ATM - A2 Milk Corporation Limited

[Sideshow Bob]

https://www.fool.com.au/2023/01/28/a2-milk-shares-are-up-30-in-a-year-is-this-price-sweet-or-sour/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+30+J anuary+2023

[winner69]

https://www.fool.com.au/2023/01/28/a2-milk-shares-are-up-30-in-a-year-is-this-price-sweet-or-sour/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+30+J anuary+2023

Extract:
Looking at the analyst ratings collated by Commsec about the business, three rate A2 Milk shares as a buy, four rate it as a hold, and five rate it as a sell.

Jeez unbelievable that 5 analysts rate it as SELL ….what the heck are they on

[limmy]

If the reserve bank raise interest rates by another 0.5% in Feb, you might get more analysts rating it as a SELL

[ralph]

https://www.bbc.com/news/world-asia-china-64457367

https://www.bbc.co.uk/news/world-asia-china-64457367 may help sales in 9 months

[Lease]

If the reserve bank raise interest rates by another 0.5% in Feb, you might get more analysts rating it as a SELL

I don't think so. ATM is a net cash company which have no burden of finance cost. Rates hike won't have impact.

[Baa_Baa]

I don't think so. ATM is a net cash company which have no burden of finance cost. Rates hike won't have impact.

Lease, I don't think so either, it's just lingering doubts from those who have failed to realise that ATM bottomed out and turned the corner many months ago, completely revised their distribution and sales channels and are on track to record results, very profitable, along with no debt, a massive cash hoard giving them choices, a share buyback less than halfway through and an SP that is UP a massive percentage from the recent lows. Almost all the company bashers have gone now and it's still not too late to join the recovery.

Sentiment expressed on discussion groups like this, are quite often not reflective of market sentiment, or reality.

[sb9]

SAMR registration seem to be in the last stage of finalisation. Nice one, onwards and upwards from hereon!

[carrom74]

SAMR registration seem to be in the last stage of finalisation. Nice one, onwards and upwards from hereon!

Just crossed the yearly high of $7.77 briefly. I guess the wording in the synlait”s announcement is making all the difference

[sb9]

Just crossed the yearly high of $7.77 briefly. I guess the wording in the synlait”s announcement is making all the difference

Nice announcement before HY results due out on Mon (20th).

[Sideshow Bob]

https://www.nzx.com/announcements/406946

Revenue up 18%, Profit 23%.

Results commentary:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/406946/388833.pdf

[sb9]

https://www.nzx.com/announcements/406946

Revenue up 18%, Profit 23%.

Results commentary:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/406946/388833.pdf

Impressive performance under challenging market conditions.

[Sideshow Bob]

Impressive performance under challenging market conditions.

Especially when the Chinese IMF market declined 11% in volume/12.5% in value.

[Lease]

Very pleased H1 results. The CEO is great!

[winner69]

Forget the past …this is the new reformed A2

[Baa_Baa]

Excellent results, hopefully the market agrees and carries on with re-rating ATM, up 85% from it's low already. Still 40% of the buy-back to go. SAMR approval is close. USA liquid milk excellent growth, might see IMF coming on stream with the FDA exemption.

[Sideshow Bob]

22k through so far in NZ this morning.....

Waiting for the ASX to open to see what the Aussies are thinking of it.

[carrom74]

22k through so far in NZ this morning.....

Waiting for the ASX to open to see what the Aussies are thinking of it.
4.5% down. Guess it’s got to do with the decrease in the China market label in value terms 12.2%…

Or it’s A2 and it’s volatility 😀

[Lease]

4.5% down. Guess it’s got to do with the decrease in the China market label in value terms 12.2%…

Or it’s A2 and it’s volatility 

I think that 12.2% decline is for overall China market. ATM China label IMF revenue is up 43.5% and they also gain market share.

Nevertheless, I have sold all my position this morning.

[carrom74]

I think that 12.2% decline is for overall China market. ATM China label IMF revenue is up 43.5% and they also gain market share.

Nevertheless, I have sold all my position this morning.

Good call. I guess it can never reach the pre-Covid highs.with continuous decline with its biggest market, these are serious headwinds.

[carrom74]

Good call. I guess it can never reach the pre-Covid highs.with continuous decline in birth rate with its biggest market, these are serious headwinds.

[bull....]

average result , outlook bit weak. probable giving up those rally before the fact gains

[winner69]

$12.6 million inventories written down or written off seems an awful lot of spilt milk

[whatsup]

WTF is going on with ATM today a big 5% drop after 1 hour of trading now @ $682 !!

[bull....]

$12.6 million inventories written down or written off seems an awful lot of spilt milk

could have handed it out to food banks ? probably why the price keeps going down investors upset they just threw it in the bin

[TLM54]

Would be nice to see A2 out perform again but there’s so much geopolitical uncertainty with the West and China right now.

Yesterday there were plenty of headlines about US threatening consequences for China if they supply arms to Russia. Imagine what western sanctions on China will mean for A2.

The long term outlook is just as volatile as the short term.

[ralph]

Would be nice to see A2 out perform again but there’s so much geopolitical uncertainty with the West and China right now.

Yesterday there were plenty of headlines about US threatening consequences for China if they supply arms to Russia. Imagine what western sanctions on China will mean for A2.

The long term outlook is just as volatile as the short term.

And New Zealand in general ,we would be screwed by the yanks again .

[winner69]

Price down sine results announced

But let’s not forget it’s still 64% higher than 52 week low

Pretty good

[whatsup]

Off the bottom for now, please keep it up overall I didnt think the recent result was too bad so cannot understand the gloom going forward !

[kizame]

Off the bottom for now, please keep it up overall I didnt think the recent result was too bad so cannot understand the gloom going forward !

I think the gloom going forward is that it already had better growth built into the shareprice, the PE is rather lofty for low double digit growth.

I think the best strategy is to watch for new leaders emerging from whatever mess we are presumably heading toward. Cash is king imop.

[sb9]

Strong close on ASX at 6.46, cent shy of day’s high. Equates to 7.10 here.

Let’s see what tmrw brings..

[sb9]

Buyback mode activated and in full swing.

[sb9]

Just got upto speed with BUB results released end last month. What a shambolic performance, wouldn't like to be holder in that outfit. So much for getting first approval to supply to US market last year and that Corporate daigou once called A2 Andy jumped on their side and everyone thought BUB is the next big thing in IF market. Wouldn't touch it with a barge pole after looking at their recent numbers.

[Sideshow Bob]

https://www.nzx.com/announcements/408581

Buyback now finished....average price $6.87

[winner69]

$150m well spent?

[TLM54]

For the amount of buying they did above $7, it’s incredible they couldn’t stabilise and establish a floor above $7, even for the short term.

Anyway, congrats to all the insiders who used this liquidity injection to exit on their positions at the expense of the company’s cash reserves.

[winner69]

For the amount of buying they did above $7, it’s incredible they couldn’t stabilise and establish a floor above $7, even for the short term.

Anyway, congrats to all the insiders who used this liquidity injection to exit on their positions at the expense of the company’s cash reserves.

And made a few brokers happy

[Baa_Baa]

For the amount of buying they did above $7, it’s incredible they couldn’t stabilise and establish a floor above $7, even for the short term.

The purpose of the share buyback has nothing to do with controlling the share price, in fact it is deliberately conducted in a manner that does not significantly affect the share price.

Shareholders should be happy that there is now $149 million worth of shares that have been cancelled, as they all now own a larger percentage of the company.

[winner69]

Bad day for the white gold stocks ……both SML and ATM down 5%

Could be a rough week

[Toddy]

What do the charts indicate where the next support level is for ATM?

[carrom74]

https://www.rnz.co.nz/news/lobbying/486527/how-well-connected-lobbyists-ask-for-and-receive-urgent-meetings-sensitive-information-and-action-on-law-changes-for-their-corporate-clients

Interesting read- so A2 involves lobbyists to press their case to gain FDA approval… which was a success, which makes me wonder whether they would be doing the same with the Chinese regarding SAMR… curious enough our foreign minister is on the two day trip to Beijing.

[bull....]

china has also recently installed new national mandatory standards for imported dairy products and infant formula that impose a burden on manufacturers such as A2 Milk. The dual-listed is still waiting for its registration to be officially approved and has been stocking inventory in the meantime.“Timing is uncertain and subject to State Administration for Market Regulation (SAMR) approval. If this approval isn’t achieved, it would impact A2M’s China label infant formula sales ([roughly] 30 per cent of 2022 group sales),” Moore said.

guess the same issue for synliat in there registration

https://www.theage.com.au/business/companies/chinese-parents-love-a2-milk-s-infant-formula-do-investors-love-it-too-20230323-p5cusy.html

[bull....]

subtle downgrade by atm today

As a result, the Company expects revenue growth to be at the low end of its previous expectations

https://www.nzx.com/announcements/410403

[winner69]

subtle downgrade by atm today

As a result, the Company expects revenue growth to be at the low end of its previous expectations

https://www.nzx.com/announcements/410403

I reckon that’s a $20m/$25m lower ebitda than previous quidance

[bull....]

I reckon that’s a $20m/$25m lower ebitda than previous quidance

certainly be something but maybe they are looking to reduce this by squeezing synliat more

a2MC is in discussions with Synlait regarding the allocation of certain one-off production/supply chain and other related costs between the two companies

[bull....]

guess the possibiliity sml go bust wont be helping atm there % s/h would have to be written off

[Baa_Baa]

guess the possibiliity sml go bust wont be helping atm there % s/h would have to be written off

The possibility that SML might go bust is very very low, but the possibility that Bright Dairy and A2 Milk let that happen is minuscule. Combined, or even A2 by itself, could write out the cheque for the SML takeover, they have such a huge cash hoard. It's only important because SML have the key supply agreement to A2 and the SAML. Remember SML are majority owned by the China government, you reckon they'll let it go bust? Yeah right.

[ralph]

The possibility that SML might go bust is very very low, but the possibility that Bright Dairy and A2 Milk let that happen is minuscule. Combined, or even A2 by itself, could write out the cheque for the SML takeover, they have such a huge cash hoard. It's only important because SML have the key supply agreement to A2 and the SAML. Remember SML are majority owned by the China government, you reckon they'll let it go bust? Yeah right.
Totally true amongst all the hysteria , they are small change for atm & the chinese but needed for their capabilities.

[Balance]

Totally true amongst all the hysteria , they are small change for atm & the chinese but needed for their capabilities.

Agreed.

The Chinese invest with a 50 years time horizon as opposed to the short sighted quarter by quarter horizon of many a Western company.

Reason why an Asian company is now NZ’s largest private forestry owner. Remember how we used to have Fletcher Forests, NZ Forest Products, Carter Holt and Evergreen Forests dominating the NZX?

[Baa_Baa]

Agreed.

The Chinese invest with a 50 years time horizon as opposed to the short sighted quarter by quarter horizon of many a Western company.

Reason why an Asian company is now NZ’s largest private forestry owner. Remember how we used to have Fletcher Forests, NZ Forest Products, Carter Holt and Evergreen Forests dominating the NZX?

China wants (has) an ownership stake in the whole value chain, end to end. When they decide what value chains they want a stake in, well, they go after it and we can all see ATM and SML are part of that, as far as dairy products are concerned. Anyone can research who really owns SML and a decent chunk of ATM as well. But do they do that research? Or just post nonsense on a public discussion group about something they don't really know much about, or own but might want to own, if the price is right for them. So transparent it's laughable.

Follow the money, it doesn't matter where it comes from. Align your horizons to the owners, you'll do very well, as they will.

[hesiod]

Don't forget Fonterra.

[bull....]

The possibility that SML might go bust is very very low, but the possibility that Bright Dairy and A2 Milk let that happen is minuscule. Combined, or even A2 by itself, could write out the cheque for the SML takeover, they have such a huge cash hoard. It's only important because SML have the key supply agreement to A2 and the SAML. Remember SML are majority owned by the China government, you reckon they'll let it go bust? Yeah right.

nice to see you thinking and yes atm is likely looking to buy 1 or some of sml factories. as stated very publically last yr atm wants to own factories and that ties in with sml saying there will be no cap raising

[Sideshow Bob]

https://www.nzx.com/announcements/411090

Musical chairs.....

[carrom74]

https://www.nzx.com/announcements/411090

Musical chairs.....

More like perform or perish…

[bull....]

big changes coming after synliat warning ?

[BlackPeter]

This is a post from KW in the other forum ... and I think its worthwhile to repeat that here:



author=KW

Maybe everyone was too quick to judge ... :(

Back in Dec 2019 Jayne Hrdlicka said "she had not anticipated the amount of travel involved when she took up the role 18 months ago... The Board and I agreed that this next phase is going to be too difficult to manage alongside my other commitments whilst also managing the health and wellness priorities of my family and me."

Turns out her husband was given a terminal cancer diagnosis in Nov 2019. He has now passed.
https://www.afr.com/markets/equity-markets/virgin-boss-hrdlicka-to-take-personal-leave-20230508-p5d6t2


Anybody involved in the Jayne Hrdlicka bashing at that time is hopefully ashamed.

... it appears that tragic things happen even to CEO's ...

I think we should send her and her family our condolences ... and maybe learn that sometimes family reasons are not just a cover up when senior staff is resigning.

[Ggcc]

This is a post from KW in the other forum ... and I think its worthwhile to repeat that here:



Anybody involved in the Jayne Hrdlicka bashing at that time is hopefully ashamed.

... it appears that tragic things happen even to CEO's ...

I think we should send her and her family our condolences ... and maybe learn that sometimes family reasons are not just a cover up when senior staff is resigning.
If it was mentioned in her resignation that her husband was sick everyone would have reacted that way and hoped her for the best. But it wasn’t

Sad for her loss or anyone who has a loss like that.

[Baa_Baa]

If it was mentioned in her resignation that her husband was sick everyone would have reacted that way and hoped her for the best. But it wasn’t

Sad for her loss or anyone who has a loss like that.

I think many people just reacted to the negative, they didn't take in account her reason for leaving, spending time with her family, the health and wellbeing of them, which in hindsight did tell us something albeit cryptic.

Unfortunately though she had already destroyed shareholder / Board relations prior to that with disposal of her sign-on shares, millions of $ worth, so it's not surprising imo that investors reacted badly to her resignation and didn't give a second thought to the underlying message that some sh1t was going down in her life and her family.

A lot of what she wanted to do seemed to make sense at the time, but I think she was battling the Board ego's who didn't want to upset the high double digit growth/earnings. And she had put shareholders on the defence. Well, we now know how that worked out.

[Ggcc]

I think many people just reacted to the negative, they didn't take in account her reason for leaving, spending time with her family, the health and wellbeing of them, which in hindsight did tell us something albeit cryptic.

Unfortunately though she had already destroyed shareholder / Board relations prior to that with disposal of her sign-on shares, millions of $ worth, so it's not surprising imo that investors reacted badly to her resignation and didn't give a second thought to the underlying message that some sh1t was going down in her life and her family.

A lot of what she wanted to do seemed to make sense at the time, but I think she was battling the Board ego's who didn't want to upset the high double digit growth/earnings. And she had put shareholders on the defence. Well, we now know how that worked out.

I do stand corrected about her family issues which at the time I suppose I neglected to read. I do feel sad about someone losing someone so close to them. Condolences Jane

[Baa_Baa]

I do stand corrected about her family issues which at the time I suppose I neglected to read. I do feel sad about someone losing someone so close to them. Condolences Jane

All corporate listed company announcements are carefully crafted to obfuscate the underlying meaning, so as not to alarm shareholders, but all it does it actually does is create uncertainty and doubt which is the opposite of what they intended! It would be refreshing if company's just told the truth, plain and simple, like 'our CEO resigned because her husband is unwell and needs support that she can't give as well as meeting the demands of being CEO'.

That said, she really did smash shareholder confidence in her and the board, by selling her sign-on shares for millions, with the excuse it was to pay for 'tax expenses'. Even if it was true, it screwed her credibility and put the Board under a lot of pressure for not having considered that the CEO might just sell her millions as soon as she got them.

So, no matter what her reason for resigning, however obfuscated, she and the Board were already not trusted by shareholders.

What came after that was a complete disaster, not solely of her making, but the Board do still have class action law suits to answer to, they appear to have really screwed up and will have to defend why they didn't.

[aperitif]

https://www.cfe-samr.org.cn/sldt/sdxx/yyepfrfcppf_180/pjyj_182/202306/t20230605_4921.html

SAMR Approval

[carrom74]

https://www.cfe-samr.org.cn/sldt/sdxx/yyepfrfcppf_180/pjyj_182/202306/t20230605_4921.html

Finally about time!

Hopefully when the announcement comes out tomorrow,it will throw more light on the duration of the license/registration etc,

[gr8teful]

Finally about time!

Hopefully when the announcement comes out tomorrow,it will throw more light on the duration of the license/registration etc,

It does: SAMR approves re-registration of a2MC's China label IMF - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/412552)

"SAMR’s approval will allow Synlait to manufacture 至初® for a2MC until September 20271" This should make Market happy!

[whatsup]

It does: SAMR approves re-registration of a2MC's China label IMF - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/412552)

"SAMR’s approval will allow Synlait to manufacture 至初® for a2MC until September 20271" This should make Market happy!

20271 thats a very long time, will there still be humans on planet earth in that year ?

[winner69]

Did A2 destroy Bubs China business or is the China IF market completely stuffed

Bulbs sales to China hardly anything at the moment …..there’s just too much stock in warehouses over there…..5 years worth

From Bubs the other day -

As previously reported, there remains a significant amount of inventory held in trade, predominantly Bubs Supreme. This product was developed for AZ Global and Alice for exclusive distribution into China. Bubs Australia understands there is more than 5 years of Bubs Supreme finished goods inventory held in multiple warehouses, based on the current rate of sale.

[Filthy]

Did A2 destroy Bubs China business or is the China IF market completely stuffed

birth rate still trending down in China; 6.77 for every 1,000 people, down from 10.41 in 2019

https://www.ft.com/content/541008b7-4294-485b-a56d-3e4a9d34c198

might be a market wide problem. but A2 is surely better than Bubs? so maybe not too bad eh.

[rollypolly]

it does not matter if the birth rate is down. In 2022, around 9.56 million babies were born in China. The number of births has decreased gradually from 17.86 million in 2016.

That number is already more than NZ population. That is only for newborn. What about the year 1 to year 5? One has to understand why A2 milk failed badly. It is all due to covid. Australian closed their door and the Chinese students went home. A2 rely on the Chinese students to sell on the daigou market. The Chinese students were earning big bucks before the covid lockdown.

So far, there are 40,000 China students in Australia and it is set to grow in Australia. There are Chinese students coming to New Zealand as well. That will be another daigou channel.
Do you think the company, A2 milk, is not tempted to use those students again? A2 milk is different from honey. There are so many types of honey in the world, however, there is only one A2 milk.

The challenge both the buyer/seller faced is that we kept hearing horrible news about China. Nothing good comes out from China until Chris Hipkins recent trips.
A2 is playing the long game and I believe their sales will grow.

[BlackPeter]

....

A2 milk is different from honey. There are so many types of honey in the world, however, there is only one A2 milk.

...

Nice PR line - but I hope you realize that this is absolute non-sense? There are so many different milk sorts around, and even A2 milk can be sold by any Tom, Dick & Harry.

ATM might have A2 in their name, but it is not even trademarked. Its similar to Genesis Energy. They have the "Energy" in their name, but everybody is allowed to produce and sell the same stuff as they please. No advantage for them as well.

Anybody can hold A2 cow herds and sell their output as A2 milk .... and everybody does. As well, most of the milk sold from other animals (like sheep, goat) is A2 anyway.

A2 is just one milk protein which neither ATM nor anybody else holds IP for - it is just naturally occurring.

[Filthy]

it does not matter if the birth rate is down. In 2022, around 9.56 million babies were born in China. The number of births has decreased gradually from 17.86 million in 2016. That number is already more than NZ population. That is only for newborn. What about the year 1 to year 5? One has to understand why A2 milk failed badly. It is all due to covid. Australian closed their door and the Chinese students went home.

Yes, 9.56M still a huge number; but it will be all relative and based on a percentage market share vs competitors. Ultimately, there is now almost half as many babies (~customers) to sell too (in total) than there used to be. market is forward looking as well; so as this continues to trend down (and get worse), the market will likely take this into account. This will also have a flow-on effect to years 1-5 (so will be prolonged pain). totally agree with your thoughts around the daigou sales channel though; which has also had a huge impact.

[carrom74]

Also it’s worth noting that in terms of competition… companies competing in this reduced market is also reducing. Abbots left with about 4% market share. The Chinese food regulation is very tough these days.Of about 200 applications towards SAMR only about two dozen would be approved (read somewhere must be NZ herald). It’s a tough market out in China and A2 is one of those very few companies which actually grew its market share.

[BlackPeter]

...

That number is already more than NZ population. That is only for newborn. What about the year 1 to year 5? One has to understand why A2 milk failed badly. It is all due to covid. Australian closed their door and the Chinese students went home. A2 rely on the Chinese students to sell on the daigou market. The Chinese students were earning big bucks before the covid lockdown.

...


Well, sure - Covid was the trigger for last times failure. However - Covid only could trigger the failure because management lacked quite basic management skills and the board was so deep asleep (or probably worse - drunk from the hype pushing the SP into the stratosphere), that they didn't bother to ask the most basic questions like - do we understand and manage our most important sales channel?

You need to understand whether you are investing into a lottery (which might bring some returns as long as Fortuna is smiling), or whether you invest into a professionally managed company with a board which identifies risks and problems before the earnings went already over the cliff.

Covid did show us that ATM's management and oversight is (well, used to be) substandard. Sure - Covid seems to be behind us (or we learned to live with the fatality rate), but what makes you believe that ATM is these days run by a better board and management?

Clearly a high risk investment, and not sure whether the potential returns are sufficient likely to compensate for the risks.

[billkiapi]

The risk for ATM and any other "foreign" infant nutrition brand is the domestic industry has become very strong, and good (learning from their overseas investments in plants) and the CCP is promoting local food. With secondary cities becoming the hotspot for births, the risk is they will do the patriotic thing and trust the CCP to keep them safe by buying local. Yili, Feihe, Meng Nui seem to be the real threat here.

[Baa_Baa]

The risk for ATM and any other "foreign" infant nutrition brand is the domestic industry has become very strong, and good (learning from their overseas investments in plants) and the CCP is promoting local food. With secondary cities becoming the hotspot for births, the risk is they will do the patriotic thing and trust the CCP to keep them safe by buying local. Yili, Feihe, Meng Nui seem to be the real threat here.

It's worth looking into the ownership of A2 Milk company, and its suppliers of IF, you'll find that that goes a long way up the chain into CCP government. It could be argued that A2 Milk is a 'local' supplier. That could all change of course, but there are no signs that it will. A2 continue to grow market share in China.

[winner69]

Does this have any ramifications or just a bit of a nuisance -

a2 Milk Company loses trademark battle with Theland

The a2 Milk Company has lost a trademark battle after it tried to stop Chinese-owned Theland from using A2 in its infant formula brand. In 2018, Milk New Zealand Dairy filed an application to register two trademarks for its Theland infant formula brand, both of which included A2 on it. Milk NZ is the exporting arm of the Milk New Zealand Group, which, according to its website, has 29 farms across the country under the Theland Farm Group brand.


https://businessdesk.co.nz/article/finance/a2-milk-company-loses-trademark-battle-with-theland
Prob paywalled

[rollypolly]

Nice PR line - but I hope you realize that this is absolute non-sense? There are so many different milk sorts around, and even A2 milk can be sold by any Tom, Dick & Harry.

ATM might have A2 in their name, but it is not even trademarked. Its similar to Genesis Energy. They have the "Energy" in their name, but everybody is allowed to produce and sell the same stuff as they please. No advantage for them as well.

Anybody can hold A2 cow herds and sell their output as A2 milk .... and everybody does. As well, most of the milk sold from other animals (like sheep, goat) is A2 anyway.

A2 is just one milk protein which neither ATM nor anybody else holds IP for - it is just naturally occurring.

of course, anyone can have A2 milk herd.
having the herd is one thing, production is another.

It like saying everyone can have hives that have manuka honey, but producing it, branding it is another ball game. One needs to have the volume and all the 4Ps of marketing.

If it is so easy, Fonterra would have done it ages ago, given that they have their distribution chains all line up to the factory.

[BlackPeter]

of course, anyone can have A2 milk herd.
having the herd is one thing, production is another.

It like saying everyone can have hives that have manuka honey, but producing it, branding it is another ball game. One needs to have the volume and all the 4Ps of marketing.

If it is so easy, Fonterra would have done it ages ago, given that they have their distribution chains all line up to the factory.

Funny statement. Are you sure you know what you are talking about?

Of course could have Fonterra done that - they choose initially not to go into A2, which may or may not have been a mistake.

And talking about the "production" - just in case you are collateral damage of the new science curriculum ... milk (whether A1 or A2) is produced in cows, and they know how to do that. Comes with the genes.

The processing (that's what happens after the milking) is exactly the same whether you have an A1 or an A2 cow (trust me, I know, we do have an A2 cow (a Dexter) :p; and milk her daily.

Any farmer can milk them and any milk factory can process the milk. A1 in, A1 out, A2 in, A2 out. Easy as.

Marketing does not seem to be too hard either. Just google "A2 milk" - plenty of suppliers around. My google search just delivered 9 products, only two of them related to ATM.

ATM used to have one nose ahead when the whole thing started (takes a bit of time to build up your pure A2 herds, otherwise you can't sell as A2) - but given that the average life of a producing milking cow is 6 years, this advantage is gone a long time ago.

I don't see any moat for ATM - they are just another boring dairy company with a substandard board, even if some supporters still try to pump up the hype.

[aperitif]

https://www.odt.co.nz/news/the-south-today/electric-upgrade-mataura-valley-milk

[carrom74]

https://www.japantimes.co.jp/news/2023/05/11/business/china-baby-product-firms-age-up/

An excellent article. Talks about how companies are changing their business model by almost changing their target market from babies to older population… right from diapers and other adult “vitaminised” offerings…

I am hoping A2 follow suit in china before it’s too late.

[Snow Leopard]

That explains the somewhat subtle "Makanan untuk Orang Tua" lit. "Food for Old People" here (https://appeton.com/index.php).

[Azz]

Great thread. I pulled the trigger on this about a year ago. Now even on it. This is the most random, hard to pin-down NZ stock I know of. Might be time to get out... But they have so much cash on hand. Maybe I'll stay in...

[waikare]

Great thread. I pulled the trigger on this about a year ago. Now even on it. This is the most random, hard to pin-down NZ stock I know of. Might be time to get out... But they have so much cash on hand. Maybe I'll stay in...

Ye, why are they hanging onto so much cash? The share price appears to be going nowhere, if they were to pay a dividend, it may change the outlook for many punters.

[Azz]

Ye, why are they hanging onto so much cash? The share price appears to be going nowhere, if they were to pay a dividend, it may change the outlook for many punters.

This company is a genuine enigma.

[Baa_Baa]

Ye, why are they hanging onto so much cash? The share price appears to be going nowhere, if they were to pay a dividend, it may change the outlook for many punters.

Paying a dividend is tantamount to admitting defeat of their growth ambitions. The conundrum is that they do have a very large cash balance (albeit earning significantly more interest than a year ago), but little or no signals as to what they're going to do with it.

The share buy back was a token gesture to shareholders, it really meant very little given the number shares on issue. But at least it indicates that that the Board are conscious of shareholder dissatisfaction and doing something, albeit what seems a token gesture.

This is a sign of a very lazy balance sheet, a massive cash hoard, no debt, chasing growth through expanded marketing funded by cash flows. There is no doubt in my mind that the current PE (and share price) is already anticipating growth in new markets, but we have little evidence yet that is working.

They seem a bit confused about owning the whole value chain, versus their legacy of being pure marketing and a distribution/sales channel. It seems though, that they're leaning towards the value chain, owning manufacturing, supply, distribution, sales channels.

But this transition is very difficult for investors to value while they talk like a marketing company but behave like an end to end supply chain. One is aggressive going after market share, but the other is conservative building capability. Shareholders are probably a bit confused, understandably so as ATM seem confused also about what their future story really is.

When they sort out their new identity and communicate that is with evidence that it is working, I think this will be priced at significantly more than is presently. Until then, the market will look at the PE and other metrics and say, yeah, lazy balance sheet and no clear guidance on other markets, so price is what it is.

Meanwhile, the big holders, instos and the like, will game the SP as they have done for a few years now.

[Azz]

It seems though, that they're leaning towards the value chain, owning manufacturing, supply, distribution, sales channels.

That doesn't sound good.......

[aperitif]

https://www.sydneyairport.com.au/corporate/media/corporate-newsroom/sydney-airport-traffic-performance-june-2023

[Sideshow Bob]

https://www.sydneyairport.com.au/corporate/media/corporate-newsroom/sydney-airport-traffic-performance-june-2023

Daigou sales are a fraction of that in the past. The market has moved on.

[Azz]

Great thread. I pulled the trigger on this about a year ago. Now even on it. This is the most random, hard to pin-down NZ stock I know of. Might be time to get out... But they have so much cash on hand. Maybe I'll stay in...

I sold. Now watch them rocket higher lol.

[Baa_Baa]

I sold. Now watch them rocket higher lol.

What? It's in a confirmed down trend since February, there's no rocket here, yet. When did you sell?

[Azz]

What? It's in a confirmed down trend since February, there's no rocket here, yet. When did you sell?

This week, all of them. :-)

[Azz]

I sold. Now watch them rocket higher lol.

A few times over the years, me selling my stake in a stock has precipitated the sold stock thereafter very quickly doubling or even tripling lol...!

[Baa_Baa]

A few times over the years, me selling my stake in a stock has precipitated the sold stock thereafter very quickly doubling or even tripling lol...!

Thank you then if you trigger a 2+ 3+ or more, something to look forward to. Hopefully you made a profit with your exit, it's been a lot lower than this.

[Azz]

Thank you then if you trigger a 2+ 3+ or more, something to look forward to. Hopefully you made a profit with your exit, it's been a lot lower than this.

Lol I'll be happy for any holders if my sell causes a double or triple or even better!

I came out exactly even on this one.

[limmy]

I sold. Now watch them rocket higher lol.
It's often the case, sell and the price goes up. Buy and the price drops down.

[Azz]

It's often the case, sell and the price goes up. Buy and the price drops down.

haha yep !

[Waltzing]

https://www.cnbc.com/2023/08/01/china-should-act-to-pull-sputtering-economy-back-from-brink-professor-.html

[aperitif]

First glimpse at the new China Label due to be released in December.

[silverblizzard888]

A pretty mixed stock at the moment, the positive is theres more tourist coming to build up some milk powder, and the negative is China has a slowing economy and a declining birth rate, so naturally less demand.

[silverblizzard888]

Fonterra just announced that milk prices will be taking another hit dropping from $8 to $7 due to lower demand from China, expect a hit to ATM revenues.

"Fonterra Co-operative Group Ltd today reduced its 2023/24 season forecast Farmgate Milk Price range from $7.25 - $8.75 per kgMS, with a midpoint of $8.00 per kgMS, to $6.25 - $7.75 per kgMS, with a midpoint of $7.00 per kgMS.


Fonterra CEO Miles Hurrell says the revised forecast Farmgate Milk Price range reflects ongoing reduced import demand for whole milk powder from Greater China."

[bull....]

morgans say a2 sales growth for 2nd half will be very low

[Sideshow Bob]

Normally low milk prices are good for their margins, aren't they??

[Balance]

Normally low milk prices are good for their margins, aren't they??

That’s what I thought too.

[silverblizzard888]

Normally low milk prices are good for their margins, aren't they??

Good for margins, but at the same time you're selling a lot less.

[aperitif]

14712

A glimpse at the new China Label. The true alpha here is an upgrade to English label where margins are a lot higher and possibly in the organic category. See Aptamil Essensis priced $65aud. Nevertheless, report Monday. Outlook will be catalyst along with US update/capital management.

[bull....]

morgans say a2 sales growth for 2nd half will be very low

tending to agree more each time i see china data ( what's released ) that there slowing will mean consumers trade down infant formula brands to cheaPER stuff i reckon this impacting a2 sales

[Sideshow Bob]

Market doesn't like it - down 7% this morning.

https://www.nzx.com/announcements/416640

The a2 Milk Company (“the Company”, “a2MC”) today announces a strong FY231result driven by execution of its growth strategy which is mainly focused on capturing the full potential of the China infant milk formula (IMF) market. More specifically:

1. Full year result in line with the Company’s previous guidance with double digit revenue and earnings growth
2. Result driven by strong growth in China segment with sales up 38% and record market share in China label IMF
3. China brand health reached new highs driven by record levels of marketing investment increasing by 13% to $260m
4. Total IMF sales were up over 8% in a market that declined by 14% making a2MC a top-3 share gainer in the market
5. Successful SAMR re-registration of China label IMF product provides continued access to the domestic market

These results are particularly strong considering the very challenging market conditions in China. The China IMF market, which accounts for almost 70% of a2MC’s sales, declined materially in FY23 reflecting volume declines driven by the rolling impact of fewer newborns in recent years and a decline in average selling prices due to an increase in competitive intensity.

Financial results and outlook2,3
• Revenue growth of 10.1% to $1,592.9 million- China & Other Asia segment sales up 37.9%, ANZ sales down 30.2% due to an intentional change in distribution strategy, USA sales up 27.1% and MVM sales up 9.2%- IMF sales up 8.4% with China label sales up 27.8% and English label sales down 6.1%4- Liquid milk sales in ANZ and USA up 7.1% and 27.1% respectively
• EBITDA5 up 11.8% to $219.3 million with an EBITDA to sales margin of 13.8% (up 0.2ppts)
• Net profit after tax (NPAT) including amounts attributable to non-controlling interests up 26.2% to $144.8 million with$155.6 million6 attributable to owners of the Company
• Basic earnings per share (EPS) up 28.7% to 21.2 cents
• On-market share buyback of $149.1 million completed with closing net cash7 of $757.2 million
• Despite an expected double-digit decline in the China IMF market in FY24, the Company expects to increase market share and achieve low single-digit

Group revenue growth in FY24 and an EBITDA margin broadly in line with FY23 (see full outlook statement in the ‘FY23 Results Commentary and Outlook’ announcement)

Operational highlights
• Reached new highs in China brand awareness, trial and loyalty metrics supported by new brand positioning, increased investment, higher impact integrated marketing campaigns and always-on consumer engagement
• Achieved top-3 share gainer in China IMF market overall with record market share, particularly in China label IMF in mother and baby stores (MBS) and domestic online (DOL) channels, and with China label sales exceeding English label sales for the first time in FY23 supported by growth in lower tier cities
• Received approval from China’s State Administration for Market Regulation (SAMR) for the re-registration of a2MC’sChina label IMF product a2 至初®, formulated in line with China’s new GB standards enabling continued access to the registered market that accounts for 85% of the total China IMF market (English label representing remaining 15%)

Increased English label IMF market share in the cross-border e-commerce (CBEC) channel as the number 1 share gainer, and increased market share in the combined offline-to-online (O2O) and Daigou channels
• Grew sales and improved online platform rankings in China label and English label IMF in the Double 11 and 618 key sales events with reduced promotional activity and improved market pricing
• Ramped up innovation and supported growth through new product launches in all categories
• Improved business health key indicators, including improved market pricing and trade margins supporting the distribution ecosystem, increased share of early-stage product sales, and IMF channel inventory and product freshness maintained attarget levels notwithstanding new GB product transition which is tracking to plan• Extended exclusive import and distribution partnership with China State Farm Agribusiness (CSFA) for 5 years and entered into a longer-term strategic co-operation agreement
• Achieved Enforcement Discretion and progressed long-term FDA approval process to sell IMF product in the USA and significantly reduced USA operating losses
• Accelerated supply chain transformation, including increasing raw A1 protein free milk supply, completing the in sourcingof all a2TM branded milk powder products , completing production trials for the insourcing of certain a2TM IMF branded product with manufacturing to start in 1H24, and commencing production trials for a new a2TM English label IMF range, all with Mataura Valley Milk (MVM) and new supply partners
• Advanced sustainability programmes, including commencing the electrification of MVM from 100% renewable energysources, commenced on-farm methane inhibitor feasibility study, entered into a research agreement with Lincoln University and developed a sustainable packaging roadmap CEO commentary The a2 Milk Company’s

Managing Director and CEO, David Bortolussi said: “I’m proud of what our team has achieved this year, growing sales by 10% while the core China IMF market declined by14% is a remarkable achievement.• “Our China label IMF sales exceeded English label sales for the first time, and our total IMF sales were over $1.1 billionmaking us a top-3 share gainer in the market overall.• “Achieving re-registration of our China label IMF product recently was critical to maintaining access to the important domestic market and we look forward to launching our new product in the coming months.•

“The Daigou market in English label IMF declined sharply again this year by almost 40% and we have pivoted further tothe more controlled channels which have performed better and where we continue to gain share.• “We have re-invested more in our brand again this year driving further gains in China brand health metrics and supportingfuture sales growth.•

“The China IMF market has become increasingly challenging as a result of lower birth rates and increased competitiveintensity. Notwithstanding, we are well positioned to continue to invest and grow share in FY24 to emerge in a strongerposition when the market recovers.”

[Filthy]

results out 830am. down 7-8%. and its nearly 11am. and no comments yet (other than Bobs regular results post). something strange going on!

[Fortunecookie]

Triple threat.

Declining birth rate as everyone is aware.
Competition against local brands.
Lower milk prices

To add a fourth, increased inventory.

Majority of the npat increase is due to int income.

[Toddy]

Loaded with risk. Nothing to really like.

[whatsup]

What a turn around after todays so so ann !

[BlackPeter]

Triple threat.

Declining birth rate as everyone is aware.
Competition against local brands.
Lower milk prices

To add a fourth, increased inventory.

Majority of the npat increase is due to int income.


Loaded with risk. Nothing to really like.

Where are all the rampers gone? Where are all the tales of endless growth and these pretty charts showing everything good just going higher?

Only three years ago SP was above $20 and punters did beat up anybody who signalled the obvious risks for ATM which by now materialized.

Sounds like the party is over, is it?

[winner69]

Mataura Valley EBITDA loss $24m on $113m of sales

Ouch …but all be OK after 2026

Always thought MVN be a real drag on the group financial performance

[Azz]

Where are all the rampers gone? Where are all the tales of endless growth and these pretty charts showing everything good just going higher?

Only three years ago SP was above $20 and punters did beat up anybody who signalled the obvious risks for ATM which by now materialized.

Sounds like the party is over, is it?

The rampers were right to ramp - back in the day! A nice little earner.

And, now, the party is most certainly over, bar a miracle.

[winner69]

They took another $63m hit on the ‘investment’ in Synlait

In Other Comprehensive Income so doesn’t really count …but impacts reported Equity

[bull....]

as expected result as forecast by bull last week. that is not too good

[Mr Slothbear]

The rampers were right to ramp - back in the day! A nice little earner.

And, now, the party is most certainly over, bar a miracle.

did you read the results? They are actually extremely good and even more so considering the situation in China.

forecast doe next year is grim but it has an air of under promise, overdeliver but the environment they’re working in will be by far the harshest seen before

[Balance]

No dividend or further share buyback - place your faith in the directors and management to do the right thing with the cash.

With their track record, would you?

[Toddy]

Hope they aren't thinking of spending anymore cash investing in Synlait.

[Azz]

did you read the results? They are actually extremely good and even more so considering the situation in China.

forecast doe next year is grim but it has an air of under promise, overdeliver but the environment they’re working in will be by far the harshest seen before

What is the strategy of the company? The old "middleman" strategy was awesome. A better strategy than the one before that of some sort of "patent" company. But now they are what exactly?

[Azz]

place your faith in the directors and management to do the right thing with the cash.

With their track record, would you?

It's a pretty scary proposition!

[Balance]

Hope they aren't thinking of spending anymore cash investing in Synlait.

Precisely what is happening in the background, one suspects.

[winner69]

This doesn’t bode well … in the media re Stats NZ release

New Zealand infant formula exports halved in July from a year earlier, compounding a 13% decline in the price simultaneously.

[billkiapi]

Hope they aren't thinking of spending anymore cash investing in Synlait.

I think they'll end up buying Synlait for a song- I don't think the banks will want exposure to the debt at Synlait and will sell it cheap to an A2/Bright consortium. It'd be a good deal for A2 if they do. Won't stop people coming after the directors of Synlait I guess, but that is not A2's problem

[winner69]

Aspirations of sales ~$2billion in F27

Jeez that’s a growth rate of 5%/6% pa

A2 a real growth company these days eh …no wonder share price tanking

[Habits]

I think they'll end up buying Synlait for a song- I don't think the banks will want exposure to the debt at Synlait and will sell it cheap to an A2/Bright consortium. It'd be a good deal for A2 if they do. Won't stop people coming after the directors of Synlait I guess, but that is not A2's problem

Would SML be a good punt , if A2 pay a premium for takeover

[carrom74]

DB did talk about possible M&A”s vaguely after being pushed by the analysts on why capital returns are not considered to the shareholders.Who knows their poor cousin could be lapped up for a steal!

[winner69]

Weird that PEB and ATM topped the losers board today :eek2:

Bring back the good ol days when they were the stars ;)

[Bikeguy]

The license to manufacture the product A2M sells into China is held by SML, so whether A2M like it or not they will have to do whatever it takes to keep SML producing.

[silverblizzard888]

They've performed exceedingly well in a declining Chinese market to get an EBITDA of $254.1 million while every other part of the company drags that down to $219.3 EBITDA. This year is the opposite, China looking a little shaky, while the other parts of business get close to breakeven, leading the company to expect a similar EBITDA figure for FY24. The key contribution in maintaining their performance comes from the declining NZ milk price, which is helping maintain their margins.

Its actually next financial year (FY25) that is the worrying year where stage 3 & stage 4 will see a drop off in demand since there will be a lot less babies to serve in that category than prior years, while the NZ milk price may recover at the same time which will reduce their margins and lower their EBITDA. The one thing that could save a decline in EBITDA is how they decide to invest their cash. Large possibility it will be to takeover Synlait in some way since they have hinted it will be about supply chain transformation, though it would be hard to see Bright Dairy sell up for anything below $3, so either a joint offer or a merger that would see Birght Dairy own a part of ATM.

In the event Bright Dairy would entertain a $3 per share takeover of Synlait, that would cost ATM about $525m to acquire the 80% they don't own. Bright may entertain that deal given the declining Chinese Market and if there was a good supply agreement in place.

[Bikeguy]

They've performed exceedingly well in a declining Chinese market to get an EBITDA of $254.1 million while every other part of the company drags that down to $219.3 EBITDA. This year is the opposite, China looking a little shaky, while the other parts of business get close to breakeven, leading the company to expect a similar EBITDA figure for FY24. The key contribution in maintaining their performance comes from the declining NZ milk price, which is helping maintain their margins.

Its actually next financial year (FY25) that is the worrying year where stage 3 & stage 4 will see a drop off in demand since there will be a lot less babies to serve in that category than prior years, while the NZ milk price may recover at the same time which will reduce their margins and lower their EBITDA. The one thing that could save a decline in EBITDA is how they decide to invest their cash. Large possibility it will be to takeover Synlait in some way since they have hinted it will be about supply chain transformation, though it would be hard to see Bright Dairy sell up for anything below $3, so either a joint offer or a merger that would see Birght Dairy own a part of ATM.

In the event Bright Dairy would entertain a $3 per share takeover of Synlait, that would cost ATM about $525m to acquire the 80% they don't own. Bright may entertain that deal given the declining Chinese Market and if there was a good supply agreement in place.

I think you have made some fair and accurate points above, my thoughts are along the same line, Bright is the key to both A2M and SML in many ways.

[silverblizzard888]

I think you have made some fair and accurate points above, my thoughts are along the same line, Bright is the key to both A2M and SML in many ways.

They are just too attached to SML to not save them especially given the depressed asset pricing, so might as well use the profits they make to take it over or another avenue will be taking over another company that can produce product for China. Originally I thought they would use MVM to transition to that straight away, but seems to be quite slow progress on that end. I'd definitely love to see them add more products to the pipeline, why stop at milk powder when they can utilise the A2 brand into other products. They need to build an ecosystem of A2 products so that parents who like A2 infant formula have other products they can use to.

[Sideshow Bob]

https://www.nzx.com/announcements/418353

:ohmy:

The a2 Milk Company Limited (a2MC, the Company) advises that after market hours on Friday, 15 September it provided Synlait Milk Limited (Synlait) with written notice cancelling the exclusive manufacturing and supply rights enjoyed by Synlait in respect of stages 1 to 3 of a2MC’s current infant milk formula (IMF) products (being a2 Platinum® and a2 至初®) for sale by a2MC in the markets of China, Australia and New Zealand. Stage 4 IMF and other a2MC products supplied by Synlait are not subject to exclusivity. Synlait has advised that it is considering the notice of cancellation, it reserves its rights, and it will respond formally in due course.

a2MC has given notice of cancellation of Synlait’s exclusive manufacturing and supply rights due to Synlait’s delivery in full and on time performance (DIFOT) during FY23 falling below the level required for Synlait to maintain such exclusive rights, including as referenced in a2MC’s market announcement on 26 April 2023 and primarily in relation to English label IMF product.

The manufacturing and supply agreement between Synlait and a2MC (Supply Agreement) will remain in place notwithstanding removal of exclusivity and Synlait remains an important supplier of a2MC. a2MC considers that pricing terms and other key terms of the Supply Agreement between the parties will continue to apply. In particular, and as previously confirmed to the market:

• The Supply Agreement continues on a rolling term until either party gives three years’ notice of termination to the other party; and
• a2MC considers that Synlait continues to be contractually bound to supply up to the same prescribed IMF volume per annum , including all stages of both a2MC’s current English label product, a2 Platinum®, and a2MC’s new China label GB product, a2 至初® (which is being transitioned in the China market in 1H24, with the launch remaining on track).

Synlait is considering a2MC’s cancellation notice. If Synlait disputes the notice, the matter will be resolved through good faith negotiations, followed by confidential binding arbitration as provided for under the dispute resolution provisions of the Supply Agreement. At this stage, a2MC expects that any such dispute resolution process may take some time to complete. In the meantime, a2MC has advised Synlait that it would agree to maintain Synlait’s exclusivity until any dispute is resolved (assuming it is resolved by the end of 2024), and even once the matter is resolved, a2MC considers that a2MC will continue to have the right, but not the obligation, to fully source its current IMF products from Synlait.

Subject to the outcome of any dispute resolution process, removal of Synlait’s exclusivity will provide a2MC with the option to produce a2 Platinum® (being the brand of a2MC’s current English label product) at any facility in the future, including Mataura Valley Milk (MVM). MVM is a purpose-built dairy nutritionals facility situated in New Zealand’s South Island and of which the Company owns 75% in partnership with China Animal Husbandry Group (which owns 25%). Having regard to the dispute resolution process, product development cycles and the New Zealand dairy season, any positive impact of the removal of Synlait’s exclusivity on MVM utilisation and profitability is not expected to have a material impact in FY24 or FY25. As previously announced, accelerating MVM’s path to profitability by FY26 or earlier is a strategic priority.

Authorised for release by the Board of Directors

[winner69]

Hey Bob …..think it says we (A2) want to make some of this ‘exclusive’ stuff ourself (MVN) so we found an reason (DIFOT’ to end the ‘exclusive’ bit ….and we not really friends

[Ggcc]

Hey Bob …..think it says we (A2) want to make some of this ‘exclusive’ stuff ourself (MVN) so we found an reason (DIFOT’ to end the ‘exclusive’ bit ….and we not really friends
Every business for itself lol

[Sideshow Bob]

Hey Bob …..think it says we (A2) want to make some of this ‘exclusive’ stuff ourself (MVN) so we found an reason (DIFOT’ to end the ‘exclusive’ bit ….and we not really friends

They are only at 19.8% friend level......

[whatsup]

They are only at 19.8% friend level......

So what does the SML shares that ATM holds worth ?

[winner69]

So what does the SML shares that ATM holds worth ?

Lot less than they paid for them

[winner69]

Whatsup …A2 paid an average of $6.69 for their 43 million shares

So as Friday more than $230m down the gurgler

But heck … HUGE strategic value in being 19% shareholder eh

[carrom74]

If A2 uses Matarua for production of English label IF, I guess the margins could improve and also CBEC channels showed an improvement of 8.3% YOY. I sort of get what’s going on in the management”s mind. Improve margins(as it’s manufactured by A2 itself) and eventually throw synlait from the cliff.

[Bikeguy]

If A2 uses Matarua for production of English label IF, I guess the margins could improve and also CBEC channels showed an improvement of 8.3% YOY. I sort of get what’s going on in the management”s mind. Improve margins(as it’s manufactured by A2 itself) and eventually throw synlait from the cliff.

Do you really think A2 are going to throw Bright Dairy off a cliff?

[Ggcc]

Do you really think A2 are going to throw Bright Dairy off a cliff?
China Animal husbandry group which owns some of Mataura is a state owned enterprise. Would you prefer the state owned business helping your business, or Bright Dairy a business based in Shanghai. I mean best to not piss anyone off, but I would back the state owned enterprise for China every time.

[BlackPeter]

China Animal husbandry group which owns some of Mataura is a state owned enterprise. Would you prefer the state owned business helping your business, or Bright Dairy a business based in Shanghai. I mean best to not piss anyone off, but I would back the state owned enterprise for China every time.

I assume you realize that Bright Dairy is a part of Bright Food, which is wholly owned by the Shanghai Municipal Government. Which in China clearly means it is a state controlled business, unless you expect the city of Shanghai to do something the dear secretary would not like, which they would do at most once.

In practical terms it does not matter in any shape or form, whether the Chinese company you are working with is directly owned by the state or owned by some local Chinese authority which reports into the state as they would.

[Ggcc]

I assume you realize that Bright Dairy is a part of Bright Food, which is wholly owned by the Shanghai Municipal Government. Which in China clearly means it is a state controlled business, unless you expect the city of Shanghai to do something the dear secretary would not like, which they would do at most once.

In practical terms it does not matter in any shape or form, whether the Chinese company you are working with is directly owned by the state or owned by some local Chinese authority which reports into the state as they would.
Thank you I did not realise that. I did a basic search and it came forward that the business was from Shanghai. On knowing this how do you feel ATM should proceed from here as both are state owned and you agreed that SML may have pissed off ATM?

[Bikeguy]

China Animal husbandry group which owns some of Mataura is a state owned enterprise. Would you prefer the state owned business helping your business, or Bright Dairy a business based in Shanghai. I mean best to not piss anyone off, but I would back the state owned enterprise for China every time.

Your opinion is valued and people sharing their thoughts is totally the right approach to getting a greater understanding of anything for anyone 😊
I respect what you are saying in regards to China and state owned enterprises, and I actually fully agree with you in placing weight on their involvement Â…however their political system is layered, do you understand who owns Bright?
The company is owned (some would say fronted would be more accurate) by the Shanghai Municipal Government, behind which stands the Shanghai Investment Group…it is the second largest China food and beverage manufacturing (that is a very important word to note) company based in China…It may stand behind a number of layers but (some would say) Bright is very much China ruling party “owned”
The Animal Husbandry Group and Bright are not competitors, and it is no coincidence that these companies take blocking stakes in many businesses, alongside getting board members in place, alongside getting their banks in place, all designed to secure the manufacturing assets, and production capabilities of said companies.
These state owned entities work together and their strategic view is long term.
MVM actually needs the IP Synlait have, it is way to simplistic to say that MVM can take up capacity of Synlait production as many seem to think, and very time consuming and expensiveÂ…it is far more probable that the time is now right for Bright to move on Synlaits assets, and then transfer all the knowledge and IP required to MVM. Bright and AHG would then control the raw material supply and manufacturing assets and the channel to market (registration to sell) required to provide them what they want, no disrespect to A2 but they are along for the ride, they have an amazing brand and product but China controls this business.

[Ggcc]

Your opinion is valued and people sharing their thoughts is totally the right approach to getting a greater understanding of anything for anyone 😊
I respect what you are saying in regards to China and state owned enterprises, and I actually fully agree with you in placing weight on their involvement Â…however their political system is layered, do you understand who owns Bright?
The company is owned (some would say fronted would be more accurate) by the Shanghai Municipal Government, behind which stands the Shanghai Investment Group…it is the second largest China food and beverage manufacturing (that is a very important word to note) company based in China…It may stand behind a number of layers but (some would say) Bright is very much China ruling party “owned”
The Animal Husbandry Group and Bright are not competitors, and it is no coincidence that these companies take blocking stakes in many businesses, alongside getting board members in place, alongside getting their banks in place, all designed to secure the manufacturing assets, and production capabilities of said companies.
These state owned entities work together and their strategic view is long term.
MVM actually needs the IP Synlait have, it is way to simplistic to say that MVM can take up capacity of Synlait production as many seem to think, and very time consuming and expensiveÂ…it is far more probable that the time is now right for Bright to move on Synlaits assets, and then transfer all the knowledge and IP required to MVM. Bright and AHG would then control the raw material supply and manufacturing assets and the channel to market (registration to sell) required to provide them what they want, no disrespect to A2 but they are along for the ride, they have an amazing brand and product but China controls this business.
Thank you a very informative post. I do agree China currently controls A2M. What do you see happening with SML if both parties work for what’s best for China? A2 can walk away from SML and still be financially intact.

[Baa_Baa]

An illustration of the relationship A2 Milk has with China government is via the 'China Animal Husbandry Group' (CAHG), a China 'State Owned Enterprise'. CAHG’s parent company is the state-owned China National Agriculture Development Group (https://www.cnadc.com.cn/en/index.jhtml), which also owns a logistics and distribution company in Shanghai which is a key partner for A2 Milk. "CNADC adheres to the plans made by the Central Committee of the CPC and the State Council"

CAGH announced in 2016 the acquisition of Mataura Valley Milk processing plant. Since then the ownership has recently changed with A2 Milk taking 75% share and CAHG retaining 25%.

The Mataura Valley Milk Board composition changed with David Bortolussi as chair but they retained Dr Tingwu Xue as Director; he is President of China Animal Husbandry Group (the largest Chinese SOE in Animal Husbandry and the major shareholder of Mataura Valley Milk, BODCO Limited). Chairman of Mataura Valley Milk, BODCO Limited and Nouriz. They also retained Deyong Zhang as DirectorChief Compliance Officer and General Manager of International Business of China Animal Husbandry Group.

The CAHG website (https://cahg.cnadc.com.cn/NewsRoom/index.jhtml) describes New Zealand Milk as "Best Source of Milk in the World".

The CAHG relationship with A2 Milk is highly strategic, indeed critical in terms of the infant formula supply and distribution channels from NZ into China.

I think A2 Milk is sufficiently well known by, and connected to, the CAHG, CNADC SOE's and ultimately the strategy and plans of the CPC, to realise A2 Milk is a New Zealand company sourcing, manufacturing, infant formula into China. It does the CAHG, CNADC, and CPC an injustice insulting them in that they might naively think A2 Milk is an Australian company.

It would be quite the thing if China sanctioned, embargoed or otherwise compromised the A2 Milk Company. I just can't see it happening, is there risk, yes, is there great risk or impending doom. Yeah nah.


Certainly the Chinese are not fools, we're talking about their government here. They've already shown what they can do if they want to. Probably more to come. Whether it affects A2 Milk remains to be seen, so far it doesn't affect it at all.

While Australia represents A2's largest market - for fresh milk - and China it's second largest - for infant formula, all A2 infant formula product into China is sourced and shipped from New Zealand, manufactured by Synlait under very strict rules imposed by the Chinese.

A2 Milk has "management operations" in a number of countries (https://thea2milkcompany.com/our-businesses), with China having its own dedicated A2 Milk management operations. A2 Milk, Synlait and Mataura all have significant strategic ownership representation of Chinese company's.

Australia – a2 Milk™
Australia – a2 Platinum®
New Zealand – a2 Milk™
USA – a2 Milk®
China – a2™至初® (https://www.a2nutrition.cn) ... check out the China operations (you'll need a translator if only read English)
Canada – a2 Milk™
China – Official Tmall China store
HK – Official Tmall Global store

Sure, the macro risk is there but trying to pin it on A2 having offices in Australia, well I'm not sure what would motivate such a narrow focus.

These are from Sept 2021 but I think they're still true.

[Bikeguy]

Thank you a very informative post. I do agree China currently controls A2M. What do you see happening with SML if both parties work for whatÂ’s best for China? A2 can walk away from SML and still be financially intact.

Since the impact of Covid there has been so much made of the poor management of A2, and the lawsuits are underwayÂ…but if we can be balanced about it the honest truth is the management at A2 weÂ’re not asleep and neither are they stupid people, they simply over the years took credit for something that they hadnÂ’t done ( the huge profit and stellar rise of their brand)
A2 is going to be totally fine, they are going to stay in their lane and do exactly what they are being asked to do, drive the price of Synlait down (legally) and spend some money picking up the assets Bright wants ( avoids laws of foreign ownership if itÂ’s a JV with a resident company)
Everything will just continue as normal, (except most Synlait retail shareholders are going to get a haircut)

[Newman]

Everything will just continue as normal, (except most Synlait retail shareholders are going to get a haircut)

The combined share holding of A2 and Bright Dairy is 60%, far from the 90% that would force the retail investors to surrender.

[Bikeguy]

The combined share holding of A2 and Bright Dairy is 60%, far from the 90% that would force the retail investors to surrender.

I agree with you, my comment is more around my belief a takeover offer will be made ( and accepted ) around the $2.10 area…leaving many underwater. (Myself included)

[aperitif]

This story also takes off again SAMR enforce regulation on a2 milk practices. A2 are in a good place with close(soon to be closer) ties to relevant authorities.

It is currently of benefit to a2 to have as many participants as possible looking to break into the category, as it increase awareness and as they are the “pioneer” conversion tends to be higher. Also, legacy formula producers are marketing legacy milk with “a2”included. Which is not wrong, hence why regulation is needed.

[billkiapi]

More likely a liquidation and clean acquisition of the assets

[BlackPeter]

Thank you I did not realise that. I did a basic search and it came forward that the business was from Shanghai. On knowing this how do you feel ATM should proceed from here as both are state owned and you agreed that SML may have pissed off ATM?

Hard to say - I assume that the strategic goals of the Peoples Republic of China are not correlated with A2M's strategic goals - and I assume that A2M's interests feature very low on Chinas strategic priority list.

If A2M do have contacts in China whom they can trust (i.e. having a several decades long trustful working relationship) ... then they might have a quiet meeting with them to find out how they can best serve Chinas interests and benefit as well. Not sure though, A2M does have such contacts in China ... but hey, lets hope I am wrong.

[Newman]

More likely a liquidation and clean acquisition of the assets

Other institutions with a deep pocket would want SML. Fonterra might want it as well to help expand the A2 milk business. ATM and Bright Dairy could dream of getting SML free, but the chance is similar to winning a big lottery.

[Bikeguy]

Other institutions with a deep pocket would want SML. Fonterra might want it as well to help expand the A2 milk business. ATM and Bright Dairy could dream of getting SML free, but the chance is similar to winning a big lottery.

That’s a pretty fair assessment

[Bikeguy]

Bright are not going to gamble their current sizeable investment, neither are A2…it’s a pretty good game of brinkmanship going on buts it’s all really just posturing and ego, everyone involved knows what’s going on and how valuable Synlait is in the game.

[aperitif]

https://www.yicaiglobal.com/news/chinas-new-marriages-jump-54-in-first-half

[Sideshow Bob]

https://www.nzx.com/announcements/420060

Dispute submitted to arbitration

The a2 Milk Company Limited (a2MC, the Company) refers to its market announcement made on Monday, 18 September confirming that it had provided Synlait Milk Limited (Synlait) with written notice cancelling the exclusive manufacturing and supply rights held by Synlait in respect of stages 1 to 3 of a2MC’s current infant milk formula (IMF) products (being a2 Platinum® and a2 至初®) for sale by a2MC in the markets of China, Australia and New Zealand.

Synlait disputed the notice and, in accordance with the dispute resolution provisions of the manufacturing and supply agreement, a2MC and Synlait entered into a 20-business day period of good faith negotiations, which has not resolved the dispute. The matter will now be submitted to confidential binding arbitration as provided for under the dispute resolution provisions of the manufacturing and supply agreement.

Authorised for release by the Board of Directors

[carrom74]

Sign of things to come…

https://www.bbc.co.uk/news/articles/cv20pywdj0zo

[Rawz]

Sign of things to come…

https://www.bbc.co.uk/news/articles/cv20pywdj0zo

shrinking birth rate and China has for a number of years has had a big push for more breastfeeding

[aperitif]

https://www.linkedin.com/posts/timhortonschina_timschina-activity-7122076210481831936-yrmp?utm_source=share&utm_medium=member_ios

[bull....]

should be under 4$ soon i read china birth rate declined even more recently. no one feeling the love over there

[whatsup]

should be under 4$ soon i read china birth rate declined even more recently. no one feeling the love over there

Not yet, on the way up ------- slightly !!

[whatsup]

AGM tomorrow, b 4 covid the meeting was a must attend, but tomorrow , what ? , who is attending ?? !

[whatsup]

S Hers can attend the AGM by vertual link today @ 11-00

[Sideshow Bob]

Meeting materials - https://www.nzx.com/announcements/421740

I wonder if the A2 meeting will be as interesting as yesterdays meeting at the Pullman?? With Chris, Winnie and David??

As for an outlook:

Moving now to our outlook for FY24. As stated at the time of our results release:
• We expect China IMF market conditions to be more challenging in FY24 compared toFY23 with a further double-digit decline in market value;
• Despite these headwinds, we expect to continue to gain market share in IMF; and
• At the group level, we are expecting low single-digit revenue growth, EBITDAmargins to be similar to FY23 and an improvement in cash flow.

[bull....]

no positive outlook statement

[winner69]

no positive outlook statement

Least no negative outlook

But $2 bilion and mid teens ebitda marginnbybF26 still in play

But 7% pa revenue growth not that good is it when you read all the rave words etc etc

[bull....]

Least no negative outlook

But $2 bilion and mid teens ebitda marginnbybF26 still in play

But 7% pa revenue growth not that good is it when you read all the rave words etc etc

trying to maintain there current levels looks like there positive outlook.

[whatsup]

$1-00 cash / share on its books so $3-00 + for the rest ?

[whatsup]

Up 5% + today, not too bad for a down day imo.

[silverblizzard888]

Given the conditions they are operating in ATM is actually performing quite well. Gaining market share in a shrinking IMF market in China and maintaining margins is pretty good.

[bull....]

A2 Milk boss says China formula market in steep decline
https://www.afr.com/companies/retail/a2-milk-boss-says-china-formula-market-in-steep-decline-20231116-p5ekd9

[whatsup]

A2 Milk boss says China formula market in steep decline
https://www.afr.com/companies/retail/a2-milk-boss-says-china-formula-market-in-steep-decline-20231116-p5ekd9

But the company did say that ATM was increasing market share at the expense of the other players !

[nztx]

Are Class Action games still on the table, or has ATM settled all of them ? ;)

[billkiapi]

The Aussie action still underway

[nztx]

The Aussie action still underway


two of them, weren't there ?

[aperitif]

Marriages have a high correlation to new births, worth noting a2 are out performing in stage 1(0-6 months)

https://says.com/my/news/chinese-couples-rushing-to-get-married-to-have-dragon-babies (https://says.com/my/news/chinese-couples-rushing-to-get-married-to-have-dragon-babies)

14855

[Patrick11]

Bubs is in serious trouble it's gone through the cash like there is no tomorrow.

[winner69]

Bubs is in serious trouble it's gone through the cash like there is no tomorrow.

But getting $28m to focus on the US

[Baa_Baa]

But getting $28m to focus on the US

You're assuming this $128m market cap company that made a loss of $108m on revenue of $60m, and bombed out of the China market, is going to attract additional investment in a cap raise of about 165m new shares (about 20% of shares on issue), to expand (open) a new market in the USA!

We'll see about that, $28m cap raise is a massive massive dilution on the current shareholders currently suffering a $0.17 share price, with no certainty it will work out. Good luck, they'll need it.

This crap has no place on the ATM thread. There is no comparison or relevance to ATM.

[winner69]

David B doing a rave with Madison

How A2 aims to grow marketshare in a shrinking infant formula market


https://www.youtube.com/watch?v=u-1rK5ujjlM

[aperitif]

David B doing a rave with Madison

How A2 aims to grow marketshare in a shrinking infant formula market


https://www.youtube.com/watch?v=u-1rK5ujjlM

Interesting…First time DB has done an interview in detail since his appointment some 3 years ago. FY24E they will have circa $865mm in cash! The market believes they are looking to acquire manufacturing but a strategic alliance is more likely imo. A few multinationals will be taking a look considering they’re taking market share and have huge operational leverage once the market turns.

“ATM is trading on a 12 month forward PE of ~17x (~14x cash adjusted) and EV/EBIT of ~10x, which is in-line with similar consumer staples peers on a PE basis” Forsyth Barr

[whatsup]

Interesting…First time DB has done an interview in detail since his appointment some 3 years ago. FY24E they will have circa $865mm in cash! The market believes they are looking to acquire manufacturing but a strategic alliance is more likely imo. A few multinationals will be taking a look considering they’re taking market share and have huge operational leverage once the market turns.

“ATM is trading on a 12 month forward PE of ~17x (~14x cash adjusted) and EV/EBIT of ~10x, which is in-line with similar consumer staples peers on a PE basis” Forsyth Barr

Yes I thought that this was a very good interview, answered all questions imho. well done fish heads.

[aperitif]

“The a2 Milk Company (ATM) is changing its stripes. It has well-publicised strategic intentions to vertically integrate its supply chain, be it through M&A, organic investment at Mataura Valley Milk (MVM), or JVs/alliances. It's not a matter of if, it's a matter of when. Our detailed scenario analysis assesses how ATM would evolve should it purchase SynlaitMilk's (SML) Dunsandel asset. We acknowledge this isn't necessarily likely but we think it would prove to be an attractive asset for ATM, helping to reduce supply chain risks (mainly regulatory), capture manufacturing margin (albeit we don't think group margins will notably improve), and drive EPS growth ahead of current consensus forecasts. We have also explored the ramifications should ATM pursue other NZ manufacturing sites. Given current undemanding valuation multiples, investors appear cautious on the potential implications of such a large investment. Our analysis supports our OUTPERFORM rating, and we believe the market is too cautious on the potential capex investment implications” FB

[aperitif]

https://businessdesk.co.nz/article/primary-sector/is-a2-milk-eyeing-up-synlaits-dunsandel

[aperitif]

20 years of a2 milk powder: one meter wide and ten thousand meters deep, leading the high-quality advancement of the milk powder market with strong innovation
Xiao Liu 2023-12-05 10:27 Views:587
Introduction: Looking at the entire dairy market, the A2 protein category has been born for more than 20 years, but the market education is relatively mature. The unique advantages of A2 protein "easy to digest and easy to absorb" have penetrated deeply among practitioners and consumers. A2 milk powder has become a popular track for dairy enterprises at home and abroad. It has also led to the rapid expansion of this market.

However, scientific research is an endless process. Thanks to the decades-long focus of scientists at home and abroad, the recent research on A2 protein has made significant progress again. A2 protein can not only improve the level of glutathione GSH, an antioxidant that is very important to the immune system, but also It can synergize with lactoferrin: lactoferrin can regulate glutathione GSH activity, thus providing better self-protection for infants and young children. Glutathione GSH can play an antioxidant role and participate in the detoxification process to help the human body maintain normal immune system function. And the latest research results have been transformed and applied by a2 milk company to the new product series of infant formula from a2 to early childhood.


A2 milk powder welcomes new opportunities for development. The new research has once again confirmed the gold content of A2 protein, and the whole industry has further seen the richer potential value and broad development prospects of the A2 category.

From niche to mainstream
The multiple benefits of A2 protein are constantly confirmed.

As an important source of nutrients for the human body, scientific research and product innovation on milk have never stopped. We can't help wondering how many secrets are hidden in a glass of milk? Especially about A2 protein, the high scientific research barriers in the early stage of category development have built the foundation for its high-end quality and unique nutritional value, and a2 company has been digging up the "nutritional gold mine" of A2 protein step by step and bringing its treasure to more people to meet different needs. Requirements.


Reviewing the relevant research and application of A2 protein, it can be roughly divided into three stages:

A coincidence inspired scientific research in the 1.0 era: a study originally published in the journal NATURE in the 1960s found that cows produce different types of beta-casein due to genetic variation, thus revealing the study of milk proteins.

Decades have been focusing on research from scientific discovery to product landing. It is the 2.0 era: from early principle research, cell experiments, animal experiments, and clinical experiments. After countless studies, it has been found that A2 protein has benefited to the human body, and it has been confirmed that milk containing only A2 protein and does not contain A1 is more prophilic milk. And the human body will significantly reduce the symptoms of gastrointestinal discomfort after drinking milk. For example, the Effects of Ordinary Milk and Milk Containing Only A2 β-casein on the Digestion of Chinese Children: A random study jointly completed by experts from China and Australia in 2019 shows that milk containing only A2 β-casein can reduce gastrointestinal symptoms caused by milk intolerance in preschool children in China, and can Improve its cognitive performance accordingly. Many experts and scholars at home and abroad have devoted themselves to the field of A2, and their research on different nationalities, different ages and different groups of people has made the A2 category significantly different from other subcategories, and their value attributes have laid the foundation of the category.

Breaking through the research margin and discovering the synergy with different high-quality nutrients means that the A2 category has entered the 3.0 era: with more and more brands entering the game, accelerating the promotion of A2 milk powder from the minority to the mainstream. On the whole, the industry's perception of A2 protein is still concentrated in intestinal health fields such as digestion and absorption. But in fact, scholars have paid attention many times in their research that milk containing only A2 protein and without A1 can double the level of glutathione GSH, a "self-protective factor" antioxidant, which is very important for human immunity, which undoubtedly adds another fire to the rapid development of the A2 category.

An exciting news is that the interpretation of the latest study "Effects of Infant Formulas Supplementing Lactoferrin on Respiratory Infection and Diarrhea in 2-3 Years Old" released at the 17th National Perinatal Medical Academic Conference (CSPM) of the Chinese Medical Association in 2023 shows that the intake of A2 beta-casein cattle Milk with excellent amount of lactoferrin can improve common acute respiratory infections and diarrhea problems, and reduce the course of acute upper respiratory tract infections and/or diarrhea by 23%.

From intestinal comfort to immune health
The latest research solves the mystery of "multiplying self-protection"

Immune health has long been the focus in the field of maternal and infant nutrition. Especially in the face of various viruses and frequent colds in autumn and winter, infants and young children, as susceptible people, need their own strong immunity to resist external challenges. Immunity is like an ordinary invisible "guardian god" that provides for the baby's health at every critical moment.

In the past, many people had a relatively simple understanding of the role of the human intestine. In fact, the intestine is not only an digestive and absorption organ, but also an important immune organ of the human body. Therefore, when scientists deeply studied A2 protein, they found that in addition to its easily perceived digestive and absorption benefits, there is a certain inevitability to improve the value of the powerful self-protective factor glutathione GSH.

In recent years, we have seen that in the field of innovation of infant powder products, the cross-combination of different high-quality nutrients has become a trend, but it is the first time in the industry to study and demonstrate the synergy between A2 protein and excellent lactoferrin. This new research not only provides a new solution for children's intestinal comfort and immune health, but is bound to lead a new wave of formula innovation. At this time, as a pioneer and leader in the field of A2 protein, the new trend of a2 company has naturally become the focus of industry attention.

It is reported that during this year's Expo, a new series of infant formula was released. This series applies the latest research and empirically proves that it only contains A2 protein milk, which has a synergistic effect with an excellent amount of lactoferrin, and plays a 1+1>2 effect in helping babies improve their self-protection. At the same time, as a blockbuster work of a2 company to open a new decade in the Chinese market, this new series is a top-grade in nutritional formula, milk source and other aspects, with a ferritin purity higher than 95%, compared with 450% upgrade of the previous generation a2 to initial product content, which has attracted great attention from the market as soon as it is launched. The product advantages of a2 to the new product "good absorption and self-protection" have also become a new standard for feeding selection for young families of the new generation, and have also set a benchmark for the industry to match A2 protein milk powder.


It can be seen that in the development of A2 category, a2 milk company not only has the forward-looking ability to lead scientific research, but also has the comprehensive strength to transform scientific research achievements and user needs into innovative products.

First, focus and innovation
Lead the A2 category to a broader future

A glimpse of the development history of the entire A2 category is the evolutionary history of the milk powder market. No matter how the external environment and user needs change, scientific research ability has always been the endogenous driving force for the development of the industry. Since 2023, the new national standard racing competition and brand breakthrough competition have also focused the focus of industry competition on scientific research and innovation.


Up to now, A2 protein has become synonymous with high-end and quality, and the layout of A2 milk powder has also become the standard configuration of leading dairy companies. Everyone collects firewood and the flame is high, and the competition in the whole A2 milk powder market has also entered a higher latitude. Looking forward to the future, why can a2 company always be in the leading position?

First, first: At first, a group of scientists engaged in A2 beta-casein research established a2 milk company and was committed to discovering and promoting the benefits of A2 protein for the human body. Globally, a2 was the first to carry out A2 protein science research, and it was also the first to launch the first A2 protein product. The two "firsts" laid the strength of a2's "looking insight + scientific research gene + transformation and landing" from the beginning.

Second, focus: As the only company in the world that only produces A2 protein dairy products, and the industry that has been focusing on A2 protein research for more than 20 years, the professional value, product matrix and user mind in the field of A2 protein are beyond the right, which determines that the enterprise is difficult to be surpassed. For example, in order to obtain milk powder containing only A2 protein, it is necessary to master the patented A2 gene detection technology, and before 2017, a2 milk company was the only dairy company with this technology. For example, although many dairy companies are currently laying out A2 milk powder, in the minds of channel merchants and consumers, as long as they mention A2 milk powder, many people think of a2 at the first time. The brand is synonymous with the category.

Third, innovation: around the continuous broadening of the research margin of A2 protein, a2 continues to increase research on empirical evidence and product iteration. The ultimate product way has always been the biggest core competition barrier of a2, and the strong scientific research endogenous force also provides a continuous impetus for continuous innovation.

Back to the beginning of the birth of the A2 category, a2 is not a unique way to create demand, but a real insight into the underlying logic of user needs: finding and solving problems.

The launch of new research and new products is also a line of "discovering and solving problems", aiming at the strong needs of maternal and infant families to improve the digestive absorption and immune health of infants, and providing more scientific research support and more accurate solutions. In this process, it also provides a new high-quality advancement for the milk powder industry.

http://www.myguancha.com/post/22812.html

[Balance]

A mild positive to start 2024 for ATM :

https://www.reuters.com/world/asia-pacific/new-zealand-says-chinas-safeguard-duties-milk-powder-over-2024-01-01/

New Zealand said on Monday all its dairy products were now able to enter China duty-free as safeguard duties on milk powder ended on Dec. 31, marking the removal of all remaining tariffs agreed upon in the free trade deal between the two countries.

"This is good news for our dairy sector. The removal of these remaining tariffs is expected to deliver additional annual tariff savings of approximately NZ$350 million ($221 million)," Trade Minister Todd McClay said in a statement.

[billkiapi]

A mild positive to start 2024 for ATM :

https://www.reuters.com/world/asia-pacific/new-zealand-says-chinas-safeguard-duties-milk-powder-over-2024-01-01/

New Zealand said on Monday all its dairy products were now able to enter China duty-free as safeguard duties on milk powder ended on Dec. 31, marking the removal of all remaining tariffs agreed upon in the free trade deal between the two countries.

"This is good news for our dairy sector. The removal of these remaining tariffs is expected to deliver additional annual tariff savings of approximately NZ$350 million ($221 million)," Trade Minister Todd McClay said in a statement.

100% agree with you on this one...

[aperitif]

OUTPERFORM

The a2 Milk Company (ATM) is changing its stripes. It has well-publicised strategic intentions to vertically integrate its supply chain, be it through M&A, organic investment at Mataura Valley Milk (MVM), or JVs/alliances. It's not a matter of if, it's a matter of when. Our detailed scenario analysis assesses how ATM would evolve should it purchase SynlaitMilk's (SML) Dunsandel asset. We acknowledge this isn't necessarily likely but we think it would prove to be an attractive asset for ATM, helping to reduce supply chain risks (mainly regulatory), capture manufacturing margin (albeit we don't think group margins will notably improve), and drive EPS growth ahead of current consensus forecasts. We have also explored the ramifications should ATM pursue other NZ manufacturing sites. Given current undemanding valuation multiples, investors appear cautious on the potential implications of such a large investment. Our analysis supports our OUTPERFORM rating, and we believe the market is too cautious on the potential capex investment implications.


ATM will vertically integrate its supply chain in time — there are numerous options
One of ATM's five strategic pillars is to ‘transform its supply chain’ with the desire to: (1) expand China Label (CL) registered market access, (2) utilise MVM and invest in NZ capability, and (3) develop China supply capability. As part of all five pillars, it has stated it will, ‘explore opportunities to accelerate strategy execution through M&A, JVs, and alliances’. The key quantitative targets related to its supply chain are access to at least three CL registrations and an expanded English Label (EL) IF portfolio. The key attraction is wider access to CL licenses; this makes sense to us as the company seeks to improve its competitive positioning over the long term, and reduce future regulatory supply chain risks. ATM has numerous viable options, including: (1) SML Dunsandel, (2) Bodco's blending & canning site, (3) other NZ based IF manufacturers (notably Yili or Yashili), (4) expedite MVM investment, and/or (5) invest in China.
A compelling option is to acquire SML's Dunsandel asset. We are not suggesting this is likely, but it does offer attractive qualities to ATM, particularly the all important regulatory licenses. We don't have a firm view on value but would expect a purchase price >NZ$400m. Our base case scenario suggests FY25 EPS accretion of ~+35% to +40% (fully cash funded), ROIC decline to ~16% (from ~17% in FY23), and a reduction in net cash balance to ~NZ$415m (from ~NZ$720m at FY23).

Valuation is relatively attractive; the market appears overly nervous on the capex implications
We have previously argued ATM's earnings multiple has been too high, particularly given the fundamental change in growth and returns as it morphs into a conventional consumer staples company. ATM is now trading on a 12 month forward PE of ~17x (~14x cash adjusted) and EV/EBIT of ~10x, ~-40% below its respective five year average multiples. It is now trading in-line with similar consumer staples peers on a PE basis and ~-20% EV/EBIT discount (both at record lows on a relative basis). We are now comfortable: (1) the step-change in ATM's business is being appropriately reflected in its share price, and (2) see relative valuation as attractive, particularly given our constructive view on medium-term growth (FY26 to FY23 EPS CAGR of ~+10%).

FB

[bull....]

China’s population falls by 2.08 million to 1.4097 billion in 2023 as births tumble, adding to demographic concerns


China’s overall population fell by 2.08 million last year to 1.4097 billion, down from 1.4118 billion in 2022, while births declined by 5.6 per cent to 9.02 million in 2023
The world’s second-largest economy is under pressure as its population declines and gets older

https://www.scmp.com/economy/economic-indicators/article/3248695/chinas-population-falls-208-million-14097-billion-2023-births-tumble-adding-demographic-concerns

[aperitif]

A2 up on news they are selling on Amazon USA today. FYI, Bubs is selling circa $705k usd of products a week(54% on Amazon). Good timing from a2 management with Bubs inventory depleted due to wc issues. Although small sums for a company of a2’s size, can fast track US profitability with current drag.

Also, marriage data looking positive for 24. A leading indicator of births
14911

14912

https://www.linkedin.com/posts/thea2milkcompany_the-a2-milk-company-us-is-excited-to-announce-activity-7153215898072322048-8Jm5?utm_source=share&utm_medium=member_ios

[Baa_Baa]

China’s population falls by 2.08 million to 1.4097 billion in 2023 as births tumble, adding to demographic concerns


China’s overall population fell by 2.08 million last year to 1.4097 billion, down from 1.4118 billion in 2022, while births declined by 5.6 per cent to 9.02 million in 2023
The world’s second-largest economy is under pressure as its population declines and gets older

https://www.scmp.com/economy/economic-indicators/article/3248695/chinas-population-falls-208-million-14097-billion-2023-births-tumble-adding-demographic-concerns




Totally missed the point, as a trader you would be into the news and scoop up some gains on the USA news, still this might have legs so …

[winner69]

Totally missed the point, as a trader you would be into the news and scoop up some gains on the USA news, still this might have legs so …

Seems bull had it right after all. This guy reckons A2 gained today because Chinese birth numbers weren’t as bad as they could have been.

From Market Wrap -

At home, a2 Milk rose 17c or 3.96% to $4.46 after China said 9.02m babies were born last year, down from 9.56m in 2022 – the seventh successive year that the number has fallen.

Robertshawe said the latest Chinese birth rate was positive for a2 Milk, which had previously indicated the number of births would be in the low 8m.

“The birth rate is still down but not as bad as some people thought it would be. And it appears new marriages are increasing, and maybe China has hit the bottom in births.”

[aperitif]

Missed what point?

[Baa_Baa]

Seems bull had it right after all. This guy reckons A2 gained today because Chinese birth numbers weren’t as bad as they could have been.

From Market Wrap -

At home, a2 Milk rose 17c or 3.96% to $4.46 after China said 9.02m babies were born last year, down from 9.56m in 2022 – the seventh successive year that the number has fallen.

Robertshawe said the latest Chinese birth rate was positive for a2 Milk, which had previously indicated the number of births would be in the low 8m.

“The birth rate is still down but not as bad as some people thought it would be. And it appears new marriages are increasing, and maybe China has hit the bottom in births.”

Yes, a GDP miss by bugger all and birth rates, but missed ATM going live on Amazon in the USA. Market liked it. Expect some follow through, keep up

[Baa_Baa]

Missed what point?

Give them a minute or two to connect the dots. Yeah nah, anyone watching the news and the market has already scored over 5%, today. Amazing that the Amazon USA launch news was announced on LinkedIn, you'd think it might warrant a market update? Thanks for the charts, Bub's might be a minnow but they do have some leading indicator relevance to ATM in the USA. Probably depends on how involved one is, sucking in all of the feeds and moving quickly to take advantage or avoid the downsides. Or just strolling by this thread occasionally and biffing BS and half-stories into the mix, to make some impression. Well that backfired today didn't it. Keep posting.

[aperitif]

Yes, a GDP miss by bugger all and birth rates, but missed ATM going live on Amazon in the USA. Market liked it. Expect some follow through, keep up

Yes, this will fly on ongoing positive marriage and birth data. Glad they have increased marketing investment heavily over the past three years. They will have gained so much leverage from marketing spend as seen in every data metric tracked + market shares. Coupled with USA profitability, MVM profitability/production, SG&A line decreasing in out years, organic English label, product innovations and $800mm on the balance sheet.

[aperitif]

Give them a minute or two to connect the dots. Yeah nah, anyone watching the news and the market has already scored over 5%, today. Amazing that the Amazon USA launch news was announced on LinkedIn, you'd think it might warrant a market update? Thanks for the charts, Bub's might be a minnow but they do have some leading indicator relevance to ATM in the USA. Probably depends on how involved one is, sucking in all of the feeds and moving quickly to take advantage or avoid the downsides. Or just strolling by this thread occasionally and biffing BS and half-stories into the mix, to make some impression. Well that backfired today didn't it. Keep posting.


Yes, i have a RSS feed that tracks various metrics with alerts for all my positions.

[bull....]

Yes, a GDP miss by bugger all and birth rates, but missed ATM going live on Amazon in the USA. Market liked it. Expect some follow through, keep up

seriously atm going live on amazon is a stock mover.

[winner69]

seriously atm going live on amazon is a stock mover.

…gives punters hope that US is the place to go ……… might move some stock (product that is) lol

[aperitif]

FB

Births in China during 2023 of 9.02m were +15% ahead of our 7.86m forecast (and likely notably ahead of market expectations). At this stage we leave our earnings forecasts for The a2 Milk Company (ATM) unchanged but increase our 2024 new birth forecasts. Under our revised industry model changes, we estimate the current share price implies ~+100 bps of China Infant Formula (IF) market share gains over the medium term, assuming ~15% EBITDA margins. We are more optimistic and forecast ~+200–250 bps of market share expansion. We continue to see the risk reward as positively skewed, particularly in light of recent constructive Kantar data and ongoing industry consolidation.
link

2023 new births +15% ahead of our forecast

We are not demographers and hence had low conviction in our 2023 new birth forecast but numerous anecdotes through 2023 suggested new births of around ~8m (or potentially lower). At ATM's ASM in November, management also indicated an expectation of ~8m. Expectations were low ahead of the data release and investors have been cautious on China's birth outlook. While the positive 2023 surprise isn't structurally significant in the context of China's infant population, we see this as favourable for investor sentiment.

2024 could be better again; we revise our assumptions upwards

Empirical evidence from policy change and challenges in China suggests a sustained increase in births medium term is unlikely. That said, we think an increase in 2024 is likely. The biggest driver is marriage data. Annualising the first nine months of 2023 on pre-COVID seasonality in Q4 suggests marriage growth of +10% versus 2022. Marriages are the best leading indicator for births (R-squared of 0.89 from 2009 to 2022). Applying the regression equation suggests 2024 births of ~10m. Further, on 25 January 2023, China announced the end of lockdowns; we think the lagged impact of this can't be discounted. Evidence in other countries has shown a solid rebound in births post COVID, which is unlikely to be reflected materially in 2023 data. 2024 is also year of the dragon in China (in Chinese culture this represents good luck, strength, and health), albeit, history shows this hasn't led to a notable increase in births.
We update our industry model for 2023 births and increase our 2024 forecast ~+15% (to 9.8m from 8.5m). We make minimal changes thereafter (we assume 8.0m–8.5m births through to 2030). We leave our ATM earnings forecasts unchanged given we still forecast solid market share growth and have only revised two years of birth data rather than making wholesale changes. However, should birth rate greenshoots be maintained this provides upside risk to our medium/long-term revenue assumptions.

ATM specific data remains constructive

ATM data remains solid irrespective of the macro backdrop. Growth in followers and search intensity for ATM's products continue to show solid performance on an absolute basis and versus peers across multiple key social media sites. Further, Alibaba market share remains at record highs and Kantar data on a three month rolling basis shows +25% growth (with market share also at record highs).

[Sideshow Bob]

Opened up 8c/almost 2% higher in Oz.

Market loving it.

[winner69]

Jeez, A2 close at $4.90 today …..maybe $5 tomorrow

Headlines like this help

China's 2023 birth rate is good news for a2 Milk
https://businessdesk.co.nz/article/markets/chinas-2023-birth-rate-is-good-news-for-a2-milk

Basically a summary of a Craig’s report. They seem to like them big time

Did mention Amazon and US in general but said - “Overall, we remain sceptical that the a2-only infant formula concept will gain significant traction in the US,”

[Baa_Baa]

Jeez, A2 close at $4.90 today …..maybe $5 tomorrow

Headlines like this help

China's 2023 birth rate is good news for a2 Milk
https://businessdesk.co.nz/article/markets/chinas-2023-birth-rate-is-good-news-for-a2-milk

Basically a summary of a Craig’s report. They seem to like them big time

Did mention Amazon and US in general but said - “Overall, we remain sceptical that the a2-only infant formula concept will gain significant traction in the US,”

And up over 20% from its recent low. Kind of creeps up on you, not expecting much, then a whole pile of big money wades in.

[Baa_Baa]

And up over 20% from its recent low. Kind of creeps up on you, not expecting much, then a whole pile of big money wades in.

23.5% now, with a back test of the 200EMA on the daily, and close 2 pips above it. Decent volume too. Hope I haven't jinxed it, lol.

[winner69]

OMG …BUBS on fire, Esp in the USA

Continued momentum in USA with gross revenue of $13.7m, up 498% on pcp

Jeez nearly 500% up

If BUBS can do that you can only imagine what A2 can do

[aperitif]

From FB

Mosaic of datapoints are constructive and potentially indicative of 1H24 revenue upside versus consensus




1H24 Kantar offtake is up +6% versus 1H23 with Cross Border E-Commerce (CBEC) particularly strong. Consensus forecasts a 1H24 IF decline of -2%. ATM exited 1H24 with 2Q24 market share of 7.3% (highest on record) and growth of +19% versus 2Q23.
ATM Alibaba market share is at record highs. In January ATM's value on a six month rolling basis was up +7% (category; -13%) against the prior period.
Port data ​​​​​​​as a China Label (CL) proxy remains messy but​​​​ on a three month rolling basis exports to Australia from Lyttelton are at their highest level since early 2022.
Furthermore, brand health metrics remain robust with ATM's follower growth on Tmall and Douyincontinuing to outpace peers while WeChat searches are broadly consistent with peers.




Sydney Airport, Jan 22nd

”By the end of the year, international passenger volumes have almost fully recovered, and we have experienced one of the strongest China recoveries of any international airport globally with nine airlines flying 89 return-services weekly to mainland China. In 2023 we also saw extra international capacity translate into strong passenger volumes in the India and South Korea markets”

[Sideshow Bob]

Up $1.07/23.8%.

Not bad.....

[aperitif]

From FB

An acquisition will likely be value accretive for ATM shareholders


In this report we have conducted detailed analysis of a potential acquisition of SML Dunsandel, we have also explored (1) Bright Dairy, and (2) other assets ATM could look to acquire in NZ. We have structured the report into four core sections.


Dunsandel is an attractive asset: The key attraction is its GACC and SAMR licenses, we think asset value is likely NZ$500-700m.
Scenario analysis: Our base case is a ~+10% benefit to IF gross margins, broadly unchanged EBIT margins and ~+40% EPS uplift.
Bright Dairy background: Bright Dairy's gearing is low and it continues to have strategic goals to own international assets.
Dunsandel isn't the only option: Throughout the NZ IF market, ATM could diversify its supply chain in alternative ways.

Key value drivers remain robust under an acquisiton




EPS: FY25 central scenario EPS of NZ31cps (bull case of NZ38cps and bear case of NZ23cps). This compares to our FY25 EPS of NZ24cps (consensus; NZ26cps). Only under our bear case scenario over the medium term do we not expect EPS accretion.
Returns: We expect an acquisition to be return on equity accretive but return on capital dilutive. Even under our bull case scenario, medium/long-term return on capital is broadly consistent with our current forecasts. Under our bear case scenario, returns on capital remain above WACC. Our base scenario forecasts medium-term returns on capital and equity of ~16%.
Cash balance: Our FY24E net cash forecast is ~NZ$865m (ex acquisition), which represents ~30% of ATM's market capitalisation. Our base case scenario results in FY25 cash of ~NZ$415m (~13% of market capitalisation), bear and bull are ~NZ$300m (~10%) and ~NZ$530m (~17%) respectively. Thereafter, by FY27 we forecast cash balances of ~NZ$620m, ~NZ$850m, and ~NZ$1,080m under all three scenarios. This compares to our current base case of ~NZ$1,330m.

What could SML Dunsandel be worth?


We determine Dunsandel's property, plant, and equipment asset value is likely worth NZ$500m to NZ$700m. Share market and transactional evidence suggests that if a prospective buyer was looking to acquire the asset ~1x book value may be a best case scenario. Given the attraction of SML Dunsandel, should the asset be for sale we assume it would be a competitive process which should provide asset valuation support.

What we know with a high degree of certainty


Using mixed disclosure to decipher Dunsandel's asset value is a challenging task. We have assessed SML'sdisclosure since listing (including its IPO prospectus) to try to estimate today's Dunsandel asset value. What we know is:


SML has spent >NZ$700m in capital expenditure on its Dunsandel assets since FY08 (we also note PPE value at FY08 was ~NZ$80m). We note that within each financial year there is often material ‘other’ capex which generally includes: (1) intangibles, and (2) routine operational/maintenance capex, both of which we haven't included in the >NZ$700m.
Property, plant, and equipment asset value at FY17 was ~NZ$470m (prior to the impact of large Auckland acquisitions). We assume this includes ~NZ$12m related to the NZ Dairy Company purchase in 2017 (where SML was due to spend an additional ~NZ$30m capex for blending and canning capabilities).
Disclosed Dunsandel capex since FY17 is ~NZ$275m (excluding maintenance/other capex).
Total disclosed Auckland capex has been ~NZ$425m, but within ‘other’ capex it is likely higher.

~NZ$90m for Abbott (new customer) additions
​​​​​​​~NZ$28m for Pokeno land
~NZ$260m for original Pokeno build
~NZ$50m for NZ Dairy Company/Blending & Canning


Insourcing could be a ~+10% benefit to ATM's IF gross margins


We have undertaken detailed analysis attempting to assess what the benefit to ATM's IF gross margins may be if it was to takeover Dunsandel and insource production. Our base case is that we assess it could be a ~+10% benefit to ATM's IF gross margins. This excludes the impact of ATM likely having to inherit Ingredients production (NZ milk curve and depressed ATM volumes won't allow IF production for ATM all year round). We discuss the impact of Ingredients production further through the report.

[Newman]

[QUOTE=aperitif;1040699]From FB

[COLOR=#121D26][FONT=LatoRegular]An acquisition will likely be value accretive for ATM shareholders

China might refuse to renew the license that Synlait holds if it is taken up by A2 Milk.

[nztx]

Up $1.07/23.8%.

Not bad.....


Keep it up .. we need more babies screaming & crying up in Asia to keep the momentum on a roll :)

[aperitif]

[QUOTE=aperitif;1040699]From FB

[COLOR=#121D26][FONT=LatoRegular]An acquisition will likely be value accretive for ATM shareholders

China might refuse to renew the license that Synlait holds if it is taken up by A2 Milk.

IMO only, I would think the most logical solution is for MVM to merge with Synlait to create a super manufacturing entity with A2 owning 51%, China State 24.5% and Bright 24.5%.
The respective values of each entity would need to be determined and subsequent payments made to correspond with these final equity positions. Then, they can work out what asset is core and what facilities are not needed anymore.
this way, all 3 parties have a common interest and the issue of which factory produces A2 platinum is not relevant.
A2 mngt would also control the manufacturing process with majority control.

[ralph]

all 3 parties have a common interest and the issue of which factory produces A2 platinum is not relevant.
A2 mngt would also control the manufacturing process with majority control.


Although quite plausible /conceivable to some degree , the Chinese whom can gerrymander the process to suit themselves with export licences etc will not let a2 get a majority of synlait as they know this is the goose laying the eggs & a2 sells those eggs back to them at a highly Inflated price .
Good luck to A2 shareholder's it would be a great step for new zealand, but lets be realistic the chinese are to inscrutable & cunning for that to happen

[Bikeguy]

all 3 parties have a common interest and the issue of which factory produces A2 platinum is not relevant.
A2 mngt would also control the manufacturing process with majority control.


Although quite plausible /conceivable to some degree , the Chinese whom can gerrymander the process to suit themselves with export licences etc will not let a2 get a majority of synlait as they know this is the goose laying the eggs & a2 sells those eggs back to them at a highly Inflated price .
Good luck to A2 shareholder's it would be a great step for new zealand, but lets be realistic the chinese are to inscrutable & cunning for that to happen

Well said,

[aperitif]

all 3 parties have a common interest and the issue of which factory produces A2 platinum is not relevant.
A2 mngt would also control the manufacturing process with majority control.


Although quite plausible /conceivable to some degree , the Chinese whom can gerrymander the process to suit themselves with export licences etc will not let a2 get a majority of synlait as they know this is the goose laying the eggs & a2 sells those eggs back to them at a highly Inflated price .
Good luck to A2 shareholder's it would be a great step for new zealand, but lets be realistic the chinese are to inscrutable & cunning for that to happen

What if Bright are the ones building a stake in a2 over the last month for that very reason. Then you have alignment

[Newman]

What if Bright are the ones building a stake in a2 over the last month for that very reason. Then you have alignment

Why would Bright Dairy want to accumulate A2m shares at a high price? The money to buy A2m could be applied to control Synlait and get what Bright Dairy wants. It does not need A2M as much as A2M needs Bright Dairy.

[Sideshow Bob]

https://www.nzx.com/announcements/426363

The a2 Milk Company (“the Company”, “a2MC”) today announces a positive 1H241result driven by strong execution of itsgrowth strategy which is mainly focused on capturing the full potential of its China market opportunity.

More specifically,the Company:
1. Delivered a positive interim result with 3.7% revenue growth and 5.0% EBITDA2 growth
2. Grew total IMF sales despite a double-digit decline in the China infant milk formula (IMF) market
3. Achieved top-5 China IMF position with brand health reaching new highs supported by record levels of marketing
4. Launched new GB registered China label IMF product successfully with transition ahead of plan
5. Stabilised English label IMF sales on 2H23 after several periods of decline with new products on the way
6. Improved revenue growth guidance for FY24 relative to prior outlook statement

Financial results and outlook3,4
• Revenue growth of 3.7% to $812.1 million- Regional revenue: China & Other Asia segment up 16.5%, ANZ down 24.1% due to a change in distribution strategy,USA up 8.6% and MVM down 4.7%- Category revenue: Total IMF up 1.5% with China label up 10.4% and English label down 6.9%5, liquid milk in ANZand USA up 1.5% and 7.0% respectively, other nutritionals6 up 48.5% and ingredients (MVM) down 4.7%
• EBITDA up 5.0% to $113.2 million with an EBITDA margin of 13.9% (up 0.2ppts)• Net profit after tax (NPAT) attributable to owners of the Company up 15.6% to $85.3 million7
• Basic earnings per share (EPS) up 18.6% to 11.8 cents
• Closing net cash8 of $792.1 million up $34.9 million on June 2023 with operational cash conversion of 86.8%9
• FY24 revenue growth guidance increased from low, to low-to-mid single-digit percent on prior year. EBITDA marginexpected to be broadly in line with FY23 (see FY24 Outlook in the “1H24 Results Commentary and Outlook”announcement)
• Medium-term revenue ambition timing modified to reflect market conditions (see Medium-term revenue ambitionupdate in the “1H24 Results Commentary and Outlook” announcement)Operational highlights
• Delivered total IMF sales growth of 1.5% in a challenging China IMF market that continues to be impacted by thecumulative decrease in newborns over the past few years, market-wide transition to products formulated under the newGB standards, and macroeconomic conditions, with total market sales down 13.6%
• Reached new highs in China brand awareness, trial and loyalty metrics supported by increased investment and moretargeted and integrated sales and marketing campaigns
• Achieved record market share in China label IMF channels, with 3.5% market value share in mother and baby stores(MBS) and 3.6% market value share in domestic online (DOL) retail channels, resulting in being a top-5 share gainer in theChina label market and top-5 brand overall including English label

• Launched upgraded China label IMF product a2 至初® range successfully, formulated in line with China’s new GBstandard, and with transition ahead of plan
• Stabilised total English label IMF sales compared to 2H23 with English label market value share relatively stable –achieved 20.6% overall share of the English label market, with 21.4% share in the cross-border e-commerce (CBEC)channel and 20.5% in the combined offline-to-online (O2O) and Daigou channels, with high growth in emerging channelssuch as Douyin/TikTok
• Continued to optimise English label route-to-market through drop-shipping from Tier 1 distributors to consumers, anddeveloped a new distribution partnership with the market leader in the O2O channel (Yuou)
• Progressed development of two new English label IMF products with MVM and a new commercial IMF supply chainpartner (Yashili NZ, a subsidiary of Mengniu) – targeting to launch the first product (a2 Gentle Gold™) in 2H24
• Commenced production of a2 Platinum® Stage 4 IMF with MVM and another new commercial IMF supply chain partner(New Zealand New Milk, a subsidiary of Lactalis)
• Accelerated sales growth of other nutritional products, up 48.5%, utilising A1 protein free milk powders produced byMVM
• Developed two new fortified English label adult milk powder products (a2™ Immune and a2™ Move), to launch in 2H24
• Continued to develop a2 Milk® Lactose Free market penetration and progressed major upgrade of Kyabram processingfacility in Victoria with Kyvalley Dairy Group• Improved profitability of USA business, commenced distribution of a2 Platinum® IMF under US Food and DrugAdministration (FDA) Enforcement Discretion with selected retailers in-store and online, and progressed long-term FDAIMF approval with clinical trial underway
• Advanced sustainability programme significantly including commissioning a high-pressure electrode boiler at MVMpowered by certified renewable energy10 to materially reduce greenhouse gas emissions from the site and achieved CY23target of all certified farms supplying A1 protein free milk attaining an animal welfare certification and farmenvironmental plan via third party audit and verification processesCEO commentary

The a2 Milk Company’s Managing Director and CEO,
David Bortolussi said:
• “We continued to execute against our growth strategy, primarily focused on the China market which now representsapproximately 80% of our total branded sales.”
• “We grew our IMF sales in a market that was down double-digits with China label sales up significantly, and launched ournew GB registered China label IMF product which is progressing well.”
• “After several years of COVID-19 related disruption and market decline, we are pleased that our a2 Platinum® sales andthe English label market have stabilised compared to 2H23.”
• “Beyond IMF, we are investing in growth in other nutritional products for kids, adults and seniors, and we are alsopursuing growth in new markets.”
• “As we continue to invest and grow, consumers are increasingly seeing the benefits of a2 Milk™, providing us with aplatform to further expand our portfolio, with the launch of more new products expected later this year.”

[winner69]

Pushed their $2 billion sales target out a year …now F27 or later

Must have read my comments re growth rates required to do it by F26 lol

[whatsup]

https://www.nzx.com/announcements/426363

The a2 Milk Company (“the Company”, “a2MC”) today announces a positive 1H241result driven by strong execution of itsgrowth strategy which is mainly focused on capturing the full potential of its China market opportunity.

More specifically,the Company:
1. Delivered a positive interim result with 3.7% revenue growth and 5.0% EBITDA2 growth
2. Grew total IMF sales despite a double-digit decline in the China infant milk formula (IMF) market
3. Achieved top-5 China IMF position with brand health reaching new highs supported by record levels of marketing
4. Launched new GB registered China label IMF product successfully with transition ahead of plan
5. Stabilised English label IMF sales on 2H23 after several periods of decline with new products on the way
6. Improved revenue growth guidance for FY24 relative to prior outlook statement

Financial results and outlook3,4
• Revenue growth of 3.7% to $812.1 million- Regional revenue: China & Other Asia segment up 16.5%, ANZ down 24.1% due to a change in distribution strategy,USA up 8.6% and MVM down 4.7%- Category revenue: Total IMF up 1.5% with China label up 10.4% and English label down 6.9%5, liquid milk in ANZand USA up 1.5% and 7.0% respectively, other nutritionals6 up 48.5% and ingredients (MVM) down 4.7%
• EBITDA up 5.0% to $113.2 million with an EBITDA margin of 13.9% (up 0.2ppts)• Net profit after tax (NPAT) attributable to owners of the Company up 15.6% to $85.3 million7
• Basic earnings per share (EPS) up 18.6% to 11.8 cents
• Closing net cash8 of $792.1 million up $34.9 million on June 2023 with operational cash conversion of 86.8%9
• FY24 revenue growth guidance increased from low, to low-to-mid single-digit percent on prior year. EBITDA marginexpected to be broadly in line with FY23 (see FY24 Outlook in the “1H24 Results Commentary and Outlook”announcement)
• Medium-term revenue ambition timing modified to reflect market conditions (see Medium-term revenue ambitionupdate in the “1H24 Results Commentary and Outlook” announcement)Operational highlights
• Delivered total IMF sales growth of 1.5% in a challenging China IMF market that continues to be impacted by thecumulative decrease in newborns over the past few years, market-wide transition to products formulated under the newGB standards, and macroeconomic conditions, with total market sales down 13.6%
• Reached new highs in China brand awareness, trial and loyalty metrics supported by increased investment and moretargeted and integrated sales and marketing campaigns
• Achieved record market share in China label IMF channels, with 3.5% market value share in mother and baby stores(MBS) and 3.6% market value share in domestic online (DOL) retail channels, resulting in being a top-5 share gainer in theChina label market and top-5 brand overall including English label

• Launched upgraded China label IMF product a2 至初® range successfully, formulated in line with China’s new GBstandard, and with transition ahead of plan
• Stabilised total English label IMF sales compared to 2H23 with English label market value share relatively stable –achieved 20.6% overall share of the English label market, with 21.4% share in the cross-border e-commerce (CBEC)channel and 20.5% in the combined offline-to-online (O2O) and Daigou channels, with high growth in emerging channelssuch as Douyin/TikTok
• Continued to optimise English label route-to-market through drop-shipping from Tier 1 distributors to consumers, anddeveloped a new distribution partnership with the market leader in the O2O channel (Yuou)
• Progressed development of two new English label IMF products with MVM and a new commercial IMF supply chainpartner (Yashili NZ, a subsidiary of Mengniu) – targeting to launch the first product (a2 Gentle Gold™) in 2H24
• Commenced production of a2 Platinum® Stage 4 IMF with MVM and another new commercial IMF supply chain partner(New Zealand New Milk, a subsidiary of Lactalis)
• Accelerated sales growth of other nutritional products, up 48.5%, utilising A1 protein free milk powders produced byMVM
• Developed two new fortified English label adult milk powder products (a2™ Immune and a2™ Move), to launch in 2H24
• Continued to develop a2 Milk® Lactose Free market penetration and progressed major upgrade of Kyabram processingfacility in Victoria with Kyvalley Dairy Group• Improved profitability of USA business, commenced distribution of a2 Platinum® IMF under US Food and DrugAdministration (FDA) Enforcement Discretion with selected retailers in-store and online, and progressed long-term FDAIMF approval with clinical trial underway
• Advanced sustainability programme significantly including commissioning a high-pressure electrode boiler at MVMpowered by certified renewable energy10 to materially reduce greenhouse gas emissions from the site and achieved CY23target of all certified farms supplying A1 protein free milk attaining an animal welfare certification and farmenvironmental plan via third party audit and verification processesCEO commentary

The a2 Milk Company’s Managing Director and CEO,
David Bortolussi said:
• “We continued to execute against our growth strategy, primarily focused on the China market which now representsapproximately 80% of our total branded sales.”
• “We grew our IMF sales in a market that was down double-digits with China label sales up significantly, and launched ournew GB registered China label IMF product which is progressing well.”
• “After several years of COVID-19 related disruption and market decline, we are pleased that our a2 Platinum® sales andthe English label market have stabilised compared to 2H23.”
• “Beyond IMF, we are investing in growth in other nutritional products for kids, adults and seniors, and we are alsopursuing growth in new markets.”
• “As we continue to invest and grow, consumers are increasingly seeing the benefits of a2 Milk™, providing us with aplatform to further expand our portfolio, with the launch of more new products expected later this year.”

Nice 8.3% kick up, so far today.

[winner69]

Nice 8.3% kick up, so far today.

And still rising

Over 6 bucks by lunch time

As BaaBaa would say that’s 50% up from recent low

[Sideshow Bob]

And still rising

Over 6 bucks by lunch time

As BaaBaa would say that’s 50% up from recent low

$5.85

The real action starts at lunchtime......

[Balance]

And still rising

Over 6 bucks by lunch time

As BaaBaa would say that’s 50% up from recent low

Excellent!

The big cap stocks performing helps sentiment towards NZX stocks - and they do need a lift.

[Paint it Black]

$5.85

The real action starts at lunchtime......

Sure is!! Patience to be rewarded.

[whatsup]

And still rising

Over 6 bucks by lunch time

As BaaBaa would say that’s 50% up from recent low

$6.00 gone and on to $6-30 +

[Baa_Baa]

$6.00 gone and on to $6-30 +

Good day for ATM, golden cross is just a sniff away.

[Balance]

Good day for ATM, golden cross is just a sniff away.

Wonderful!

Here's wishing ATM to $7.00!

[Filthy]

https://www.shortman.com.au/stock?q=A2M - short positions have continued to increase, which is interesting considering the result. could be a squeeze coming.

[Baa_Baa]

https://www.shortman.com.au/stock?q=A2M - short positions have continued to increase, which is interesting considering the result. could be a squeeze coming.

Shortman data is delayed ... currently 13th February, 2024 i.e. before the announcement

[Paint it Black]

Shortman data is delayed ... currently 13th February, 2024 i.e. before the announcement

Might be few sad shorters then.

[Balance]

Might be few sad shorters then.

We saw that yesterday - a lot of ouchy ouchs as shorters panicked to cover.

[Filthy]

Shortman data is delayed ... currently 13th February, 2024 i.e. before the announcement

ahhh yes! thanks Bal. - be interesting to see what it has dropped to now then huh?

[whatsup]

I see in a ann today from Aussie that Jane Hardlicker ( spelling ) has left the job that she left ATM for, Virgin Airlines, seems as though she moves around allot or is there some other reason for her moving , like ---- -- ---- ?

[676767]

I see in a ann today from Aussie that Jane Hardlicker ( spelling ) has left the job that she left ATM for, Virgin Airlines, seems as though she moves around allot or is there some other reason for her moving , like ---- -- ---- ?

Her Husband died mid last year and she has kids, so more likely she'll take a few board roles and mostly disappear from the public eye. Looking back, she might have been right about diversifying ATM. People didn't want to hear it at the time.

[nztx]

Her Husband died mid last year and she has kids, so more likely she'll take a few board roles and mostly disappear from the public eye. Looking back, she might have been right about diversifying ATM. People didn't want to hear it at the time.

https://www.abc.net.au/news/2024-02-20/virgin-australia-ceo-jayne-hrdlicka-steps-down-from-airline/103489878

Similar reason for leaving ATM ?


After leaving Qantas in April 2018, Ms Hrdlicka was named as the chief executive of a2 Milk in July that year, but stepped down after 18 months citing family reasons.

[aperitif]

Takeover incoming

[nztx]

Takeover incoming


you what ? where ? :)

[Bikeguy]

Takeover incoming

I follow your posts as I find them intelligent, thank you, appreciate your heads up.

[nztx]

Maui say Big Sheep Milk problem in China - time to turn off the sheep here:


https://www.nzherald.co.nz/nz/maui-milk-sheep-milk-waikato-suppliers-told-stop-milking-as-china-market-dries-up/M7RVJHRSNNHS5LYY5F7VLOATZ4/


Maui Milk sheep milk: Waikato suppliers told stop milking as China market dries up

[nztx]

Takeover incoming



The horn at ATM still hasn't sounded .. did the mail get lost ? :)

[Sideshow Bob]

Prof Keith's latest article

https://www.interest.co.nz/rural-news/126699/keith-woodford-provides-update-a2-milk-noting-good-science-always-wins-out-long?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+7+ March+2024

[Charlie]

So Vangard have been buying since the mid $4.
Made over 40%
in 3 months....

[winner69]

So Vangard have been buying since the mid $4.
Made over 40%
in 3 months....

Not many shares transactions traded in those 3 months …didn’t bother add them up but looks a few hundred thousand

Wonder what the other 35m/36m shares cost them

[Charlie]

Its on their anouncment, the individual prices .

[winner69]

Its on their anouncment, the individual prices .

Yeah I appreciate that and they have made money in the last 3 months transactions …even allowing for those they bought for $6.53 last week.

What I was wondering there’s only a few hundred thousand shares listed but they own more than 36 million in total ……and was wondering what their average is for the whole lot.

[winner69]

Vanguard have held ATM shares for long time

[aperitif]

https://www.barrons.com/news/china-s-fm-heads-to-australia-new-zealand-480051e1

[Charlie]

Good point as always ...I just saw they had just become a substantial holder, so that must have tipped them over the edge. Nice to see they have confidence in the future, other wise they would be selling, no?
Onwards and upwards hopefully.....

[aperitif]

14987

Nestle/Synlait joining forces. Could a2 join the party

[Bikeguy]

14987

Nestle/Synlait joining forces. Could a2 join the party

I feel it’s more Nestle/Bright joining forces…Nestle knows what’s required for access to the China market…

[winner69]

Good point as always ...I just saw they had just become a substantial holder, so that must have tipped them over the edge. Nice to see they have confidence in the future, other wise they would be selling, no?
Onwards and upwards hopefully.....

Vanguard been selling last week …no longer a substantial shareholder

Nothing really changed eh Charlie

Probably will become a substantial shareholder again next week …..that be good news

[Baa_Baa]

Vanguard been selling last week …no longer a substantial shareholder

Nothing really changed eh Charlie

Probably will become a substantial shareholder again next week …..that be good news

No big deal, Vanguard lightens up 137,211 and still hold 36,016,174 4.982% - nothing to see here.

Meanwhile, in the last few days:
- Bennelong Funds Management notify 41,186,962 5.7%
- Goldman Sachs Group notify 40,370,505 5.6%

Current SP action driven by big money. Up 64% since the low last November, been a good trade. Golden cross 21/2, Super Golden cross 11/3, testing minor horizontal resistance now at $6.70 ish and no significant resistance above here until $7.70 another 15% from here.

[Charlie]

You guys are the pros. Great comments as usual. Happy to get an extra 15 % maybe.
was lucky to pick some up at .57c back in the day......