...:t_down:

You guys are all being too soft. ATM closes down 23.6% in Australia for the day. I have just noticed that "Babbage" rhymes with "garbage". Your mission for the weekend. Compose a song whose lyrics recognise that fortunate fact ;-P !

SNOOPY

[ShouldHaveHeld]

I'm getting comvita ptsd from this

[Waltzing]

Mr S this is not your normal post format. How does "gar" rhymes with "bab".

[Beagle]

https://www.goodreturns.co.nz/article/976517979/shares-plummet-as-a2-shocks-market.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+18+Dec+ 2020
Trust is broken.

https://www.nzherald.co.nz/business/market-close-a2-milk-plunges-infratil-get-approval-for-deal/T5FZKARTE7ZPUY3F6LHEQDDTRA/ Paywalled.
Sour Milk

[tim23]

"The wisest rule in investment is: when others are selling, buy. When others are buying, sell. Usually, of course, we do the opposite. When everyone else is buying, we assume they know something we don't, so we buy. Then people start selling, panic sets in, and we sell too."


how do you know? For every buyer there is a seller?!

[LEMON]

Still a good company trying to survive during difficult times.

I'm down and pissed but won't hold a grudge. I bought A2 because I believe they will shine once again.

[alokdhir]

Still a good company trying to survive during difficult times.

I'm down and pissed but won't hold a grudge. I bought A2 because I believe they will shine once again.

Only hope to hold or buy ATM again around $ 8.50 is looking for a takeover offer from a better management . I am really disappointed with what they said today and in what manner . :t_down:

[alokdhir]

Only hope to hold or buy ATM again around $ 8.50 is looking for a takeover offer from a better management . I am really disappointed with what they said today and in what manner . :t_down:

I was in Hold ATM camp against my better judgement after posting here first that ASM commentary is not very convincing ...today I bailed out as management let me down by trying to fool investors two times first after full year results that strong growth expected and after 40 days they down grade ...then at ASM stating no downgrades and then after 30 days give massive profit and sales warning ...really disappointing behaviour from highly paid professionals :t_down:

[Gregnz]

I was in Hold ATM camp against my better judgement after posting here first that ASM commentary is not very convincing ...today I bailed out as management let me down by trying to fool investors two times first after full year results that strong growth expected and after 40 days they down grade ...then at ASM stating no downgrades and then after 30 days give massive profit and sales warning ...really disappointing behaviour from highly paid professionals :t_down:

Personally I'm well down on a large parcel I purchased at $15.06 but my gut feeling is telling me to ride this out, its only a loss once I bail, and the majority of the loss has already happened. Biggest issue for me now, I held money back to average down and have held off doing so, key is trying to time a potential bottom. There was an uplift in late trading today but I think it's too early to tell if today was the bottom. I'd be keen to see who was buying today, if any institutions have started buying, clearly a lot of shares changed hands, was this a further move out of retail holders into institutional holders and how much of the company is now owned by the big fish...

[Gregnz]

Am I correct in thinking we dont get Half Year until approx Feb 27th? I keep seeing comments elsewhere of people saying its due in 2 weeks? I always remember half year being end of Feb?

[longy]

8 times out of 10, sell when executives are selling, especially when many of them are doing so.

ATM is the outstanding example this year of following the executives.
Likewise, buy when they are buying.

I will remember this lesson for a very long time!!!

[troyvdh]

Some old buggers like myself remember that if one is recieving an annual compounding return of 7 % ..you're doing ok...just saying..

[Old mate]

I was in Hold ATM camp against my better judgement after posting here first that ASM commentary is not very convincing ...today I bailed out as management let me down by trying to fool investors two times first after full year results that strong growth expected and after 40 days they down grade ...then at ASM stating no downgrades and then after 30 days give massive profit and sales warning ...really disappointing behaviour from highly paid professionals :t_down:


I have done done the same. There behaviour is nothing short of very dodgy.
Ive had enough.

[Balance]

I will remember this lesson for a very long time!!!

https://www.fool.com.au/2020/08/28/a2-milk-share-price-lower-after-chairman-ceo-coo-and-other-execs-sell-millions-of-shares/

Great selling by the executives!

[sb9]

https://www.fool.com.au/2020/08/28/a2-milk-share-price-lower-after-chairman-ceo-coo-and-other-execs-sell-millions-of-shares/

Great selling by the executives!

To be fair, management have sold post FY results every year if we go back and check details. This year has been exceptionally unpredictable with Covid disruption and current Aus-China spat.

If anything, it gives opportunity for management to refine their underlying strategy to counter these sort of disruptions. 2021 will no doubt gonna be difficult but it also gives company the opportunity to reflect and rejuvenate with fresh ideas. Let’s see if the new CEO has got that skill to steer the ship well, if so he’ll be in for a huge windfall and shareholders.

Finally time’s really up for that Hearn guy to go as I said many times before, I voted against his reelection for last two years.

[bull....]

https://www.fool.com.au/2020/08/28/a2-milk-share-price-lower-after-chairman-ceo-coo-and-other-execs-sell-millions-of-shares/

Great selling by the executives!

very smart executives running a2. impeccable timing. must have been reading my tea leafs on sharetrader

[winner69]

Personally I'm well down on a large parcel I purchased at $15.06 but my gut feeling is telling me to ride this out, its only a loss once I bail, and the majority of the loss has already happened. Biggest issue for me now, I held money back to average down and have held off doing so, key is trying to time a potential bottom. There was an uplift in late trading today but I think it's too early to tell if today was the bottom. I'd be keen to see who was buying today, if any institutions have started buying, clearly a lot of shares changed hands, was this a further move out of retail holders into institutional holders and how much of the company is now owned by the big fish...

Difficult to pick the bottom mate

As you still believe in A2 (after all still going to make $300m odd in F21) why not average down in lots.... say buy a third of what you are going to add to your holding on Monday and then other lots in following weeks or appropriate periods

Might miss the bottom but probably get a pretty good price

[whome]

Courtesy of NZ Herald -‘Shane Solly, portfolio manager with Salt Funds Management, said a2 Milk's earnings downgrade has left a sour taste in investors' mouths. "It's a Christmas present no-one wants.
"The company was clearly expecting a recovery in the daigou and that has not happened through the lack of travel with China. Their mistake was being too optimistic about the daigou demand returning."
Solly said a2 Milk's direct sales to China are strong with 40 per growth in the mother and baby stores. "It is still a premium product and a well-respected brand, and the sour taste will take time to rinse through. This is maybe the reset a2 Milk needed in terms of sales and margins."
I go along with Shane’s view. I see this period as the darkest days for A2 given the effect COVID has had in stopping daigou coupled with stupid Aussie politicians prodding China and getting tariffs imposed in return - not yet for infant formula but the threat is there. With 240 vaccines being trialled around the world I see COVID receding in the next 12 mths due to increased herd immunity if nothing else. We really need a vaccine against Aussie politicians. As Winner said A2 are still going to make $300 mill in ‘21. Too late to sell after the event but that’s investing - and have seen plenty ups & downs after 50 years in shares. Discl. Hold A2 and not selling. I would be interested to hear from posters directly involved in daigou.

[Beagle]

Courtesy of NZ Herald -‘Shane Solly, portfolio manager with Salt Funds Management, said a2 Milk's earnings downgrade has left a sour taste in investors' mouths. "It's a Christmas present no-one wants.
"The company was clearly expecting a recovery in the daigou and that has not happened through the lack of travel with China. Their mistake was being too optimistic about the daigou demand returning."
Solly said a2 Milk's direct sales to China are strong with 40 per growth in the mother and baby stores. "It is still a premium product and a well-respected brand, and the sour taste will take time to rinse through. This is maybe the reset a2 Milk needed in terms of sales and margins."
I go along with Shane’s view. I see this period as the darkest days for A2 given the effect COVID has had in stopping daigou coupled with stupid Aussie politicians prodding China and getting tariffs imposed in return - not yet for infant formula but the threat is there. With 240 vaccines being trialled around the world I see COVID receding in the next 12 mths due to increased herd immunity if nothing else. We really need a vaccine against Aussie politicians. As Winner said A2 are still going to make $300 mill in ‘21. Too late to sell after the event but that’s investing - and have seen plenty ups & downs after 50 years in shares. Discl. Hold A2 and not selling. I would be interested to hear from posters directly involved in daigou.

I have them on a forward PE of 28.2 based on eps of 39 cps for FY21 and that assumes there is not another downgrade, (which I do not think is a safe assumption).
Yesterday's share price drop on the face of it seems logical enough, (dropped in line with the forecast drop in current year eps) but no account seems to have been taken by the market yet of whether metrics of that order are still appropriate going forward given reports suggesting Chinese made IF is apparently gaining significantly more traction and predatory pricing practices by Fonterra with their Karicare A2 IF might cause ATM's growth rate to slow going forward. There's also no apparent account with those suggested metrics with the very heightened geopolitical risks that are readily apparent. On top of that I think management's credibility is now at best, "in doubt".

I guess it all comes down to whether one accepts management's explanation that this is a one-off Covid impact affecting the daigou sales or whether there are issues with the brand starting to lose traction with its growth ? I am skeptical that management are being completely transparent on what's happening out there, (for commercially sensitive reasons) and human nature is such one always wants to think the challenges presenting are temporary and the good times will start rolling again soon enough. Hope is a strategy, or is it ?

I remember the days ATM was on a forward PE of 30 and they were growing eps at 30-40%, that was the time to own them in my opinion...that they are still on a very similar metrics when there is now ample evidence growth has dramatically slowed in recent years and obvious headwinds to the business, frankly surprises me.

I would say in my several decades of investing that the old adage that downgrades usually come in three's is correct more than 90% of the time.
I think earnings will get another downgrade and the metrics this company trades on will also get a significant reset.

For what its worth, I never buy shares in a downtrend.

[Poet]

Like a lot of others, I'm not only not pleased but also highly suspicious of what's gone on here. It particularly irks me that management and board were selling large numbers of shares (shares, I might add that were not even bought and paid for by them, but instead were provided by us the shareholders in light of the fantastic levels of management performance)

According to Shane Solly
"The company was clearly expecting a recovery in the daigou and that has not happened through the lack of travel with China. Their mistake was being too optimistic about the daigou demand returning."

What I want to know is what sales numbers were the board and management looking at on 18 November when they reaffirmed revenue guidance for 1H21 at 725 to 775 million. At that point they were stating that there was a non zero possibility that (with just six weeks to run until the end of 1h21) they would achieve revenue of $775 million. Now four weeks later they are saying $670m so a deterioration of $105 million in a month.

Anybody have a guess at what sales number they would have to have had already "in the bank" at 18 November for them to sensibly and rationally think they could get to a total of $775million over the subsequent 6 weeks? I would pick that they would have needed around $595 million if they were doing a simple linear extrapolation from the known to the unknown, they may have some justification for using something slightly more optimistic than a simple linear model but....

Since they are now saying actual outcome will be $670m, I'm thinking it likely they only had around $520m banked at 18 November, so the $2B question is why they thought it reasonable to make such wildly optimistic projections.

[alokdhir]

ATM business model maybe intact and it may come back in 1-2 years time but in reality there is hard work to be done ahead for the company .SP is reflecting that they are in trouble and its future looking at next 6 months of stiff challenges . Yes it can reset itself and reduce its dependence on indirect sales mostly dependent on travel / tourists . CBEC also getting effected and other products and not only IF being effected is not good news at all . Stores sales better and liquid milk better but money spinning business not doing well . 1-2 years process to get it back on track as per me provided management gets things right and get help from conditions improving which actually precipitated this fall and exposed their vulnerability fully .

Secondly ATM management has failed ( 3/10 ) on corporate governance standards . In times like this disclosures and almost running commentary of company functioning including what's changing and how they proposing to counter it should be provided as regular updates .

Two times they changed their outlook dramatically within very short period of reassuring ...Not looking good for them at all !!

SP will drift lower till people get more confident of traction coming back in some way . All slides down stops before trying to move up .

Not business growth dynamics at the moment but it becoming Takeover target will cushion SP . Many will take a punt at its TO chances ...SP is very close to being called very attractive for that to happen if someone sees value and usefulness of doing that !

As they are mainly China business company so most likely it can be from China and from someone looking to get in China or add premium products to their existing China business like big Chinese dairy distributors etc

[BlackPeter]

I was a believer! Trust me. Originally brought at $19. Doubled down at $15. Then again at $14. But the writing is on the wall for all to see now. I've got a 3yr old so understand once an infant anything (formula, prams, front pack etc) brand falls out of favor, and new (Chinese) brands build traction.. mums talk.. not keen to sit around watching it play out.

I'm now in the other camp and expect another downgrade before the end of the FY. :(

Not intending to pick on you ... but this post is an excellent example that religion (a believer!) and investment strategies don't match.

Obviously - nobody (including me or you) can predict how the share price will go from here, but blind faith it will recover is as bad and non-sensical than shear fear that the world will end for this company.

So - what do we know?


A2M is an easily scalable and so far fast growing marketing company for a product consumers want (and some of them need).
(forward) Revenue CAGR around 40, well yes until the blip they announced for the current year.
(forward) earnings CAGR around 30, will be less now, but no doubt they will stay profitable even during the blip.
ongoing expansion into the worlds largest domestic market (the US)
Very healthy balance sheet (liabilities to assets something like 21%);
huge cash balance (i.e. war chest);


Yes, the current year clearly will provide a deviation from the growth trend, but trends have a habit of regressing to the mean, don't they? Is this Covid thingy really likely to destroy A2's future growth opportunities in eternity by inconveniencing one of their sales channels if we assume that mankind gets Covid within the next 12 months or so under control and that even A2 managers might be able to think about different sales channels and different markets if they have time to think hard enough?

Of course - balance and winner might be right that management is often too optimistic and reluctant to admit previous errors in judgement (they are ...), which results in the famous adage "down grades come always in threes" (i.e. 2 down, one to come).

Possible, i.e. it might make sense to sell now and buy back cheaper. Could be a sensible strategy for traders, and may or may not work out. Not sure about others, but I find it always easier to identify the peaks and troughs with hindsight ... not so easy during the action ;):

However - this is clearly not the time to write A2M off for all times ... they are a healthy company with a great story and a great product. If there have been good reasons to buy them 6 months ago, than none of these reasons has changed (but a minor timing issue).

Some famous investor said once there is a time to sell, a time to buy and a time to go fishing. Personally I still need to make up my mind whether for A2 its currently the second or the third, but the time to sell is in my view well passed by ... and panicking is never a good response to share market events.

[alokdhir]

I have them on a forward PE of 28.2 based on eps of 39 cps for FY21 and that assumes there is not another downgrade, (which I do not think is a safe assumption).
Yesterday's share price drop on the face of it seems logical enough, (dropped in line with the forecast drop in current year eps) but no account seems to have been taken by the market yet of whether metrics of that order are still appropriate going forward given reports suggesting Chinese made IF is apparently gaining significantly more traction and predatory pricing practices by Fonterra with their Karicare A2 IF might cause ATM's growth rate to slow going forward. There's also no apparent account with those suggested metrics with the very heightened geopolitical risks that are readily apparent. On top of that I think management's credibility is now at best, "in doubt".

I guess it all comes down to whether one accepts management's explanation that this is a one-off Covid impact affecting the daigou sales or whether there are issues with the brand starting to lose traction with its growth ? I am skeptical that management are being completely transparent on what's happening out there, (for commercially sensitive reasons) and human nature is such one always wants to think the challenges presenting are temporary and the good times will start rolling again soon enough. Hope is a strategy, or is it ?

I remember the days ATM was on a forward PE of 30 and they were growing eps at 30-40%, that was the time to own them in my opinion...that they are still on a very similar metrics when there is now ample evidence growth has dramatically slowed in recent years and obvious headwinds to the business, frankly surprises me.

I would say in my several decades of investing that the old adage that downgrades usually come in three's is correct more than 90% of the time.
I think earnings will get another downgrade and the metrics this company trades on will also get a significant reset.

For what its worth, I never buy shares in a downtrend.

What are your views about it looking attractive as TO target ?

As per u what SP levels will make TO attempt very likely ?

Keeping in view it has almost 1 billion in bank and good 300million NP business with chances of further growth ahead

[Beagle]

What are your views about it looking attractive as TO target ?

As per u what SP levels will make TO attempt very likely ?

Keeping in view it has almost 1 billion in bank and good 300million NP business with chances of further growth ahead

I am sure many will speculate on this but I don't wish too. My very brief thoughts are that for my money If I were theoretically sitting on the board of a major international competitor I'd want to wait and see where the dust settles on this, see what their real net profit is and how badly sales growth has declined. For what its worth I doubt OIO and Commerce commission approval's would be straightforward or a certainty either.

Let me answer you question with some questions:-

Secondly ATM management has failed ( 3/10 ) on corporate governance standards . In times like this disclosures and almost running commentary of company functioning including what's changing and how they proposing to counter it should be provided as regular updates .

Two times they changed their outlook dramatically within very short period of reassuring ...Not looking good for them at all !!
Would that impress you if you were on the board of a competing company looking at possibly taking them over ?
What about them still being on a forward PE of 28 times when their profit is going backwards ? I know raising debt to make takeovers is cheap but why give yourself a hospital pass ?
Is just over $1 per share in cash an especially relevant factor here ?

[whome]

I thought that Fonterra had the rights to market A2 branded products through their well established channels in SE Asia with the exception of China. Fonterra are arrogant enough to think they can ignore an agreement with ‘the little guy’. Could we see litigation here.

[whome]

BTW excellent posts above with good informative opinions.

[alokdhir]

I am sure many will speculate on this but I don't wish too. My very brief thoughts are that for my money If I were theoretically sitting on the board of a major international competitor I'd want to wait and see where the dust settles on this, see what their real net profit is and how badly sales growth has declined. For what its worth I doubt OIO and Commerce commission approval's would be straightforward or a certainty either.

Let me answer you question with a question

Would that impress you if you were on the board of a competing company ?

Thats why I will like to TO the company and replace its top management by my own team . They are in this position because of some poor management and some poor governance standards as they were trying to run away from reality and was doing too much wishful thinking

All professional managers of that level should be knowing that travel like before is not coming back at least for further 12 months ...then on what basis they expected return to normal as soon as December 2020 !!!

[Beagle]

Like a lot of others, I'm not only not pleased but also highly suspicious of what's gone on here. It particularly irks me that management and board were selling large numbers of shares (shares, I might add that were not even bought and paid for by them, but instead were provided by us the shareholders in light of the fantastic levels of management performance)

According to Shane Solly
"The company was clearly expecting a recovery in the daigou and that has not happened through the lack of travel with China. Their mistake was being too optimistic about the daigou demand returning."

What I want to know is what sales numbers were the board and management looking at on 18 November when they reaffirmed revenue guidance for 1H21 at 725 to 775 million. At that point they were stating that there was a non zero possibility that (with just six weeks to run until the end of 1h21) they would achieve revenue of $775 million. Now four weeks later they are saying $670m so a deterioration of $105 million in a month.

Anybody have a guess at what sales number they would have to have had already "in the bank" at 18 November for them to sensibly and rationally think they could get to a total of $775million over the subsequent 6 weeks? I would pick that they would have needed around $595 million if they were doing a simple linear extrapolation from the known to the unknown, they may have some justification for using something slightly more optimistic than a simple linear model but....

Since they are now saying actual outcome will be $670m, I'm thinking it likely they only had around $520m banked at 18 November, so the $2B question is why they thought it reasonable to make such wildly optimistic projections.



An excellent, insightful and searching post. I really wish you would post more often.
I'd like to think with decent computerized monthly accounting systems they would have at the very least known what the four months sales were to 31 October 2020 at the time of making their reassurance on 18/11/20 that sales were still on track for $725m - $775m in the first half and $1,100m for 2H.

Given its likely that 4 months sales data had already been accumulated I think its safe to assume sales in November and indicative sales for December must have seriously tanked for their revised 1H guidance to be well outside the bottom end of the previous range. The doubt as to whether they were blindly optimistic or covering their butts regarding insider selling in the very recent past is very much an open $64,000, (or perhaps $640,000 for some), question in my mind at least.

I think you are right to be highly suspicious of what's gone on here...right from the time of the announcement of the FY20 result and assurances of ongoing strong growth to yesterday. My nose for creative corporate B.S. and insider selling of shares and subsequent butt covering has been giving me a very solid reading for many months now, (hence the sustained loud barking).

I suspect when insiders sold in late August 2020 they knew very well that sales YTD had tanked pretty badly....unfortunately its very hard to make an actionable case out of that alone.

[YoungBull]

Not intending to pick on you ... but this post is an excellent example that religion (a believer!) and investment strategies don't match.

Obviously - nobody (including me or you) can predict how the share price will go from here, but blind faith it will recover is as bad and non-sensical than shear fear that the world will end for this company.

So - what do we know?


A2M is an easily scalable and so far fast growing marketing company for a product consumers want (and some of them need).
(forward) Revenue CAGR around 40, well yes until the blip they announced for the current year.
(forward) earnings CAGR around 30, will be less now, but no doubt they will stay profitable even during the blip.
ongoing expansion into the worlds largest domestic market (the US)
Very healthy balance sheet (liabilities to assets something like 21%);
huge cash balance (i.e. war chest);


Yes, the current year clearly will provide a deviation from the growth trend, but trends have a habit of regressing to the mean, don't they? Is this Covid thingy really likely to destroy A2's future growth opportunities in eternity by inconveniencing one of their sales channels if we assume that mankind gets Covid within the next 12 months or so under control and that even A2 managers might be able to think about different sales channels and different markets if they have time to think hard enough?

Of course - balance and winner might be right that management is often too optimistic and reluctant to admit previous errors in judgement (they are ...), which results in the famous adage "down grades come always in threes" (i.e. 2 down, one to come).

Possible, i.e. it might make sense to sell now and buy back cheaper. Could be a sensible strategy for traders, and may or may not work out. Not sure about others, but I find it always easier to identify the peaks and troughs with hindsight ... not so easy during the action ;):

However - this is clearly not the time to write A2M off for all times ... they are a healthy company with a great story and a great product. If there have been good reasons to buy them 6 months ago, than none of these reasons has changed (but a minor timing issue).

Some famous investor said once there is a time to sell, a time to buy and a time to go fishing. Personally I still need to make up my mind whether for A2 its currently the second or the third, but the time to sell is in my view well passed by ... and panicking is never a good response to share market events.

I am inclined to agree. Looking at the long term of this stock, has its fundamentals really changed? The largest threat to a changing fundamental as Beagle noted is the local demand and the cheaper alternatives. A switch in consumer behaviour to these may suggest the demand for a premium “clean New Zealand” product has changed, which would be a threat to A2’s economic competitive moat.

In my uneducated and young opinion I think that demand is still there. It is important to remember that the Asian market is huge. Can local and cheap options gain such a significant market share over said huge market to completely lock A2 out of growth options? Is there evidence that these companies have gained a substantially larger market share since you were willing to buy A2 at $21?

The terrible management of the company can leave a bad taste in your mouth, but I believe that may cause investors to perceive the company as a whole as terrible when in reality it still has significant options for growth, a healthy cash balance and a great brand. I personally see this as a chance to buy in at prices that we haven’t been able to get in a long time, so I consider myself very fortunate.

That said I will be watching updates on the Asian consumer behaviour to see if this fundamental has truly changed.

[mondograss]

I just want to say that I’m appreciating the calm, constructive, well reasoned and informative posts on this thread at the moment rather than the hysterical nonsense that’s been the norm up until recently. I’m not a holder right now but I have been and would be again under the right conditions so it’s great to understand others thoughts on where this is traveling.

[ratkin]

Just sell all your shares and buy EBOS, what could possibly go wrong? Well run south island company

[macduffy]

I just want to say that I’m appreciating the calm, constructive, well reasoned and informative posts on this thread at the moment rather than the hysterical nonsense that’s been the norm up until recently. I’m not a holder right now but I have been and would be again under the right conditions so it’s great to understand others thoughts on where this is traveling.

That's because the reason for the trading halt is now known and can be evaluated. Previously, it was all just speculation.

[mondograss]

That's because the reason for the trading halt is now known and can be evaluated. Previously, it was all just speculation.

Oh I’m talking about all the carry on well before the trading halt.

[alokdhir]

Trading Halt was another blunder of management . For what came out of Halt was not enough reason to justify 2 days of Halt and create so much panic and stress for the investors .

Just because they didn't want to burn some midnight oil doing the calculations they asked for time by Halting .

They rather cause trouble to investors then trouble themselves for just a simple Downgrade . They did once before without Halt so why Halt for this one ...Maybe they wanted to make people think that this time they did their calculations better :t_down:

[winner69]

They say Q2 is better than Q1 (to get to $670m sales)

Is that to make us feel happy ....momentum growing or something.

But seeing the $670m is way short of guidance $775m one would have to think that Q1 was a real shocker but they embed quite happy with progress a month or so ago.

But then Q2 might always be better than Q1 so a rather meaningless thing to say in the first place

[Balance]

Oh I’m talking about all the carry on well before the trading halt.

All that carry on saved some big $$$$.

[Gregnz]

Genuine question, why doesn't Daigou exist in NZ to the extent they exist in Australia? Why has there always been such a focus on personal shoppers in Australia when the product is made here and we can walk into any of our local supermarkets and pick it up. I'm trying to wrap my head around why Daigou has been so profound in Australia but not mentioned in NZ. We havent had all the additional lockdowns like Victoria have had, and had Daigou been operating here the impact most likely would have been significantly less. We have had sea freight operating throughout all lockdowns, and several air freight flights per week into Shanghai and others being operating by China Southern and other Chinese airlines.

[Beagle]

19/08/2020 Results Presentation boldly titled "Building from Strength" FY21 Outlook "Notwithstanding these uncertainties, overall for FY21, we anticipate continued strong revenue growth supported by our continued investment in marketing and organisational capability
FY21 EBITDA margin is expected to be in the order of 30 to 31%"

Very heavy insider selling followed very shortly after this outlook statement

Revised outlook on 28/09/20 Just on a month later
Notwithstanding the significant uncertainty and volatility in market conditions as a result of COVID-19 we have determined it appropriate to provide an update to our outlook to include our view of Group revenue as follows:
- Group revenue for 1H21 of $725 million to $775 million
- Group revenue for FY21 of $1.80 billion to $1.90 billion
- Group EBITDA margin for FY21 in the order of 31%.

Above was confirmed in the CEO's address on 18/11/2020 albeit with them adding various caveats that made it clear the forecast was based on a number of factors and assumptions about the future.

One month later they go into a long trading halt and deliver the bombshell update with a radical revision of not just IH and 2H sales but also to the gross profit margin.

I will leave investors to decide for themselves if the first FY21 outlook statement, (including the title of that outlook statement) was very carefully crafted to keep the share price at the lofty level of $20 plus so insiders could sell and reap millions in profits.

[Ggcc]

Genuine question, why doesn't Daigou exist in NZ to the extent they exist in Australia? Why has there always been such a focus on personal shoppers in Australia when the product is made here and we can walk into any of our local supermarkets and pick it up. I'm trying to wrap my head around why Daigou has been so profound in Australia but not mentioned in NZ. We havent had all the additional lockdowns like Victoria have had, and had Daigou been operating here the impact most likely would have been significantly less. We have had sea freight operating throughout all lockdowns, and several air freight flights per week into Shanghai and others being operating by China Southern and other Chinese airlines.
I think shipping costs come into the equation. Read QEX history and they will explain a little bit about it. They are NZ Daigou

[Habits]

"Very heavy insider selling followed very shortly after this outlook statement"

If not a scam it looks very dodgy... I don't have atm so don't follow all the notices. Its good you're on their trail

[Rawz]

However - this is clearly not the time to write A2M off for all times ... they are a healthy company with a great story and a great product. If there have been good reasons to buy them 6 months ago, than none of these reasons has changed (but a minor timing issue).

Some famous investor said once there is a time to sell, a time to buy and a time to go fishing. Personally I still need to make up my mind whether for A2 its currently the second or the third, but the time to sell is in my view well passed by ... and panicking is never a good response to share market events.

Lots has changed from 6 months ago thou? The way I see it- the CBEC channel and MBS should have seen much larger increases to offset the decline in daigou. As those with infants know you do all you can to keep them on the same formula. So if your baby is on ATM brand and you can't obtain it via daigou you go to the other channels.

Instead CBEC is noted as below their expectation post 11/11 and MBS up 40%??? Would have expected much much higher to compensate. And it's entirely possible management expected the CBEC and MBS channels to pick up the slack from the decline in daigou and that's why they kept their guidance for so long. Waiting for the numbers to climb... but they never did.

So I see it as a brand switch. To karicare (or whatever), but more likely to Chinese home brand.

It's not the end of the world. They are still a great company and will bounce back in 1,2, ? years. I sold because I think the share price will continue to drop to bring the P/E closer to 20 and then go sideways from there. I don't see the point in holding for this period? Take the money and top up on HGH, EBOS, HLG, TRA, KIP and a few others.. just my opinion (which comes with little experience I must admit)

[Gregnz]

Lots has changed from 6 months ago thou? The way I see it- the CBEC channel and MBS should have seen much larger increases to offset the decline in daigou. As those with infants know you do all you can to keep them on the same formula. So if your baby is on ATM brand and you can't obtain it via daigou you go to the other channels.

Instead CBEC is noted as below their expectation post 11/11 and MBS up 40%??? Would have expected much much higher to compensate. And it's entirely possible management expected the CBEC and MBS channels to pick up the slack from the decline in daigou and that's why they kept their guidance for so long. Waiting for the numbers to climb... but they never did.

So I see it as a brand switch. To karicare (or whatever), but more likely to Chinese home brand.

It's not the end of the world. They are still a great company and will bounce back in 1,2, ? years. I sold because I think the share price will continue to drop to bring the P/E closer to 20 and then go sideways from there. I don't see the point in holding for this period? Take the money and top up on HGH, EBOS, HLG, TRA, KIP and a few others.. just my opinion (which comes with little experience I must admit)

I’ve seen somewhere if you take the cash on hand into the equation, the P/E is already around 17?

[winner69]

If you take midpoint of sales guidance (1.474m) and use a 27% ebitda margin (they say 26% to 29%) F21 ebitda will be $398m ($152m or 27% less than F20 ...ouch)

Lower sales adverse impacts ebitda by $81m but the real killer is that the much lower ebitda margin (down 4.8% points) has an adverse impact of $71m

Suppose the ebitda margin problem is more to do with prices than costs (hope they are managing these in difficult times). If so that is real problem because recovering price (competition) is very difficult and this becomes an issue going forward.

So selling less is a big problem but getting less for what you sell is a double whammy

[Balance]

19/08/2020 Results Presentation boldly titled "Building from Strength" FY21 Outlook "Notwithstanding these uncertainties, overall for FY21, we anticipate continued strong revenue growth supported by our continued investment in marketing and organisational capability
FY21 EBITDA margin is expected to be in the order of 30 to 31%"

Very heavy insider selling followed very shortly after this outlook statement
...,

I will leave investors to decide for themselves if the first FY21 outlook statement, (including the title of that outlook statement) was very carefully crafted to keep the share price at the lofty level of $20 plus so insiders could sell and reap millions in profits.

Victoria went into hard lockdown from beginning of August.

The impact on daigou trade must have been felt within the first few weeks?

It took the company nearly 2 months to wake up to the problem?

Beggars belief !

[winner69]

I’ve seen somewhere if you take the cash on hand into the equation, the P/E is already around 17?

On F21 forecast of 38 cents EPS the PE is 29 - take off say $950m cash the PE is just over 25

[Rawz]

I’ve seen somewhere if you take the cash on hand into the equation, the P/E is already around 17?

I'm sure you can get any P/E you like by adding and subtracting. I'm sure I read above P/E based on FY21 high 20s, 28?. ASB Securities have them 21.5 currently based on historical earnings.

[Gregnz]

Current P/E as of 5pm yesterday is 20.98

[winner69]

Current P/E as of 5pm yesterday is 20.98

That's based on F20 profit ($11.00/ 0.524)

F21 profit going to be about 38 cents a share

[Balance]

That's based on F20 profit ($11.00/ 0.524)

F21 profit going to be about 38 cents a share

Stock should be trading on a PE of 18 - $6.84

Third downgrade would see it down to that level.

[Gregnz]

I’m keen to see where it finds support next week on the asx. I believe previous support was $9.81 aud which it bounced off at $9.82, buyers flooded in.

Personally I struggle to get my head around P/E ratios, plenty of companies generating significantly smaller profits with much higher P/E and yet seem to be darlings on the ASX, I’m thinking AfterPay etc

[sb9]

Stock should be trading on a PE of 18 - $6.84

Third downgrade would see it down to that level.

If it gets to that level, there’ll be multiple bids the next day to scoop up the company...

[Snoopy]

I’ve seen somewhere if you take the cash on hand into the equation, the P/E is already around 17?


This is flawed logic. If ATM were going to take all their cash and give you a bumper special dividend then you would be on the right track. But ATM need the cash for their second tilt at the United States market, which is loss making. If they give you the cash, then ATM will not be able to develop the US and other Asian markets and growth will slow. ATM trades on a very high PE ratio (and yes so does much of the rest of the market but that is beside the point). Without growth the share price will collapse. (Some will say this process has already started.).

The whole idea that ATM has 'a lot of cash' is not true anyway from an investor perspective. Yes there is a lot in dollar terms But having to pay $11 for a share to buy $1.15 worth of cash is a very expensive way to obtain 'cash'.

Equally absurd is the suggestion that shareholders should ignore losses in the USA when valuing the company. It is true that shareholders would make more money today if the US operation was shut down. But guess what? A core part of future growth is to expand in the US. If such a growth plan did not exists the PE ratio would be trimmed again, as it became clear that ATM was a one market wonder for infant formula. The cash is needed "in house" to develop the business. Only when ATM starts to pay a dividend might a shareholder consider even some of that cash to be surplus to requirements, and so to be valued separately.

SNOOPY

[Balance]

If it gets to that level, there’ll be multiple bids the next day to scoop up the company...

Not if there’s a third downgrade.

[winner69]

If it gets to that level, there’ll be multiple bids the next day to scoop up the company...

Suppose there are some who would pay $8 billion for a $300m annual cash flow

[Mr Slothbear]

This is flawed logic. If ATM were going to take all their cash and give you a bumper special dividend then you would be on the right track. But ATM need the cash for their second tilt at the United States market, which is loss making. If they give you the cash, then ATM will not be able to develop the US and other Asian markets and growth will slow. ATM trades on a very high PE ratio (and yes so does much of the rest of the market but that is beside the point). Without growth the share price will collapse. (Some will say this process has already started.
SNOOPY


100% incorrect. Have been over this before A2 can fund US and asia growth via ongoing cashflow and future manufacturing partnerships.

US is very close to break even

as I said last time check ROIC and ROE. A2 need very little capital to grow.

in fact they need so little capital to grow thats why the massive cash pile is growing in the bank. Hard to spend it when you don’t really need to and can’t justify it besides the geographical diversification, risk spread etc..

[Snoopy]

100% incorrect. Have been over this before A2 can fund US and asia growth via ongoing cashflow and future manufacturing partnerships.

US is very close to break even

as I said last time check ROIC and ROE. A2 need very little capital to grow.

in fact they need so little capital to grow thats why the massive cash pile is growing in the bank. Hard to spend it when you don’t really need to and can’t justify it besides the geographical diversification, risk spread etc..


Mr Slothbear. You may be right in that future business development can be funded by future cashflow. But without sitting in that boardroom you really don't know what A2's plans for their cash is. Of late they have shown interest in buying into manufacturing plant that wasn't apparent in the early days for example. Where you are wrong is that the cash is very easy to spend. Just declare a special dividend and all that surplus cash will be gone. But A2 haven't done that. And the reason is they want to retain it to develop the business in ways you or I are not privy to. So until A2 declare a special dividend to divest themselves of all their supposedly surplus cash, taking the cash as an asset to be valued separately is actually counting it twice.

SNOOPY

[sb9]

Not if there’s a third downgrade.

Remember what happened to Bellamys, that was in more dire straits than A2..

[FTG]

Victoria went into hard lockdown from beginning of August.

The impact on daigou trade must have been felt within the first few weeks?

It took the company nearly 2 months to wake up to the problem?

Beggars belief !

Agree Balance. Frankly, the entire management/governance around these matters have been quite poor, bordering on negligent. Disappointing, and I'm not even a shareholder. I smell a rat....and as we know, if it smells like a rat, sounds like a rat and looks like a rat....

Going into a trading halt was unnecessary, and a little akin to a possum in headlights. Perhaps they were trying to "buy themselves some time" so they could set/control the narrative?

Technicals are still not looking healthy on the chart. But there may be a little support around $10. Interestingly we are now pretty much around the 50% retracement level off the FTH, but with yesterdays gap down, I wouldn't recommend trying to catch a falling knife right here & now. Seeing a number with an 8 in front is not inconceivable!

[Blue Skies]

Remember what happened to Bellamys, that was in more dire straits than A2..


Up 81.7% in the last 12 months in case anyones forgotten.
And AIR still in dire straits, up 125% in 9 months. (A lot of us got that wrong)

[alokdhir]

Best way to trade or invest in ATM ...follow KFL people not any outperform or must buy reports of fake news brokers, analysts and investment banks

They are the ones with actual money in the business .

They were the first ones who said we have reduced our position as sales not performing as we expected . Read their latest monthly report then you will know .
Yes they saved investors $ 1.5 mil by selling 500,000 ATM over $ 14 last week !!!
I followed them in and out ...though was not happy to exit around 14 but rest is history now ...

To get future track of ATM need study what they doing with their rest 3.8 million ATM !!!!

[clearasmud]

It's only 200m

[Oberon]

I sold out as COVID hit the fan and was underwhelmed SP hadn't reacted with much cheer after the prior annual report. Of course, this was before SP started on it's heady trajectory.

And of course, A2 hit a new ATH ... such is life. I've been philosophical and attempted to integrate the lessons learned from this outrageous year in the markets.

I haven't been paying much attention to the company these past few months. But yeesh - if you'd told me then that A2 would be looking down the barrel of sub $10 I would have laughed you out of the room.

If you have confidence in the long term and have a 5 year+ horizon, then I'd scoop some up now, lock 'em in the bottom drawer and forget about them. As a trade, well - to quote Paul Tudor Jones: "'The trend is your friend' is not repeated often enough" - in other words, go fishing.

Also mentioned further up - consumer behaviour in Asia and local brands gaining traction are very big ??? hanging over the long term. I have my doubts A2 will continue to enjoy the same success as first mover as the market is increasingly exposed to and grows comfortable with quality products from competitors. I've always had some unease with A2 having so many of their eggs in the Chinese market. Yes, it's a lucrative market. Unfortunately, they've struggled to make a sizable footprint in the states; they pulled out of the UK. Yes, A2 has shown an impressive ability to bounce back, but past performance is not always indicative of future results. Nothing is certain in this game.

It's one to keep an eye on. But I'd be reluctant entrusting my money with current management. It ain't a pretty picture.

Maybe they could bring back Jayne to turn things around. <ducks>

[winner69]

Best way to trade or invest in ATM ...follow KFL people not any outperform or must buy reports of fake news brokers, analysts and investment banks

They are the ones with actual money in the business .

They were the first ones who said we have reduced our position as sales not performing as we expected . Read their latest monthly report then you will know .
Yes they saved investors $ 1.5 mil by selling 500,000 ATM over $ 14 last week !!!
I followed them in and out ...though was not happy to exit around 14 but rest is history now ...

To get future track of ATM need study what they doing with their rest 3.8 million ATM !!!!

KFL might have saved 1.5mill last week but have taken a paper loss of over $10m on the $50m plus they held on to

They probably still happy holding long term - might even see them average down and buy heaps more

Won't really hurt their performance v benchmark seeing A2 such a large proportion of the NZX50 as well

[Balance]

KFL might have saved 1.5mill last week but have taken a paper loss of over $10m on the $50m plus they held on to

They probably still happy holding long term - might even see them average down and buy heaps more

Won't really hurt their performance v benchmark seeing A2 such a large proportion of the NZX50 as well

Conceivable they could have sold the whole lot with this upgrade.

In any case, conceivable too that they buy back the 500k shares they sold to help the sp?

[winner69]

Conceivable they could have sold the whole lot with this upgrade.

In any case, conceivable too that they buy back the 500k shares they sold to help the sp?

and tomm will be saying that Blackrock 'shook the tree' so much they can now buy heaps more at super cheap prices

[Balance]

and tomm will be saying that Blackrock 'shook the tree' so much they can now buy heaps more at super cheap prices

Smart operators, Blackrock & UBS as two institutions who have been specifically mentioned as big guy tree shaking institutions - scaring & conning the small investors out of their ATM shares at $18 all the way down to $14 until the downgrade yesterday?

Yet the same naive, dumb & scared small investors can now buy back same said shares at 30% to 80% discounts to where they were scared into selling said shares to the tree shaking institiutions?

Maybe, the tree shakers are not so smart after all?

[alokdhir]

KFL might have saved 1.5mill last week but have taken a paper loss of over $10m on the $50m plus they held on to

They probably still happy holding long term - might even see them average down and buy heaps more

Won't really hurt their performance v benchmark seeing A2 such a large proportion of the NZX50 as well


Point I was trying to make was that KFL people could see this downgrade coming so they reduced position as much as they thought prudent . Now have to see if they have changed their position about it long term buy or not . If they start adding at lower levels will show that they think it will come back in a year or so

Also a question to all ATM experts here both buy side and sell side experts please ....At what price ATM becomes a value buy ??

I am not suggesting or even thinking it will have V shaped recovery ...it will be most likely U shaped if at all ...but at what SP levels its a value buy with risks rewards in the favour of buying ??

[Balance]

On a very serious note, reading through all the postings in the last 3 days, I believe imo that there are several pertinent observations I would make about the downgrade announcement yesterday:

1. Directors and management obviously do not have a good handle of what's happening with sales & stocks in the market - been too easy in the last few years with demand exceeding supply. Management information system is deficient and frontline staff have been asleep on the job.

This is a very serious problem & issue for a company which is attempting to go global. The fact that we have had 2 shocking downgrades within the space of 3 months is testimony to that fact.

2. Daigou sales are very significant (hundreds of millions of dollars) and ATM is extremely vulnerable to any disruption to that sales channel. With the stroke of a pen, the China government can wipe out that channel.

3. Related to 1 and 2, have there been channel & brand switch? So the decline in sales is really the cannibalization of sales from daigou channel to the direct sales channels in China? This could explain why sales growth to China are now going backwards overall.

4. Management selling in the quantum and the timing begs the question if there has been skulduggery in the way they presented sales forecasts in the last 3 months. Revert back to 1 above if there is no skulduggery. Either way, there is a very serious issue which the company needs to come clean on.

I would certainly stay clear of investing in ATM until answers are forthcoming on the above points.

[777]

Point I was trying to make was that KFL people could see this downgrade coming so they reduced position as much as they thought prudent . Now have to see if they have changed their position about it long term buy or not . If they start adding at lower levels will show that they think it will come back in a year or so

Also a question to all ATM experts here both buy side and sell side experts please ....At what price ATM becomes a value buy ??

I am not suggesting or even thinking it will have V shaped recovery ...it will be most likely U shaped if at all ...but at what SP levels its a value buy with risks rewards in the favour of buying ??


Speculation only that KFL knew this was coming.

Cash would have be required for last weeks dividend payout and as only part of the cash required being covered by dividends received they would have to sell down some holdings. ATM could have been the chosen one which in hind sight was a good choice.

[bull....]

On F21 forecast of 38 cents EPS the PE is 29 - take off say $950m cash the PE is just over 25

yes still too high thats why im holding my short , more downside too come i reckon. most competitors have pe more like 15. as for synliat always said it was overpriced at $10 expect this to get savaged badly. a manufacturerer never trades on a big pe

[Gregnz]

I’m certainly watching with interest to see when people who are short on the stock start closing their positions. A lot of people will have their fingers on the trigger. Plus a lot of people now see far better value buying into the company or averaging down who also have their finger on the trigger for any sign of support or a change to a uptrend.

[Lion_graf]

How many are still game enough to sell?

Disc. Currently down 30%..

[alokdhir]

Speculation only that KFL knew this was coming.

Cash would have be required for last weeks dividend payout and as only part of the cash required being covered by dividends received they would have to sell down some holdings. ATM could have been the chosen one which in hind sight was a good choice.

If u read their latest monthly news letter ...they have specifically said that sales growth not happening as they thought it would so reducing position . They gave specific reason for reducing position which said exactly what downgrade quantified ...ie sales not as per expected track !!

Not saying they had insider info ...was suggesting following them maybe better idea then only mostly fake recommendations !!

[alokdhir]

Where SP will ATM becomes a value buy ?

8.50 or ....please ideas !!!:eek2:

[Gregnz]

How many are still game enough to sell?

Disc. Currently down 30%..

Personally, not looking to sell. My gut feeling is we will see a recovery, perhaps not to all time highs, but at least north of where we are. All it has done for me is extend the timeframe on how long I remain invested.
I suspect many are in the same boat who don’t want to realise actual losses now and are going to hold onto their shareholding’s at this level.

I’m watching with interest what happens when eagerness to sell starts to lessen and those who are short on the stock start to close positions, that could very well have a positive impact on the share price like it has in previous years. If anything the fact so many are short on the stock at these levels is becoming more of a positive than a negative I feel as eventually they have to close the positions they have.

[Gregnz]

Where SP will ATM becomes a value buy ?

8.50 or ....please ideas !!!:eek2:

Never trust a Internet forum for advice like that. Buy where you are comfortable. This isn’t going to be a short term investment, and whether you pay $8.50 or $11, is it really going to matter in 5 years?

[SPC]

Carmel Fisher told me years ago at a roadshow somewhere that there are a bunch of diy folk her build personal portfolios mirroring KFL. She said all well and good but KFL team frequently sell and buy portfolio stocks for various reasons not necessarily revealed and the 'wannabes' tend to be behind on the trend and the reasons why. It is also correct to assume that the atm sale may have been needed for divie cash because it has to come from somewhere. My question is - do the diy crowd pay themselves 2% nta per Quarter div tax free...and how do they fund it?.... selling of course.

[alokdhir]

Never trust a Internet forum for advice like that. Buy where you are comfortable. This isn’t going to be a short term investment, and whether you pay $8.50 or $11, is it really going to matter in 5 years?

I am not looking to buy ...just trying to find at what consensus level of SP it seems value buy to most ...as that will most likely show the floor of SP

[alokdhir]

Carmel Fisher told me years ago at a roadshow somewhere that there are a bunch of diy folk her build personal portfolios mirroring KFL. She said all well and good but KFL team frequently sell and buy portfolio stocks for various reasons not necessarily revealed and the 'wannabes' tend to be behind on the trend and the reasons why. It is also correct to assume that the atm sale may have been needed for divie cash because it has to come from somewhere. My question is - do the diy crowd pay themselves 2% nta per Quarter div tax free...and how do they fund it?.... selling of course.

Most of the 2% divvy comes as new shares at 3% discount ...around 65% ...so no need to cash out full dividend payouts ...secondly was just suggesting that as they have actual money in the game so knowing what they doing is more helpful knowledge about short term trajectory of the stock rather then only paper recommendations of brokers .

They hinted at this downgrade coming which many here were also saying ...they actually acted on their belief and sold 500,000 shares even at depressed SP of 14 !

[SPC]

I take the cash every time. I'll buy at the time and price of my choosing. Like March/April 2020. Not now.

[Gregnz]

Personally I suspect a lot of the movement in the share price is reflective of uncertainties around future growth and obviously disappointment in management that updated guidance has been released only a month after the previous guidance was reconfirmed.

I took a look back at Feb 2019, when the results for half year till 31st december 2018 were released, the share price traded between $13-$15 at a time when revenue was $613m, cash on hand was $288m.

[Balance]

Personally I suspect a lot of the movement in the share price is reflective of uncertainties around future growth and obviously disappointment in management that updated guidance has been released only a month after the previous guidance was reconfirmed.

I took a look back at Feb 2019, when the results for half year till 31st december 2018 were released, the share price traded between $13-$15 at a time when revenue was $613m, cash on hand was $288m.

Totally irrelevant - the story has changed and market will price the changed story accordingly.

[Gregnz]

Totally irrelevant - the story has changed and market will price the changed story accordingly.

Absolutely, my point being hence why we are at $11, and not $13+

[Balance]

I am not looking to buy ...just trying to find at what consensus level of SP it seems value buy to most ...as that will most likely show the floor of SP

I would recommend those looking to buy get comfortable with the following issues before talking about what level you buy in:


On a very serious note, reading through all the postings in the last 3 days, I believe imo that there are several pertinent observations I would make about the downgrade announcement yesterday:

1. Directors and management obviously do not have a good handle of what's happening with sales & stocks in the market - been too easy in the last few years with demand exceeding supply. Management information system is deficient and frontline staff have been asleep on the job.

This is a very serious problem & issue for a company which is attempting to go global. The fact that we have had 2 shocking downgrades within the space of 3 months is testimony to that fact.

2. Daigou sales are very significant (hundreds of millions of dollars) and ATM is extremely vulnerable to any disruption to that sales channel. With the stroke of a pen, the China government can wipe out that channel.

3. Related to 1 and 2, have there been channel & brand switch? So the decline in sales is really the cannibalization of sales from daigou channel to the direct sales channels in China? This could explain why sales growth to China are now going backwards overall.

4. Management selling in the quantum and the timing begs the question if there has been skulduggery in the way they presented sales forecasts in the last 3 months. Revert back to 1 above if there is no skulduggery. Either way, there is a very serious issue which the company needs to come clean on.

I would certainly stay clear of investing in ATM until answers are forthcoming on the above points.

[Gregnz]

If we remove COVID-19 from the equation, where would we be? Covid isn’t with us forever, that’s my reasoning for why I still believe in the business long term. I believe in the business but not necessarily current management, let’s hope for better with incoming ceo.
If it wasn’t for covid, I don’t believe we would have received a guidance downgrade and I suspect the share price would still be $20+

[Balance]

If we remove COVID-19 from the equation, where would we be? Covid isn’t with us forever, that’s my reasoning for why I still believe in the business long term.
If it wasn’t for covid, I don’t believe we would have received a guidance downgrade and I suspect the share price would still be $20+

Covid has exposed many a company and their weaknesses.

ATM is no exception imo - just more spectacular and there are now some serious issues for the company to address.

Good news is that ATM has a good business and a very strong balance sheet so there is time to fix any issues.

Eg. Are current management and directors really up to the job? The two downgrades in 3 months point to deficient MIS and questionable calibre of frontline staff.

Maybe, just maybe Jayne should have been allowed to stay on?

[Gregnz]

Covid has exposed many a company and their weaknesses.

ATM is no exception imo - just more spectacular.

Yes, but at least we now know what those weaknesses are so they can be addressed. So post Covid potentially a return to Daigou and increased sales within China. Plus a ongoing focus on other markets outside China.
Perhaps long term Covid has done us a favour?

[Gregnz]

Good to see balanced discussion here vs other forums I follow, so thank you all for that.

[Balance]

Yes, but at least we now know what those weaknesses are so they can be addressed. So post Covid potentially a return to Daigou and increased sales within China. Plus a ongoing focus on other markets outside China.
Perhaps long term Covid has done us a favour?

Don't be too sure - have there been channel & brand switch? So the decline in sales is really the cannibalization of sales from daigou channel to the direct sales channels in China? This could explain why sales growth to China are now going backwards overall.

Could be that we have seen the best of sales growth in China for ATM.


Good to see balanced discussion here vs other forums I follow, so thank you all for that.

Critical we all aggressively explore and assess all pertinent matters relating to why ATM has failed so spectacularly with the two downgrades. Could be an opportunity or could be something more ominous. Past performances and share prices are no guide to future performance, and hence sp!

[BlackPeter]

Don't be too sure - have there been channel & brand switch? So the decline in sales is really the cannibalization of sales from daigou channel to the direct sales channels in China? This could explain why sales growth to China are now going backwards overall.

Could be that we have seen the best of sales growth in China for ATM.



You probably should disclose your shorts - they seem to impede on your sight :):

So - if a sinkhole appears under our newly build motorway and I take the old road into town instead of queuing up on the motorway, does this mean that I am canabalising the motorway?

That's what you said about direct sales canabalising Daigou .... it appears that your try to throw as many negative expressions around as you can. Instilling fear might be good for a shorters agenda, but it is not really helpful in any sensible discussion.

A2 had a huge sales boost after the start of the pandemic ... and given that babys are unlikely to have consumed significantly more milk during the pandemic than before ... it is quite likely that consumers just filled their cupboards (hey, other people bought toilet paper to last for the next 2 decades) - and find now that they still have some tins they want to use before buying new stuff, which well might explain a temporary drop in sales.

Not sure how any MIS system would be able to determine whether a tin of A2 milk sold in a Sydney supermarket gets immediately consumed, gets put into the cupboard as emergency ration for the next lock down or is sent in a parcel to China. I see how it can be difficult to predict short term product demand and product flow. Don't you?

Do you have any long term indications that Chinese parents are moving on from buying A2 product? If yes - what are they?

[+++++]

Didn't check Fri afternoon. Ouch. LOL. Oh well, life continues. Hopefully sunny Xmas Day.

[Beagle]

Stock should be trading on a PE of 18 - $6.84

Third downgrade would see it down to that level.

My gut instinct tells me that's now a reasonable PE going forward, (I think once a new floor in eps is found this year future growth is going to be much slower and much more expensive to achieve) but we will have to wait and see what eps is for the year. With the speed and severity of the recent downgrades something much lower than 38 cents is quite possible, even probable.


This is flawed logic. If ATM were going to take all their cash and give you a bumper special dividend then you would be on the right track. But ATM need the cash for their second tilt at the United States market, which is loss making. If they give you the cash, then ATM will not be able to develop the US and other Asian markets and growth will slow. ATM trades on a very high PE ratio (and yes so does much of the rest of the market but that is beside the point). Without growth the share price will collapse. (Some will say this process has already started.).

The whole idea that ATM has 'a lot of cash' is not true anyway from an investor perspective. Yes there is a lot in dollar terms But having to pay $11 for a share to buy $1.15 worth of cash is a very expensive way to obtain 'cash'.

Equally absurd is the suggestion that shareholders should ignore losses in the USA when valuing the company. It is true that shareholders would make more money today if the US operation was shut down. But guess what? A core part of future growth is to expand in the US. If such a growth plan did not exists the PE ratio would be trimmed again, as it became clear that ATM was a one market wonder for infant formula. The cash is needed "in house" to develop the business. Only when ATM starts to pay a dividend might a shareholder consider even some of that cash to be surplus to requirements, and so to be valued separately.

SNOOPY

Excellent high caliber post.


Agree Balance. Frankly, the entire management/governance around these matters have been quite poor, bordering on negligent. Disappointing, and I'm not even a shareholder. I smell a rat....and as we know, if it smells like a rat, sounds like a rat and looks like a rat....

Going into a trading halt was unnecessary, and a little akin to a possum in headlights. Perhaps they were trying to "buy themselves some time" so they could set/control the narrative?

Technicals are still not looking healthy on the chart. But there may be a little support around $10. Interestingly we are now pretty much around the 50% retracement level off the FTH, but with yesterdays gap down, I wouldn't recommend trying to catch a falling knife right here & now. Seeing a number with an 8 in front is not inconceivable!
Agree about the rat comment 100%. My nose for corporate creative B.S. has been giving a reading off the charts for quite some time hence the persistent loud warning barks.


On a very serious note, reading through all the postings in the last 3 days, I believe imo that there are several pertinent observations I would make about the downgrade announcement yesterday:

1. Directors and management obviously do not have a good handle of what's happening with sales & stocks in the market - been too easy in the last few years with demand exceeding supply. Management information system is deficient and frontline staff have been asleep on the job.

This is a very serious problem & issue for a company which is attempting to go global. The fact that we have had 2 shocking downgrades within the space of 3 months is testimony to that fact.

2. Daigou sales are very significant (hundreds of millions of dollars) and ATM is extremely vulnerable to any disruption to that sales channel. With the stroke of a pen, the China government can wipe out that channel.

3. Related to 1 and 2, have there been channel & brand switch? So the decline in sales is really the cannibalization of sales from daigou channel to the direct sales channels in China? This could explain why sales growth to China are now going backwards overall.

4. Management selling in the quantum and the timing begs the question if there has been skulduggery in the way they presented sales forecasts in the last 3 months. Revert back to 1 above if there is no skulduggery. Either way, there is a very serious issue which the company needs to come clean on.

I would certainly stay clear of investing in ATM until answers are forthcoming on the above points.

Agree 100%. Its a real shame Geoff Babbage is ending his career on this very sour note. I can't help wondering if the game is up with ATM with the strong growth in competition ?
Whatever happened to the valuable IP and patents that ATM used to talk about so often in years gone by ?

I think the shares are a great short at $11 and are headed in the short term considerably lower but I'm not going there in terms of shorting them.

For what its worth folks I know the Kingfish group (Barramundi and Marlin included) do regular company visits and are talking to the management of the firms they invest in on a regular basis. This is one of the ways they have consistently achieved outperformance in recent years.

[alokdhir]

You probably should disclose your shorts - they seem to impede on your sight :):

So - if a sinkhole appears under our newly build motorway and I take the old road into town instead of queuing up on the motorway, does this mean that I am canabalising the motorway?

That's what you said about direct sales canabalising Daigou .... it appears that your try to throw as many negative expressions around as you can. Instilling fear might be good for a shorters agenda, but it is not really helpful in any sensible discussion.

A2 had a huge sales boost after the start of the pandemic ... and given that babys are unlikely to have consumed significantly more milk during the pandemic than before ... it is quite likely that consumers just filled their cupboards (hey, other people bought toilet paper to last for the next 2 decades) - and find now that they still have some tins they want to use before buying new stuff, which well might explain a temporary drop in sales.

Not sure how any MIS system would be able to determine whether a tin of A2 milk sold in a Sydney supermarket gets immediately consumed, gets put into the cupboard as emergency ration for the next lock down or is sent in a parcel to China. I see how it can be difficult to predict short term product demand and product flow. Don't you?

Do you have any long term indications that Chinese parents are moving on from buying A2 product? If yes - what are they?

I agree with u that his is shorter's perspective ...so he highlights negatives more ...moreover its easy to kick a person when he is down ...

What worried me more after reading both downgrade communications ...now they stating that covid impacted Daigou channel decimation is leading to CBEC slowdown also ...how that happens without brand loyalties being shifted or more A2 alternatives available or in reality the a2 brand not as strong as we think it to be ...after all milk is a commodity only ...whats special about A2 milk from ATM company if others also offer A2 protein only milk etc

Also they said other products sales also being effected not only IF in China ....this also they are attributing to Daigou vanishing thus publicity associated with it vanishing which provided them with free grass root level exposure to chinese nook and corner as all WeChat sellers put posts on their account about things they can daigou in ...these posts which show ATM products and its benefits to all friends of that WeChat seller back home ...( All are very well connected back home ..reason they become WeChat sellers )

Think brand loyalty of Apple phones ...people wait to get it ...they dont switch to other easily available brand doing the same stuff etc ...A2 milk seems to become more commodity then speciality product of ATM with so many A2 options available to chinese people ...maybe its exposing the lack of strength of ATM's brand value

Yes the market is so huge that sales can still grow ...but growth rate and margins can be issue going forward ...IMHO

[Gregnz]

Dont forget the New Zealand component with brand loyalty or switching to other A2 brands. Many people who bought A2 did so because it was manufactured in NZ, and this is something that locally produced Chinese brands can never match.

[winner69]

........

Maybe, just maybe Jayne should have been allowed to stay on?

Agree ...just because the Board weren’t prepared to change was no reason to sack her

And bring Babidge back was a big big mistake (said so at the time but most revered him)

Chairman Hearn seems to have been a non-event over the last year

Hope new guy is good ....else A2 will never catch up on the year they they lacked leadership and failed to tackle new challenges.

[Beagle]

I predict the cost of achieving growth and the level of same going forward is going to be considerably more challenging than in the past. Geoff Babbage definitely looking past his prime at the ATM annual shareholder meeting https://www.nzherald.co.nz/business/a2-milk-shares-plummet-after-cutting-earnings-outlook/O4PVG3G5E5R2VG6IMTVVD5DQCE/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+19 +December+2020
Maybe both getting Jayne on board and bringing him back was a mistake ?

One more downgrade to come, possibly 2 before the end of FY21. I suspect they will only do $1.3b turnover in FY21 and gross margin at the low end of expected range. My estimate for FY21 is $250m net profit after tax = 33.6 cps. Choose your PE but I would not pay more than 18. Fair value in my opinion is ~ $6.

[Gregnz]

I predict the cost of achieving growth and the level of same going forward is going to be considerably more challenging than in the past. Geoff Babbage definitely looking past his prime at the ATM annual shareholder meeting https://www.nzherald.co.nz/business/a2-milk-shares-plummet-after-cutting-earnings-outlook/O4PVG3G5E5R2VG6IMTVVD5DQCE/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+19 +December+2020
Maybe both getting Jayne on board and bringing him back was a mistake ?

I suspect they will only do $1.3b turnover in FY21 and gross margin at the low end of expected range. My estimate for FY21 is $250m net profit after tax = 33.6 cps.
Choose your PE but I would not pay more than 18. Fair value in my opinion is ~ $6.

Each to their own I guess, but few companies on the NZX with a share price of $6 and generating a net profit of $250m after tax.

[alokdhir]

I predict the cost of achieving growth and the level of same going forward is going to be considerably more challenging than in the past. Geoff Babbage definitely looking past his prime at the ATM annual shareholder meeting https://www.nzherald.co.nz/business/a2-milk-shares-plummet-after-cutting-earnings-outlook/O4PVG3G5E5R2VG6IMTVVD5DQCE/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+19 +December+2020
Maybe both getting Jayne on board and bringing him back was a mistake ?

I suspect they will only do $1.3b turnover in FY21 and gross margin at the low end of expected range. My estimate for FY21 is $250m net profit after tax = 33.6 cps.
Choose your PE but I would not pay more than 18. Fair value in my opinion is ~ $6.

Add $ 3 for all other assets it has like cash , brand , NZ product etc etc ...So my FV is $ 8-9 max under present circumstances .

[Gregnz]

Gosh, all things considered, I wouldn't want to be invested in FPH, with a P/E of 48+ , full year revenue of only $1.26b, and a after tax profit of only $287m. Yet people happy to pay $34 per share. or Ryman for that matter with a P/E of 25+, generating profits of only $242m and currently $15+ per share.

[Beagle]

Add $ 3 for all other assets it has like cash , brand , NZ product etc etc ...So my FV is $ 8-9 max under present circumstances .

As Snoopy has observed, that cash is required to fund future growth, once a new low base is established in FY21. Without it and the future growth the cash will be used to generate the shares are not worth a PE of 18 so my view is adding back cash on hand is inappropriate. Likewise the brand value is what drives hopefully some modest growth going forward and therefore I would argue is already encapsulated in the metrics I have chosen.

I know $6 seems radically low but I have always been happy to sail my own race and use my own nose to find sensible value.

[alokdhir]

Gosh, all things considered, I wouldn't want to be invested in FPH, with a P/E of 48+ , full year revenue of only $1.26b, and a after tax profit of only $287m. Yet people happy to pay $34 per share. or Ryman for that matter with a P/E of 25+, generating profits of only $242m and currently $15+ per share.

FPH will be doing almost 2 b sales with profits of around 0.5b eps of 0.85 in this full covid year ...going forward also a big boost to future growth due to covid exposure of their products to many many new doctors and patients . Sector P/E is 45 as its niche healthcare showing steady growth and better prospects ahead with ageing world population . They have patent products and invest 10% in R&D regularly . No wonder they were No 1 company of NZ 2020 .

FPH has given 14 earnings upgrades in last 3 years with more coming in Feb 2021

RYM value moves with property prices too for obvious reasons ...it went to $ 6 in march now ...

[Gregnz]

FPH will be doing almost 2 b sales with profits of around 0.5b eps of 0.85 in this full covid year ...going forward also a big boost to future growth due to covid exposure of their products to many many new doctors and patients . Sector P/E is 45 as its niche healthcare showing steady growth and better prospects ahead with ageing world population . They have patent products and invest 10% in R&D regularly . No wonder they were No 1 company of NZ 2020 .

FPH has given 14 earnings upgrades in last 3 years with more coming in Feb 2021

RYM value moves with property prices too for obvious reasons ...it went to $ 6 in march now ...

I disagree with FPH but will keep on topic. Their demand for ventilators spiked during covid and has now fallen off a cliff.

[alokdhir]

I disagree with FPH but will keep on topic. Their demand for ventilators spiked during covid and has now fallen off a cliff.

Agree with keeping on topic part but fully disagree with your FPH views ...also they dont make Ventilators ...Humidifier ( part of ICU invasive ventilation ...world no 1 product ) and also doing great these days on non invasive ventilation ...front line standard covid hospital treatment protocol !! Their Nov sales were highest so far and still rising ...

[daveypnz]

I asked a friend in China if local IF brands are becoming more popular, she said yes. However she doesn't have a child so probably doesn't have her finger on the pulse but she did say the push to buy locally produced goods across the board is very real.

I see Feihe are marketing their IF as "More Suitable for Chinese Babies"

[Gregnz]

I asked a friend in China if local IF brands are becoming more popular, she said yes. However she doesn't have a child so probably doesn't have her finger on the pulse but she did say the push to buy locally produced goods across the board is very real.

I see Feihe are marketing their IF as "More Suitable for Chinese Babies"

There is definitely a push to buy local. There is also a huge portion of Chinese who dont trust Chinese manufactured product. Also, generally mothers will keep their babies on the same formula brand, the switch to a different brand isn't quite as easy as just buying a different brand or buying whats on sale at the time. This is where A2 will be able to prove to us if they really are as good at being a marketing company as we hope they are. The key for A2 is being manufactured in NZ.

[Arbroath]

I always find with a sexy stock like A2 there is much hype and expectation in the upside but equally when there is disappointment a lot of angst and exaggeration that the world is ending and the share price is suddenly worth about 30% of whee it was only a few months ago.

Don’t get me wrong $21 was hyped and I didn’t own having sold about $15/16 on the way up. Management definitely should’ve handled this downgrade better as I and many others thought they’d fail to make their optimistic guidance. They have lost some credibility and trust which will take 1-2 years to rebuild. Have dipped my toes back in under $11. Don’t think they’ll miss the bottom end of guidance now but that’s not saying much given the $400m cut to the bottom end of guidance range. Main risk now for me is getting caught up in the Australia-China crap going on but this is still a good company and if they can meet the adjusted guidance and show the potential of the US market then a PE of 25-30 will be sustainable imho.

If they slide to $8-9 range I’ll double up and hold for the next 5 years as this is not a fly by night operation.

[Beagle]

Each to their own I guess, but few companies on the NZX with a share price of $6 and generating a net profit of $250m after tax.

Its all about earnings per share and what the more moderate growth rate is going to be going forward. That's going to take quite some time to be established. For that reason I won't touch this at any price until a new confirmed uptrend is in place. $6 is just an indicative marker for me where I think the fundamental's might start to look reasonably attractive...more important for me is a new confirmed uptrend, (confirmed for instance with a break up through the 100 day moving average), which I think is highly unlikely to happen anytime soon.
While a clear downtrend remains this is a very dangerous place to have one's capital invested, in my opinion. Downgrades almost always come in three's !

[101nick101]

One of my larger holdings that I purchased between $14-17, I'll battening down the hatches and see where things are in a year or 2 instead of selling off now at a loss.

[Gregnz]

Our investor friends in Australia seem convinced there have been 3 downgrades in 4 months, has there? I can only find 2?

[Balance]

Guess some posters here will be more receptive to listening to the old investment adages?

Sp then was $16.65.


Those of us around long enough have learnt (and through bitter experiences at the beginning) to heed some investment adages which have proven to be sound and wise over time and again.

One adage is that Downgrades do come in threes irrespective of what a company or management tell you.

Another is not to try and catch falling swords - you may not have many fingers left!


It’s just the nature of things that most downgrades come in threes, whether the companies are good or bad companies.

Directors and management like to believe that any set backs are temporary and one offs - so they tend to underplay the downgrade when it comes.

Another adge is not to double down, but double up.

[Hello123]

https://www.youtube.com/watch?v=upqAK7sdGRg

[Gregnz]

https://www.youtube.com/watch?v=B_GJR1MJjHY

[Gregnz]

Based upon the comments on those two videos, a lot of people now have it on their radar to buy, plenty of people with their fingers on the trigger. I want to average down on shares I purchased at $15.06, but will wait until the trend is heading north before buying more even if I miss out on the bottom.

[Hello123]

https://www.youtube.com/watch?v=upqAK7sdGRg

According to his calculation by 2030:

Bearish case $7.06
Base case $12.47
Bullish case $19.40

[Beagle]

Moose Opines from deep within Siberia and asked me to share.

Mark Minervini, one of those social media stock gurus, had some good points around technical and what to make about once-market-leaders. Thought you might like to post this up on ST since people are now (FINALLY) starting to heed warnings and think about how much further this could tank.

See below:
To compound money, and not your losses, you need to be aware of an insidious probability I call the 50/80 Rule. Here it is: Once a secular market leader puts in major top, there’s a 50 percent chance that it will decline by 80 percent—and an 80 percent chance it will decline by 50 percent.


Think about these probabilities for a moment. After a stock makes a huge upward move, it will almost assuredly drop by 50 percent when it ultimately tops out. And, it’s a flip of a coin whether that downward move will be as much as 80 percent. The average percentage decline that big market leaders experience once they top is 70%. Timing is not the point I’m making here. This story is a cautionary tale about paying attention to the first loss to hit your radar.


Every major decline starts as a minor pullback. If you have the discipline to heed sound trading rules, you will limit your losses while they’re small and you will not throw good money after bad. But if you rationalize all the reasons why your stop should be ignored or why you shouldn’t use a stop in the first place, then the damage will be far greater when the stock keeps dropping. And if you “average down” through that drop, thinking this stock just has to turn around at some point, then the uncontrolled losses will devastate you psychologically, and eventually decimate your trading account.

Holding a hard falling stock or worse, buying more may make you money once, twice, or a few times. But at some point your stocks will keep on falling. You won’t have just a loss on your original position; you’ll also lose on the additional shares you’ve bought. At this point, you might really compound your mistakes by convincing yourself this has to be the bottom, so you should buy even more! Some investors are so egotistical about accepting mistakes that they double down several times. Amateur traders strive to be right, pros strive to make money.

Buying broken leaders may work for you at some point. But the reality is, you’re compounding mistakes—not money–-and eventually, this behavior will bite you hard and ultimately destroy any chances you have for stellar performance. That’s a guarantee!

A bit sobering, eh?

So, if we take the recent high of $21.74, the 80% probably of it hitting $10.87 has now been completed. Unfortunately, holders deep underwater now have the very real, flip-a-coin-chance, of seeing it declince 80% from those highs to $4.35. YIKES! As cited above, the average decline is 70%, equating to $6.52 - and is much inline with yours and Balance's views (spooky, eh?). Me thinks some posters on ST should start heeding warnings from both of you, yesterday.

Plenty more fish in the sea to be playing with on the stock market than a once-darling growth company with compressing margins, declining revenue and a possible loss of market sector and brand power. Those who claim they are long-term sure better have a better intestinal fortitude than those who require A2M as the coming year or two is going to be very, very difficult indeed...

[Gregnz]

Moose Opines from deep within Siberia and asked me to share.

I gather the 50/80 rule has been around for some time. Isn’t what we are seeing the effect of a temporary one in one hundred year event, I.e Covid?

[Beagle]

I gather the 50/80 rule has been around for some time. Isn’t what we are seeing the effect of a temporary one in one hundred year event, I.e Covid?

I don't know, I had never heard of it until my friend emailed me the above and asked me to share it so its up to people to DYOR on that. That's essentially how the directors are explaining it. Whether there are systemic issues about loss of brand power, geopolitical questions about the CCP encouraging buy China made, slowdown or growth from aggressive pricing practices by Fontera with their Karicare A2 product and other competition slowing growth is the key question investors have to decide for themselves.

For me technical analysis is your best friend when there's so much fundamental uncertainty about the possible growth rate going forward. The trend is definitely not your friend at present, (unless one is short) but at some stage in the future it will be.

I liked the first video with the bear case...pretty much how I see it although I am also factoring in another downgrade, hence my $6. I think with the second video its extremely simplistic to simply take the average PE for the last 4-5 years and say that's an appropriate multiple going forward. Takes no account of the slowing growth rate in the last couple of years and the way the growth has tanked and gone into reverse this year and no account of the apparent governance credibility issue I've discussed previously. Also takes no account of the risks I've mentioned in my first paragraph.

[aperitif]

The last three months on this particular forum have reminded me so much of when the same crew were attacking RD & Xero in 2014/15. I continued to hold through all the drivel and is now 5x the value of my house with no intention of selling. The same goes for a2, this is a once in a lifetime innovation in a commodity category. People need to stop looking through their microscope and get in a satellite to see the bigger picture unfolding. Looking forward to replying to this message in 5 years on my yacht.

[porkandpuha]

Moose Opines from deep within Siberia and asked me to share.

Rinse and repeat

[Habits]

https://www.youtube.com/watch?v=upqAK7sdGRg

Good reasoning... too conservative but thanks for posting

[silverblizzard888]

Straight forward situation here. A2 has experienced a halt in its current business growth due to Covid halting its sales channels, price will likely drop a bit more maybe to $8 due to a negative outlook, investors not wanting to wait this out and the time it will need to recover may take 12 months. The long term fundamentals have not changed, their products are still in large demand, the management team is still amazing, so this stock is still worth about $15 in a years time when everything returns back to normal. Be greedy when others are fearful, at least that is how I will approach this.

[ratkin]

The last three months on this particular forum have reminded me so much of when the same crew were attacking RD & Xero in 2014/15. I continued to hold through all the drivel and is now 5x the value of my house with no intention of selling. The same goes for a2, this is a once in a lifetime innovation in a commodity category. People need to stop looking through their microscope and get in a satellite to see the bigger picture unfolding. Looking forward to replying to this message in 5 years on my yacht.

I have no idea where this stock is going, however what I find fascinating are the posts on this forum. In particular the need some posters seem to have to try and manipulate others. Like you say, the same thing happened on xero. If people are not holding a stock it is strange they have a compulsion to tell everyone how terrible it is.

The posts add nothing, and are just designed to mess with the heads of the holders, I struggle to see what motivates people to make these sort of posts, on the surface it looks as if they just enjoy seeing others suffer, although they try and disguise it under the guise of trying to warn people.

[alokdhir]

I have no idea where this stock is going, however what I find fascinating are the posts on this forum. In particular the need some posters seem to have to try and manipulate others. Like you say, the same thing happened on xero. If people are not holding a stock it is strange they have a compulsion to tell everyone how terrible it is.

The posts add nothing, and are just designed to mess with the heads of the holders, I struggle to see what motivates people to make these sort of posts, on the surface it looks as if they just enjoy seeing others suffer, although they try and disguise it under the guise of trying to warn people.

Fully agree with your thoughts about real motivation of over negative posts .

I for one was trying to do brainstorming with so called ATM experts to find out a consensus floor SP of ATM in these troubled times for the company so one can quantify risk reward equations better

All companies go thru bad times precipitated by extra ordinary or ordinary events

But only good companies come back from abyss ...so once anyone has decided about the pedigree of ATM then no need worry about extra 12 months wait which has been added to his waiting time

Like I am sure ATM will bottom out in next 2-4 months period when all will become negative on it ...to find out where is my motivation to do this exercise ...my 2C is that 8-9 SP levels ...may make a spike low of below that in any panic but that would not be actionable SP

Also I am pretty certain in my mind 90/100 that ATM is a quality company and it will come back ...maybe sooner then any expecting at the moment but surely in 12 months or so

Holders need hold ...buyers can start thinking of 4 parcels buying on the way down for getting it on all lower price points ...with atleast 2-3 years investment horizon .

[HCR20]

Hang on Beagle...you've never heard of the 50/80 rule and you don't know if your friends claim is fact-based and yet you post in such an authoritive tone?

[Balance]

Some seriously amateurish investment thoughts, recommendations, ‘advice’ & ‘suggestions’ being dished out by some ‘heads in the sand’ posters in the last day.

Anyone paying attention to their posts as ATM sp drops away in the last few months and lose money will have cause to take offence.

Investing is about taking into consideration all perspectives, positive or negative. Seems like some posters here only want to read their ‘confirmation’ bias.

Beware!

[Balance]

Hang on Beagle...you've never heard of the 50/80 rule and you don't know if your friends claim is fact-based and yet you post in such an authoritive tone?

Beagle has already replied :

‘I had never heard of it until my friend emailed me the above and asked me to share it so its up to people to DYOR on that. That's essentially how the directors are explaining it. Whether there are systemic issues about loss of brand power, geopolitical questions about the CCP encouraging buy China made, slowdown or growth from aggressive pricing practices by Fontera with their Karicare A2 product and other competition slowing growth is the key question investors have to decide for themselves.‘

I have never heard or read of the 50/80 rule either but am happy to ‘DYOR’ and assess accordingly.

A simple google search comes up with a number of articles, this being the principle one :

http://www.minervini.com/blog/index.php/blog/show/the_50_80_rule_excerpt_from_mark_minervinis_think_ trade_like_a_champion

[winner69]

I gather the 50/80 rule has been around for some time. Isn’t what we are seeing the effect of a temporary one in one hundred year event, I.e Covid?

You probably right there Greg

Stocks like OCA dropped by 60% and HGH dropped by 50% and SUM by 50% from their highs because of Covid - they did the 80% probability thing but not the 50% probability thing .....but recovered nicely eh as A2 will / might in due course.

As you suggest A2's fall from grace maybe is just a covid thing (although late to the party) and little to do with a cool sounding rule dreamt up by a guy on social media

Ask yourself why this moosie reports in from Siberia via Beagle - Siberia being code for being not wanted on this forum.

[percy]

Some great companies have suffered some big set backs.
Mainfreight listed at $2 .Were going to take on the world.First stop Australia went terribly wrong.So they fixed it.
MFT share price 6/2/2000 $1.66 ..25/2/2001 $1.18....19/1/2003 $1.12...Latest $62.66
Ebos.Just a pretty ordinary medical supply distributor.Lost Clark agency for joints at one stage,which was a very profitable part of their business.Expansion into Australia went badly,so they fixed it.
EBO share price 30/1/2000 $3.39....27/5/2001 $2.05....1/5/2005 $3.41...Latest $25.75
XRO.Xero.Going to set the world on fire.Something goes wrong they fix it.
XRO share price 18/11/2011 $4.62...9/3/2014 .$41.93...7/12/2014 $15.18. Latest $150.59.
So the question A2 shareholders have ask themselves is whether A2 is a great company or an ordinary company?


ps.I brought my first holding of PAZ in April 2011 at 3.5 cents.Luckily for me few others posted on that thread.If they had they would have rated PAZ as a sell.Everything that could go wrong for them did go wrong,so they would have been right..lol..Latest share price 55 cents.

[Waltzing]

MR P "They fixed it"

a well respected brand. Strong balance sheet. Experienced at selling product. The product has been validated according to by Bio Chem sources is suitable for consumption. They may have to cut price but they should still be profitable? Takes a lot of work to follow a company this size.

[winner69]

https://www.youtube.com/watch?v=upqAK7sdGRg

According to his calculation by 2030:

Bearish case $7.06
Base case $12.47
Bullish case $19.40

Those prices are his valuations for today - the 2030 bit is how out projected cash flows our for and then discounted back into what they are worth today

He seems to use a 10% discount rate so his base case is essentially saying if you bought today at $12.47 and his assumptions turned out right you'd get 10% pa return

Pretty impressive presentation - have you thought about what A2's sales growth might be over the next 5 and 10 years?

[Balance]

https://www.nzx.com/announcements/365379

So Synlait is expecting a 35% drop in IF sales by ATM.

All Covid & daigou related?

Read the text carefully and you get a few clues that there is more to the drop than just Daigou related?

[winner69]

Good post percy - yes those mentioned companies did fix things and became great .... and many others have done the same

I'd say A2 will fix things as well .....esp as Babidge is about to go but something for the new man to get stuck into.

New guy done things like this - '...during which he restructured and transformed the business into a brand focused, leading omni-channel retailer with successful wholesale partnerships, delivering double digit compound annual growth in sales and earnings over the past five years'

I like this bit about him 'David has demonstrated significant skill in guiding businesses through periods of significant growth whilst also effectively managing the changes that expansion frequently requires'

[bull....]

synliat update is another massive downgrade , a2 must be forecasting huge reduced volumes going forward. probably not wanting to get caught with inventory issues

[Balance]

synliat update is another massive downgrade , a2 must be forecasting huge reduced volumes going forward. probably not wanting to get caught with inventory issues

Actually, if they have huge inventory levels, there is every reason to cut back on production orders until the situation settles.

As an aside, a contact of mine bought a couple of cans of A2 IF over the weekend and said she was surprised at the production date - 27 Jan 2020 & 6 April 2020. Starting to supply from the built up unsold inventory?

[bull....]

Actually, if they have huge inventory levels, there is every reason to cut back on production orders until the situation settles.

As an aside, a contact of mine bought a couple of cans of A2 IF over the weekend and said she was surprised at the production date - 27 Jan 2020 & 6 April 2020. Starting to supply from the built up unsold inventory?

it would be prudent management to reduce inventory levels. i would say a2 told synliat quietly dont expect much orders from us in the near future as we wait to see how sales unfold in the new year.

[Balance]

Good post percy - yes those mentioned companies did fix things and became great .... and many others have done the same

I'd say A2 will fix things as well .....esp as Babidge is about to go but something for the new man to get stuck into.

New guy done things like this - '...during which he restructured and transformed the business into a brand focused, leading omni-channel retailer with successful wholesale partnerships, delivering double digit compound annual growth in sales and earnings over the past five years'

I like this bit about him 'David has demonstrated significant skill in guiding businesses through periods of significant growth whilst also effectively managing the changes that expansion frequently requires'

Seem to recall the new man Martin Stewart at Sky TV was going to do the same? Great credentials too!

https://www.nzx.com/announcements/327350

[Balance]

You probably should disclose your shorts - they seem to impede on your sight :):

So - if a sinkhole appears under our newly build motorway and I take the old road into town instead of queuing up on the motorway, does this mean that I am canabalising the motorway?

That's what you said about direct sales canabalising Daigou .... it appears that your try to throw as many negative expressions around as you can. Instilling fear might be good for a shorters agenda, but it is not really helpful in any sensible discussion.

A2 had a huge sales boost after the start of the pandemic ... and given that babys are unlikely to have consumed significantly more milk during the pandemic than before ... it is quite likely that consumers just filled their cupboards (hey, other people bought toilet paper to last for the next 2 decades) - and find now that they still have some tins they want to use before buying new stuff, which well might explain a temporary drop in sales.

Not sure how any MIS system would be able to determine whether a tin of A2 milk sold in a Sydney supermarket gets immediately consumed, gets put into the cupboard as emergency ration for the next lock down or is sent in a parcel to China. I see how it can be difficult to predict short term product demand and product flow. Don't you?

Do you have any long term indications that Chinese parents are moving on from buying A2 product? If yes - what are they?

This is the problem with this site - too many with vested interests trying to ramp up and down to suit their positions.

I have not shorted ANY stock in the last 2 years - as befits my belief that the market would be a good one for going long, rather than short. So put that insinuation of yours to one side for a start.

Brand & channel switch are real possibilities especially when new competition has entered the A2 market (eg. Karicare at $10 a can cheaper in NZ than A2) and consumers in China can now buy directly from ATM's sales channel there rather than Daigou.

A double downgrades in 3 months is a serious matter - not a blip as some here would like us to believe.

[Balance]

https://www.nzx.com/announcements/365379

So Synlait is expecting a 35% drop in IF sales by ATM.

All Covid & daigou related?

Read the text carefully and you get a few clues that there is more to the drop than just Daigou related?


These posts on Synlait thread are pertinent :

October 2020 :
Lots going on at Synlait.
Projects cancelled
Restructuring
jobs being cut..

December 2020 :
Synlait Know what is going on, their warehouses are almost full, As i have said before they cant get the stuff out of the country.
It was the street Christmas party saturday...Spoke to neighbour who works there, she said HR and Payroll have been given the push and are now outsourced

[Waltzing]

"27 Jan 2020 & 6 April 2020"

hardly just in time...

[Balance]

https://www.shortman.com.au/stock?q=A2M

60m shares shorted as at 14 December.

Going to be fascinating to see whether shorters are covering or adding to their positions.

[ratkin]

Very gloomy from Sinlait, I take more notice of that than the last Ten pages of waffle on this thread.

[whatsup]

This is far from over, Q is will it go under $10.00 ?

Hmmmm, looking like it is but IMHO if it goes under $10 then that a big over reaction and good buying, the sky IS NOT FALLING !!!!

[winner69]

Very gloomy from Sinlait, I take more notice of that than the last Ten pages of waffle on this thread.

I think Synlait were very restrained in what they disclosed - for good reason

Anyway Merry Christmas and Happy New Year me old mate ratkin - all the best

[Balance]

"27 Jan 2020 & 6 April 2020"

hardly just in time...

Guess it shows that pertinent information relating to how a company is actually & really doing can be gleaned from simple everyday things!

[Balance]

Updated research from Morningstar.

Valuation: $16.30 Undervalued but there is time to purchase

A2 Milk Facing Near-Term Challenges, but Shares Offer Margin of Safety; FVE Maintained

Investment rating

While The A2 Milk Company's highest-growth days are behind it, we still expect solid future gains, with market share opportunities in Chinese infant formula, North American fresh milk, and other global dairy products supporting our outlook for 12.5% annual earnings per-share growth over the next decade.

And with minimal capital investment needs, A2 is set to enjoy stellar returns on invested capital and strong free cash flow.

We think the firm has carved out a narrow economic moat, owing to its brand intangible assets. However, the firm's future success relies mostly on developments in the Chinese infant formula market, where we estimate A2 generates more than 80% of its earnings through both direct sales and Australian third parties.

We expect the firm's market share to climb to about 17% by fiscal 2030 from more than 6% in fiscal 2019, although competition and increased marketing needs present near-term risks.

[ratkin]

I think Synlait were very restrained in what they disclosed - dor good reason

Anyway Merry Christmas and Happy New Year me old mate ratkin - all the best

Yeah enjoy the holidays, we all earned them this year

[Lease]

Some great companies have suffered some big set backs.
Mainfreight listed at $2 .Were going to take on the world.First stop Australia went terribly wrong.So they fixed it.
MFT share price 6/2/2000 $1.66 ..25/2/2001 $1.18....19/1/2003 $1.12...Latest $62.66
Ebos.Just a pretty ordinary medical supply distributor.Lost Clark agency for joints at one stage,which was a very profitable part of their business.Expansion into Australia went badly,so they fixed it.
EBO share price 30/1/2000 $3.39....27/5/2001 $2.05....1/5/2005 $3.41...Latest $25.75
XRO.Xero.Going to set the world on fire.Something goes wrong they fix it.
XRO share price 18/11/2011 $4.62...9/3/2014 .$41.93...7/12/2014 $15.18. Latest $150.59.
So the question A2 shareholders have ask themselves is whether A2 is a great company or an ordinary company?


ps.I brought my first holding of PAZ in April 2011 at 3.5 cents.Luckily for me few others posted on that thread.If they had they would have rated PAZ as a sell.Everything that could go wrong for them did go wrong,so they would have been right..lol..Latest share price 55 cents.

Unfortunately few people have foresight to conclude whether A2 is a great company or ordinary company. I reckon even A2 management don't know. So share investing always involves some degree of gambling. For A2, I am convinced Chinese people still like their products(otherwise why MBS revenue rise strongly?), thus I will give the management some time to fix the issues.

Disc.: currently not holding, but keen to enter

[dreamcatcher]

People looking for an alternative valuation UBS has released one earlier today, reduced TP from NZ$20.50 to NZ$17 buy

Massive 60m shorts still need to close and expecting this to bounce to NZ$15

Make your own mind up concerning.......... RISK - REWARD

[bull....]

$10 support in aus if it breaks new lows coming .... lets go boys

[Norwest]

Serious question,

Does the ATM "A2 infant formula" product have any technology/secret formula etc are protected via IP regarding its infant formula that make it substantially better and a reason to buy vs. something like Karicare A2, Nestle A2 etc or any of the other branded A2 IF products?

Or is it just marketing/branding that their infant formula has as far as IP goes?

[Waltzing]

Balance "Guess it shows that pertinent information relating to how a company is actually & really doing can be gleaned from simple everyday things!"

When ones mind is busy following world events simple check on inventory slip ones mind.

Bike shop supplies from china still OUT of STOCK.

Not so A2 Milk. Prehaps there have been problem shipping? and it has lead to a supply build up combined with slower sales via third party. But surely in this day and age the inventory shipping levels on databases are easy to look up every day, every hour and see where your product is in the supply chain.

Obviously management does not have access to a live Dashboard of product stock shipments.

Production run lag times lead to a lumpy supply chains.

Therefore sales forecasts by management may also be LUMPY.

Opening up other markets may be a new goal. Arab market? European Market? Japan?

[Balance]

Balance "Guess it shows that pertinent information relating to how a company is actually & really doing can be gleaned from simple everyday things!

Obviously management does not have access to a live Dashboard of product stock shipments.

And speaking of observations:

Just came back from supermarket and thought I would check out IF section.

Karicare A2 - $31.99 vs ATM - $44.00

Can recall Karicare was $33.95 before so looks like Danone is moving to clear stock first?

[peat]

Serious question,

Does the ATM "A2 infant formula" product have any technology/secret formula etc are protected via IP regarding its infant formula that make it substantially better and a reason to buy vs. something like Karicare A2, Nestle A2 etc or any of the other branded A2 IF products?

Or is it just marketing/branding that their infant formula has as far as IP goes?

a little bit kind of - not really though hahah - thats my view but others will disagree.

this has all been covered so if you are serious then read the threads (SML as well) .

[alokdhir]

[QUOTE=bull....;863820]$10 support in aus if it breaks new lows coming .... lets go boys[/QUOTE

Not breaking your 10 support ....if it holds then bounce to 12.40 ??

[Waltzing]

"Danone " doing a lot to go carbon neutral as well. 40% market share in NZ..

[JW Invests]

Those prices are his valuations for today - the 2030 bit is how out projected cash flows our for and then discounted back into what they are worth today

He seems to use a 10% discount rate so his base case is essentially saying if you bought today at $12.47 and his assumptions turned out right you'd get 10% pa return

Pretty impressive presentation - have you thought about what A2's sales growth might be over the next 5 and 10 years?

Hey Winner, really appreciate it and sharing what I've learnt from you from many years of lurking on this forum.

Hope you guys enjoyed the video, cheers.

[bull....]

[QUOTE=bull....;863820]$10 support in aus if it breaks new lows coming .... lets go boys[/QUOTE

Not breaking your 10 support ....if it holds then bounce to 12.40 ??

gave it crack , still early in the day

[Ruby]

https://www.smh.com.au/business/companies/a2-milk-names-david-bortolussi-as-new-ceo-20200811-p55khj.html

"David understands the Chinese business culture, understands the way they do business, understands the importance of partnerships and relationships…and it's those qualities that transfer into our business," he said.
Mr Bortolussi is currently group president, international innerwear at HanesBrands, the underwear and activewear business. In 2016 Hanes bought Pacific Brands, owner of the famous Bonds brand.
"He took a business (Pacific Brands) that was close to moribund really and saw that the intrinsic value in that company, which had to be exploited, was in its brands. And (he) took those brands and enlivened them and that drove ultimately the retail strategy, and that's what attracted Hanes," Mr Hearn said

[Beagle]

Hey Winner, really appreciate it and sharing what I've learnt from you from many years of lurking on this forum.

Hope you guys enjoyed the video, cheers.

Good video, well done. I like your bearish case but how this plays out is anyone's guess. I believe downgrades come in three's and its highly likely we'll see another one before FY21 is done and dusted. Welcome to the forum.

[bull....]

[QUOTE=bull....;863820]$10 support in aus if it breaks new lows coming .... lets go boys[/QUOTE

Not breaking your 10 support ....if it holds then bounce to 12.40 ??

the $10 held taking off now , i do day trades so ignore my commentary unless you doing the same , im short long term still

[see weed]

SP up 60c in last hour. Has the worm turned or dead cat?;)

[Balance]

SP up 60c in last hour. Has the worm turned or dead cat?;)

Short coverings will provide some floor support before the next step up or down.

[tomm]

People looking for an alternative valuation UBS has released one earlier today, reduced TP from NZ$20.50 to NZ$17 buy

Massive 60m shorts still need to close and expecting this to bounce to NZ$15

Make your own mind up concerning.......... RISK - REWARD
Same strategy here.

[Sideshow Bob]

Will be interesting to see what happens with Mataura Valley, and if that DD with a view to purchase continues (all things being equal, originally supposed to complete end FY21). Obvious capacity remains with Synlait for the short/perhaps more medium term. Do they invest in stainless steel? Or do they spend some of their warchest on marketing and generating revenue? Hmmmmmm.

[Beagle]

Will be interesting to see what happens with Mataura Valley, and if that DD with a view to purchase continues (all things being equal, originally supposed to complete end FY21). Obvious capacity remains with Synlait for the short/perhaps more medium term. Do they invest in stainless steel? Or do they spend some of their warchest on marketing and generating revenue? Hmmmmmm.

Implications for Synlait if they go ahead with this acquisition look a little ominous !

[see weed]

Short coverings will provide some floor support before the next step up or down.
Still, we are having a lot of fun over here. Have had 4000 on the sell all morning and have amended it 11 times so far. It is like a game of cat and mouse.:)

[Beagle]

Still, we are having a lot of fun over here. Have had 4000 on the sell all morning and have amended it 11 times so far. It is like a game of cat and mouse.:)

As long as you're still the cat that's okay ;)

[see weed]

As long as you're still the cat that's okay ;)
I felt like a cat this morning. This afternoon I feel like a mouse with sp snapping at my tail heading north:D.

[Sideshow Bob]

Implications for Synlait if they go ahead with this acquisition look a little ominous !

Although ATM still have almost a 20% holding in SML - albeit looking less valuable by the day. Only thing is infant formula approvals?

But otherwise clip the ticket twice??

Could be also an opportunity for Bright to take them out and go all the way....??? Maybe there is some sort of deal in the wind??

Too many question marks!! ;)

[Beagle]

I felt like a cat this morning. This afternoon I feel like a mouse with sp snapping at my tail heading north:D.

As long as you're not chasing your own tail you should be okay ;)

[alokdhir]

[QUOTE=alokdhir;863827]

the $10 held taking off now , i do day trades so ignore my commentary unless you doing the same , im short long term still

Seems like 10.40 stopped it ...first small hurdle it cud not cross ...shows further bearishness ...till below 11.45 ...no bounce prospects !!:confused:

[petty]

Hell of a bearish feed this has become. I'm an investor not a trader. As Buffet said you should only be prepared to invest in stocks by asking yourself if you would be happy to hold them if the stock market closed for 5 years. I agree with comments made here indicating that downgrades are COVID related therefore I see the 5 year horizon similar now to how I saw it in January 20.
Having said that I appreciate many here are traders and therefore your approach will be different.
For investors who are new to investing. Be mindful of coming here (sharetrader) for investment advice or insights. DOYR, follow your convictions and if you're an investor be guided by where you see A2 in 5 years not 5 months.

(That being said what a painful pre christmas kick in the guts)

[LEMON]

Wonder if the institutes have anything to do with boosting the price?
They wouldn't want to see ATM falling so low and leaving sour tastes.

[Lease]

Hell of a bearish feed this has become. I'm an investor not a trader. As Buffet said you should only be prepared to invest in stocks by asking yourself if you would be happy to hold them if the stock market closed for 5 years. I agree with comments made here indicating that downgrades are COVID related therefore I see the 5 year horizon similar now to how I saw it in January 20.
Having said that I appreciate many here are traders and therefore your approach will be different.
For investors who are new to investing. Be mindful of coming here (sharetrader) for investment advice or insights. DOYR, follow your convictions and if you're an investor be guided by where you see A2 in 5 years not 5 months.

(That being said what a painful pre christmas kick in the guts)

This forum indeed has a lot of long-term share investors.

[winner69]

Hell of a bearish feed this has become. I'm an investor not a trader.....

.....

(That being said what a painful pre christmas kick in the guts)

Investors probably feeling the effect being $8 billion poorer from a few months ago

[dobby41]

Although ATM still have all but a 20% holding in SML - albeit looking less valuable by the day. Only thing is infant formula approvals?

I thought they had 20% rather than all but 20% (ie 80%)?

[dreamcatcher]

Only BRAND Toyota can call their cars Toyota..........

[Sideshow Bob]

I thought they had 20% rather than all but 20% (ie 80%)?

Sorry - but was meaning very very close to a 20% holding. Will edit to make clearer.

[Waltzing]

"Having said that I appreciate many here are traders "

some operations do both. Often it depends on the stock and its life cycle and its sector. To say TRADER or INVESTOR is not actually accurate. Some operations are more complex than that.

If this stock has no IP and has build a market based only approach to its product with nothing else than some Operators may decide its a TRADE and other stock are a HOLD.

[Akane]

Wonder if the institutes have anything to do with boosting the price?
They wouldn't want to see ATM falling so low and leaving sour tastes.

Instos most likely have insider information and would've offloaded before the halt was in place.

[Ggcc]

Hell of a bearish feed this has become. I'm an investor not a trader. As Buffet said you should only be prepared to invest in stocks by asking yourself if you would be happy to hold them if the stock market closed for 5 years. I agree with comments made here indicating that downgrades are COVID related therefore I see the 5 year horizon similar now to how I saw it in January 20.
Having said that I appreciate many here are traders and therefore your approach will be different.
For investors who are new to investing. Be mindful of coming here (sharetrader) for investment advice or insights. DOYR, follow your convictions and if you're an investor be guided by where you see A2 in 5 years not 5 months.

(That being said what a painful pre christmas kick in the guts)
Well said and I hold your view. Many have egos that are present during hindsight

[Gregnz]

Hindsight is a great thing. Gosh if we all got our predictions right 100% of the time we would all be billionaires.

[Balance]

Hindsight is a great thing. Gosh if we all got our predictions right 100% of the time we would all be billionaires.

Downgrades come in threes.

How’s that for foresight?

[Balance]

Downgrades come in threes.

How’s that for foresight?

And how about those who confidently stated that ATM would not be affected when the pandemic broke out in March because it is so well positioned as an essential food?

Point being that market conditions do change and well managed companies adapt their businesses to be as much in tune with such conditions as possible.

[Gregnz]

And how about those who confidently stated that ATM would not be affected when the pandemic broke out in March because it is so well positioned as an essential food?

Point being that market conditions do change and well managed companies adapt their businesses to be as much in tune with such conditions as possible.

Purely my opinion, but I’d think A2 management are currently adapting their business. As I’ve said previously, maybe this was the wake up call they needed?

[Balance]

Purely my opinion, but I’d think A2 management are currently adapting their business. As I’ve said previously, maybe this was the wake up call they needed?

2 downgrades in 3 months?

Let me make a call here - they have not got a clue!

Too busy gilding the lily and to make matters worse, some were busy selling shares.

[alokdhir]

Downgrades come in threes.

How’s that for foresight?

I acknowledge your point also and also acknowledge that many of you warned here many a time after sept downgrade ...

Most want to hear what they thinking ...which actually means not hearing at all ...as if one doesn't process other point of view in the same manner as his own then he might as well not listen or debate about any views or issues

[Gunner]

Downgrades come in threes.

How’s that for foresight?

Post covid, this will continue on as if 2020 -21 never happened. This is obviously far from ideal but this doesnt change the 5 year forecast. Plenty of stocks have had downgrades only to bounce back with avengence with time.

[Balance]

Post covid, this will continue on as if 2020 -21 never happened. This is obviously far from ideal but this doesnt change the 5 year forecast. Plenty of stocks have had downgrades only to bounce back with avengence with time.

So sure?

IF Karicare A2 $31.99 vs A2 $44

The competitive landscape is changing.

[Gunner]

So sure?

IF Karicare A2 $31.99 vs A2 $44

The competitive landscape is changing.

I'm as sure as you can be. More likely than not imo.

[Gregnz]

I personally see no benefit in locking in losses now. It’s the same management who got us to all time highs, then Covid hit. I know if I was management I’d have been overly cautious with the recent guidance update. There may be another downgrade, their might not be. I guess I’ll take my chance. I’ll take it on the chin if it does happen.

[alokdhir]

So sure?

IF Karicare A2 $31.99 vs A2 $44

The competitive landscape is changing.

Countdown online shows both stage 3 prices ....Karicare 900 gm 3 @ 34 vs a2 Platinum 3 @ 39

Point remains both made in nz and both A2 protein only ...so no difference in most people's eyes

[Balance]

Countdown online shows both stage 3 prices ....Karicare 900 gm 3 @ 34 vs a2 Platinum 3 @ 39

Point remains both made in nz and both A2 protein only ...so no difference in most people's eyes

Try the crucial stage 1 prices. That’s what get babies ‘stuck’ on a brand/taste.

[alokdhir]

I personally see no benefit in locking in losses now. It’s the same management who got us to all time highs, then Covid hit. I know if I was management I’d have been overly cautious with the recent guidance update. There may be another downgrade, their might not be. I guess I’ll take my chance. I’ll take it on the chin if it does happen.

Most likely u r doing the right thing ...holding and not selling out now

Just need little more time thats most likely the only trouble involved :t_up:

[Balance]

I personally see no benefit in locking in losses now. It’s the same management who got us to all time highs, then Covid hit. I know if I was management I’d have been overly cautious with the recent guidance update. There may be another downgrade, their might not be. I guess I’ll take my chance. I’ll take it on the chin if it does happen.

In your shoes, I would probably do the same - the time to get out was the first downgrade.

[RTM]

I personally see no benefit in locking in losses now. It’s the same management who got us to all time highs, then Covid hit. I know if I was management I’d have been overly cautious with the recent guidance update. There may be another downgrade, their might not be. I guess I’ll take my chance. I’ll take it on the chin if it does happen.

If ATM is just a part, say 5-8 %, of your diversified portfolio, then little harm done really. And yes, I would hold and ride it out as well. Good luck.

[Gunner]

If ATM is just a part, say 5-8 %, of your diversified portfolio, then little harm done really. And yes, I would hold and ride it out as well. Good luck.

A good lesson on the importance on being diversified. I'm about 7% in ATM but sounded like Couta was 80% plus from memory.

[alokdhir]

However, Professor Ravi Gupta of the University of Cambridge told the BBC if more mutations are added to the strain "then you start worrying".
"This virus is potentially on a pathway for vaccine escape, it has taken the first couple of steps towards that," Prof Gupta said.

Latest worrying aspects of UK strain ...early days but thats also a possibility which scientists are not fully ruling out at the moment !!:scared:

[Gregnz]

Thanks, yes fortunately diversified. Unfortunately diversified into several other recent poor performers too (Plexure, Push Pay), so overall not looking healthy, still green though.

[Beagle]

A good lesson on the importance on being diversified. I'm about 7% in ATM but sounded like Couta was 80% plus from memory.

Around 90% if my memory serves me correctly. Really hope he doesn't go "all in" at this level thinking he can't lose at this price.
Such a wide range of potential future outcomes its almost impossible to value. All comes down to the future growth rate once this years haircut is complete and frankly that's anyone's guess.

[Gregnz]

Its honestly not nice talking about people behind their backs. If they want to pop in and tell us for themselves, all well and good. The way the business was performing prior to Covid, I'd not be the least bit surprised to see many holders with far more than 5-10% of their portfolio invested in A2.

[Beagle]

Its honestly not nice talking about people behind their backs. If they want to pop in and tell us for themselves, all well and good. The way the business was performing prior to Covid, I'd not be the least bit surprised to see many holders with far more than 5-10% of their portfolio invested in A2.

Its a matter of public record what his percentage was, he told us himself earlier on this thread as well as acknowledging that he's lost more than the value of two houses, (and that was before the latest share price collapse on Friday).

[Gregnz]

Interesting that it closed in the green on the ASX, I truely wasn't expecting that. I guess the next few days will paint a better picture.

[Baa_Baa]

Its honestly not nice talking about people behind their backs. If they want to pop in and tell us for themselves, all well and good. The way the business was performing prior to Covid, I'd not be the least bit surprised to see many holders with far more than 5-10% of their portfolio invested in A2.

Agree that it's not nice, but while the "tell us" is not happening here, it is happening elsewhere, including quantifying in $ the amount how much down from the highs. Some people wear their heart on their sleeves, I feel awkward when other people drill on them for doing so. Everyone has things they wish they hadn't done, but few actually disclose it. For lot of people they couldn't even afford the brokerage fee to exit the position in question, let alone absorb and get over the financial loss. I would do exactly the same thing as he is in the same circumstances, right now. Nothing, do nothing. Re-calibrate timelines, keep the faith. This company is not going out of business.

[Scrunch]

I personally see no benefit in locking in losses now. It’s the same management who got us to all time highs, then Covid hit. I know if I was management I’d have been overly cautious with the recent guidance update. There may be another downgrade, their might not be. I guess I’ll take my chance. I’ll take it on the chin if it does happen.

My take on it - the update noted FY $1.4b and $1.55b as revenue figures, along with FY margins of 26% and 29%. If you assume that the non-cost of goods costs are similar to last year at $420m, the $1.4b is a 56% gross margin less $420m for a 26.0% margin. The $1.55b figure is a 56% gross margin less $420m for a 28.9% margin. If the above simplistic calculations are correct, they indicate ATM has lost/expect to lose sales, but the gross margin may be substantially the same as last year.

This creates a couple of interesting questions:
Does ATM discount to increase sales or keep your premium pricing position?

Does ATM cut operational costs as a short-term response or maintain operational capacity but have a smaller surplus this year?

On the figures above, ATM management look to have decided to accept less sales but preserve market positioning / gross margins.
It creates a lower volume, higher margin path which is consistent with the large SML downgrade. The numbers are also consistent with maintaining (but not growing) existing levels of operational/marketing expenditure. This will mean ATM can bounce back quickly to its past growth track - if/when distribution issues are addressed. Both look like sensible longer term decisions.

Disc Hold.

[Gregnz]

For anyone who feels like a listen, its about an hour, A2 conference call following the latest guidance update:

https://a2investordocs.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/20201221220050/A2M_CC_181220.mp3

[mondograss]

A note that I read on Citi guidance that I hadn't considered was that if there is overstocking, they may have to offer deep discounts to get it shifted before it expires.

[Ruby]

Thanks Greg, definitely worth listening to this investor call, answers a lot of the questions being bandied about in here.

[Sideshow Bob]

Its honestly not nice talking about people behind their backs. If they want to pop in and tell us for themselves, all well and good. The way the business was performing prior to Covid, I'd not be the least bit surprised to see many holders with far more than 5-10% of their portfolio invested in A2.

Think it is a given A2 is a higher proportion of portfolios of many of this threads posters. Alot have been holders since <$1 - like myself, the ones I still hold are still a 16-bagger at todays price. As value has risen (and risen) over the years, then expect some profit would have been taken off the table, but some would have let their winners run.

[Ruby]

@ 1:05 of investor call...share buy back option on the table with the board...

[see weed]

ATM $110,000 ps:t_up: on ASB site

[oldtech]

What on earth is wrong with ASB??

[Balance]

ATM $110,000 ps:t_up: on ASB site

I am a billionaire! :scared::t_up::D

[Alpha]

Seems to be on all shares. So not only are NZX systems crap so are ASBs.

Do we live in a third world country?

[alokdhir]

Maybe thats ASB securities way of compensating ATM holders for management debacle precipitated by Covid .... Xmas magic :D

[see weed]

I am a billionaire! :scared::t_up::D
Market Cap= $82,058,066,538,500. Do we really need a take over offer on that sort of profit....Not really....Selling the golden goose.

[Beagle]

Agree that it's not nice, but while the "tell us" is not happening here, it is happening elsewhere, including quantifying in $ the amount how much down from the highs. Some people wear their heart on their sleeves, I feel awkward when other people drill on them for doing so. Everyone has things they wish they hadn't done, but few actually disclose it. For lot of people they couldn't even afford the brokerage fee to exit the position in question, let alone absorb and get over the financial loss. I would do exactly the same thing as he is in the same circumstances, right now. Nothing, do nothing. Re-calibrate timelines, keep the faith. This company is not going out of business.

My take on it. What if it goes down to $6 ? Don't know about others, (that's their own business with their partner if its joint money), but my approach is when I am investing joint matrimonial property finances I am forever mindful that I have very strong fiduciary obligations to act in my wife's best interests at all times and not expose her to undue risk or financial danger. Nothing about the future growth rate of ATM is certain and they remain on a very high forward PE for a company that faces considerable current headwinds that may prove to be enduring.

[alokdhir]

Short term levels to watch on downside ...10.90 to 11.20 current , 10.40-10.55 next downside support , 9.80 to 10 solid support !!

[Poet]

I just listened to the conference call from the other day.

Certainly, as is to be expected, a lot of attempted butt-covering going on by the board and management

"we did caveat our forecasts when we made them" etc etc

Putting that aside though, IMO the analyst from Bank of America asked the most pertinent question of Jeff B (around the 22 minute mark)

The question was along the lines of

"how can we be sure that the information systems that ATM has in place are appropriate and timely given that we analysts, and ATM itself, have now been blindsided with two sudden and unexpected profit downgrades in the space of just a couple of months"

Babbage's reply was along the lines of

"yes, we believe that our information systems are timely and appropriate, if we had known any extra information at the time of our AGM (which was late November) we would have revised our guidance then"

After a bit more butt-covering he went on to state

"I am looking at the finalised sales numbers to the end of November (ie as at the time of this conference call) and I can tell you they are not materially different to what we were forecasting when we issued our guidance and I can categorically tell you that EBITDA numbers are not below what we were forecasting. December was always going to be a big month and it became clear last week that December wouldn't meet expectations"

So, it would appear, to me at least, that to go from a first half revenue projection of 725-775m down to $670m given that everything was rosy up until the end of November must mean that December sales have absolutely collapsed (or is there another way to look at this)

I personally think that these people are engaging in magical thinking, and just continually pushing out the miracle recovery that is just on the horizon - "didn't happen in December, not to worry, we will just assume it will happen in the second half year"

Be very afraid people

Discl - out yesterday

[Beagle]

I just listened to the conference call from the other day.

Certainly, as is to be expected, a lot of attempted butt-covering going on by the board and management

"we did caveat our forecasts when we made them" etc etc

Putting that aside though, IMO the analyst from Bank of America asked the most pertinent question of Jeff B (around the 22 minute mark)

The question was along the lines of

"how can we be sure that the information systems that ATM has in place are appropriate and timely given that we analysts, and ATM itself, have now been blindsided with two sudden and unexpected profit downgrades in the space of just a couple of months"

Babbage's reply was along the lines of

"yes, we believe that our information systems are timely and appropriate, if we had known any extra information at the time of our AGM (which was late November) we would have revised our guidance then"

After a bit more butt-covering he went on to state

"I am looking at the finalised sales numbers to the end of November (ie as at the time of this conference call) and I can tell you they are not materially different to what we were forecasting when we issued our guidance and I can categorically tell you that EBITDA numbers are not below what we were forecasting. December was always going to be a big month and it became clear last week that December wouldn't meet expectations"

So, it would appear, to me at least, that to go from a first half revenue projection of 725-775m down to $670m given that everything was rosy up until the end of November must mean that December sales have absolutely collapsed (or is there another way to look at this)

I personally think that these people are engaging in magical thinking, and just continually pushing out the miracle recovery that is just on the horizon - "didn't happen in December, not to worry, we will just assume it will happen in the second half year"

Be very afraid people

Discl - out yesterday

Nominated for post of the year !!

[alokdhir]

I just listened to the conference call from the other day.

Certainly, as is to be expected, a lot of attempted butt-covering going on by the board and management

"we did caveat our forecasts when we made them" etc etc

















Putting that aside though, IMO the analyst from Bank of America asked the most pertinent question of Jeff B (around the 22 minute mark)

The question was along the lines of

"how can we be sure that the information systems that ATM has in place are appropriate and timely given that we analysts, and ATM itself, have now been blindsided with two sudden and unexpected profit downgrades in the space of just a couple of months"

Babbage's reply was along the lines of

"yes, we believe that our information systems are timely and appropriate, if we had known any extra information at the time of our AGM (which was late November) we would have revised our guidance then"

After a bit more butt-covering he went on to state

"I am looking at the finalised sales numbers to the end of November (ie as at the time of this conference call) and I can tell you they are not materially different to what we were forecasting when we issued our guidance and I can categorically tell you that EBITDA numbers are not below what we were forecasting. December was always going to be a big month and it became clear last week that December wouldn't meet expectations"

So, it would appear, to me at least, that to go from a first half revenue projection of 725-775m down to $670m given that everything was rosy up until the end of November must mean that December sales have absolutely collapsed (or is there another way to look at this)

I personally think that these people are engaging in magical thinking, and just continually pushing out the miracle recovery that is just on the horizon - "didn't happen in December, not to worry, we will just assume it will happen in the second half year"

Be very afraid people

Discl - out yesterday

Now they have gone on other side I believe ...now they are not forecasting any miracles ...just same as before ...670 HY1 and 730 HY2 ..total 1.4 billion ..easy to do IMHO ...anything else will be bonus

If they cant do this also ...then famous 3rd Downgrade will come sometime in May 2021 ....but I will not bet on that ...though its a gamble either way

[Poet]

Nominated for post of the year !!

Well, thank you Beagle.

I also want to highlight an excerpt from Tim Hunter's column in NBR in November where he is reporting on the A2 ASM (I hope it's OK to post a little bit of this here)

I think Hearn's answer to this shareholder question might go a long way towards an explanation of just what is actually ailing ATM

However, there was no mistake about A2’s policy on providing stock for Australian supermarkets, Hearn said.

Responding to a question on why shelves across the Ditch were constantly under-supplied with A2 product, Hearn said creating a perception of scarcity was part of the brand’s attraction.

“It’s a policy not a mistake,” he said. “An element of scarcity produces excitement … It’s part of our commercial strategy.”

[Gregnz]

The scarcity policy is a stupid one in my opinion. If they want people to convert over to drinking their product, it needs to be available when they want it. I drink A2 and buy it from countdown in Auckland, luckily I haven't encountered it being out of stock, but if it was I'd be pissed.
Thats clearly a area for improvement.

In addition, It would also be handy to have more than just a 2L option. Seems Australia have plenty of size variety. Perhaps more people would consider buying it in NZ if they could buy it in smaller than 2L bottles.

[winner69]

Poet ...good info

I had also concluded that Dec had to have been very bad for things to make sense

But I’m still puzzled why they state Q2 sales (even with a poor December) are greater than Q1

Seasonality?

[Gregnz]

I wonder what impact 11/11 had this year. Sales up 24% on last year, did that lead to another pantry stocking event, hence a quieter than predicted December.

[BlackPeter]

I just listened to the conference call from the other day.

Certainly, as is to be expected, a lot of attempted butt-covering going on by the board and management

"we did caveat our forecasts when we made them" etc etc

Putting that aside though, IMO the analyst from Bank of America asked the most pertinent question of Jeff B (around the 22 minute mark)

The question was along the lines of

"how can we be sure that the information systems that ATM has in place are appropriate and timely given that we analysts, and ATM itself, have now been blindsided with two sudden and unexpected profit downgrades in the space of just a couple of months"

Babbage's reply was along the lines of

"yes, we believe that our information systems are timely and appropriate, if we had known any extra information at the time of our AGM (which was late November) we would have revised our guidance then"

After a bit more butt-covering he went on to state

"I am looking at the finalised sales numbers to the end of November (ie as at the time of this conference call) and I can tell you they are not materially different to what we were forecasting when we issued our guidance and I can categorically tell you that EBITDA numbers are not below what we were forecasting. December was always going to be a big month and it became clear last week that December wouldn't meet expectations"

So, it would appear, to me at least, that to go from a first half revenue projection of 725-775m down to $670m given that everything was rosy up until the end of November must mean that December sales have absolutely collapsed (or is there another way to look at this)

I personally think that these people are engaging in magical thinking, and just continually pushing out the miracle recovery that is just on the horizon - "didn't happen in December, not to worry, we will just assume it will happen in the second half year"

Be very afraid people

Discl - out yesterday

Cheers - very appropriate summary and (I think conclusion).

While I am not expecting A2M to sink to the ground, I came as well to the conclusion that their current numbers contain still an unreasonable amount of hope, which is neither a good investment strategy nor a good business strategy.

I discounted when buying for the recruiting mistake they made with Jane (no matter how you see Janes performance, she was clearly not a good match for the company and the board missed that).

I sort of discounted that they changed their strategy and bought ways too dear into SML.

I forgave them for a highly unrealistic first downgrade and sort of discounted their cluelessness related to current business during the AGM, but I do see some sense in a three strikes logic (or is this already four?).

It sort of feels that they either don't know what they are doing .... or worse - they do know, but choose not to be honest with the shareholders.

Sold out yesterday as well (with a loss). Good industry, questionable board and management. Independent from my view on the fundamentals ... I should have kept KW's good advise in mind ... never buy into a downtrend, EVER!

[Sideshow Bob]

So sure?

IF Karicare A2 $31.99 vs A2 $44

The competitive landscape is changing.

And a test to see how strong the A2 "brand" is.

[BlackPeter]

So sure?

IF Karicare A2 $31.99 vs A2 $44

The competitive landscape is changing.

You well might have a point. Looking at consumer reviews (https://www.productreview.com.au/c/baby-formulas) ... while the A2 Platinum formula gets rated with a respectable 4.3 out of 5, so do many much cheaper baby formulas (like ALDI Mamia Gold (shudder) for A$11.99 (same amount);

The Karicare standard (A1/A2 mix) formula gets rated with 4.1 / 5, but the Karicare Goat formula seems to be more loved by Australian babies and ends up with the same consumer rating as A2 Platinum. No rating yet for the Karicare A2, but for what it is worth - Goat milk is A2 milk as well, i.e. it might well get the same rating as A2 Platinum and Karicare Goat, just available at a better price.

12156

Ah yes - and lets not forget that there are several formulas from Munchkin, Bellamy, Oli6 Goat and Nestle who all get still better product ratings (4.4 to 4.8) than A2 Platinum.

Maybe A2 don't deserve anymore the price premium they demand?

[tomm]

You well might have a point. Looking at consumer reviews (https://www.productreview.com.au/c/baby-formulas) ... while the A2 Platinum formula gets rated with a respectable 4.3 out of 5, so do many much cheaper baby formulas (like ALDI Mamia Gold (shudder) for A$11.99 (same amount);

The Karicare standard (A1/A2 mix) formula gets rated with 4.1 / 5, but the Karicare Goat formula seems to be more loved by Australian babies and ends up with the same consumer rating as A2 Platinum. No rating yet for the Karicare A2, but for what it is worth - Goat milk is A2 milk as well, i.e. it might well get the same rating as A2 Platinum and Karicare Goat, just available at a better price.

12156

Ah yes - and lets not forget that there are several formulas from Munchkin, Bellamy, Oli6 Goat and Nestle who all get still better product ratings (4.4 to 4.8) than A2 Platinum.

Maybe A2 don't deserve anymore the price premium they demand?
You can't compare Cocacola with some crap Coke fizzy drink.

[BlackPeter]

You can't compare Cocacola with some crap Coke fizzy drink.

No need to fight - I didn't :):

You need to tell the customers who rated these products that they are wrong.

But then, didn't Mr. Selfridge teach us that the customer is always right? - and he is correct. Disagree with a customer and you loose them.

Given this axiom - what is the point to argue? Only options for A2 would be to either reduce their margin or alternatively to improve whatever they can do to turn their product in the customers eyes back into the premium category. At this stage they are (following above information) in the eyes of the customers as good as the cheapest ALDI formula, and there are many better formulas around.

As well - do you really think that e.g. Nestle and Danone (both produce better rated formulas than the A2 Platinum) survived the last 100 plus years by selling cr*p? Underestimate the opposition at your peril ;);

[Gregnz]

Competition is a good thing, it often expands markets. I’ve mentioned before, but at the risk of being shot down for this comment, perhaps it’s time A2 introduce a budget brand. Difficult to do without cannibalising existing sales, but would be better competition for lower priced product. There will always be a market for premium formula at premium prices, but perhaps for a chunk of the market this is out of reach.
NZ is already known for having the cheapest cost to farm and manufacture dairy, and additional volume overall would help A2 through further economies of scale.

[tomm]

Tell that to all the insto's and investors , too late for now , they love A2M . and with my personal experiment with ATM, I also love this premium brand products which are helping my nephew with autism.
Told you to buy in the dip, you are eager to get in aren't you? this Sp is still ridiculous cheap never late to get in.

[tomm]

Well done to all investors whom weren't panic and picked at $10.50+.

[Ruby]

It works for Apple,many phones & devices are rated equal...but they keep pumping them out and people keep buying them.
The Asian psyche drives them to covet expensive brands and exclusivity...having a tin of A2 on the bench at home lets the other mummies know they can afford the best for their little ones.
That is why most exclusive european brands whether it be cars,watches,clothing have been saved by the asian markets.Over the years I have visited HKG,you would see european tourists at the market buying knock offs,whilst the asian tourists were queueing to get into the Louis Vuitton stores etc.

[winner69]

Well done to all investors whom weren't panic and picked at $10.50+.

Well done to you tom

As I said before in a few weeks time when share price is above 15 bucks again everybody will saying what was all the fuss about

[tomm]

Well done to you tom

As I said before in a few weeks time when share price is above 15 bucks again everybody will saying what was all the fuss about
Regarding Left or Right fuss , I do feel good with my pick at $10.80 yesterday and more today top up for my holding.

[Balance]

https://www.shortman.com.au/stock?q=A2M

61m shares shorted 16 December - day before the trading halt.

Some serious money made there so will not be surprising to have some short coverings today.

[Gregnz]

At the risk of sounding a bit dumb, can anyone enlighten me with how a share buy back works? At what point would the company have to disclose this has occurred, I assume we wouldn’t know until it had happened?

What effect would this have on earnings per share. Am I on the right track in thinking eps increases because less shares are in the market?

[Gregnz]

https://www.shortman.com.au/stock?q=A2M

61m shares shorted 16 December - day before the trading halt.

Some serious money made there so will not be surprising to have some short coverings today.

I thought that was the total number of shares shorted. 8.2% of the total shares on issue?

[dobby41]

Well done to all investors whom weren't panic and picked at $10.50+.

People keep saying this sort of thing as if it is all over.
Go back and you find 'well done buying at $18 or $19' etc
Is the downward fall over or is it taking a breather (a dead cat bounce)?