:):):D:):)
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Loving it...just to refresh the numbers from last upgrade....
Revenue to be $300 to $315 Mln and EBITDA of $33 to $37 Mln from last upgrade...
Revenue to be $350 to $360 Mln and EBITDA of $52 to $54 Mln from today's upgrade!!!
And if you know them well enough they always under promise and over deliver. Based on this I wouldn't be surprised if the numbers are tab higher come actual results announcement time in August...
Remember they hit 2.61 in February. Sold mine at 2.52. Back in though.
Great news today for holders. Confirms ATM's potential as a diversified dairy company with a credible point of difference and well established in several key markets including Australia, UK and China. Whoopee!
I agree with the 'credible point of difference', but disagree strongly with the rest of Left Fields post.
A2 is not diversified at all, and relies on a single product output: A2 milk. It is the least diversified company possible, as if A2 suddenly becomes 'bad science' then the whole company becomes worthless. Note that I am not suggesting that A2 actually will be found wanting. Only pointing out that if this happened, the 'all in one milk bucket strategy' -the opposite of diversification- means the company would collapse.
A2 is well established only in Australia, and the Australian performance looks like it is being propped up with sales of 'Australian A2 infant milk formula' to China.
The update was on A2 favourably navigating their way through the evolving import restrictions into China. But there was no mention made of the UK and USA. These are clearly a best still in the development phase or at worst in deep trouble.
IMO despite the progress, they have not nearly justified their share price to date and at any price starting with $1 remain grossly overvalued by any fundamental measure you care to name.
SNOOPY
Market update advises anticipating having $50million cash in hand at end FY16. Any chance some of this will be dispersed as dividends? if they gave $30million back as a dividend that would be roughly 4c per share?
Ooh, SNOOPY down on ATM again, time to top up? :-)
130% revenue growth this year on last. Currently selling $430m worth of product annualised. Most definitely cash flow positive, but unlikely to return dividends (and I don't think they should) as cash could be used for growth in the US/UK. A modest 20% increase in sales on what they are currently selling would make ATM a $560m revenue company, easily achievable in my books given the ramp up on their supply side and seemingly endless growth in China (plus any results from a massive marketing campaign). Could be $500m plus and $80-100m in earnings with those numbers, 12-15c EPS with more future growth. The science is looking more solid every year, the release of the upcoming large Chinese study should be a watershed moment as well.
Really don't mind holding long term, billion dollar company by end of the decade is my pick.
Hi Snoopy, I appreciate your comments, and just wanted to point out that the term 'diversified' can relate to more than just products. A2 is Internationally diversified, it is not merely reliant on the NZ and/or Aust market. It is also well diversified in terms of product supply and distribution.
In terms of diversified products it is very wise to concentrate initially on raw milk and infant milk formula however, when appropriate it can further diversify into products such as yoghurt, dairy food snacks, cheese and ice-cream etc. (I understand ice-cream has been tested in the Aus market, but personally wonder about this as it sends mixed marketing messages. IMHO Yoghurt would be much smarter.)
That said, I agree it is early days for this company, and much needs to be achieved, but I am very happy to hold a small amount of ATM in my portfolio.
I had second thoughts on what I posted along these lines mfd, so thank you for raising the 'science' point. There are many on this thread who hang on tenderhooks as the scientific trials get rolled out. Favourable scientific trials I see more as a perpetual 'push forward' that will ultimately improve the credibility and hopefully sales of the company. But I see A2 more as a 'marketing company', and to generalize they are top notch marketers.
Being a top notch marketer is no guarantee of success in all markets. They have proved themselves in Australia but not in New Zealand. And once they really start to push in the US, they will be up against all sorts of top notch marketers in the traditional home of top notch marketing. So there are no guarantees.
But I do think that it is probably more important, short to medium term, to get the marketing right ahead of getting the science right.
SNOOPY
ATM are diversified in terms of having more than one farm supplying A2, sure. But I think they would still be vulnerable to regional disease risk.
ATM is entirely reliant on the Australian/Chinese (not sure it is possible to separate the two) market, as other markets are not profitable. Not unexpected at this part of the business development, but definitely a funding engine with all its eggs in one basket nevertheless.
All the above rely on the A2 brand and associated A2 benefits though. Using A2 milk in value added products is a good strategy, but none of these products would stand up without the A2 milk brand behind them. So not really diversification in my eyes.Quote:
In terms of diversified products it is very wise to concentrate initially on raw milk and infant milk formula however, when appropriate it can further diversify into products such as yoghurt, dairy food snacks, cheese and ice-cream etc. (I understand ice-cream has been tested in the Aus market, but personally wonder about this as it sends mixed marketing messages. IMHO Yoghurt would be much smarter.)
Nothing wrong with holding a small amount if you are a believer. I too am a believer, but not at anything like current market prices. Too much blue sky built in already is what I see as the problem.Quote:
That said, I agree it is early days for this company, and much needs to be achieved, but I am very happy to hold a small amount of ATM in my portfolio.
SNOOPY
Thanks Snoopy. A few of points.
1.) Product diversification depends on the stages of a company's lifecycle. I can recall in the 1980's an USA investment in CocaCola was criticised because the company was perceived as 'single brand' and not diversified enough.
2.) A2 has a unique scientific story behind it's product, and this science allows it to command a useful premium. It is a story that my stomach believes literally. I can only digest A2 milk and there are a growing number of loyal A2 followers like me. That said the company needs to be careful to align itself with 'healthy' products and I'm unsure if A2 ice-cream is a wise move.
3.) In Jan 2016 I recorded on this thread that I had sold half my ATM holding (acquired at an av of $0.58c) when the market was $2.40. My ATM holding is now a 'free-holding'. Is that safe enough for you? I consider myself a long term holder and continue to support this company.