ATM - A2 Milk Corporation Limited

[sb9]

Maybe... I think the key difference here is that Bellamy's don't yet have a permit to sell in Chinese stores. A permit A2 has through Synlait. Rightly or wrongly Jayne has been quite critical of the Bellamy's model and I think that A2's multi channel approach reduces the risk.

The impact of new ecommerce regulations will be interesting. My view is that A2 first half results will be really solid with the impact (if any) of new regulations occuring in the second half of the year.

I do hope so but there's a pesky element that exists on ASX called "Shorters" ​and they won't spare unfortunately.

[dobby41]

ATM would still have a significant piece of the market pie and if everyone is drinking A2 milk then the pie is huge.

At the moment there is a pie (milk) and sub-pie (A2 milk).
ATM have a significant piece of the A2 milk pie but are really small players in the milk pie - and that is the only pie that there would be.
Their differentiator would be gone.
May be a wee ways away but likely to happen.

I understand way back when A2 was the normal milk and A1 came about as a mutation that seemed to become the prevalent type.

[petty]

I know nothing about shorters, rightly or wrongly. Im 30 and hold investments with retirement in mind so I'm not too worried by the volatility created by traders. I see the main risk to A2 share price in the near term is wider sharemarket PE retraction which will hit higher growth stocks more heavily and or recession due to global factors (brexit/tradewars). Over time Im comfortable with my holding size and will only exit if dynamics for A2 change. These could be competition, IP loss, regulation changes etc.

[sb9]

I know nothing about shorters, rightly or wrongly. Im 30 and hold investments with retirement in mind so I'm not too worried by the volatility created by traders. I see the main risk to A2 share price in the near term is wider sharemarket PE retraction which will hit higher growth stocks more heavily and or recession due to global factors (brexit/tradewars). Over time Im comfortable with my holding size and will only exit if dynamics for A2 change. These could be competition, IP loss, regulation changes etc.

Long term no issues here, just brace short term volatility.

Seems as though A2 is pretty resilient in first few minutes of open on ASX, so may be this time its different.

[tzbang]

At the moment there is a pie (milk) and sub-pie (A2 milk).
ATM have a significant piece of the A2 milk pie but are really small players in the milk pie - and that is the only pie that there would be.
Their differentiator would be gone.
May be a wee ways away but likely to happen.

But by then they wouldn't necessarily need a differentiator.
As everyone is slowly moving to make A2 milk pies alongside their normal pies - they massively boost awareness and promotion of the a2 milk pie.
ATM are ready to benefit from this from being significantly ahead of everyone else. So although they start to share the a2 milk pie, the pie is getting larger by the year.
By the time there are no normal pies being made ATM's market share could be massive.

[Leftfield]

I know nothing about shorters, rightly or wrongly. Im 30 and hold investments with retirement in mind so I'm not too worried by the volatility created by traders. I see the main risk to A2 share price in the near term is wider sharemarket PE retraction which will hit higher growth stocks more heavily and or recession due to global factors (brexit/tradewars). Over time Im comfortable with my holding size and will only exit if dynamics for A2 change. These could be competition, IP loss, regulation changes etc.

You're on track. It's about time in the market, not short term timing the market with this gem.

I've been in ATM since 2014 and have seen shorters come and go. I've seen fearsome comparisons to BAL come and go. Fears of China regulation come and go etc..

The big picture is that in FY18 ATM sales grew 68% to $923 mill. Net P was up 116% to $196 mill and Cash on Hand was up 131% to $231 mill.

For FY19 if revenue increases at a slower pace (say) 40% ATM's revenue could reach $1.3 b, Net P and Cash on Hand could double. (DYOR) There are few other NZX companies that offer this potential.

The next update will provide info to assess progress to these goals, and until then all else is just speculation.

[minimoke]

I wonder how long it would take for all cows in NZ to be A2?

Latest article I read which is referenced in this thread estimated 10 years

[dobby41]

But by then they wouldn't necessarily need a differentiator.
As everyone is slowly moving to make A2 milk pies alongside their normal pies - they massively boost awareness and promotion of the a2 milk pie.
ATM are ready to benefit from this from being significantly ahead of everyone else. So although they start to share the a2 milk pie, the pie is getting larger by the year.
By the time there are no normal pies being made ATM's market share could be massive.

I think you miss my point - in the end there would be only 1 pie - the milk pie (which is now all A2) - ATM would then be a minnow with nothing to differentiate them.

[dobby41]

Latest article I read which is referenced in this thread estimated 10 years

Thanks - food for thought, though 10 years is a long time and anything can happen.

[Balance]

I think you miss my point - in the end there would be only 1 pie - the milk pie (which is now all A2) - ATM would then be a minnow with nothing to differentiate them.

That's a bit like saying that in the end, there is only the Cola market and Coca-Cola would then be a minnow etc etc.

Never ever under-estimate first mover advantage when cemented in.