ATM - A2 Milk Corporation Limited

[Gunner]

Your right, i don't see much value elsewhere on the NZX currently, this stock stands out like pee stains in the snow.

Its becoming harderto ignore the value that ATM is offering at the moment.

• High margin
• No debt
• $850 million plus cash reserves
• Still a growth company
• Premium product
• Cyclical share price movement (possibly at or near the bottom)

There are some medium to long term concerns with geo politicaland increased competition (but then there a lot of babies that need milk) andshort term with Covid but overall its flashing buy in my books.

[Gunner]

Your right, i don't see much value elsewhere on the NZX currently, this stock stands out like pee stains in the snow.

Its becoming harderto ignore the value that ATM is offering at the moment.

• High margin
• No debt
• $850 million cash reserves
• Still a growth company
• Premium product
• Cyclical share price movement (possibly at or near the bottom)

There are some medium to long term concerns with geo politicaland increased competition (but then there a lot of babies that need milk) andshort term with Covid but overall its flashing buy in my books.

[Biscuit]

Always a good idea to take notice of those who are willing to share real experience with having made mistakes in the past, if in doubt do nothing.

Yes, I think other people's experience is valuable and should be filed away with our own experiences to help make decisions in the future. As an old fart who has lost and made money over many years, I am a great believer in having a strategy that you stick to and not reacting to changes in price on the fly. My natural inclination is buy and hold long term and don't worry too much what you pay for stuff or what other people think it is worth.

[flyinglizard]

Negative Fundamental Facts:

1. China Birth Rate is decreasing since 2018
2. Massive Competitors entered A2 niche market since 2019

2.1 Fonterra has Aptamil Essensis Organic A2 selling 40-45% above ATM A2 price
2.2 Fonterra has Karicare A2 selling 45-50% below ATM A2 price
2.3 Other OZ brands promote their own A2
2.4 Chinese domestic brands promote A2B

[couta1]

Negative Fundamental Facts:

1. China Birth Rate is decreasing since 2018
2. Massive Competitors entered A2 niche market since 2019

2.1 Fonterra has Aptamil Essensis Organic A2 selling 40-45% above ATM A2 price
2.2 Fonterra has Karicare A2 selling 45-50% below ATM A2 price
2.3 Other OZ brands promote their own A2
2.4 Chinese domestic brands promote A2B

Lol the competitors have made no difference to date besides its a massive market, are you a holder of this stock or a random down ramper just paying us a visit?

[Waltzing]

Yes its a big chart and if the numbers are good it will be a sky rocket..

Competition is good, means the product sells.

DISC: yes we have held and will again if the numbers are good.

[Gunner]

Negative Fundamental Facts:

1. China Birth Rate is decreasing since 2018 -
2. Massive Competitors entered A2 niche market since 2019

2.1 Fonterra has Aptamil Essensis Organic A2 selling 40-45% above ATM A2 price
2.2 Fonterra has Karicare A2 selling 45-50% below ATM A2 price
2.3 Other OZ brands promote their own A2
2.4 Chinese domestic brands promote A2B

Only 15 million per year then? A bit of a stretch to say that is a concern. Increased competition will always happen. Competition is something to keep an eye on but not a huge concern yet I don't think. A lot of babies in the world.

[winner69]

Only have 2% share in MBS stores and 20% share of CBRE channel

Still plenty of opportunity

[Gregnz]

Good to see quite a bit of resistance on the ASX today, the push to keep it down doesn't seem to be working. I also see shorts have dropped on shortman.com.au . Perhaps the usual November rally is starting to turn the tide.

[Beagle]

Been a truly fascinating study in human psychology these last few weeks just observing this thread.
We've had all the expected phycological behaviors from long term holders and those with a very heavy exposure.
Talk of it being bargain basement is expected and totally misplaced in my opinion and appears to lack any recognition that the growth rate has dramatically slowed.
https://www.marketscreener.com/quote...22/financials/

Forward PE at the current price is 27 and is most certainly not cheap considering the current outlook for the year ahead is for ostensibly no earnings growth !
That's right, the average analyst estimate is for 53 cps up just 1 cent from last year's 52 cents.
This is predicated on a massive second half rebound in sales with the company itself expecting sales of $750m in the first half and a massive 47% more at $1,100m in the second half. WOW - Good luck with that !

The potential for the impact of Covid to linger into the second half and potentially beyond that should be clear enough. Even if this very lofty target for second half sales is met there is still ostensibly no earnings growth in the current year. What should be crystal clear is the growth rate is slowing.

Eps for the last 5 years is FY16 4.4 cps, FY17 12.7 cps, FY18 26cps, FY19 39 cps and FY20 52 cps. This gives a CAGR of just over 60% for the last 5 years, very impressive.
What are the analysts projecting for the next 3 years ? An average growth rate of 15%, very different to what the company has enjoyed in the past and certainly nowhere near as impressive so some PE contraction is definitely to be expected !

If 2H sales don't rebound as strongly as the company is expecting shareholders can expect a strong share price reaction. Its going to be a fascinating year. If there are more excuses coming and more downgrades (downgrades usually come in 3's as Balance alludes too and I agree) there's trouble ahead as sure as night follows day. Lets get real here, the geopolitical and competitive environment has changed in the last couple of years. Its clear to me some people are in complete denial about that.

Its a little sad to note that basic TA like selling when it broke down through the 100 day MA would have got shareholders out at ~ $20.

Disc: Its an extremely rare day I ever buy in a confirmed downtrend, and then only on truly compelling value, (not the case here in my opinion), so I continue to keep my powder dry and will await a confirmed bottom being put into the share price and the emergence of the beginnings of a new uptrend.

Just thought I would update my thoughts. I'll go back to being on holiday from this thread and continue my fascinating study into human psychology. This I am sure will include some strong and possibly derisory rebuttal's to this post.