ATM - A2 Milk Corporation Limited

[mondograss]

A good chunk of the extra inventory hold may well be related to the build up to 11\11 which has historically seen them struggle to keep shelves stocked. This will be what they're referring to when they talk about adding flexibility to their inventory, the ability to respond rapidly by putting a lot of product into big sales events.

[Leftfield]

Feeling a lot better after a good sleep! Another interesting day ahead.

Agree with Mondograss that inventory build likely to be related to 11/11.

Yesterday I expressed concern at ATM's Marketing spend going forward. The former CEO Geoff Babbage was adept at signalling increased advertising spending and then juggling that spend as the year progressed to ensure healthy end year financials. I hope the CEO Jayne learns from this.

My other concern was the foreign exchange impacts caused by Trump's trade wars. The high US$ makes ATM's planned US promotion more expensive, while devaluing the Chinese Yuan lowers ATM's sales returns.

Looking ahead, I see ATM's growth slowing to about 30%, however I'm not as pessimistic as Beagle with his FWD EPS of 44.4, rather I see FWD EPS at around 51c ( a 30% increase on current levels) which at a PE of 30 equates to a forward looking SP of around $15.33

That's all for me for a while. GLH.

[bull....]

Not today.

There will be short coverings as shorters breath a sigh of relief and thank their lucky stars.

time will tell. the shorts were piled on recently 18 mil odd shares so some people were clearly positioning for this pull back.

[Southern_Belle]

IMHO this feels similar to the early days of Xero. A polarising share that people either like or loathe. Each side will read the results & attach meaning to it as 'proof' of their position. Lots of volatility based on the mood of the day and analysis of every announcement and rumour.

Facts are if you bought in this time last year, you are still better off than having the money in the bank. My guess is, if you bought in today, this time next year you will still be on the winning side.

I bought Xero at around $5, rode the rollercoaster until $42 thinking only way is up. It plunged & felt sick at all the 'money I was losing' ..... fear got the better of me and sold out completely at $24 and took comfort as it kept sinking to $15 ...... now it is about $63 .... hindsight is a wonderful thing but it doesn't pay the bills ... or pay for the holidays.

Sit tight, ignore the volatility and learn the lessons that are best provided when you have skin in the game.

[Balance]

Morningstar has updated their research - valuation up 50c to $15.00 and for what it is worth, threy did have this one right when they valued ATM at $14.50 before!

[couta1]

I'll play the game with these Turkeys now the price has stabilised(Sort of) sell some for a loss and buy back more shares cheaper, see if the Kiwis are being the opposite to yesterday(A bit too enthusiastic)

[sb9]

IMHO this feels similar to the early days of Xero. A polarising share that people either like or loathe. Each side will read the results & attach meaning to it as 'proof' of their position. Lots of volatility based on the mood of the day and analysis of every announcement and rumour.

Facts are if you bought in this time last year, you are still better off than having the money in the bank. My guess is, if you bought in today, this time next year you will still be on the winning side.

I bought Xero at around $5, rode the rollercoaster until $42 thinking only way is up. It plunged & felt sick at all the 'money I was losing' ..... fear got the better of me and sold out completely at $24 and took comfort as it kept sinking to $15 ...... now it is about $63 .... hindsight is a wonderful thing but it doesn't pay the bills ... or pay for the holidays.

Sit tight, ignore the volatility and learn the lessons that are best provided when you have skin in the game.

Well thought out post.

Yes, the landscape is changing (in China), gone are days where easy money could be made through daigou channel as it was prevalent when Geoff was around. Now with changes in chinese online laws for personal shoppers, the company needs to look at long haul with more sustainable channels of sales penetration and that's what Jayne is doing.

As per article written in AFR, you can't expect continued growth in top line without investing bit like saying "can't have your cake and eat it too" ..

[Balance]

I'll play the game with these Turkeys now the price has stabilised(Sort of) sell some for a loss and buy back more shares cheaper, see if the Kiwis are being the opposite to yesterday(A bit too enthusiastic)

I am out of 2/3rd of my shareholding this morning - the game has changed for ATM (as articulated by Jayne herself) and the market will be cautious about how well the repositioning will deliver imo until the next update.

Nice to lock away some of that triple digit gains.

[Balance]

I'll play the game with these Turkeys now the price has stabilised(Sort of) sell some for a loss and buy back more shares cheaper, see if the Kiwis are being the opposite to yesterday(A bit too enthusiastic)

Be careful out there - I do think the game has changed and the intos may be adjusting their game accordingly?

[dompf]

Be careful out there - I do think the game has changed and the intos may be adjusting their game accordingly?

What a rollercoaster, I still dont believe the fundamentals of A2 has changed dramatically from a week ago to today; I'm just going to hold the handrail and hope I don't get swept off.

Will be interested to hear the strategy moving forward in Sep.