ATM - A2 Milk Corporation Limited

[drcjp]

I find it somewhat interesting that a company with the growth prospects of ATM..

Who just released a 1Q report like the one this week is sliding backwards in share price..

Market hubris. Knowing when its silly something to learn I guess, Lots of buyers out there now who have watched their investment slide back 25% in the space of a few days will be hurting.
SUM also down from a hubris of around 4.25 last year. Analysts have ATM at around 1.87. Funny that.

[sb9]

Both A2M and BAL are at the mercy of traders (shorters) these days. They're having game with those two stocks.

However, at the end of day it all depends on your investment objective and what's your margin of safety is. I for one not too concerned with day to day movements as I'm in for long haul (having got mine at 58c and few more at recent capital issue at 68c).

[Bjauck]

Market hubris. Knowing when its silly something to learn I guess, Lots of buyers out there now who have watched their investment slide back 25% in the space of a few days will be hurting.
SUM also down from a hubris of around 4.25 last year. Analysts have ATM at around 1.87. Funny that.

I am not sure why you singled out SUM...RYM is also down about 5% from 6/8/2015 when SUM was $4.25. Which perhaps suggests a sector re-rating (unless hubris also affected RYM?). However with ATM, it does seem as though the good set of results did not matter as far as the current traders of this stack are concerned.
Disc:Hold RYM SUM ATM

[RGR367]

If the Market offers it back at a lower price what it accepted last time at a higher price then why not just buy it again?

[Sideshow Bob]

Farmers Weekly

http://viewer.zmags.com/publication/...c#/c965c23c/11

[blobbles]

Farmers Weekly

http://viewer.zmags.com/publication/...c#/c965c23c/11

Great read.

UK break even end of June. Then its likely PROFIT. Not sure how SNOOPY will spin next years UK profit into a loss? Surely will be an interesting read.

A2 now successful in 2 markets, or 3 markets - fresh milk Aus, powdered milk Aus, powerdered milk China (and potentially fresh milk China). Soon to be 4 markets with fresh milk UK. While US is going slower than expected, the fact that they have, or about to, succeed in 2 similar western markets is an excellent sign.

So not sure how SNOOPY arrives at the conclusion "one trick pony"?? About to make ~$47m from ~340m revenue while still losing money by supporting not yet profitable markets. Likely to have been $60m profit if they weren't in UK/USA. Growth rate of ~100%. Supply side shouldn't have a problem for the next 2 years, according to the article and they know how much they are growing.

Surely this is the sort of company statistics investors like us should be salivating over.

[Leftfield]

Great read.

UK break even end of June. Then its likely PROFIT. Not sure how SNOOPY will spin next years UK profit into a loss? Surely will be an interesting read.

A2 now successful in 2 markets, or 3 markets - fresh milk Aus, powdered milk Aus, powerdered milk China (and potentially fresh milk China). Soon to be 4 markets with fresh milk UK. While US is going slower than expected, the fact that they have, or about to, succeed in 2 similar western markets is an excellent sign.

So not sure how SNOOPY arrives at the conclusion "one trick pony"?? About to make ~$47m from ~340m revenue while still losing money by supporting not yet profitable markets....

Don't forget further options in the NZ market when current distribution agreement ends.

[Snoopy]

Great read.

UK break even end of June. Then its likely PROFIT. Not sure how SNOOPY will spin next years UK profit into a loss? Surely will be an interesting read.

A2 has grouped the UK and USA markets together going forwards. So it won't be possible to find out how profitable UK is. I would virtually guarantee that the UK and USA together will still be loss making though.

A2 now successful in 2 markets, or 3 markets - fresh milk Aus, powdered milk Aus, powerdered milk China (and potentially fresh milk China).

We hear stories of Chinese Australians buying up infant formula in Australia and selling it on the black market in China. Meanwhile A2 is establishing their own sales channels in China. It is not clear to me how opening up A2s own direct sales into China will affect the sales of infant formula in Australia. It could be a zero sum game with growth in direct China sales being directly offset by falling infant formula sales in Australia. Also remember that A2 have no production in China. All China product is sourced frm Australia and New Zealand.

A2 declare 'Australia and New Zealand' and 'China and Other Asia' as separate markets. I put it to you that it is really just one market: Australia and New Zealand, with some export sales to China. The infant formula market in China is far less profitable than the "Australian and New Zealand" markets, despite infant formula being the highest value product. It seems unlikely then that selling lower value product into China (fresh milk) can boost profits significantly in that market.

This is where my 'one trick pony' comment comes from.

Soon to be 4 markets with fresh milk UK. While US is going slower than expected, the fact that they have, or about to, succeed in 2 similar western markets is an excellent sign.

EBITDA break even in the UK is not really succeeding. EDITDA break even just means making a smaller loss overall.

So not sure how SNOOPY arrives at the conclusion "one trick pony"?? About to make ~$47m from ~340m revenue while still losing money by supporting not yet profitable markets. Likely to have been $60m profit if they weren't in UK/USA. Growth rate of ~100%. Supply side shouldn't have a problem for the next 2 years, according to the article and they know how much they are growing.

Again EBITDA profit is not the same as after tax profit. Growth rates of 100% ultimately means 100% more cows in the supply chain. Not impossible. But not as easy as a software producer who can pull their resources out of cyberspace.

Surely this is the sort of company statistics investors like us should be salivating over.

All the salivating is already on the table. The share price today already assumes real profits in the USA and further growth into other markets not even on management's horizon yet. I'm not saying this won't happen eventually. I am just saying the share price has got ahead of actual profitable growth on any realistic time horizon. Come back in ten years and $2 might look like value. Until then ATM looks like a money losing proposition for investors who jump in today, even if the company in operating market terms continues to develop according to managements plans.

SNOOPY

[kizame]

Its also worth noting that the shareprice has hit 2.50 and just lately 2.60 both times it was slammed back down to where it is now.
With the latest result just out, and nothing special happening to make the share price continue from here,I think the growth is built in at the moment. The simple fact that the price didn't linger at 2.60 and falls right back to where it was before the announcement,tells me it isn't going any further for the time being. Most people would have to be very happy with where it is now anyway.

[Ginger_steps_]

Its also worth noting that the shareprice has hit 2.50 and just lately 2.60 both times it was slammed back down to where it is now.
With the latest result just out, and nothing special happening to make the share price continue from here,I think the growth is built in at the moment. The simple fact that the price didn't linger at 2.60 and falls right back to where it was before the announcement,tells me it isn't going any further for the time being. Most people would have to be very happy with where it is now anyway.

Its very popular in aus at the moment, sentiment is strong and they have released 3 substantial profit upgrades in 4 months, with another likely to come soon. Add in instos, I think this stock has got plenty of volatility ahead over the next 3 months, with a bias to the upside! IMO if a2 continue on this trajectory for the next 12 months we could see it trading at a PE of 60-80 (not Snoopy's PE!!), such as many other growth companies on the ASX.

On another note - I have moved from my little hick town to Coffs Harbour. I was in Coles today and noticed a2 400g tins of a2 platinum (usually 900g), sold at a price premium of course. They are the only brand from what I can see who have these small tins - their profit margins are being fed meat pies hourly!