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  1. #8716
    Gnawing on Bones Beagle's Avatar
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    Quote Originally Posted by hardt View Post
    Well if you want to throw around awards meaning something , surely the bullish on A2 Harbour Asset with the below awards are worth more.


    Morningstar Fund Manager of the Year: Domestic Equities Category 2018
    Morningstar Fund Manager of the Year: International Equities Category 2018
    Morningstar New Zealand Fund Manager of the Year, 2017
    FundSource Awards – Australasian Equity Sector - Winner 2017 (for our Focus Fund)
    Morningstar New Zealand Fund Manager of the Year, 2016
    Morningstar New Zealand Fund Manager of the Year: Fixed Interest Category 2016
    Morningstar New Zealand Fund Manager of the Year, 2014
    FundSource Awards Boutique Manager of the Year 2014
    And they do multiple trips to China to see how things are going for themselves while others presumably make blind assumptions to toss into their valuation models, (garbage in- garbage out).
    No butts, hold no mutts, (unless they're the furry variety).

  2. #8717
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    Quote Originally Posted by winner69 View Post
    Wow ...they pretty good eh ...the best?
    They must be, I mean Morningstar don't just throw out awards willy nilly... right?

    In all seriousness, Harbour are pretty good.

    Nikko asset also happen to have a cabinet full of awards, they just so happen to be bullish on A2 as well.

    Quote Originally Posted by Beagle View Post
    And they do multiple trips to China to see how things are going for themselves while others presumably make blind assumptions to toss into their valuation models, (garbage in- garbage out).
    I think Devon said they are going to send a person to China soon enough to have a proper look at the market, perhaps they will see what Harbour do... perhaps everyone just sees what they want and nothing changes... ( most likely )

    Devon have been wrong on A2 this past FY while the company continues to post stunning records for shareholders so it is safe to say my money is not in Devon.
    Last edited by hardt; Yesterday at 08:18 PM.

  3. #8718
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    Quote Originally Posted by hardt View Post
    Over the last 18 months significantly material announcements and updates have lead to substantial increases to analysts revenue and earnings assumptions for A2M, justifiably so, the SP has risen with the tide...

    A year ago the expectations for FY18 was Revenues of 667M and EPS of 15c
    A year ago, on 22nd May 2017, the ATM share price was $NZ3.49. That makes for a projected PE for FY2018 one year out of 349/15 = 23

    Fast forward to todays expectations of FY18 Revenues of ~920M and EPS of 25-29c ( ^38% & ^87% )
    Closing price 22nd May 2018 was $NZ11.04. That makes for a projected PE for FY2019 of 1104/29 = 38 to 1104/25 = 44

    Those last figures of course are influenced by what the market sees happening in FY2019 and beyond. Using your figures the expectations of revenue increase over the year FY 2018 are up by:

    920/667 = 1.37 (+37%)

    Earnings expectations are up by: 25/15 to 29/15 equals = +66% to +93%

    So what you are telling us Hardt, is that the growth of earnings expectations has been approximately twice as much as the growth of revenue expectations.

    Now looking towards next year's reporting date (for FY2019 this is 30th June 2019), what earnings growth will be required to reduce the one year forward looking PE back to 23? Using an average forward PE at the FY2018 balance date of 41, I get:

    41/23 x 27cps = 48cps (FY2019 projected earnings)

    This is an increase in earnings of 48cps/27cps of 77% between FY2018 and FY2019 year on year. Now all that is fine. But what we are talking about here is a profit increase of nearly 80% for two years in a row. I would expect the second year (FY2018 to FY2019) to be more difficult to achieve because we are starting from a larger initial sales base and true competition, in the A2 space has arrived.

    The share price gain over the last year has been 1104/349 = +300%

    This increase is a lot higher than any projected increase in profitability. So this is evidence to me that the share price has got a long way ahead of itself. If the FY2017 historic multiple had been maintained over the year, the ATM share price today would be about $6.30. I would say that is much closer to 'fair value' than the $11.04 the ATM share trades at today.

    Increasing IF consumption market share in China to 4.6% ( not based on value but on volume )
    The small print at the bottom of page 18 the latest ATM presentation (16-18 May 2018), suggests the firm Kantar that ATM use for 'market tracking' measure 'value' and not 'volume'.

    https://thea2milkcompany.com/wp-cont...2018_FINAL.pdf


    Perhaps you need to ask yourself why you only contribute to this thread when the share price goes down?
    Because that is when shareholders are probably most interested in why the share price has fallen?

    SNOOPY
    Last edited by Snoopy; Yesterday at 09:04 PM.
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  4. #8719
    An awesome cool cat winner69's Avatar
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    Sales forecasts for A2 over the next 2 years don't look too outrageous

    Chart is rolling annual sales
    Attached Images Attached Images
    The bullish case is always most compelling on the highs.

  5. #8720
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    Quote Originally Posted by Snoopy View Post
    A year ago, on 22nd May 2017, the ATM share price was $NZ3.49. That makes for a projected PE for FY2018 one year out of 349/15 = 23



    Closing price 22nd May 2018 was $NZ11.04. That makes for a projected PE for FY2018 of 1104/29 = 38 to 1104/25 = 44

    Those last figures of course are influenced by what the market sees happening in FY2019 and beyond. Using your figures the expectations of revenues are up by:

    920/667 = 1.37 (+37%)
    There was plenty of uncertainty priced in at $3.50 while the regulatory environment was still rather iffy as well, plenty of issues facing Bellamy's dragged down the sector and the popularity and uptake of A2's offering was not even on the radar for most investors last year.

    A2 is trading on par with its domestic peers while housing the best ( by far ) margins on the market... with a steady flow of cash with no real expenditure.
    A2's performance has warranted a set of above market and above sector multiples.
    Since August, the Forward PE has floated between 40-50 alongside every upgrade.

    Having one of the lowest PEG ratios on the market is also of no significance?
    Last edited by hardt; Yesterday at 08:39 PM.

  6. #8721
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    Quote Originally Posted by Scrunch View Post
    Excuse my ignorance, but isn't it the profitability of the "mature market" that matters.
    Yes I agree.

    Some markets like supermarket retail have high turnover and low margins. The cumulative market value of the participants may only be some fraction of the volume sold. Other markets can be mature with quite strong margins. The cumulative market value of companies operating in these markets will materially exceed the value of sales. Australian companies like ANZ and BHP show this through market capitalisations more than 3x annual sales.
    You make a good point. That is why my 'market value of all market participants' = 'value of total market sales' is really a rule of thumb where competition is high and profit margins are restricted.

    One of ATM's strengths is the strong margin on the sales its making. IMO it would take a collapse of the A2 market margins before the market capitalisation of the participants was sensibly lower than the market sales figures. This could happen but its not what's being priced by the market currently. If there are $10b of china sales, the cumulative market capitalisation of the participants should be a lot more than this. ATM being near this figure at about $8.2b isn't an issue.
    As markets mature, unusually high net profit margins tend to reduce. I am not saying this will necessarily happen to ATM in FY2019 or even FY2020. But A2 only protein milk itself is a naturally occurring commodity product with little patent protection. Sharper priced competition is coming.

    I think the part of your quote that I have emboldened is a real risk.

    SNOOPY
    Last edited by Snoopy; Yesterday at 09:35 PM.
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  7. #8722
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    Quote Originally Posted by hardt View Post
    There was plenty of uncertainty priced in at $3.50 while the regulatory environment was still rather iffy as well, plenty of issues facing Bellamy's dragged down the sector and the popularity and uptake of A2's offering was not even on the radar for most investors last year.
    Yes, but there are what i perceive as risks at least equal to those still in the market today (see my post 8668).

    A2 is trading on par with its domestic peers while housing the best ( by far ) margins on the market... with a steady flow of cash with no real expenditure.
    IMO, ATM has no domestic peers. The closest I an think of is Comvita, which is a stretch to say it is really comparable. As an aside I expect market development expenditure for ATM to increase a lot.

    A2's performance has warranted a set of above market and above sector multiples.
    Since August, the Forward PE has floated between 40-50 alongside every upgrade.
    Eventually these high PEs have to come down. The fact that they haven't is a warning sign for me.

    Having one of the lowest PEG ratios on the market is also of no significance?
    PEGs are usually based on analysts projections, not company projections. I don't think it is very easy to forecast where sales and profits will go from here. I would take all published PEG ratios for ATM with a grain of salt.

    SNOOPY
    Last edited by Snoopy; Yesterday at 09:46 PM.
    Management top tip: Share the responsibility. Change your name by deed-poll to "Someone Else"

  8. #8723
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    dow futures well up, will tomorrows sentiment (assuming closes well up) be enough to stop the machines from dropping the price further? A good day on the dow used to mean a good day for atm...I know that makes no financial sense other than creating positivity

    China-US trade ceasefire: The world's top two economies have agreed not impose new tariffs on one another while trade talks continue.

  9. #8724
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    View expressed by Bell Potter’s high-profile stock guru, Richard Coppleson, who is predicting that the stock will surge back to over $13 over the next two weeks because of its inclusion into the prestigious global stock benchmark that is watched closely by international fund managers.

    16/05/2018 Bell Potter .........Buy Recommendation A$12.8o

    https://www.fool.com.au/2018/05/15/w...ext-two-weeks/

  10. #8725
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    China planning to end limits on number of children families can have.
    https://www.bloomberg.com/news/artic...n-as-this-year

  11. #8726
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    Quote Originally Posted by JayRiggs View Post
    China planning to end limits on number of children families can have.
    https://www.bloomberg.com/news/artic...n-as-this-year
    WOW Opportunity Knocks

    Good find, thanks for sharing

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