ATM - A2 Milk Corporation Limited

[NT001]

Hi Snoopy

I won't try to debate every point you raise, many of which simply demonstrate rather different points of view on what ATM is about. But a couple of points:

The US is a big place, even bigger than - Australia ;-). But if you believe there are no vested interests there and the competition will roll over that's fine. SNOOPY

No I don't think there are no vested interests there, but it's a huge and diverse market and a2 milk is not going to be a threat, just another consumer option. It may pose a bit of a challenge to soy, almond etc because it will be saying you may not need to switch to faux milk when there's a real milk that avoids some of the problems of apparent lactose intolerance for some consumers. But what are they going to do - close a2 down? Not when the science is so clear in favour of a2.

As for the threat from Buffalo Milk: if buffalo could be farmed economically as a competitor for cow's milk, I suspect we'd already be hearing about it. And ATM does not try to use its IP monopoly to stop people having a2 cows, a part of nature. It just says in effect that you can't market your milk as a2 unless you can prove it's a2, and the only way you can do that is by using our DNA test.

You say that ATM "have given up on profits! They are reinvesting all their positive cashflow into developing new markets". Lots of companies forego dividend payments in their early stages to reinvest in expansion. That doesn't mean they've given up on profits.

[blobbles]

Big volume day - 2.4m, probably 2m in the last hour. New floor for a bit one hopes...

[Harrie]

Not sure how many fund managers would own ATM snapiti. Given that they scrap into the top 50 I would think a few but probably not that much of an exposure as lifting the price would make any difference to overall fund performance. Would think that those funds running growth portfolios would have some exposure but that is not the majority of where most of the money is, rather more the conservative and balanced portfolios. In addition to this a lot of the fund managers tend to prefer dividend paying stocks and a number that I am aware of believe that in terms of ATM the "science is not proven" When it is they will be happy to pay twice the price than where they are currently...institutional mentality.

[mayday]

looks snapiti has got banned on ST

[Harrie]

Sucking in buyers at 66c for Mr Seller to offload another swodge today?

[janner]

Pleased to report that Count Down Mt. Wellington have increased the shelf space by 100%

Now have two rows by 5 or 6 bottles instead of the one row..

With a much less erratic supply ..

Slowly but surely :-)))

[Snoopy]

No I don't think there are no vested interests there, but it's a huge and diverse market and a2 milk is not going to be a threat, just another consumer option. It may pose a bit of a challenge to soy, almond etc because it will be saying you may not need to switch to faux milk when there's a real milk that avoids some of the problems of apparent lactose intolerance for some consumers. But what are they going to do - close a2 down? Not when the science is so clear in favour of a2.

The USA is the home of a million market niches. Ther is certainly a niche there for A2

As for the threat from Buffalo Milk: if buffalo could be farmed economically as a competitor for cow's milk, I suspect we'd already be hearing about it. And ATM does not try to use its IP monopoly to stop people having a2 cows, a part of nature. It just says in effect that you can't market your milk as a2 unless you can prove it's a2, and the only way you can do that is by using our DNA test.

I only mentioned buffalo because buffalo milk is all A2, so there is no need to take the A2 licensed test. What I am saying is you can market milk which chemically is the same as A2,without calling it A2,and it will have the same benefits as A2 because it is exactly the same thing!

You say that ATM "have given up on profits! They are reinvesting all their positive cashflow into developing new markets". Lots of companies forego dividend payments in their early stages to reinvest in expansion. That doesn't mean they've given up on profits.

I don't want to question the A2 strategy of spending all their spare cashflow on developing the brand. IMO that is the right thing to do at this stage of the product development cycle. The fact that A2 is on the cusp of profitability, or could be profitable if they wanted to be, is what attracted me to look at them. This is no mean achievement among growth companies. But what is important from here is the amount of capital required to develop the company from today, verses the current and likely capital available in the future. If Australia is not generating enough investable capital going forwards then ATM has a problem, notwithstanding their past success in Australia.

The point I was making is that if they were making regular profits of significance, like say Fonterra launching a new ice cream brand, there is no ticking clock for the business plan to succeed. A mistake may slow down maket development. But in the case of ATM, a mistake could kill the company. The A2 milk product itself can outlive a potential ATM company collapse. And should a collapse happen I think A2 milk would go on. But current shareholders would no longer be in the picture if that happened. What I am saying is the ultimate success of 'A2 milk' and the ultimate success of the 'A2 milk company' are different things. I am not sure that all investors here understand they are investing in the A2 milk company, which may or may not follow the fortunes of A2 milk itself.

SNOOPY

[winner69]

Excuse my ignorance.

How do ATM get the milk onto the supermarket shelves in Australia, physically that is.

They have farmers with a2 herds .....they say they have a network of independent processors (dairy factories?) who process the milk ......freight seems to be a big expense. That's about all I know

Do they pay these independent processors a set rate to process the milk and package the end product?

Does A2 have its own distribution centre / warehouses or do they utilise the infrastructure of the independent processors to get the product to the likes of Coles?

From a value chain perspective I assume that what A2 Corp makes is what they sell it to Coles et al less want they pay the farmer for the raw milk less the independent processing cost less all distribution and delivery costs? Sales and marketing on top that.

Just trying to fine tune my financial model

[NT001]

How do ATM get the milk onto the supermarket shelves in Australia, physically that is......they say they have a network of independent processors (dairy factories?) who process the milk ......

A part of the answer to your question is contained in the following two items. The fact is that a2MC in Australia still has a variety of processing and distribution arrangements cobbled together. But it has had quite a big plant of its own in Sydney since 2012, and its new deal in Western Australia illustrates how it is expanding away from that facility.

http://www.headliner.co.nz/news/12957.html

http://www.voxy.co.nz/business/a2-co...plant/5/119801

[see weed]

Uptrend has already started and is looking good.

If you look at the last 6 weeks graph, it is starting to look good, just a couple of big sellers to go.