ATM - A2 Milk Corporation Limited

[Harrie]

The selling all looks a bit systematic doesn't it W69? As predicted another little flurry at 5pm as predicted! Stuffed if I know what's going on though but it seems a little more than what you would expect the natural gyrations of the market to produce.
The nice thing is that there also seems to be a steady stream of buyers willing to back the company at these prices.
Is Wotherspoon a man of action or just a pontificating DH? if the latter, I suspect we are off into the mid 30's. IMO the future SP is highly dependent on the UK success. If there is none, the chances of marketing into the US market also look tenuous. The growth in Aussy is already largely discounted into the SP

[NT001]

IMO the future SP is highly dependent on the UK success. If there is none, the chances of marketing into the US market also look tenuous. The growth in Aussy is already largely discounted into the SP

I don't quite follow that reasoning Harrie. The funding is basically in place for the US operation, which is initially very modestly costed. Its success is going to depend on the publicity it generates, which will be related to health and suchlike issues that are very important to a certain high-income subset of US consumers. The company's US market development strategy is not at all dependent on, or modelled on, the UK operation. The latter will obviously take a year or two to mature, but judging from the Wotherspoon interview is being well planned and not rushed. Californians aren't going to give a hoot about what happens in UK.

The ATM SP will presumably continue to be influenced for a while by the activities of the mystery seller, but I would assume the company has some ideas on how to promote the shares when they float in Aussie, taking advantage of consumer loyalty there. It wouldn't look good if the SP fell flat. ATM may be a big company in terms of capitalisation in NZ, but not in Aussie. It'll be interesting to see if Freedom foods release any of their ATM holding into the float. I don't believe Aussie investors are going to be much influenced by preliminary results from the UK. They have their own perceptions of A2 milk, and if looking externally would be more interested in what's happening in China than in the UK.

I also understand there are some further interesting scientific results coming up for release in coming months. I don't see the company facing any resource crisis, and I was heartened by Wotherspoon's suggestion that the first real foray into Europe is some way off.

[MAC]

Valuation and fundamentals always trump sentiment over the long run Harrie, try to relax a bit.

The China fresh milk market and infant formula market(s) are more immediate, and I don’t think the market will really appreciate that until HY15 reporting. The UK and US are longer term investments and we must patiently let them initiate, mature and grow over the next few years, just as intended.

There are so many more a2 product revenue streams now than just 18 months ago, and the savvy folk at ATM are very good at recognising new opportunities, many of which are in addition to the 2012 strategic plan, which provide for quite good continuity in growth.

The product mix provides both diversification and continuity, from the FY14 report;

“Whilst revenue growth in China and the UK are presently well behind original plan, this shortfall should be compensated by sales of infant formula in Australia and other products in both Australia and Asia.”

You may just do your head in watching the share price every day, day in day out, try putting ATM in the bottom draw for a few months and forget it’s there, you’ll feel better.

Analyst consensus is presently $0.80 (+40%), I think this is quite low as they have not altered since the China fresh milk market has opened up, my FY15 valuation, granted a bit further out, is $1.10, let’s see.

[Harrie]

Thankyou NT and Mac for keeping me on track. Totally accept all that however I must have let my frustration get the better of me last night over a wine or two! I was just throwing a few comments out there for a bit of reaction...and it all reconfirms my own thinking.

[NT001]

India, which is the world’s second most populous country and has the world’s second highest cows-milk output (after USA), is to introduce new milk quality standards, with possible implications for the global A1-A2 debate.

Should we be interested? Well it’s not going to affect the ATM share price this week, but it could be significant longterm in hammering home the case for A2 milk.

http://www.newindianexpress.com/citi...cle2564881.ece

Note the specific reference to A2.

Apart from addressing issues of milk hygiene and the widely varying nutritional quality of milk, there is talk of enforcing a ban on cross-breeding European cows that carry the A1 gene with the indigenous Indian hump-backed cow (bos indicus) which is (or was) pure A2.

http://www.newindianexpress.com/citi...cle1516842.ece

Indian scientists and officials have declared A1 milk a health hazard, and the Indian public is far better informed on the A1-A2 issue than consumers elsewhere. Yet without quality standards, the Indian consumer doesn’t know what he/she is buying.

Much cross-breeding has already taken place to boost Indian per-cow milk output, and crossbred cows carrying the A1 gene are now thoroughly mixed into the national herd. So much so, in fact, that there’s now a shortage of pure indigenous A2 stock to breed from.

The cross-bred (mostly Friesian-Holstein) cows produce more milk but require more and better feed and are less resistant to local insect pests and diseases, and the nutritional value of their milk is markedly lower than that of the local breeds.

A lot of this is not directly relevant to the A2 issue and ATM.

But what if the new regulations require a label stating the A1-A2 status of milk offered for public sale? That’s what a lot of people are pressing for.

http://devinder-sharma.blogspot.co.n...rink.html?q=a2

It would be a world first and could potentially involve having to utilise ATM’s tailhair-testing IP. It could also put Fonterra, which sells dairy products into India but refuses to recognise A1-A2 as an issue, in a rather awkward position.

And any step taken by the Indian government to officially endorse A2 over A1 on health grounds would add support to the a2MC position globally. Worth watching, I think

[Harrie]

Done a bit of research over the weekend I see NT?
Thanks for that, potential upside for ATM in all that, certainly no negatives for them. More education = More sales

[NT001]

Done a bit of research over the weekend I see NT?
Thanks for that, potential upside for ATM in all that, certainly no negatives for them. More education = More sales

I've been following the debate in India for some time, wondering if the government was going to really come to grips with some of these issues, so when the announcement finally came it was just a matter of pulling some of the material together. There's been some good A1-A2 scientific research done in India. You're right, all upside rather than downside for ATM.

[see weed]

looks like new lows coming a close below 58c very bearish

Time to top up again? Purchased some yesterday at 58c, but have never bought any at 57c before. Exciting times roller coaster ride. Buy buy buy.

[NT001]

Has anybody seen any preliminary assessments by Australian analysts as to what ATM shares might be worth when they float there? The company said this should occur about end of March and benefit all shareholders.

[winner69]

Has anybody seen any preliminary assessments by Australian analysts as to what ATM shares might be worth when they float there? The company said this should occur about end of March and benefit all shareholders.

Maybe dual listing will end up like Summerset, EBOS, Nuplex etc dual listings - a non event

Even heavy weights like Spark, Air NZ and Xero have relatively light volumes.

I wouldn't hang my hat on a ASX listing boosting the shareprice just because its listed.

However being the mechanism for Freedom selling down might be another matter.