ATM - A2 Milk Corporation Limited

[blackcap]

Interesting and I hope good for ATM> Anecdotally off course. I went to my local Countdown today because I was out of milk. Previously they have only had one line of A2 on the shelf but to my surprise there were now 3 lines of A2 milk. This to me shows more demand for the product, or it is A2 doing more to get their product on the shelf. Good to see.

[NT001]

To see weed and Joshuatree

Almost all Countdowns nationwide seem to have A2 Milk. But maybe the processors (Ridge) are having trouble meeting demand, and I also know that in some cases the Countdown people who order supplies are simply not ordering enough. I've often found the A2 shelf is empty and I have to ask, whereupon someone goes out the back and gets some, which is not the way for them to build A2 sales. Our local Countdown, a medium sized one, orders just 2 dozen bottles a day. I've seen one New World that has A2, in Porirua I think, but usually Countdown is the place to go. NZ distribution merits a question at the next AGM, but the amounts being sold here are trivial compared with Australia, where ATM also has a bigger piece of the action.

[blackcap]

Milfie still averaging down, now have nearly 15%. Gaynor is KEEN.

hahaha you should watch your abbreviating. Milfie to me conjures up images and they do not take the form of a bearded middle age white male.

[Tsuba]

Milfie still averaging down, now have nearly 15%. Gaynor is KEEN.

So Moosie. Since you're in doom mode these days is that a good thing or a bad thing ?

[axe]

Milfie still averaging down, now have nearly 15%. Gaynor is KEEN.

What will happen to SP if Gaynor loses his appetite?

[Tsuba]

What will happen to SP if Gaynor loses his appetite?

The no mind of their own lemmings and sheep will panic.

[MAC]

Yep, “For brands companies (i.e. Fonterra’s brands business and A2 Milk), margins tend to improve as the cost of dairy ingredients decrease, also implying a positive auction last night”.

http://www.harbourasset.co.nz/wp-con...ts-updated.pdf

[Bobcat.]

I'm getting more interested technically in this stock. Now that it's broken historical support at 65c, the next support level is 60c, which is where I'm thinking of placing a bid.

But then I checked a few fundamentals. ANZ Securities states the following:

MC = $422m
eps = only 0.16c !
p/e = a whopping 400 !
nta = only 7c
Reuters recommends only a hold.

Something doesn't look right. If these figures are true, there's a lot of growth potential factored into its price. Milford and NZ Super seem to think so (recent announcements at 13.8% uplifted to 14.8% and from 5% to 6% respectively).

Insights welcome.

[Bobcat.]

Thanks MAC. I've dug out some info from their HY Feb report, which by the way is the time from which their sp started falling:

Strategic Agenda

"The FY13 strategic agenda centred on the increasing profits from the Australian business funding revenue growth in the priority markets of the United Kingdom and China. To the extent revenue growth in the UK is tracking behind plan, this is offset by enhanced performance in Australia and additional product and market opportunities being pursued."

o EBITDA before share of associate earnings of $2,576,000 compared to the prior corresponding period of $3,459,000;

A second shipment of infant formula to China took place in November 2013 following a first shipment in June 2013.

Cash on hand at 31 December 2013 was $13,156,000.

Has anybody got any update on:
a) what "additional product and market opportunities [are] being pursued"? or
b) sales into Australia? or
c) shipments into China? or
d) cash on hand.

FY Report is due in a month.

Cheers,

BC

Edit: I've found this from a 28 April announcement to help answer my question c):
"a2MC Managing Director Geoffrey Babidge says "the requirements of the [China] registration process are consistent with our expectations. We have been working closely with Synlait Milk in anticipation of potential changes and will continue to do so to build the Company's position in this market."

https://www.anzsecurities.co.nz/Dire...spx?id=3598635

Getting registered and doors open into China may be what's required to turn around this stock's downward momentum.

[Bobcat.]

Thanks MAC (yes, I did see your earlier post but it was labelled "since Oct 2012" and I thought it could perhaps be products released pre-Feb's HY Report).

Given that people will continue to buy ATM's products (be it fresh milk, long-life milk, infant formula or cream) in a recession or market downturn, I figure that this is probably a good enough defensive stock, although I would like to see a better p/e before investing much.

A bid at 60c with a stop loss at 58c I think will do for now.

Cheers,

BC