ATM - A2 Milk Corporation Limited

[Nasi Goreng]

Geez... there are some awful questions coming in...These people do not listen at all.

Geoffrey is bright red answering these mongoloids questions about Fresha Valley.

Was there an update on A2 branded milk for sale in NZ?

[see weed]

Any mention of dividend?

[okay]

Geoff and David always put on a well organised and professionally delivered ASM. I went a couple of years ago, but just did the virtual one this year, which worked well.

They were quite coy about the use of capital. Maybe they have a potential acquisition or investment in mind in the nutrition area? Just pure speculation. Their timing of the investment in the Synlait stake was excellent.

They have a very good management team, so I would be comfortable with them keeping the capital available for any use they think fits their expansion and growth plans.

[okay]

Any mention of dividend?

They didn't rule anything out or in. They said they would update after the half year results in February.

[Leftfield]

Was there an update on A2 branded milk for sale in NZ?

Yes, my take was that the current agreement with Fresha has expired, and they are in active negotiations with Fresha re future developments. Other than that nothing substantive, I suspect their priorities are USA and Asia.

[silu]

Just a little word of mouth but my friend in Dallas, Texas has reported that the local mum group has been discussing the benefits of A2 milk and she is the type of soccer mum that knows what she wants and where to get it.

[Snoopy]

It's a great meeting and you shouldn't have sold 10k of ATM earlier this morning...... my new projection range for the SP is $NZ8.50 to $NZ12.00

Some very selective reading of the results being reported here. The two points that stood out for mere are below:

From p30
"Inventory reduction reflects strong infant formula demand exceeding stock availability."

From p6, outlining future strategies for FY2018 and beyind:
"Development of sourcing strategies for nutritional products to support growth initiatives."

Translation: They have sold down all the stock they can and don't yet have a supply strategy in place to meet projected future demand. Exactly as I suspected.

More from today's AGM presentation:

NPAT: $90.6m

No Shares on issue: 718,238,067

eps = 12.6c

Share price at $3 gives a PE of: 300/12.6 = 24

This is a very generous PE for a company that cannot crank up production in any hurry, but I think that ATM deserves this premium. My $3 valuation still looks spot on.

SNOOPY

[see weed]

Yes, my take was that the current agreement with Fresha has expired, and they are in active negotiations with Fresha re future developments. Other than that nothing substantive, I suspect their priorities are USA and Asia.

What do ya think, all positive news in the paper etc tomorrow, and new wave of buyers come through. Might get to 8.50 and $12 buy Christmas go baby go.

[Leftfield]

What do ya think, all positive news in the paper etc tomorrow, and new wave of buyers come through. Might get to 8.50 and $12 buy Christmas go baby go.

Yep I'm v bullish, bought more today, so now back over 60% of my portfolio (average hold price less than $1.00.) Fabulous stock, fabulous management.

Heading to $NZ 10.00 soon IMHO. North of $12.00 by Feb 18.

[sb9]

Yep I'm v bullish, bought more today, so now back over 60% of my portfolio (average hold price less than $1.00.) Fabulous stock, fabulous management.

Heading to $NZ 10.00 soon IMHO. North of $12.00 by Feb 18.

Yes, its definitely heading to 2 digit number soon in my opinion, it could be as early as this year or early next year. One things is sure though by Feb 18, which is FH 18 results time, price won't be in single digit barring any major disaster....which is very unlikely but you never know.

Few more points that I tht are worth their mention:

- We've Synlait's upcoming ASM next wed, which might add to further bullish sentiment in the short term.

- ATM would be sitting on close to $175ml cash on hand as of today, they didn't announce any divvy or outlined plans for any share buyback as signalled earlier. They seem to be very coy about their future plans with the use of capital which make think they've some big plans up their sleeves and keeping a tight lid on things.

- Their balance sheet would be envy of any blue chip company with zero debt, plenty of cash on hand and their investment in Synlait more then doubled in a years time.

That's all for now.

PS - Just one bit of negative I noticed is re the re-lection of Chairman Mr Hearn, he got close to 25% of votes against, not sure what to read into that.