ATM - A2 Milk Corporation Limited

[Balance]

dont know if anyone saw q & a sunday looked like winstones not happy about all the infant formula going to china .... probably wants it going other places as well?

Winston is an economic buffoon - disciple of that equally pathetic accountant buffoon Muldoon.

Notice he says one thing in NZ and when he goes overseas, he says another thing?

Only the oldies, envies and greedies in NZ are fooled by him so relax.

[couta1]

Have been topping up over the last few days, now makes up about 40% of my portfolio total, not sure how far she will drop but going very long on this darling now. PS-I see BAL hit a high of $19.75 today and sits on a PE of 147 compared to A2's 61, I know which is the better buy by a long shot.

[couta1]

I see the shorters are staying clear of this stock currently, only 2.69% of total volume was shorted yesterday, many of them were severely burnt after the result and Fonterra deal, a dangerous stock to short IMO.

[Beagle]

Have been topping up over the last few days, now makes up about 40% of my portfolio total, not sure how far she will drop but going very long on this darling now. PS-I see BAL hit a high of $19.75 today and sits on a PE of 147 compared to A2's 61, I know which is the better buy by a long shot.

I agree and ATM is certainly growing faster. Reuters has the 2018 PE of BAL at 46 and ATM at 43. Historical PE's are irrelevant for companies growing this fast. Actually speaking of what PE year is appropriate the fact that we're almost into the last quarter of the FY18 year its probably best to consider their 2019 PE to make an intelligent decision on which is best and I see ATM's 2019 PE in the mid-late 20's which is great for a stock with such tremendous growth.

[Nasi Goreng]

I agree and ATM is certainly growing faster. Reuters has the 2018 PE of BAL at 46 and ATM at 43. Historical PE's are irrelevant for companies growing this fast. Actually speaking of what PE year is appropriate the fact that we're almost into the last quarter of the FY18 year its probably best to consider their 2019 PE to make an intelligent decision on which is best and I see ATM's 2019 PE in the mid-late 20's which is great for a stock with such tremendous growth.

Hey Beagle,

in this case for me, PE is absolutely relevant for ATM. When we look at PE’s of 30, 40 or 50 years, it is assuming profits are maintained at current levels for that period of time.

Now of course, A2 will continue to grow for a while which will shrink the current PE number.

Lets say in 3-4 years we get to a more comfortable number like 20 and the patents wear off, the competitive landscape changes and A2 don’t own any manufacturing facilities. Could A2 milk company peak and could Fonterra/SML/Competitor take advantage of A2 who have done the hard yards marketing the product. I keep on asking myself, 10 years from now, will there be other A2 suppliers and the answer I come up with is yes. In which case, why would anyone make A2 for A2 when they could do it themselves.

The brand is worth heaps, I’m not sure if it’s worth $10 billion.

Nasi

[Leftfield]

Hey Beagle,

in this case for me, PE is absolutely relevant for ATM. When we look at PE’s of 30, 40 or 50 years, it is assuming profits are maintained at current levels for that period of time.

Now of course, A2 will continue to grow for a while which will shrink the current PE number.

Lets say in 3-4 years we get to a more comfortable number like 20 and the patents wear off, the competitive landscape changes and A2 don’t own any manufacturing facilities. Could A2 milk company peak and could Fonterra/SML/Competitor take advantage of A2 who have done the hard yards marketing the product. I keep on asking myself, 10 years from now, will there be other A2 suppliers and the answer I come up with is yes. In which case, why would anyone make A2 for A2 when they could do it themselves.

The brand is worth heaps, I’m not sure if it’s worth $10 billion.

Nasi

Nasi, you have a point. However it is not all about patents.

It's also about branding. Many companies can make a drinkable cola, but there is only one Coca Cola.

If you begin to think of ATM as the Coca Cola of milk, then you maybe you will begin to see the branding potential.

Add to the branding potential, first mover advantage, no legacy manufacturing issues and the ability to rapidly move into other products/markets (yogurts, deserts, supplements etc etc) and you can begin to see considerable potential ahead for ATM.

Will the potential be realised? Who knows but so far ATM's track record is hard to beat and PE multiples have proven conservative.

[Beagle]

Ask yourself why people continue to pay three times the price for a Mercedes-Benz car compared to a Japanese brand. The vast majority of MB patents on their technology have worn off but people still buy them because Mercedes-Benz tell people their cars are the best in the world.
Now think about baby formula for your one and only little cute baby...are you going to take any chances with their life, or stick with the gold standard product that your friends have been using ?
When you wrap your mind around those issues you'll start to understand brand value, patents current or expired.
Agree with what Left Field has just also said above.
Just expanding the PE argument a little. A current year PE of 43 could reduce to half that if FY19 profits double and with an ongoing strong growth outlook past FY19 you could easily make the argument that next years PE is too cheap. I'll worry about the "what if's" in ten years time in about 6-7 years from now.
Besides that based on my forecast the current year PE is late 30's and there's plenty of companies trading on the NZX on a current year PE in the 30's with a vastly inferior growth rate or medium term outlook.

[minimoke]

Someone having a wee pull an ATM's chain today. 2.4% rise to around $12.86

[couta1]

Someone having a wee pull an ATM's chain today. 2.4% rise to around $12.86

Thought it might go a bit lower and fill a lower gap yet to be filled, didn't buy my final parcel in anticipation of that, happy with the bounce though, quite a bit of time before we would expect any significant announcement so could still go a bit lower.

[minimoke]

didn't buy my final parcel in anticipation of that, happy with the bounce though, quite a bit of time before we would expect any significant announcement so could still go a bit lower.

Hmm - now up to $13.00

Edit. Is this what bots do - now $13.10. Though I see 32,100 went through at $13.06
(Edit $13.20 - cant keep up!)