ATM - A2 Milk Corporation Limited

[NT001]

California is by far the biggest milk producing state in the US, with output 50% higher than Wisconsin, which is no.2 (2014 figures). But Wisconsin calls itself America's Dairyland. And California's dairy industry is somewhat under threat because of chronic drought, to which no solution is in sight.

[Bjauck]

Says more about her world view than anything else.
If the state is the biggest dairy in the US then, by US definitions, it must be the biggest in the world.

Perhaps NZ is world famous....in NZ, just to paraphrase a NZ drink's advertising slogan. NZ built up its dairy industry supplying the UK, not the USA, so I think an American's lack of knowledge of NZ dairy is understandable. Wisconsin has a population of about 5.7m (compared to NZ 4.5m and California's 38.8m). So dairy is identified with Wisconsin as it is an important industry there.

[dobby41]

Perhaps NZ is world famous....in NZ, just to paraphrase a NZ drink's advertising slogan. NZ built up its dairy industry supplying the UK, not the USA, so I think an American's lack of knowledge of NZ dairy is understandable. Wisconsin has a population of about 5.7m (compared to NZ 4.5m and California's 38.8m). So dairy is identified with Wisconsin as it is an important industry there.

If NZ wasn't on the US map for dairy they wouldn't have any import restrictions would they?
NZ certainly isn't the worlds largest dairy producer but they are top in exports are they not?
Not that any of this matters to ATM though the ability of other countries to ramp up A2 milk production is probably quite high.

[Snoopy]

I don't know where Snoopy gets his information on A2MC bosses selling their shares and the reasons for their doing so. I haven't seen much to back this up apart from notice by one individual, the CEO, that he has sold a very minor part of his holding with no details as to the reason. It seems to me there are a few cynics around who believe they can mind-read.

NT001, I was talking of Babbage selling down his holding from 6m shares in July 2015 to 3.5m shares today. That represents a 42% drop in his holding - not small by any standard I know. It is true that I have no evidence of any other managment selling down - you got me there. But I made the comment because with the CEO selling, that gives an implied permission for any other senior officer of the company to sell down too, with no questions asked.

As to the future of A2 shares, I don't pretend to understand TA or FA, but have some understanding (which very few investors seem to) of the difference between A2 and its competition, and the underlying science. A lot of market experience to date is almost irrelevant because the company has been prohibited from properly explaining the benefits of A2, or to be more precise, the potential health risks of its competition - standard milk which contains A1 protein.

This will change as more scientific findings emerge.

Not sure I agree with that. I think A2 have been very successful at getting their message out - especially in Australia. And there is plenty of information in the public domain for those who care to look. Let me pose the question another way.

If this Chinese trial with a higher number of people confirms the results of an earlier trial with less people, what do you expect to happen to A2 sales?

My point is we are talking about a food here, not a medicine. For those who believe they, or their baby, will benefit from A2, they can do so now at relatively low cost. If you are having digestive system problems with regular milk, why would you not try A2 right now? The product is on the shelf. The cost of a personal trail is relatively low. There is no downside risk switching to A2. Why not just try it out now?

What difference will the positive results of a larger trail make? Maybe someone's doctor might feel more comfortable suggesting A2 as a dietary modification? But where is the extra supply going to come from should demand suddenly boom? It could take years to build up larger A2 herds. Meantime potential customers might be lost to Soy Milk. Where is the upside for A2 profits in the short to medium term with the potential release of the upcoming research paper?

Is your expectation of the results of a more rigorous testing program even on the radar of the general consuming public? Do consumers even care what scientists think? In China, some rich consumers believe that by eating ground up parts of a Tiger's anatomy, it will increase their virility. The fact that there is no scientific evidence to support this, doesn't stop them buying such a potion at a premium price and ingesting it.

SNOOPY

[dobby41]

But where is the extra supply going to come from should demand suddenly boom? It could take years to build up larger A2 herds.

This is an area I have wondered - one that seems to get glossed over.

[Ginger_steps_]

This is an area I have wondered - one that seems to get glossed over.

It takes years to build up an a2 herd - It takes days/weeks to separate a herd, as a base from which to begin building the a2 herd. Add a farm gate price premium, and already booming demand - why wouldn't farmers jump on it? The wheels are in motion http://milktheopportunity.synlait.com

[Joshuatree]

Wow a lot of demand there Gs, thanks. Heres hoping clandestine missions switching A2 cows ( and ear tags) out of herds at night don't eventuate.

[NT001]

As regards building up A2 herds, GS is right - it's not difficult to create an all-A2 herd almost overnight by separating out those in existing herds. Switching eartags etc would not work. Each cow would have to be tested and verified as pure A2, and the milk from each herd is tested rigorously and often, so the infiltration of just one non-A2 cow would be detected quickly and I assume the herd would be barred from supply until the "culprit" was identified and excluded. The herd's milk would not be entirely wasted - it would just go into the standard A1-A2 mix - but the owner would lose his premium, so it would be in his interest to guard against that sort of hank-panky.

[NT001]

NT001, I was talking of Babbage selling down his holding from 6m shares in July 2015 to 3.5m shares today. That represents a 42% drop in his holding - not small by any standard I know. It is true that I have no evidence of any other managment selling down - you got me there. But I made the comment because with the CEO selling, that gives an implied permission for any other senior officer of the company to sell down too, with no questions asked.SNOOPY

My math differs from yours, Snoopy. In July, Babidge's family trust had 6m fully paid and 5m partly paid shares which totalled 11 million. He then sold 1 million fully paid shares at 72 cents to help pay off a loan facility. His declaration of holdings following that sale showed him as still having 5 million partly paid and 5 million fully paid shares.

https://www.nzx.com/files/attachments/222913.pdf

In December he sold a further 1 million shares at an average of around 168 cents, taking his total stake to 9 million shares, at which point the company said the transaction took place in a period when sales by executives and directors were not restricted. Yet there were no reported sales by others as far as I'm aware, even though the SP rose almost 50 percent beyond that.

A few days ago Babidge sold a further half million shares. By my reckoning he has sold 2.5 million shares since July, not 3.5 million, and this is just over 20% of his original stake, not 42%, taking his stake down from 11 million to 8.5 million shares. And there is nothing whatever to suggest he sold down because he considered shareholder expectations were too high. Only 1.5m shares were sold after the big pre-Christmas SP rally.

As to your other questions about what I expect to come out of the Chinese clinical trial, I honestly wouldn't know precisely, but if the result is favourable its value in promoting the health/medical difference between A2 and A1 won't necessarily be limited to China. I personally think too much attention is being focused on China, which is an unpredictable and volatile market, and am more interested in the US, about which we haven't heard much as yet. a2MC already has TV ads running in the US which highlight the digestive issues.

Sure there's been nothing to stop Australian consumers trying A2 milk, but there's been a huge legal barrier against the company making any health claims to push their product, in Aussie or anywhere else. People keep saying "show us the science", so it will hopefully be harder for the knockers to question A2's scientific credibility.

Cheers

[NT001]

NT001, I was talking of Babbage selling down his holding from 6m shares in July 2015 to 3.5m shares today. That represents a 42% drop in his holding - not small by any standard I know. It is true that I have no evidence of any other managment selling down - you got me there. But I made the comment because with the CEO selling, that gives an implied permission for any other senior officer of the company to sell down too, with no questions asked.SNOOPY

My math differs from yours, Snoopy. In July, Babidge's family trust had 6m fully paid and 5m partly paid shares which totalled 11 million. He then sold 1 million fully paid shares at 72 cents each to help his family trust pay off a loan facility. His declaration of holdings following this sale showed him as still having 5 million partly paid and 5 million fully paid shares.

https://www.nzx.com/files/attachments/222913.pdf

In December he sold a further 1 million shares at an average of around 168 cents each, at which point the company said the ransaction took place in a period when sales by executives and directors were not restricted. Yet there were no sales by others, even though the SP rose almost 50 percent beyond that.

A few days ago he sold a further half million shares. By my reckoning he has sold 2.5 million shares since July, not 3.5 million, which is just over 20% of his total stake, not 42%. And there is nothing whatever to suggest he sold down because he considered shareholder expectations were too high. Only 1.5m shares were sold after the big pre-Christmas SP rally.

As to your other questions about what I expect to come out of the Chinese clinical trial, I wouldn't know precisely, but if the result is favourable its value in promoting the health/medical difference between A2 and A1 won't necessarily be limited to China. I personally think too much attention is being focused on China, which is an unpredictable market, and am more interested in the US, about which we haven't heard much as yet. a2MC already has TV ads running in the US which highlight the digestive issues.