ATM - A2 Milk Corporation Limited

**QFD Sage** · 21-07-2015, 05:57 PM

Finishing very strongly in Aussie, with significant volumes too. Feels like someone is building a position to me. Agree with previous post, will await SSH notices with interest.

**blobbles** · 21-07-2015, 05:59 PM

267m next year! Will probably be 300m the way they are going!

41m from A2 platinum alone! Too early to say "I told you so" re Chinese market loving A2?

**NT001** · 21-07-2015, 07:30 PM

Originally Posted by KW

Except that sweet FA is going to China - only $3m of revenue from Asia, and that includes fresh milk sales. The bulk of the formula sales was in ANZ. Still good though, and probably more profitable to sell in ANZ than Asia anyway going by the EBITDA losses in Asia.

Agree, KW. Of course, the holdup in Chinese approval for Synlait held up ATM for quite a while and with that now fixed, things should be picking up. And the relationship with the JD sales site should help a lot. Plus, a2MC has some results from a human trial in China ready for release soon. That will hopefully give A2 some real impetus because as I understand it, digestive problems with dairy are more of a problem with Chinese than with European consumers. Trial results involving Chinese consumers in China should give A2 the edge, starting with fresh milk, and logically this should also boost confidence in A2 formula.

But the Chinese market will always have its difficulties, both logistical and cultural, and my bet is that the US will quickly overtake it.

**NT001** · 21-07-2015, 08:07 PM

Here's an update in The Australian of yesterday's story that disappeared behind a paywall. I've cut it back somewhat, but here are the main points in case they likewise get paywalled. It's got some good new info.

Dairy company a2 Milk and its major shareholder the Perich family-backed Freedom Foods have reached a stalemate over a takeover approach by Freedom and its partner Dean Foods, with the predators believed to be underwhelmed by a trading update issued by the milk company.
Yesterday a2 formally rejected the approach by Freedom and the US-listed Dean Foods and said it was exploring other potential approaches it had received since the Freedom offer was made public last month.
Geoffrey Babidge, a2’s managing director, also confirmed the group had put a potential capital raising on hold as it revealed earnings before interest, tax, depreciation and amortisation was forecast to triple to $NZ12 million ($10.6m) in 2016, slightly above consensus forecasts.
Revenue is tipped to rise from $NZ154m in 2015 to $NZ267m in 2016, above most forecasts.
It is believed the Perich family and Freedom are concerned about a2’s ability to finance and execute its expensive international expansion plans, especially in the US, without the support of a deep-pocketed partner.
But Mr Babidge said the group’s infant formula sales in Australia, New Zealand and China had been better than expected, as were sales from new product launches including whole milk powder, launched in June.
“At certain times I sit down with key shareholders and talk about their views about growth and shareholders have perspectives on what we are doing. I take those on board. That is welcome,’’ Mr Babidge said.
“These results are now starting to demonstrate the strength of the business and the strength of the business model going forward.
“Infant formula looks like a bigger opportunity. It has taken time for returns to come through and that creates frustrations. (But) that is starting to produce substantial returns.’’
While Freedom declined to comment on the market update, it is believed it sees no reason to increase the terms of its indicative offer made last month, the details of which have remained confidential.
However, a 30 per cent premium to a2’s trading price prior to the offer being made last month would translate to an offer price between 65c and 70c. a2 shares closed 0.8 per cent higher at 67c yesterday.
One analyst, who declined to be named, said the update was better than expected and that the US expansion strategy was generating better sales than had been anticipated.
There have been no discussions on the terms of the offer between the principals of a2 and Freedom and Dean Foods over the past month. Instead, the discussions between advisers have centred on the terms of the confidentiality agreement between the two groups.
Mr Babidge said a planned capital raising to fund the group’s international expansion had been put on hold. “We have acceded to that (request) as part of the expression of interest process ... (But) we have sufficient funding capability for the current business plan,’’ Mr Babidge said.

**iceman** · 21-07-2015, 09:16 PM

Originally Posted by KW

Except that sweet FA is going to China - only $3m of revenue from Asia, and that includes fresh milk sales. The bulk of the formula sales was in ANZ. Still good though, and probably more profitable to sell in ANZ than Asia anyway going by the EBITDA losses in Asia.

It would be interesting to know how much of the Australian sales of formula are being sent to China. Some info is suggesting that may be quite significant via internet sales.
Thanks for posting the Australian article NT001. Interesting reading.

Definitely interesting times ahead for ATM and I would be very pleased if we get no takeover at this stage

**sb9** · 21-07-2015, 10:18 PM

It's quite fascinating how this is unfolding atm. Closed at 72.5c on Asx, which is roughly 81c nz. Will be interesting to see how far this goes tmrw...

**baller18** · 22-07-2015, 09:10 AM

Off market trade of nearly 1.5 million at 78 cents...
Funny what happened yesterday should've happened the day the trading update was released, guess it's the takeover speculators bailing out..
Think people have had a day or two to digest the results now