ATM - A2 Milk Corporation Limited

[Balance]

NTA backing just too low for a company with a premium product. It amazing just how fast a premium product becomes a non premium product, when everyone starts getting on the bandwagon. It's like a pyramid scheme. Those that got in early reaped the rewards. Now the risk comes in. You are betting that supply and demand are going to remain in your favor.

Question of when supply overwhelms demand with A2 milk - not if, but when - as long as as super or premium profits are there to be made.

There is no real barriers to entry - milk is milk from cows and it is a question of when farmers & the other dairy companies are able to switch production over to A2.

A2 had an exceptional and still has an excellent first mover advantage however still - so the new CEO needs to come up with a strategic plan to entrench & maintain that advantage.

Or is it already too late?

[Beagle]

Question of when supply overwhelms demand with A2 milk - not if, but when - as long as as super or premium profits are there to be made.

There is no real barriers to entry - milk is milk from cows and it is a question of when farmers & the other dairy companies are able to switch production over to A2.

A2 had an exceptional and still has an excellent first mover advantage however still - so the new CEO needs to come up with a strategic plan to entrench & maintain that advantage.

Or is it already too late?

First mover advantage only lasts so long...and then its gone. I'd say its well on its way to being gone, give it another 2-3 years and its just like any other dairy commodity. That's how I see it.
Analysts FY22 and beyond predictions of eps growth are in real danger of being commoditized down to far more realistic level's, maybe even just single digit or even low single digit eps growth going forward from a sub 30 cps new lower base in 2021 ? Maybe 28 cps this year and average growth of 5% suggesting a fair PE of about 16 x 30 cents for FY22 = $4.80 ?

Whatever the new rate of growth is off this year's much lower base, (assuming there is any and a further deterioration in operating profit in FY22 is avoided, recall Synlait have real concerns about demand not just this year but also in FY22), I am absolutely sure of one thing, it will be nothing like the rate of growth ATM has enjoyed in the past so the current lofty forward PE of about 30, (which is what ATM has historically traded on in years gone bye when growth was much faster ), looks very vulnerable to a significant contraction and accordingly I foresee the steep share price downtrend continuing for quite some time.

This is down by ~ 60% the last 9 months and that could very easily repeat in the next 9 months in my opinion. The trend is definitely not your friend, unless one is a shorter !!

[Biscuit]

First mover advantage only lasts so long...and then its gone. I'd say its well on its way to being gone, give it another 2-3 years and its just like any other dairy commodity. That's how I see it..........


That's not necessarily true. Many companies that enjoy first mover advantage become the dominant player in their market off the back of that even though competitors abound. There are literally thousands of companies we could all name that are still here today because they exploited first mover advantage. Also, it is still early days for a2 milk - there are still plenty of people in the world who have not yet had the opportunity to buy over-priced a2 milk.

[Beagle]

Yes its possible, Coke and Pepsi spring readily to mind but its usually built off a competitive advantage or something truly unique about the product. ATM can claim theirs's is from clean green N.Z. and try and pull the upper hand brand and premium pricing trick but how will this wash in China with Xi Jinping extoling huge amounts of propaganda about the virtues of supporting the motherland and all she produces ? Noticed which brands are growing fastest in China, its not ATM !

Will all these new prospective customers in other countries be "sticky" and how much will it cost ATM to attract them ?, that's another can of very expensive worms right there ! How long will ATM keep throwing ~ $50m per annum down the USA rathole in the hope of being profitable one day ? How much to try and expand into other countries ? Can ATM afford it ?
When will shareholders start to receive dividends ?

Don't forget the current geopolitical situation with China and that ATM relies on China for a lot of their profit. One stroke of Xi Jinping's pen and ATM could be in a world of hurt like the Australian wine industry. Huge geopolitical risk ?, you bet there is !

[Lease]

Same. I'm a contrarian. Small holding and accumulating. I know one shouldn't catch a falling knife but there comes a point where this is oversold - although it's hard to tell where that level is in light of the current SP trend versus growth in the non-daigou Chinese channels and growth in the US market share. ATM have a very small share of some very large markets. And if this shake-up results in a move away from and/or less reliance on daigou, then ATM will come out of this a better business. Daigou channels don't sit well with me from the perspective of sustainable business.

Well said, Ferg. People here look ATM has been finished. haha, I wonder what they said when SP reached $21(I don’t want to waste time to go over previous posts).

[aperitif]

Keep it coming Beagle. I remember the days when you were bagging Xero, only for it to 50 bag for me. The irony is that you’re an accountant and you probably use the software.

[Ggcc]

Keep it coming Beagle. I remember the days when you were bagging Xero, only for it to 50 bag for me. The irony is that you’re an accountant and you probably use the software.
Most accountants I know use MYOB and find that Xero’s features are not up to scratch for complicated stuff. However they do mention that Xero is amazing for small businesses owners and that’s where the moneys at

[Beagle]

Keep it coming Beagle. I remember the days when you were bagging Xero, only for it to 50 bag for me. The irony is that you’re an accountant and you probably use the software.

You overlooked telling me you bought apple shares in the 1970's and are now a trillionaire :p

Dead right Ggcc. Nothing special about XRO software.

I find small business owners who use XRO an exercise in absolute frustration to the point where I'm no longer interested. They expect that all their data entries are accurate and complete, that no errors or reallocations are necessary, are not prepared to pay me to do a reasonable amount of analytical review of their system and to pay next to nothing for me to finalize their financial statements and tax returns because the job is ostensibly all done already. I usually reply well if the job's almost all done you might as well finish it off yourself.
That response gets me the result I'm looking for and works a charm every time. Why work for next to nothing...

[aperitif]

Funny you say that, I’ve been an Apple shareholder since 2012. My strategy has been to invest in companies that change or make peoples lives better and let them compound over time. This forum is a great tool for finding where the consensus is on a stock, and betting against it. Especially when the main shepherd(you) has no conviction....

[Ggcc]

Funny you say that, I’ve been an Apple shareholder since 2012. My strategy has been to invest in companies that change or make peoples lives better and let them compound over time. This forum is a great tool for finding where the consensus is on a stock, and betting against it. Especially when the main shepherd(you) has no conviction....
It will go up over time, just how long is that piece of string. Still holding on and believe ATM will follow XRO in their footsteps

[alokdhir]

Funny you say that, I’ve been an Apple shareholder since 2012. My strategy has been to invest in companies that change or make peoples lives better and let them compound over time. This forum is a great tool for finding where the consensus is on a stock, and betting against it. Especially when the main shepherd(you) has no conviction....

U need to differentiate between if companies product on which it has monopoly like Apple products produced by Apple only makes life better or generic products like A2 milk who anyone can produce or sell does that ...Apple hardware is not that sells ...its it software which makes it so likeable and which grants it its moat ...In ATM moat came from A2 milk which has become commodity then where else u got advantage ...Marketing company can spin it where ...in my view no where ...only can make it better quality and more accessible etc .

So no comparison with Apple products or company with ATM ....IMHO

FPH will equate with Apple in my opinion .

[Lease]

A rational investor does not expect ATM high growth(sales CAGR 50%, net profit CAGR 90%) over the past five year will continue forever. So slow down is a natural result. The points are: Sales of China label infant nutrition up by 45%, MBS market share continues to increase. These mean A2 products are still very popular.

The issue of A2 is distribution. Previously it heavily relied on Aussie daigou, which now clearly the daigou can't return to previous scale even if Covid pass behind us. This is the new CEO's main job to fix the issue.

Given the fact A2 IF is still popular and market penetration is still low in China, I expect A2 will achieve earnings growth CAGR 20%. I put the growth rate in my model and it shows current SP offer nearly 20% of margin of safety.

[Beagle]

Funny you say that, I’ve been an Apple shareholder since 2012. My strategy has been to invest in companies that change or make peoples lives better and let them compound over time. This forum is a great tool for finding where the consensus is on a stock, and betting against it. Especially when the main shepherd(you) has no conviction....

See my latest post on OCA and I am still a minor shareholder :eek2: Time to back the truck up on OCA, MAV thinks so.

I sold ATM three years ago for $13 and my portfolio has done exceptionally well since then but what would this stupid barking sheep herder know...

[winner69]

See my latest post on OCA and I am still a minor shareholder :eek2: Time to back the truck up on OCA, MAV thinks so.

I sold ATM three years ago for $13 and my portfolio has done exceptionally well since then but what would this stupid barking sheep herder know...

I was surprised at the time when you sold out of ATM and missing out on the rise to $20 plus

But then wasn't that about the time you first fell in love with HLG and made heaps before bailing out over 6 bucks

Disc: I’ve never held Apple shares

[Balance]

https://www.raskmedia.com.au/2021/04/03/is-the-a2-milk-asxa2m-share-price-a-deep-value-opportunity/

Wrong and wrong time and gain in the past - but with the sp where it is, could Rask Media finally get it right?

" .... A2 Milk is getting to the point where you are getting compensated for that risk – the Chinese label infant label nutrition is still growing strongly and that could make up for the lost local revenue over the long term despite the lost daigou sales."

[Balance]

A rational investor does not expect ATM high growth(sales CAGR 50%, net profit CAGR 90%) over the past five year will continue forever. So slow down is a natural result. The points are: Sales of China label infant nutrition up by 45%, MBS market share continues to increase. These mean A2 products are still very popular.

The issue of A2 is distribution. Previously it heavily relied on Aussie daigou, which now clearly the daigou can't return to previous scale even if Covid pass behind us. This is the new CEO's main job to fix the issue.

Given the fact A2 IF is still popular and market penetration is still low in China, I expect A2 will achieve earnings growth CAGR 20%. I put the growth rate in my model and it shows current SP offer nearly 20% of margin of safety.

Let's put the headwinds ATM faces in some perspective before discussing CAGR 10% or above.

For ATM to achieve any kind of earnings growth in the next few years, the company has to grow revenues at an accelerated rate to offset the drop in EBITDA margin.

EBITDA margin was 32.6% in 2020 compared to 27% in latest half year results & continuing to decline.

So all things being equal, ATM will have to grow sales by 21% just to stay still.

Things are of course not all equal, so what's the likely scenario over 2021?

IF is the most lucrative and high margin product ATM sells - so the other products that ATM sells are going to have to increase (volume) significantly more than 20% to offset the reduced overall margin.

Then, there's the increased input costs of milk which SML has no option but to pass on.

Add to the above the requirement for ATM to spend up large on marketing & promotions to maintain its position against increased competition in A2 IF & milk.

Suspect analysts are doing the sums as above, downgrading forecasts after attempting to get clarification from ATM - that's why ATM's sp has dropped everyday (bar one day) since March 4.

[Beagle]

I was surprised at the time when you sold out of ATM and missing out on the rise to $20 plus

But then wasn't that about the time you first fell in love with HLG and made heaps before bailing out over 6 bucks

Disc: I’ve never held Apple shares

I held HLG and ATM for years. It was clear to me that the growth was falling away so I sold out of ATM in March 2018 and yes I took steps with HLG to protect my capital as Covid started to go rampant early last year.

It took two and half years from when I sold at $13 to get over $20. Suppose one theoretically had the foresight and patience to hold and theoretically timed it well and sold at about $20, that's 54% left on the table and 2.5 years to earn it. Sounds pretty good doesn't it but the NZX 50 went up just on 45% in that timeframe so ATM outperformed by about 9% in 2.5 years or about 3.5% per year. Certainly a satisfactory result if one had timed their exit really well. I'm very comfortable with how my portfolio performed over that same timeframe and more importantly as far as ATM is concerned, since then when ATM shares have collapsed.

As Balance has outlined immediately above, the prognosis looking ahead looks very tough.

[Balance]

I held HLG and ATM for years. It was clear to me that the growth was falling away so I sold out of ATM in March 2018 and yes I took steps with HLG to protect my capital as Covid started to go rampant early last year.

It took two and half years from when I sold at $13 to get over $20. Suppose one theoretically had the foresight and patience to hold and theoretically timed it well and sold at about $20, that's 54% left on the table and 2.5 years to earn it. Sounds pretty good doesn't it but the NZX 50 went up just on 45% in that timeframe so ATM outperformed by about 9% in 2.5 years or about 3.5% per year.
Certainly a satisfactory result if one had timed their exit really well. I'm very comfortable with how my portfolio performed over that same timeframe and more importantly as far as ATM is concerned, since then when ATM shares have collapsed.

Disc: My investment advisor at Forbar talked me out of buying Apple shares more than a decade ago. I no longer avail myself of his "expertise"

Always leave something for the next guy when you sell - investment adage.

[Lease]

Let's put the headwinds ATM faces in some perspective before discussing CAGR 10% or above.

For ATM to achieve any kind of earnings growth in the next few years, the company has to grow revenues at an accelerated rate to offset the drop in EBITDA margin.

EBITDA margin was 32.6% in 2020 compared to 27% in latest half year results & continuing to decline.

So all things being equal, ATM will have to grow sales by 21% just to stay still.

Things are of course not all equal, so what's the likely scenario over 2021?

IF is the most lucrative and high margin product ATM sells - so the other products that ATM sells are going to have to increase (volume) significantly more than 20% to offset the reduced overall margin.

Then, there's the increased input costs of milk which SML has no option but to pass on.

Add to the above the requirement for ATM to spend up large on marketing & promotions to maintain its position against increased competition in A2 IF & milk.

Suspect analysts are doing the sums as above, downgrading forecasts after attempting to get clarification from ATM - that's why ATM's sp has dropped everyday (bar one day) since March 4.

If you go to Tmall to search Infant Formula, sort by "Monthly Sales Volume", ATM IF is still on top 50. If you specifically search A2 related IF, ATM is absolutely on top Number One!

Things are not that bad. Think about if A2 China label IF have another 50% increase, their MBS market share expand to 10%, what will happen to SP?

[ratkin]

Bit about A2 here
https://thebull.com.au/buying-stocks-at-52-week-lows/?utm_source=TheBull&utm_campaign=050139c216-US-121189830-2_COPY_01&utm_medium=email&utm_term=0_27a4a54d92-050139c216-266289825

[Getty]

Always leave something for the next guy when you sell - investment adage.

I wish you were always there, telling that to the guys I buy off! lol

[Sideshow Bob]

https://www.nutraingredients-asia.com/Article/2021/03/01/Daigou-still-slow-Infant-nutrition-brands-driving-sales-at-mother-and-baby-stores-e-commerce-in-China?utm_source=MKT_0321&utm_campaign=Monthly_Recap&utm_medium=email

[Balance]

https://www.nutraingredients-asia.com/Article/2021/03/01/Daigou-still-slow-Infant-nutrition-brands-driving-sales-at-mother-and-baby-stores-e-commerce-in-China?utm_source=MKT_0321&utm_campaign=Monthly_Recap&utm_medium=email

Excellent summary of the state of play in the all critical China IF market for all players.

Note references to tougher domestic competition, lower birth rates (down 15% in 2020) and how ongoing success will be determined by players' on-the-ground strategy & distribution capability and product mix.

Trust ATM's new CEO is taking note as he formulates his reset strategy.

[Lease]

I don't concern China declined birth rate as ATM target high-end segment which is still growing. This has been confirmed by Feihe 2020 annual results announcement: https://www.chinafeiheir.com/EnInvestor/Reports

Domestic competition? Generally speaking, yes, but that is for broad Infant Formula market. For A2 specific niche market, so far I can't see anyone can compete ATM which is absolutely dominant.

[Sideshow Bob]

Although only 6 weeks since results announcement, wouldn't mind seeing some sort of update later in April. Give the market a little confidence, after $2b market cap being wiped off in that period.

Last year updated 22nd of April, and that was all gravy......

Either that, or some board/management buying!! ;)

[Balance]

Although only 6 weeks since results announcement, wouldn't mind seeing some sort of update later in April. Give the market a little confidence, after $2b market cap being wiped off in that period.

Last year updated 22nd of April, and that was all gravy......

Either that, or some board/management buying!! ;)

Next announcement will be Strategy Reset by new CEO after he has comprehensively evaluated the state of the company and the industry. Wouldn’t be good news.

[Lease]

I have completely written off 2021FY. It won't recover quickly. I use 2021FY as base year to forecast future years. Given the dominant position of A2 series products, I'm positive on ATM future years.

[Lease]

If I were the CEO, I'd like the results of 2021FY to be the worst, then any future better results are his great job done.

[Gunner]

If I were the CEO, I'd like the results of 2021FY to be the worst, then any future better results are his great job done.

Of course. Human nature. He will report worst case scenario and be the hero after he's been in the saddle long enough and reports (hopefully) a big turn around in a years time.

[Biscuit]

Of course. Human nature. He will report worst case scenario and be the hero after he's been in the saddle long enough and reports (hopefully) a big turn around in a years time.


Or, of course, there is always the possibility that he will do his job in a professional manner and provide an accurate and informative update as and when appropriate?

[Gunner]

Or, of course, there is always the possibility that he will do his job in a professional manner and provide an accurate and informative update as and when appropriate?

If hes smart he'll conduct a top to bottom review and identify all the skeletons and get them out in the open before his good work can turn it around.

[Leftfield]

New addition to the A2 story in China noticed by HC poster.

12413

Is there life in this old dog yet?

[Baa_Baa]

New addition to the A2 story in China noticed by HC poster.

12413

Is there life in this old dog yet?

There were two new products, I can’t find the HC post anymore.

[Lease]

New addition to the A2 story in China noticed by HC poster.

12413

Is there life in this old dog yet?

Thanks LF for update, very glad A2M have new products on market. I think A2M is still a puppy not old dog.

[aperitif]

a2 have released a few products lately from what I have observed over the last 6 months. UHT 200ml Smart Nutrition and Full Cream(1Q21), a2 instant milk powder 850g(more premium feel) English and Chinese label. Just recently relaunched a2 Manuka honey powder(late Mar). Another observation with their IF portfolio is the 400g tin(CL/EL) for stage 1 and 2.

Pics from Hema stores and JD.... enjoy

124151241612417

[Leftfield]

Thanks for sharing aperitif.

Lease I like the puppy analogy.
Early days and too early to write off after a bit of puppy do's on the carpet.

[Blue Skies]

Are we in a confirmed uptrend yet? :)

[causecelebre]

Haha two days maketh a trend?

[BlackPeter]

a2 have released a few products lately from what I have observed over the last 6 months. UHT 200ml Smart Nutrition and Full Cream(1Q21), a2 instant milk powder 850g(more premium feel) English and Chinese label. Just recently relaunched a2 Manuka honey powder(late Mar). Another observation with their IF portfolio is the 400g tin(CL/EL) for stage 1 and 2.

Pics from Hema stores and JD.... enjoy

124151241612417

Nice pics, but just wondering - is this the stuff piling up in Synlait's warehouse (remember their latest downgrade?) ... or does ATM have by now as well other milk powder producers?

[Lease]

Yes, today's rise is purely market fluctuation. Until ATM publicly announce some good news, SP won't have clear direction. But we can see the Company are working hard to turn around. Now we see they launch new products to enrich their product portfolio. I am sure they are also doing re-balance inventory and strengthening their distribution channels.

Let's see what's turn up. I'm positive.

[imarktu]

I'm accumulating at this price. But, as a bag holder at $24, what do I know? :t_up:

[alokdhir]

I'm accumulating at this price. But, as a bag holder at $24, what do I know? :t_up:

When did it go to $ 24 buddy ? Maybe I missed it ...:eek2:

[imarktu]

When did it go to $ 24 buddy ? Maybe I missed it ...:eek2:

Sorry, my mistake. Was $21.40. Makes me feel a little​ better...

[Balance]

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

Short coverings in progress, locking in profits.

[Balance]

Excellent perspective on what is needed to get A2M firing again :

https://www.livewiremarkets.com/wires/a2-s-remarkable-story-desperate-for-a-turnaround

[Biscuit]

Excellent perspective on what is needed to get A2M firing again :

https://www.livewiremarkets.com/wires/a2-s-remarkable-story-desperate-for-a-turnaround


According to that commentator, A2 "specialises in distributing mysterious probiotic-laden milk products". Not perhaps great analysis?

[sb9]

According to that commentator, A2 "specialises in distributing mysterious probiotic-laden milk products". Not perhaps great analysis?

Moreover, its bit outdated as the article was published in Feb'21.

[Biscuit]

Moreover, its bit outdated as the article was published in Feb'21.

Yes, but I think it is still a relevant summary of where we still are now. Good brand, lots of unresolved problems and headwinds, management looking a bit lost, desperate need to reinvigorate channels and marketing in China.

[JohnnyTheHorse]

So what's happening right now?

Daily RSI was massively oversold and there hadn't been a rally in weeks. For a trader this rally was expected. We are now looking for a daily lower high to be set, which would be confirmed by loss of the hourly uptrend.

We are still in a daily/weekly/monthly downtrend, so the overall trend has not changed and an uptrend from here is not the most likely case.

Disc: trading, but not holding overnight positions due to news risks.

[sb9]

Yes, but I think it is still a relevant summary of where we still are now. Good brand, lots of unresolved problems and headwinds, management looking a bit lost, desperate need to reinvigorate channels and marketing in China.

Sure, while it hurts to see what happened with COVID situation, its probably big wake up call for Board and Management not to be complacent and that's big negative from me on both Geoff and Peter not to have plan B in place if things went astray.

From new CEO David's point of view, he's great opportunity to revamp company's strategic direction to better prepare for further shocks. Let's see if he can be successful in steering the ship smoothly and for long term.

[Biscuit]

..... its probably big wake up call for Board and Management not to be complacent and that's big negative from me on both Geoff and Peter not to have plan B in place if things went astray.....



Yes, seems they were travelling on cruise control. Hopefully this will turn out to be a timely shock that leads to a more resilient company that looks less like a headless chicken.

[winner69]

Yes, seems they were travelling on cruise control. Hopefully this will turn out to be a timely shock that leads to a more resilient company that looks less like a headless chicken.


Do you think Geoff regrets coming back as the caretaker

Probably be remembered for stuffing it up and not for the good work done previously

Pity they sacked Jayne

[Biscuit]

Do you think Geoff regrets coming back as the caretaker

Probably be remembered for stuffing it up and not for the good work done previously

Pity they sacked Jayne


When things are going well, people almost always look cleverer than they really are. Its the stuff-ups and how we come through them that define us.

[Balance]

Moreover, its bit outdated as the article was published in Feb'21.

Points as pertinent today as it was in Feb :


"....... they've got probably one of the strongest brands in the region and a really unique differentiator. It is actually turning into more of a reopening play. If the stars are aligned for them, it could represent some compelling value in the future. It could also fit nicely into a larger FMCG portfolio, so M&A activity couldn’t be ruled out."

" .....there's been a valuation that is a bit difficult to overcome; concerns around product and geographic concentration and the regulatory risk has been too onerous for us."

" ....On the operating side, they're having to lean further into demand generation investment, which has probably been lacking over the past few years. They've had the luxury of effectively free marketing from a very engaged and motivated army of Daigou. You could argue that they've essentially been over-earning and under-investing in marketing. They're also going to have to provide more support in terms of trade spend with corporate Daigou, but this one may be more of a permanent cost impost."

" ....the structures are there for performance to improve. But unfortunately, a lot of this relies on factors outside of their control. The one thing they can control is capital allocation to brand and channel. It is likely that they will have to bear more pain in the short to medium term as invest to fend off stiffer competition from domestic producers. This investment is key to driving future success, but it will likely take some time*."

All eyes on the reset strategy announcement from the new CEO!

* Something Jayne was advocating but got shot down, and then told to pack her bags.

[Ggcc]

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

Short coverings in progress, locking in profits.
Some big covers almost a recovery lol. Maybe a bit more to it

[Sideshow Bob]

Some big covers almost a recovery lol. Maybe a bit more to it

While usual caveat of being on the NZX, pre ASX opening, up another 5.1% this morning......

[sb9]

While usual caveat of being on the NZX, pre ASX opening, up another 5.1% this morning......

Yep, Kiwis enthusiasm will be curbed by Aussies in their usual Friday sell off, if not we could say things are looking tad positive. Not holding my breath though either way until we hear an update from the company.

[Bobdn]

Every boring NZ ETF investor (including me) is cheering on ATM. It's been a bit of a drag on NZG and FNZ. I think our share market must have under performed just about every market, developing and developed, since the beginning of the year.

[Leftfield]

Some big covers almost a recovery lol. Maybe a bit more to it

Only a matter of time till the upside potential outweighs the downside risk.

(still holding and a lot happier today, specially as I switched some ATM gains into PEB. Currently these two account for 50% of my portfolio ;))

[alokdhir]

I had thought of $ 8.50 as my trigger to come in and then every 10 cents down more additions ....But I got scared after the authoritative discourses of BBB ...

But its still nice to see ATM contributing after a long while to people's happiness ...Me hold thru KFL and NZG ...:p

[Balance]

I had thought of $ 8.50 as my trigger to come in and then every 10 cents down more additions ....But I got scared after the authoritative discourses of BBB ...

But its still nice to see ATM contributing after a long while to people's happiness ...Me hold thru KFL and NZG ...:p

Careful!

You are starting to sound like Cindy & her team of incompetents!

[alokdhir]

Careful!

You are starting to sound like Cindy & her team of incompetents!

I didn't mean any harm buddy ...U r trying to protect us only ...I know intentions are good :D

[Balance]

I didn't mean any harm buddy ...U r trying to protect us only ...I know intentions are good :D

No sweat - we just don’t want too many Cindys & her types around!

[alokdhir]

When big brother wakes up then ATM down and FPH up ....maybe they trying to tell us which is better stock ...like so many well wishers here :ohmy:

[Lorne Ranger]

When big brother wakes up then ATM down and FPH up ....maybe they trying to tell us which is better stock ...like so many well wishers here :ohmy:

Or just tough to expect three days of SP growth on the back of zero announcements? Its an easy 5% for some. Will be interesting to see whats left when tide goes out shortly, the odds are shrinking on any significant further falls (but WTFRK?)

[Balance]

Yep, Kiwis enthusiasm will be curbed by Aussies in their usual Friday sell off, if not we could say things are looking tad positive. Not holding my breath though either way until we hear an update from the company.

74 cents swing ($9.34 to $8.60) from the Kiwi exuberance to Aussies sell down as you predicted - when will they ever learn?

[Leftfield]

Interesting article (https://edition.cnn.com/2021/04/07/business/plant-based-food-drink-asia-intl-hnk/index.html)...... Nestle launching a dairy milk free Milo.

12420

[Habits]

74 cents swing ($9.34 to $8.60) from the Kiwi exuberance to Aussies sell down as you predicted - when will they ever learn?

Morningstar report came out, repeated on Radio NZ in the morning, identifying ATM as undervalued and oversold.... still not a stock I want to own

[Balance]

Morningstar report came out, repeated on Radio NZ in the morning, identifying ATM as undervalued and oversold.... still not a stock I want to own

Morningstar has a valuation of $15.10 for ATM - issued 30 March from what I can find.

[aperitif]

https://www.morningstar.com.au/stocks/article/a2ms-outlook-sour-but-not-spoiled/211102

[BlackPeter]

https://www.morningstar.com.au/stocks/article/a2ms-outlook-sour-but-not-spoiled/211102


Fleck sees a rebound in profitability and forecasts revenue to grow at an annual rate of 12 per cent through to fiscal 2030.

Amazing ... this guy seems to be able to predict growth rates accurately 10 years into the future. Just wondering why anybody with these capabilities still needs to earn his keep by warming board chairs for Morning Star ...

[Lease]

Amazing ... this guy seems to be able to predict growth rates accurately 10 years into the future. Just wondering why anybody with these capabilities still needs to earn his keep by warming board chairs for Morning Star ...

Well, it's not an accurate prediction. It's an estimation. Given the fact ATM revenue CAGR at 50% over the past 5 years, their sales of China label IF up 45% in the past six month, and its market share in China is still low of 2.4%, I don't think this analyst's estimation is hugely aggressive.

[Habits]

Morningstar has a valuation of $15.10 for ATM - issued 30 March from what I can find.

That sounds like a joke price... I don't follow MS for much since they loudly stated FBU as a sell when it was around 550 and their valuation 510. SP now 720. I have heard other criticism of their recommendations. Honestly i find ST the best along with filtering of opinions, due diligence and gut feel

[Biscuit]

That sounds like a joke price... I don't follow MS for much since they loudly stated FBU as a sell when it was around 550 and their valuation 510. SP now 720. I have heard other criticism of their recommendations. Honestly i find ST the best along with filtering of opinions, due diligence and gut feel


I also have little confidence in Morningstar. Interesting they see: "... in China, A2M is part of a growing consumer preference for premium, international brands instead of locally made product....." which seems contradictory to the general opinion expressed here and elsewhere.

[BlackPeter]

Well, it's not an accurate prediction. It's an estimation. Given the fact ATM revenue CAGR at 50% over the past 5 years, their sales of China label IF up 45% in the past six month, and its market share in China is still low of 2.4%, I don't think this analyst's estimation is hugely aggressive.

Laws of physics will tell you that its difficult to keep the same growth rate if your mass is increasing - unless you have access to unlimited energy :p ;

But anyway - Predicting a constant and high 10 years growth rate for such a company in a fast evolving market with competition fast catching up is ridiculous ... at least he would need to add some working assumptions (like baby production rate in the target markets over the next 10 years, development of the trading relationships in the target markets over 10 years and obviously a good explanation why he thinks the competition will sit for the next ten years on their hands) and give some conservative and optimistic scenarios. What he did is highly unprofessional.

Sure - he made up a number. Anybody can do that, and anybody's guess would be as good as his. This prediction / estimation / guess / tale is worth nothing, but that's ok given that they share it for free ;):

[Lease]

Laws of physics will tell you that its difficult to keep the same growth rate if your mass is increasing - unless you have access to unlimited energy :p ;

But anyway - Predicting a constant and high 10 years growth rate for such a company in a fast evolving market with competition fast catching up is ridiculous ... at least he would need to add some working assumptions (like baby production rate in the target markets over the next 10 years, development of the trading relationships in the target markets over 10 years and obviously a good explanation why he thinks the competition will sit for the next ten years on their hands) and give some conservative and optimistic scenarios. What he did is highly unprofessional.

Sure - he made up a number. Anybody can do that, and anybody's guess would be as good as his. This prediction / estimation / guess / tale is worth nothing, but that's ok given that they share it for free ;):

This is a news article, for free. I'm sure if you paid for his analysis report, there would be assumptions, explanations, bear and bull case scenarios.

I have my own model for stock analysis and for ATM, I think the analyst's estimation is conservative.

[Lease]

I also have little confidence in Morningstar. Interesting they see: "... in China, A2M is part of a growing consumer preference for premium, international brands instead of locally made product....." which seems contradictory to the general opinion expressed here and elsewhere.

What is general opinion?

[Jiggs]

Hong Kong's daily newspaper/website reports that "an Auckland courier firm" has been used by smugglers to import US$175 million of NZ baby milk formula into China in the last 21 months, thus avoiding the 40% customs duty. I thought there had been 0% duty since 2017?
https://www.scmp.com/news/china/politics/article/3129023/chinese-customs-detain-15-suspected-smuggling-baby-milk-formula

[kiora]

That wouldn't have been QEX would it?
Too small an amount?

[nztx]

using Couriers wouldn't come cheap .. ;)

one of those buy to order outfits then send it on it's way to the Custies in motherland ? ;)

Seem to remember an outfit in Aussie doing this a while back which hit TV here .. poor Chinese Students just earning their keep
being extra industrious in OZ that was .. ;)

[Lease]

The case illustrates one thing: Chinese people love NZ infant formula. We should not worry too much about domestic competition. If local products are so good, why these people take risk to smuggle NZ IF?

[Balance]

The case illustrates one thing: Chinese people love NZ infant formula. We should not worry too much about domestic competition. If local products are so good, why these people take risk to smuggle NZ IF?

Flawed logic.

They smuggle anything to escape duty & taxes.

[Lease]

Flawed logic.

They smuggle anything to escape duty & taxes.

Do you have any proof they smuggle anything? If the products nobody wants, why smuggle?

[Balance]

Plenty more where that came from if you care to do a bit of research & understand why smuggling in any country (including NZ) is so lucrative.


Do you have any proof they smuggle anything? If the products nobody wants, why smuggle?

https://www.globaltimes.cn/page/202101/1214351.shtml

" .....smuggled included frozen beef and internal cattle organs, which were identified as having originated from India, Argentina and other countries, said the court.

China's General Administration of Customs bans the import and circulation of hoofed animals and their related products from India and Argentina, which are on its List of Animals and Their Products Prohibited to Be Imported from Countries and Areas with Animal Epidemics as FMD (foot-and-mouth disease) endemic areas."

[Lease]

Flawed logic.

They smuggle anything to escape duty & taxes.


Plenty more where that came from if you care to do a bit of research & understand why smuggling in any country (including NZ) is so lucrative.



https://www.globaltimes.cn/page/202101/1214351.shtml

" .....smuggled included frozen beef and internal cattle organs, which were identified as having originated from India, Argentina and other countries, said the court.

China's General Administration of Customs bans the import and circulation of hoofed animals and their related products from India and Argentina, which are on its List of Animals and Their Products Prohibited to Be Imported from Countries and Areas with Animal Epidemics as FMD (foot-and-mouth disease) endemic areas."

Global Times? hahaha, looks you really don’t know Chinese. The paper has full fake news.

[Lease]

Flawed logic.

They smuggle anything to escape duty & taxes.


Plenty more where that came from if you care to do a bit of research & understand why smuggling in any country (including NZ) is so lucrative.



https://www.globaltimes.cn/page/202101/1214351.shtml

" .....smuggled included frozen beef and internal cattle organs, which were identified as having originated from India, Argentina and other countries, said the court.

China's General Administration of Customs bans the import and circulation of hoofed animals and their related products from India and Argentina, which are on its List of Animals and Their Products Prohibited to Be Imported from Countries and Areas with Animal Epidemics as FMD (foot-and-mouth disease) endemic areas."


Sounding like ... you are.

Fair enough, surely you have your point. I have mine.

[Balance]

Global Times? hahaha, looks you really don’t know Chinese. The paper has full fake news.

Oh, you mean like Tump pronouncing everything he is wrong on as fake news?

But since you so obviously think that SCMP is so authoritative :

https://www.scmp.com/news/asia/east-asia/article/2184911/chinas-crackdown-food-smuggling-hurt-indias-buffalo-meat-exports

"China does not allow imports of the Indian meat due to fears over foot-and-mouth disease, but that hasn’t stopped smugglers getting into the country via neighbouring nations."


Fair enough, surely you have your point. I have mine.

Your point of view is without foundation and without research or due diligence.

Do you make all your postings the same way, I wonder?

[Lease]

Oh, you mean like Tump pronouncing everything he is wrong on as fake news?

But since you so obviously think that SCMP is so authoritative :

https://www.scmp.com/news/asia/east-asia/article/2184911/chinas-crackdown-food-smuggling-hurt-indias-buffalo-meat-exports

"China does not allow imports of the Indian meat due to fears over foot-and-mouth disease, but that hasn’t stopped smugglers getting into the country via neighbouring nations."



Your point of view is without foundation and without research or due diligence.

Do you make all your postings the same way, I wonder?

Balance, this is a share investing forum. Can we discuss more meaningful stuff?

[Balance]

Balance, this is a share investing forum. Can we discuss more meaningful stuff?

It is meaningful for those of us who assess the credibility of posters, based upon that postings they make.

[nztx]

Has ATM reached the bottom yet ? or more freefall forecasted ? ;)

[Balance]

Has ATM reached the bottom yet ? or more freefall forecasted ? ;)

Who knows?

Short term, ask the chartists and they are all negative.

To me, it's about the big picture now - there is unlikely there will be any uptrend until the new CEO announces his prognosis from the extensive assessment he must be making of what has gone so wrong with ATM.

Remember that he was appointed (August 2020) when ATM was still riding high and he would have accepted the appointment at that time with a very different view of what needed to be done.

Akin to a driver thinking he is going to be charging down the highway in a new car to find that there's all kinds of problem with the engine which needs fixing first!

[Leftfield]

12426

Interesting article out of AFR and Purdue University. Good news for A2.

Can anyone help with more info (steering clear of copyright issues) ??

[Baa_Baa]

12426

Interesting article out of AFR and Purdue University. Good news for A2.

Can anyone help with more info (steering clear of copyright issues) ??

Type this into Google search "Purdue University A2 study" :)

[Leftfield]

Type this into Google search "Purdue University A2 study" :)

Appreciated tho' not quite as useful as I had hoped..... that's likely all my fault ;)

[longy]

Most info that has already mentioned before.. However, I have not heard of this before "The company A2 Milk has been aggressively defending its intellectual property in America, claiming Oklahoma-based fast food and “ice cream parlour” chain Braum’s has infringed on its trademark after launching its own range of A2-branded dairy products.... This is also interesting... as A2 Milk owns the patent for the test that can detect and isolate cows that only carry the A2 protein, eliminating the chances of A1 contamination."

[Lease]

Appreciated tho' not quite as useful as I had hoped..... that's likely all my fault ;)

I have found this: https://dietitianconnection.com/app/uploads/2021/02/Prof-Savaiano-Slides-Webinar-24022021_-updated-image.pdf

But it looks the study is supported by A2M.:)

[Leftfield]

I have found this: https://dietitianconnection.com/app/uploads/2021/02/Prof-Savaiano-Slides-Webinar-24022021_-updated-image.pdf

But it looks the study is supported by A2M.:)

Well done you!! Thanks v much. :t_up: Still a very valid piece of research IMHO. Supports similar Chinese and NZ research.

Longy the case between A2 and Braum's was signalled about 12 - 18 months ago (pre Covid). ATM claim that Braums have copied their labelling and IP claims on Fresh Milk. I've seen pics of the Braums product and think ATM have a good case, however I'm no lawyer, and suspect that it will take a couple more years to resolve. The downside is that Braums is a Ma and Pa family owned USA company...... so will attach some sympathy being 'attacked' by a big multinational like ATM. Out of court settlement likely IMHO.

And yes, ATM owns a lot of IP including the test you mention. Provides it with a good 'moat.'

Here's some of the IP claimed by ATM (not to mention the copyright stuff that Braums have allegedly breached.)

Beta-casein a2 and prevention of inflammation of the bowel
Beta-casein a2 and reducing or preventing symptoms of lactose intolerance
Beta-casein a2 and blood glucose levels
Beta-casein a2 and antioxidant capacity
Infant formula comprising human milk peptides
Beta-caseins and cognitive function
Beta-caseins and gut microbiota
A2 beta-casein and viscosity of milk products

[porkandpuha]

https://seekingalpha.com/article/4418603-a2-milk-company-remains-attractive-despite-challenges?mail_subject=acopf-the-a2-milk-company-remains-attractive-despite-challenges&utm_campaign=rta-stock-article&utm_content=link-0&utm_medium=email&utm_source=seeking_alpha

[JimmyTrade]

Diamond handing this company from its highs in 2018.. along with SML isn’t paying off. Lessons learnt for sure.

[Gerald]

http://www2.aspecthuntley.com.au/pdf/bellpotter/companyprofile/today/A2M_cp.pdf

[sb9]

Bell Potter who were bashing A2 previously have upgraded their rating to "Buy"...explains price rise today.

[Lease]

http://www2.aspecthuntley.com.au/pdf/bellpotter/companyprofile/today/A2M_cp.pdf

Thanks Gerald. Great news to see Daigou might start to recover. But I wish the new CEO still work out strategy of distribution as daigou should not be a major long-term distribution channel.

[sb9]

With half way through April, they should've good handle on how previous quarter ending March went and also trend into the last quarter. We shouldn't be too far away for an update from the company, be very interesting.

[BlackPeter]

With half through April, they should've good handle on how previous quarter ending March went and also trend into the last quarter. We shouldn't be too far away for an update from the company, be very interesting.

I guess just looking at the pattern it would be about time for the next step down, wouldn't it?

12434

But then they say that the past is not a reliable indicator for the future ... and sometimes they are right (and often wrong ;) ).

[Balance]

All within 48 hours :

https://www.fool.com.au/2021/04/13/is-it-time-to-get-your-hopes-up-for-the-a2-milk-asx-a2m-share-price/

Bell Potter has taken a more positive view on the A2 Milk share price. This is due to the belief that issues causing its recent downgrade cycle are reversing.

The report first highlights A2’s move to materially scale back its Australian infant milk formula (IMF) deliveries to address excess stock.

It notes that exports from Synlait Milk Ltd (ASX: SM1) to Australia were down 72% in the past 6 months since September 2020, relative to the 6 months to August 2020. Bell Potter said that “inventory infill appears to have materially contracted, addressing one element of the inventory build”.

In terms of Australian exports to China, the report highlights two sequential monthly gains in finished infant formula exports since the December 2020 lows. Interestingly, the broker did not expect an uplift to occur so early on, calling this an early sign of life.

https://www.fool.com.au/2021/04/14/a2-milk-asxa2m-share-price-sours-amid-international-student-uncertainty/

According to a report in yesterday’s The Australian, as a result of Australia’s delayed vaccine rollout for COVID-19, the country appears unlikely to reach herd immunity by the end of 2021 and therefore not open its borders to international students.

[Balance]

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

Shorters continue to cover, providing short term price support.

[Leftfield]

Chinese Diary companies SP's rally after government announcement that it should remove all birth control to encourage people to have more children. See it here. (https://hotcopper.com.au/threads/media-updates.4489996/page-8420?post_id=52486843)

[BlackPeter]

Chinese Diary companies SP's rally after government announcement that it should remove all birth control to encourage people to have more children. See it here. (https://hotcopper.com.au/threads/media-updates.4489996/page-8420?post_id=52486843)

Problem is that there are not anymore enough Chinese females in an age young enough to reproduce in order to keep population numbers up. The biological clock can't be fooled. Anyway - good to see good old hype working again :):

[HKG2301]

Problem is that there are not anymore enough Chinese females in an age young enough to reproduce in order to keep population numbers up. The biological clock can't be fooled. Anyway - good to see good old hype working again :):

With the greatest of respect, BP, what utter tosh! :laugh:

[BlackPeter]

With the greatest of respect, BP, what utter tosh! :laugh:

Interesting - which part of my post did you not understand?

I guess looking at the Chinese population pyramid is not that hard and most people even might know that women between 20 and 40 are most likely to be able to bear offspring ... Oops - I hope this is not too shocking news for you, isn't it :scared::

Add to that that many of the even still available princesses in child bearing age don't really want to go through the process anymore - and certainly not more often than once.

Just connect the dots and (depending on your desires) your amusement levels might drop :p - or alternatively - just keep your head stuck in the sand ... though - laughing while the head is stuck in the sand might be an unpleasant experience as well ...

[Gerald]

12439

UBS report 6/04 if anyone missed it.

[winner69]

12439

UBS report 6/04 if anyone missed it.

Target 16 bucks sounds good

[davflaws]

The demographics may well suggest that the birthrate in China will inevitably fall. But does that mean that the premium end of the IF market will shrink?

I imagine that only a tiny proportion of the Chinese population are currently in that market, but that proportion will increase - ie the rising standard of living in a very very large population will swamp any drop in the birthrate.

As I see it, ATM's future success will come from it's continuing ability to sell all the A2milk we can produce at a healthy premium.

Disc: - halved my holding just under $12 a while back for reasons totally unrelated to my view of ATM's long term prospects.

[winner69]

The demographics may well suggest that the birthrate in China will inevitably fall. But does that mean that the premium end of the IF market will shrink?

I imagine that only a tiny proportion of the Chinese population are currently in that market, but that proportion will increase - ie the rising standard of living in a very very large population will swamp any drop in the birthrate.

As I see it, ATM's future success will come from it's continuing ability to sell all the A2milk we can produce at a healthy premium.

Disc: - halved my holding just under $12 a while back for reasons totally unrelated to my view of ATM's long term prospects.

In the 1970’s when Cadbury eyed up China they had an ambition of selling a Dairy Milk bar to every person in China. They haven’t achieved that ambition yet .....but haven’t given up

I thinknk Mars is #1 in China

[Biscuit]

......They still trying to do that .....but haven’t given up yet......

call me pedantic about gramma......but them the same

[Akane]

12439

UBS report 6/04 if anyone missed it.

Very optimistic price point, if it does hit $16 I'm gonna unload my bags. My apologies for being a doomer but the bag holding on this is getting unbareable.

[winner69]

Very optimistic price point, if it does hit $16 I'm gonna unload my bags. My apologies for being a doomer but the bag holding on this is getting unbareable.

That UBS report reminds me of the old saying - ‘Those who write what fools want to read is always sure of a large audience’

[BlackPeter]

In the 1970’s when Cadbury eyed up China they had an ambition of selling a Dairy Milk bar to every person in China. They haven’t achieved that ambition yet .....but haven’t given up

I thinknk Mars is #1 in China

Chinese cuisine is great and healthy ... unhealthy fatty snacks are not really part of it. Means Cadbury will have endless future opportunities to keep failing their delusional targets :).

But hey, given their success in fattening up NZ and Australia (hand in hand with Coca Cola, McDonalds and KFC), it must work with China as well, mustn't it?

[Ggcc]

Chinese cuisine is great and healthy ... unhealthy fatty snacks are not really part of it. Means Cadbury will have endless future opportunities to keep failing their delusional targets :).

But hey, given their success in fattening up NZ and Australia (hand in hand with Coca Cola, McDonalds and KFC), it must work with China as well, mustn't it?
That has to do with how wealthy they are. Generally affluent areas of China like shanghai consume chocolate more often, but the average Chinese individual only eats a tiny amount of chocolate per year. Apparently 100 grams

Ps Over half of adults in China, or more than half a billion people, are now overweight, an official report has found. The figures have risen significantly since 2002, when 29% of adults were overweight. The country's rapid economic growth in recent decades has led to major changes to lifestyle, diet and exercise habits.

[Biscuit]

....The country's rapid economic growth in recent decades has led to major changes to lifestyle, diet and exercise habits.

Excellent, NZ well positioned to profit from that: we can sell them loads of expensive high fat food and when they obese, FPH can sell them sleep apnoea devices.

[longy]

Did you guys see the news on University of Queensland has enrolled a record number of international students in 2021? They see 50% increased in Chinese student compared to 2020, defying predictions that closed borders and negative messaging from the Chinese government would dampen demand. However, some university in OZ experienced a drop in enrollment. I am wondering if those are students got stuck in OZ and decided to carry on with education. Has their border opened up yet?

[aperitif]

Inventory drawdown and discounting looks to be coming to an end across various E-Commerce platforms. Most stages selling well across various stores, especially Stage 3 as usual.

Interested to see if the company will give an update as we are now in the much anticipated 4Q. BKL is doing an investor briefing Thursday, looking to see how their corporate daigou reactivation is progressing.

[aperitif]

See attached photos; of note the JD.com live-streaming event where 374,000 people tuned in!!!
124451244612447

[Lease]

Inventory drawdown and discounting looks to be coming to an end across various E-Commerce platforms. Most stages selling well across various stores, especially Stage 3 as usual.

Interested to see if the company will give an update as we are now in the much anticipated 4Q. BKL is doing an investor briefing Thursday, looking to see how their corporate daigou reactivation is progressing.

I have traced JD and Tmall as well, and got same conclusion as yours.

Be positive.

[Akane]

See attached photos; of note the JD.com live-streaming event where 374,000 people tuned in!!!
124451244612447

I'll take the cheaper Aptamil thanks.

[Leftfield]

I'll take the cheaper Aptamil thanks.

Perhaps users of JD Com are smarter than you give credit.

A2 now #3 on the JD leader board. See pic below.

12448

Just saying...... as always DYOR 'cos I am biased.

[Balance]

Perhaps users of JD Com are smarter than you give credit.

A2 now #3 on the JD leader board. See pic below.

12448

Just saying...... as always DYOR 'cos I am biased.

I don’t read mandarin so why is A2M ¥215 vs Feihe ¥269?

Has A2M been discounting or is their can half size?

[Balance]

I don’t read mandarin so why is A2M ¥215 vs Feihe ¥269?

Has A2M been discounting or is their can half size?

If ATM has been discounting aggressively to get rid of stock, it is not a good strategy to maintain a premium positioning for its products?

[Baa_Baa]

I don’t read mandarin so why is A2M ¥215 vs Feihe ¥269?

Has A2M been discounting or is their can half size?

You know that it’s not actually A2 Milk doing the selling on jd.com right? Any punter can sell their stuff at any price they like.

[Balance]

You know that it’s not actually A2 Milk doing the selling on jd.com right? Any punter can sell their stuff at any price they like.

I understand that but the supplier is still ATM ultimately, right?

The low price is only possible if the sellers get their supplies from ATM at a low enough price to discount.

[ralph]

It may be via QEX the missing IF

[porkandpuha]

If ATM has been discounting aggressively to get rid of stock, it is not a good strategy to maintain a premium positioning for its products?

A couple of months ago you were wahhing on and giving us weekly updates around the high A2 IF price vs the Karicare price at your local Pak n Save as if the premium price was an unjustifed bad thing.

Now you are going on about the reduced A2 price being a poor strategy? Make up your mind instead of being the negative thread contrarian.

[Balance]

A couple of months ago you were wahhing on and giving us weekly updates around the high A2 IF price vs the Karicare price at your local Pak n Save as if the premium price was an unjustifed bad thing.

Now you are going on about the reduced A2 price being a poor strategy? Make up your mind instead of being the negative thread contrarian.

Actually, you have proven my point 100% - ATM cannot keep its premium pricing so watch out for the fourth downgrade on its way.

[Master98]

Australian broking house Credit Suisse had cut its target price by 14 per cent on A2 Milk to A$7.14 (NZ$7.71).

[Oberon]

Hey all. Just another random check on my ol' fav ...


Actually, you have proven my point 100% - ATM cannot keep its premium pricing so watch out for the fourth downgrade on its way.

Random observation: I saw an A2 infant formula advertised on TV a couple of weeks back. Can't say I've ever seen A2M's IF marketed on TV here in NZ.

Also, I can't remember if it was here or over at HC, but someone posted a price comparison between A2 and other IFs (Countdown). IIRC, A2 was close to twice the price.

It may well be a solid, quality product. Doesn't mean the more competitively priced competition is rubbish, either. If I were a discerning customer with a baby (and bills), I might not be able to justify paying so much more for "premium" when there are several other products that appear to tick the same boxes, at nearly half the price.

[Balance]

Australian broking house Credit Suisse had cut its target price by 14 per cent on A2 Milk to A$7.14 (NZ$7.71).

https://www.fool.com.au/2021/04/20/declining-birth-rates-could-threaten-the-a2-milk-asxa2m-share-price/

Credit Suisse’s rationale for downgrade.

[Sideshow Bob]

Hey all. Just another random check on my ol' fav ...



Random observation: I saw an A2 infant formula advertised on TV a couple of weeks back. Can't say I've ever seen A2M's IF marketed on TV here in NZ.

Also, I can't remember if it was here or over at HC, but someone posted a price comparison between A2 and other IFs (Countdown). IIRC, A2 was close to twice the price.

It may well be a solid, quality product. Doesn't mean the more competitively priced competition is rubbish, either. If I were a discerning customer with a baby (and bills), I might not be able to justify paying so much more for "premium" when there are several other products that appear to tick the same boxes, at nearly half the price.

Was it A2 advertising or was it Haven? Haven (havenbaby.co.nz) (https://www.havenbaby.co.nz/)

It is definitely worth looking to see who is behind Haven.......would think pretty small scale - at this stage

Significantly cheaper ($29.95 for stage 1 via their website compared to $39.00 at Countdown for A2).

[MichelleH]

Zuru is behind Haven...

[Sideshow Bob]

Zuru is behind Haven...

Correct.....:)

[bull....]

a2 just about to make new lows , last area of support around 7. 80 - 8 .10 area then it goes all the way back to $2. why had such a big run up from 2 to 8 with out stopping on the way up. maybe it find it natural level then between to 2 and 8 then

[Balance]

a2 just about to make new lows , last area of support around 7. 80 - 8 .10 area then it goes all the way back to $2. why had such a big run up from 2 to 8 with out stopping on the way up. maybe it find it natural level then between to 2 and 8 then

Sp must hold A$7.50.

If it does not, a rapid drop to A$5.30 is a certainty?

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

Shorters seem to have stopped covering and started selling again?

[Getty]

Did anybody notice yesterday, that ST had 477 viewers during the day, instead of the average 250?

Was it because both FTSE & DOW were down, and viewers may have been looking for opinion/guidance?

Comments please.

Pardon me for posting this here, but I thought I'd insert into a well read thread.

[676767]

Did anybody notice yesterday, that ST had 477 viewers during the day, instead of the average 250?

Was it because both FTSE & DOW were down, and viewers may have been looking for opinion/guidance?

Comments please.

Pardon me for posting this here, but I thought I'd insert into a well read thread.

Probably everyone just excited the sites finally back up again

[Balance]

Intriguing how the sp still gets bought up on the NZX in the mornings when we all know that the real action really starts when ASX opens!

[Blue Skies]

Did anybody notice yesterday, that ST had 477 viewers during the day, instead of the average 250?

Was it because both FTSE & DOW were down, and viewers may have been looking for opinion/guidance?

Comments please.



Pardon me for posting this here, but I thought I'd insert into a well read thread.


Just speculation, but when there's a sea of red ink and ATM touching new lows, anxiety levels go up, amygdala gland gets hyper active sitting off a chain reaction, frontal cortex (logical thinking) gets engaged to calm things & seeks reassurance from the many reasoned and well informed ST posters we are still on right track, whatever that is. :mellow:

[Balance]

Intriguing how the sp still gets bought up on the NZX in the mornings when we all know that the real action really starts when ASX opens!

And sure enough, someone paid $8.55 on NZX this morning when the shares could be obtained for $8.17, saving 38c when ASX opens.

Plenty dumb imo.

Of greater interest today - will ATM test A$7.50 and will A$7.50 hold?

[JohnnyTheHorse]

And sure enough, someone paid $8.55 on NZX this morning when the shares could be obtained for $8.17, saving 38c when ASX opens.

Plenty dumb imo.

Of greater interest today - will ATM test A$7.50 and will A$7.50 hold?

Hourly RSI is in the teens and the break of resistance didn't get that much follow through. I'm expecting a bounce for a few hours, then keep bleeding.

[McPussPuss]

Thoughts on the sector from Prof. Woodford;

https://www.interest.co.nz/rural-news/110065/many-more-a2-milk-and-a2-infant-formula-brands-are-now-emerging-across-globe

[Balance]

Keith Woodford's opinion about the state of A2 milk - interesting read.

It is clear from his opinion piece that ATM has lost sight of the need to invest in R&D to maintain its leading position in the industry - something that top notch companies do.

We all know that ATM did not believe in Jayne's strategy of accelerated spending on marketing and promotion to maintain and enhance its competitive position.

All short term thinking with ATM, it seems and now the new CEO must step up to steer a new direction - long term gain from short term pain.

https://www.interest.co.nz/rural-news/110065/many-more-a2-milk-and-a2-infant-formula-brands-are-now-emerging-across-globe

Excerpts :

"Many more A2 milk and A2 infant formula brands are now emerging across the globe but market leader The a2 milk Company is struggling."

"Internationally, there are multiple A2 brands of both A2 milk and A2 infant formula now available, particularly in Asia, to a lesser extent in the Americas, but with Europe still lagging.
Most of the big international brands now have A2 projects. Including niche marketers, there are probably more than 20 brands spread across the globe."

And this is the most disturbing bit :

"Whether COVID is the only pothole for ATM is a moot point. About five years ago the company decided to focus on its own brands rather than further developing the category. At that point, they stepped back from major research funding.

Even before that, the company was managed primarily by marketers rather than scientists, but then they pivoted even further towards marketing. I think they were dazzled by their own success. They lost sight of fundamental issues relating to the need to further build the science foundations."

[aperitif]

https://www.nestle.com/media/mediaeventscalendar/allevents/2021-three-month-sales

Clock is ticking....

[winner69]

Keith Woodford's opinion about the state of A2 milk - interesting read.

It is clear from his opinion piece that ATM has lost sight of the need to invest in R&D to maintain its leading position in the industry - something that top notch companies do.

We all know that ATM did not believe in Jayne's strategy of accelerated spending on marketing and promotion to maintain and enhance its competitive position.

All short term thinking with ATM, it seems and now the new CEO must step up to steer a new direction - long term gain from short term pain.

https://www.interest.co.nz/rural-news/110065/many-more-a2-milk-and-a2-infant-formula-brands-are-now-emerging-across-globe

Excerpts :

"Many more A2 milk and A2 infant formula brands are now emerging across the globe but market leader The a2 milk Company is struggling."

"Internationally, there are multiple A2 brands of both A2 milk and A2 infant formula now available, particularly in Asia, to a lesser extent in the Americas, but with Europe still lagging.
Most of the big international brands now have A2 projects. Including niche marketers, there are probably more than 20 brands spread across the globe."

And this is the most disturbing bit :

"Whether COVID is the only pothole for ATM is a moot point. About five years ago the company decided to focus on its own brands rather than further developing the category. At that point, they stepped back from major research funding.

Even before that, the company was managed primarily by marketers rather than scientists, but then they pivoted even further towards marketing. I think they were dazzled by their own success. They lost sight of fundamental issues relating to the need to further build the science foundations."

That’s not good eh Balance .....got to keep that product development up.

Shame with zillions in the bank

[silu]

It's such a shame that the board didn't pull through with Jayne's strategy. We could have been like Red Bull or Coca-Cola for the dairy industry and build up this moat around us with instant brand recognition but they were so short-sighted.

[Baa_Baa]

That’s not good eh Balance .....got to keep that product development up.

Shame with zillions in the bank

Who funded Prof Woodward's "scientific research"?

[winner69]

It's such a shame that the board didn't pull through with Jayne's strategy. We could have been like Red Bull or Coca-Cola for the dairy industry and build up this moat around us with instant brand recognition but they were so short-sighted.

A2 ripe for a takeover I reckon ..will happen before they get too far down the track of becoming a producer ...rather than a marketer

[Ggcc]

A2 ripe for a takeover I reckon
I feel the same way, but I don’t think they will pay that much of a premium. Maybe $15-17 in this environment. It would be sad if it did happen though

[Blue Skies]

On a brighter note, according to MPI report last year, NZ's highly trusted dairy all sourced from GMO free, free range, grass fed, cows is a strong advantage over many of the international brands. Over the years corporations like Nestle have at various times been involved in some shocking practices including in the IF area.
Absolute trust in the integrity of a product any mother is putting in the mouth of their newborn child is extremely important & once a companies reputation is tarnished it is very hard to ever fully regain it.

On another issue, interesting to see China media praising our Foreign Affairs Minister's recent speech & independent stance, & talking about closer cooperation with NZ while relationships with Aust, US etc continue to deteriorate. Got to be helpful for NZ brands to Chinese consumers.

[aperitif]

Nestle selling down their a2 portfolio, strategic stake imminent...

12452

[Ruby]

https://www.interest.co.nz/rural-news/110065/many-more-a2-milk-and-a2-infant-formula-brands-are-now-emerging-across-globe
From the same article...
"Sometimes I get asked by farmers as to how long I think it will be before the A2 premium disappears. My response is that they are asking the wrong question. In the long term, the question is when will the A1 milk sell only at a discount. That situation may still be a long way distant, but it is coming..."

[Leftfield]

https://www.interest.co.nz/rural-news/110065/many-more-a2-milk-and-a2-infant-formula-brands-are-now-emerging-across-globe
From the same article...
"Sometimes I get asked by farmers as to how long I think it will be before the A2 premium disappears. My response is that they are asking the wrong question. In the long term, the question is when will the A1 milk sell only at a discount. That situation may still be a long way distant, but it is coming..."

Thanks for posting. Interesting article. The next ATM market update is going to be v interesting.

[Lease]

https://www.nestle.com/media/mediaeventscalendar/allevents/2021-three-month-sales

Clock is ticking....

From Press Release of Nestle Three-Month Sales to 31 March 2021:

"China saw double-digit growth, helped by a recovery in out-of-home channels and the timing of Chinese New Year. Growth was broad-based across most product categories, reflecting continued momentum in e-commerce and a strong innovation pipeline. The largest growth contributor was Nestlé Professional, as sales improved significantly. Coffee, culinary, dairy and confectionery all grew at double-digit rates. Growth in Infant Nutrition turned positive."

Looks there are no reasons to be pessimistic on A2M China sales.

[silu]

Interesting. I wonder what the new CEO has been reading in the tea leafs?

"Blackmores CEO says $200m in daigou sales gone from industry. Alastair Symington said on Thursday that even when international borders do open up again, the size of the daigou trade would be lower because of the severe disruptions which had taken place during the COVID-19 pandemic."

https://www.afr.com/companies/healthcare-and-fitness/blackmores-ceo-says-200m-gone-from-industry-in-daigou-sales-20210421-p57l88

[Balance]

Those who assert that China domestic brands are no threat to foreign brands need to reconsider & rethink strategy again.

https://www.theaustralian.com.au/business/chinese-consumers-increasingly-favour-local-brands-over-foreign-brands/news-story/b0c879f63aa3fe2257825328105ccfde

Excerpt :

‘Chinese consumers are shifting their loyalties from popular high-profile foreign retail fashion brands, such as Nike and Adidas, to local Chinese brands with that trend also emerging in the purchase of vitamins and infant milk formula that could pose a risk to Australia’s A2 Milk, Bubs and Blackmores.’

[Akane]

Those who assert that China domestic brands are no threat to foreign brands need to reconsider & rethink strategy again.

https://www.theaustralian.com.au/business/chinese-consumers-increasingly-favour-local-brands-over-foreign-brands/news-story/b0c879f63aa3fe2257825328105ccfde

Excerpt :

‘Chinese consumers are shifting their loyalties from popular high-profile foreign retail fashion brands, such as Nike and Adidas, to local Chinese brands with that trend also emerging in the purchase of vitamins and infant milk formula that could pose a risk to Australia’s A2 Milk, Bubs and Blackmores.’

Exactly, do not underestimate the amount of nationalism in China.

[longy]

Those who assert that China domestic brands are no threat to foreign brands need to reconsider & rethink strategy again.

https://www.theaustralian.com.au/business/chinese-consumers-increasingly-favour-local-brands-over-foreign-brands/news-story/b0c879f63aa3fe2257825328105ccfde

Excerpt :

‘Chinese consumers are shifting their loyalties from popular high-profile foreign retail fashion brands, such as Nike and Adidas, to local Chinese brands with that trend also emerging in the purchase of vitamins and infant milk formula that could pose a risk to Australia’s A2 Milk, Bubs and Blackmores.’

Apparently only some 1000 people took part in the survey so I have read it somewhere.

[longy]

Apparently only some 1000 people took part in the survey so I have read it somewhere.

"A recent note on Chinese consumer preferences by Citi analyst Sam Teeger said a survey of 1000 Chinese consumers by Citi’s US Retail Team revealed consumers are more likely to buy domestic athletic brands (Li Ning and Anta) as compared to foreign athletic brands (Nike and Adidas)."

[longy]

From Press Release of Nestle Three-Month Sales to 31 March 2021:

"China saw double-digit growth, helped by a recovery in out-of-home channels and the timing of Chinese New Year. Growth was broad-based across most product categories, reflecting continued momentum in e-commerce and a strong innovation pipeline. The largest growth contributor was Nestlé Professional, as sales improved significantly. Coffee, culinary, dairy and confectionery all grew at double-digit rates. Growth in Infant Nutrition turned positive."

Looks there are no reasons to be pessimistic on A2M China sales.

I am wondering how A2 is doing in US? The last time I heard was about a month ago... it has some 22K distributors/shops across US.

[carrom74]

I am wondering how A2 is doing in US? The last time I heard was about a month ago... it has some 22K distributors/shops across US.

USA head”s interview-about 2 weeks ago.
https://www.bloomberg.com/news/videos/2021-04-08/a2-milk-looks-to-scale-up-in-the-u-s-as-chinese-sales-disrupted-video

[bull....]

I see jacinda didnt offer any new climate iniatives at the summit , so the number of cows in NZ are safe for now.

[Sideshow Bob]

And sure enough, someone paid $8.55 on NZX this morning when the shares could be obtained for $8.17, saving 38c when ASX opens.

Plenty dumb imo.

Of greater interest today - will ATM test A$7.50 and will A$7.50 hold?

Opened at $7.50 on the ASX today.....now $7.49

[silu]

This is just so brutal. Since reaching its high it only had like 4 weeks where it finished higher on a Friday than when it opened on a Monday.

[Balance]

Opened at $7.50 on the ASX today.....now $7.49

Looks grim - next stop A$5.30 if it closes below A$7.50 at the close this afternoon on ASX?

Meanwhile, another broker (previously positive on A2M) has downgraded its recommendation and valuation :

https://www.fool.com.au/2021/04/22/why-the-a2-milk-asxa2m-share-price-hit-a-multi-year-low-today/

According to a note out of Morgans, the broker has downgraded a2 Milk’s shares to a hold rating from add and slashed the price target on them by almost 20% to $8.34.

The broker made the move after its research indicated that prices in China are not improving and retailers in the local market are discounting inventory ahead of use by dates. Morgans fears that its excess inventory could be a bigger problem that it previously anticipated.

Based on this, the broker believes that a2 Milk is unlikely to achieve its guidance for FY 2021. This would be bitterly disappointing given how the company has downgraded its guidance numerous times since it was first given to the market.

[Balance]

Update too from Citi:

Citi reiterated its sell rating and $7.15 price target on the company’s shares.

It also has concerns over discounting as excess inventory nears its use by dates. But as well as this, the broker’s research appears to indicate that Chinese consumers are now preferring domestic brands for consumer products. This includes athletic brands, vitamins, and, unfortunately, infant formula. It feels this could impact demand in the key market.

[Sideshow Bob]

Looks grim - next stop A$5.30 if it closes below A$7.50 at the close this afternoon on ASX?

A2 currently worth $223m less than yesterday......does look grim.

[Rawz]

Looking grim. Below the 52 week low. Dropped under a $6b market cap.

It's getting closer to my $7 buy price. Based on 25% ebitda margin and 10% growth rate for 10 years.

[winner69]

Looking grim. Below the 52 week low. Dropped under a $6b market cap.

It's getting closer to my $7 buy price. Based on 25% ebitda margin and 10% growth rate for 10 years.

That's very bullish growth rate for 10 years rawz ....and high EBITDA

What would your target be if 10% was say 5%

[bull....]

its been hammer time since $20

[bull....]

really the price is going lower today because at the climate summit they discussed the impact of cow farts on the climate. did you know 1 cow can burp and fart 160 odd litre of methane into the atmosphere. thats a sh..t load of methane being emitted each day from the global cow population. now the consensus is being decided on what the idea population of cows should be on the planet. less cows less a2 milk?

[Balance]

really the price is going lower today because at the climate summit they discussed the impact of cow farts on the climate. did you know 1 cow can burp and fart 160 odd litre of methane into the atmosphere. thats a sh..t load of methane being emitted each day from the global cow population. now the consensus is being decided on what the idea population of cows should be on the planet. less cows less a2 milk?

Don’t think so.

Less cows = less A1 milk cows = more A2 milk cows imo

[Sideshow Bob]

Don’t think so.

Less cows = less A1 milk cows = more A2 milk cows imo

Bull should be worried if less cows.

Sorry Friday attempt at humour.....;)

[Rawz]

That's very bullish growth rate for 10 years rawz ....and high EBITDA

What would your target be if 10% was say 5%

Remember it wasn't so long ago that management reiterated that in the medium term 30% editda margins were achievable. Not that much credence should be given to management.. At last check they were at 27% but from all the talk of clearing stock and general competition I thought 25% was more likely.

5% growth rate is $5.04 share price :ohmy:

[madmat]

Exactly, do not underestimate the amount of nationalism in China. Sure, but as the dust settles just wait for another Melamine scandal.

[Balance]

Sure, but as the dust settles just wait for another Melamine scandal.

Not when the punishment is the death penalty, swiftly and unceremoniuosly carried out with a bullet to the skull.

The cost of the bullet is apparently charged to the family as well to cement in the ultimate shame.

[Snow Leopard]

really the price is going lower today because at the climate summit they discussed the impact of cow farts on the climate. did you know 1 cow can burp and fart 160 odd litre of methane into the atmosphere. thats a sh..t load of methane being emitted each day from the global cow population. now the consensus is being decided on what the idea population of cows should be on the planet. less cows less a2 milk?

Problem solved:
Feeding cows seaweed could cut their methane emissions by 82% (https://www.theguardian.com/environment/2021/mar/18/cows-seaweed-methane-emissions-scientists)

Disc: Hold neither A2M nor seaweed

[Maxtrade]

Sp must hold A$7.50.

If it does not, a rapid drop to A$5.30 is a certainty?

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

Shorters seem to have stopped covering and started selling again?


To those that follow ATM could you please provide some educated views on the following...

Is it a lost cause holding onto ATM shares. Stupidly bought in near its highs right before it took a turn for the worse. It's hard to believe the share price has dropped 60% for this company off recent SP $21 highs. Is there any point holding these shares in the hope the SP will recover in the next couple of years? Or should I cut my losses and move on. It is hard to see the SP dropping further and further, keep thinking it cant go any lower and must find support for a recovery at some point?

[Biscuit]

To those that follow ATM could you please provide some educated views on the following...

Is it a lost cause holding onto ATM shares. Stupidly bought in near its highs right before it took a turn for the worse. It's hard to believe the share price has dropped 60% for this company off recent SP $21 highs. Is there any point holding these shares in the hope the SP will recover in the next couple of years? Or should I cut my losses and move on. It is hard to see the SP dropping further and further, keep thinking it cant go any lower and must find support for a recovery at some point?

I doubt your question will prompt anything more profound than has already been expressed on this thread. Some people think it is still over-priced and will drop further as managers and punters get a more complete idea of how things are likely to travel post-covid. Others think it is under-priced and will start to rise once managers and punters get a more complete picture of how things are likely to travel post-covid. In other words, your guess is as good as anyone's.

[Rawz]

To those that follow ATM could you please provide some educated views on the following...

Is it a lost cause holding onto ATM shares. Stupidly bought in near its highs right before it took a turn for the worse. It's hard to believe the share price has dropped 60% for this company off recent SP $21 highs. Is there any point holding these shares in the hope the SP will recover in the next couple of years? Or should I cut my losses and move on. It is hard to see the SP dropping further and further, keep thinking it cant go any lower and must find support for a recovery at some point?

The time to sell was around downgrade level 2. That was when Beagle and co were barking at their loudest warning of issues the company has. I did the same as you and purchased high, ended up getting out at $12 which was painful at the time but obviously happy now.

If I was you I would hold. If the position is less than 10% of your portfolio maybe even top up to DCA. If your holding is over 20% I wouldn't add. Just hodl.

There is plenty of upside with a huge china market that still has low penetration in the MBS channel and other growth to come from south east Asia and North America. Who knows, the new CEO could be a absolute guru and turn the company around.

GLH

[sb9]

Raided all nooks and corners around home to get a small top up at the close, can't be that bad this A2 story. Something's gotta give one way or other.

[Mickey]

To those that follow ATM could you please provide some educated views on the following...

Is it a lost cause holding onto ATM shares. Stupidly bought in near its highs right before it took a turn for the worse. It's hard to believe the share price has dropped 60% for this company off recent SP $21 highs. Is there any point holding these shares in the hope the SP will recover in the next couple of years? Or should I cut my losses and move on. It is hard to see the SP dropping further and further, keep thinking it cant go any lower and must find support for a recovery at some point?

Mate you're in the hell zone. A couple of stories. I followed CNU all the way down to the $1.30s and kept dollar cost averaging. Why, coz I believed they'd eventually climb out of the political crap they were buried in. Worked out pretty well.

I bought into NZR at the top and watched it slowly decline. I didn't believe it could recover from a number of negative influences and so I bailed in the low $3s and took a sizeable haircut. Glad I did coz look at the sp now.

Obviously theses 2 cases are of no real immediate help but hopefully they'll prompt you to do your research on the company and the macro economics and based on what your conclusions are you'll commit to sell, hold or to continue investing. This share market game can be a tough gig and there's no easy path to riches. You win some, you lose some but hopefully you win more than you lose and along the way you learn heaps. I wish you well. Good luck!

[Gunner]

Stay away until there is a clear upward trend. This has been a falling knife for 6 month

[Balance]

To those that follow ATM could you please provide some educated views on the following...

Is it a lost cause holding onto ATM shares. Stupidly bought in near its highs right before it took a turn for the worse. It's hard to believe the share price has dropped 60% for this company off recent SP $21 highs. Is there any point holding these shares in the hope the SP will recover in the next couple of years? Or should I cut my losses and move on. It is hard to see the SP dropping further and further, keep thinking it cant go any lower and must find support for a recovery at some point?

This is going to sound mercenary but hopefully, it will provide you with some guidance as what to do.

In the sharemarket, what holders (who have taken an absolute hammering) like you do next is one of the turning points experienced investors monitor closely.

Why, because the pain often becomes so great and unbearable that even the diehard believers finally give up and sell out - in other words, CAPITULATION.

And capitulation is when the experienced seasoned investors swoop and mope up shares off the tortured hands.

Imo your downside from here is probably around A$2 before it finds good support (based on technicals) - your upside could be much higher if the new CEO comes out with a really good strategy and convincing story of how the company intends to use its strengths to rebuild a better sales & marketing platform than one so dependent upon a low cost but opague sales channels which have proven to be shaky.

I certainly am not touching the shares myself until the new CEO articulates his strategy, and it better be a good and coherent strategy PLUS the sp shows a clear uptrend.

If I have to pay $10 to get back into the game, I am happy to. There is nothing more soul destroying than watch a share making new lows after buying it!

[silu]

Speaking of new CEO. Have we had any kinds of interviews with him in newspapers or magazines? When Jayne became CEO I quickly had an impression what she was all about but the new guy is a mystery so far.

[silu]

and @ Maxtrade. Never guess a bottom. However I do believe in DCA when a) the story changed and I like it and b) the market seems to like it too and it is trending up again.

[Balance]

Speaking of new CEO. Have we had any kinds of interviews with him in newspapers or magazines? When Jayne became CEO I quickly had an impression what she was all about but the new guy is a mystery so far.

Remember that David was appointed in August 2020 when everything was sweet for ATM - record sales, record profits, bright outlook and share price at all time high.

He was going to take over the rein with a solid growth platform to take ATM to new highs.

Then came the sale of shares by insiders and the triple profit downgrades.

He is a seasoned operator (like Jayne) but he is not going to make the same mistakes as Jayne did - mouthing off strategies & plans until he has assessed fully the unhappy situation ATM is in & put in a place a strategic plan to turn things around.

A plan with 100% buy in & support by the BOD before he announces it.

So his announcement is eagerly awaited.

[silu]

Remember that David was appointed in August 2020 when everything was sweet for ATM - record sales, record profits, bright outlook and share price at all time high.

He was going to take over the rein with a solid growth platform to take ATM to new highs.

Then came the sale of shares by insiders and the triple profit downgrades.

He is a seasoned operator (like Jayne) but he is not going to make the same mistakes as Jayne did - mouthing off strategies & plans until he has assessed fully the unhappy situation ATM is in & put in a place a strategic plan to turn things around.

A plan with 100% buy in & support by the BOD before he announces it.

So his announcement is eagerly awaited.

Because of this uncertainty I sold all my holdings some weeks back. I can only see 3 reasons which would move the SP upwards where I would feel I missed out.

a) exceeding and upgrading forecasts
b) another baby formula scandal in China
c) takeover activity

Neither to me is likely in the short term so why hold and freak out about the constant downward spiral.

[see weed]

I like the last 14 posts. Very good reading. I have still got my 50c shares which am not selling, but am also waiting for next update. Am not going to say how many thousands my portfolio is down this year. A2 does it to me every year for the last 3 years, but this year is a bit deeper, but I can absorb that. A2 update was on 22/4/20 last year. This years update not out yet. What normally is the results of a later update?

[LEMON]

I also bought at a $20 average, caught the knife down to 60%.
I noticed very important patterns that altered my decision to sell a few weeks back
1. It was affecting my mood almost daily.
2. I was scrambling looking for reassurance.
3. I wanted to defend every positive remark towards ATM and snuff at every negative remark.

I decided the paper loss was not significant enough to alter my mood, I felt my mood changed because I spent time looking at share forums and being a part of the spit for spats. This is Investing 101 don't dos, do not be emotionally involved, I told myself I wasn't but now I see I WAS emotionally involved.

So I sold at a 60% loss and said if I believe in the company I can buy back in later. Take the loss and learn.
Now I have sold I look at the company differently. It's funny how we tell ourselves it's fine.

I'm not telling you to sell, I do not know the impact on your mood or financial situation but what I would say is, if it's not a big enough loss to recover has it all been worth it?

I wish I stuck to my plan that if it falls below 10% I would sell, but I never, instead I fed into others positive outlook.

Now I have taken what was leftover from ATM and reinvested elsewhere I have already made almost 50% back of my loss and feel a lot happier with a very expensive basket full of hard-hitting new lessons.

Hope this helps you make the right choice for your own personal decision maxtrader.

[Lease]

I like the last 14 posts. Very good reading. I have still got my 50c shares which am not selling, but am also waiting for next update. Am not going to say how many thousands my portfolio is down this year. A2 does it to me every year for the last 3 years, but this year is a bit deeper, but I can absorb that. A2 update was on 22/4/20 last year. This years update not out yet. What normally is the results of a later update?

Fantastic SW, I bought ATM at average 77c, but sold out all at around $11. Now I re-enter from $8.5. I don’t think A2 story is over given it has successfully built brand awareness in China. And its penetration is still low in China. The mistake A2 made over the last year is miscalculation of daigou in Australia & NZ, which caused excessive inventory held. Now they have to discount the price to quickly sell these inventory that are close to expire date.

But at same time, I note A2 Chinese label IF sale at much higher price, which means as long as A2 IF has normal length for date of use. They can still be sold at premium.

[LEMON]

I would also like to point out I didn't just sell primarily for my mood and mental health. I decided that the world is still far too messy with Covid, the daigou is still likely being hammered with a lack of students. China is pulling away from western markets and the road for ATM recovery will be long and punishing.

[JeremyALD]

Somehow I am still up overall on A2 despite topping up at much higher levels. Another $1 down and that story will change though!

I think the story is looking a bit bleak at the moment, and in the short term there is probably better investments elsewhere.

However, I don't see the point of selling if you still believe in the long term potential of the company. I am trying to add onto my portfolio these days, rather than moving investments around. This tends to work better for me. A2 is probably the only exception where I should of seen of this coming 6 months ago. I think the market has priced in most the negatives now though, so I do see more upside overall at these levels.

[carrom74]

It’s all doom and gloom at the moment. I agree that the company is going through some serious issues both logistically and also in terms of competition. But NZ govt”s recent 5 eyes announcement in detaching trade with “other” issues could be a master stroke for A2. Hope they capitalise on it(it is still a NZ company)

Last results investors call is attached ( about two months ago) if all is delivered as per their projections then we should see an uptake.
https://assets-au-01.kc-usercontent.com/bca3e5d5-83bd-02bf-1c27-acb036630e5b/df2ee78f-aff8-4dcc-a018-2220f8212124/The%20a2%20Milk%20Company%20Limited%20-%20HY21%20Results%20-%20Analyst%20Q&A%20-%2010011881%20-%20250221.mp3

[alokdhir]

" A2 Milk has further to fall
On the other side of the board, former market darling A2 Milk dropped 4% to $7.90 - the stock’s lowest price since January 2018.
Brokers and analysts are predicting a fourth earnings downgrade from the company, which disappointed investors when it suddenly revealed a key export channel which operated out of Australia had collapsed.
Yesterday, brokerage firm Morgans warned retailers in the China market were discounting inventory and said another earnings downgrade was possible.
Citi Research echoed their concerns, adding that Chinese consumers are increasingly preferring domestic brands over imports.
Craig's Investment Partner’s McIntyre said analysts had reached a consensus that further downgrades were the more likely outcome.
“Another downgrade and then potentially that’s when you might buy,” he said. "

I will agree with above assessments of various brokers ...Now the down trend is fully entrenched and it need capitulation and then longish base formation ...

Anyways Craigs says one more downgrade and then can start buying ...so maybe around 6.50 to 7.00 mark

[Lease]

1245412455

English label stage 3 A2 IF sale at 215RMB, Chinese label sale at 380 RMB. Normally English label IF is more expensive so I think these are to expire thus they have to sell at discount.

Now Chinese label stage 3 A2 IF is the most expensive one among the same products at JD.com.

[Lease]

12454 12455

English label stage 3 A2 IF sale at 215RMB, Chinese label sale at 380 RMB. Normally English label IF is more expensive so I think these are to expire thus they have to sell at discount.

Now Chinese label stage 3 A2 IF is the most expensive one among the same products at JD.com.

[winner69]

They had a huge pile of stock to quit didn't they

Hope it's moving ...at any price

Anybody know how much surplus stock there was

[Rawz]

Since these days we are buddy buddy with China and not playing lap dog to the US, ATM should delist from the ASX and comeback to a sole listing on the NZX. Aussie/US vs China is going to get worse before it gets better and ATM would do well to make it absolutely clear that it is a NZ company. Imagine if ATM unfairly got caught up in some sort of Aussie product boycott in the Chinese market..

NZX would give ATM a much higher valuation anyways. NZX always up in the morning then down as soon as Aussie opens.

[winner69]

Since these days we are buddy buddy with China and not playing lap dog to the US, ATM should delist from the ASX and comeback to a sole listing on the NZX. Aussie/US vs China is going to get worse before it gets better and ATM would do well to make it absolutely clear that it is a NZ company. Imagine if ATM unfairly got caught up in some sort of Aussie product boycott in the Chinese market..

NZX would give ATM a much higher valuation anyways. NZX always up in the morning then down as soon as Aussie opens.

All the A2 action comes out of Sydney where most of the Leadership Team work from. Seems Company Secretary works out of Auckland and that's about it. The Boatd is scattered across the globe

A2 seen as a company founded in NZ, still HQ'd in NZ for show only ...... but basically now an Aussie company with a global supply chain?

[Rawz]

All the A2 action comes out of Sydney where most of the Leadership Team work from. Seems Company Secretary works out of Auckland and that's about it. The Boatd is scattered across the globe

A2 seen as a company founded in NZ, still HQ'd in NZ for show only ...... but basically now an Aussie company?

Scary.. well at least its headquartered in NZ, even if for show

[TLM54]

The technicals are actually looking pretty decent. SP approaching the convergence of the falling wedge going for a triple bottom with MACD divergence and approaching closely to being oversold. So the signals for a reversal are really coming together.

Sadly there’s still far too much downside risk from a fundamentals perspective imo to enter this trade, for now.

Like others here, I’m watching for that fourth downgrade and the new CEOs strategy announcement.

[Balance]

https://www.fnarena.com/index.php/2021/04/22/a2-milk-at-a-crossroad-in-china/

ATM at a crossroad in China?

Can a2 Milk ((A2M)) grow its sales of infant formula and market share in China and defy a declining birth trend? The infant formula market is working through an oversupply issue at present and prices have fallen, with excess inventory at all levels.

Moreover, China's largest domestic producer of infant formula, Feihe, has recently downgraded projections for demand by -45%. Credit Suisse asserts the trend in China of declining birth rates will eventually affect infant formula sales and the industry could soon confront its first contraction.

This could be sharp, as the aggregate number of babies of infant formula age will, if the trend persists, be -30% lower in 2025 compared with 2018. Credit Suisse suspects this trend will undermine the growth and increased use of premium formula.

[sb9]

Re Credit Suisse and their own woes and headaches, you be the judge...

https://www.bbc.com/news/business-56841945.amp

https://www.efinancialcareers.com/news/2021/04/jpmorgan-close-credit-suisse-investment-bank

https://www.wsj.com/amp/articles/credit-suisses-5-5-billion-archegos-hit-enters-big-league-of-bank-losses-11619256601

Sorry for topic digression however relevant in light of above.

[winner69]

Re Credit Suisse and their own woes and headaches, you be the judge...

https://www.bbc.com/news/business-56841945.amp

https://www.efinancialcareers.com/news/2021/04/jpmorgan-close-credit-suisse-investment-bank

https://www.wsj.com/amp/articles/credit-suisses-5-5-billion-archegos-hit-enters-big-league-of-bank-losses-11619256601

Sorry for topic digression however relevant in light of above.

OK - by association CS analysts useless then?

[sb9]

OK - CS analysts useless then?

I’m not endorsing that viewpoint, but important for people to be in the know in wider scheme of things and make their own judgment.

[whatsup]

When the so called experts say, declining birth rate, at what % is it declining anything, less than 10% I would say because of the population would be meaningless, come on experts numbers and sources please? .

[ratkin]

When the so called experts say, declining birth rate, at what % is it declining anything, less than 10% I would say because of the population would be meaningless, come on experts numbers and sources please? .

It all a red herring anyway. Just a device used by down rampers to make the picture look as bleak as possible. Reality is a small change in birthrate is the last thing holders need to be worrying about.

[whatsup]

It all a red herring anyway. Just a device used by down rampers to make the picture look as bleak as possible. Reality is a small change in birthrate is the last thing holders need to be worrying about.

B!00dy downrampers/shorters will try any trick, I guess that they are making up now for the hundreds of millions that they lost on the way up.

IMHO its all about picking the bottom now as it will rise again, always the potential for someone to have a crack at getting a 10% stake, then its game on !!

[BlackPeter]

When the so called experts say, declining birth rate, at what % is it declining anything, less than 10% I would say because of the population would be meaningless, come on experts numbers and sources please? .


It all a red herring anyway. Just a device used by down rampers to make the picture look as bleak as possible. Reality is a small change in birthrate is the last thing holders need to be worrying about.


B!00dy downrampers/shorters will try any trick, I guess that they are making up now for the hundreds of millions that they lost on the way up.

IMHO its all about picking the bottom now as it will rise again, always the potential for someone to have a crack at getting a 10% stake, then its game on !!

Amazing what the endowment effect can do to peoples judgement and social behavior ...

Anyway - good luck to all hodlers :):

[Balance]

English label stage 3 A2 IF sale at 215RMB, Chinese label sale at 380 RMB. Normally English label IF is more expensive so I think these are to expire thus they have to sell at discount.

Now Chinese label stage 3 A2 IF is the most expensive one among the same products at JD.com.


They had a huge pile of stock to quit didn't they

Hope it's moving ...at any price

Anybody know how much surplus stock there was

A few comments regarding the two postings above :

1. Discounting

More than a year after the massive stock-up by the daigou channel to capitalize on the likelihood of ramp up in demand from China because of the covid lockdowns, we now see the aftermath of that stock-up in the massive discounting of A2 IF in the China market as expiry dates loom.

Clearly a case where the huge expectations of demand have failed to not only materialize but of greater concern, excess supply has obviously overwhelmed whatever demand there is there.

The daigou channel is getting its backside burnt big time with this kind of massive discounting and ATM's premium positioning will be taking a beating imo. Implications :

1. Going to take the daigou channel a lot longer to recover,

2. ATM is going to have to spend a lot to burnish the premium positioning.

It has been more than 7 months after the first profit downgrade (overstocking situation and dropping demand) when ATM becomes aware of the problem - it's clear that the company had no handle on just how bad the situation was and still is.

So yes, a fourth downgrade is looming - not just for F21 but for F22 as well imo.

2. Stock Levels

The half years results to 31 Dec 2020 paint a very grim picture of just how bad ATM's systems were in not quantifying the overstocking situation out there, or more to the point - how sharply sales have fallen off the face of the cliff!

Total sales dropped by $128m (16%)

but

inventories increased $51m (35%) or $75m (51%) when the $23m stock write-off is taken into consideration.

With the panic discounting happening per 1 above, it looks like stock has not been moving out there - the last two downgrades (after the first) attest to that in any case.

To make the picture of even greater concern, note that inventories were $118m as at 31 Dec 2019 vs $198m as at 31 Dec 2020 (or $222m per stock write off) - a doubling of stock levels!

Synlait's announcement puts the stock situation in perspective - ATM is still grappling with poor MIS about real sales levels out there.

The new CEO will be grappling with all that as he formulates his strategy - let's see what he comes out with.

[Lease]

A few comments regarding the two postings above :

ATM's premium positioning will be taking a beating imo.

So how do you explain A2 Chinese label stage 3 IF is still the most expensive one among the same products, ie, A2 IF from Nestle, Bellamy,etc?

[winner69]

Down another 1% plus on ASX today

[Balance]

So how do you explain A2 Chinese label stage 3 IF is still the most expensive one among the same products, ie, A2 IF from Nestle, Bellamy,etc?

Does not mean that its premium positioning is not taking a beating - ultimate proof will be sales numbers.

When China consumers can get the genuine NZ product, shipped all the way from NZ to their door, at over 40% discount - what does that say about the advertised China label price?

[sb9]

Down another 1% plus on ASX today

Make that 2% down..

[Lease]

Does not mean that its premium positioning is not taking a beating - ultimate proof will be sales numbers.

When China consumers can get the genuine NZ product, shipped all the way from NZ to their door, at over 40% discount - what does that say about the advertised China label price?

At JD.com, search by "sales volume", A2 Chinese label stage 3 IF rank at No. 6. Same products: Bellamy at No. 28, Aptamil at No. 31, Nestle at No. 69.

You yourself can check my above-mentioned.

[Balance]

At JD.com, search by "sales volume", A2 Chinese label stage 3 IF rank at No. 6. Same products: Bellamy at No. 28, Aptamil at No. 31, Nestle at No. 69.

You yourself can check my above-mentioned.

I am sure you are right, Lease - no need for me to check.

Issue is how much of ATM sales volume actually go through JD.com of the company’s total sales.

Anyone know?

[aperitif]

Peter Nathan’s 800,000 options expire 12th May,2021. Instos keeping this price depressed so he gets punished for his poor performance and complacency the last 9 months.

[winner69]

Deleted...somebody answered

[BlackPeter]

Peter Nathan’s 800,000 options expire 12th May,2021. Instos keeping this price depressed so he gets punished for his poor performance and complacency the last 9 months.

Sounds like one of these crazy conspiracy theories. Frankly, I think you overestimate the sense of fairness and the resolve of "the institutions", whoever this might be.

Worse - you clearly misjudge what might drive a bunch of greedy competing institutions - there are only two things diving them: !) For the respective fund manger to earn a big bonus and 2) for the respective institution to make money. If 1 and 2 are conflicting, than 1) prevails.

Punishing poor performing board managers by artificially keeping the share price low is clearly nothing which would drive them ... unless it would be related to the bonus payment of the fund manager :p;

[xp04]

Peter Nathan’s 800,000 options expire 12th May,2021. Instos keeping this price depressed so he gets punished for his poor performance and complacency the last 9 months.

Peter Nathan executed those options on 2nd of March. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/368484/341612.pdf

[Balance]

Peter Nathan executed those options on 2nd of March. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/368484/341612.pdf

He got them for 60c - so still plenty of gains to be made - but obviously not as much as when he exercised them.

[xp04]

He got them for 60c - so still plenty of gains to be made - but obviously not as much as when he exercised them.
Gains or no gains or how much will be known when he sells them. Could be tomorrow, could be in two years time, no point to play guess game

[winner69]

Make that 2% down..

And now 3%

[longy]

And now 3%

I know it is a different time and different scenario, but this look awfully familiar comparing Xro back then when I bought at $45 and sold out at $21. Took a massive hit then. However, I managed to regain all of the loss and sitting on a good paper gain on XRO. Each to their own but am going to place this stock at the bottom draw and see where it will be in a few years time.

[Balance]

And now 3%

Sobering - 4% on Friday so that’s 7% down in 2 days.

Looks like market is starting to price in a fourth profit downgrade.

[alokdhir]

I know it is a different time and different scenario, but this look awfully familiar comparing Xro back then when I bought at $45 and sold out at $21. Took a massive hit then. However, I managed to regain all of the loss and sitting on a good paper gain on XRO. Each to their own but am going to place this stock at the bottom draw and see where it will be in a few years time.

IMHO if u do that ...there is more then 80% chance that U will end up better off ...Just need stop worrying about the current bottoming out process ...Most likely its very close to it ...in next 3-6 months it maybe higher then current SP

Though I must say IMHO ATM turned out to be a pretty ordinary company with below average management quality ....this downtrend has exposed that to the world so people will be wiser now

[Balance]

1245412455

English label stage 3 A2 IF sale at 215RMB, Chinese label sale at 380 RMB. Normally English label IF is more expensive so I think these are to expire thus they have to sell at discount.

Now Chinese label stage 3 A2 IF is the most expensive one among the same products at JD.com.

Someone pointed out to me that Chinese label stage 3 IF was selling for over 430 RMB at the beginning of the month.

Looks like discounting taking effect across the whole A2 range.

I sense that some posters here are mesmerized by ATM's #1 position in the IF sales stake (which is great) but missing the margin erosion as a result of the discounting.

[see weed]

UBS buying back in 2.7m on 20/4/21?

[Balance]

UBS buying back in 2.7m on 20/4/21?

Active trader in ATM - note that UBS sold down below 5% in March.

[winner69]

Kingfish sort of blaming themselves but also thought management could have done better. Still hold over $30m worth -


a2 Milk was the worst performer in the portfolio — a disappointing 29% drop. The weak “daigou” channel continued to impact the business. We originally underestimated the size of the issue and thought management could better navigate the problem. But we have adjusted and learnt from new information.

We significantly reduced our target position in November and December 2020, and again in February and March 2021, as our channel checks remained persistently weak

[bull....]

i remember some posters saying how clever kingfish were on the way up.

[Rawz]

Kingfish sort of blaming themselves but also thought management could have done better. Still hold over $30m worth -


a2 Milk was the worst performer in the portfolio — a disappointing 29% drop. The weak “daigou” channel continued to impact the business. We originally underestimated the size of the issue and thought management could better navigate the problem. But we have adjusted and learnt from new information.

We significantly reduced our target position in November and December 2020, and again in February and March 2021, as our channel checks remained persistently weak

Goes to show that even the pros with all their resources can get it wrong.

[alokdhir]

Kingfish sort of blaming themselves but also thought management could have done better. Still hold over $30m worth -


a2 Milk was the worst performer in the portfolio — a disappointing 29% drop. The weak “daigou” channel continued to impact the business. We originally underestimated the size of the issue and thought management could better navigate the problem. But we have adjusted and learnt from new information.

We significantly reduced our target position in November and December 2020, and again in February and March 2021, as our channel checks remained persistently weak

Goes to show how mediocre ATM management turned out to be ... Just took one downtrend or difficult time to expose their inabilities fully ...

[bull....]

UBS buying back in 2.7m on 20/4/21?

and mitsi selling down

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/371251/344866.pdf

[see weed]

Someone feeling confident in Aus. this morning with buy order of 50,000 @ $7.46c.

[Balance]

Someone feeling confident in Aus. this morning with buy order of 50,000 @ $7.46c.

It’s getting there but the buyer has turned tail and disappeared.

Technicals look like A2M is heading towards A$5.XX?

[silu]

It's telling that 2 of the biggest cheerleaders (actually they were pretty well informed) on the ATM board on HC have come out saying they sold some time ago.

[JohnnyTheHorse]

It’s getting there but the buyer has turned tail and disappeared.

Technicals look like A2M is heading towards A$5.XX?

"Surely it can't go any lower"

[silu]

"Surely it can't go any lower"

Mitsubishi still has 55,731,400 shares left. What if they decide to sell.

[Balance]

It's telling that 2 of the biggest cheerleaders (actually they were pretty well informed) on the ATM board on HC have come out saying they sold some time ago.

Sold sometime ago?

Shows the sort of posters they are.

[silu]

Sold sometime ago?

Shows the sort of posters they are.

to be fair I'm not a 100% if they posted that they sold when they sold. I was bored over the weekend with a new kitten in my lap and browsed the boards. What's left lives in hope or blind faith.

Now trading at below 52 week low

[winner69]

It’s getting there but the buyer has turned tail and disappeared.

Technicals look like A2M is heading towards A$5.XX?

Got to go below $7.00 first

[alokdhir]

Sort of capitulation going on...Darkest before dawn ...must be 3:30 AM for ATM ??