ATM - A2 Milk Corporation Limited

[Balance]

Have a look at Comvita for comparison - one other company which built its initial success on the daigou channel.

Unlike ATM, CVT is already executing its reset & transformative strategy (of shifting over-reliance on daigou sales & harvest vagaries) - successfully.

Turnaround is massive and management is upbeat about delivering on expectations.

ATM still has not worked out a reset strategy from my reading of today’s commentary - except that they need the cash in the bank to see them through challenging times ahead!

[porkandpuha]

"Local players continue to gain share against the traditional multinational brands, driven both by the strength of local brands in domestic channels, as well as an overall mix shift fromcross-border to domestic channels."

It's a bit concerning when you openly admit in your annual report that you are losing market share in your key market..

Edit to add: The backup development market in North America doesnt look too flash either

[Beagle]

As Balance says pretty downbeat outlook

However, given the continuing uncertainty and volatility in a2MC’s consumer markets resulting from issues related to COVID19 and other rapidly changing market dynamics, particularly in China, the Company has determined not to provide specific guidance regarding anticipated Group revenue or EBITDA margin at this time. Rather, it is providing current observations on key drivers and important issues that may impact its FY22 results.

And the 'observations' make pretty sombre reading

More pain ahead?

The problem is a solid recovery in sales and EBITDA margin has been the average view of brokers and in my view is currently baked into the share price. https://www.marketscreener.com/quote...22/financials/

Average analyst view for FY22 was for sales growth of 14%, recovery in EBIT margin to 17.7% and eps of 24 cps and even if they can make those numbers, (which surely must be in doubt now) that's a forward PE of ~ 30 which is exactly the same metrics the shares were trading on in the good old days of mid last decade when it was growing really strongly !

Shares look very fully priced to me and the risk / reward ratio here appears heavily skewed to the downside.

[waterboy]

The problem is a solid recovery in sales and EBITDA margin has been the average view of brokers and in my view is currently baked into the share price. https://www.marketscreener.com/quote...22/financials/

Average analyst view for FY22 was for sales growth of 14%, recovery in EBIT margin to 17.7% and eps of 24 cps and even if they can make those numbers, (which surely must be in doubt now) that's a forward PE of ~ 30 which is exactly the same metrics the shares were trading on in the good old days of mid last decade when it was growing really strongly !

Shares look very fully priced to me and the risk / reward ratio here appears heavily skewed to the downside.

The forecast or lack of an issue.
There is still 875 million in case and 109 million in writedown plus the 10 million for MVM, if you take these out the P/E is a lot more realistic. They didn't have the cash pile in the good old days.
Difficult one to value but uncertainty is not good.

[winner69]

The forecast or lack of an issue.
There is still 875 million in case and 109 million in writedown plus the 10 million for MVM, if you take these out the P/E is a lot more realistic. They didn't have the cash pile in the good old days.
Difficult one to value but uncertainty is not good.

Still have 875m cash .....but haven't paid for that MVM yet

[alokdhir]

Still have 875m cash .....but haven't paid for that MVM yet

If u take out cash , SML shares, MVM shares then stand alone ATM enterprise valued @ 4.5 $ per share as per one analysis out of OZ ...

[Beagle]

The forecast or lack of an issue.
There is still 875 million in case and 109 million in writedown plus the 10 million for MVM, if you take these out the P/E is a lot more realistic. They didn't have the cash pile in the good old days.
Difficult one to value but uncertainty is not good.

I don't accept the whole back the cash out "contrived" version of calculating the metrics.
Its clear that the vast majority of that cash is needed for the MVM acquisition and to try and rebuild the brand.
No share buy-back or dividend speaks for itself that they need that cash so arguments about contrived metrics on a cash out basis now look highly creative.

[Ggcc]

I don't accept the whole back the cash out "contrived" version of calculating the metrics.
Its clear that the vast majority of that cash is needed for the MVM acquisition and to try and rebuild the brand.
No share buy-back or dividend speaks for itself that they need that cash so arguments about contrived metrics on a cash out basis now look highly creative.

At the end of the day its a very long hold if you want to make some serious coin, with the short term sp most likely going lower.

So many unknowns, so many scenarios. I don't believe anyone can give advice on such an announcement by ATM as to where the sp will be in the future. I feel a takeover would be the best case scenario in the short term.

[Motley Crew]

" The day before announcing its latest result, a2 Milk increased 20c or 2.88 per cent to $7.15. Smith said there was a whisper that its daigou trade had improved and stabilised – this affirmation will be well received by investors. "

Most likely at least NZX will start positive unless results are too bad ...which is only 2/10 chance IMHO

If they followed rules ( which surely they will now after under class action threat ) Revenue should be in 1.14 B to 1.32 B range ...so headline to look for is total revenue ...1.27 B most likely

Rest will be future talk which will be mainly positive

Like Bull ....I also sold part of holding to see the drama of the day ....20% down I can get my sold ones back ...but not expecting 5.50 to come

Absolutely nothing in that announcement that inspires me with any immediate confidence, or desire to buy the shares. Back under $6 as I see it, and until there is something substantive to report the SP will continue lower. October is still a long way off. The company is pushing the reset button and is looking for the 'new normal'. Only takeover speculation will keep the SP propped up

[Balance]

Absolutely nothing in that announcement that inspires me with any immediate confidence, or desire to buy the shares. Back under $6 as I see it, and until there is something substantive to report the SP will continue lower. October is still a long way off. The company is pushing the reset button and is looking for the 'new normal'. Only takeover speculation will keep the SP propped up

And if indeed Nestle is interested, it would just sit back and wait for the sp to fall to a low level.