ATM - A2 Milk Corporation Limited

**Beagle** · 20-02-2019, 10:28 AM

Originally Posted by winner69

Main thing to note is Gross Margins continue to improve (inputs and price)

EBITDA margins shrinking in H2 because of added investment in growth (doing what Heartland are doing and not holding back). You know that anyway

Even at 31%/32% full year EBITDA margin is higher than last year ...isn’t that good?

Yes 31.5% EBITDA (mid point) is a nice improvement on 30.7% last year and a little above consensus expectations of 30.9% for FY19 https://www.marketscreener.com/A2-MI...22/financials/
I am not sure however that the average market consensus of 37 cps is going to be exceeded by much if anything what with marketing doubling in the second half.
If we work of 37 cps (average analyst expectation) the shares at $13.80 are on a forward PE of 37 which is right at the top end of their historical multiple range.
One should not overlook the China concentration / regulatory risk with this stock which in my view is not priced into the stock at all.

Synlait on a forward PE of 19.6 with its more diversified business plan looks like a better risk reward investment at around $9.80 on around half the PE that ATM at $13.80.
Remember that in many ways their fortunes are inextricably linked.
Interestingly is we look right out to FY21 as far as the analysts are forecasting the eps growth rate of Synlait and ATM is the same and yet its priced on roughly half the PE.
I think at just under $14 its a great time to lock in some profit before Herdlicker and her colleagues do.

Not trying to rain on anyone's parade, (so I will leave it at that and let you guys enjoy the day)...it just could be there's a better and safer way to play this growth story with Synlait.

**Sideshow Bob** · 20-02-2019, 10:39 AM

Originally Posted by minimoke

100,000 just gone through at $13.81. Someone taking profit and someone cross they didn't buy yesterday.

Expect that was Seeweed closing out one of his trades...…..

**bull....** · 20-02-2019, 10:41 AM

Originally Posted by Beagle

Yes 31.5% EBITDA (mid point) is a nice improvement on 30.7% last year and a little above consensus expectations of 30.9% for FY19 https://www.marketscreener.com/A2-MI...22/financials/
I am not sure however that the average market consensus of 37 cps is going to be exceeded by much if anything what with marketing doubling in the second half.
If we work of 37 cps (average analyst expectation) the shares at $13.80 are on a forward PE of 37 which is right at the top end of their historical multiple range.
One should not overlook the China concentration / regulatory risk with this stock which in my view is not priced into the stock at all.

Synlait on a forward PE of 19.6 with its more diversified business plan looks like a better risk reward investment at around $9.80 on around half the PE that ATM at $13.80.
Remember that in many ways their fortunes are inextricably linked.
Interestingly is we look right out to FY21 as far as the analysts are forecasting the eps growth rate of Synlait and ATM is the same and yet its priced on roughly half the PE.
I think at just under $14 its a great time to lock in some profit before Herdlicker and her colleagues do.

Not trying to rain on anyone's parade, (so I will leave it at that and let you guys enjoy the day)...it just could be there's a better and safer way to play this growth story with Synlait.

need to remember in the long run manufacturers always get screwed as big customers demand better costs. a2 will be no different at some point in time.

**Sideshow Bob** · 20-02-2019, 10:41 AM

What price did Jayne sell out at? $12 something? Surely could have taken a loan out against them, and then pocketed another dollar or so.

**minimoke** · 20-02-2019, 10:44 AM

Originally Posted by Beagle

Not trying to rain on anyone's parade, (so I will leave it at that and let you guys enjoy the day)...it just could be there's a better and safer way to play this growth story with Synlait.

Some of us hold both. (ye old favourite will be coming out of hibernation tonight!)

**sb9** · 20-02-2019, 10:47 AM

Originally Posted by Beagle

erdlicker and other insiders going to dump millions more shares on the market ?, (remembering they haven't been able to sell as insiders leading up to this announcement).

Doesn't worry me a bit if and when all of them they sell out after delivering such a stupendous result for shareholders. They deserve to enjoy their hard work too.

**see weed** · 20-02-2019, 10:55 AM

Originally Posted by Sideshow Bob

Expect that was Seeweed closing out one of his trades...…..

No, I only sell in 2000 to 3000 blocks during the day or a bigger block on open or close. Buying I have a different approach

.

**Beagle** · 20-02-2019, 10:56 AM

Originally Posted by sb9

Doesn't worry me a bit if and when all of them they sell out after delivering such a stupendous result for shareholders. They deserve to enjoy their hard work too.

No argument that Babbage deserves an extremely comfortable retirement as he has done wonders for this company over a long period of time.