ATM - A2 Milk Corporation Limited

[aperitif]

Peter Nathan holds 420,000 if you bothered to go and do some research you would know that. You have been and continue to be wrong

[tomm]

Concluding thoughts. Fundamentally the stock is extremely expensive for the forecast growth rate of 7% this year. Even with this rout the FY20 PE is over 2 Personally I think there will at best be no growth this year.
The Chinese communist party is whipping up tremendous nationalistic fervor to by China made. I think growth in the future is going to be much tougher and more expensive to come by.
Growth has dramatically slowed over recent years and I think the best days growth are behind this company. It went from ~ $3 in March 2017 to $13 in March 2018 in just one year. You'll never see anything remotely like that again.

Look at this current situation with the Covid-19, ofcourse everything is getting extremely hard for any and every business out there. But I gotta put my both hand to applause to ATM, has been dodged all the bullets so far until now. Even then they still confident the EBITDA will still be in line of 31%.

[Beagle]

$12.15 now gives FY20 PE of 22.6 which looks more realistic to me.

[bull....]

$12.15 now gives FY20 PE of 22.6 which looks more realistic to me.

looks to high to me for a company with no growth in the next year overall. will probably have ebbs up and down in price but i think the tops in this cycle. covid gave it a unexpected push up , but now that is a big negative tail wind now. once the bull market finishs as well it be priced on much lower multiples like most stocks

[Beagle]

I'm guessing high single figure growth from FY22 onwards for the next 7-10 years`..whether that's a safe assumption is anyone's guess.Attachment 11983 With thanks to Moose for sending me the TA Chart

[couta1]

I remember when XRO went from $45 to $12, talk from all and sundry on here at the time was it was finished and would never climb to those heights again, well the rest is history, it left the NZX at $25NZ and is currently trading at over $100AU. A2 is having its annual drop aided by a blip downgrade and is sitting on a huge cash pile, those who think it has had its day need to study stories like the XRO one, quite frankly I've heard it all before and have been in the middle of it before and I'm not keen on repeating past mistakes by being shaken out.

[bull....]

Thanks for posting mate. Couple of further thoughts drilling down into the governance and disclosure element of this which looks more murky the deeper one looks for the nuances of the choice of words.
In late August the directors in their presentation under outlook say "Notwithstanding these uncertainties, overall for FY21, we anticipate continued strong revenue growth supported by our continued investment in marketing and organisational capability (I'll come back to the bolded bit).

In the following ten days there was heavy and widespread selling by insiders including for example the CEO of the Asia Pacific division selling 750,000 of his 850,000 shares, i.e. nearly all of them https://www.nzx.com/announcements/358806

One month later they come out with quite substantially revised guidance , just 6.8% annual growth. $750m first half, $1,100m second half at the mid point.

Drilling down into the nuances of this the company's outlook statement which was released contemporaneously with their FY20 results with 33% revenue growth, wherein they said the outlook was for "continued strong revenue growth". The presentation itself was titled "Building from Strength" What I find interesting is the choice of words here.
They could very easily have said for example we expect continuing growth in sales and left the word "strong" out, or they could have toned it down with "albeit at growth level's that could be lower than last year. Continuing strong sales growth implies on the face of it growth at a very similar strong level to FY20, i.e. 33%.

You could make the case that the outlook statement and overall tone presented a less than accurate picture of their real expectations at that time. The substantial selling shortly thereafter (acknowledging they have very short windows of opportunity to effect this), is at best very poor optics.

I think there are grounds for shareholders to feel aggrieved that the original outlook statement was more than a little too optimistic which begs the question regarding 2H sales expectations being 47% higher than 1H. (A cynic might say that they had to release an update that showed some growth expectations or there would have been a riot at the annual meeting about the insiders selling). In my very long career as an accountant I have learned that the very best guide to the future is the most recent past, not what happened last year or the years before that. I am cynical about the strength of the 2H sales recovery and I think is highly likely shareholders will end up having to swallow a couple of dead Covid rats with further downgrades to come.

It should be obvious to all investors that there's FAR MORE risk around 2H sales forecasts than 1H and its contingent on the diagou sales channel fully recovering, but will it ? Downgrades come in three's (Balance). In my experience this is right well over 80% of the time. 2H sales recovery to that extent looks optimistic / just plain hopeful to me. But like almost all things about the future, very little is absolutely certain, all we can do is try and extrapolate off current information, known trends and obvious and less obvious risks. Time will tell...

i dont think the insiders were doing anything wrong at all they clearly spelt out to all investors in there results risks were on the horizon , if people didnt listen its not there fault

[Cyclical]

$12.15 now gives FY20 PE of 22.6 which looks more realistic to me.

That kind of level doesn't bode well for the index. I hope everything is ok over there at FPH.

[Leftfield]

I remember when XRO went from $45 to $12, talk from all and sundry on here at the time was it was finished and would never climb to those heights again, well the rest is history, ...... A2 is having its annual drop aided by a blip downgrade and is sitting on a huge cash pile, those who think it has had its day need to study stories like the XRO one, quite frankly I've heard it all before and have been in the middle of it before and I'm not keen on repeating past mistakes by being shaken out.

My thinking too Couta, the XRO experience is still fresh in my mind too.

We came out of XRO just fine......... and I'm certainly not one to panic over ATM.

In the meantime I smile when I read how views have changed.......

Company has a great track record of positively surprising the market AND updating guidance that significantly exceeds previous guidance and I note they said they were happy with January's trading.
Considering Synlait have only just been able to start doubling their canning and drying capacity I think the market is in for a BIG surprise with 2H results and I think the research I posted recently from Bell Potter $A13 valuation which contained therein an earnings estimate for FY18 of just 30 cents per share $N.Z. is likely to be very conservative, notwithstanding the significant extra marketing spend in the U.S. in this second half to set the company up for more growth in FY19 and beyond. Odds on favorite to hit $20 sometime in the next few years, possibly much earlier than anyone on here might imagine.

I'll take that advice and continue to HOLD. Thanks Beagle.

[Beagle]

looks to high to me for a company with no growth in the next year overall. will probably have ebbs up and down in price but i think the tops in this cycle. covid gave it a unexpected push up , but now that is a big negative tail wind now. once the bull market finishs as well it be priced on much lower multiples like most stocks

Yeah I think you have a good point, a forward PE of 22 is still quite high. Good yardstick is Danone which has been enjoying solid growth and is forecast to enjoy 15.5% EPS growth in FY21 and beyond and currently trading on a forward PE of just 15.6 That's a PEG ratio of just 1.0 for a food company ! Wow, that's growth at a very reasonable price right there ! https://www.marketscreener.com/quote...34/financials/
More on Danone here https://www.danone.com/investor-rela...d-figures.html

Thanks for that quote Left Field...a wonderful journey down memory lane to years gone by. Looks like a quote from 2017. That was the last year the company grew really strongly with the share price up from $3 in March 2017 to $13 in March 2018. What a rush that was !! Its fun looking back at years gone by and remembering when shares used to be exciting, thanks, I enjoyed that, brought back great memories but there's no room in my investment strategy for emotional attachment to stocks based on past history. I find if you want to achieve market outperformance one needs to adapt their strategy to changing conditions.
I prefer GARP stocks mate, Growth at a reasonable price.

I for one can't see any point comparing a SAAS company like XRO with a dairy products company but if it gives you and Coutts some comfort I am pleased for you both.