ATM - A2 Milk Corporation Limited

[silu]

News that British multinational consumer goods giant Reckitt Benckiser Group will take a £2.5 billion ($4.57 billion) hit on the sale of its struggling baby formula business in China is not a good sign for The a2 Milk Company.

https://www.afr.com/companies/manufa...0210608-p57z0t

God I'm glad I closed out my position in this. It would need to do a 95% from current levels to get back to the price when I sold. I wonder how many, like I did, held on for too long because we felt a kinship with a company that made us a lot of money.

[Leftfield]

You could also say that the Reckett Benckiser Group's Chinese business model is vastly different from A2M's and the impending sale could be good news for ATM.

In the current T-Mall promotion A2 currently ranked 4th.

T - Mall sale .png

( As usual DYOR and take care ..... this result may be a skewed by 'discounting' and 'lower margins'.... time will tell.)

[Balance]

Something about the tide going out and someone is caught without swimwear?

https://www.sharecafe.com.au/2021/05...tals-reappear/

As the case of A2 Milk shows, ‘poster child’ stocks which can generate a lot of hype and capture the headlines for a time are no substitute for quality businesses like Brambles, which possess a sustainable competitive advantage, recurring earnings, and capable management which can grow the business over the longer term, and which are trading at a reasonable price.

[Balance]

You could also say that the Reckett Benckiser Group's Chinese business model is vastly different from A2M's and the impending sale could be good news for ATM.

By Broker News

With Reckitt’s having divested of its China infant formula business, Citi evaluates the read-through for a2 Milk.

Were a2 to be priced at the same enterpise value implied by the sales price, it would be worth $12.06 per share. However, the broker believes a2’s earnings are materially different now compared to 2020, given diagou disruption and lack of local China manufacturing.

A recovery in diagou to 50% of FY20 would value a2 at $6.54, but investment appeal is lower, Citi suggests, given:

no local production,

reliance on a single product

and

lower market share.

Sell and $5.85 target retained.

[see weed]

Something about the tide going out and someone is caught without swimwear?

https://www.sharecafe.com.au/2021/05...tals-reappear/

As the case of A2 Milk shows, ‘poster child’ stocks which can generate a lot of hype and capture the headlines for a time are no substitute for quality businesses like Brambles, which possess a sustainable competitive advantage, recurring earnings, and capable management which can grow the business over the longer term, and which are trading at a reasonable price.

Very interesting graphs. A2 is a 3 year chart and brambles is a 25 year chart. If I invested, which I did, $50,000 in a2 in 2015, on todays closing price would equal $597,000. $50,000 in Brambles in 2015 at $2.60 odd, I will let you do the maths. Sold my last 20,000 lot a few weeks back a bit over $105,000 profit.

[Master98]

https://www.raskmedia.com.au/2021/06...ace-more-heat/
"A2 milk shares may face more heat"

[Blue Skies]

Seems to be quite solid support forming around 600 mark, possibly driven by bargain hunters creeping in.

Here's a question i'ld be interested in what posters think.

In 5 years time, which would have been the better investment at todays prices & why ?
Lets say just for example $1million invested in ATM or Auckland investment property?

[see weed]

Seems to be quite solid support forming around 600 mark, possibly driven by bargain hunters creeping in.

Here's a question i'ld be interested in what posters think.

In 5 years time, which would have been the better investment at todays prices & why ?
Lets say just for example $1million invested in ATM or Auckland investment property?

$1,000,000 property at 10% a year = $1,500,000 in 5 years. $1,000,000 ATM shares at $6.10c= 163,934 shares. The ATM shares would have to go up $3.05c to $9.15c to equal the $500,000 property gain, which could take any amount of years the way a2 is going at the moment. If things picked up and got on track again a2 could gain a few dollars in a number of years. Or you could divide the mill into 5 and invest in 5 different companies. Good night.

[tommy_d]

$1,000,000 property at 10% a year = $1,500,000 in 5 years. $1,000,000 ATM shares at $6.10c= 163,934 shares. The ATM shares would have to go up $3.05c to $9.15c to equal the $500,000 property gain, which could take any amount of years the way a2 is going at the moment. If things picked up and got on track again a2 could gain a few dollars in a number of years. Or you could divide the mill into 5 and invest in 5 different companies. Good night.

I'm struggling with the maths in the post above a little. The small error only reinforces the point being made though

property increase at 10% a year. I assume after five years that means an increase multiplier of 1.1 to the power of five, so 1.6105. Seems to check out.
year 0 = 1,000,000
year 1 = 1,000,000*1.1 = 1,100,000
year 2 = 1,100,000*1.1 = 1,210,000
year 3 = 1,210,000*1.1 = 1,331,000
year 4 = 1,331,000*1.1 = 1,464,100
year 5 = 1,464,100*1.1 = 1,610,510

so the ATM share price would have to increase even more than the stated 50%. The thing about the house though is that you might be able to buy it using leverage, so that gain could be made on an initial outlay of $100,000 if you can get a 10% lvr. Which is pretty much the maths that has been rewarding those using debt to buy houses, leverage is king, well, maybe heir to compounding interest, but close...

[see weed]

I'm struggling with the maths in the post above a little. The small error only reinforces the point being made though

property increase at 10% a year. I assume after five years that means an increase multiplier of 1.1 to the power of five, so 1.6105. Seems to check out.
year 0 = 1,000,000
year 1 = 1,000,000*1.1 = 1,100,000
year 2 = 1,100,000*1.1 = 1,210,000
year 3 = 1,210,000*1.1 = 1,331,000
year 4 = 1,331,000*1.1 = 1,464,100
year 5 = 1,464,100*1.1 = 1,610,510

so the ATM share price would have to increase even more than the stated 50%. The thing about the house though is that you might be able to buy it using leverage, so that gain could be made on an initial outlay of $100,000 if you can get a 10% lvr. Which is pretty much the maths that has been rewarding those using debt to buy houses, leverage is king, well, maybe heir to compounding interest, but close...

Yes you are right, I forgot to compound the yearly interest. So the new figure is a2 would have to go up $3.725c plus the $6.10c = $9.825c to match the investment property gain. Am talking basic, if you had a mill $ in the bank without getting a mortgage and bought a property or a2 shares. If mortgage interest rates happened to go up in the next 5 years it might slow the rising property market from 10% year to 7% year. Time will tell, and hope mortgage rates don't go up too much for the struggling. When I had a mortgage they were in the 12% to 15% range and always had at least 40% deposit years ago.