ATM - A2 Milk Corporation Limited

[Jasemc]

Could well be drive price down to make it appeal to Aussie. Makes sense.

[see weed]

https://nzx.com/companies/ATM/announcements/261182

AMP dropped their holding from 5.61% to 2.97%.

Sale of 17,433,371 shares between 31/10/14 and 25/02/15

That explains some of recent downtrend then....

For every seller there is a buyer. So who is the new holder? Maybe brokers getting ready to feed ASX. Me going to wait for ASX listing.

[MAC]

I think we may well see a violent correction to the upside once that sell pressure is gone.

Could happen any day too, I don't think Australian intso buyers have to wait for the ASX listing, more likely they have been waiting for the HY results as the trigger, they can transfer shares between exchanges for a loose change fee.

ATM is otherwise a very tightly held stock with low liquidity outside of the 85% of long term large holders.

Analyst consensus price targets are at 80c and have been at that level consistently since October last year, prior to that they were higher, their valuations will be higher than their price targets.

Milford were buying ATM up to 90c last year and would not have done so without seeing long term upside from that point, they increased their holding to around 14% below 90c.

[Jasemc]

Yep every big sp sale is amp down

[Harrie]

I don't have any past info on what volume is traded except on the day, but didn't 17m shares trade in just one day a few days ago?.
If so thats the full allocation of AMP's sales going back to October. incidently, this raises an important issue regarding prompt SSH disclosure (at least to the 5% mark anyway).
There has been a heap more shares traded than 17m since october, so there has to be a heap more sellers than just AMP Capital, and in good quantaties.
By the same token a corresponding heap of buyers too, albeit at a lower level. The 5 oclock boys are still there too. They can't all be representing AMP.

[mayday]

could be shorters? provided if they started shorting in 80c, 70c or even 60c level, they could still make a good profit by buying them back at currenct sp - plenty from AMP for sale , just be my guess

I don't have any past info on what volume is traded except on the day, but didn't 17m shares trade in just one day a few days ago?.
If so thats the full allocation of AMP's sales going back to October. incidently, this raises an important issue regarding prompt SSH disclosure (at least to the 5% mark anyway).
There has been a heap more shares traded than 17m since october, so there has to be a heap more sellers than just AMP Capital, and in good quantaties.
By the same token a corresponding heap of buyers too, albeit at a lower level. The 5 oclock boys are still there too. They can't all be representing AMP.

[Snoopy]

I have to say Snoopy that even I disagree with you on this.

It might be worth stepping back a bit reading all the report, re-read back a couple of years reports and consider what there true cash-burn rate is.

The real cash burn is what would happen if every market went as well as Australia ;-P. In practice ATM appointed a dud exclusive distributor in New Zealand, had to buy out their joint venture partner in England, and had to overcome the ban on their infant formula into China. Granted ATM have solved or are working on all of these issues. The point I am making is that 'stuff happens'. Having cash on hand to meet unexpected contingencies is good business practice. ATM might get by, true. But if anything else unexpected happens the bail out cash bin is bare.

Yes if they continue as is they will run out of cash in a couple of years but they do have reasonable revenue and profitable business segments, so if the worst comes to the worst they can get probably get by.

ATM could certainly get by as a stand alone business in Australia. But unfortunately that means a share price starting with a '2' not a '5'. Therein lies the downside risk for people buying into ATM today.

SNOOPY

[MAC]

At the beginning of 2014 when the SP was above 90c, AMP held around 11%, Milford mopped up a few of those along the way between then and now.

Although the NZ super fund officially gave AMP the boot in October, that would not have occurred without months of prior consultation and clarification, it's entirely probable AMP were selling right through that process as a matter of de-risking on their part.

Astonishing isn't it what just a single shareholder can do when they have to sell irrespective of valuation.

Still though 15M shares were snapped up quick yesterday, the rest could go as easily tomorrow off the back of a report like that.

[Snoopy]

Bit pessimistic there Snoopy. As the company has stated - sales in the UK are expected to double. That there is cashflow. And China sales are about to start, whilst all the expenses for China have already been incurred in the prior half. More cashflow. That being said, I would not be surprised if they use the ASX listing to bring on a big institutional investor - they all say they arent looking to raise cash, but then when they get an offer to good to refuse, they take it.

The thing that I was puzzled about was that it wouldn't take much to fix the cash position.

660m shares on issue. A 1:4 cash issue at 30c would raise:

0.25 x 660m x $0.3 = $49.5m

All the cash worries would be over, for what is really peanut money in corporate terms. Around $50m is plenty of capital to fast track expansion into the US. Even a 1:8 issue at 30c ($25m) might be enough. So why sail so close to the wind with their cash?

My best logical conclusion: ATM have approached their major shareholders and those shareholders do not support a cash issue, even a modest one. They don't want to see their stake diluted and they don't want to part with more cash. But from the outside that looks like ridiculous gamesmanship. So much at risk for what is in corporate terms a very modest capital injection.

I think KW might be right. Get a new Chairman on board, and make sure a couple of directors are Aussie. Get an Australian institutional investor on board via a placement. Makes sense. But also makes for a soft share price going forwards until the new investor is bedded in.

SNOOPY

[Snow Leopard]

...But bugger it, if XRO can jump 30% based on no news other than a cap raising, why can't ATM get some love???

Best Wishes
Paper Tiger