ATM - A2 Milk Corporation Limited

[dreamcatcher]

China data analysts Syntun estimate all 618 sales at 578.5 billion yuan ($89.4 billion), up 26.5% over 2020.

https://www.forbes.com/sites/frankla...h=156c4d1365ae

[Leftfield]

China data analysts Syntun estimate all 618 sales at 578.5 billion yuan ($89.4 billion), up 26.5% over 2020.
https://www.forbes.com/sites/frankla...h=156c4d1365ae

Encouraging that A2 held it's fourth ranking in a very competitive field.

ATM sale data.png

Not getting excited yet.... as much depends on the next update.

[dobby41]

Interesting article
"With its shares down over 50% year to date has The a2 Milk Company become of interest for value investors"
https://www.goodreturns.co.nz/articl...investors.html

[Beagle]

Hi folks,interested to hear where people think this stock is headed...Beagle,Balance ??

ATMJU21.jpg
For my money fundamental analysis is almost useless at this point as nobody can reliably predict what future earnings will be, certainly not the company itself with its profoundly shocking track record of downgrades. This is a highly volatile, uncertain and risky situation. Although there are some TA indicators that give some emerging encouragement (break up through the 30 day MA, red line) the shares are still in a confirmed downtrend and I wouldn't consider touching them until there is a clear break up through the 100 day MA, (the dark line).

I have a VERY low level of confidence in management's abilities and its clear their inventory management and reporting systems need a total overhaul. In terms of fundamental analysis for what its worth, I think the shares are priced as though a strong recovery in sales is almost certain...and i don't think it is all that certain. I have far too much cash in my portfolio allocation but notwithstanding this I am not touching them. Actions speak louder than words

[Arbroath]

"I think the shares are priced as though a strong recovery in sales is almost certain"

I'm not saying the situation can't get worse, perhaps much worse, but that is a laughable statement. Imho a strong recovery in sales this year would see them back above $10 by Xmas. Could depend on what you mean by strong of course but do you really think the shares would be at $6.50 still by Xmas if they can get sales growing strongly again in the next 6 months?

You are right that the situation is risky but I don't think the market, after 4 downgrades, is pricing much in now. A fifth downgrade though would still kneecap them another 20% or so...

[BlackPeter]

"I think the shares are priced as though a strong recovery in sales is almost certain"

I'm not saying the situation can't get worse, perhaps much worse, but that is a laughable statement. Imho a strong recovery in sales this year would see them back above $10 by Xmas. Could depend on what you mean by strong of course but do you really think the shares would be at $6.50 still by Xmas if they can get sales growing strongly again in the next 6 months?

You are right that the situation is risky but I don't think the market, after 4 downgrades, is pricing much in now. A fifth downgrade though would still kneecap them another 20% or so...

Shares are currently (at AU$6.10) trading at a forward PE of 27.5 or on a backward PE of 44.2; The only way to justify the current share price is if you assume (and price in) significant (and sustainable) earnings growth.

Will they manage to turn the cart around and achieve this amazing (and already priced in) growth?

I have no idea ... but I can't see why you call beagles statement "laughable". He just stated the plain obvious.

[Biscuit]

Great update:

"... unique 'End to End' business model with around 350 people
employed in markets outside of New Zealand to ensure that (we are) better
connected to customers and consumers in market and (are) able to adapt at speed
to meet local market changes and needs. A particular strength of this model
has been evidenced in Mainland China and Asia where (we have) been able to
offset the impact of the challenges in the Daigou market in Australia and New
Zealand. This model also enables the business to continue to perform strongly
even with travel and tourism being so restricted..."

Oh, no, hang on, that was Comvita.

[Beagle]

Shares are currently (at AU$6.10) trading at a forward PE of 27.5 or on a backward PE of 44.2; The only way to justify the current share price is if you assume (and price in) significant (and sustainable) earnings growth.

Will they manage to turn the cart around and achieve this amazing (and already priced in) growth?

I have no idea ... but I can't see why you call beagles statement "laughable". He just stated the plain obvious.

Exactly BP...a strong recovery in sales is already baked into the current share price like its an absolute certainty, (when maybe it isn't).
I sold 3 years and 3 months ago at ~ $13...what would I know lol

[BlackPeter]

Great update:

"... unique 'End to End' business model with around 350 people
employed in markets outside of New Zealand to ensure that (we are) better
connected to customers and consumers in market and (are) able to adapt at speed
to meet local market changes and needs. A particular strength of this model
has been evidenced in Mainland China and Asia where (we have) been able to
offset the impact of the challenges in the Daigou market in Australia and New
Zealand. This model also enables the business to continue to perform strongly
even with travel and tourism being so restricted..."

Oh, no, hang on, that was Comvita.

Yep, I thought I'd seen that announcement coming from a different company : But yes - you are right, it is possible to do it, one just needs the right management forming and implementing the right strategy.

Can't be that hard, can it?

[Arbroath]

Shares are currently (at AU$6.10) trading at a forward PE of 27.5 or on a backward PE of 44.2; The only way to justify the current share price is if you assume (and price in) significant (and sustainable) earnings growth.

Will they manage to turn the cart around and achieve this amazing (and already priced in) growth?

I have no idea ... but I can't see why you call beagles statement "laughable". He just stated the plain obvious.

Couple of points BP:

- the backward PE is irrelevant because it has $120m of stock tipped down the drain in it. If there's a "strong recovery in sales" how much more stock do you see them writing off in FY22?
- FY22 PE of around 27x does not factor in a strong recovery in sales...with consensus only recovering less then half the c. $500m sales deterioration in FY21 v FY20.

Maybe this is all a disagreement about the word strong. For me the market is cautiously pricing in only a mild c. 10-15% sales recovery in FY22. A strong recovery for me is more like a 25% sales recovery to $1.5b+ for FY22.

It is all very fluid because they either deliver a decent recovery or there are more systemic issues in the business than poor stock channel management.