ATM - A2 Milk Corporation Limited

[BFG]

Just picked up a bottle of A2 to try over the coming week as lactofree was out. Certainly not selling as fast as the Lewis Road stuff, but then again what is (do they put crack in it?)

[NT001]

Don't all those numbers just suggest a long steady sell down over the last six months? Often this is a sign that price is just adjusting to fair value. Nothing more or nothing less than that and no conspiracy theories needed, just speculation drove the shareprice to unrealistically great heights and 55/60 cents really is a fair price.

Yes Winner, I think you and Harrie have probably got it right, between you. In posting those transaction totals I was not suggesting a conspiracy, just noting the facts which I agree support your interpretation. As I pointed out myself in post 2195, there was no obvious rational basis for the SP surging into the 90s, and in view of what's been happening elsewhere (XRO etc) an adjustment was hardly surprising.

Fair price? On your figures the SP is overpriced. MAC and I would say otherwise and he has TA to support his view, I've really only got a lot of faith in the company and its science assets. The market's a bit against ATM at the moment, and I still don't discount takeover of some kind, although for what purpose I can't quite see. Good time for long-term holders to accumulate, I'd say. Tomorrow could be interesting.

[NT001]

Don't all those numbers just suggest a long steady sell down over the last six months? Often this is a sign that price is just adjusting to fair value. Nothing more or nothing less than that and no conspiracy theories needed, just speculation drove the shareprice to unrealistically great heights and 55/60 cents really is a fair price.

Yes Winner, I think you and Harrie have probably got it right, between you. In posting those transaction totals I was not suggesting a conspiracy, just noting the facts which I agree support your interpretation. As I pointed out myself in post 2195, there was no obvious rational basis for the SP surging into the 90s, and in view of what's been happening elsewhere (XRO etc) an adjustment was hardly surprising.

Fair price? On your figures the SP is overpriced. MAC and I would say otherwise and he has TA to support his view, I've really only got a lot of faith in the company and its science assets. The market's a bit against ATM at the moment, and I still don't discount takeover of some kind, although for what purpose I can't quite see. Good time for long-term holders to accumulate, I'd say. Tomorrow could be interesting.

[MAC]

I think you mean FA rather than TA NT001, I honestly couldn’t do what you do, invest on faith and science alone, the money wouldn’t leave the bank, I have to do the numbers, anally run the DCF and other models, even that’s not enough, there has to be good forward growth prospects, good management, market research and a focused strategic plan.

I’m happy to continue to hold ATM for several years or until the fundamentals alter, no sign of that at this time, I’ve topped up recently and am content with my spread, would be topping some more right now if I wasn’t already at my diversification limit. It’s a dip and opportunity from fair value that should never have occurred, and that’s no reason not to take advantage.

[nextbigthing]

anally run the DCF and other models

Must resist the urge to post the multitude of inappropriate comments running through my mind right now.

[mayday]

Must resist the urge to post the multitude of inappropriate comments running through my mind right now.

LOL...dudes

[Harrie]

I agree with you W69, apart from trying to dispel conspiracy theory, technically it would appear that ATM is close to "fair value" based on the ratio analyses you have calculated. We have all done those calcs but as everyone knows todays fair value is tomorrows discounted price in some cases.

The question has to be around market growth potential and the belief that ATM can capitalise on opportunities and significantly increase its sales revenue. The market SP definitely moved on anticipation of growth expectations earlier this year. The market is telling us now that expectation of growth has been less than convincing to date, and that until it reads otherwise ATM will be discounted to around technical "fair value".
I accept MAC's DCF models but these are based on forecasts and forecasts are just that. Forecasts need to be justified by reality. Its all about the faith that this company can forfill its sales revenue targets. Its a bigger leap of faith to be buying in at 90c, but less of a leap at 55c.
I look at the science and the growing anecdotal evidence. I look at the growing market for milk powder and fresh milk in China, (goddam its $16 bil now and expected to grow to $30bil by 2017!) I see without any conclusive scientific evidence A2's share by sales revenue in Australia move to around 10%, I see the massive amount of leverage that can be gained by a diversification of product using A2, I see more discussion around downsides of A1 beta protein etc etc, then I look at the downside. Its still milk, there has been no scientific evidence that it has any detrimental effect, its the closest to mothers milk you can buy, so the worst that can happen is that it will trade at "fair value".
This would have to be the best "fair value" investment around...just keep accumulating.

[winner69]

Anybody have any idea what the cash (investing cash that is) is needed over the next 5 years to make this growth happen.

I note 2013 was $5.8m and 2014 was $7.5m ......what about the next few years?

Just anally updating DCF

Probably will need to reverse engineer growth rates and margins to get anyway near an EV of $660m ($1 a share) and then assess that with my current assumptions.

[nextbigthing]

Just anally updating DCF

IMHO this method produces sh!t results.

[NT001]

I think you mean FA rather than TA NT001, I honestly couldn’t do what you do, invest on faith and science alone, the money wouldn’t leave the bank, I have to do the numbers, anally run the DCF and other models, even that’s not enough

Yes MAC, I did mean FA, which is an abbreviation describing how much I know about it, as many on this thread will have realised by now. I was lucky to buy in when I had some spare cash and A2Corp was a penny dreadful that sounded like it was onto something interesting and beneficial. I get a lot of fun out of discussing where it may or may not be headed, and would be concerned about a takeover, but I have other things to do in life than worry about managing it technically as an investment. The way you do it sounds interesting.