ATM - A2 Milk Corporation Limited

[Rawz]

However - this is clearly not the time to write A2M off for all times ... they are a healthy company with a great story and a great product. If there have been good reasons to buy them 6 months ago, than none of these reasons has changed (but a minor timing issue).

Some famous investor said once there is a time to sell, a time to buy and a time to go fishing. Personally I still need to make up my mind whether for A2 its currently the second or the third, but the time to sell is in my view well passed by ... and panicking is never a good response to share market events.

Lots has changed from 6 months ago thou? The way I see it- the CBEC channel and MBS should have seen much larger increases to offset the decline in daigou. As those with infants know you do all you can to keep them on the same formula. So if your baby is on ATM brand and you can't obtain it via daigou you go to the other channels.

Instead CBEC is noted as below their expectation post 11/11 and MBS up 40%??? Would have expected much much higher to compensate. And it's entirely possible management expected the CBEC and MBS channels to pick up the slack from the decline in daigou and that's why they kept their guidance for so long. Waiting for the numbers to climb... but they never did.

So I see it as a brand switch. To karicare (or whatever), but more likely to Chinese home brand.

It's not the end of the world. They are still a great company and will bounce back in 1,2, ? years. I sold because I think the share price will continue to drop to bring the P/E closer to 20 and then go sideways from there. I don't see the point in holding for this period? Take the money and top up on HGH, EBOS, HLG, TRA, KIP and a few others.. just my opinion (which comes with little experience I must admit)

[Gregnz]

Lots has changed from 6 months ago thou? The way I see it- the CBEC channel and MBS should have seen much larger increases to offset the decline in daigou. As those with infants know you do all you can to keep them on the same formula. So if your baby is on ATM brand and you can't obtain it via daigou you go to the other channels.

Instead CBEC is noted as below their expectation post 11/11 and MBS up 40%??? Would have expected much much higher to compensate. And it's entirely possible management expected the CBEC and MBS channels to pick up the slack from the decline in daigou and that's why they kept their guidance for so long. Waiting for the numbers to climb... but they never did.

So I see it as a brand switch. To karicare (or whatever), but more likely to Chinese home brand.

It's not the end of the world. They are still a great company and will bounce back in 1,2, ? years. I sold because I think the share price will continue to drop to bring the P/E closer to 20 and then go sideways from there. I don't see the point in holding for this period? Take the money and top up on HGH, EBOS, HLG, TRA, KIP and a few others.. just my opinion (which comes with little experience I must admit)

I’ve seen somewhere if you take the cash on hand into the equation, the P/E is already around 17?

[winner69]

If you take midpoint of sales guidance (1.474m) and use a 27% ebitda margin (they say 26% to 29%) F21 ebitda will be $398m ($152m or 27% less than F20 ...ouch)

Lower sales adverse impacts ebitda by $81m but the real killer is that the much lower ebitda margin (down 4.8% points) has an adverse impact of $71m

Suppose the ebitda margin problem is more to do with prices than costs (hope they are managing these in difficult times). If so that is real problem because recovering price (competition) is very difficult and this becomes an issue going forward.

So selling less is a big problem but getting less for what you sell is a double whammy

[Balance]

19/08/2020 Results Presentation boldly titled "Building from Strength" FY21 Outlook "Notwithstanding these uncertainties, overall for FY21, we anticipate continued strong revenue growth supported by our continued investment in marketing and organisational capability
FY21 EBITDA margin is expected to be in the order of 30 to 31%"

Very heavy insider selling followed very shortly after this outlook statement
...,

I will leave investors to decide for themselves if the first FY21 outlook statement, (including the title of that outlook statement) was very carefully crafted to keep the share price at the lofty level of $20 plus so insiders could sell and reap millions in profits.

Victoria went into hard lockdown from beginning of August.

The impact on daigou trade must have been felt within the first few weeks?

It took the company nearly 2 months to wake up to the problem?

Beggars belief !

[winner69]

I’ve seen somewhere if you take the cash on hand into the equation, the P/E is already around 17?

On F21 forecast of 38 cents EPS the PE is 29 - take off say $950m cash the PE is just over 25

[Rawz]

I’ve seen somewhere if you take the cash on hand into the equation, the P/E is already around 17?

I'm sure you can get any P/E you like by adding and subtracting. I'm sure I read above P/E based on FY21 high 20s, 28?. ASB Securities have them 21.5 currently based on historical earnings.

[Gregnz]

Current P/E as of 5pm yesterday is 20.98

[winner69]

Current P/E as of 5pm yesterday is 20.98

That's based on F20 profit ($11.00/ 0.524)

F21 profit going to be about 38 cents a share

[Balance]

That's based on F20 profit ($11.00/ 0.524)

F21 profit going to be about 38 cents a share

Stock should be trading on a PE of 18 - $6.84

Third downgrade would see it down to that level.

[Gregnz]

I’m keen to see where it finds support next week on the asx. I believe previous support was $9.81 aud which it bounced off at $9.82, buyers flooded in.

Personally I struggle to get my head around P/E ratios, plenty of companies generating significantly smaller profits with much higher P/E and yet seem to be darlings on the ASX, I’m thinking AfterPay etc