ATM - A2 Milk Corporation Limited

[winner69]

My FY19 forecast numbers are based today's trading update and taking into account previously reported numbers:

Rev - $ 1.288M
NPAT - $ 295M
EPS - $ 0.40c

A 30 PE multiple would put them at $12, 35 at $14 and 40 at $16.

Wow sb9 .....about the first time you numbers are higher than mine

Whatever they pretty good eh.

Do you ever go out 10 years plus and do a DCF valuation ..or are you a PE multiples person?

[sb9]

Wow sb9 .....about the first time you numbers are higher than mine

Whatever they pretty good eh.

Do you ever go out 10 years plus and do a DCF valuation ..or are you a PE multiples person?

Don't do DCFs winner, not as clever as you just bit of FA, PE and lots of gut feel....

[BlackPeter]

My FY19 forecast numbers are based today's trading update and taking into account previously reported numbers:

Rev - $ 1.288M
NPAT - $ 295M
EPS - $ 0.40c

A 30 PE multiple would put them at $12, 35 at $14 and 40 at $16.

Question is - do markets support in the current climate a PE of 30 for a growth company with growth rates which are - longterm - clearly unsustainable?

I guess how long can you keep growing with a CAGR of above 20 when all you sell is milk which any other competitor (admittedly with some transitional effort) can produce (at the same cost) as well? It's not rocket science - humans are producing A2 milk since the stone ages ... and they are milking A2 cows for at least the last 10,000 years ;

[reacher]

up over $11 now. This reminds me of last Feb went from 9.50 odd to $11 in morning then up to $12 or so after asx opened then to $14 within the next two weeks after that .

With over 7% of shares shorted in the last few days I expected some similar crazy price action when they have to cover. Unless the Aussies had much higher expectations!

[see weed]

Offloaded a few due to above, sometimes the Kiwis get a bit too enthusiastic before the Aussie open. PS-Hope I'm wrong.

I thought that last Feb. The highs for three days....20/2/18= $9.40.....21/2/18=$11.87.... 22/2/18=$14.62c. I will hold and see where Aussi takes us.

[winner69]

Question is - do markets support in the current climate a PE of 30 for a growth company with growth rates which are - longterm - clearly unsustainable?

I guess how long can you keep growing with a CAGR of above 20 when all you sell is milk which any other competitor (admittedly with some transitional effort) can produce (at the same cost) as well? It's not rocket science - humans are producing A2 milk since the stone ages ... and they are milking A2 cows for at least the last 10,000 years ;

Earnings growth F19 35%-40% and law of big numbers or growth rate decay says next year earnings growth could be less than 30%

So PE at 30 ok for now? Or too high?

[couta1]

I thought that last Feb. The highs for three days....20/2/18= $9.40.....21/2/18=$11.87.... 22/2/18=$14.62c. I will hold and see where Aussi takes us.

You never know,I've seen it go both ways, that's why I place a bet each way.Lol

[allfromacell]

Question is - do markets support in the current climate a PE of 30 for a growth company with growth rates which are - longterm - clearly unsustainable?

I guess how long can you keep growing with a CAGR of above 20 when all you sell is milk which any other competitor (admittedly with some transitional effort) can produce (at the same cost) as well? It's not rocket science - humans are producing A2 milk since the stone ages ... and they are milking A2 cows for at least the last 10,000 years ;

The growth potential out of China has a lot more room to run, they tripled sales growth in the 11/11 event and still sold out in the first few hours of the event. In my opinion that most of the Chinese mothers who buy A2 IF don’t know or care about the whole A1 v A2 debate. A2’s board and marketing team has shown they have a very good strategy that continues to work and understand that market very well. I think a PE of 30 is more than justified especially when taking into account the cash on hand.

The fresh milk side of the business is nice for diversification but really isn’t that important imo. Granted there is always a high risk when dealing with China but you have to give credit where it is due with A2MC’s ability to come in and snatch just shy of 6% market share so quickly in such a competitive market.

[BlackPeter]

Earnings growth F19 35%-40% and law of big numbers or growth rate decay says next year earnings growth could be less than 30%

So PE at 30 ok for now? Or too high?

I don't think that a 2 year time window is large enough to assess whether the PE of 30 is a fair deal. As long as they could grow sustainably with more than 20 % for say the next 10 years (that's more than 6-folding their earnings in 10 years), would I happily pay for a PE of 30 ... but not sure about this assumption.

I expect A2's market growth to drop in line with other diary giants turning towards A2. Converting all cows would be something like 10 years (if they start now), but obviously - the competition will move in earlier and hey, they started already.

How long will the sun keep shining for A2 to reap the benefits of their early start? Another 3 to 5 years? Doubt it will be longer ...

[peat]

While share buy back might be "nice" it doesn't solve an underlying problem. That is increasing supply. For me, I am looking forward to an announcement on further investment in the supply chain.

they have security of supply from SML but also mention a strategic arrangement with Fonterra (whatever that means - does Fonterra even produce A2 milk?)

Whether this is sufficient is hard to gauge still ?