ATM - A2 Milk Corporation Limited

[couta1]

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.

I dont see anything different in this update than what you've already posted previously and of course I don't agree with a lot of the assumptions here, a lot of unsubstantiated scare mongering in this post also.

[jonu]

I dont see anything different in this update than what you've already posted previously and of course I don't agree with a lot of the assumptions here, a lot of unsubstantiated scare mongering in this post also.

The Beagle probably has a BUY order at a slightly lower level and is nervous it won't get filled before the probable November recovery.

[Beagle]

Analysts have dialed back their estimates of growth this year and in future years since I last posted over a month ago. I feel someone needed to point this out.

[couta1]

Analysts have dialed back their estimates of growth this year and in future years since I last posted over a month ago. I feel someone needed to point this out.

Haha Analysts are just broking company sluts, they all play their little games with this stock by downgrading and upgrading in order to make as much money as possible from weak hands.

[flyinglizard]

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?

I do not hold, or will buy ATM/A2M in the future.

The Major risk is Geopolitics. We see China temperately refused to import some wheat, coal, wine and beef products from Australia, discouraged Chinese to study or visit Australia, and imported iron ore from Brazil, rather than Australia. China has more options to hit Australian economy, such as ban on OZ healthy products exporting, dairy. Blackmores, Swisse and Bellamy's Organic... Can you 100% confidently say that A2 is immense to this?



3.0 If China decided to decouple with Australia........

3.1 A2 has been strangely marked as OZ company in Australia, although Chinese customers, Kiwis and A2 company itself all believe it is a NZ company.
3.2 A2 needs to complete acquisition of Mataura Valley Milk as soon as possible to lower the COGS, rebrand itself from Australia.
3.3 Improves its non-daigou sales channel (they already on the right track)
3.4 Try live stream sales in China

4.0 Growth to Matured?

We all know that A2 cannot maintain such a high GAGR in the long run, it will slow down eventually. It must develop new markets to keep growth.

4.1 A2 develops new markets, such as Vietnam? Vietnam attracted large foreign investment and SamSung moved its production line from China to Vietnam, contributing to 28% of Vietnam GDP in 2018. Vietnam has nearly 0.1 billion population, birth rate is above 2.0.

I hope you will have a successful investment journey and A2 is able to get through this pandemic. Please do not get things emotionally, always prepare for the worst scenario.

Mr. B, you have your chance to buy around $10, if bad things happens.

[Beagle]

Funny you mention $10. Was just chatting with a friend earlier today and said that I can foresee 45 cps possibly happening and then the market getting skittish and rerating the PE down to say 22. As you say, if bad things happen, $10 is quite possible.
https://www.marketscreener.com/quote...34/financials/ Interesting you talk about geopolitical risk being potentially very serious, pretty much how I see it too. ATM very dependent on China, FAR too dependent for my liking.
Interesting comparison with Danone with its widespread food interests and exporting to many different markets, far better diversified and according to average analyst forecasts has very similar growth prospects to ATM in the foreseeable future. Forward PE just 13.9. Hmmm.

Unfortunately I think some people just get too fixated with one stock based on past performance and extrapolate that out and think world domination is inevitable in due course. New people coming on to this forum need to see counter balancing posts from time to time.

I better go back on holiday from this thread before the zealots get too upset

[couta1]

I do not hold, or will buy ATM/A2M in the future.

The Major risk is Geopolitics. We see China temperately refused to import some wheat, coal, wine and beef products from Australia, discouraged Chinese to study or visit Australia, and imported iron ore from Brazil, rather than Australia. China has more options to hit Australian economy, such as ban on OZ healthy products exporting, dairy. Blackmores, Swisse and Bellamy's Organic... Can you 100% confidently say that A2 is immense to this?



3.0 If China decided to decouple with Australia........

3.1 A2 has been strangely marked as OZ company in Australia, although Chinese customers, Kiwis and A2 company itself all believe it is a NZ company.
3.2 A2 needs to complete acquisition of Mataura Valley Milk as soon as possible to lower the COGS, rebrand itself from Australia.
3.3 Improves its non-daigou sales channel (they already on the right track)
3.4 Try live stream sales in China

4.0 Growth to Matured?

We all know that A2 cannot maintain such a high GAGR in the long run, it will slow down eventually. It must develop new markets to keep growth.

4.1 A2 develops new markets, such as Vietnam? Vietnam attracted large foreign investment and SamSung moved its production line from China to Vietnam, contributing to 28% of Vietnam GDP in 2018. Vietnam has nearly 0.1 billion population, birth rate is above 2.0.

I hope you will have a successful investment journey and A2 is able to get through this pandemic. Please do not get things emotionally, always prepare for the worst scenario.

Mr. B, you have your chance to buy around $10, if bad things happens.

You might be surprised to learn like quite a few over on HC that A2 is indeed a NZ company not Australian. PS-Are you a computer bot?

[couta1]

Funny you mention $10. Was just chatting with a friend earlier today and said that I can foresee 45 cps possibly happening and then the market getting skittish and rerating the PE down to say 22. As you say, if bad things happen, $10 is quite possible.
https://www.marketscreener.com/quote...34/financials/ Interesting you talk about geopolitical risk being potentially very serious, pretty much how I see it too. ATM very dependent on China, FAR too dependent for my liking.
Interesting comparison with Danone with its widespread food interests and exporting to many different markets, far better diversified and according to average analyst forecasts has very similar growth prospects to ATM in the foreseeable future. Forward PE just 13.9. Hmmm.

Unfortunately I think some people just get too fixated with one stock based on past performance and extrapolate that out and think world domination is inevitable in due course. New people coming on to this forum need to see counter balancing posts from time to time.

I better go back on holiday from this thread before the zealots get too upset

Well all things are possible, even for OCA to go back below $1 and HLG back below $2 but not likely, always best to stick to the knitting pattern you really understand than one where you only know half the stitches aye.

[carrom74]

https://www.smh.com.au/world/asia/au...03-p56b31.html

Thank goodness.No IF

[couta1]

https://www.smh.com.au/world/asia/au...03-p56b31.html

Thank goodness.No IF

Sounds unconfirmed at present but just as well babies dont need to chew on rock lobsters to survive.