ATM - A2 Milk Corporation Limited

[Ggcc]

Do you own shares balance or are you looking to buy? Thanks

I would say from his reporting on the company That the answer is NO. But don’t take my word for it

[hyinvest]

Consensus forecast by 7 brokers per MarketScreener.

And looking at it now, the brokers have all updated their forecasts and it shows EPS of 16cps in F22!

So PER of 38 X !!!!

Priced like a growth stock, that's for sure.

Using 16cps and assuming a generous P/E of 20, this means SP of $3.20

Using 11cps (2021 EPS) with a generous P/E of 20, this means SP of $2.20

[Gerald]

did a2 milk give F22 forecast earnings or just someone speculation? a2 milk did say 1HF22 performance will be materially lower than 1HF21, so i think F22 earning will be similar or lower than F21.

The Company is expecting 1H22 revenue(including MVM) to be marginally lower than 1H21 due mainly to lower English label
infant nutrition salesoffset by the addition of MVM revenue. 2H22 revenue (including MVM) is expected to be significantly
higher than 2H21 due mainly to actions taken in 2H21 to rebalance channel inventory, increased marketing investment and the
inclusion of MVM revenue



So say 650m 1H22, and if significantly higher in 2H22 means 20-30% say 1,487-1,554m for the full year, 80m of which is from MVM.

Marketscreener only has 1284m for FY22, so expectations are already pretty low (although SP obviously pricing in more then consensus expectations).

[Beagle]

Consensus forecast by 7 brokers per MarketScreener.

And looking at it now, the brokers have all updated their forecasts and it shows EPS of 16cps in F22!

So PER of 38 X !!!!

Priced like a growth stock, that's for sure.

Yeap, I called this very early that they'd struggle to make 20 cents eps in FY22 and it seems the brokers agree
https://www.marketscreener.com/quote...22/financials/

Well worth noting that they're expecting earnings to grow dramatically in FY23 to 29 cps but I think that guesswork is incredibly vulnerable to quite savage future reassessment. The simple fact of the matter is nobody has any real clear visibility on FY22, (and you can't believe a single word management tells you anymore as their reputation is well and truly stuffed). Visibility on FY23 simply doesn't exist at all let alone anything further out than that and therefore DCF valuations are completely worthless. Best to stick to sensible conservative metrics on FY22 wherein we have some change of making a rough guess of earnings and then for the rest of one's analysis rely on TA, which also screams SELL !

For mine, I'm happy to take 16 cents as a fair guess for FY22 as this lines up with my sense around this. No way this deserves a forward PE like in the good old days when it really was growing strongly, (mid last decade where a forward PE of 30 was the norm), let alone a whopping 38 times guessed FY22 earnings

Early days but I think for all the known risks a sensible forward PE is in the range of 15-18 which suggests to me fair value is around $2.40 - $2.88 maybe a bit less considering the woefully inept management. I was a bit generous with my guess of $3 earlier this week. I reckon at this point shareholders are on a hiding to nothing. Wake me up when we get down to $2.50.

[Ferg]

Using 11cps (2021 EPS)

I did an analysis earlier which suggests normalised earnings is closer to 23 cps. You need to dive into the numbers and see there were a number of one off items that should be adjusted. Normalised earnings removes one off anomalies to get a better understanding of the base business.

post is here

[Beagle]

But as you suggested earlier Ferg, most of the normalized profit was made in the first half of FY21 and the momentum is to the downside.

[winner69]

Has A2 have said how much MVM will contribute financially

Last MVM accounts had revenues at $114m and a HUGE LOSS but one never knows how accounting is done in overseas company in NZ

A2 did say MVM might be ebitda positive in F25

Paying $260m for 75% for that doesn't seem a great idea but what the heck do I know

[winner69]

Should have read results commentary properly re MVM expectations

Based on revised volume assumptions, it is now expected that in FY22 MVM will deliver approximately $80 million in revenue (excluding intercompany revenue) and an EBITDA loss of approximately $20 million for the 11 months post-completion.

[Balance]

Should have read results commentary properly re MVM expectations

Based on revised volume assumptions, it is now expected that in FY22 MVM will deliver approximately $80 million in revenue (excluding intercompany revenue) and an EBITDA loss of approximately $20 million for the 11 months post-completion.

Becoming clear why ATM is holding on desperately to the cash - MVM & US will chew through $50m and more of cash alone a year, while additional promotional & marketing spending in China could easily be $100m+.

[winner69]

Becoming clear why ATM is holding on desperately to the cash - MVM & US will chew through $50m and more of cash alone a year, while additional promotional & marketing spending in China could easily be $100m+.

Seems one has to come up with valuation of A2 in its own right in some traditional way (like guess sakes Ebitda and profits and use a PE) …….but then discount that ‘valuation’ somewhat for the drag on A2 financials is going to bring over many years