ATM - A2 Milk Corporation Limited

[carrom74]

Quite conspicuous about the timing of the news article… on a lazy Sunday afternoon. Why would they?. May be the media knows something we don’t…

[alokdhir]

I think this is largely shorts being squeezed out based on the price action in the first hour. I am surprised it had the momentum and closed near the highs, which may mean longer term shorts are continuously covering. If big money is serious about this they will gap it up on open tomorrow and really crush them. Let's see what happens.

That may happen after Aussy opening ....NZX will let u buy in 6.90 -7.10 range ....

[alokdhir]

Takeover at 11 bucks next week maybe

You need to read this thread …or the papers ….never mind ….get in now …heaps more to be made

Buddy has advised to get in ....thats interesting ...." Heaps to be made " :t_up:

[alokdhir]

Head of private wealth research at Craigs Investment Partners, Mark Lister said it was just one newspaper reporting “what looks like an off-the-cuff comment” but it was a realistic possibility.
A2 Milk’s share price is very low, but it holds a considerable amount of cash on its balance sheet and retains a strong brand.
“The market, to a degree, believes where there is smoke there is fire. There were also probably a lot of people shorting the stock who don't want to get burned if there is truth to it,” he told BusinessDesk.
Investors who have shorted a stock eventually have to buy the stock to complete the trade, which sometimes leaves them scrambling to buy if a share price starts to climb.
Other investors may be buying back into the stock to “keep a toe in the water” having sold positions earlier in the stock’s decline. A total of 1.7m shares worth $12m were traded.
“It could all fizzle out and there could be nothing to it – but if I was a holder I’d be sitting tight and biding my time to see if there was some truth to it,” Lister said.

Views of Lister are much more fairer then that of Jarden's analyst's

[Sideshow Bob]

From Business Desk daily email:

A2 shares spike as Aussie media reheats Nestle rumours (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=9052367fe8&e=3b6f9185d3)A report in the Australian media ramping up speculation about a takeover of the A2 Milk company by Swiss-based global food giant Nestle saw the dual-listed dairy company’s share price jump in NZX trading today.
However, local analysts are sceptical about the suggestion, which appears to rest primarily on the fact that the A2 share price has collapsed over the last year.

[Balance]

From Business Desk daily email:

A2 shares spike as Aussie media reheats Nestle rumours (https://businessdesk.us20.list-manage.com/track/click?u=786ac0b2dc4f2240875208882&id=9052367fe8&e=3b6f9185d3)A report in the Australian media ramping up speculation about a takeover of the A2 Milk company by Swiss-based global food giant Nestle saw the dual-listed dairy company’s share price jump in NZX trading today.
However, local analysts are sceptical about the suggestion, which appears to rest primarily on the fact that the A2 share price has collapsed over the last year.

A rehash of the same takeover rumors The Australian put out in April this year :

https://www.theaustralian.com.au/subscribe/news/1/?sourceCode=TAWEB_WRE170_a_GGL&dest=https%3A%2F%2Fwww.theaustralian.com.au%2Fbusi ness%2Fdataroom%2Fa2-milk-back-on-takeover-radar-as-it-struggles-with-loss-of-daigou-trade%2Fnews-story%2F3d94be4ece0c41892375aa804112540d&memtype=anonymous&mode=premium

[Maxtrade]

A rehash of the same takeover rumors The Australian put out in April this year :

https://www.theaustralian.com.au/subscribe/news/1/?sourceCode=TAWEB_WRE170_a_GGL&dest=https%3A%2F%2Fwww.theaustralian.com.au%2Fbusi ness%2Fdataroom%2Fa2-milk-back-on-takeover-radar-as-it-struggles-with-loss-of-daigou-trade%2Fnews-story%2F3d94be4ece0c41892375aa804112540d&memtype=anonymous&mode=premium

Yeah hard to know. Really high volumes would indicate some validity in the statement. But then again many factors that may not eventuate. Could be nothing more than a reporter's hope or opinion with The Australian. Pretty easy for media to play with sharemarkets it seams. Might be a squeeze on shorts followed by a heavy price reduction to follow. Then potentially a consideration for a buyout. That would be more in line with corporate mentality if a buy out was actually going to be actioned.

The pitfalls and difficulties facing ATM/ China have not instantly been resolved or gone away. So the attractiveness of ATM would be in debate to Nestle. Especially when they are struggling in this area themselves. So to invest in ATM and be deeper into an uncertain market would be a pretty risky decision at this time.

Anyone having anything more solid than The Australian sourced rumour. Seems many investors are jumping on that band wagon all of a sudden. FOMO maybe? or Insiders? But maybe yesterdays rally will take a heavy reversal once the initial shorts stop bailing out from fear of this rumour.

[Maxtrade]

Also from memory wasn't it Jarden or Craigs Analysts who were very recently stating fair value for SP to be $6.10 NZD

[Sideshow Bob]

Also from memory wasn't it Jarden or Craigs Analysts who were very recently stating fair value for SP to be $6.10 NZD

Just had a look, and Craigs have a target price of $7.78.

[Ggcc]

I guess there must be something in this rumour that has come out. Either that, or lots of shorts covering in panic mode

[Sideshow Bob]

I guess there must be something in this rumour that has come out. Either that, or lots of shorts covering in panic mode

About 1% of the company traded so far today (mainly on the ASX of course). Looks like the initial ASX opening euphoria is starting to wear off....

[Maxtrade]

I think this is largely shorts being squeezed out based on the price action in the first hour. I am surprised it had the momentum and closed near the highs, which may mean longer term shorts are continuously covering. If big money is serious about this they will gap it up on open tomorrow and really crush them. Let's see what happens.

Looks like you were right again JTH. The big money does not seem to be flowing in today continuing yesterdays rally. If there was anything more substantial behind it I agree the strong up trend would've pushed through today with big money flowing in. However it doesn't look like that's happening, so more likely it was shorts bailing out due to being nervous about the article in the Australian. Actually looks like that has now subsided and we are seeing a several from the brief rally yesterday.

I would expect the next ATM announcement to be very poor and likely to see another strong sell off pushing the SP back down to recent lows. Is that your take on the most likely outcome next?

[see weed]

BUGGER BUGGER BUGGER:t_down:

[see weed]

BUGGER BUGGER BUGGER:t_down:
I thought this time was different. I think I would be a better shorter at this rate.

[Maxtrade]

I thought this time was different. I think I would be a better shorter at this rate.

Yeah I bet the shorters that sold out and caused yesterdays rally are probably rethinking their decision now. Especially when based off one article in the Australian. It is amazing how influential the media can be on the sharemarket these days. Or hey it only takes Musk to make one announcement and he can play with Tesla and Crypto stocks as he likes. Simple business fundamentals don't seem to be quite as determining as they once use to be.

Still might be worth shorting now. Wait for next coming announcement which is undoubtedly not going to be very attractive. Likely to initiate a further sell off. Regardless of if anything materialises on any possible interested takeover offers, that wouldn't happen until the share price is driven down another round. As mentioned further up in this thread, if Nestle were interested I'm sure they would be smart enough to wait until SP drops lower again off further poor earnings results before then even starting to show any real interest. A takeover would need to be a steal to be attractive, and with forward P/E at todays share price ATM is far from attractive currently. Let alone with the hurdles still faced in China. Does anyone think the shorts bought in a bit prematurely yesterday, ie got too nervous on unsubstantiated 'news' and over reacted?

[alokdhir]

I dont think its prudent to short ATM anymore ...more risk involved ...Cant keep flogging the same old horse just in one direction ...

Turn around very close ...shorting can be dangerous ...big moves against shorts possible at slightest notice .

Also as no negative trading update came so its pretty certain they are meeting their revised 2nd Half estimates ....more chance of surprising on upside then downside as estimates were pretty low

[nztx]

I dont think its prudent to short ATM anymore ...more risk involved ...Cant keep flogging the same old horse just in one direction ...

Turn around very close ...shorting can be dangerous ...big moves against shorts possible at slightest notice .

Also as no negative trading update came so its pretty certain they are meeting their revised 2nd Half estimates ....more chance of surprising on upside then downside as estimates were pretty low


Holders probably need thick rubber grundies for the wild ATM ride too .. ;)

[Leftfield]

I dont think its prudent to short ATM anymore ......more chance of surprising on upside then downside as estimates were pretty low

Crikey, TA looking quite Bullish, all sorts of candles being lit, close to Golden Cross..... must be a mistake!

(Disc - biased so take care.)

[Balance]

Crikey, TA looking quite Bullish, all sorts of candles being lit, close to Golden Cross..... must be a mistake!

(Disc - biased so take care.)

Now TA is a useful to trade short term for the most liquid stock on the NZX.

[alokdhir]

Crikey, TA looking quite Bullish, all sorts of candles being lit, close to Golden Cross..... must be a mistake!

(Disc - biased so take care.)

Price action out of OZ is showing ...something surely cooking ...either very big good news or very big bad news so they maybe ramping up the prices by media help to short further at higher levels . All know what games big money plays and how !!

We need to figure out fast ...is it big up after news kind or big down after news kind of game

Both ways risk is involved so staying cautious and within means is prudent

[Maxtrade]

Price action out of OZ is showing ...something surely cooking ...either very big good news or very big bad news so they maybe ramping up the prices by media help to short further at higher levels . All know what games big money plays and how !!

We need to figure out fast ...is it big up after news kind or big down after news kind of game

Both ways risk is involved so staying cautious and within means is prudent


Were the rumours of Nestle take-over all Chinese whispers. Sounds like it's more to do with the lawsuit between A2M and Nestle. Which A2M is now appealing. Will SP crash back down once this news update now gets out today!?

The a2 Milk Company (https://www.copyright link/companies/manufacturing/a2-milk-s-china-plan-under-review-as-it-downgrades-earnings-20210510-p57qd5) is escalating its battle against Nestlé to the Federal Court over the Swiss multinational food and drink giant’s registration of a trademark of its baby formula branding for NAN a2.
The largest baby formula maker in the world originally applied for the trademark in January 2019, four months after launching its own version of a2 (https://www.copyright link/companies/retail/nestle-launches-a2-baby-formula-challenging-the-a2-milk-company-20181010-h16gnr)only baby formula in Australia and New Zealand, as it sought to curb the dominance of a2 Milk in the specialty segment.

On Monday, the dual-listed New Zealand-based company lodged an appeal in the Federal Court of Australia.
Nestlé declined to comment, while a2 Milk company spokesman confirmed: “The a2 Milk Company has appealed the decision.”
A2 Milk is seeking leave to appeal and cancel out Delegate McDonagh’s decision.
The company seeks to do so on the basis that Nestlé’s product prominently features a2 or A2 and that is substantially similar to a2 Milk and they are in the same category of products.

[couta1]

Yeah I bet the shorters that sold out and caused yesterdays rally are probably rethinking their decision now. Especially when based off one article in the Australian. It is amazing how influential the media can be on the sharemarket these days. Or hey it only takes Musk to make one announcement and he can play with Tesla and Crypto stocks as he likes. Simple business fundamentals don't seem to be quite as determining as they once use to be.

Still might be worth shorting now. Wait for next coming announcement which is undoubtedly not going to be very attractive. Likely to initiate a further sell off. Regardless of if anything materialises on any possible interested takeover offers, that wouldn't happen until the share price is driven down another round. As mentioned further up in this thread, if Nestle were interested I'm sure they would be smart enough to wait until SP drops lower again off further poor earnings results before then even starting to show any real interest. A takeover would need to be a steal to be attractive, and with forward P/E at todays share price ATM is far from attractive currently. Let alone with the hurdles still faced in China. Does anyone think the shorts bought in a bit prematurely yesterday, ie got too nervous on unsubstantiated 'news' and over reacted? Lol far from attractive currently, your kidding right.

[Beagle]

Lol far from attractive currently, your kidding right.

Mate, have you been a naughty dog ? https://www.nzherald.co.nz/nz/covid-19-coronavirus-delta-outbreak-queenstown-police-deal-with-lockdown-flouters-in-snow-spot/LNVB2DTEUOICSAME44Z3UHCAHI/ Relative value is the difference between where one perceives a stock should be and where it currently is. Everyone's own perception is unique to them ;)

[couta1]

Mate, have you been a naughty dog ? https://www.nzherald.co.nz/nz/covid-19-coronavirus-delta-outbreak-queenstown-police-deal-with-lockdown-flouters-in-snow-spot/LNVB2DTEUOICSAME44Z3UHCAHI/ Relative value is the difference between where one perceives a stock should be and where it currently is. Everyone's own perception is unique to them ;) Yep perception is everything just like sentiment. Lol those naughty snow bunnies look to be having fun, as a law abiding citizen im harshly constrained to looking out the window at the lake and snow capped mountains from the sofa whilst drinking a nice cup of tea which will become wine in an hour or two. Big decision now there is one available flight left to WGTN tomorrow that you can actually book is, should we stay or should we go, time to roll the dice.:cool:

[nztx]

Mate, have you been a naughty dog ? https://www.nzherald.co.nz/nz/covid-19-coronavirus-delta-outbreak-queenstown-police-deal-with-lockdown-flouters-in-snow-spot/LNVB2DTEUOICSAME44Z3UHCAHI/ Relative value is the difference between where one perceives a stock should be and where it currently is. Everyone's own perception is unique to them ;)


LOL but whitebaiting is a bit of sport and exercise - isn't it ? ;)

whether it results in small nibbles or bites ..

[Beagle]

should we stay or should we go: Might be some hidden answer in here, enjoy ;) https://www.bing.com/videos/search?q=should+i+stay+or+should+i+go&cvid=4d01611f634f49c282fde15b3c703de6&aqs=edge.0.0l9.6520j0j1&pglt=43&PC=U531&ru=%2fsearch%3fq%3dshould%2bi%2bstay%2bor%2bshould %2bi%2bgo%26cvid%3d4d01611f634f49c282fde15b3c703de 6%26aqs%3dedge.0.0l9.6520j0j1%26pglt%3d43%26FORM%3 dANNTA1%26PC%3dU531&view=detail&mmscn=vwrc&mid=B0EE7D4C7D65B0BF24A2B0EE7D4C7D65B0BF24A2&FORM=WRVORC I reckon life is short...might as well follow your heart and do what you want to do. View's better in Queenstown too. There's always the exemption thing you talked about as the escape clause if you need it.

[couta1]

Might be some hidden answer in here, enjoy ;) https://www.bing.com/videos/search?q=should+i+stay+or+should+i+go&cvid=4d01611f634f49c282fde15b3c703de6&aqs=edge.0.0l9.6520j0j1&pglt=43&PC=U531&ru=%2fsearch%3fq%3dshould%2bi%2bstay%2bor%2bshould %2bi%2bgo%26cvid%3d4d01611f634f49c282fde15b3c703de 6%26aqs%3dedge.0.0l9.6520j0j1%26pglt%3d43%26FORM%3 dANNTA1%26PC%3dU531&view=detail&mmscn=vwrc&mid=B0EE7D4C7D65B0BF24A2B0EE7D4C7D65B0BF24A2&FORM=WRVORC I reckon life is short...might as well follow your heart and do what you want to do. View's better in Queenstown too. There's always the exemption thing you talked about as the escape clause if you need it. Love that song, everyone we have talked to today reckons we should stay and even the Beagle has turned positive so its a done deal.

[Beagle]

Love that song, everyone we have talked to today reckons we should stay and even the Beagle has turned positive so its a done deal.

You're allowed out for exercise. Cindy will give all of N.Z. at least another 4 days lockdown is my pick. Aucklanders, should psyche themselves up for a good long 4 week staycation I reckon. I might dig out some of Dad's old books that Mum kept and I got the lot when Mum went to be with God 4 months ago. Must be something in there that will pique my interest.

Its a very pleasant walk around Queenstown gardens, can admire the view and chat with your wife and ponder the mysteries of life. It'll be really good for you guys. If you're really keen you can walk all the way around the edge of the lake to Frankton and back. Enjoy.

[winner69]

Xxxxxxxxxxxxxxxxxxx

[flyinglizard]

On board today, waiting for A2 share purchase back plan.

[nztx]

Any bonus points for being in & then out (on seeing signs of the tide changing) on ATM ? ;)

At least no red ink resulted, but it recouped a small bit of past Red ..

[huxley]

Picked up a few over the past two days, is it even a lockdown if you don’t open a few speculative positions? :)

[HKG2301]

https://seekingalpha.com/article/4450899-the-a2-milk-company-hidden-growth-in-crisis

[aperitif]

Who needs Daigou when you have Hainan duty free travel… Chinese channels to market are always evolving! Estée Lauder CC below

https://www.globaltimes.cn/page/202105/1222894.shtml (https://www.globaltimes.cn/page/202105/1222894.shtml)

128651286612867

[Maxtrade]

Crikey, TA looking quite Bullish, all sorts of candles being lit, close to Golden Cross..... must be a mistake!

(Disc - biased so take care.)

Hey guys, any updates or feelings on direction SP is next heading? Expected poor results leading to drop in SP to reach a bottom, then see of any interest in hostile takeovers if SP gets to around $5? Whats everyones analysis on how this plays out next?

[alokdhir]

Hey guys, any updates or feelings on direction SP is next heading? Expected poor results leading to drop in SP to reach a bottom, then see of any interest in hostile takeovers if SP gets to around $5? Whats everyones analysis on how this plays out next?

IMHO dont expect it to tank this time ...I am not ...as results most likely will meet guidance provided earlier and its already in the price ...as no further downgrades were announced after completion of the full year or just before it ...so not expecting anything bad to bring it to $ 5

Only thing of interest in results will be how much under or over guidance and WHAT AHEAD ?

[Leftfield]

Hey guys, any updates or feelings on direction SP is next heading? Expected poor results leading to drop in SP to reach a bottom, then see of any interest in hostile takeovers if SP gets to around $5? Whats everyones analysis on how this plays out next?

Percy once said (words to effect,) "making buy/sell calls without up-to-date company data is speculation, making buy/sell calls based on company information is investment."

ATM's TA is poised on a 'golden cross' with tightened Bollinger bands which could break either way depending on the coming news. Indeed some tree shaking may result in it slipping (say in morning trading of the results.)

That said, I see it having more longer term upside than downside in the weeks after the result, so for me it is a hold. (I'm not buying and won't be buying more - as I have enough at 10% of my portfolio.)

If I was going to buy, I would wait to see what is contained in the update news and buy into a more firm uptrend.

JMHO - DYOR and take your own decisions.

[bull....]

pre announcement rally today?

[alokdhir]

pre announcement rally today?

Depends upon what more people are thinking about the results ....way its holding over 6.75 ...good chance of 7.25 possible today

[see weed]

pre announcement rally today?
Maybe someone has heard something positive before results come out?

[Greekwatchdog]

Hedging there bets. Simply write off 2021 and set the benchmark for 2022 beyond. Hopefully lessons learned and lessons gained.

[Balance]

https://www.nzherald.co.nz/business/a2-milk-gets-a-shot-at-redemption-with-annual-result/SWL5WK7TRG6KA4NZHO5NEPS2FE/

Paywalled

Preview of what analysts are looking for in ATM's results announcement tomorrow.

Huge spread in analysts' 2022 forecast - so a lot of interest in what kind of guidance (if any) ATM will be giving.

[bull....]

Maybe someone has heard something positive before results come out?

im picking very good US results , they have run out of milk in the US recently due to schools going back etc . im in for a trade yesterday also i forgot to add in my haste if the the recent lockdown in china is anything to go by if looking at comparison period last feb 2020 sales china there should have been a surge in sales recently last 2 mths maybe

[Balance]

pre announcement rally today?

Real market opens in 3 minutes.

NZX is all noise & no substance before ASX opens.

[Balance]

im picking very good US results , they have run out of milk in the US recently due to schools going back etc . im in for a trade yesterday also i forgot to add in my haste if the the recent lockdown in china is anything to go by if looking at comparison period last feb 2020 sales china there should have been a surge in sales recently last 2 mths maybe

Means even bigger losses in the US?

[see weed]

Just having fond memories of 42 months ago on 20/2/18, day before results and scrapping up some cash and topping up with an extra 21,000 ATM @ $9.50c and selling them next day for a quick trade at $11 before ASX opened, and they kept going up another $1 or so after ASX opened. Those were the days my friend we thought they would never end.:D

[bull....]

Means even bigger losses in the US?

its called investing for growth , the revenue growth is more important. capital management plans announcement tomorrow ? anyway take care folks this is a volatile stock at times up and down so take your guess for tomorrow announcement at your own risk if you trade

[Balance]

its called investing for growth , the revenue growth is more important. capital management plans announcement tomorrow ? anyway take care folks this is a volatile stock at times up and down so take your guess for tomorrow announcement at your own risk if you trade

That’s what they all like to say!

I am picking a really downbeat & sober commentary tomorrow - with no material improvements. Heaps of money to be outlaid in the next 12 months to ‘protect’ the brand and stop further deterioration in sales in China - declining birth rate, strong domestic brand competition and geopolitical risk to the fore.

Not investing for growth but to stop further decline.

[dobby41]

Maybe someone has heard something positive before results come out?

Buy the rumour and sell the fact?

[Baa_Baa]

Buy the rumour and sell the fact?

Who knows, but ATM is already 33% up from the low-point following the 4th downgrade, it's technically (chart) broken out of even the most conservative down-trend line, is well above 50EMA - firing buy signals all over the place.

[Maxtrade]

Hasn't broken through the 100EMA yet, which would need to be achieved to break the longterm downtrend.

[Leftfield]

Hasn't broken through the 100EMA yet, which would need to be achieved to break the longterm downtrend.

FWIW I've found 30 day MA and 90 day MA more accurate for NZX...... particularly with small cap companies. Anyway's each to his/her own..... be boring if we all did the same.

[Motley Crew]

IMHO dont expect it to tank this time ...I am not ...as results most likely will meet guidance provided earlier and its already in the price ...as no further downgrades were announced after completion of the full year or just before it ...so not expecting anything bad to bring it to $ 5

Only thing of interest in results will be how much under or over guidance and WHAT AHEAD ?

I would not expect there to have been any further guidance after year end - that would pre-empt the release of the annual results due any day now. Also, in their announcement on 10 May, the company implied that there would be no further announcements until August when the Full Year results were released. It concerns me that we are nearing the end of the month and still the results have not been released. A quick look back over recent years to 2016 shows that the results are released on a Wednesday (morning) - usually the second last Wednesday of the month. Today is the last Wednesday of August and still the results have not been released. There was also no indication earlier in the month as to what exact date the results would be announced, as many other companies do. Breaking with tradition gives me cause for uneasiness. This may be unfounded, but in my experience such changes tend to be associated with problems, more than good news. Turning around a company the size of ATM is not like changing direction in an America's Cup yacht on foils. It is more like slowing down a juggernaut on ice, changing direction, and getting back up to speed again. I am not confident that we have seen the last of the troubles for this NZ market behemoth, no matter how the results are dressed up, and laced with cautious optimism. The SP may even spike with this optimism for the future, but the substance will be in the reading between the lines of the commentary that goes with the FY announcement. For me it remains a Wait and See. JMHO

[Motley Crew]

FWIW I've found 30 day MA and 90 day MA more accurate for NZX...... particularly with small cap companies. Anyway's each to his/her own..... be boring if we all did the same.

For short to medium term trends and direction changes, I use 10 day and 30 day MA. Surprisingly accurate for identifying bounces off support levels

[Baa_Baa]

Hasn't broken through the 100EMA yet, which would need to be achieved to break the longterm downtrend.

It's not an absolute thing, and I said down-trend-line, but if the 100EMA spins your wheels, that's not far away either at $7.42

Anyway, whatever happens to the SP today is irrelevant really, it's all about what happens tomorrow.

GLTH

[xp04]

I would not expect there to have been any further guidance after year end - that would pre-empt the release of the annual results due any day now. Also, in their announcement on 10 May, the company implied that there would be no further announcements until August when the Full Year results were released. It concerns me that we are nearing the end of the month and still the results have not been released. A quick look back over recent years to 2016 shows that the results are released on a Wednesday (morning) - usually the second last Wednesday of the month. Today is the last Wednesday of August and still the results have not been released. There was also no indication earlier in the month as to what exact date the results would be announced, as many other companies do. Breaking with tradition gives me cause for uneasiness. This may be unfounded, but in my experience such changes tend to be associated with problems, more than good news. Turning around a company the size of ATM is not like changing direction in an America's Cup yacht on foils. It is more like slowing down a juggernaut on ice, changing direction, and getting back up to speed again. I am not confident that we have seen the last of the troubles for this NZ market behemoth, no matter how the results are dressed up, and laced with cautious optimism. The SP may even spike with this optimism for the future, but the substance will be in the reading between the lines of the commentary that goes with the FY announcement. For me it remains a Wait and See. JMHO

If instead of looking back over the recent years you've looked at company's website you would notice that report date of 26th of august was published there for quite some time now.
Just because company implied that there would be no further announcements until August it does not mean they will not comply with listing rules and withhold material information if such appeared. Deviation from guidance by more than 5% is material and would require to be announced to the market

[Motley Crew]

If instead of looking back over the recent years you've looked at company's website you would notice that report date of 26th of august was published there for quite some time now.
Just because company implied that there would be no further announcements until August it does not mean they will not comply with listing rules and withhold material information if such appeared. Deviation from guidance by more than 5% is material and would require to be announced to the market
Should've checked the website I guess :-)
And We look forward to tomorrow with bated breath. (or is that 'baited' breath ?)
The last downgrade did give them plenty of leeway in case of continuing adverse events, so I think they covered themselves for that eventuality when they said there would no further updates until the release of FY results. The proof will remain in the reading - hopefully it will be positive, but I remain guarded. The key is not to get too excited about the results if (probably when) they say they are optimistic for the future, but that there are still many challenges ahead. The road ahead is still likely to be bumpy, but hey, a flat highway isn't nearly as exciting as a side road with a few pot holes and tight bends to negotiate.

[Sideshow Bob]

a2 milk in China: Analysts divided on brand’s long-term growth potential amid Nestle takeover rumours (nutraingredients-asia.com) (https://www.nutraingredients-asia.com/Article/2021/08/24/a2-milk-in-China-Analysts-divided-on-brand-s-long-term-growth-potential-amid-Nestle-takeover-rumours?utm_source=newsletter_daily&utm_medium=email&utm_campaign=25-Aug-2021&cid=DM977151&bid=1687050842#)

Regional analysts are divided on The a2 Milk Company’s long-term growth potential, especially in China – its current largest market – amid acquisition rumours.

[Balance]

im picking very good US results , they have run out of milk in the US recently due to schools going back etc . im in for a trade yesterday also i forgot to add in my haste if the the recent lockdown in china is anything to go by if looking at comparison period last feb 2020 sales china there should have been a surge in sales recently last 2 mths maybe

You still in the stock for the announcement tomorrow, bull?

This from Forbar :

"Forsyth Barr's sales channel checks suggested that the company had not turned a corner just yet.

A key area of downside risk would be another round of inventory writedowns."

[flyinglizard]

Sold at $7.21 and bought MFT at $90.96 this afternoon. what a trade! Risk still in ATM. You cannot turn a bad apple into a good one overnight. The rotten is to the core!



The a2 Milk Company’s Managing Director and CEO, David Bortolussi said:

• “While our third quarter trading was broadly in line with plan, it is clear that the actions taken to addresschallenges in the Daigou and CBEC channels will not result in sufficient improvement in pricing, sales andinventory levels to meet our previous guidance

• “We have conducted a comprehensive review of inventory in the trade and this work has indicated thatchannel inventory levels are higher than had been anticipated• “The challenges in the Daigou and CBEC channels have been exacerbated by excess inventory anddifficulties with visibility

• “In the interest of the long-term health of our brand and the medium-term trading outlook of the business,more aggressive actions to address inventory will be taken which will impact FY21 revenue and EBITDA,and potentially 1Q22.

• “Despite these short-term setbacks, we are confident in the long-term potential for infant nutrition andother opportunities we have in China, and are determined to build on the strong position we have built inthe market over the past five years

• “We recognise that the China market and channel structure is changing rapidly and are commencing acomprehensive review of our growth strategy and executional plans to respond to this new environment• “The Board is actively considering capital management initiatives, including a potential share buy-backand we will provide an update at the full year results in August

[Beagle]

You still in the stock for the announcement tomorrow, bull?

This from Forbar :

"Forsyth Barr's sales channel checks suggested that the company had not turned a corner just yet.

A key area of downside risk would be another round of inventory writedowns."

Once they're out of the restricted trading period, (day after reporting) one thing to watch for is further insider sales in the next few weeks. No matter what they say about recovery prospects in FY22 what we know from last years complete fiasco is if insiders sell, its a clear sign to get out. Actions speak louder than words and with regard to ATM, its a LOT LOUDER !!

[Waltzing]

This was and still is a WAR ZONE...

If you play this you need professional hedging...

Since when has China ever been predictable.

The most dangerous stock on the NZX.

Get some shelter ...

https://www.youtube.com/watch?v=v5R9SZM2jaE

[Ferg]

The most dangerous stock on the NZX.

Worse than NTL?

[X-men]

Lol... funny people here made such a judgement...

Revenue $1.2b....for God sake....

[bull....]

You still in the stock for the announcement tomorrow, bull?

This from Forbar :

"Forsyth Barr's sales channel checks suggested that the company had not turned a corner just yet.

A key area of downside risk would be another round of inventory writedowns."

yes i sold some yesterday at 6.92 asx and i keep the rest for the announcement. the stock would have to fall 10% + on the announcement for my position to out right lose money now , of course if it goes up i make less on the remaining trade
thats the off-set on prudent money management.

[alokdhir]

" The day before announcing its latest result, a2 Milk increased 20c or 2.88 per cent to $7.15. Smith said there was a whisper that its daigou trade had improved and stabilised – this affirmation will be well received by investors. "

Most likely at least NZX will start positive unless results are too bad ...which is only 2/10 chance IMHO

If they followed rules ( which surely they will now after under class action threat ) Revenue should be in 1.14 B to 1.32 B range ...so headline to look for is total revenue ...1.27 B most likely

Rest will be future talk which will be mainly positive

Like Bull ....I also sold part of holding to see the drama of the day ....20% down I can get my sold ones back ...but not expecting 5.50 to come

[Balance]

That’s what they all like to say!

I am picking a really downbeat & sober commentary tomorrow - with no material improvements. Heaps of money to be outlaid in the next 12 months to ‘protect’ the brand and stop further deterioration in sales in China - declining birth rate, strong domestic brand competition and geopolitical risk to the fore.

Not investing for growth but to stop further decline.

Results out and as I expected - downbeat with uncertainties so no forecast for F22.

Also, no share buyback or dividend - better use for money in the business (read we need the money to try & retain market share).

[winner69]

As Balance says pretty downbeat outlook

However, given the continuing uncertainty and volatility in a2MC’s consumer markets resulting from issues related to COVID19 and other rapidly changing market dynamics, particularly in China, the Company has determined not to provide specific guidance regarding anticipated Group revenue or EBITDA margin at this time. Rather, it is providing current observations on key drivers and important issues that may impact its FY22 results.

And the 'observations' make pretty sombre reading

More pain ahead?

[X-men]

They will have to do that as lawyers are tailing them to sue....lol

[alokdhir]

1.21 B and rest all as expected ...nothing to tank the stock .

Keep in mind takeover talk will cushion any big selling ...

Its more like rangebound only 6.50 to 7.25

[Balance]

Have a look at Comvita for comparison - one other company which built its initial success on the daigou channel.

Unlike ATM, CVT is already executing its reset & transformative strategy (of shifting over-reliance on daigou sales & harvest vagaries) - successfully.

Turnaround is massive and management is upbeat about delivering on expectations.

ATM still has not worked out a reset strategy from my reading of today’s commentary - except that they need the cash in the bank to see them through challenging times ahead!

[porkandpuha]

"Local players continue to gain share against the traditional multinational brands, driven both by the strength of local brands in domestic channels, as well as an overall mix shift fromcross-border to domestic channels."

It's a bit concerning when you openly admit in your annual report that you are losing market share in your key market..

Edit to add: The backup development market in North America doesnt look too flash either

[Beagle]

As Balance says pretty downbeat outlook

However, given the continuing uncertainty and volatility in a2MC’s consumer markets resulting from issues related to COVID19 and other rapidly changing market dynamics, particularly in China, the Company has determined not to provide specific guidance regarding anticipated Group revenue or EBITDA margin at this time. Rather, it is providing current observations on key drivers and important issues that may impact its FY22 results.

And the 'observations' make pretty sombre reading

More pain ahead?

The problem is a solid recovery in sales and EBITDA margin has been the average view of brokers and in my view is currently baked into the share price. https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/

Average analyst view for FY22 was for sales growth of 14%, recovery in EBIT margin to 17.7% and eps of 24 cps and even if they can make those numbers, (which surely must be in doubt now) that's a forward PE of ~ 30 which is exactly the same metrics the shares were trading on in the good old days of mid last decade when it was growing really strongly !

Shares look very fully priced to me and the risk / reward ratio here appears heavily skewed to the downside.

[waterboy]

The problem is a solid recovery in sales and EBITDA margin has been the average view of brokers and in my view is currently baked into the share price. https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/

Average analyst view for FY22 was for sales growth of 14%, recovery in EBIT margin to 17.7% and eps of 24 cps and even if they can make those numbers, (which surely must be in doubt now) that's a forward PE of ~ 30 which is exactly the same metrics the shares were trading on in the good old days of mid last decade when it was growing really strongly !

Shares look very fully priced to me and the risk / reward ratio here appears heavily skewed to the downside.

The forecast or lack of an issue.
There is still 875 million in case and 109 million in writedown plus the 10 million for MVM, if you take these out the P/E is a lot more realistic. They didn't have the cash pile in the good old days.
Difficult one to value but uncertainty is not good.

[winner69]

The forecast or lack of an issue.
There is still 875 million in case and 109 million in writedown plus the 10 million for MVM, if you take these out the P/E is a lot more realistic. They didn't have the cash pile in the good old days.
Difficult one to value but uncertainty is not good.

Still have 875m cash .....but haven't paid for that MVM yet

[alokdhir]

Still have 875m cash .....but haven't paid for that MVM yet

If u take out cash , SML shares, MVM shares then stand alone ATM enterprise valued @ 4.5 $ per share as per one analysis out of OZ ...

[Beagle]

The forecast or lack of an issue.
There is still 875 million in case and 109 million in writedown plus the 10 million for MVM, if you take these out the P/E is a lot more realistic. They didn't have the cash pile in the good old days.
Difficult one to value but uncertainty is not good.

I don't accept the whole back the cash out "contrived" version of calculating the metrics.
Its clear that the vast majority of that cash is needed for the MVM acquisition and to try and rebuild the brand.
No share buy-back or dividend speaks for itself that they need that cash so arguments about contrived metrics on a cash out basis now look highly creative.

[Ggcc]

I don't accept the whole back the cash out "contrived" version of calculating the metrics.
Its clear that the vast majority of that cash is needed for the MVM acquisition and to try and rebuild the brand.
No share buy-back or dividend speaks for itself that they need that cash so arguments about contrived metrics on a cash out basis now look highly creative.
At the end of the day its a very long hold if you want to make some serious coin, with the short term sp most likely going lower.

So many unknowns, so many scenarios. I don't believe anyone can give advice on such an announcement by ATM as to where the sp will be in the future. I feel a takeover would be the best case scenario in the short term.

[Motley Crew]

" The day before announcing its latest result, a2 Milk increased 20c or 2.88 per cent to $7.15. Smith said there was a whisper that its daigou trade had improved and stabilised – this affirmation will be well received by investors. "

Most likely at least NZX will start positive unless results are too bad ...which is only 2/10 chance IMHO

If they followed rules ( which surely they will now after under class action threat ) Revenue should be in 1.14 B to 1.32 B range ...so headline to look for is total revenue ...1.27 B most likely

Rest will be future talk which will be mainly positive

Like Bull ....I also sold part of holding to see the drama of the day ....20% down I can get my sold ones back ...but not expecting 5.50 to come


Absolutely nothing in that announcement that inspires me with any immediate confidence, or desire to buy the shares. Back under $6 as I see it, and until there is something substantive to report the SP will continue lower. October is still a long way off. The company is pushing the reset button and is looking for the 'new normal'. Only takeover speculation will keep the SP propped up

[Balance]

Absolutely nothing in that announcement that inspires me with any immediate confidence, or desire to buy the shares. Back under $6 as I see it, and until there is something substantive to report the SP will continue lower. October is still a long way off. The company is pushing the reset button and is looking for the 'new normal'. Only takeover speculation will keep the SP propped up

And if indeed Nestle is interested, it would just sit back and wait for the sp to fall to a low level.

[alokdhir]

And if indeed Nestle is interested, it would just sit back and wait for the sp to fall to a low level.

That makes me guess the leak about strategic share sale is coming from which side ...surely cant be buyer as it increases the SP ...:p

[Balance]

That makes me guess the leak about strategic share sale is coming from which side ...surely cant be buyer as it increases the SP ...:p

Or an institution trying to spike the sp and get out. Seen it happen before many a times.

Wouldn't be ATM as the ASX takes such 'tipping' offenses seriously.

Plus ATM is not doing a share buyback to bolster its sp as a defense speaks volume imo.

[aperitif]

Strategic stake incoming

[bull....]

"Local players continue to gain share against the traditional multinational brands, driven both by the strength of local brands in domestic channels, as well as an overall mix shift fromcross-border to domestic channels."

It's a bit concerning when you openly admit in your annual report that you are losing market share in your key market..

Edit to add: The backup development market in North America doesnt look too flash either

exactly very good points

[nevchev]

How much of the 1.2 billion is stock sold at reduced prices due to shelf life expiry dates

[Dlownz]

Wow big drop on opening. I see that recovering by the end of the day. Don't have any gambling money available

[Beagle]

Or an institution trying to spike the sp and get out. Seen it happen before many a times.

Wouldn't be ATM as the ASX takes such 'tipping' offenses seriously.

Plus ATM is not doing a share buyback to bolster its sp as a defense speaks volume imo.

Despite previously talking up the prospect of a buyback.

[Maxtrade]

I would not expect there to have been any further guidance after year end - that would pre-empt the release of the annual results due any day now. Also, in their announcement on 10 May, the company implied that there would be no further announcements until August when the Full Year results were released. It concerns me that we are nearing the end of the month and still the results have not been released. A quick look back over recent years to 2016 shows that the results are released on a Wednesday (morning) - usually the second last Wednesday of the month. Today is the last Wednesday of August and still the results have not been released. There was also no indication earlier in the month as to what exact date the results would be announced, as many other companies do. Breaking with tradition gives me cause for uneasiness. This may be unfounded, but in my experience such changes tend to be associated with problems, more than good news. Turning around a company the size of ATM is not like changing direction in an America's Cup yacht on foils. It is more like slowing down a juggernaut on ice, changing direction, and getting back up to speed again. I am not confident that we have seen the last of the troubles for this NZ market behemoth, no matter how the results are dressed up, and laced with cautious optimism. The SP may even spike with this optimism for the future, but the substance will be in the reading between the lines of the commentary that goes with the FY announcement. For me it remains a Wait and See. JMHO


Maybe getting back down into the mid $5's wasn't so unrealistic. With no support about any takeovers. No good news. More struggles and bad news. No clear solutions, seems like the steady bull push pre announcement was a lot of hope. Now with nothing materialising a falling SP into the $5's is very realistic within the next couple of days. If there were any real serious strategic share purchases being considered it would make sense to let the SP drive down maybe even sub $5 before presenting any real offers of interest. If I was going to present a takeover offer I would wait for the SP to hit all time lows at this stage before presenting any hand, wouldn't they already be thinking this. Also I think the takeover rumour was a lot of speculation stirred by the journalist of the Australian. Nothing substantial has materialised from it whatsoever. Unless I am missing something?

[Getty]

Keep ya powder dry, boys.

[Maxtrade]

Not to sure this time. Not a lot of positive news to bolster any recovery.
The SP was higher as it was factoring a lot of hope into this announcement, but very recently was sitting around $6 NZD. Might find resistance at $6, but then again with a lot of hope gone out the window and no reality of takeover interest, might likely downtrend back into the $5's.

I think with this news, when ASX opens there will be a lot of shorts reentering, and institutions selling who were hoping for a more positive result. Will likely take a heavy dive with large selling volumes later today.

DISC sold out all remaining ATM shares on opening today.

Johnny The Horse, Leftfield, Balance, what's your take? Form that new trough at ~$5.5 NZD now

[Master98]

sp will back to $5 level soon, china birth rate drop 16% first half of 2021, local players gain market share, daiguo channel won't recovery in near future......

[Entrep]

Given growth is gone, what's a reasonable new PE and share price for ATM?

[Motley Crew]

Have a look at Comvita for comparison - one other company which built its initial success on the daigou channel.

Unlike ATM, CVT is already executing its reset & transformative strategy (of shifting over-reliance on daigou sales & harvest vagaries) - successfully.

Turnaround is massive and management is upbeat about delivering on expectations.

ATM still has not worked out a reset strategy from my reading of today’s commentary - except that they need the cash in the bank to see them through challenging times ahead!

ATM could do well to heed the way CVT reset its business. Sure it is a much smaller enterprise, but it recognised what it needed to do to smooth out the supply of raw material which was being impacted by the variability of the weather. Investment in marketing (at 15% of sales revenue) which so many companies fail to recognise is a key driver in increasing market share and the future sustainability of results. The markets that CVT operate in are almost exactly those that ATM operates in, and in general both are providers of single 'observable' products (milk and honey - that sounds like NZ all over doesn't it - the land of milk and honey, only ATM has gambled too heavily with an over-reliance on a single market, which all marketers will tell you will eventually have a predictable outcome). Even though CVT has a wider range of offerings in related health products, its premium manuka honey brands is where it will achieve flagship results, off which they can leverage the rest of their product range.
Disc. Sold ATM in 2020 and topped up heavily in CVT to average down a very high entry point made some years ago. It was worth the wait.

[Motley Crew]

Wow big drop on opening. I see that recovering by the end of the day. Don't have any gambling money available

Don't count on it. Oz is yet to open. Another battering on the way.

[MarineSalvage]

so true - 12noon going to be interesting...
Don't count on it. Oz is yet to open. Another battering on the way.

[Balance]

so true - 12noon going to be interesting...

ATM on NZX usually positive, then gets hammered by ASX on opening.

[Motley Crew]

Maybe getting back down into the mid $5's wasn't so unrealistic. With no support about any takeovers. No good news. More struggles and bad news. No clear solutions, seems like the steady bull push pre announcement was a lot of hope. Now with nothing materialising a falling SP into the $5's is very realistic within the next couple of days. If there were any real serious strategic share purchases being considered it would make sense to let the SP drive down maybe even sub $5 before presenting any real offers of interest. If I was going to present a takeover offer I would wait for the SP to hit all time lows at this stage before presenting any hand, wouldn't they already be thinking this. Also I think the takeover rumour was a lot of speculation stirred by the journalist of the Australian. Nothing substantial has materialised from it whatsoever. Unless I am missing something?

Yep. Why would you make a takeover offer at $6 when the market will take ATM a lot lower. Wait for the blood-letting to end and then swoop. Investors (gamblers) will be pleased to receive $3.50 to get out when the time comes :-)

[Maxtrade]

yeah I agree, wouldn't be surprised if we see pushing 20% drop on ASX today. A lot of hope just got squashed this morning. The upside potential now seems a long way off and a lot more risk involved.

[Beagle]

Given growth is gone, what's a reasonable new PE and share price for ATM?

Excellent question. I think AT BEST we're in a very low growth environment for ATM, maybe no growth. No growth fair PE is 11.5 in my book. I would ascribe a PE of no more than 18 to a low growth company.
These are the metrics I use and have worked extremely well for me over many, many years.

Maybe then can do 20 cps in earnings in FY22, maybe not. Choose whatever PE you think is right but I think a forward PE of 30 in the current environment with all known information, trends and risks is absolutely nuts !

[Balance]

Given growth is gone, what's a reasonable new PE and share price for ATM?

Ex growth but with no yield support - so put ATM on a PER of 15 times (being generous here) on its F22 forecast and see what you get.

Ouch!

[X-men]

Air loss $440m n share only down 1%

Atm..made profit...shares down 10%

Market is crazy bunch

[Maxtrade]

Yep. Why would you make a takeover offer at $6 when the market will take ATM a lot lower. Wait for the blood-letting to end and then swoop. Investors (gamblers) will be pleased to receive $3.50 to get out when the time comes :-)

$3.50 might be a stretch! Would say there will likely be some solid support if got to low $4's

[Maxtrade]

Yeah how on earth AIR is staying up makes no sense whatsoever!??

[Beagle]

Excellent question. I think AT BEST we're in a very low growth environment for ATM, maybe no growth. No growth fair PE is 11.5 in my book. I would ascribe a PE of no more than 18 to a low growth company.
These are the metrics I use and have worked extremely well for me over many, many years.

Maybe then can do 20 cps in earnings in FY22, maybe not. Choose whatever PE you think is right but I think a forward PE of 30 in the current environment with all known information, trends and risks is absolutely nuts !


Ex growth but with no yield support - so put ATM on a PER of 15 times (being generous here) on its F22 forecast and see what you get.

Ouch!

Funny you pick that, that's right in the middle of the range I suggested at exactly the same time. If they can do 20 cents eps in FY22 and we use a PE of 15 that's only $3 :eek2:
I think the shorters are going to really get stuck into this.

[Maxtrade]

Excellent question. I think AT BEST we're in a very low growth environment for ATM, maybe no growth. No growth fair PE is 11.5 in my book. I would ascribe a PE of no more than 18 to a low growth company.
These are the metrics I use and have worked extremely well for me over many, many years.

Maybe then can do 20 cps in earnings in FY22, maybe not. Choose whatever PE you think is right but I think a forward PE of 30 in the current environment with all known information, trends and risks is absolutely nuts !

So with PE 11- 15, where would you expect SP should respectively be now then Beagle and Balance?

[Motley Crew]

Funny you pick that, that's right in the middle of the range I suggested at exactly the same time. If they can do 20 cents eps in FY22 and we use a PE of 15 that's only $3 :eek2:
I think the shorters are going to really get stuck into this.

And the $3.50 takeover price looks good :-) :-)

[Master98]

looks like MVM is a black hole, loss maker, expect back to positive EBITDA FY25, they buy this plant just want to maintain good relationship with china partner.

[alokdhir]

Yeah how on earth AIR is staying up makes no sense whatsoever!??

AIR has Govt of NZ behind them ...they are an essential service for an island nation ...profits are secondary

ATM has Mr B after them ...so tanked 14% today ...lol :p

[alokdhir]

OZ time coming local punters loosing conviction to sell ATM :D

[Beagle]

AIR has Govt of NZ behind them ...they are an essential service for an island nation ...profits are secondary

ATM has Mr B after them ...so tanked 14% today ...lol :p

LOL The shorters will be the ones after them with comments like this in the annual report
In FY22, the Company expects the value of the overall infant
nutrition market to decrease due to the lower number of
births (during the year, and also as a result of the year prior),
an increase in competitive intensity and promotional activity
impacting average pricing, partially offset by a continuation
of the usage penetration and premiumisation trend.
--------------------------------------------------------------------------
In China label infant nutrition, the Company is expecting
to grow sales in FY22, as well as gain moderate share,
albeit in a weaker market overall. The focus is on acquiring
new users and expanding distribution. Inventory levels are
reducing, and product freshness is improving. In 1Q22, the
Company is continuing to reduce distributor inventory levels
which will impact sales. This is expected to result in a stronger
2H22 compared to 1H22
---------------------------------------------------------------------------
In English label infant nutrition, with the category
under pressure and the challenges experienced by a2MC in
FY21, the Company is targeting sales stabilisation in FY22
but a wide range of outcomes is possible. The COVID-19
impacts on the daigou/reseller channel and associated
impact on CBEC for English label products are expected to
be prolonged.
-----------------------------------------------------------------
Very sobering stuff.

[flyinglizard]

I spent a couple of hours on reading those reports released this morning. The worst timing is not coming yet. Business update in Q1 22 should be the worst, if the below factors are following the logic.

- ATM still have aging inventory not written off for China Label, and will continue through 1Q22. We do not know what amount of this.

- Flat market share in China market, due to domestic brands taking more market shares

- They still cannot complete the market strategy review this time. more than one year already we are in Covid trading environment.

- They project adverse foreign currency movements which is still on the way.

What happened in China during Q1 22?

- Flooding for several provinces since July. Sales Disruption, freight problem

- Some cities are still in lockdown status (Delta) in Aug. Sales Disruption, freight problem ?

- Sumner (June - Aug), not good for stock piling when the temperature is around 35- 40 degree. Babies do not drink much warm infant milk during the summer, compared with the winter, that is human nature.


Nestle has its own A2 IF range, why need to takeover A2? High SP and noise news good for takeover? Particularly from broker's mouth.

https://www.nutraingredients-asia.com/Article/2019/11/20/A2-milk-for-whole-family-Nestle-China-s-expands-demographic-reach-after-previous-launches-for-mother-and-baby

[alokdhir]

LOL The shorters will be the ones after them with comments like this in the annual report
In FY22, the Company expects the value of the overall infant
nutrition market to decrease due to the lower number of
births (during the year, and also as a result of the year prior),
an increase in competitive intensity and promotional activity
impacting average pricing, partially offset by a continuation
of the usage penetration and premiumisation trend.
--------------------------------------------------------------------------
In China label infant nutrition, the Company is expecting
to grow sales in FY22, as well as gain moderate share,
albeit in a weaker market overall. The focus is on acquiring
new users and expanding distribution. Inventory levels are
reducing, and product freshness is improving. In 1Q22, the
Company is continuing to reduce distributor inventory levels
which will impact sales. This is expected to result in a stronger
2H22 compared to 1H22
---------------------------------------------------------------------------
In English label infant nutrition, with the category
under pressure and the challenges experienced by a2MC in
FY21, the Company is targeting sales stabilisation in FY22
but a wide range of outcomes is possible. The COVID-19
impacts on the daigou/reseller channel and associated
impact on CBEC for English label products are expected to
be prolonged.
-----------------------------------------------------------------
Very sobering stuff.

I know ...U r right about results ...but like u said for ZEL ..." Where there is smoke ...there is fire too " So maybe signs of that fire keeping shorts at bay .

Also u r a seasoned markets player ...U know markets look at least 6 months ahead and normally stock bottoms much before business bottoms ...so maybe ATM bottomed last June around 5.40 ...

DISC: Very small position taken today morning for entertainment purposes only ...after all stuck inside ...Lockdown fatigue :D

[Hoop]

so true - 12noon going to be interesting...

ATM on NZX usually positive, then gets hammered by ASX on opening.

Yes 12 noon will be very interesting
I have noticed recently a change of behaviour..Short term charts is showing a change in oscillation between NZX opening and ASX opening times..Recently ATM has flipped and has been more pessimistic than the A2M..Why? I don't know, but a feeling maybe the Shorters got burned and decreased their activity..They did have a great time for a long while consistently seeing High NZX low ASX scenario, but like all things change happens as nothing lasts forever..

So today would be the ideal day to see a change back in behaviour (another flip)?? We will find out after ASX opening when the upset A2M market stops squirming and the dust settles..

Taking a (wishful) optimistic view with the upset NZX market ATM did not fall below it's major support level (NZ$~6.10) and still well above it's primary support (bottom) of NZ$~5.40..
The 3 month secondary up trending line is still intact... If there is no behavioural flip (or a very brief one) today I will take it as an optimistic sign.

Conclusion:..no major technical damage..(yet)
Chart will follow
Disc: still have a small holding

[see weed]

Aussi opened early today? Sorry was looking at ATM NZ depth:eek2:

[Balance]

Aussi opened early today? Sorry was looking at ATM NZ depth:eek2:

Only buyers today will be short covering.

Tomorrow is when sp is going to get another big leg down imo after brokers and analysts do their downgrades and recommendations.

[Balance]

Yes 12 noon will be very interesting
I have noticed recently a change of behaviour..Short term charts is showing a change in oscillation between NZX opening and ASX opening times..Recently ATM has flipped and has been more pessimistic than the A2M..Why? I don't know, but a feeling maybe the Shorters got burned and decreased their activity..They did have a great time for a long while consistently seeing High NZX low ASX scenario, but like all things change happens as nothing lasts forever..

So today would be the ideal day to see a change back in behaviour (another flip)?? We will find out after ASX opening when the upset A2M market stops squirming and the dust settles..

Taking a (wishful) optimistic view with the upset NZX market ATM did not fall below it's major support level (NZ$~6.10) and still well above it's primary support (bottom) of NZ$~5.40..
The 3 month secondary up trending line is still intact... If there is no behavioural flip (or a very brief one) today I will take it as an optimistic sign.

Conclusion:..no major technical damage..(yet)
Chart will follow
Disc: still have a small holding

What happened to the positive indicators (golden cross etc etc) lighting up on the TA front according to some of the posters?

What a great trading stock for those who use TA but then get caught by yet another disappointing ATM announcement?

[Biscuit]

......DISC: Very small position taken today morning for entertainment purposes only ...after all stuck inside ...Lockdown fatigue :D

I got enough entertainment from this one last year. Decided to stick to investing in companies that actually know what they are doing.

[flyinglizard]

The worst part is they still do not know what they are doing and going to do. No strategy review released yet as promised and no share purchase back plan. only has rumor.

[alokdhir]

The worst part is they still do not know what they are doing and going to do. No strategy review released yet as promised and no share purchase back plan. only has rumor.

Maybe dont want to waste good money to buy their worthless shares ...lol :p

[alokdhir]

I got enough entertainment from this one last year. Decided to stick to investing in companies that actually know what they are doing.

Got out with my pants intact ...just in time and had some fun too ...:D

[Biscuit]

Maybe dont want to waste good money to buy their worthless shares ...lol :p

lol, that would show an unusual amount of good judgement on their part.

[Hoop]

I know ...U r right about results ...but like u said for ZEL ..." Where there is smoke ...there is fire too " So maybe signs of that fire keeping shorts at bay .

Also u r a seasoned markets player ...U know markets look at least 6 months ahead and normally stock bottoms much before business bottoms ...so maybe ATM bottomed last June around 5.40 ...

DISC: Very small position taken today morning for entertainment purposes only ...after all stuck inside ...Lockdown fatigue :D

ASX opening neutral..not negative...so behaviour has not changed..Price NZ6.52 down NZ63c -8.8%...No major technical breaks so I'm taking the odds of this 3 month rally continuing is getting better as the day progresses..

Putting more money where my mouth is...accumulated a small parcel just now.

[Balance]

lol, that would show an unusual amount of good judgement on their part.

Maybe they will use the cash to buy Nestle A2 milk business for $500m?

[flyinglizard]

Maybe dont want to waste good money to buy their worthless shares ...lol :p

But I found some good spots in its reports........ The turning point may be Q1 22 after all aging English label inventory gone.

I am just complaining that the two key drivers they do not deliver.

[alokdhir]

But I found some good spots in its reports........ The turning point may be Q1 22 after all aging English label inventory gone.

I am just complaining that the two key drivers they do not deliver.

If u r right that business turning point maybe Q1 22 then Hoop is right that stock bottomed around 5.40 in June last ...

I agree with Hoop ...more chance of it going up ahead then down ...Maybe will follow Hoop to actually see while holding some !!!

[Balance]

One analyst’s takeaway regarding revenues :

‘Overall, the company is expecting first half revenue to be marginally lower than the prior corresponding period. Though, this includes revenue from the acquired Matura Valley business.’

Lower revenues, lower margins and increased marketing, promotion and distribution expenses - analysts are going to be taking a knife to their current forecasts.

[Ferg]

For what it's worth, normalised earnings was 23.3c per share. Normalised earnings being NPAT and adding back the after tax effect of the stock write down of $108.6m, one-off MVM acquisition costs of $10.4m and one-off software costs of $9.7m.

Comprehensive income was savaged by the SML revaluation of -$134m resulting in an overall comprehensive loss of $53m for the year, hence the slight reduction in NTA versus last year.

H2 was an operating loss (EBIT) of -$57.8m but this was negatively impacted by the 3 items previously mentioned. Adjusted EBIT (adjusted for the 3 items above) was $46m for the half versus $175m (unadjusted) for the previous half. This was impacted by:

lower sales & adjusted COGS for less GM of $86m (note: only $85m of the $108m stock provision was in H2, note also H1 was not adjusted for its stock provision)
an increase in marketing costs of $33m versus H1
an increase an adjusted admin costs of $8m (insurance?)


ATM is priced like a growth stock but it's hard to see growth in FY22 given the run rate on the revenue lines for H2 versus H1. Although I haven't compared H2 revenues by line to H2 last year.

Maybe the market is pricing in growth for FY23.

[Getty]

Maybe they will use the cash to buy Nestle A2 milk business for $500m?

Very suspocitive!

[Maxtrade]

Only buyers today will be short covering.

Tomorrow is when sp is going to get another big leg down imo after brokers and analysts do their downgrades and recommendations.


I was wondering why we haven't seen the ASX dive further. That would make sense. So likely to see the ASX drop more tomorrow then?

[Beagle]

Good analysis Ferg. More stock write-downs to come.
I've been an accountant for 40 years now, (yeah even I find that hard to believe). I have consistently seen that the very best guide to the near future financial performance is the most recent financial performance so the 2H adjusted profit of only $46m makes for a very sobering prognosis going forward.

Who knows what FY23 will bring, (really its a lottery), but I think they will do well to earn 20 cents per share for FY22, (I am very skeptical they can do that). I think people still paying a PE of around 30 are very, very "brave". I think the daigou channel is ostensibly dead and buried.

Very good stock to short, in my opinion.

[Hoop]

What happened to the positive indicators (golden cross etc etc) lighting up on the TA front according to some of the posters?

What a great trading stock for those who use TA but then get caught by yet another disappointing ATM announcement?

Yep ATM A2M is a TA's bitch stock at the moment.

re: Golden and Death crosses...This Chartist thinks they are Media hype fodder..The crosses lag too much and by the time the crosses happens often the event is over and the opposite is happening. Not a great fan

"What happened to the positive indicators" All indicators are variables and subject to change. We have been too accustomed with stocks that have been in Bull mode for years and the indicators don't jump around a lot. Same with stocks in Bear Mode..
The year old ATM A2M Bear seems to have "bottomed out" a few months ago and dare I say it "could be in some sort of reversing mode out of it's Bear Market Cycle" but don't quote me on that ...
This life between Bear and Bull mode makes investors life a bitch as uncertainty reigns because most investors still perceive the stock going down, witnessing media bad news, reinforced hindsight and lots of negative sentiment helps create a poor looking future forecast and who would blame them ..

but there is an investor dilemma happening as the crap news is still coming out yet the expected constant price fall has disappeared and replaced by price whipsawing all over the place ....There has been an animal behaviour (trading pattern) change ...This up down all over the place, failed breakouts and so forth could be seen as some sort of a market reversal sign as ATM struggles to change species between Bear and Bull..or..as investor's fear some sort of continuation event (hibernating Bear) before the Bear wakes up, regains control and the constant downward trend resumes..Time will tell. Markets are future looking.

[Balance]

I was wondering why we haven't seen the ASX dive further. That would make sense. So likely to see the ASX drop more tomorrow then?

Huge volume being done on ASX - approaching 20m shares so there's a lot of selling and a lot of buying.

Easy to figure out who's most likely to be buying - short coverings to lock in yet another lot of gains, thank you all very much.

Who is going to buy tomorrow?

Picking A2M to finish today at A$6.05 - ASX sp starting to show distinct weakness as brokers starts to update their forecasts after talking to the company about the results.

[waterboy]

Huge volume being done on ASX - approaching 20m shares so there's a lot of selling and a lot of buying.

Easy to figure out who's most likely to be buying - short coverings to lock in yet another lot of gains, thank you all very much.

Who is going to buy tomorrow?

Picking A2M to finish today at A$6.05 - ASX sp starting to show distinct weakness as brokers starts to update their forecasts after talking to the company about the results.

Pretty accurate picking there, whats tomorrows close please good sir?

[Hoop]

......

Picking A2M to finish today at A$6.05 - ASX sp starting to show distinct weakness as brokers starts to update their forecasts after talking to the company about the results.

A2M Closed A$6.05.
Spot on..Well done Balance
Can I borrow your crystal ball..

[winner69]

……..

I have consistently seen that the very best guide to the near future financial performance is the most recent financial performance so the 2H adjusted profit of only $46m makes for a very sobering prognosis going forward.

.

As you often say beagle cash is king

H2 operating cash flow was $98m …it was $267m last year

H2 better than H1 which was negative $9m

Full year 21 was a miserable $89m …..way down on the $427m last year

Hard to see them generating anything like past cash flows for a while.

[winner69]

Media articles don’t paint a pretty picture for MVM over the next year or two.

Seems they’ve needed to revise down volume expectations they were going to transfer to MVM and MVM were out looking for new business.

A2 said there’s going to be a loss from MVM in half one ….we know where that’s heading eh

[aperitif]

I will lend you 50,000 @ 6% if you want to short it, PM me.

[Beagle]

ATM referred too as a troublemaker as $600m of their market cap is torn up. https://www.goodreturns.co.nz/article/976519159/nz-shares-down-as-a2-milk-sheds-600m.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+26+Aug+ 2021

Yes Winner, cash flow is the lifeblood of business.

[Balance]

I will lend you 50,000 @ 6% if you want to short it, PM me.

Just buy a put option on ASX. Easy.

Or sell a call option.

[Habits]

I will lend you 50,000 @ 6% if you want to short it, PM me.

No thanks... could go either way

[aperitif]

No dramas, let me know if you change your mind.

Just out of curiosity, how many hours have you spent on this forum today?

[Balance]

From an interview with DB today :

‘ "I don't think the market fully appreciates the potential impact of the significant reduction in the Chinese birth rate," he said.’

So all those who think that the reduction in birth rate does not matter - take note!

[Beagle]

No dramas, let me know if you change your mind.

Just out of curiosity, how many hours have you spent on this forum today?

I think you'll find that many people who spend a lot of time on here don't need to work.

[Waltzing]

Along side the articles on ATM return to growth stories.

Interesting read on ice cream products in china.

https://www.interest.co.nz/business/111936/mark-tanner-traces-unilevers-clever-marketing-its-magnum-icecream-product-china-and

[JohnnyTheHorse]

I will lend you 50,000 @ 6% if you want to short it, PM me.

You can short for less than 3% (inclusive of borrow rate and interest rate on margin).

[Balance]

https://www.smh.com.au/business/companies/a2-milk-rethinks-its-chinese-business-as-profits-plummet-20210826-p58m09.html

A good article summarising the state of play with ATM.

Big negatives with a few small positives.

“Citi analyst Sam Teeger questioned if the company’s best days were behind it, raising concerns the business may not be able to resolve its issues.

“It seems like a leap of faith to assume the A2 can turn its fortunes around,” he said. “The company needs to make material changes surrounding driving growth, innovation and brand positioning in order to address structural headwinds.”

Mr Teeger said the company’s higher than expected earnings in the Australia/New Zealand region was a positive, along with A2’s successful efforts to right-size its inventory levels.”

[JohnnyTheHorse]

I wouldn't be surprised to see this retest previous lows based on comments from the company. It's very noteworthy to me that the weekly trend never changed and is at risk or reconfirming it's weekly downtrend if AU$5.80 breaks. I now see a credible technical scenario where we have just cooled off weekly and monthly RSI and this has all just been a monthly bear flag (leading to one last large capitulation drop).

Disc: no open position at time of posting.

[Balance]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/378050/353347.pdf

Long and wrong.

So it’s the Vanguard Group who had been buying A2M shares large.

Now, will they keep buying to average down their cost?

[mike2020]

I wouldn't be surprised to see this retest previous lows based on comments from the company. It's very noteworthy to me that the weekly trend never changed and is at risk or reconfirming it's weekly downtrend if AU$5.80 breaks. I now see a credible technical scenario where we have just cooled off weekly and monthly RSI and this has all just been a monthly bear flag (leading to one last large capitulation drop).

Disc: no open position at time of posting.
One last capitulation? I feel like a bystander watching the Titanic sink (wait, it looks like it's coming back up!). You only have one short term hope with this and it is a takeover, ok, Westland had contracted suppliers and assets, ATM has long been proud of its middleman status and very little benefit flowed through to farmers, what would you actually be buying and what would you pay for it and why? Or long term they take a page or two from Comvita and actually make a few hard calls. They have had plenty of time to do the latter. The sale of shares by management....
Having tried the A2 product I have to say, I would invest in locally produced oat milk. Its great in coffee and quite creamy.

[Master98]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/378050/353347.pdf

Long and wrong.

So it’s the Vanguard Group who had been buying A2M shares large.

Now, will they keep buying to average down their cost?
lol, big boy can make wrong judgment, i assuming they will push sp lower to buy more to average down their cost.

[Baa_Baa]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/378050/353347.pdf

Long and wrong.

So it’s the Vanguard Group who had been buying A2M shares large.

Now, will they keep buying to average down their cost?

Is it how one interprets 'in-specie', i.e. that could be equivalent to an outright Sell, or it could be a transfer to some other Vanguard owned fund?

The Net for the period notified is:

-20,833,823 shares






Shares

Value



Buy


2,139,378

$ 13,986,195.28


Sell


(172,403)

$ (1,106,595.04)


In-Specie


(22,800,798)

$ (141,747,169.65)

[GTM 3442]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/378050/353347.pdf

Long and wrong.

So it’s the Vanguard Group who had been buying A2M shares large.

Now, will they keep buying to average down their cost?

Well they started buying in late April at somewhere north of $7.50. The last notified purchase was a few days back at about $6.50.

So it looks like they've been averaging down for a few months now.

I'm almost tempted to work out their average cost, just for the fun of it

[Balance]

Is it how one interprets 'in-specie', i.e. that could be equivalent to an outright Sell, or it could be a transfer to some other Vanguard owned fund?

The Net for the period notified is:

-20,833,823 shares






Shares

Value



Buy


2,139,378

$ 13,986,195.28


Sell


(172,403)

$ (1,106,595.04)


In-Specie


(22,800,798)

$ (141,747,169.65)



'In-specie' is transfer within Vanguard entities.

She's a big one is Vanguard - US$7 trillion of funds under management! A lot FUM via passive ETF.

[Baa_Baa]

Well they started buying in late April at somewhere north of $7.50. The last notified purchase was a few days back at about $6.50.

So it looks like they've been averaging down for a few months now.

I'm almost tempted to work out their average cost, just for the fun of it

The Average of the share prices are:



Buy


$ 6.57


Sell


$ 6.73


In-Specie


$ 6.00

[alokdhir]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/378050/353347.pdf

Long and wrong.

So it’s the Vanguard Group who had been buying A2M shares large.

Now, will they keep buying to average down their cost?

Vanguard as u know is Index funds specialist ...they didn't have any choice but to buy as inflow in their funds increased

[Balance]

A2M Closed A$6.05.
Spot on..Well done Balance
Can I borrow your crystal ball..

I see NZX is eagerly waiting for A2M to start trading on ASX - low volume (as usual) and hesitant trading.

Well, I talked to a broker who's rather miffed that their analyst has not done a proper update yet as the company has not provided any earnings guidance this time round.

All the analysts are in the same boat so it is going to be fascinating to find out over the course of today what their updated earning forecasts are going to be.

One thing for sure is that the bullish brokers like Bell Porter (actual results yesterday were way below their expectations) are going to have to justify to their clients why they were so far out. The bearish brokers like Citibank have been vindicated so are going to turn even more negative.

My pick is that we will see another down day and share price will close near to A$5.65.

[flyinglizard]

I see NZX is eagerly waiting for A2M to start trading on ASX - low volume (as usual) and hesitant trading.

Well, I talked to a broker who's rather miffed that their analyst has not done a proper update yet as the company has not provided any earnings guidance this time round.

All the analysts are in the same boat so it is going to be fascinating to find out over the course of today what their updated earning forecasts are going to be.

One thing for sure is that the bullish brokers like Bell Porter (actual results yesterday were way below their expectations) are going to have to justify to their clients why they were so far out. The bearish brokers like Citibank have been vindicated so are going to turn even more negative.

My pick is that we will see another down day and share price will close near to A$5.65.


Ha, brokers are waiting for other brokers to release updated valuation report. Who is the first one? They are at the same boat as the company management, NO IDEA for the company future! Maybe a decent drop to $3.xx will give all participants some safety margin.

[Balance]

Ha, brokers are waiting for other brokers to release updated valuation report. Who is the first one? They are at the same boat as the company management, NO IDEA for the company future! Maybe a decent drop to $3.xx will give all participants some safety margin.

$3.XX is where it is heading in the absence of corporate activity.

ATM is not a growth stock any more - that story is over for now.

[Ferg]

Well, I talked to a broker who's rather miffed that their analyst has not done a proper update yet as the company has not provided any earnings guidance this time round.

Maybe they should do their own work for once? Or maybe hire people with experience?

If we here at ST are capable of banging together a forecast, surely they can too given the extra information they have had over the years?

[Balance]

Maybe they should do their own work for once? Or maybe hire people with experience?

If we here at ST are capable of banging together a forecast, surely they can too given the extra information they have had over the years?

Agree with you but ….

…. that’s not how the industry works.

The analysts love companies which spoon-feed them with information and the fund managers love analysts who are closest to the companies - not best analytical skill.

The system works well until a company blows itself up. ATM is a classic case.

[Master98]

maybe those brokers and analysts want market itself running for few days, then they value the company against the actual market sp.

[winner69]

maybe those brokers and analysts want market itself running for few days, then they value the company against the actual market sp.

The way it works -
Price moves, then an army of analysts all over the world make up stories to justify those price moves. Then price moves again, and the analyst go to work. Rinse & repeat. That’s why we should follow price and ignore the analysts

[alokdhir]

The way it works -
Price moves, then an army of analysts all over the world make up stories to justify those price moves. Then price moves again, and the analyst go to work. Rinse & repeat. That’s why we should follow price and ignore the analysts

Thats why the most popular and true saying ...Only Market thus SP tells the truth rest all is fibbing !! :D

[Entrep]

Craigs downgrade out, TP $5.30 or thereabouts

[Master98]

A$6.0 level just broken.

[alokdhir]

Craigs downgrade out, TP $5.30 or thereabouts

All will come ...then the deal will be done ...brokers will still make money ...telling wrong targets also ...doing deals also ...they only loyal to incoming money ...not to free advise seekers ...lol

[flyinglizard]

China population 2021: births may drop to lowest on record


Analysis of local government data showed that newborns may have fallen by 17 per cent in some regions in the first half of the year
Chinese mothers gave birth to 12 million babies last year, down from 14.65 million in 2019, marking an 18 per cent decline year on year

https://www.scmp.com/economy/china-economy/article/3145600/china-population-2021-births-may-drop-lowest-record-jefferies

[Balance]

A$6.0 level just broken.

Notice the volume picking up as the sp falls?

$5.50 next stop?

[Maxtrade]

Craigs downgrade out, TP $5.30 or thereabouts

Guess the previous comments in this thread with SP $3.50 based off expected PE 11-15 is very much a reality. Will we see a new low somewhere between $3.50 and $5. Shorts will likely be coming out of the wood work again. Haven't got into shorts with my trading to date, but maybe now is a good opportunity to start with ATM.

[Getty]

https://youtu.be/EiMFvx43vpw

[JohnnyTheHorse]

Got the setup I was waiting for this morning with a small bounce on Aussie open to set a 15m and 1hr lower high. Shorted into resistance at AU$6.18 and covered on a pivot at AU$5.92. Looking to short more lower highs and long a bounce of AU$5.80 (or even better a break of this into a bounce).

[flyinglizard]

got the setup i was waiting for this morning with a small bounce on aussie open to set a 15m and 1hr lower high. Shorted into resistance at au$6.18 and covered on a pivot at au$5.92. Looking to short more lower highs and long a bounce of au$5.80 (or even better a break of this into a bounce).


how to short this one?

[Entrep]

Guess the previous comments in this thread with SP $3.50 based off expected PE 11-15 is very much a reality. Will we see a new low somewhere between $3.50 and $5. Shorts will likely be coming out of the wood work again. Haven't got into shorts with my trading to date, but maybe now is a good opportunity to start with ATM.

Yes, PE needs to come way, way down on this one.

[Hoop]

Can investors succeed by relying solely on Broker forecasts or their buy/sell activities?
..There was a debate (actually more like a big argument) a long time ago (2013?) as to how accurate Broker forecasts ended up being. Somewhere back on Sharetrader or maybe Sharechat, Phaedrus used his Metastock program to test the correlation between forecast v actual price. The results showed a mediocre correlation..That created the argument :D. . I did a similar thing manually by plotting past forecast data with actual price on charts and eyeballing the results.
Back in 2013 when I plotted the forecast price data with the actual stocks price I found an interesting lag correlation ..Broker forecasts were above the actual price (over optimistic) most of the time during Bear market cycles and below the actual price (over pessimistic) during bull market cycles..
This resulted in investors using broker forecasts perceiving the stock prices were "cheap" during a down trending period ( outgoing tide...Bear cycle)
Also noticed was their forecasting was more conservative than the actual price event both up and down..and to correct that conservatism they would chase the actual price by updating their forecast creating a lag effect...This is evident when the stock reverses and "comes right" ...investors miss the golden opportunity to invest near the bottom because updated broker's price forecasts are still pessimistic..

Fast forward to 2021..I'm not sure if broker forecasts v actual stock prices now are similar or different to many examples of 2013
But...Interesting ..huh:)

Psychology-wise.. It seems to be a "Human Thing" a sub-conscious bias by relying too much on the past up to the present when formulating a forecast..

An example below is 2012 - 2013 FBU price v Macquaries forecast target price chart..Also Note the PE Ratio rise against the pessimistic forecasting.

12889

[Ferg]

An interesting discussion on analysts which has confirmed my thinking and answered my (somewhat rhetorical) questions above. What this highlights to me is that any analytical work or target SP produced by a broking house is not worth the paper it is written on. Yeah they can get some credit for collating some of the macro trends, but the micro stuff?......useless. The cynical side of me thinks the target prices are there to drive activity....qui bono? (definitely rhetorical)

[flyinglizard]

valuation equation is calculated based on the input like growth rate. however, even the A2 management team cannot figure that out, how can analysts get the accurate number for future growth rate? guess work or relay on industry average figure. En............ maybe more guess work.

[Master98]

seriously thinking A2 milk may be kicked out of MSCI index at next index rebalancing if current sp continue on downtrend.

[101nick101]

Haven't been following this stock since I sold out at a loss, have they righted the ship yet?

[Ferg]

Haven't been following this stock since I sold out at a loss, have they righted the ship yet?

Not yet. Latest annual report has EPS of 23c, sales and EBIT momentum appear soggy. They are tipped to earn 24cps next year but are not providing guidance. They may surprise, either upwards or downwards. Most here think we have not yet seen the bottom. Others don't expect Management to do nothing, especially in China and USA markets. So it's bit of a crap shoot with odds possibly favouring downside over upside, with a view to growth in possibly FY23.

[Beagle]

Not yet. Latest annual report has EPS of 23c, sales and EBIT momentum appear soggy. They are tipped to earn 24cps next year but are not providing guidance. They may surprise, either upwards or downwards. Most here think we have not yet seen the bottom. Others don't expect Management to do nothing, especially in China and USA markets. So it's bit of a crap shoot with odds possibly favouring downside over upside, with a view to growth in possibly FY23.

Good synopsis and what's a fair PE for a company with so much uncertainty hanging over it ? Its beyond my comprehension why anyone would pay more than 18 times near term earnings unless they think long term this will come out smelling like rose petals mixed in with fresh A2 milk powder. How can anyone be sure of the long term prognosis ?
Makes DCF "valuations" nothing but a bunch of very highly speculative guesswork.

[Biscuit]

Haven't been following this stock since I sold out at a loss, have they righted the ship yet?

We are expecting the ship to stabilize once it settles on the bottom.

[Balance]

We are expecting the ship to stabilize once it settles on the bottom.

What if it’s a submarine?

[Motley Crew]

We are expecting the ship to stabilize once it settles on the bottom.

Nope. Ever heard of 'Journey to the Centre of the Earth' ?

[davflaws]

Nope. Ever heard of 'Journey to the Centre of the Earth' ?

China syndrome?

[alokdhir]

When no one wants to buy ATM then what happens to SP ? $ 1 maybe ....but Mr B says $ 3 fair value ....Morningstar says $ 10 !!!:confused:

[iceman]

seriously thinking A2 milk may be kicked out of MSCI index at next index rebalancing if current sp continue on downtrend.

This from Stocktakes in the Herald this afternoon: "A2 Milk has moved out of the FTSE large-cap index and will go into the mid-cap."

[Biscuit]

What if it’s a submarine?

As in the Kursk, perhaps?

[Hoop]

Bugger..Lots of TA technical damage today..rocketing down this last hour..now reaching another major support (NZ$6.10ish) not many supports left :(..
Can someone pull the plug on the ASX I don't want Balance to be spot on 2 days in a row..

[nztx]

I'd be nervous even trying anything in the 5's on this one at the moment ;)

[mike2020]

It was priced for growth now you need to do the opposite? Shrinkage does not seem inappropriate ;)

[Balance]

Bugger..Lots of TA technical damage today..rocketing down this last hour..now reaching another major support (NZ$6.10ish) not many supports left :(..
Can someone pull the plug on the ASX I don't want Balance to be spot on 2 days in a row..

Macquarie has reaffirmed ‘SELL’

Bell Porter has reduced target price (follow sp down) and reaffirmed ‘BUY’

Citi has upgraded to ‘BUY’

Let’s see what UBS & Credit Suisse come out with.

PS. Bell Porter has zero credibility having followed the sp down with its price target and valuation.

[Hoop]

Bugger..Lots of TA technical damage today....
This continuous onslaught is what causes damage (https://www.youtube.com/watch?v=2Un766SnIDc)

[nztx]

It was priced for growth now you need to do the opposite? Shrinkage does not seem inappropriate ;)


lost a bit on past forays in ATM .. looking to recover some red

I buy = SP fall .. I'm sure others have favourite companies which have a bit of a habit of doing that :)

[Balance]

This from Stocktakes in the Herald this afternoon: "A2 Milk has moved out of the FTSE large-cap index and will go into the mid-cap."

Expect a sell-off then around 17 Sept when it exits the large-cap index.

Then there’s the MSCI & S&P indices which could follow. They are the biggies!

[winner69]

When no one wants to buy ATM then what happens to SP ? $ 1 maybe ....but Mr B says $ 3 fair value ....Morningstar says $ 10 !!!:confused:

There will always be the ‘it was 20 bucks once so cheap as now, really really cheap’ brigade willing to buy

[Leftfield]

Since the ATM FY21 results last Thursday, I’ve reduced my remaining ‘free held’ holding to below 5% of my portfolio.

Why not sell them all? I’m sentimentally attached to A2, and my remaining shares will act as a ‘bookmark’ that will keep me interested in the company which I still see as having a good long term future. However, in the short term I don’t see ATM out-performing the NZX as it did for many years.

As I look back on the 9 years I owned ATM shares, my realized tax free capital gains are over 1,300% on my original investment ( ie approx 150% pa.) and as for many years ATM was over 70% of my portfolio, I did very, very well and also learned much.

So thanks ATM for the good times, I wish you well for the future.

[couta1]

Since the ATM FY21 results last Thursday, I’ve reduced my remaining ‘free held’ holding to below 5% of my portfolio.

Why not sell them all? I’m sentimentally attached to A2, and my remaining shares will act as a ‘bookmark’ that will keep me interested in the company which I still see as having a good long term future. However, in the short term I don’t see ATM out-performing the NZX as it did for many years.

As I look back on the 9 years I owned ATM shares, my realized tax free capital gains are over 1,300% on my original investment ( ie approx 150% pa.) and as for many years ATM was over 70% of my portfolio, I did very, very well and also learned much.

So thanks ATM for the good times, I wish you well for the future. Unfortunately A2 in the main has been a wealth destruction company for the majority to varying degrees, its lost over 10 bill off its market cap and those buying North of the current price far outnumber earlier investors, its certainly cost me a huge amount more than I ever made from it, fortunately I survived and I mean that literally. Going forward its a long road home from here and long term I hope it goes onto future success but bar a T/O I don't see the sp gaining much traction over the next year.

[Balance]

Since the ATM FY21 results last Thursday, I’ve reduced my remaining ‘free held’ holding to below 5% of my portfolio.

Why not sell them all? I’m sentimentally attached to A2, and my remaining shares will act as a ‘bookmark’ that will keep me interested in the company which I still see as having a good long term future. However, in the short term I don’t see ATM out-performing the NZX as it did for many years.

As I look back on the 9 years I owned ATM shares, my realized tax free capital gains are over 1,300% on my original investment ( ie approx 150% pa.) and as for many years ATM was over 70% of my portfolio, I did very, very well and also learned much.

So thanks ATM for the good times, I wish you well for the future.

Well articulated.

ATM as a stock has served us very very very well until a year ago.

But I have learnt the hard way over the years to never fall in love with a stock or to hold a stock for sentimental reasons.

You invest or hold a stock because you believe in its business, it’s management and the industry that it is in.

[winner69]

Annual Report is 118 pages

Must be some good stories in it

Anybody read it it yet?

[Balance]

Unfortunately A2 in the main has been a wealth destruction company for the majority to varying degrees, its lost over 10 bill off its market cap and those buying North of the current price far outnumber earlier investors, its certainly cost me a huge amount more than I ever made from it, fortunately I survived and I mean that literally. Going forward its a long road home from here and long term I hope it goes onto future success but bar a T/O I don't see the sp gaining much traction over the next year.

Glad and thankful you made it through, couta1.

You are right about the majority losing money on ATM - one more reason why it lacks attraction for those who are objective about the company's prospects. And it is good that the current CEO is not sugar-coating the challenges facing the company anymore - let's see what his review brings in October.

[Shareguy]

I also have been a long-term holder so at current price I’m still well in the money. I’m planning on buying more if it gets down to $5.50. See this stock as a takeover play.

[couta1]

I also have been a long-term holder so at current price I’m still well in the money. I’m planning on buying more if it gets down to $5.50. See this stock as a takeover play. Identifying a stock early on in its life and going big is the way to go if you can hold the vision through the tough times, I think of the eary XRO investors as another example, I've gone big on PAZ on the unlisted market for this very reason and are confident that investment will make back all my A2 losses plus some in due course.

[Leftfield]

Well articulated.

ATM as a stock has served us very very very well until a year ago.

But I have learnt the hard way over the years to never fall in love with a stock or to hold a stock for sentimental reasons.

You invest or hold a stock because you believe in its business, it’s management and the industry that it is in.

Thanks Balance, appreciated.

FWIW your last para is the key reason I still hold some (as well as the dodgy sentimental reasons.) I'll wait for the Oct update before I make any more moves, if the news is promising I'll scale up, if its not I may well get out.

Couta, thanks for sharing. I wish you well.

[aperitif]

Thanks for the insight in your investing journey,

I resonate with your story as I have held XRO for over a decade now and it has changed my family’s life behind my wildest dreams. I held through the gigantic drawdowns whilst everyone told me it’s best days we’re behind it.

The big thing focus on with a2 is market share, the rest is all noise! a2 milk is a once in a lifetime innovation in a commodity category. Consumers still adore the product, the paths to market will change over time but the demand will always be there.

From my point of view the next steps for a2 are;

1- Increased marketing into T3/4/5 cities where they have traditionally under indexed.

2- Product innovation - The baby food market has inherent high margins. I see yoghurt pouches and kids cheese being the next step, along with milk adjacencies in the US.

3- Strategic tie ups - Starbucks/Hema stores and a potential stake from a multinational which will increase the speed to market which I have talked about previously.

4- Hainan domestic travel - Currently 10-15% of Chinese people have a passport. The entire population is able to travel to Hainan(Hawaii of China) and buy luxury goods/IF duty free up to 100,000 yuan. This will in time replace the need for daigou.

Like XRO, the road ahead will be bumpy but I believe in their vision.

I recommend you read the book “100 baggers” by Chris Mayer during the lockdown. Large drawdowns are common in all great companies.

[Beat the Bank]

I sold out on Thursday - down $11k. I felt that we have not had good transparent management and I didn't see a path to manage the massive changes the market has presented. The world, especially marketing to China, has changed. It is a great product and brand but we cannot be confident of growth. I also own Synlait that I haven't yet sold. I wonder what to do with that? It would be really sad to loose this company to a takeover offshore and I would certainly buy in again if I feel they have a solid plan to relaunch the brand, and that the China demand is there. I feel for so many who have lost out in this kiwi growth story killed by Covid.

[Jim]

The good old days a2milk are history, it is not paying any dividend even with a great cash pile. Not worth looking at it

[Balance]

The good old days a2milk are history, it is not paying any dividend even with a great cash pile. Not worth looking at it

Because it is still a growth story - according to the company.

It is debatable but trading on a PE multiple of 25X F22 forecast earnings that there are still those in the market who believe the same.

[Master98]

Because it is still a growth story - according to the company.

It is debatable but trading on a PE multiple of 25X F22 forecast earnings that there are still those in the market who believe the same.
did a2 milk give F22 forecast earnings or just someone speculation? a2 milk did say 1HF22 performance will be materially lower than 1HF21, so i think F22 earning will be similar or lower than F21.

[Balance]

did a2 milk give F22 forecast earnings or just someone speculation? a2 milk did say 1HF22 performance will be materially lower than 1HF21, so i think F22 earning will be similar or lower than F21.

Consensus forecast by 7 brokers per MarketScreener.

And looking at it now, the brokers have all updated their forecasts and it shows EPS of 16cps in F22!

So PER of 38 X !!!!

Priced like a growth stock, that's for sure.

[aperitif]

Do you own shares balance or are you looking to buy? Thanks

[Ggcc]

Do you own shares balance or are you looking to buy? Thanks
I would say from his reporting on the company That the answer is NO. But don’t take my word for it

[hyinvest]

Consensus forecast by 7 brokers per MarketScreener.

And looking at it now, the brokers have all updated their forecasts and it shows EPS of 16cps in F22!

So PER of 38 X !!!!

Priced like a growth stock, that's for sure.

Using 16cps and assuming a generous P/E of 20, this means SP of $3.20

Using 11cps (2021 EPS) with a generous P/E of 20, this means SP of $2.20

[Gerald]

did a2 milk give F22 forecast earnings or just someone speculation? a2 milk did say 1HF22 performance will be materially lower than 1HF21, so i think F22 earning will be similar or lower than F21.


The Company is expecting 1H22 revenue(including MVM) to be marginally lower than 1H21 due mainly to lower English label
infant nutrition salesoffset by the addition of MVM revenue. 2H22 revenue (including MVM) is expected to be significantly
higher than 2H21 due mainly to actions taken in 2H21 to rebalance channel inventory, increased marketing investment and the
inclusion of MVM revenue



So say 650m 1H22, and if significantly higher in 2H22 means 20-30% say 1,487-1,554m for the full year, 80m of which is from MVM.

Marketscreener only has 1284m for FY22, so expectations are already pretty low (although SP obviously pricing in more then consensus expectations).

[Beagle]

Consensus forecast by 7 brokers per MarketScreener.

And looking at it now, the brokers have all updated their forecasts and it shows EPS of 16cps in F22!

So PER of 38 X !!!!

Priced like a growth stock, that's for sure.

Yeap, I called this very early that they'd struggle to make 20 cents eps in FY22 and it seems the brokers agree
https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/

Well worth noting that they're expecting earnings to grow dramatically in FY23 to 29 cps but I think that guesswork is incredibly vulnerable to quite savage future reassessment. The simple fact of the matter is nobody has any real clear visibility on FY22, (and you can't believe a single word management tells you anymore as their reputation is well and truly stuffed). Visibility on FY23 simply doesn't exist at all let alone anything further out than that and therefore DCF valuations are completely worthless. Best to stick to sensible conservative metrics on FY22 wherein we have some change of making a rough guess of earnings and then for the rest of one's analysis rely on TA, which also screams SELL !

For mine, I'm happy to take 16 cents as a fair guess for FY22 as this lines up with my sense around this. No way this deserves a forward PE like in the good old days when it really was growing strongly, (mid last decade where a forward PE of 30 was the norm), let alone a whopping 38 times guessed FY22 earnings :eek2:

Early days but I think for all the known risks a sensible forward PE is in the range of 15-18 which suggests to me fair value is around $2.40 - $2.88 maybe a bit less considering the woefully inept management. I was a bit generous with my guess of $3 earlier this week. I reckon at this point shareholders are on a hiding to nothing. Wake me up when we get down to $2.50.

[Ferg]

Using 11cps (2021 EPS)

I did an analysis earlier which suggests normalised earnings is closer to 23 cps. You need to dive into the numbers and see there were a number of one off items that should be adjusted. Normalised earnings removes one off anomalies to get a better understanding of the base business.

post is here (https://www.sharetrader.co.nz/showthread.php?2318-ATM-A2-Milk-Corporation-Limited&p=903924&viewfull=1#post903924)

[Beagle]

But as you suggested earlier Ferg, most of the normalized profit was made in the first half of FY21 and the momentum is to the downside.

[winner69]

Has A2 have said how much MVM will contribute financially

Last MVM accounts had revenues at $114m and a HUGE LOSS but one never knows how accounting is done in overseas company in NZ

A2 did say MVM might be ebitda positive in F25

Paying $260m for 75% for that doesn't seem a great idea but what the heck do I know

[winner69]

Should have read results commentary properly re MVM expectations

Based on revised volume assumptions, it is now expected that in FY22 MVM will deliver approximately $80 million in revenue (excluding intercompany revenue) and an EBITDA loss of approximately $20 million for the 11 months post-completion.

[Balance]

Should have read results commentary properly re MVM expectations

Based on revised volume assumptions, it is now expected that in FY22 MVM will deliver approximately $80 million in revenue (excluding intercompany revenue) and an EBITDA loss of approximately $20 million for the 11 months post-completion.

Becoming clear why ATM is holding on desperately to the cash - MVM & US will chew through $50m and more of cash alone a year, while additional promotional & marketing spending in China could easily be $100m+.

[winner69]

Becoming clear why ATM is holding on desperately to the cash - MVM & US will chew through $50m and more of cash alone a year, while additional promotional & marketing spending in China could easily be $100m+.

Seems one has to come up with valuation of A2 in its own right in some traditional way (like guess sakes Ebitda and profits and use a PE) …….but then discount that ‘valuation’ somewhat for the drag on A2 financials is going to bring over many years

[winner69]

morbid fascination as to how expensive 'strategic' reasons by investing in similar companies

A2 have paid $288m for their interest in Synlait - now worth $140m ..... 'strategic' reasons worth it

Goodness knows what $270m into MVM is going to bring

Maybe it's a case having too much cash burning holes in pockets - or Babidge's follies

[Master98]

looks like MVM is a black hole, loss maker, expect back to positive EBITDA FY25, they buy this plant just want to maintain good relationship with china partner.
i quote my own post.

[Arbroath]

FWIW I'll have a stab at FY22 even though management are too scarred to attempt it publicly (actually think David wants to preserve his credibility for when they make a FY23 forecast next year)

H1 Revenue $600-625m + c. $40m for MVM = $640-665m (in keeping with marginally lower guidance but is actually about a 10% fall in core revenue on H1 '21)
H2 Revenue $650-675m + c. $40m for MVM = $690-715m (in keeping with significantly higher guidance for H2 and is a decent uplift in core business on H2 '21)

Total Revenue $1.33-1.38b (about a 5-8% revenue uplift on FY21 excluding MVM)
Ebitda margin around 20% so $260-275m ebitda
Npat around $160-170m after higher tax rate of c. 38%
EPS c. 19 cents per share = PE of 32 at $6.08. Ex-cash PE is c. 27x and Ex-MVM and US losses the core business PE still about 20x

The real action though is around whether they can demonstrate that momentum is building for FY23 to be the real recovery year. Valuations on FY22 earnings aren't that material to me. If they tangibly start to turn this around then they'll recover to $9-10 pretty fast once that is apparent. If not, they'll head towards Beagle's PE based valuation in the $4 range.

[winner69]

Arbroath - for what's it worth my calculated guess for F22 sales is 1,360m

some 660m in H1 and 700m in H2

Not as optimistic as you re npat - my calc said about 130m or eps 17.5 cents .... current PE 34

I think we are both about right --- a bright future built into current share price (or a big takeover premium)

[couta1]

There was an article in the Herald today titled, Dont retire poor-How to avoid hardship in your twilight yrs. My first thought was dont invest in the A2 milk company as it has been one of the greatest examples of wealth destruction you will ever see, great for the few early investors but between the current price and $21 some serious damage has been done to punters financial status to varying degrees including instos like Blackrock who bought around double the current price plus some. Manipulating/gameplaying instos like UBS and Citi have probably done pretty well with their shorting operation but the vast majority have been losers for sure.
I sold my latest holding after reading the report(Yes for a good sized loss) I thought it was the most uninspiring/flat/ stale old cracker report I'd read in ages.
Holding and waiting for a T/O was the only reason to keep holding and I decided against that as it will probably never happen but might be wrong.
Of course go big or go home types like myself go down hardest but it is what it is.
I don't know where the sp is heading over the next year but its road back to $21 I doubt will ever happen, should get back to double digits if things go well but as one of the most staunch holders/traders of the stock since 2013 im out for good, even my extremely frugal lifestyle is no match for the damage this thing can do.

[Master98]

There was an article in the Herald today titled, Dont retire poor-How to avoid hardship in your twilight yrs. My first thought was dont invest in the A2 milk company as it has been one of the greatest examples of wealth destruction you will ever see, great for the few early investors but between the current price and $21 some serious damage has been done to punters financial status to varying degrees including instos like Blackrock who bought around double the current price plus some. Manipulating/gameplaying instos like UBS and Citi have probably done pretty well with their shorting operation but the vast majority have been losers for sure.
I sold my latest holding after reading the report(Yes for a good sized loss) I thought it was the most uninspiring/flat/ stale old cracker report I'd read in ages.
Holding and waiting for a T/O was the only reason to keep holding and I decided against that as it will probably never happen but might be wrong.
Of course go big or go home types like myself go down hardest but it is what it is.
I don't know where the sp is heading over the next year but its road back to $21 I doubt will ever happen, should get back to double digits if things go well but as one of the most staunch holders/traders of the stock since 2013 im out for good, even my extremely frugal lifestyle is no match for the damage this thing can do.
Hi couta1, look forward and put this behind.

[couta1]

Hi couta1, look forward and put this behind. For sure mate, its been a year from Hades to say the least and a lesson for others I guess that all that glitters doesn't always glitter.

[flyinglizard]

Two questions:

- For China label section, the FY21 annual report shows that the first time, H1 sales are more than H2 (page 13.) that implies the China label sales could be slowing down too (the historical data shows H1 sales normally lower than H2)


- AFTER ACQUIRISION OF MVM, the depreciation of plants and equipment nearly double due to increase in fixed assets items, in accounting terms that it will looks bad for NPAT. Not sure the amount, coz we do not know the fixed assets of MVM. Anybody know what the depreciation amount for H1 FY22?

[flyinglizard]

FWIW I'll have a stab at FY22 even though management are too scarred to attempt it publicly (actually think David wants to preserve his credibility for when they make a FY23 forecast next year)

H1 Revenue $600-625m + c. $40m for MVM = $640-665m (in keeping with marginally lower guidance but is actually about a 10% fall in core revenue on H1 '21)
H2 Revenue $650-675m + c. $40m for MVM = $690-715m (in keeping with significantly higher guidance for H2 and is a decent uplift in core business on H2 '21)

Total Revenue $1.33-1.38b (about a 5-8% revenue uplift on FY21 excluding MVM)
Ebitda margin around 20% so $260-275m ebitda
Npat around $160-170m after higher tax rate of c. 38%
EPS c. 19 cents per share = PE of 32 at $6.08. Ex-cash PE is c. 27x and Ex-MVM and US losses the core business PE still about 20x

The real action though is around whether they can demonstrate that momentum is building for FY23 to be the real recovery year. Valuations on FY22 earnings aren't that material to me. If they tangibly start to turn this around then they'll recover to $9-10 pretty fast once that is apparent. If not, they'll head towards Beagle's PE based valuation in the $4 range.

The revenue is still going down, they have more inventory to write down during H1 FY 22. MVM plants and equipment depreciation!!! and China label sales slow down !!! you cannot ignore the higher and higher shipping cost, COGS will be higher and marginal cost higher.

[aperitif]

There was an article in the Herald today titled, Dont retire poor-How to avoid hardship in your twilight yrs. My first thought was dont invest in the A2 milk company as it has been one of the greatest examples of wealth destruction you will ever see, great for the few early investors but between the current price and $21 some serious damage has been done to punters financial status to varying degrees including instos like Blackrock who bought around double the current price plus some. Manipulating/gameplaying instos like UBS and Citi have probably done pretty well with their shorting operation but the vast majority have been losers for sure.
I sold my latest holding after reading the report(Yes for a good sized loss) I thought it was the most uninspiring/flat/ stale old cracker report I'd read in ages.
Holding and waiting for a T/O was the only reason to keep holding and I decided against that as it will probably never happen but might be wrong.
Of course go big or go home types like myself go down hardest but it is what it is.
I don't know where the sp is heading over the next year but its road back to $21 I doubt will ever happen, should get back to double digits if things go well but as one of the most staunch holders/traders of the stock since 2013 im out for good, even my extremely frugal lifestyle is no match for the damage this thing can do.

Emotion, be it fear or greed, is the greatest enemy of the ordinary investor

12900

[Ferg]

While we are throwing around forecasts, given Management won't do it, I am picking a fall in H1 revenue with a slight rebound in H2 over H1, giving the following for FY22:

Revenues $1.18b
GM 50%
NPAT $130m

17.4c EPS assuming no change in shares.

[couta1]

Emotion, be it fear or greed, is the greatest enemy of the ordinary investor

12900 A2 was actually my lifestyle for many yrs, due to the avg volume I held it was like a full time job on the trading side of things and up until this time last yr I had done extremely well. The biggest mistake I made was underestimating how far it was going to go down this time(It had been down 35%ish in the two previous yrs) so I like many others thought it would turn around at this level. No-one even the most staunch TA advocates would have believed it would go to where it is now a yr ago. My strategy of selling for a loss and buying back more had served me well for many yrs but of course in hindsight we know this time was different so continuing to sell for a loss and buying back in just lead to huge losses becoming even larger, at the end of the day waiting for it to return to $20 was not an option this time around. I never went through much Fear or Greed to be honest and as I said it was a lifestyle but yes in general your squiggly worm diagram holds true.

[winner69]

Arbroath - for what's it worth my calculated guess for F22 sales is 1,360m

some 660m in H1 and 700m in H2

Not as optimistic as you re npat - my calc said about 130m or eps 17.5 cents .... current PE 34

I think we are both about right --- a bright future built into current share price (or a big takeover premium)

……but David probably holding the good stuff back and my 130m calc guess will turn out to be 205m

[Beagle]

FWIW I'll have a stab at FY22 even though management are too scarred to attempt it publicly (actually think David wants to preserve his credibility for when they make a FY23 forecast next year)

H1 Revenue $600-625m + c. $40m for MVM = $640-665m (in keeping with marginally lower guidance but is actually about a 10% fall in core revenue on H1 '21)
H2 Revenue $650-675m + c. $40m for MVM = $690-715m (in keeping with significantly higher guidance for H2 and is a decent uplift in core business on H2 '21)

Total Revenue $1.33-1.38b (about a 5-8% revenue uplift on FY21 excluding MVM)
Ebitda margin around 20% so $260-275m ebitda
Npat around $160-170m after higher tax rate of c. 38%
EPS c. 19 cents per share = PE of 32 at $6.08. Ex-cash PE is c. 27x and Ex-MVM and US losses the core business PE still about 20x

The real action though is around whether they can demonstrate that momentum is building for FY23 to be the real recovery year. Valuations on FY22 earnings aren't that material to me. If they tangibly start to turn this around then they'll recover to $9-10 pretty fast once that is apparent. If not, they'll head towards Beagle's PE based valuation in the $4 range.

Looks like a really tough gig for ATM for the foreseeable future. Old inventory still hanging around, declining birth rates in China, daigou sales channel is dead for the foreseeable future, rise and rise of nationalistic fervor in China and CCP extoling buy China made, unstable and deteriorating geopolitical environment, Delta variant outbreaks set to create real headaches with shipping availability, costs and distribution, losses from MVM, reputational damage to try and restore with all the massive marketing costs that implies and last but not least many shareholders now feeling disenfranchised. I think investors are wise to take make a very sober assessment of the risks here.

Yes ATM will throw a heck of a lot at trying to stabilize the ship with personnel and marketing, (because there is nothing else they can do), but there are no guarantees of success.

[BlackPeter]

Emotion, be it fear or greed, is the greatest enemy of the ordinary investor

12900

The good old cyclical stock - and yes, if ATM turns out to be one of them, you are right - now is perhaps the point of maximum financial opportunity.

Problem is just - we only will know with hindsight, and it well could be one of the less favorable shapes.

Not saying it will turn out like WYN, but it might end up like FSF:

12901

Are they at the point of maximum opportunity as well?

Personally I would not put my money onto this horse ...

[winner69]

BP mentions Fonterra ……chart reflects long term under performance, from both operational and selling/marketing point of views

It’s a worry that A2 seem hell bent on morphing into a Fonterra look alike …..is buying all that stainless steel a good thing

[Balance]

BP mentions Fonterra ……chart reflects long term under performance, from both operational and selling/marketing point of views

It’s a worry that A2 seem hell bent on morphing into a Fonterra look alike …..is buying all that stainless steel a good thing

Fonterra’s biggest misfortunes & losses have been its misadventures investing overseas - from China to South America, it has lost billions of dollars.

If ATM’s strategy review in October comes out with a strategy of investing in assets overseas, especially in China, it’s timbeeeerrrrrr time!

Get the hell out of the way.

[hyinvest]

I did an analysis earlier which suggests normalised earnings is closer to 23 cps. You need to dive into the numbers and see there were a number of one off items that should be adjusted. Normalised earnings removes one off anomalies to get a better understanding of the base business.

post is here (https://www.sharetrader.co.nz/showthread.php?2318-ATM-A2-Milk-Corporation-Limited&p=903924&viewfull=1#post903924)

Many thanks Ferg for sharing your analysis. Great work.

[winner69]

Fonterra’s biggest misfortunes & losses have been its misadventures investing overseas - from China to South America, it has lost billions of dollars.

If ATM’s strategy review in October comes out with a strategy of investing in assets overseas, especially in China, it’s timbeeeerrrrrr time!

Get the hell out of the way.

That’s what worries me balance ….they seem quite keen going down that path

[winner69]

From AR A2 “Contributed to Synlait’s conversion of its current coal boiler to biomass fuel”

Wonder how much they threw in the pot

[hyinvest]

As Peter Lynch said "Sometimes it’s always darkest before the dawn, but then again, other times it’s
always darkest before pitch black."

[couta1]

As Peter Lynch said "Sometimes it’s always darkest before the dawn, but then again, other times it’s
always darkest before pitch black." Quite the paradox that quote, for new punters the dawn is about to breakforth but for the battle wounded the night looks far from over and could get darker yet.

[Habits]

While we are throwing around forecasts, given Management won't do it, I am picking a fall in H1 revenue with a slight rebound in H2 over H1, giving the following for FY22:

Revenues $1.18b
GM 50%
NPAT $130m

17.4c EPS assuming no change in shares.

Would suggest a SP below 4 dollars, PE still more than 20 times at that level. So at 6 dollars it is a Sell

[Ggcc]

Luckily this is a share trader forum and not a hold for longterm forum. People generally do better holding than trading. Although with this share who knows. Just be aware most people here are traders and not longterm holders. DYOR

[couta1]

Luckily this is a share trader forum and not a hold for longterm forum. People generally do better holding than trading. Although with this share who knows. Just be aware most people here are traders and not longterm holders. DYOROf course you can do both as I did but yes generally long is best as I have discovered the hard way with other shares, however going long at $6 or below is hugely different than staying long at $20.

[aperitif]

The good old cyclical stock - and yes, if ATM turns out to be one of them, you are right - now is perhaps the point of maximum financial opportunity.

Problem is just - we only will know with hindsight, and it well could be one of the less favorable shapes.

Not saying it will turn out like WYN, but it might end up like FSF:

12901

Are they at the point of maximum opportunity as well?

Personally I would not put my money onto this horse ...

Haha, in no way is it cyclical.

Comparing ATM to FSF is first level thinking, just because they both sell dairy products. Go away and study both business models and rethink your position.

Being capital light is both a strength and weakness.

[winner69]

A2 sales history below - annual totals at each half year (ie rolling two halves)

a bright future needs one of those hockey sticks patterns - invariably those never turn into reality

[Ggcc]

A2 sales history below - annual totals at each half year (ie rolling two halves)

a bright future needs one of those hockey sticks patterns - invariably those never turn into reality
I think the SP might head lower in the short term. I won't be increasing my current holding, but will look into it if things are on the up. I am still positive about the longterm, as COVID was their real reason they went downhill. Of course management did enjoy the ride, sitting in the passenger seat before and during the pandemic with their eyes closed and hopefully they will learn from this mistakes, as what Fletcher Building learnt. They need to prove they are on top of things for me to double down. Currently A2 is under 5% of my portfolio

[aperitif]

A2 was actually my lifestyle for many yrs, due to the avg volume I held it was like a full time job on the trading side of things and up until this time last yr I had done extremely well. The biggest mistake I made was underestimating how far it was going to go down this time(It had been down 35%ish in the two previous yrs) so I like many others thought it would turn around at this level. No-one even the most staunch TA advocates would have believed it would go to where it is now a yr ago. My strategy of selling for a loss and buying back more had served me well for many yrs but of course in hindsight we know this time was different so continuing to sell for a loss and buying back in just lead to huge losses becoming even larger, at the end of the day waiting for it to return to $20 was not an option this time around. I never went through much Fear or Greed to be honest and as I said it was a lifestyle but yes in general your squiggly worm diagram holds true.

You’ve essentially just validated my point

[Rawz]

The ole ATM thread. Still racking up the comments and views. By far the most talked about stock on sharetrader.

Wanted to say thanks to couta1 for sharing his ATM story. This thread always has numerous 'guests' viewing the page and I bet some are young investors in their 20s that don't want to create a profile and post, but will certainly be taking a lot from this website just by reading the comments. You being so upfront and honest with your story, especially around losing $$$ may help someone in the future avoid they same fate on other stocks. It's certainly something I have taken a mental note on and will try learn from.

aperitif- thanks for being the resident ATM bull taking on some of the ST legends. Certainly helps generate discussion.

I've only ever known red ink on ATM personally. By memory, bought in at $19 and sold at $16. Small amount. Consider myself lucky. Sold out because of some very loud barking from Beagle, Balance and Bull after downgrade 2 (think they called themselves the B team?). I had never owned a stock going through multiple downgrades. I figured management understood the company and downgraded then that was it. How many downgrades was it in the end? 4 or 5? If it wasnt for sharetrader I would have been a possum in the headlights for at least another downgrade before I figured out what was going on.

Currently I am (like almost everyone else) watching and waiting in the wings to pick up some near the bottom. Where that is?? Nobody knows.. Good luck all. :)