ATM - A2 Milk Corporation Limited

[Snoopy]

US:
Product launched on time, three supermarket chains on board, similar gross margins to Australia, similar demographic, the correct recipe for success, will be an interesting watch over the next three years also.

Mac if A2 milk in the USA had similar gross margins to Australia, it wouldn't need to be funded from Australia! You will have noticed that the $A has declined significantly against the USD in recent months. That means less USD to fund the US expansion. Couple this with a big talking ex Pepsi manager driving things in the US and a softening of ATMs intention to not raise new capital, I would guess the book build is happening as we speak. That would expain why the ATM share price is weak.

SNOOPY

[Harrie]

Some big numbers you quote.

Doubt if ATM ever represented 9% of the NZX50 ......probably well under 1%

ATM Active Fund has ATM as 1.8% of that total fund

Just to keep record straight

And I understand that AMP weren't compelled / forced to sell down as much of ATM as they did. ATM was a great investment for them over the years with a decent proportion of hem acquired at 10 cents or less

Just using market cap rates for NZX50 and total market. These numbers are readily available. Naturally at 97c ATM's cap would have represented a higher % of market cap than at 60c.
When I talk about what Milford held I'm talking about TOTAL percentage. The share of ATM held in specific portfolios is allocated on risk profile so some funds will hold more than others within the array of funds available managed by Milford.
The 15% held by Milford has been known for some time. Not sure what they own now.

Good investment from AMP if they purchased at 10c, but what investor looks at selling irrespective of the profits that can be made by selling now, if they can see future upside. Something has happened to their risk assessment hasn't it, or were they a forced seller?

[NT001]

I’m pretty sure that nearly every FA and analyst in the world may disagree with you when you say that stocks cannot be valued NT001, many make a precise science and a professional career of it.

But, yes the company is on track and management have proven they are both capable and can deliver.

Well as you know, MAC, I'm not one of the stock analysts you mention, and I rather take the view that they - and I know that includes you - are a bit like the scientists who understand what causes earthquakes and can tell you the mathematical chances of having a magnitude 9 quake once in the next 300 years, but can't tell you whether it'll be tomorrow, or even if it will happen at all. Fat lot of use that is, in my opinion, except that it's worth knowing you should DYOR and get a LIM report if buying an old brick house built on quicksand.

Heaps of things can go wrong. My ATM shares will go to my heirs and successors probably, but I've already told them "don't sell in the short term", and I don't mind admitting I've also told them of your DCF estimate and some of the others out there. They're comforting up to a point, but who's to say they won't be revised downwards in a few months? And what does that say about the "precise science" they're based on? You once told me you'd never invest as I do without doing FA calculations, and that's the difference between us I guess. I prefer the precise science underlying the A2 proposition, which is now so strong it can only be strengthened, not overturned.

Everything you say about the company implementing a well thought-out market strategy is correct and in my view probably a little under-stated, but translating that into investment value at this stage seems to me, well, speculative.

[MAC]

Each to their own I guess at the end of the day, if everyone had the same investment approach markets would go in straight lines. Although, I’m not sure Warren would have become an oracle without fundamental analysis.

One thing that I think we can agree on I think is that a2MC have a reasonable track record now of success.

Whilst it takes two to three years to open up new geographic markets in the UK and US, it is done so by a company with well sourced management, ex Campbell Arnott’s and now Pepsi, and an FMCG business model which has been proven.

The China market is a bit more immediate though as the a2 milk is source from already existing production facilities in Australia and New Zealand and just retailed within market. IMO it’s this market that holds the best growth prospects over the next 6 to 12 months, particularly in fresh milk and UHT, perhaps with the Bangkok, Jakarta and Singapore markets coming on stream in that time frame also.

Analyst revenue estimates were exceeded at HY15, they are presently FY15 $154M (+38%), although I would not be surprised to see on the day, that that estimate is also proved to be a little conservative.

regards, Mac

[mayday]

look at the bids at 46 and 41 someone thinks its going down

also cant fnzc lend there new holding out for shorting?

No sign of shorting by far
http://www.asx.com.au/data/shortsell.txt

not a wise movement to short A2MC (after reading MAC&NT's comments)

[bull....]

No sign of shorting by far
http://www.asx.com.au/data/shortsell.txt

not a wise movement to short A2MC (after reading MAC&NT's comments)

im happy being on the other side

[skid]

look at the bids at 46 and 41 someone thinks its going down

also cant fnzc lend there new holding out for shorting?

I think its more or less business as usual...Some maybe feeling uneasy or profit taking and some on the other side looking for a bargain--couple big numbers on each side

[drcjp]

Sorry, but this is total B***S***
https://nzx.com/companies/ATM/announcements/263640
What kind of financial co. CAN'T COUNT?

I smell more shenanigans....

[skid]

Havnt seen a basic cock up like that since PEB had to retract one of their announcements--Makes you wonder how seriously to take a performance valuation from a company that cant count

[MAC]

Two months away from the end of the FY15 reporting period, and I’ve a revenue estimate of $161M (+45%), happy to share and compare analysis offline as always;

AUS Fresh Milk	$114.4M
AUS Infant Formula	$37.5M
AUS UHT/Cream/Yogurt	$1.0M
China Segment	$5.5M
UK & US Segment	$2.7M
TOTAL	$161M (+45%)

Such a result would also satisfyingly place a2MC on track for achieving their stated FY16 goal of $230M in revenues.

Also of interest is a start of the planned diversification away from Australian fresh milk sales, which IMO may peak sometime in the next couple of years.

Base case:

Australian fresh milk market share 9.6%, mean period NZD/AUD exchange rate 0.95, double second half UK revenues as advised by a2MC, continued momentum in Australian infant formula sales growth. Fresh milk and infant formula sales traction in China.

Sensitivities:

Australian Fresh Milk Market Share 10%	$166M (+49%)
Australian Fresh Milk Market Share 9%	$154M (+38%)
Mean Period NZD/AUD Exchange Rate 0.96	$160M (+44%)
Mean Period NZD/AUD Exchange Rate 0.94	$162M (+46%)