ATM - A2 Milk Corporation Limited

[couta1]

Agree with all that from Citi and what they project is contemporary with infant formula volume guidance from ATM's supplier in Mid Canterbury.

FY17 NZ$1.50 valuation from me, expect a drop on agm day when the market wakes up to all this and ATM issue guidance. Synlait will be a much better performer than ATM over the next 12 months I reckon.

Not really an issue for long term holders as the article itself points out, the SP could triple looking a few years down the track IMO.Citi may also have ulterior motives in their recommendations.

[sb9]

Not really an issue for long term holders as the article itself points out, the SP could triple looking a few years down the track IMO.Citi may also have ulterior motives in their recommendations.

Well said, anything big players come up with in terms of their recommendation I take it with a grain of salt be it sell or buy.

Looks like Citi are playing a game out there.

[sb9]

FY17 NZ$1.50 valuation from me,

Hope it gets there, I can get another big bite...

[iluab]

Not really an issue for long term holders as the article itself points out, the SP could triple looking a few years down the track IMO.Citi may also have ulterior motives in their recommendations.

It's not just Citi Couta respectfully, Synlait have issued very low growth guidance for infant formula which would have been based on ATM consultation, both SML and ATM assessment through their market analysts based in China, and no doubt through their respective direct communications with Chinese regulators.

Sometimes when emotionally invested in a stock it is hard to accept the reality of the situation, but as you say, over the very long term ATM should recover, the question is if you are invested in ATM at present is, are you prepared to wait up to two years for that recovery, and will this bull market have ended by then.

[King1212]

look at all the big insto sucked up by WYN....you would think with all their best analysts they would safe??? so sometimes I think share market is a luck......

[couta1]

For what it's worth, median target price of $2.22 from 5 analysts, 4 with hold and 1 with sell recommendation, so sell very much the underdog.

[iluab]

For what it's worth, median target price of $2.22 from 5 analysts, 4 with hold and 1 with sell recommendation, so sell very much the underdog.

Not really, analysts adjust their positions and those of their high net worth clients before they release or update their price targets.

You need to consider this as a matter of factual analysis;

Analyst consensus is presently for $514m revenues in FY17 or around 45% yoy growth. To achieve that level of growth ATM would need to achieve around 75% growth in infant formula sales.

Synlait have already provided guidance such that infant formula growth will be around 12.5%.

That is an unsurmountable gap for ATM to overcome even at the most optimistic end of the spectrum.

Some analysts may update their valuations prior to the agm, most if not all will probably wait until ATM confirm their guidance which is almost certainly likely to be in line with that of Synlait, as the two companies consult and work closely behind the scenes on such matters.

In my opinion SML will perform much better than ATM over the next 12 months, and I've been rotating from ATM into SML over the last few weeks.

Hope won't make you rich Couta, dispassionate analysis will make you rich.

Trust this assists you and your thought processes, it’s never easy recognising the downside when you’ve held stocks for a long time, don’t ever let them become like your kids, they’re just assets to be bought or discarded.

[Ginger_steps_]

Not really, analysts adjust their positions and those of their high net worth clients before they release or update their price targets.

You need to consider this as a matter of factual analysis;

Analyst consensus is presently for $514m revenues in FY17 or around 45% yoy growth. To achieve that level of growth ATM would need to achieve around 75% growth in infant formula sales.

Synlait have already provided guidance such that infant formula growth will be around 12.5%.

That is an unsurmountable gap for ATM to overcome even at the most optimistic end of the spectrum.

Some analysts may update their valuations prior to the agm, most if not all will probably wait until ATM confirm their guidance which is almost certainly likely to be in line with that of Synlait, as the two companies consult and work closely behind the scenes on such matters.

In my opinion SML will perform much better than ATM over the next 12 months, and I've been rotating from ATM into SML over the last few weeks.

Hope won't make you rich Couta, dispassionate analysis will make you rich.

Trust this assists you and your thought processes, it’s never easy recognising the downside when you’ve held stocks for a long time, don’t ever let them become like your kids, they’re just assets to be bought or discarded.

Or......You could look at this scenario with a hint of optimism and a dash of logic (a touch of respect sure wouldn't hurt either).

Second half Revenue was $213.7M - therefore zero growth from 2nd half would equate to $427.4M annual revenue. A measly 20% growth basically gets us to you analysts consensus of $514 M (hardly an "unsurmountable gap").
Add to that a2 have multiple new distributers in China, growth in adult milk powder as a flow on from exposure from IF, increasing fresh milk sales, cashflow positive UK, NZ sales coming on board in 2017, a2 sales direct to chinese consumers growing rapidly (beasty margins) - and don't forget the 40% increase in babies being born in China at present (which one would assume accounts for the shortage of Stage 1 Platinum IF on the market at the moment).

So, I would say that even the analysts estimates are conservative and expect a share price well north of $2.22 by FY2017. Finally, in conclusion - "You need to consider this as a matter of factual analysis" and I "Trust this assists you and your thought processes" . lol

[Ginger_steps_]

Not really an issue for long term holders as the article itself points out, the SP could triple looking a few years down the track IMO.Citi may also have ulterior motives in their recommendations.

Ulterior motives such as trying to get a lower average buy price for the impending boom? See attached image (broker data) for Citi group's net accumulation of 840 000 shares at an average price of 1.87 only a couple days before issuing their Sell rating. Attachment 8422

[iluab]

Ha, ok Ginger, do consider though a couple of things, the Synlait 12.% IF growth guidance would place ATM with overall annual revenue growth of around about between 10 and 15%, so your 20% is probably very much actually on the optimistic side.

Secondly, there is also a chance of us actually seeing a drop in ATM IF revenues due to the pending regulatory changes in the first half of FY17, it is hard to imagine, I get that, but CVT just showed us that it can actually happen with the loss they just made when facing a very similar set of cross boarder regulatory changes.

We shall just have to sit tight and wait, one can do that risk free on the sidelines, or one can do that stressed holding ATM shares and riding it through come what may, each to their own really.