ATM - A2 Milk Corporation Limited

[Gregnz]

I just want it to go back to the $16-$17 range, minimise my losses and call it an expensive lesson, but TBH it's looking very grim.

I think you need to ask what has changed since you invested in A2? Did you think it was a rocket ship to the moon as the $16-$17 range would suggest you purchased post Covid after the all time highs of $20+.
My reasons for investing haven't changed, and I stand by my own analysis that Covid19 (a one in one hundred year event) is the reason for the depressed share price. I'm actually still pleasantly surprised that the company is still highly profitable and generating significant revenue throughout this period.
Yes we may have to wait longer to achieve the returns we would like to see, but I don't think many here invested in the hope of making a quick buck.

[Akane]

I think you need to ask what has changed since you invested in A2? Did you think it was a rocket ship to the moon as the $16-$17 range would suggest you purchased post Covid after the all time highs of $20+.
My reasons for investing haven't changed, and I stand by my own analysis that Covid19 (a one in one hundred year event) is the reason for the depressed share price. I'm actually still pleasantly surprised that the company is still highly profitable and generating significant revenue throughout this period.
Yes we may have to wait longer to achieve the returns we would like to see, but I don't think many here invested in the hope of making a quick buck.

I actually averaged to mid $19's, I always thought this is overpriced, at all the price points since $8 until it just kept going up, I caved and bought in thinking it'll keep going - "Hey I might believe this is overpriced, but the gravy train is at full speed ahead, let's hop on!".

Bbut then I realised I was right, it IS overpriced. It's just milk that can be replicated, the "but muh coca cola" argument is flawed, Coke has the secret formula to make it taste the way it does, whilst A2 milk is just milk... "But it has the A2 protein!" well, get some A2 cows into other countries and you can have your own A2 milk, just like they're doing with Zespri golden kiwifruits

Daigou argument is flawed, if the product is that desired, they'll just buy at their local store, or T-mall etc. If you desired a piece of A5 Wagyu steak but you had to go across town to get it - you WILL go across town to get it instead of settling for some Aussie chuck steak, wouldn't you? Obviousy A2 is not as desireable as one would think, therefore even if the Daigou argument is valid (the Daigou channel is hindered), consumers must've been thinking "gee, I can't get A2 from my favourite daigou, oh look that's some Sanlu milk, I'll have that instead, it's the same anyway" - that just reinfornces the idea A2 milk is just milk - nothing special.

I'm sure there'll be both sides of the arguments, if you strongly believe A2 is the future, I wish all bag holders the best - I'm a bag holder as well and just as frustrated as you all are, we're all in this together, for both right and wrong reasons.

Yes, I put money on this and I made a HUGE mistake, I learned a lot - I just want to minimise the cost of this lesson as much as I could, that's all. This is the part where I regret getting on the roller coaster and wish to undo all the things I've done, but the roller coaster has just started and there's no platform in sight for me to safely get off.

[Gregnz]

I actually averaged to mid $19's, I always thought this is overpriced, at all the price points since $8 until it just kept going up, I caved and bought in thinking it'll keep going - "Hey I might believe this is overpriced, but the gravy train is at full speed ahead, let's hop on!".

Bbut then I realised I was right, it IS overpriced. It's just milk that can be replicated, the "but muh coca cola" argument is flawed, Coke has the secret formula to make it taste the way it does, whilst A2 milk is just milk... "But it has the A2 protein!" well, get some A2 cows into other countries and you can have your own A2 milk, just like they're doing with Zespri golden kiwifruits

Daigou argument is flawed, if the product is that desired, they'll just buy at their local store, or T-mall etc. If you desired a piece of A5 Wagyu steak but you had to go across town to get it - you WILL go across town to get it instead of settling for some Aussie chuck steak, wouldn't you? Obviousy A2 is not as desireable as one would think, therefore even if the Daigou argument is valid (the Daigou channel is hindered), consumers must've been thinking "gee, I can't get A2 from my favourite daigou, oh look that's some Sanlu milk, I'll have that instead, it's the same anyway" - that just reinfornces the idea A2 milk is just milk - nothing special.

I'm sure there'll be both sides of the arguments, if you strongly believe A2 is the future, I wish all bag holders the best - I'm a bag holder as well and just as frustrated as you all are, we're all in this together, for both right and wrong reasons.

Yes, I put money on this and I made a HUGE mistake, I learned a lot - I just want to minimise the cost of this lesson as much as I could, that's all. This is the part where I regret getting on the roller coaster and wish to undo all the things I've done, but the roller coaster has just started and there's no platform in sight for me to safely get off.

There are so many things in that argument which are wrong, but your entitled to your own opinion, it seems regardless of anything I was to say, you’ve already made up your mind that investing in A2 was a HUGE mistake.
If you don’t think there is a platform to get off the roller coaster, perhaps just sell out now at a loss?

The Coca Cola argument has been thrashed to death, I’ve even posted about Fiji Water and other water brands which have made their owners millions, and believe it or not, it’s just bottled water.

Having children you’ll realise that it’s not often as simple as just changing formula brands at a whim, regardless of local alternatives.
You might be surprised to know that many local Chinese still don’t trust local brands, so there will always be a market for imported alternatives.

If you can get your hands on it at a local library, take a read of a book called “Devil in the milk”. Once I read that, I realised that the A2 milk journey is only just beginning. There is a reason that many of the major brands are now starting to introduce their own A2 products, further increasing the size of the overall A2 market.

[alokdhir]

I actually averaged to mid $19's, I always thought this is overpriced, at all the price points since $8 until it just kept going up, I caved and bought in thinking it'll keep going - "Hey I might believe this is overpriced, but the gravy train is at full speed ahead, let's hop on!".

Bbut then I realised I was right, it IS overpriced. It's just milk that can be replicated, the "but muh coca cola" argument is flawed, Coke has the secret formula to make it taste the way it does, whilst A2 milk is just milk... "But it has the A2 protein!" well, get some A2 cows into other countries and you can have your own A2 milk, just like they're doing with Zespri golden kiwifruits

Daigou argument is flawed, if the product is that desired, they'll just buy at their local store, or T-mall etc. If you desired a piece of A5 Wagyu steak but you had to go across town to get it - you WILL go across town to get it instead of settling for some Aussie chuck steak, wouldn't you? Obviousy A2 is not as desireable as one would think, therefore even if the Daigou argument is valid (the Daigou channel is hindered), consumers must've been thinking "gee, I can't get A2 from my favourite daigou, oh look that's some Sanlu milk, I'll have that instead, it's the same anyway" - that just reinfornces the idea A2 milk is just milk - nothing special.

I'm sure there'll be both sides of the arguments, if you strongly believe A2 is the future, I wish all bag holders the best - I'm a bag holder as well and just as frustrated as you all are, we're all in this together, for both right and wrong reasons.

Yes, I put money on this and I made a HUGE mistake, I learned a lot - I just want to minimise the cost of this lesson as much as I could, that's all. This is the part where I regret getting on the roller coaster and wish to undo all the things I've done, but the roller coaster has just started and there's no platform in sight for me to safely get off.

I read your thoughts about ATM and the lesson u talking about ....I agree with u that a2 brand got tested for its strength and it didn't turn out to be as strong as we all thought it to be ...Can the company make it stronger ...yes they can over period of time if they are a quality marketing company .

Secondly for SP to move up we need more profits thus higher eps and on continuous basis so market sees some growth story ...that can also be achieved as market for A2 milk is expanding with more awareness and more products .

For me what has mainly changed for ATM is not just Covid exposing their weaknesses of distribution but also weakness of its a2 brand . After all like u say milk is a commodity only and all A2 only milks can be considered to be same to be distinguished by only brand strength . ATM will surely work on this and must be acknowledging this changed scenario in their board meetings

Hopefully being a good marketing company they will try to increase their revenues from naturally expanding pool out of awareness of the benefits of A2 only milk

If they can do that faster then overall growth of this A2 market then it will be considered job well done and SP will again reach high multiples , if they just grow with market or under that then SP will still rise with increased eps but multiples will be much lesser

So it all depends now on the marketing ability of this marketing company IMHO ....next 6-12 months will be important

[Rawz]

Having children you’ll realise that it’s not often as simple as just changing formula brands at a whim, regardless of local alternatives.
You might be surprised to know that many local Chinese still don’t trust local brands, so there will always be a market for imported alternatives.

That's part of his point re daigou thou. It's not simple changing formula so if your baby is used to A2 milk and the daigou channel is closed then why wouldn't you just buy it from the online channel or mother and baby channel?

[bull....]

I actually averaged to mid $19's, I always thought this is overpriced, at all the price points since $8 until it just kept going up, I caved and bought in thinking it'll keep going - "Hey I might believe this is overpriced, but the gravy train is at full speed ahead, let's hop on!".

Bbut then I realised I was right, it IS overpriced. It's just milk that can be replicated, the "but muh coca cola" argument is flawed, Coke has the secret formula to make it taste the way it does, whilst A2 milk is just milk... "But it has the A2 protein!" well, get some A2 cows into other countries and you can have your own A2 milk, just like they're doing with Zespri golden kiwifruits

Daigou argument is flawed, if the product is that desired, they'll just buy at their local store, or T-mall etc. If you desired a piece of A5 Wagyu steak but you had to go across town to get it - you WILL go across town to get it instead of settling for some Aussie chuck steak, wouldn't you? Obviousy A2 is not as desireable as one would think, therefore even if the Daigou argument is valid (the Daigou channel is hindered), consumers must've been thinking "gee, I can't get A2 from my favourite daigou, oh look that's some Sanlu milk, I'll have that instead, it's the same anyway" - that just reinfornces the idea A2 milk is just milk - nothing special.

I'm sure there'll be both sides of the arguments, if you strongly believe A2 is the future, I wish all bag holders the best - I'm a bag holder as well and just as frustrated as you all are, we're all in this together, for both right and wrong reasons.

Yes, I put money on this and I made a HUGE mistake, I learned a lot - I just want to minimise the cost of this lesson as much as I could, that's all. This is the part where I regret getting on the roller coaster and wish to undo all the things I've done, but the roller coaster has just started and there's no platform in sight for me to safely get off.

try not to worry its only a loss when you sell , everyone makes mistakes

[Gregnz]

That's part of his point re daigou thou. It's not simple changing formula so if your baby is used to A2 milk and the daigou channel is closed then why wouldn't you just buy it from the online channel or mother and baby channel?

I must have mis interpreted what he was saying about Daigou. After all the product has been available in over 20,000 stores in China, yet mothers still chose to purchase via Daigou.
That’s why we have seen a 40% increase in sales from the store network in China, because they are now buying it locally.
Daigou will just be the cream on top , if and when it eventually returns.

[Biscuit]

...... I just want to minimise the cost of this lesson as much as I could......

Losing money always hurts. The more you lose, the more it hurts and the pain of losing money is a much stronger emotion than the pleasure of winning money. Emotion makes for bad investment decisions. It's not advice but one strategy to minimise loss would be to take money off the table in steps. Some now, some in a few months or at a particular level. Plans are one way to avoid making decisions based on emotion.

[TLM54]

I read your thoughts about ATM and the lesson u talking about ....I agree with u that a2 brand got tested for its strength and it didn't turn out to be as strong as we all thought it to be ...Can the company make it stronger ...yes they can over period of time if they are a quality marketing company .

Secondly for SP to move up we need more profits thus higher eps and on continuous basis so market sees some growth story ...that can also be achieved as market for A2 milk is expanding with more awareness and more products .

For me what has mainly changed for ATM is not just Covid exposing their weaknesses of distribution but also weakness of its a2 brand . After all like u say milk is a commodity only and all A2 only milks can be considered to be same to be distinguished by only brand strength . ATM will surely work on this and must be acknowledging this changed scenario in their board meetings

Hopefully being a good marketing company they will try to increase their revenues from naturally expanding pool out of awareness of the benefits of A2 only milk

If they can do that faster then overall growth of this A2 market then it will be considered job well done and SP will again reach high multiples , if they just grow with market or under that then SP will still rise with increased eps but multiples will be much lesser

So it all depends now on the marketing ability of this marketing company IMHO ....next 6-12 months will be important

Your last point doesn't make any sense and Akane actually provided the counter to this argument: If kids were so dependent on A2 and could not possibly change brands, then why has sales completely tanked? There are alternative channels other than daigou, so why has there been no uptick there? Last guidance, the director even advised that CBEC has under performed.

Like I've said before, the daigous have been deteriorating because class of 2020 students and 12month visa visitors have been leaving AUS/NZ towards the end of the year and no new student and visitors are coming in to replace them. These are the people who have the connections to the mainland china consumers. With tertiary enrollments wrapped up and uni about to start, I think we can be certain students are not coming back this semester. So ask yourself, what is the state of the daigous for the rest of the financial year?

some people have also previously pointed out that other brands have rolled out A2 protein IF as well, the milk from the various brands will be coming from the same share milkers as A2, so Akane is right in pointing out that there isnt anything inherently special about the product itself compared to it's competitors.

[alokdhir]

Your last point doesn't make any sense and Akane actually provided the counter to this argument: If kids were so dependent on A2 and could not possibly change brands, then why has sales completely tanked? There are alternative channels other than daigou, so why has there been no uptick there? Last guidance, the director even advised that CBEC has under performed.

Like I've said before, the daigous have been deteriorating because class of 2020 students and 12month visa visitors have been leaving AUS/NZ towards the end of the year and no new student and visitors are coming in to replace them. These are the people who have the connections to the mainland china consumers. With tertiary enrollments wrapped up and uni about to start, I think we can be certain students are not coming back this semester. So ask yourself, what is the state of the daigous for the rest of the financial year?

some people have also previously pointed out that other brands have rolled out A2 protein IF as well, the milk from the various brands will be coming from the same share milkers as A2, so Akane is right in pointing out that there isnt anything inherently special about the product itself compared to it's competitors.

Looks like u quoted the wrong post ...