ATM - A2 Milk Corporation Limited

[Beagle]

A2 and Synlait currently the same price ! Which has better prospects ?
Disc: I have a bob each way with an almost identical number of shares in each company.

[minimoke]

A2 and Synlait currently the same price ! Which has better prospects ?
Disc: I have a bob each way with an almost identical number of shares in each company.

How odd
I topped up the other day with both at $10.00 thinking this would be the only time they would have parity. I have equal amounts (other than $2) invested in both ATM and SML. ATM is up 18% and SML is up 42%. Long term I like ATM better.

[couta1]

no one really knows where the cull will go and how far , but assumptions on growth for a2 are very strong and fully factored in share price i reckon so any hiccupp to the forecasts will be punished very bad hence why all the short selling probably people hedging there bets going forward

And if a large Meteorite hits the earth, I reckon the SP would also get punished really badly as well. PS-Shorters might get a little bit of incinerating on Thursday.

[Sideshow Bob]

As a positive we should be able to look forward to cheaper beef on our supermarket shelves - but reality overall numbers are inconsequential.

Most of it goes to burger patties/manufacturing, and exported to the US.

Not much good for beef after being sucked dry for years - but on the upside any of the steak cuts would be great exercise for your jaw!

[Beagle]

How odd
I topped up the other day with both at $10.00 thinking this would be the only time they would have parity. I have equal amounts (other than $2) invested in both ATM and SML. ATM is up 18% and SML is up 42%. Long term I like ATM better.

FNZC think competitors (like Synlait) are going to eat Fonterra's lunch
http://www.sharechat.co.nz/article/0...ay+29+May+2018
Just as well ATM got a bob each way on who supplies them going forward.

[sb9]

A2 and Synlait currently the same price ! Which has better prospects ?
Disc: I have a bob each way with an almost identical number of shares in each company.

SML currently up by 5c at 10.55 compared to 10.50 for ATM. Who would've thought.....

[minimoke]

no one really knows where the cull will go and how far , but assumptions on growth for a2 are very strong and fully factored in share price i reckon so any hiccupp to the forecasts will be punished very bad hence why all the short selling probably people hedging there bets going forward

We don't know how far the cull will go. Bu tlets deal with what we know. Synlait and A2 farms are subject to rigorous control to ensure herds are and stay A2

Synlait has been rigorously testing for M Bovis for ages. If it was on one of there farms we would probably know.

Farmers are queuing up to be a Synlait supplier. Of course they will be M Bovis free to be part of the supply chain. (Actually might see more farmers want to be part of this supply chain now!)

M Bovis is not like Dydymo - it cant just end up on a birds foot and fly from farm to farm. A2 farms will make sure it doesn't enter their front gate.

Those at risk of M Bovis will be those who buy untagged cows or who have been lax in their herd transfer management.

There are much bigger and more realistic risks - like exchange rates or Donald nuking Korea at play.

[couta1]

SML currently up by 5c at 10.55 compared to 10.50 for ATM. Who would've thought.....

One of them is a better long term buy, by a row of milk cans.

[BlackPeter]

A2 and Synlait currently the same price ! Which has better prospects ?
Disc: I have a bob each way with an almost identical number of shares in each company.

Good question. I would think that ATM (forward PE of 28.6, CAGR of 49 if they can manage to keep growing that fast; highly scale-able model and low capital requirements) offers potentially (and short term) higher returns than SML, however - as well higher risks. Imagine the following scenarios:

Some scientist discovers at some stage that A1 milk might have benefits over A2 (I don't expect that, but hey - some years ago nobody knew about the benefits of A2 over A1). The A2 bubble would deflate quite quickly.
On the other hand - if we assume the A2 success story continues, than give it another 15 years or so and everybody will sell A2 milk. Maybe ATM still keeps a first mover advantage, but their margins (and with that the SP) will shrink.
I think no matter how you spin it. but the amazing growth of ATM will probably rather soon come back to earth.

SML (forward PE of 20.5 and CAGR of 15) however is a well managed but old fashioned production company. While they need (lots of) capital to expand, they do have a culture of picking opportunities. A2 is one of them, but Lactoferrin, grass fed milk and just offering the customers milk from better managed farms (environmentally as well as animal welfare) allows them to charge a "feel-good" factor.

SML would be hit if A2 goes for some reason bust, but it would not kill them.

SML as well will at some stage slow down in further growth, but than - they have the better PE ;

So - I guess it depends on your risk profile and your investment horizon which of the companies you prefer ....

Discl: hold lots of SML and (at current) no ATM ... but still waiting for the shorters to gift me some reasonable priced ATM as well ;

[Leftfield]

A2 and Synlait currently the same price ! Which has better prospects ?
Disc: I have a bob each way with an almost identical number of shares in each company.

ATM by a country mile!