ATM - A2 Milk Corporation Limited

[Lease]

Looks the worst is over. If everything goes with plan, next year EPS will be around 21C. If they can achieve medium-term ambition($2b sales, EBITDA margin at low-to-mid 20s), EPS will be 40C, SP will be over $10.

[sb9]

Looking to break into $6 range, but for the schizophrenic US markets, would've got there easily...

[Paint it Black]

Hmm - any DCF is just as good as the underlying assumptions it is based on. Might be worthwhile to check them and remember how many people are able to predict not just the economic conditions for the next ten years with any accuracy, but who know as well exactly how the big political games will evolve over that time and how consumer demand will develop.

Let us know when you meet somebody who knows ;

Until then - this is an agricultural company supplying a product consumers can do very well without (as the last year nicely demonstrated). Their target market is shrinking (less and less Chinese babies and less well off Chinese parents) and subject to huge risks in the geo political game.

Their alternative market (the US - plan B) is still loosing money and nobody knows where it will go.

Established agricultural companies sell typcially for an average PE of 10 (considering the cyclical nature of their earnings), ATM's PE is still above 30.

2 dear 4 me - and in my view still plenty of further hype deflation potential in the SP.

Agree DCF relies on forecasted earnings etc but it also uses a discount rate which is related to the opportunity cost of capital in which A2 is far better placed that the likes of F&P which is in debt and has a DCF currently slightly below it's current SP. DCF vs SP is another tool used by serious investors which imho is worth checking before investing.

[Sideshow Bob]

Looking to break into $6 range, but for the schizophrenic US markets, would've got there easily...

$6.01 now.....

[sb9]

$6.01 now.....

Yeah, first target from hereon is $6.31 which was the high point at release of FH results on 21/02. All depends of Analysts' recommendations post their conf call today.

[sb9]

Closed almost at day’s of 5.40 on ASX. Looking good in the short term.

[bull....]

long way to go to get back to the glory days.
pe of 33 - 34 expensive if the the road to glory again has a pothole

[sb9]

long way to go to get back to the glory days.
pe of 33 - 34 expensive if the the road to glory again has a pothole

For sure, its long uphill to get back to previous glory. However, they've stabilized the business model now and have more control around inventory and other key metrics.

[xafalcon]

Class action participation being advertised on the radio yesterday

[BlackPeter]

For sure, its long uphill to get back to previous glory. However, they've stabilized the business model now and have more control around inventory and other key metrics.

OK - so lets take it, they are now a hopefully stable agricultural producer with a PE above 30. Given that they moved more and more from marketing (easy and cheap scalable) to production (much more expensive to scale), what are they worth if they maintain their current earnings (plus or minus the phase of the cycle)?

I don't see them defaulting, but I don't see them grow a lot either ... unless there are some more hype peaks (and troughs) to come ... but hey, hype is like earthquakes ... there always are some more aftershocks to come. Just make sure to time them correctly ;